The economy of a country plays a significant role in the way the country functions. A poor economic condition may drive a country towards chaos and force the people to search for radical measures. The rise of the fascist regimes in Europe can be traced to the 1929 Economic Depression, which had rendered the world economy powerless. Having suffered heavy losses post the Treaty of Versailles, the economic meltdown was the final nail in the coffin. It provided a stage for a messiah-like leader, who was willing to take any steps necessary to make the country rise. It is fair to say that economics played a vital role in the rise of Hitler’s fascist government, which in turn led to the second world war.
Effects on Germany
Germany, which had already received a horrible deal with the Treaty fo Versaillessuffered the most when the Wall Street Crash of 1929 occurred. Their economy was still recovering from the “injustice” they suffered at the end of the war. Their economy was primarily propped on the back of loans that they had received from American Banks. The 1929 Great Depression rendered them helpless.
These loans had helped in establishing thriving industries in the 1920s in Germany. However, with the economic depression, the German economy was affected in a more dire way as compared to the American Economy, The loans ceased to flow in once the Great Depression started in the US. Many American financiers began to ‘call-in’ outstanding foreign loans. They were themselves fighting for survival. The German economy was not resilient enough to withstand the effects of the withdrawal of such a massive amount of capital. To makes matters worse, the American government imposed stiff tariffs on foreign products to protect their own companies. The German industry was heavily dependent on exchange with the US. Suddenly, this exchange came to a complete halt. As the German banks struggled to provide money and credit, people lost confidence in them. By 1931, multiple German institutions and banks had folded. The civilians were left to fend for themselves.
Poor Management by Weimar Government
As unemployment rates hit unimaginable numbers, the Weimar government was unable to do anything about it. Children across the country were dying of hunger and malnutrition. Millions of people, including those who held blue collared jobs in 1928, were rendered unemployed in the post-Depression phase.
To make matters worse, Heinrich Bruning, the Chancellor of Germany, made a series of disastrous policy decisions. He was more worried about inflation and budget deficits than unemployment. Instead of trying to stimulate the economy and create more jobs, Bruning opted to increase taxes and implement wage cuts and spending reductions. He was blinded in his approach to control inflation to the extent that he paid no heed to the plight of the civilians. Despite facing opposition by Reichstag, he managed to get these policies approved by the President, who issued these policies as emergency decrees in mid-1930. His policies increased the hatred of the people against the German government. The unemployment rates continued to rise. This led to constant bickering and instability at Reichstag, as no one was in favor of the policies imposed by the Chancellor.
In the state of helplessness, as the German people grew angry, they were desperate for a solution of some sort. The state of disorder contributed to the rise of Hitler and ultimately led to the Second World War.
What Worked For Hitler
Hitler’s party took advantage of the growing public discontent. One of Hitler’s promises was “Food and Bread.” At a time of large scale unemployment, this sounded like music to the German ears. The Nazi party exploited the growing fearing of unemployment and death by starvation in the minds of the people to rise to power.
Hitler was a great speaker with an extraordinary power to win people over. Goebbels’ propaganda campaign was very effective and brought massive support for the Nazis by targeting specific groups of society with different slogans and policies to win their support.
As the Weimar Coalition government fell apart, Hitler’s party came to power in 1933. Their only competition at that time was from communist parties in the country. But, communist parties appealed to a smaller crowd as compared to the Nazi Party(Nationalist Socialist DAP(NSDAP)).
Having been elected democratically, Hitler proceeded forward in a systematic way to destroy democracy in the country that ultimately culminated in him becoming the dictator of Germany.
Economics Under Hitler
Despite his many flaws, Hitler was successful in devising economic policies, which helped improve the economy of Germany. Unemployment stayed low under Hitler due to a variety of reasons. He intervened in the labor market but was careful not to boost wages beyond the market level. He set about building autobahns and Volkswagen, which helped employ a large number of people. He protected the German industry from foreign competition, suspended the gold standard, and rigidly controlled the pricing and production decisions of the private sector. Further, he decided to penalize smoking, make it easier for people to take credit, and introduced unemployment insurance to make the lives of the German citizens better.
However, like everything with Hitler, there was some shady business going on. He used certain shady tricks that were used to boost the GDP in the new non-market economy of Nazi Germany. (These techniques have been used time and again by different governments including the US Government in 2003) These techniques are handy in the long run and can help boost public morale.
Though his methods were radical, he did manage to improve the economic conditions of the people living in Germany. After having suffered for so long, Germany finally had a leader who made their life worth living. It helped Hitler win the full support of the German public. It is safe to say that his economic decisions played a significant role in him gaining the respect of the ordinary German. Thus, his policies made it easier for him to establish a fascist government in Germany.