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German preparations for war

1. Economics

After gaining the full power Hitler wanted to steer Germany to war to obtain Lebensraum. For this he needed strong military industry and economics. One of the people who made Hitler's plans real was Hjalmar Schacht - new Central Bank director. Soon he became in fact also Economics Minister. He started realising so called "New Plan" which unabled Germany buying spending more money abroad than export income. He also applied tricks to balance military expenses. One of them was convincing the biggest companies like Siemens, Gutenhoffnungshutter, Krupp and Rheinmetal to create a corporation with 1 million mark capital only. The company started emmision of papers: "Wechsels" which were guaranted by Reich Bank and that is why they were accepted. But all the emmited "Wechsels" had entire value of 12 billion marks. This allowed to cover a half of military expenses in 1934 - 1936 and smaller percent in next years (20% in 1939).
Many other papers were emmited to cover expenses like highways or agriculture. Germany also started diplomatic offensive on: Austria, Hungary, Yugoslavia, Bulgaria, Greece, Turkey, Spain and Sweden to obtain additional foreign markets. Third Reich also was buying food and raw materials from these countries. Germans offered a good price and paid in AKSI - marks, which had to be exchanged to German products but they made delays and troubles which were profitable for German economics.

After World War I Germany were obligated by Western Powers to pay 226 billion marks in gold as reparations. It was not accepted by Germans so the reparation was reduced to 132 billion and 25% of foreign trade gain. Germany did not agree again and it caused French occupation of Ruhr-basin. Numerous workers strikes and the occupation made hyperinflation and serious political crisis. Paradoxally the crisis started German march to power. England did not want French domination on the continent and USA were interested in balance in Europe. These two countries started investing in Germany what enable to create a strong base for future economics and industry. The reparation was reduced again to 113.9 billion marks and in 1932 even to 3 billion ! When Hitler came to power he denied to pay this amount and even percents of taken credits. Despite the Great Crisis which indirectly enabled Hitler to obtain the power a strong basement of German industry was created by the naive, in near future enemy countries.

In 1936 Hitler applied Four Years Plan which purpose was to push German economics to war routine.

German military expenses (in billions)

Year: Military expenses Whole budget Percent of budget National product Percent of national product
1933/34 1.9 8.1 24% 46.5 4%
1934/35 1.9 10.8 18% 52.8 4%
1935/36 4.0 12.8 31% 59.1 7%
1936/37 5.8 15.8 37% 65.8 9%
1937/38 8.2 20.1 41% 73.8 11%
1938/39 18.4 31.8 58% 82.1 22%

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