Hitler And The Economic Recovery Of Germany

Essay, Research Paper

In1930, Germany’s manufacturing had fallen 17% from that 1927 level. Bankruptcies were increasing, unemployment was rising and farmers were hurting. Some in the middle class feared sliding into the lower class. And some in the middle class blamed the economic decline on unemployed people being unwilling to work.

In 1930, the parliamentary coalition that governed Germany fell apart, and new elections were held. The biggest winner in these elections was Adolf Hitler’s National Socialist Party. From twelve seats in parliament they increased their seats to 107, becoming Germany’s second largest political party. The largest party was still the Social Democrats, and this party won 143 seats and 24.5 percent of the vote. Communist Party candidates won 13.1 percent of the vote (50 times better than the U.S. Communist Party did in the 1932 elections), and together the Social Democrats and the Communists were large enough to claim the right to make a government. But Communists and the Social Democrats remained hostile toward one another. The Comintern at this time was opposed to Communists working with reformers, and the Communists believed that a collapse of the parliamentary government would hasten the revolutionary crisis that would propel them to power.

Instead of a socialist government, the president of the German republic, Hindenburg, selected Heinrich Br ning of the Catholic Center Party to form a government. This Party had received only 11.3 percent of the vote — less than the Communists. And Br ning did not have the majority parliamentary support needed to rule. As chancellor, Br ning ruled under Hindenburg’s emergency powers. It was the beginning of the end of democracy in Germany, with Hindenburg willing to do anything but give the government back to the Socialists.

Br ning attempted to restore economic equilibrium by a balanced budget, high interest rates and remaining on the gold standard — no emergency deficit spending. And the economy continued to slide. Hitler, meanwhile, was looking good to many Germans because he seemed to be a man who believed in something and wanted radical change that differed from the alternatives offered by the Socialists and Communists. Many people in Germany lacked the sophistication needed to see what Hitler was. They did not have the hindsight that would come in later years. They did not understand that Hitler’s view of World War I, including his stab-in-the-back theory and view of much else in the past, was nonsense. Germany was an advanced industrial society and was as advanced in education as other industrial societies, but in their potential for judging candidates for office the common people of Germany can be said to have been no better or worse than common people in other advanced societies. The times and place, and the lack of sophistication among common people made too many of them vulnerable to Hitler’s arguments. They were poor at choosing a leader for a dangerous world.

Hitler found his greatest support in the traditionally conservative small towns. He campaigned with attacks on Marxism, making it clear that by Marxism he meant the Social Democrats. Hitler appealed to morality, attacking free love and what he inferred was the immorality of Berlin and some other major cities. He promised to stamp out big city corruption. He called for a spiritual revolution, for a “positive Christianity” and a spirit of national pride. Hitler repeatedly called for national renewal. He and his National Socialists benefited from the recent upheaval in the Soviet Union and the rise in fear and disgust for Bolshevism. “If you want your country to go Bolshevik,” his party’s posters read, “vote Communist. If you want to remain free Germans, vote for the National Socialists.”

Hitler called for a strengthened Germany and a refusal to pay reparations. He promised to restore Germany’s borders. He appeared to be for the common man and critical of Germany’s “barons.” To the unemployed he promised jobs and bread. His party had the appeal of being young and on the move. Disillusioned Communists joined his movement, as did many unemployed young men and a variety of malcontents. In addition to finding support in small towns, he found support among the middleclass. He found support too from some among the newly rich and among some aristocrats. He found support among a few industrialists and financiers who wished for lower taxes and the arrest of the labor movement. From wealthy contributors, Hitler was able to set up places where unemployed young men could get a hot meal and trade their shabby clothes for a storm trooper uniform.

Hitler’s call for more territory for Germany did not win him many votes, for the country was in no mood to consider adventures and risking war. Appeals to anti-Semitism had not been much help to conservative candidates before the depression, and conservative governments after the arrival of the depression were making no moves to rescind the rights of Jews. But Hitler’s continued verbal attacks on Jews had some appeal. Not one prominent industry in Germany had a Jew as an owner or director, but Hitler continued to hammer away at what he described as the Jewish aspect of capitalism, appealing to those who believed the myths about Jews and believed in the socialism of his National Socialist German Workers Party.

The depression had been worsening in Germany, and in 1932 unemployment reached thirty percent. Hindenburg’s seven-year term as president ended that year, and at age 84 Hindenburg ran for re-election, his major opponent for the presidency — Adolf Hitler. Neither Hindenburg nor Hitler won a majority, and in the runoff campaign Hindenburg won 19.4 million to Hitler’s 11.4. But in the parliamentary election held later that April, the National Socialists increased their seats from 107 to 162, the National Socialists becoming the largest political party in Germany. Hitler had lost the election for the presidency, but his campaigning had paid off.

Hindenburg had become dissatisfied with his present chancellor, Br ning, and the hunt was on for a new chancellor. Br ning still lacked the parliamentary majority needed for democratic rule, and without Hindenburg’s support, he was forced to resign. His last act as chancellor was to put a ban on Hitler’s street force: Hitler’s storm troopers, also known as the S.A. or the Brown Shirts.

The aristocratic Hindenburg disliked Hitler, seeing him as a rabble-rouser of working class types and believing that the Nationalist Socialists were indeed socialists. He was not about to select Hitler as his new chancellor, while his aide, Kurt von Schleicher, was having difficulty putting together a governing coalition of national unity. Giving up on national unity, Schleicher put together a cabinet that was largely of aristocrats — to be known as “the cabinet of barons” — with himself as minister of defense and Franz von Papen as chancellor. It was another government that lacked a parliamentary majority, and it was unpopular across Germany. But the new government did have at least one success in foreign affairs: the cancellation of Germany’s obligation to make reparations payments.

The crisis over establishing a government with a parliamentary majority continued, and in late July, 1932, another parliamentary election was held. The results hurt the middleclass and middle-road political parties, and the National Socialists increased their seats in parliament still more — to 230. The number of seats for the Communists rose to 89. Schleicher believed that it was necessary to form a government that included National Socialists, and Hitler was buoyed by the thought that he was on the verge of being selected as chancellor. When parliament opened in September, the National Socialists, seeking a government led by Hitler, organized a vote against the Papen government, and von Papen responded by dissolving parliament, with new elections scheduled for November.

In the November elections, the Communists won seventeen percent of the vote, and their number of seats in parliament rose to 100, while Hitler’s National Socialists lost 34 seats. This drop shocked the National Socialists, who believed, with some others, that their movement might have lost its momentum. Also the National Socialists were in debt from all their campaigning — Hitler having borrowed money extravagantly for his campaigns, believing he could pay it back easily if he won and that the loans did not matter if he lost. Discouraged financial backers began withdrawing their support from the National Socialists, and opportunistic party activists began leaving the party. Hitler was alarmed, and there was talk that some who were leaving the National Socialists were going over to that other party of revolution — the Communists.

Schleicher was alarmed by the growth of support for the Communists. He forced von Papen’s resignation. Papen was irritated with Schleicher and, buoyed by the decline of the National Socialists, he hit on the idea of heading a coalition that included the National Socialists, believing that he and other respectable conservatives in his cabinet could control the humbled National Socialist party. Schleicher formed an emergency government and tried to put together a coalition of many political parties, including some National Socialists that he hoped to split away from Hitler. Schleicher hoped to win the support of both moderate socialists and conservatives, but the reforms that he hoped would appeal to the moderate socialists were rejected by conservatives, and Schleicher’s coalition failed to hold together. The unwillingness of these conservatives to compromise was paving the way for Adolf Hitler, as other compromises were in the offing.

Hitler refused the proposal from von Papen that he, Hitler, be anything but the head of a new government, and Papen went to Hindenburg and proposed a government with Hitler as chancellor and himself as vice-chancellor, with the majority of the cabinet to be conservatives from von Papen’s Nationalist Party. Hitler met with some right-wing industrialists, reassuring them of his respect for private property. He told them that democracy led to socialism and that he would curb socialism and the socialist-led labor unions. The industrialists liked what Hitler told them, and, in January 1933, Hindenburg gave power to Hitler and his new coalition — the conservatives with Papen still believing that they would be able to control Hitler.

Hitler won from Hindenburg approval for yet more parliamentary elections in the coming weeks, on the grounds that his government did not have majority support in parliament. Hitler’s lieutenant, Herman G ring, was put in charge of the police, and in late February came the fire at the parliament building set by Hitler’s men but attributed to a Communist plot to make revolution. A good portion of the German people bought the story. Communists were arrested and taken away to prison. The elections were held in the crisis atmosphere created by the parliament building fire, and the National Socialists won 43.9 percent of the vote — another indication that nothing succeeds like success.

To win emergency powers, Hitler needed a two-thirds vote of approval from parliament. With his new numbers in parliament and the support of conservative and middle-road politicians, he won his two-thirds. The only party to oppose the emergency powers was the Social Democrats. The Communists, whose votes would have prevented a two-thirds majority were not present. They had been arrested.

Armed with emergency powers, Hitler now moved against the Social Democrats and their trade unions. In May and June their headquarters were occupied. They were declared illegal and enemies of the people and the state. More Communists were arrested and imprisoned, along with socialists, liberals and trade unionists — all those deemed by the Hitler regime as dangerous Leftists. The first concentration camps appeared, to number about fifty by the end of the year, some of them established by Himmler’s SS and some by the Brown Shirts. Despite the continued German proclivity toward order and legality, a few of the political prisoners were murdered, and some graft appeared as a few were ransomed to relatives or friends.

The spirit arose for a revival of what National Socialists called German culture. On May 10, 1933, students caught up in the National Socialist spirit tossed 20,000 or so books onto a bonfire outside of the University of Berlin — as Hitler’s propaganda minister, watched with elation. Among the books burned were those written by H.G. Wells, Havelock Ellis, Sigmund Freud, Prouse, Emile Zola, Andr Gide, Upton Sinclair, Helen Keller, Margaret Sanger, Jack London and the German author of All Quiet On The Western Front, Erich Maria Remarque. As the fire subsided Goebbels spoke to the crowd, saying that “these flames not only illuminate the final end of an old era; they also light up the new.”

On July 20, Monsignor Pacelli, Papal Nuncio and Vice-Chancellor Papen signed a Concordat. Papen was the right man for that job. He was a respected and civilized man and a devout Roman Catholic. Hitler wanted respectability and leverage with the Germany Catholic Center Party. Hitler was still appealing to Christians, having recently proclaimed that “we demand freedom for all religious beliefs,” and he had recently proclaimed that Christianity was “the basis of our collective morals,” the basis of the family and “the kernel of our people.” Pope Pius XI saw Communism as the greatest danger in the world, and he saw the Hitler-Papen government as a bulwark against Communism, atheism and attendant evils, including the destruction of civilization. He too did not have the hindsight that would come later. And for the Church the Concordant was practical business. In signing the Concordant, the Church acquired a guarantee of the right to regulate its own affairs in Germany, including continuing its confessional schools.

Also in July, a law was passed against the formation of new political parties — for the sake of the unity of the German people. Later that year, Jews were excluded from holding public office, from holding jobs in the civil service, in journalism, radio, farming, teaching, the theater, or in Germany’s motion picture industry. And Jews who were uncomfortable with all this and chose to leave the country had to pay a departure tax.

On November 11, 1933, the anniversary of the Armistice of 1918, Hitler spoke of the “honor” that Germany had lost with that armistice. President Hindenburg that day addressed the nation by radio, and he told the nation to “support with me and the Reich Chancellor (Hitler) the principle of equal rights and peace with honor.” “With the help of God,” he concluded, ” Germany will maintain its unity.”

The next day a plebiscite was held across Germany, designed to underscore the legitimacy of Hitler’s government. Ninety-six percent of the voting public cast their ballots. Ninety-two percent voted their approval of the single list of National Socialists and a handful of Nationalists to fill parliament. Some intimidation may have been involved in the voting, but it is estimated that overall the vote was a genuine expression of support for Hitler’s government.

Like most other economies, Germany’s economy had hit bottom in 1932. Under Hitler, the strategy for recovery was largely the work of his economics minister, Hjalmar Schaact, traditionally a conservative but dynamic in thought. Schaact stopped the sending of German money out of Germany. He reduced foreign trade largely to barter agreements, and he put strict limits on imports — all this to keep wealth within the country. Under Schaact, private industry was compelled to reinvest its profits in manufacturing approved by the state. And crucial to Germany’s recovery was government spending, much of it on public works, the most visible of which was a new highway system — the autobahn — which the army wanted for more efficient movements within Germany. There was also an electrification program, and government investment in industry. One third of Germany’s income had as its source government payments and investments — almost three times the percentage being spent by the U.S. government. And, as in Sweden, the government debt that Schaact was creating was quickly offset by the recovery in revenues that came with the rise in the economy.

Wages and the standard of living remained relatively low for Germans, but the aim of the government was not public consumption but increased industrial production of non-consumer goods. Unemployment was falling, and business optimism returned. In 1935 compulsory labor service was introduced, and unemployment was reduced further as tax incentives were introduced to persuade women to leave the labor force, to return to what was considered traditional for German women: cooking, children and church attending.

Re-armament (in defiance of the Paris Peace Conference) helped boost Germany’s economy, and without independent trade unions, Germany could keep its wages low and it prices stable. Hitler’s economy remained low in productivity, as there was little incentive, and some disincentives, to innovate — the usual incentive for innovation being high profits, which in Germany were heavily taxed. But by 1935, Germany’s farmers were prospering, and industrial production was above its 1929 level and rising rapidly. German workers had the right to try their employers in special courts in order to protect themselves from abuse. But more importantly, many workers and others were saying that Hitler had saved them from starvation. And they were grateful to Hitler for his having brought economic recovery — more than the common U.S. citizen was grateful to Roosevelt.