“More than any other country, Germany — Nazi Germany — then set out on a serious stimulus program. The government built up the military, expanded the autobahn, put up stadiums for the 1936 Berlin Olympics and built monuments to the Nazi Party across Munich and Berlin.”What Leonhardt asks is,
“The economic benefits of this vast works program never flowed to most workers, because fascism doesn’t look kindly on collective bargaining. But Germany did escape the Great Depression faster than other countries. Corporate profits boomed, and unemployment sank (and not because of slave labor, which didn’t become widespread until later).”
“Does stimulus work? Fortunately, this is one economic question that’s been answered pretty clearly in the last century.”His immediate answer:
“Yes, stimulus works. “Which leads one to wonder, what exactly did happen in the German economy? I went to William L. Shirer’s “The Rise and Fall of the Third Reich” in search of an answer. His writing was specific.
The economy of the Third Reich did in fact boom. Unemployment dropped 6 fold, from six million to less than 1 million. National production rose 102% from 1932 to 1937. National income was doubled. Says Shirer,
“To an observer, Germany in the mid-Thirties seemed like one vast beehive. The wheels of industry were humming and everyone was as busy as a bee.”But the reality was the policy of Dr. Schaat’s Wehrwirtschaft, or war economy. In secret, the entire country was placed on wartime economic status, and produced armaments in secret until forcible conscription was ordered by Hitler. An amount of 12 billion Marks was printed as internal scrip being used to finance the military, but maintain opacity to the outside world as to the source and destination of the "currency". These "Mefo" bills were explained to Hitler by Count Schwerin von Krosigk who
"remarked that they were merely a way of printing money".
Says Shirer,
“He [Schaat] also pointed out with glee [to Hitler] that the funds confiscated from the enemies of the state (mostly Jews) and others taken from the blocked foreign accounts had helped pay for Hitler’s guns. “Thus”, he cracked, “our armaments are partially financed with the credits of our political enemies”.Again,
“All of Schaat’s admitted wizardry in finance was put to work to pay forgetting the Third Reich ready for war. Printing banknotes was merely one of his devices. He manipulated the currency with such legerdemain that at one time it was estimated by foreign economists to have 237 different values. He negotiated amazingly profitable (for Germany) barter deals with dozens of countries and to the astonishment of orthodox economists successfully demonstrated that the more you owed a country the more business you did with it. His creation of credit in a country that had little liquid capital and almost no financial reserves was the work of genius or –as some said – a master manipulator.”
“In short, the German economy was mobilized for war, and businessmen, though their profits soared, became mere cogs in a war machine…”
Every economic plank that Hitler promised was abandoned; all industries were told what to build, what price to charge and what wage to pay. Small business was punished out of business, and the megabusinesses who obeyed profited, dealing much of their profits back to the party in “never ending special contributions”.
Ultimately the huge industries were provided slaves as laborers who were worked to death. Profits held up.
Source: Rise and Fall of the Third Reich, Shirer; p 258 –262.
This is the truth about the Hitler economic program; There is nothing about the NAZI economic program to recommend it to anyone other than a totalitarian. Leonhardt’s writing is deceptive, revealing either outright lying by omission or abysmal ignorance. Ignorance can be repaired; chronic lying is more difficult to deal with. Either way the NYT is right on path with its usual fare.
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