Modern history



Despite interventionist institutions like the Reich Food Estate, Hitler and the Nazi leadership generally sought to manage the economy by tough control of the market economy rather than by nationalization or direct state takeovers.75 Thus, to take one example, the regime pressed the giant chemicals combine I.G. Farben into developing and producing synthetic fuel for motor vehicles and aeroplanes through the hydrogenation of coal, so as to reduce Germany’s dependence on oil imports; an agreement was signed on 14 December 1933, committing the combine to produce some 300,000 tons a year in return for a guaranteed ten-year purchase order from the state.76 Where a company refused to go along with demands of this kind, however, the regime stepped in to bring it to heel, as in the case of Hugo Junkers, the aircraft manufacturer, who was forced to sell his majority interest in his two companies to the Reich at the end of 1933 after attempting to resist the government’s calls to convert them from civil to military purposes. On his death in April 1935, indeed, both companies were nationalized, although only briefly.77 Moreover, the Economics Ministry actively insisted on the creation of cartels in key areas so as to make it easier for the state to direct and monitor increases in war-related production.78Yet despite this increase in state intervention, as Nazi economic spokesmen repeatedly insisted, Germany was to remain a free-market economy, in which the state provided leadership and set the primary goals. For this purpose, at least early on, when the ‘battle for work’ and the reorientation of the economy towards rearmament were the main aims, Hitler needed the willing co-operation of business.

It was not surprising, therefore, that he chose a leading representative of the business community as his Reich Economics Minister after the enforced departure of the cantankerous German Nationalist Alfred Hugenberg.79 This was the general director of the Allianz Insurance Company, Kurt Schmitt. Born in 1886 into the modest bourgeois family of a doctor, Schmitt had been an enthusiastic duelling corps member at university, where he had studied commercial law, then worked briefly in the Bavarian civil service under Gustav Ritter von Kahr, later to become notorious on the far right in Bavaria. Shortly before the outbreak of war, Schmitt entered the Munich branch of the Allianz. Immensely hard-working, he was none the less no cold pen-pusher. He developed a human approach to insurance, personally mediating between claimants and insured, and thus reducing substantially the number of expensive lawsuits which the company had to handle. Not surprisingly, this led to his rapid promotion through the managerial ranks, a rise that was not seriously interrupted by the war, from which he was invalided out early on with a minor wound that became repeatedly reinfected and so prevented him from returning to the front. He became general director at the age of thirty-four. Soon, encouraged by his subordinates, Schmitt was wearing expensive, tailor-made suits and hobnobbing with the great and the good in the gentlemen’s clubs of Berlin. Under Schmitt’s leadership, Allianz expanded rapidly in the kind of mergers and takeovers that characterized other sectors of the business world in the 1920s as well. Like other businessmen, Schmitt was dissatisfied with the conditions under which private enterprise had to labour during the Weimar era, and he lobbied for a reform of the law affecting insurance through the Reich Association for Private Insurance. This brought him into contact with leading politicians, many of whom were impressed by his competence, his decisiveness and his obvious financial acumen. By the early 1930s he had become a public figure of some repute. He enhanced his reputation with his performance on the Economic Advisory Council set up by Brüning. Both Brüning and Papen offered him the post of Finance Minister. He turned the offers down in the belief that the prevailing economic situation would not allow him to do the job with any degree of success.80

By this time, Schmitt had taken up contacts with the Nazi Party. In November 1930, like Schacht a little later on, he had met Goring at a dinner and been extremely impressed by his political advocacy. Soon Schmitt was indulging Göring’s impressive appetite for food and wine in regular lunchtime meetings in a Berlin restaurant, held at his company’s expense. Before long, he had met Hitler too. The Nazis’ promise to defeat the menace of Communism and end the party-political bickering of the Weimar years won him over to their cause. A self-made man who had risen by his own abilities, Schmitt was less wedded to traditional conservative politics than were colleagues from old-established business or civil service backgrounds. As the Nazis seized power in Germany, Schmitt abandoned his previous discretion and signed up as a Party member in the spring of 1933, leading company celebrations of Hitler’s birthday on 20 April. Schmitt shared the common elite prejudice that regarded Jews as too prominent in public and intellectual life, banking, finance and the law; the most common adjective he used when referring to them was ‘unpleasant’. He agreed with Göring’s proposal, made to him at one of their private meetings, to deprive Jews of the vote and ban them from holding positions of authority over Germans. By the summer, his contacts with Goring had borne spectacular fruit. Seeking to replace Hugenberg as Reich Economics Minister, Hitler was persuaded by Göring that it would be politic to have a leading representative of the business community in the post. Hitler offered it to Schmitt, who was sworn in on 30 June 1933, believing that he had a role to play now that the political situation had been stabilized.81

Despite attempting to strengthen his position by, for example, becoming an officer in the SS, Schmitt proved no match for the big beasts in the Nazi power jungle like Goebbels, Ley or even Darré, all of whom had removed substantial areas of the economy from the purview of his Ministry within a few months. Underlings such as the Nazi economic theorist Gottfried Feder, who had written the abolition of ‘interest slavery’ into the Party programme in 1920, were a continual source of trouble. Schmitt’s announcements and instructions to state and regional officials not to endanger the economic recovery by countenancing actions against Jewish businesses were omitted from press reports and generally disregarded by ‘old fighters’. Most seriously of all, Schmitt was opposed to what he considered as unproductive expenditure on rearmament and of spectacular but, as he argued, useless ideas such as the motorways. Here too he was ignored. Schmitt disapproved of the Nazis’ extravagant propaganda claims about an economic recovery, the end of unemployment and the like. He increasingly thought of himself as a failure. Under increasing stress on all sides, he suffered a serious heart attack on 28 June 1934 and eventually resigned with effect from 30 January the following year. Before long, he had returned to the insurance business. He had realized his incompetence as a politician and refused all subsequent invitations to leave the walk of life he knew best.82

Schmitt was replaced on 3 August 1934 as Acting Economics Minister, then from 30 January 1935 on a permanent basis, by Hjalmar Schacht, who had already made it clear privately to Hitler that, unlike his predecessor, he would regard rearmament as a top priority irrespective of the economic situation. Schacht was given dictatorial powers of economic management. He began by promptly sacking Feder from his post in the Ministry and purged other Party figures who, the army had complained, were trying to impose their ideas on the management of the economy. In the next four months, Schacht established a new structure under the aegis of his Ministry, in which all firms were compulsorily enrolled in one or other of seven Reich Groups (industry, trade, banking, and so on), further subdivided into specialist and regional sub-groups. This enabled the Ministry to take a stronger lead in implementing rearmament policy on the existing basis of private enterprise rather than on the kind of anti-capitalist ideas favoured by Feder.83

Already by this time, however, the nascent armaments boom was beginning to have some unwelcome effects. By boosting domestic industrial production, the state and the army caused industry to switch away from export-oriented, mostly consumer products. Added to a continuing slump in world trade and the imposition of trade sanctions by Britain and the United States in protest against the regime’s persecution of the Jews, this caused a fall in exports from 1,260 million Reichsmarks in the last quarter of 1933 to 990 million in the second quarter of 1934. Simultaneously imports grew rapidly in volume, as demand in Germany for products like rubber, oil and cotton all increased. Imports of raw materials rose by 32 per cent from the middle of 1932 to the beginning of 1934, while the prices obtained for German exports fell by 15 per cent. The situation was made worse by the fact that Britain and the USA had allowed their currencies to depreciate, while the Nazi government, like its predecessors, was unwilling to devalue the Reichsmark for fear that it would encourage inflation. Thus German goods became more expensive on the world market, encouraging other economies to turn elsewhere for their sources, while imports to Germany became cheaper, prompting German firms to buy more of them. In 1934, Germany’s balance of payments went into deficit.84 Germany’s foreign debt rose, while its gold and foreign exchange reserves fell by more than half between January and September.85 Piecemeal foreign currency quotas and restrictions failed to have any real effect on the rapidly deteriorating situation.86 On 14 June 1934 the Reichsbank imposed a six-month stop on the repayment of all long-term and medium-term foreign debts.87

On 19 September 1934, to try and counter these mounting problems, Hjalmar Schacht, the newly anointed ‘economic dictator’ of Germany, announced a ‘New Plan’ according to which trade would from now on be on a bilateral basis: a kind of barter between Germany and other states, in which imports would only be permitted from states to which Germany exported substantial quantities of goods. ‘Implementation of the rearmament programme’, he declared on 3 May 1935, was ‘the task of German policy.’ In order to pay for it, imports had to be restricted as far as possible, to arms-related raw materials and foodstuffs that could not be grown in Germany.88 South-eastern Europe seemed a particularly favourable area for bilateral trade arrangements. A focus on the Balkans might well open up a perspective on a future Greater German trade area in East-Central Europe, the long dreamed-of Mitteleuropa (Central Europe) project. It would be safer in the event of war than existing trade links to the north and the west. Besides this, cutting back on overseas trade would lessen Germany’s dependence on the British merchant marine, which might prove severely damaging in the event of a future war between the two nations.

Too many raw materials came from far-flung parts of the globe, and the New Plan sought to reduce Germany’s dependence on such sources. Enforced by twenty-five Surveillance Officers, the new plan helped cut German imports from the rest of Europe from 7.24 billion Reichsmarks in 1928 to 2.97 billion ten years later; by the latter date, imports from South-eastern Europe, which had made up 7.5 per cent of the total in 1928, had risen to 22 per cent of the whole.89 Yet the army was soon complaining that while Schacht was managing to find the money to pay for the initial stages of rearmament, he had not succeeded in making the economy ready for war. In particular, import restrictions had dangerously depleted Germany’s domestic reserves of raw materials, ore and metals, while attempts to find substitutes - home-grown textiles, synthetic rubber and fuel, locally drilled oil and so on - had so far made only a very limited impact. The time had come, in Hitler’s view, for a far more radical intervention in the economy - one which Schacht, who made no secret of the fact that he thought the German economy had reached the limits of its ability to sustain rearmament and war mobilization by 1936, could no longer be trusted to manage.90

Map 11. Major Exporters to the Third Reich


On 4 September 1936, Hermann Goring read out to the cabinet a lengthy memorandum that Hitler had drawn up in the light of the mounting evidence of the New Plan’s bankruptcy. In typical fashion, it ranged widely over history and politics before coming to the point at issue: preparing the economy for war. Politics, Hitler declared, was ‘a struggle of nations for life’. In this struggle, the Soviet Union was now becoming a threat. ‘The essence and goal of Bolshevism is the elimination of those strata of mankind which have hitherto provided the leadership and their replacement by worldwide Jewry.’ Germany had to take the lead in the struggle against it, since Bolshevism’s victory would mean ‘the annihilation of the German people’. Preparing for the coming battle, Hitler declared, was an absolute priority. All other issues were of secondary importance. ‘The German armed forces must be operational within four years.’ ‘The German economy’, he added, ‘must be fit for war within four years.’ Hitler went through his familiar litany of economic beliefs: Germany was overpopulated and could not feed itself from its own resources; the solution lay in extending living-space to obtain new raw materials and foodstuffs. Raw materials could not be stockpiled for a war, since the quantity needed was simply too great. The production of fuel, synthetic rubber, artificial fats, iron, metal substitutes and so on had to be ratcheted up to a level that would sustain a war. Savings had to be made in food supplies; potatoes for example were no longer to be used for making schnapps. The people had to make sacrifices. An economic plan had to be drawn up. The interests of individual businesses had to be subordinated to those of the nation. Businessmen who kept funds abroad had to be punished by death.91

In presenting this memorandum to the cabinet, Goring launched a fierce attack on the view, propagated by Schacht and his ally the Price Commissioner Goerdeler, that the solution to the economic blockage of 1936 lay in scaling down the rearmament programme. On the contrary, since ‘the showdown with Russia is inevitable’, it had to be speeded up. There had to be much tighter controls on the economy and on the export of currency. Goring revealed that it was he who had been entrusted by the Leader with the execution of the Four-Year Plan that Hitler went on to proclaim at the Party Rally on 9 September. Schacht had begun to outlive his usefulness. On 18 October 1936 a decree made Göring’s supremacy official. He used it to establish a whole new organization dedicated to preparing the economy for war, with six departments dealing with the production and distribution of raw materials, the co-ordination of the labour force, the control of prices, foreign exchange and agriculture. Goring appointed the top civil servants in the Ministries of Labour and Agriculture to run the relevant two departments in the Four-Year Plan organization. In this way he began to bring the two Ministries under the aegis of the Plan, bypassing Walther Darré and Franz Seldte, the two responsible Ministers. Göring’s operation also undercut Schacht, who had been sent on compulsory leave on the day that the Plan had been unveiled to the cabinet. Schacht soon found that the Four-Year Plan operation was taking policy decisions without reference to his Economics Ministry. His protests had no effect. Increasingly frustrated at this loss of power, and increasingly worried by the rapid expansion of military and raw material production on what he regarded as an inadequate financial basis, Schacht wrote to Hitler on 8 October 1937 reaffirming his view that there could only be one head of economic affairs in the Third Reich, and making it clear he thought that person should be himself. The threat of resignation was clearly implicit.92

By this stage, however, Hitler had lost all confidence in Schacht, whose economic realism was now a serious irritation to him. On 25 October 1937, the head of the navy, Admiral Erich Raeder, had formally asked Reich War Minister General Werner von Blomberg to get Hitler to step in personally to arbitrate between the different interests - army, navy and air force - that were competing for the inadequate supplies of iron, steel, fuel and other raw materials. Hitler responded by getting Blomberg to call a meeting in the Reich Chancellery on 5 November 1937, at which the Nazi Leader outlined his overall strategy to a small group consisting of Raeder, Blomberg, the Commander-in-Chief of the army General Werner von Fritsch, the head of the air force Hermann Goring and Foreign Minister Konstantin von Neurath. Notes were taken by Hitler’s military adjutant Colonel Friedrich Hossbach, and these were subsequently used as evidence that Hitler was already planning a war in the not-too-distant future. In fact, there was no concrete plan, although there were certainly intentions. Hitler was mainly concerned to impress on his audience the need for urgency in rearmament and the imminence of armed conflict, particularly in East-Central Europe. Much of what he had to say would already have been familiar to his listeners from earlier statements of this kind. ‘The aim of German foreign policy’, Hitler began, according to Hossbach’s memorandum of the meeting, ‘was to make secure and to preserve the racial stock (Volksmasse) and to enlarge it. It was therefore a question of space.’ By this he meant, as he had always done, the conquest of East-Central and Eastern Europe, which would solve the German race’s need for expansion ‘only for a foreseeable period of about one to three generations’ before further expansion, probably overseas, became necessary and indeed, with the probable collapse of the British Empire, possible. After a detailed survey of the shortages in raw materials and foodstuffs, Hitler concluded that ‘autarky, in regard both to food and to the economy as a whole, could not be maintained’. The solution especially in terms of food supplies was to be found in ‘gaining space for agricultural use’ in Europe, by conquest and, implicitly, the removal or reduction of the people who lived there. ‘Germany’s problem’, he declared, ‘could be solved only by the use of force.’93

Hitler went on to warn that other nations were catching up in armaments, and the domestic food crisis would soon reach breaking point. Hossbach noted that Hitler’s speech sounded a new note of anxiety about his own health: ‘If the Leader was still living, it was his unalterable determination to solve Germany’s problem of space by 1943-5 at the latest.’ Indeed, he would take military action earlier if France was weakened by a serious domestic crisis or became involved in a war with another state. In either case, if war came, Germany’s first priority would be to overthrow Austria and Czechoslovakia to reduce the threat on its south-eastern flank. The forced removal of two million people from Czechoslovakia and one million from Austria would free up additional food supplies for the Germans. The British and the French, he added, were unlikely to intervene, while the Poles would remain neutral as long as Germany was victorious.94 Thus Hitler’s response to the supply bottleneck was not to reduce the pace of rearmament but to accelerate the pace of proposed conquest of ‘living-space’. Despite the doubts of some of those present at the meeting, Hitler thus pressed on with rearmament at an ever more frenetic tempo. The caution of Schacht and his allies - who included some of those present at the meeting - was brushed aside. The solution of Germany’s economic problems was reserved until the creation of ‘living-space’ in the East. With Hitler in such a mood, Schacht’s position had now become wholly untenable. On 26 November 1937 Hitler accepted his resignation as Minister of Economics. The management of the economy now passed effectively to Hermann Goring. The discussion earlier in the month made it clear that it was Goring’s job to make sure that the brakes were taken off rearmament whatever the economic problems this might cause.95

The results of these changes could soon be seen. The pace of rearmament quickened still further. As Schacht had predicted, by 1938 expenditure on preparations for war was clearly spiralling out of control: 9,137 million Reichsmarks were spent on the army, compared to 478 million in 1933; 1,632 million on the navy, compared to 192 million five years earlier; and 6,026 million on the air force, compared to 76 million in 1933. Including expenditure on administration, and on the redemption of Mefo bills, rearmament costs had risen from 1.5 per cent of national income in 1933 to 7.8 per cent in 1934, to 15.7 per cent in 1936 and 21.0 per cent two years later, where national income itself had almost doubled in the same period. The Reich’s finances, which had recorded a modest surplus in 1932, recorded a deficit of 796 million Reichsmarks in 1933, rising to nearly 9.5 billion in 1938. Acting now in his capacity as President of the Reichsbank, Schacht wrote a personal letter to Hitler on 7 January 1939, signed by all the other directors of the Reichsbank, in which he warned that ‘overstretching public expenditure’ was rapidly leading to the ‘looming danger of inflation’. ‘The limitless expansion of state expenditure’, they told Hitler, ‘is destroying every attempt to put the budget in order. Despite an enormous tightening of the screw of taxation, it is bringing the finances of the state to the edge of ruin and from this position it is wrecking the bank of issue and its currency.’ Hitler’s response was to sack him along with the entire board of directors a few days later, on 20 January 1939. He no longer fitted into the general National Socialist scheme of things, Hitler told Schacht.96

Schacht went on a long holiday to India and retired from public life on his return. After the death of his first wife, he married a member of the staff at the Munich House of German Art, a woman thirty years his junior, and after a honeymoon in Switzerland in 1941 they lived quietly in the countryside, though Schacht retained a variety of more or less meaningless titles including that of Minister without Portfolio. His successor was the former state secretary in the Propaganda Ministry, Walther Funk, whom Goring had shoehorned into the position of Reich Minister of Economics on 15 February 1938. Funk now took over the running of the Reichsbank as well, thus subordinating both institutions to the Four-Year Plan. Unsurprisingly, what Schacht and his fellow directors, some of whom were subsequently reinstated, had called the ‘unrestrained spending habits of the public finances’ continued unabated, at an even more frenetic tempo than before. On 15 June 1939 a new law removed all limits on the printing of money, thus realizing Schacht’s worst fears. But Hitler and the Nazi leadership did not care. They were counting on the invasion and conquest of Eastern Europe to cover the costs. In February 1934, Hitler had stated that rearmament had to be complete by 1942. By the time of the Four-Year Plan, the date had been moved forward to 1940. Germany’s economic problems, as Hitler had always said, could only be definitively solved by war.97


The switch from the New Plan to the Four-Year Plan in 1936 testified to the growing sense of urgency with which Hitler was now pursuing this goal. But neither could really be called a plan in the normal sense of the word. At least Schacht, as economic supremo in the early years of the Third Reich, had retained a firm conceptual grasp of the economy and state finances as a whole. But Goring, for all his undoubted energy, ambition and intuitive grasp of how power worked, possessed no such overview. He had very little understanding of economics or finance. He did not set clear priorities, nor could he, since Hitler kept changing his mind as to which arm of the services - air force, navy, army - should come top of the allocation list. New blueprints kept being produced and then superseded by more ambitious ones. The chaos of overlapping and competing competencies in the management of the economy was characterized subsequently by one senior official as the ‘organizational jungle of the Four-Year Plan’. There was a fundamental contradiction between the drive to autarky in anticipation of a long war and reckless rearmament in preparation for an imminent conflict. It was never resolved. Nor was the statistical information available which was necessary for the provision of a rational planning system. Despite its elaborate structure, which included a General Council that was supposed to co-ordinate operations and harmonize the activities of the various government Ministries involved, the Four-Year Plan consisted in reality of little more than a series of piecemeal initiatives. Yet these met with some success. Coal production, for instance, increased by 18 per cent from 1936 to 1938, lignite by 23 per cent, and coke by 22 per cent. By 1938, Germany was producing 70 per cent more aluminium than two years before and had overtaken the USA as the world’s largest producer. In 1932 Germany had only been able to meet 5.2 per cent of demand for textiles, essential among other things for military uniforms. Increased production of rayon and other artificial fibres raised this to 31 per cent in 1936 and 43 per cent by 1939. The goal of abolishing Germany’s reliance on imported fuel moved nearer to fulfilment as petroleum production went up by 63 per cent and output of synthetic fuel by 69 per cent between 1937 and 1939. In 1937 Hitler announced the establishment of ‘two gigantic buna [i.e. synthetic rubber] factories’ which would soon produce enough to meet all Germany’s requirements.98

Yet these impressive figures masked a failure of the Four-Year Plan to produce the desired result of making Germany entirely self-sufficient by 1940. To begin with, the Plan failed to solve Germany’s chronic balance of payments problem. Although exports did rise in 1937, they fell again in 1938 as German manufacturers put their faith in safe and lucrative domestic contracts instead of risking their products on the world market. And in both years, they were exceeded in value by imports, further reducing Germany’s already seriously depleted foreign currency reserves. It was this issue more than any other, perhaps, that occasioned Schacht’s growing alienation from the regime he had served so faithfully from the beginning.99 Imports continued to be vital in a number of fields after he had departed the scene. Despite massively increasing their output, Germany’s aluminium factories, for instance, relied almost entirely on imported raw materials. High-grade steel was similarly reliant on metals not to be found in Germany. Buna production amounted to no more than 5 per cent of Germany’s domestic consumption of rubber in 1938; only 5,000 tonnes had been produced, as against a planned target of 29,000. Germany still depended on imports for half its mineral oil in 1939. Expansion to the East might bring new sources of oil within Germany’s reach, but it would certainly do nothing to alleviate the shortage of rubber. Above all, these increases in domestic production had to be set against massive growth in demand, above all from the armed forces. Initially, the armed forces had conceived of rearmament as a means of strengthening Germany’s defences; but the long-term goal was always the mounting of an offensive war against the East, and already on 30 December 1935 General Ludwig Beck, Chief of the General Staff, built on the experience of successful armoured manoeuvres the previous summer to demand the creation of a more mobile kind of army, increasing the number of tank brigades and motorized infantry units. By the middle of 1936 the army was planning to include three armoured divisions and four motorized divisions in its peacetime force of thirty-six. All of these would require huge quantities of steel to build and massive amounts of fuel to drive.100

Building naval strength was less urgent, since Hitler’s main aim in the short to medium term was the conquest of Europe, and above all Eastern Europe. But in the long term, as he had indicated in his unpublished second book, he envisaged a titanic transcontinental clash with the United States, and for this a large navy would be necessary. In the spring of 1937 he increased the number of battleships to be constructed from four to six, to be completed by 1944. In addition there were to be four pocket battleships (changed in 1939 to three battle cruisers), and the pace of construction increased sharply as the threat of war with Britain loomed ever closer. Expenditure on the navy rose from 187 million Reichsmarks in 1932 to 497 two years later, 1,161 million in 1936 and 2,390 million in 1939. In 1936 ship construction accounted for nearly half of all naval expenditure, though this had sunk to under a quarter by the eve of the war, as men were drafted in to crew the new fleet and munitions were manufactured for the new guns to fire. Even in 1938 the planned fleet was thought to require six million tonnes of fuel oil a year and two million of diesel oil, in a situation in which total German consumption of mineral oils stood at six million, of which less than half was produced at home. Plans for the expansion of the air force were even more ambitious, and came up rapidly against very similar constraints. Overriding the objections of the army and navy, which saw airplanes as little more than support forces, Hitler created a Reich Aviation Ministry on 10 May 1933 under Hermann Goring, himself a former fighter pilot. Göring, aided by his talented and energetic state secretary Erhard Milch, a former director of the Lufthansa airline, immediately adopted a plan drawn up by another Lufthansa director, Robert Knauss, that envisaged an independent air force designed to fight a two-front war against France and Poland. Long-range bombers were the key to success, argued Knauss. By 1935 aircraft production had been reorganized, with many firms making components, thus saving the time of the big manufacturers such as Junkers, Heinkel or Dornier. Defensive fighters were soon added to the Ministry’s targets. In July 1934 a long-term programme envisaged the manufacture of more than 2,000 fighters, another 2,000 bombers, 700 dive-bombers, over 1,500 reconnaisance aircraft and thousands more training aircraft by the end of March 1938. By 1937, however, iron and steel shortages were beginning to have a serious effect on these ambitious plans. Constant changes in the design of bombers slowed things down further. Aircraft production actually fell from 1937 to 1938, from around 5,600 to 5,200.101

Meanwhile, iron ore imports increased from just over 4.5 million tonnes in 1933 to almost 21 million tonnes in 1938; the drive to rearm was negating the drive for autarky. Nevertheless, restrictions on foreign currency severely limited the extent to which shortfalls could be made good by imports. By 1939 the army was imposing what an American survey later described as ‘drastic restrictions on the use of motor vehicles in order to save rubber and fuel’. Already in 1937 it only received half the steel it wanted. Ammunition was in short supply, and too few barracks were being constructed to house the rapidly growing numbers of troops. The navy was unable to obtain the steel it needed to fulfil its shipbuilding programme.102 In 1937 the air force only received a third of the steel it required to meet its production targets. In October 1938, however, Göring announced a fivefold increase in the size of the air force to a size so enormous that it would have required the import of 85 per cent of known world production of aircraft fuel to keep it going. Nearly 20,000 front and reserve aircraft were to be ready for action at the beginning of the coming war in late 1941 or early 1942. In the event, when war actually did break out, the air force had just 4,000 aircraft ready for action. This was an impressive number, especially when compared to the situation six years before, but it was far below the target envisaged by Göring.103

By 1939, shortages of raw materials were leading to grotesque consequences for the everyday life of ordinary Germans. From 1937 onwards, the regime began to encourage the collection of scrap metal in order to feed the insatiable demands of the iron and steel industry. It became people’s patriotic duty to surrender any old or unused metal objects to the authorities. A Reich Commissioner, Wilhelm Ziegler, was appointed to organize the collection and, increasingly, the forced requisition of scrap. In 1938 he ordered the removal of all metal garden fences throughout the Reich. Uniformed brownshirts forcibly uprooted iron railings around factories, churches, cemeteries and parks. Iron lampposts were replaced by wooden ones. Iron railings around family graves were torn down by gangs of stormtroopers, who also combed factories and workplaces for wire, tubing and other disused metal objects. Boys from the Hitler Youth searched people’s cellars and attics for discarded tin plates, disused metal radiators, old keys and the like. Everywhere, local committees were formed to organize the hunt for scrap. Metal for non-military purposes was strictly rationed, and heavy fines were meted out to building contractors who installed central heating with metal piping in their houses instead of the more old-fashioned tiled stoves. When a toilet was put into a house, its outlet pipes had to be made of clay rather than iron. Homeowners and town councils tried to replace confiscated iron lampposts and railings with wooden ones, but there was a shortage of wood as well, also leading to a shortage of paper. Building projects were instructed to cut back their use of wood by 20 per cent, while country-dwellers were told to burn peat instead of usable wood. Coal for domestic use was rationed. Official limits were placed on the use of gold by watchmakers. A black market began to grow up in metal spare parts for washing machines and other domestic appliances. There were instances of copper and other metals being stolen and sold to arms manufacturers, who were by now so desperate that they did not ask too many questions about where it all came from.104


In addition to shortages of raw materials, the rearmament programme also created bottlenecks in the labour supply that became steadily tighter as time went on. As coal, iron and steel production, engineering, manufacturing, armaments and munitions factories sucked in all the available skilled and semi-skilled labour, the regime was forced to rethink its attitude towards women’s work. Women might not be able to work in heavy industry, but surely they would be able to take over more jobs in clerical work, and in assembly-lines in modern sectors of the economy like chemicals and electrotechnics and more generally in consumer goods production. Already in a series of decrees in 1936-7, the government withdrew the requirement that a woman receiving a marriage loan would have to give up her job and not take another one. This led to an immediate increase in the number of applications for loans, as might have been expected, and heralded a general reorientation of policy towards women’s work across the board. Only in one area, largely by chance, did restrictions become tighter: Following a conference in the Reich Justice Ministry in August 1936, at which participants raised among other things the issue of women in the judicial system, Martin Bormann asked Hitler whether women should be allowed to practise as lawyers. Hitler’s response was comprehensively negative: women, he told Bormann, could not become judges or lawyers; if they were legally qualified, then jobs should be found for them in the civil service.105 Apart from this area, however, women were returning to employment in larger numbers already. The number of women physicians increased from 2,814, or 6 per cent of the profession, in 1934, to 3,650, or 7 per cent of the profession, in early 1939, by which time 42 per cent of them were married. More significantly, women workers in industry grew in number from 1,205,000 in 1933 to 1,846,000 in 1938. The growing labour shortage in the countryside also led to an increased use of female family labour on the farms. Aware of the need to provide welfare and other kinds of support particularly for married women workers with children, the German Labour Front, the Nazi successor to the old trade unions, put increasing pressure on employers to provide day-nurseries for the young children of female workers and to regulate hours and conditions of women workers so that their health would not suffer. 106

In February 1938 the Four-Year Plan organization announced that all women under twenty-five who wanted to work in industry or the service sector had first to complete a year of duty on a farm (or in domestic work for married women workers). Extended ten months later, the scheme mobilized 66,400 young women by July 1938, and another 217,000 by July 1939. This was far more successful than the voluntary labour service promoted by the various Nazi women’s organizations with much the same purpose; by 1939 there were only just over 36,000 young women working, mainly on farms, as part of these programmes.107 One young woman who took part in such a scheme was the League of German Girls activist Melita Maschmann, who did her labour service in rural East Prussia. Here she encountered a degree of poverty and backwardness wholly alien to her comfortable background in the upper middle class of Berlin. Long hours of hard physical work were relieved only by short periods of sport, political instruction or singing. Nevertheless, despite all the hardships, as a committed member of the League of German Girls, she found the experience uplifting, even inspiring. She later confessed:

Our camp community was a model in miniature of what I imagined the National Community to be. It was a completely successful model. Never before or since have I known such a good community, even where the composition was more homogeneous in every respect. Amongst us there were peasant girls, students, factory girls, hairdressers, schoolgirls, office workers and so on . . . The knowledge that this model of a National Community had afforded me such intense happiness gave birth to an optimism to which I clung obstinately until 1945. Upheld by this experience, I believed, despite all the evidence to the contrary, that the pattern of our camp would one day be magnified on an infinite scale - if not in the next then in future generations.108

For farmers themselves, untrained city girls were often of little use, however. Moreover, in the economy as a whole, two-thirds of married women were still not registered as employed on the eve of the war in 1939. If they did work, it was often as unregistered, part-time cleaners or family assistants, above all in the countryside.109

By contrast, more than 90 per cent of unmarried adult women had jobs in 1939. Yet the increase since 1933 in the number of female industrial workers had not kept pace with the corresponding increase in the number of male industrial workers: between 1933 and 1939 the percentage of women working in industry actually fell, from just over 29 per cent to just over 25. The Labour Front’s attempts to persuade firms to provide facilities for working mothers had largely run into the sands. The mobilization of the potential female labour force also ran up against the continuing insistence of the regime and its leaders that women’s most important role was to bear and bring up children for the Reich. Marriage loans, with their continuing bonuses for every child born, and the general recovery of male employment in the course of rearmament made it seem unnecessary for mothers to endure the hardships of factory work while bringing up a family. Towards the end of 1937, indeed, the government even attempted to make girls leaving school get training in domestic science and childcare before they entered the labour market. In reality, neither working men, nor their womenfolk, nor the regime itself really thought it appropriate for women to work in heavy industry, iron and steel or other arms-related industries in what were generally agreed to be men’s jobs. Despite pressure from the armed forces for the mobilization of what one senior labour official described in June 1939 as a huge potential labour supply of some 3.5 million women currently without paid employment, the contradiction between economic interest and ideological belief ensured that nothing was done to draft women into war production before 1939.110

Behind the scenes, too, Hitler and the leading Nazis were concerned about another potential problem. Believing, as they did, that Germany had lost the First World War on the home front, not in the trenches, they were almost obsessively concerned to avoid what they thought of as a repetition of the poverty, privation and hardship suffered between 1914 and 1918 by the families of serving soldiers at home. Knowledge of this, they thought, had demoralized the troops and made the population in general susceptible to the blandishments of subversives and revolutionaries. The spectre of 1918 haunted all the Nazis’ preparations for war in the late 1930s. Drafting women into factory work would have given it concrete shape. With the outbreak of a new war, the men called up to fight would fight harder if they knew their wives were not having to slave long hours on assembly-lines producing munitions, but were instead being cared for, together with their children, by the Third Reich.111 All this meant that the regime had to look elsewhere for labour as rearmament began to intensify demand for particular kinds of workers from 1936 onwards. This meant above all foreign labour. Recruitment and virtually every other aspect of the control of workers from other countries had already been centralized under the Labour Ministry in 1933, building on previous laws and regulations that gave German workers priority and reduced foreign workers to the status of second-class citizens. Up to the summer of 1938 foreign workers were mostly unskilled and were recruited to alleviate the desperate shortage of labour on farms and to work on construction sites. Seasonal Polish workers, along with Italians, made up the bulk of this workforce. Between 1936/ 7 and 1938/9 the number of foreign workers increased from 274,000 to 435,000. Yet foreign workers were a drain on the economy because they sent much-needed hard currency back home. Thus their numbers had to be kept in check unless some means could be found of stopping them damaging Germany’s balance of payments. By 1938-9, a solution was beginning to appear, predicated, as so much else in the economy, on foreign conquest through war. Foreign workers would be recruited as forced labour, from prisoners of war and other groups in countries like Poland and Czechoslovakia once the Germans had taken control of them. And they would be subject to a particularly harsh police regime that would ensure they would do as they were told. Regulations along these lines were already introduced in August 1938 and toughened up in June 1939. They were to reach draconian extremes during the war.112

Meanwhile, however, all these measures did little to alleviate the immediate problems they were intended to address. The difficulties which the German economy was experiencing in 1938-9 were a testimony to the fundamental contradictions inherent in the Four-Year Plan. Its basic aim was to render Germany self-sufficient in foodstuffs and raw materials in preparation for a lengthy war along the lines of 1914-18, a precedent that was never far from the forefront of Hitler’s mind. A general European war, focused on the invasion of the East but encompassing the traditional enemy, France, and perhaps Great Britain as well, was expected to begin some time in the early 1940s. Yet by accelerating the pace of rearmament, the Plan created tensions and bottlenecks that could only be resolved by bringing the date of military action forward in order to obtain fresh supplies of raw materials and foodstuffs from conquered countries such as Austria and Czechoslovakia. This meant in turn that a general war might break out when Germany was less than fully prepared for it. The war that came would have to be swift and decisive because the economy was clearly in no shape to sustain a prolonged conflict in 1938-9.113 This solution was already becoming clear to Hitler in 1937, when, at the meeting recorded by Friedrich Hossbach, he told his military chiefs that the forthcoming ‘descent upon the Czechs’ would have to be carried out ‘with lightning speed’.114 The state of preparedness of the economy simply would not allow for a long-drawn-out conflict. The concept of the ‘lightning war’, the Blitzkrieg, was born. Yet neither economic planning, nor military technology and arms production, was doing anything to help prepare for putting it into effect.


The Four-Year Plan marked a massive escalation of state intervention in the economy. The priorities were being set by the regime, not by industry, and mechanisms were being put in place to make sure that business fulfilled them whatever the consequences to itself. The senior staff of the Plan were all hard-line National Socialists, from Göring at the top through the Regional Leaders Walter Köhler and Adolf Wagner, the ‘old fighter’ Wilhelm Keppler and others, who had largely displaced the traditionalist economic bureaucrats who had worked with Schacht. At the same time, however, given the focus of the Plan on synthetic fuel and synthetic rubber, as well as chemical fertilizers for agriculture and synthetic fibres for clothing and uniforms, it was not surprising that senior managers of I.G. Farben, the mammoth firm that was being commissioned to manufacture these products, played a key role in the Plan’s administration. Most prominent amongst them was one of the firm’s directors, Carl Krauch, in charge of research and development under the Plan, but there were others too, notably Johannes Eckell, head of the chemical division. Clearly these men were there above all for their expertise; but they also took on these jobs not least in the interests of their own company. This has led some historians to describe the Four-Year Plan as an ‘I.G. Farben Plan’ and to ascribe a good deal of the impetus behind the armaments and autarky programmes to the profit-making greed of big business. After the war, indeed, twenty-three leading figures in the firm were put on trial at Nuremberg for conspiring to prepare and launch a war. Although they were in fact acquitted of this charge, a large literature, not all of it Marxist, ascribed to I.G. Farben in particular and German big business in general a large part of the responsibility in driving Europe and the world to war in 1933-9.115 More generally, a huge mass of Marxist and neo-Marxist writing both at the time and subsequently, particularly in the 1950s and 1960s, sought to present the economic and ultimately too the foreign and military policy of the Third Reich as driven by capitalist interests.116

Yet already in the 1960s, some Marxist historians were beginning to argue that in Nazi Germany at least, the economy was subjected to a ‘primacy of politics’ in which the key parameters were set by ideology rather than by capitalist self-interest.117 The truth is, the economic system of the Third Reich defied easy categorization. To some extent its sheer irrationality undermines any attempt to portray it as a system at all. Superficially, the Four-Year Plan in Germany was more than reminiscent of Stalin’s Five-Year Plan in the Soviet Union. But Nazi economic planning was clearly not designed to further the interests of the working class, as its Soviet counterpart was, at least officially. While Soviet planning under Stalin more or less eliminated free markets and free enterprise, Nazi planning left business intact, from great firms like I.G. Farben all the way down to small retailers and backstreet artisanal workshops. On the other hand, Nazi rhetoric, especially in the 1920s, had a strongly anti-capitalist flavour, so it is not surprising that business only swung round to support the Party after Hitler became Chancellor in January 1933. The destruction of the labour movement in the following months convinced many businessmen that they were right to back the new regime. But as time went on, businessmen found that the regime had its own objectives that increasingly diverged from their own. Chief of these was the ever more frenetic drive to rearm and prepare for war. Initially, business was happy to accommodate itself to this objective, which brought it renewed and then increased orders. Even consumer goods producers benefited from the armaments-driven economic recovery. But within a few years, as the regime’s demands began to outstrip German industry’s capacity to fulfil them, industrialists’ doubts began to grow.118

Few industrialists’ reactions to this process were as sharp as those of the steel boss Fritz Thyssen, whose support of the Nazi Party before 1933 was as extreme as the extent of his disillusion with the movement six years later. In 1939 Thyssen bitterly condemned the state’s direction of the economy and prophesied that the Nazis would soon start shooting industrialists who did not fulfil the conditions prescribed by the Four-Year Plan, just as their equivalents were shot in Soviet Russia. He fled abroad after the outbreak of the war, his property was confiscated by the Gestapo, and he was subsequently arrested in France and put into a concentration camp.119 His alarm at the state’s growing interference in the economy was shared by many others, however. At the centre of their concerns was the Four-Year Plan. In his attempt to increase supplies of domestic raw materials, Goring had first of all berated industrialists for their egotism in exporting their products for profit instead of using them to further German rearmament, then taken matters into his own hands, nationalizing private deposits of iron ore, taking over control of all privately owned steelworks and setting up a new company, known as the Hermann Göring Works.

Founded in July 1937, this state-owned and state-run enterprise, based at Salzgitter, was designed to produce and process low-grade German iron ore at an uneconomic price, something private industry had been unwilling to do. The Hermann Göring Works would use the state’s money to pay over the odds for coking coal and other raw materials, and for labour too, forcing private firms to compete. The effect would be to push up the price of German iron and steel and make it more difficult to export; yet exports at this time were where the biggest profits lay. Worse still, the Hermann Göring Works soon began taking over small firms in the same area, then in April 1938 the Rheinmetall-Borsig armaments company. The nationalization of the large Thyssen concern was in fact part of a wider process in which Göring was getting industry into line to serve the interests of autarky and rearmament. Heavy industrialists in firms such as the United Steelworks, backed behind the scenes by Schacht while he was still in office, objected furiously to this increase in state ownership and control and to state-subsidized competition with their own enterprises. They began intriguing against the Four-Year Plan and talking about ways of getting state controls reduced. Göring had their secret meetings bugged and their telephone conversations tapped and even summoned the two leading conspirators to his office to play back recordings of their conversations. Faced with such pressure, and the more than implicit threat of arrest and consignment to a concentration camp, the industrialists, intimidated, disillusioned and divided, caved in.120

Typical of such men in many respects was the steel magnate and arms manufacturer Gustav Krupp von Bohlen und Halbach, who had presided over the Krupp firm in the company town of Essen, in the Ruhr, since marrying into the family in 1906. The Krupps had a long and close association with the Prussian state, which they supplied with arms. Kaiser Wilhelm II himself had given formal permission to Gustav to add the Krupp name to his own on his marriage to the family heiress Bertha. From that point on, Gustav, previously a career diplomat (although from an industrial family), regarded the preservation of the firm as his principal task in life. Stiff, formal, cold and unbending, he worked long hours to further the company’s interests, and was rewarded by huge armaments orders which ensured that by 1917, 85 per cent of Krupp’s output consisted of war-related products. Although not active in politics, Gustav was, like most industrialists, a conservative nationalist; Alfred Hugenberg was the chairman of the company’s supervisory board from 1909 on, and the two men shared many of the same views. A paternalist who supplied his workers with housing, welfare and other benefits in return for their agreement not to join trade unions or engage in political activity, Gustav thought the state should behave in much the same way, looking after the masses so long as it retained their loyalty. This became more difficult for the firm during the postwar inflation and even more so during the French occupation of 1923, during which Gustav was imprisoned for seven months for allegedly encouraging German resistance. However, the company survived, reorienting itself successfully towards peacetime production until it was hit by the world economic crisis in 1929. By 1933 its output of steel and coal had virtually halved since 1927, and its workforce at Essen had been reduced from 49,000 to little over 28,000.121

These events did not turn Gustav Krupp into a supporter of Nazism. On the contrary, he regarded its demagogy with considerable distaste, preferring to lend his support to the radical-conservative government of Franz von Papen. Krupp’s importance was enhanced by his position as head of the Reich Association of German Industry, the national organization of employers, on behalf of whom he lobbied against the idea of autarky and promoted the idea of a strong state which would repress the unions, cut welfare expenditure, and provide the political stability necessary for a recovery of the economy. Like many others, he did not at first see Hitler’s appointment as Reich Chancellor on 30 January 1933 as much more than the creation of yet another short-lived Weimar government. In the subsequent election campaign he gave funds to Papen and the German People’s Party in the forlorn hope of a conservative victory. Under pressure from Thyssen and other supporters of the new regime, he was forced to agree to the ‘co-ordination’ of the Reich Association. When Paul Silverberg, a Cologne industrialist and one of the Association’s most prominent figures, was deprived of his positions in 1933 and forced into exile because he was Jewish, Krupp made a point of going to visit him in his new Swiss home. He did not join the Nazi Party in its first years of rule, and although he became director of the ‘Adolf-Hitler Donation from the German Economy’, which regularly supplied the Nazi Party with large sums of money from June 1933 onwards, this was not least undertaken in order to fend off the numerous and rapacious demands made to industrialists and employers for ad hoc donations by Regional Leaders, brownshirt gangs and local Party officials. A visitor who met Krupp in Berlin towards the end of 1934 found him in despair at the arbitrary nature of Party rule. ‘Believe me’, he said, ‘we are worse off here than the natives in Timbuctoo.’122

Nevertheless, Krupp on balance was not dissatisfied with the Third Reich in the early years of its rule. He was reassured by the presence in government of men like Papen and Schacht, the continuing domination of the armed forces by officers like Blomberg and Fritsch, the relatively orthodox financial policies pursued by the Economics Ministry, and above all the swelling order books that resulted in a virtual doubling of Krupp’s profits by 1935 and an increase in the workforce at Essen from 26,360 at the beginning of October 1932 to 51,801 two years later. Before long, however, Krupp began to find that the new regime did not allow his company the freedom of action he wanted for it. An important part of the firm’s growth lay in exports, including major arms contracts in Turkey and Latin America, and Krupp was sufficiently concerned about the regime’s growing drive for autarky to speak out against it in public in 1935. He continued to maintain a mixed portfolio of products, in which armaments were only part of a wider whole. From 1937 he began to become alarmed at the Four-Year Plan’s downgrading of basic heavy industry, its hostility to international trade and its promotion of state ownership, above all in the Reich Works. The growth in the firm’s profits had slowed down considerably. The independence Krupp had sought for his business had become severely restricted by the regime’s manic concentration on preparations for a European war, in which the Krupp firm’s name marked it out for a significant part. The government provided it with interest-free loans to expand capacity, but only at the price of putting the state in charge of determining what it was used for. Things had not turned out at all as Krupp had hoped, and already in 1937 he was beginning to put his business in the hands of younger men who, he hoped, would press his company’s interests more aggressively than he himself now felt able to do. In 1941 he suffered the first of a series of strokes that forced him to relinquish his part in the business altogether. Incapacitated, he lived on until 1950, largely oblivious of what was going on around him.123

Ostensibly, a concern like I.G. Farben, whose products were at the centre of the regime’s plans for an autarkic economy, was better placed to profit from the Third Reich. From 1933 onwards its influence on the formation and implementation of government economic policy in this area grew rapidly. The concern began preparing for war as early as 5 September 1935, when it established an Army Liaison Office to co-ordinate preparation for a war economy. Yet the combine’s role should not be exaggerated, for its share of expenditure under the Plan amounted in all to no more than a quarter, and the share of the chemical industry in the German economy overall did not markedly increase under the Third Reich. Metal processing, iron, steel and mining were always more central to the rearmament programme. At the same time, I.G. Farben was forced to reorient its own production increasingly to meet the military demands of the regime. Complex and seemingly interminable negotiations over the financial conditions under which the combine would produce the much-desired buna (synthetic rubber) illustrated only too clearly the gulf between the primacy business placed on profits and the disregard the Four-Year Plan had for anything except accelerating rearmament and the drive towards autarky. I.G. Farben dragged its feet in the process because of its concern to minimize costs. By the autumn of 1939, national output of buna was only just in excess of two-thirds of the targeted 30,000 tons, while production and stockpiles of rubber in September 1939 were only sufficient for two months of warfare.124 Such caution ensured that the giant combine did well out of the Four-Year Plan, though growth rates were still slower than they had been in the initial years of recovery. From 1933 to 1936, net profits grew by 91 per cent, and between 1936 and 1939 by another 71 per cent. The five most important branches of the combine under the Plan - fuel oil, metal, rubber, plastics and nitrogen for explosives - increased their share in I.G. Farben’s turnover from 28 per cent in 1936 to almost 33 per cent in 1939; during this period they accounted for more than 40 per cent of the combine’s sales. But the contribution made to the total turnover of I.G. Farben by product lines fostered by the Four-Year Plan only grew from 28.4 per cent in 1936 to 32.4 per cent in 1939, and the combine in effect had to pay for the development of these products itself. Thus neither was the Plan mainly dependent on I.G. Farben, nor I.G. Farben on the Plan.125

Big business undoubtedly benefited from rearmament and more generally from the economic recovery that occurred, partly in the natural form of the economic upswing that had already begun before the Nazis came to power, and then increasingly from the knock-on effects of rearmament for the rest of the economy. The financial policies pursued by Schacht were bold and ingenious but in the end financially relatively orthodox. By 1938 they had run their course, and the regime, running up against the limits imposed on rearmament by the profit motive that was always the central feature of free enterprise, began to take matters into its own hands. Hitler’s unrelenting drive to rearm had already brought vastly increased interference by the regime in the economy with the Four-Year Plan. By 1938 the Nazi Party and various affiliated organizations such as the Labour Front, under Hitler’s direction, were creating huge economic enterprises that aimed to bypass conventional capitalist operations in the pursuit of the regime’s power-political goals. The automobile industry was to be outflanked by the Volkswagen company; iron and steel by the Hermann Göring Works. A rapidly swelling flood of laws and regulations aimed at setting limits on prices, forcing the rationalization of businesses, diverting investment into war-related branches, imposing production quotas, steering foreign trade, and much more.

Promises made in the Party programme and subsequently to nationalize the banks and stock exchanges of Germany had quietly been forgotten as the realities of the financial world became clear to Hitler and his lieutenants. They needed money, and banks were needed to supply it.126 Nevertheless, here too the regime gradually imposed tighter and more comprehensive controls on financial institutions in order to steer capital into the rearmament programme. By 1939 a series of laws on credit, mortages, loans and banks had ensured that freedom to invest in anything apart from rearmament had been severely curbed.127 Businessmen spent increasing amounts of time dealing with the mass of regulations and requirements imposed on them by the state. These involved increasingly detailed interference in production and trade. On 2 March 1939, for instance, Colonel von Schell, Plenipotentiary for the Automobile Industry, issued a series of orders restricting the number of different models that could be manufactured. Thus the production of spare parts could be rationalized and made less expensive, and military vehicles could be repaired more quickly and efficiently. Instead of 113 different kinds of truck and van, for example, only nineteen were allowed to be manufactured in future, and by specifically nominated companies. ‘Private property has remained in industry, to be sure,’ concluded a critical observer, but very little initiative remained ‘for entrepreneurial initiative, which is being pushed back by the power of the state in giving orders.’128 No wonder that some thought that the socialism in National Socialism was coming to the fore once more.

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