Some Observations After 50 Years
By Rudolf Jordan
Third Reich/Economy in German as “Das Gespenst der Arbeitslosigkeit: Wie es vor 50 Jahren verjagt wurde,” in “Deutschland in Geschichte und Gegenwart,” Vol. 30. No. 3 (1982); The Journal of Historical Review, vol. 5, no. 1 (spring 1984), pp. 77-83 Hitler, the Unemployed and Autarky Some Observations After 50 Years Rudolf Jordan Contrib: Ronald Klett, translation, comments
In Germany and throughout the democratic world the problem that disturbingly dominates politics today is rising unemployment and its simple cause, lack of jobs for the work force available. The worker has a right to employment. In place of the long postwar period of economic growth in Germany, known as the Wirtschaftswunder, which saw some 4.8 million foreign workers attracted to the country, the situation now is that nearly 2 million German workers seek employment and cannot find it. Their desperation today echoes events that profoundly impressed Germany and Europe – indeed, the world – half a century ago, when the words “Hitler ante portas” resounded at a time when Germany was on the edge of final collapse.
What was the situation at that time? The President of the Reich, Hindenburg, appointed Adolf Hitler as Chancellor on 30 January 1933. In his subsequent address to the German nation, Hitler stressed that two problems were the most serious of all those burdening German society. Their solution demanded the nation’s complete attention and energy. In the clearest possible terms Hitler stated these two problems: unemployment, and the plight of the peasant. Both rose like specters out of the ruins of the Weimar Republic. Both called nationalists and socialists alike to action.
Just how serious were the circumstances in Germany? Between 1929 and 1932 the yearly average of the officially recognized unemployment rose from 1.8 million to the startling figure of 6.1 million, out of a work force of 18 million – an unemployment rate of 34%. The figure of 6 million was reached as early as February 1932, which saw the workless standing in long lines outside the government employment offices. Berlin, capital of the Reich, had a population of 4.2 million, of whom 650,000 were out of work (almost 11% of total German unemployment, although Berlin held less than 7% of the German population). These piteous numbers actually understate the misery, because farm laborers and domestic help were not included in unemployment statistics. To these figures must be added the 3 million of those working in December 1932 who were only working short hours.
About one-third of the German work force in 1932 had no active role in the nation’s economy. The income of the employed fell from $5.7 billion in 1929 to $2.62 billion in 1932. Income tax statistics tell us that of about 31 million Germans drawing an income, 69.2% received less than $286 yearly; 22.7% received between $286 and $714 yearly; only 8.1% received more than that. Of a work force of 18 million, about 12 million had jobs. Of the six million workless, more than one-third were excluded from unemployment insurance and emergency unemployment relief. As welfare recipients, they were given an average of $13.09 monthly. The consequence was that the state in 1932 doled out about 16% of all salaries and wages, or 9% of the total income of the German people.
The following table makes plain the unprecedented success of the National Socialist attack on unemployment, and compares it with the situation at the same time in America.
In early 1938 (before the union with Austria), the statistically unemployed in Germany numbered only 507,000 or 2.8%, a figure that Roosevelt’s New Deal did not equal until February 1943, a good 14 months after the United States had formally entered the war.
After World War II Germany’s extraordinary socialist achievement was belittled by the use of fantastic lies. People were told that the 1930s success owed solely to the rearmament that supposedly began immediately after Hitler had assumed office. But when we realize when in fact real rearmament and remilitarization began, we can see that the foregoing table tells a very different story. When universal conscription was introduced at the end of 1935, more than 4 million of the previously unemployed were already earning a living again. At the end of 1938 the Minister of Labor reported that over 1 million jobs were going begging. There no longer was any unemployment: the problem from then on was a shortage of workers.
The unique success of the German attack on unemployment did not owe to some “solitary decision” made in the highest circles of government, but instead to an ideal partnership of “team spirit” which included the state, industry, the party, and the workers themselves. Political leaders sat down with the relevant economic specialists to realize in practice what specialists had recommended in the light of their experience. To master the crisis and to create jobs, the state spent an additional $1.33 billion during this period – that is, up to 1935. The creation of jobs turned on this settled rule of action: “First, to each a job, and thereafter to each his job.” (How in contrast this attitude is to todays “welfare-ethic”!) The full significance of the feat accomplished from 1933 to 1935 can be truly understood only when considered in light of the political situation abroad, marked as it was by the first declaration of war against Germany, which the London Daily Express of 24 March 1933 announced on page one with the headline “Judea Declares War on Germany.” What this actually meant for Germany’s new beginning is found in the text of the article:
Entire Israel the world over closes ranks to declare economic and financial war on Germany… Fourteen million Jews, in every corner of the world, have united as one to declare war on the German persecutors of their co-religionists… Germany will have a high price to pay. The Reich is faced with a complete boycott in commerce, finance, and industry. [retranslation]
What Germany in fact achieved – this “declaration of war” notwithstanding – was admiringly acknowledged abroad (Churchill, for one, in England), and at home by one of the leading German economic theorists, whose membership in the present [until late 1982] ruling party [Social Democrats] in West Germany adds a “democratic” legitimacy, should that be required, to his views. In 1935, while a student in the University of Heidelberg, he wrote his doctoral thesis (honored with the summa cum laude) entitled Work Creation and Financial Order. To quote from it:
The German organized attack on unemployment has raised and expanded the concept of jobs creation from its literal meaning of relief work to something beyond mere stimulation of the economy until there is an overlapping contribution from all the forces of economic life… After the statutory beginnings in June 1931 and July 1932, and after the National Socialist revolution, the effort developed into a comprehensive service and educational undertaking of the whole nation: the crowning achievement of this undertaking was that it dutifully drew the workers into it.
Who will want to contradict the former Federal Minister for Economic Affairs under Helmut Schmidt – namely, Prof. Dr. Karl Schiller, member of the Social Democratic Party? Yes, he was the author of the expert evaluation above. Those of us who went about our work in those days fully conscious of carrying out a nationalist and socialist revolution see in this Social Democrat’s 1935 words a ringing confirmation of this part of our intention.
by Ronald Klett
Why was National Socialist Germany so spectacularly successful in restoring full employment, whereas the major democracies – the United States, Great Britain, and France – had to employ a world war to end their economic miseries?  Strangely – or perhaps not so strangely – this question is rarely asked. Rudolf Jordan has just provided part of the answer, as also Prof. Dr. Schiller. Hitler himself answered the question. Chatting with his circle of guests on the evening of 12 November 1941, he said: “This is the secret of my Four Year Plan: I have woven the people into an autarkical economy! I did not solve the problem [of unemployment] through war industry.”  The fashionable view, in America as in Germany, is that the National Socialists achieved full employment by converting Germany into a fortress. The English historian A.J.P. Taylor spoke just this typical view: “The full employment which Nazi Germany was the first European country to possess depended in large part on the production of armaments;…”  But his next clause modifies this claim: “… but it could have been provided equally well (and was to some extent) by other forms of public works from roads to great buildings.” His following sentence further dilutes the claim: “The Nazi secret was not armament production; it was freedom from the orthodox principles of economics.” Taylor belabors the point quite needlessly, because 29 pages earlier he had obligingly (although perhaps unwittingly) strangled fashion in the womb: Even in 1939 the German army was not equipped for a prolonged war; and in 1940 the German land forces were inferior to the French in everything except leadership.”  If German “full employment depended in large part on the production of armaments,” should not Germany in 1939 have been “equipped for a prolonged war”? Should its land forces in 1940 have been “inferior to the French in everything except leadership”? The actual statistics, cited by economic historian John Kenneth Galbraith, answer these two questions:
Even in May 1940 the [German] arms industry accounted for less than 15 per cent of total industrial production [this, eight months after the war’s beginning!]; by 1941 the figure was 19 per cent, by 1942 26 per cent, by 1943 38 per cent and finally in 1944 it reached 50 per cent. 
The answer to the basic question, raised in the first sentence of this commentary, has three basic parts: 1) Keynesian deficit spending (Jordan’s view, and Gaibraith’s); 2) The workers drawn in to the economy to become an enthusiastic part thereof (Prof. Dr. Schiller); 3) Autarky, insofar as possible (Hitler). A.J.P. Taylor notwithstanding, the armaments industry was an inconsequential factor in German full employment. But Taylor could have pointedly aimed his claim at the democracies both during and after World War II.
In the closing chapter of the second volume of The Decline of the West, Oswald Spengler, in his inimitably fascinating and perspicacious way, weighs the frenzied private commercial activity required to float the modern economy:
…The ancient wrestle between the productive and the acquisitive economies intensifies now into a silent gigantomachy of intellects, fought out in the lists of the world-cities. This battle is the despairing struggle of technical thought to maintain its liberty against money-thought.
The dictatorship of money marches on, tending to its material peak, in the Faustian Civilization as in every other. And now something happens that is intelligible only to one who has penetrated to the essence of money. If it were anything tangible, then its existence would be for ever – but, as it is a form of thought, it fades out as soon as it has thought its economic world to finality, and has no more material upon which to feed. It thrust into the life of the yeoman’s countryside and set the earth a-moving; its thought transformed every sort of handicraft; today it presses victoriously upon industry to make the productive work of entrepreneur and engineer and labourer alike its spoil. The machine with its human retinue, the real queen of this century, is in danger of succumbing to a stronger power. But with this, money, too, is at the end of its success, and the last conflict is at hand in which the Civilization receives its conclusive form – the conflict between money and blood.
He was writing immediately after World War I, 65 years ago – when economic activity was far less the fever it is today. The implication of his words reminds us that every fever has its end. There is a hidden juncture at which the fresh increments of human energy, resourcefulness, vision, inventiveness, courage, resolution, farsightedness, toil, optimism, and speculation – ingredients essential to sustaining commerce at the desired level or to screw it up to an even higher pitch – mysteriously lack their customary potency or even fail utterly to be present. At this juncture the terrifying descent begins: an adventure the beginnings of which cannot be many years in the future. As part of the next great historical movement, the world – not Germany alone – will return in its respective parts, be these nations or groups of nations, to autarky, as Hitler sensibly desired for the German people. Sometime in the future our interdependent national economies, at present susceptible to paroxysms of shivering from every major storm abroad, will be looked upon as the superstition they always were: the twentieth century myth of the Fountain of Youth. By the early 1930s this fountain had run dry for Germany. Now it runs dry for the world. The German example in coping with, and superceding, this problem will not be forgotten.
Translated and with a Commentary by Ronald Klett
Translator’s Note: This article originally appeared as ‘Das Gespenst der Arbeitslosigkeit: Wie es vor 50 Jahren verjagt wurde,” in the quarterly Deutschland in Geschichte und Gegenwart Vol. 30. No.3 (1982), published by the Grabert Verlag at Postfach 1629. 7400 Tübingen I. West Germany. In this free translation I have expressed the German unemployment in per cent, added the comparable unemployment statistics for the United States (as published by the U.S. Department of Labor), and converted the Reichmark into U.S. Dollars at the official rate of one RM = 23.8 cents.
 For the democracies, World War II was, in the economic sense, a marvelously efficacious genie. American economist John Kenneth Gaibraith is refreshingly blunt about it: “The [American] Great Depression did not, in fact. end. It was swept away by World War II.” Money: Whence It Come, Where It Went (Boston: Houghton Mifflin, 1975), p. 234.
 Adolf Hitler, Monologe im Führerhauptquartier 1941-1944: Die Aufzeichnungen Heinrich Heims herausgegeben von Werner Jochmann (Hamburg: Albrecht Knaus Verlag, 1980), p. 137. The Four Year Plan Hitler refers to was the second, announced in 1936, which was to establish a largely autarkical German economy. Hitler, fully aware of the increasingly menacing attitude of neighboring countries, also instructed Goering that the Germany economy and armed forces were to be ready for war by 1940. These instructions were not fulfilled.
 A.J.P. Taylor, The Origins of the Second World War (New York: Atheneum, 1962), p. 104.
 Ibid., p. 75.
 Werner Maser, Nuremberg: A Nation on Trial (New York: Scribners, 1979), p. 138. The abundant additional war production statistics quoted by Maser in this paragraph overwhelm the reader with what is already obvious. For a fascinating light on Germany’s alleged readiness for general war in 1939, and a complete refutation of this allegation, one should consult the testimonies at the Nuremberg International Military Tribunal of General Karl Bodenschatz, Field Marshal Erhard Milch, and Colonel-General Alfred Jodl: see pp. 127-30 and 136-39 of Maser’s book. A most detailed and informative review of Germany’s readiness for war in 1939, as compared to the readiness of her surrounding enemies, is found in the chapter “The German Standard of Armament in the Year 1939” in Udo Walendy, Truth for Germany: The Guilt Question of the Second World War (VIotho/Weser: Verlag für Volkstum und Zeitgeschichtsforschung, 1981). pp. 256-90. Although Galbraith commits the error of implying that military spending played a more important role than it actually did, his remarks on the National Socialist economy before and during the war are attractive for their overall sanity: Money, pp. 225-26; The Affluent Society (New York: Houghton Mifflin, 1958), pp. 162-63.