I'm reading
The Wages of Destruction: The Making and Breaking of the Nazi Economy by Adam Tooze at the moment. It's a fascinating piece of work, undermining some of the myths that surround the Nazi period in Germany.
There are two key aspects to understanding the German economy under Hitler.
1) Their holdings of foreign exchange currencies were chronically and perilously low (enough to cover less than a week's trade for significant periods). The upshot of this were that the most draconian import and exchange controls imaginable were in place from 1933 onward. During the 1934 reserves crisis, manufacturers were having to apply on a day by day basis for rations of imported raw materials.
This problem even overrode some of the central tenets of Nazi ideology - while Jews were being 'encouraged' to leave Germany, the impossibility of them taking any resources with them due to exchange controls made it impossible for them to do so. This was the source of much internal friction in the Nazi party.
2) Echoing what was mentioned earlier in the thread, Hitler was in no way enamoured of liberal (capitalist) economics, nor big business for its own sake. Business was there to serve the needs of the state first and foremost. For example, the textiles industry, which employed 20 percent of the German workforce suffered greatly as a result of import controls as they were unable to obtain their raw materials.
It's partly true and partly strasserite myth to my mind, but what is true is the idea that within the nazi party there were people who hated the big industrialists and finance capital and who belive that Hitler did too.
Hitler's Economic Memorandum of August-September 1936, which set out the 'Four Year Plan' greatly accelerating German rearmament makes his views on private industry quite clear.
Adolf Hitler said:
It is not a matter of discussing whether we are to wait any longer...it is not the job of...government to rack...[its] brains over methods of production... Either we possess today a private industry, in which case its job is to rack its brains about methods of production; or we believe that it is the government's job to determine methods of production, and in that case we have no further need of private industry.
Adolf Hitler said:
The job of the Ministry of Economic Affairs is simply to set the national economic tasks; private industry has to fulfil them... Either German industry will grasp the new economic tasks, or else it will show itself incapable of surviving any longer in this modern age in which a Sovet state is setting up a gigantic plan. But in that case it will not be Germany that will go under, but at most a few industrialists.
The prime example of this ideology being put into action would be the nationalisation of iron ore deposits in the Ruhr in 1937 and the establishment of the nationalised Reichswerke steel works under Herman Goering purposefully in opposition to the largest private steel company in Germany, Vereinigte Stahlwerke. Another might be the effective sequestration of the Junkers aircraft company in October 1933 - Junkers disagreed with the Air Ministry about the strategy for aerial rearmament and signed his firm away to the Reich after a couple of nights in a police cell.
Big business, mostly in the heavy industry and armaments sectors did make significant profits under the Nazis. In some cases this was through direct subsidy or guarantees against losses, notably for schemes promoting autarchy, or self-sufficiency, of the German state. In 1936, IG Farben was engaged to produce synthetic fuel from coal. The state guaranteed a 5% return on IG's capital investment. However, any profits in excess of 5% accrued entirely to the Reich. In the long run, with profits well in excess of 5% the deal was very good for the state.
In other areas of the German economy, as it recovered in the years following the crisis of 1930, with full employment from the middle of the decade, the price and wage controls imposed by the government, combined with a protectionist trade policy brought about a surge in profits for German business.
The Faustian bargain was that the businesses surrendered themselves to a hierarchical system of state control, through government sponsored or mandatory cartels which dictated which products they could make and how much they could sell them for, with the threat that if they did not perform, their company would be taken away from them.
Companies were making profits but had nowhere for it to go. The money could not be invested abroad due to exchange controls. Foreign owned businesses, such as GM-owned Opel, could not pass them on to their parent companies. Practical difficulties arose for firms wanting to attract workers, as they were forbidden to raise wages.
Moreover, in 1934, the state decreed that dividends in excess of 6% of capital could not be paid to shareholders. This was partly to save the Nazis from the embarrassment of being seen as the 'dictatorship of the bosses' (the Nazis were sensitive to some aspects of public opinion) but also to force business to build up large cash reserves, which they could then use for their own industrial investment rather than turning to the markets, from which instead the government could then draw money by issuing bonds.
As an aside, the book undermines the myth of that Hitler's work creation schemes played a significant part in the recovery of the German economy. Debt-funded public works schemes had already been put in place in December 1932, before Hitler's accession to power in January 1933 and no new money was committed by the Nazis during the first and only year of its operation. The only novel element that Hitler introduced, the construction of the autobahns, accounts for only 38,000 new jobs, a tiny fraction of the fall in unemployment in the first years of Nazi rule.
None of this is to state that the Nazis were socialists in any common meaning of the word (with due note of Strasser and leftist elements such as the NSBO prior to 1934).
What it does underline, however, is that they were amenable to capitalism only where it served the needs of the state and, in their minds, the German
Volk. It ignores those demands of socialism for equal distribution of wealth, but effectively achieves control of the means of production by an elite in the name of the people - to that extent it has similarities with the Soviet Union.
