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How did Nazi Germany finance itself during the war? They produced a large amount of war material during 1939-1945, but how was this production financed? What were Germany's revenue streams that enabled them to purchase and transport the raw materials of war and pay the workers? I doubt they were exporting goods during the war, so any revenue was likely internal to the country. Given the Depression was still going on in 1939, how did they pay for the war?

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IG Farbin was financed by Henry Ford and Prescott Bush. –  user2232 Apr 24 '13 at 17:06
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@Sam - I converted your answer to a comment. After looking into it, it does look relevant, and might even be true, but it doesn't contain nearly enough supporting material to count as a full answer here. If someone (perhaps you) wants to flesh it out to a full answer, feel free. –  T.E.D. Apr 24 '13 at 23:26
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@T.E.D. Nicely done. Thank you for leading by example. –  David Pointer Apr 25 '13 at 14:05
    
A pretty broad question. There are books on this subject. –  Tyler Durden May 7 at 14:22
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@DavidPointer "Wages of Destruction" by Adam Tooze –  Tyler Durden May 7 at 16:56

5 Answers 5

up vote 21 down vote accepted

I think the Great Depression was quite irrelevant for Germany in 1939 similarly to for other countries that took measures at state regulation.

As for the income, Germany was a well-developed industrial country with advanced technology. It was a pioneering country at chemistry, electrical engineering, machine-tool construction, railroads and transportation, metallurgy and mining. Its industry was known for exceptional quality.

Germany had extensive exports, which did not stop throughout the war mostly through the neutral countries.

With the German conquests German firms earned numerous advantages that maximized their income:

  • They replaced or adsorbed the local businesses in many occupied countries
  • They earned the ability to use cheap forced labour of the conquered peoples

Also prior to the war any strikes were outlawed in Germany so that the firms could operate without risking with workers' protests.

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Very clear, concise answer. Thank you! The answers I managed to find on the web were focused on only one economic aspect or were full of rather advanced (to me) economic terms. –  David Pointer Apr 24 '12 at 17:05
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Germany heavily relied on various forms of forced labour not only of conquered peoples but also of the domestic population. For example any worker knew that once he is fired, he would be sent to the front which meant possible death. Once you rely on forced labour, you do not need to care about money any more. Germany was really short only of foreign currency for buying materials abroad. –  Anixx Apr 24 '12 at 17:22
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Also many categories of workers and farmers were paid with pseudo-money (occupation marks, ghetto money, camp money, "Ukrainian" and "Polish" money, Soviet banknotes) to minimize the need to use Reichsmark. These "currencies" could not be used outside of certain area and only could be used to buy basic things. –  Anixx Apr 24 '12 at 17:24
    
Also, Operation Bernhard used slave labor to produce British and US currency, then used for foreign purchases and pay for foreign agents...en.wikipedia.org/wiki/Operation_Bernhard –  User58220 May 4 at 0:53

Germany conquered and occupied a number of countries, and stripped them of their gold reserves (except in those instances where the countries were able to ship the gold abroad).

They sometimes paid in either marks, or more often, local currency, since they effectively controlled those countries' banking systems.

And in a pinch, they could requisition the supplies and labor that needed, basically at the point of a gun.

And Germany was one of the first countries to "exit" the Depression. That was a major result of the rearmament program, which had a "pump priming" effect on the economy.

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This recent book offers a new and very important look at this question. It is the subject of an ongoing academic debate but many of the factual findings seem to be indisputable, if I understand correctly (haven't read it but read very detailed reviews).

UPDT: Very brief summary: The Nazis borrowed prodigious sums to finance the re-armament of Germany, the Autobahns and the social benefits the Germans received. "Fortunately", at the very moment the chips were due to fall and they would have had to face insolvency, they started the war and turned it into a great expopriation scheme. That the Nazis looted all Europe and made it pay and work for the war machine is quite well-known; Ali goes into great detail showing the mechanics of the process and showing that the German was effort was to a large degree a financial pyramid, where the conquered countries and the murdered Jews were looted to pay off the deficits the Nazis had kept accruing. He posits that the common German people were quite aware of this, grosso modo, and claims that this partly explains the tenacity with which the Germans fought to the bitter end (a claim that may not immediately follow from his economic data, as other factors, e.g. ideology, are involved). One detail for example: they herded hundreds of thousands of Russians to work as labourers, industrial workers and domestic help in Germany; they were ostensibly paid (very low) salaries - but these salaries were stashed into a fund which nobody ever saw. Another example: the Germans paid for goods in the countries they conquered (at least in the East) with "occupation marks" - an artificial currency whose exchange rate they loaded heavily in their own favour.

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Your answer would be improved by adding a descriptions of the core findings of said book. –  Sardathrion Dec 4 '12 at 13:50
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Could you please give us a paraphrase of the "detailed reviews" at the very least? Part of our guidelines is to provide a complete answer rather than sending people off to another location to look for it. Otherwise we will have to closew this answer. Thanks! –  Steven Drennon Dec 4 '12 at 14:42
    
Added a brief summary. –  Felix Goldberg Dec 4 '12 at 19:38
    
BBC History Magazine in the Q&A section contains an article that supports and elaborates on Mr. Goldberg's answer. –  Mark C. Wallace Aug 27 '13 at 18:14
    
@MarkC.Wallace I couldn't find it there. Can you give a direct link? –  Felix Goldberg Aug 28 '13 at 9:29

I think the true answer is: money is a fiction, useful for bookkeeping, but ultimately meaningless. What truly matters is control of resources, infrastructure and labor. Using money is the "civilized" method of gaining that control, but if you're prepared to resort to uncivilized methods (forced labor, seizing privat property, outright conquest), you can pretty much ignore it.

See http://bits.blogs.nytimes.com/2014/01/27/bitcoin-and-the-fictions-of-money/ and http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

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That is a very interesting statement. Would you post a reference or two supporting your position? –  David Pointer May 5 at 16:56
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@DavidPointer: it's pretty obvious once you take a step back from the assumption that money is inherently a store of value (that really only holds for makeshift currencies that consist of repurposed consumer goods, like cigarettes). I couldn't find academic sources that put it in this perspective, but I'll add two interesting articles that illustrate the idea. –  Michael Borgwardt May 7 at 11:27
    
I don't see this as an answer to the question; your sources support your opinion ("I think") in the first sentence, but they don't answer teh OP's question. –  Mark C. Wallace May 7 at 11:49
    
You have not included quite a few steps necessary to support your position that money being a fiction allows Nazi Germany to finance themselves. I'm not saying you are right or wrong, but you need am much more fleshed out answer. Perhaps you could expand on the theoretical aspect of money (unit of account, store of value, medium of exchange), and how government control of the money supply would be important if you have to self-finance things as a government. Additionally, expand upon the monopoly on violence that a government wields. –  ihtkwot May 8 at 19:34

According to a recent study commissioned by the German Finance Ministry, looting of German Jewish wealth amounted to 120 billion reich marks and financed about 1/3 of the expenditure of the German armed forces during WWII.

http://www.telegraph.co.uk/news/worldnews/europe/germany/8119805/Confiscated-Jewish-wealth-helped-fund-the-German-war-effort.html

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