How Hitler Tackled Unemployment and Revived Germany’s Economy
by Mark Weber
TO DEAL WITH the massive unemployment and economic paralysis of the Great Depression, both the US and German governments launched innovative and ambitious programs. Although President Franklin Roosevelt’s “New Deal” measures helped only marginally, the Third Reich’s much more focused and comprehensive policies proved remarkably effective. Within three years unemployment was banished and Germany’s economy was flourishing. And while Roosevelt’s record in dealing with the Depression is pretty well known, the remarkable story of how Hitler tackled the crisis is not widely understood or appreciated.
Adolf Hitler became Chancellor of Germany on January 30, 1933. A few weeks later, on March 4, Franklin Roosevelt took office as President of the United States. Each man remained his country’s chief executive for the next twelve years — until April 1945, shortly before the end of World War II in Europe. In early 1933 industrial production in each country had fallen to about half of what it had been in 1929. Each leader quickly launched bold new initiatives to tackle the terrible economic crisis, above all the scourge of mass unemployment. And although there are some striking similarities between the efforts of the two governments, the results were very different.
One of the most influential and widely read American economists of the twentieth century was John Kenneth Galbraith. He was an advisor to several presidents, and for a time served as US ambassador to India. He was the author of several dozen books, and for years taught economics at Harvard University. With regard to Germany’s record, Galbraith wrote: “… The elimination of unemployment in Germany during the Great Depression without inflation — and with initial reliance on essential civilian activities — was a signal accomplishment. It has rarely been praised and not much remarked. The notion that Hitler could do no good extends to his economics as it does, more plausibly, to all else.”
The Hitler regime’s economic policy, Galbraith goes on, involved “large scale borrowing for public expenditures, and at first this was principally for civilian work — railroads, canals and the Autobahnen [highway network]. The result was a far more effective attack on unemployment than in any other industrial country.” / 1 “By late 1935,” he also wrote, “unemployment was at an end in Germany. By 1936 high income was pulling up prices or making it possible to raise them … Germany, by the late thirties, had full employment at stable prices. It was, in the industrial world, an absolutely unique achievement.” / 2 “Hitler also anticipated modern economic policy,” the economist noted, “by recognizing that a rapid approach to full employment was only possible if it was combined with wage and price controls. That a nation oppressed by economic fears would respond to Hitler as Americans did to F.D.R. is not surprising.” / 3
Other countries, Galbraith wrote, failed to understand or to learn from the German experience: “The German example was instructive but not persuasive. British and American conservatives looked at the Nazi financial heresies — the borrowing and spending — and uniformly predicted a breakdown … And American liberals and British socialists looked at the repression, the destruction of the unions, the Brownshirts, the Blackshirts, the concentration camps, and screaming oratory, and ignored the economics. Nothing good [they believed], not even full employment, could come from Hitler.” / 4
Two days after taking office as Chancellor, Hitler addressed the nation by radio. Although he and other leaders of his movement had made clear their intention to reorganize the nation’s social, political, cultural and educational life in accord with National Socialist principles, everyone knew that, with some six million jobless and the national economy in paralysis, the great priority of the moment was to restore the nation’s economic life, above all by tackling unemployment and providing productive work.
“The misery of our people is horrible to behold!,” said Hitler in this inaugural address. / 5 “Along with the hungry unemployed millions of industrial workers there is the impoverishment of the whole middle class and the artisans. If this collapse finally also finishes off the German farmers we will face a catastrophe of incalculable dimension. For that would be not just the collapse of a nation, but of a two-thousand-year-old inheritance of some of the greatest achievements of human culture and civilization …”
The new government, Hitler said, would “achieve the great task of reorganizing our nation’s economy by means of two great four-year plans. The German farmer must be rescued to maintain the nation’s food supply and, in…
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