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The Wages of Destruction

Adam Tooze

Overview

- This book argues that economics matters in war and national strategy/success

- Provides an entirely different look at a real corpus of WWII in Germany—the economic factors

- Sees the real fight that Germany was intending was the fight to the East, not the West

- German’s wanted to be an economic counter balance to what they saw as growing US hegemony

- The wars conclusion was not inevitable but logical based on the economic choices made by Germany

- From their massive debt for war development to their choice to attack Russia to gain more resources, they didn’t have the material or monetary resources to win from the start

- Bombing offensive reduced quality of components being produced, reduced the quality of labor being used to produce equipment and generally had a useful effect


1936: Four Years to War

- Nov – Germany allied with Japan

- At the start under Hitler economy was booming, unemployment had fallen

- Compared to Italy in Africa and Imperial Japan in China….Hitler seemed reasonable 205

- Rearmament was propelled by international arms race that Germany started. (France, GB, USA)

- Rearmament put Germany into budget troubles making them consider devaluing the Mark. Germany needed cash…limiting domestic consumption and increasing exports should have been the way

- US had import restrictions on Germans due to their subsidization of exports

- Stocks of foreign raw materials were at a low

- All German foreign assets were put at disposal of the Reich 214

- 4 year plan – hitler argues the germans are fighting for survival…can’t feed themselves, thus they must extend living space 220

- Could not import enough materials and to be independent so needed to replace imported raw materials with manmade ones…petrol, rubber, iron ore 220 No industrialized synthetic rubber existed at the time. Rationing of raw materials to the various services

- Businessmen hesitated to expand factories, being left with unused capacity after the rearmament 224 …argument was for survival and economic limitations (loans) lifted so they could expand

- Military was wary of having enough materials for war in 4 years as they were always lacking the projected numbers…they wanted to change timelines, hitler changed parameters 244



Into the Danger Zone

- Annexed Austria, but only added to long term problems. Pro – underemployed workforce, foreign exchange doubled the Reichsmarks. Con – reliant on imports for food and raw materials, struggled to keep exports at acceptable level 246

- Hitler didn’t want a 2 front war and war with France/Britain would delay Russian move. US economic power was huge compared to Germany, whom would lose a war of attrition. 249

- Short term treasury bills were used to fund a military spending spree 253

- Germans did multiple things to manipulate the economy

o Pressured banks and insurance to invest in govt bonds/short term paper

o Banned new mortgage borrowing

o Set a limit on wages (with a shortage of labor, wages should have increased w/o market interference) This also forced them to allocate labor by admin means since supply/demand was not allowed to work

o Wage creep, in the form of accelerated promotion, retraining, hiring bonuses, etc happened 262

o Poor premise that all forms of labor are equal in worth led to the poor expectation of an equal distribution of incomes across the economy.

o Bilateral trade deals had germans paying premiums to keep trading partners

o This meddling led to a Reichsmark without a well-defined value

- Germans tried to get money from Jews and force emigration

o Punitive taxes

o Encouraged to emigrate, making them suspects of taking capital out of country

o SS used physical terror to increase emigration incentive

o In reality, the Jewish minority did not have enough wealth to matter 277

- 1939 Hitler made speech with anti-semitic theme…lebensraum and overt challenge to GB and US

- US viewed as growing hegemon in a Jewish conspiracy for the ruination of Germany and Europe

1939: Nothing to Gain by Waiting

- Germans registered so they could be used in most productive way by the germans

- Roosevelt put 25% tariff on german imports

- Based upon the arms race and the economic situation Hitler believed germany’s proportional superiority would constantly diminish…with war inevitable he wanted to take the offensive at the earliest favorable opportunity 317

- 24 Aug 1939…Hitler and Stalin signed non-aggression pact and mutual assistance. Temp arrangement with Russia was a strategic necessity as they needed its natural resoures for armament. 320

Going for Broke: The first winter of war

- 1/3 of tonnage on german railways was coal…entire economy depended on its functioning 343

- 1939 bottlenecks, accidents caused delays and cancellations…backups at mines so production was slowed 343

- Germans got business to do work by coercion and threatening if they can’t meet their needs then the job will be given to another agency. 345

- Huge surges in outputs of ammo were not from Todts rationalization…bt from raw material allocations of steel and copper 352

- War financed though rationing of goods/strict consumption 355 unspent income went to savings accounts and the ‘silent system’ of war finance

- Choices had to be made between putting a man in the war or leaving him in a factory to produce 360. This changed thoughout the war as the number of people deteriorated…used foreign workers, women, jews…started using middle aged men for the war. This hurt the effiency of production. Foreign workers cost money/resources to feed and were less efficient than german workers. Rationed food…weak workers were less efficient especially in labor intensive jobs

- Reductions in workforce set off chains of events…farmers cut back on labor intensive produtions…reduced amount of animal feed…supplies would rot…no fertilizer as the nitrogen was used for armament 361

Victory in the west

- Success in Blitzkrieg was due to classic operational doctrine…concentration at the decisive point…not superior equipment or morale (wrt Germany’s victory over france) 375 napoleonic style warfare…maneuver 380

Britain and America: Hitler’s strategic Dilemma

- To invade Britain, Germany needed control of the air and the sea. 397 - GB never matched Germany in mobilization of domestic resources…but they closed the gap on armaments with readiness to draw on the empire and US

- Allies overwhelming air superiority was in direct response to germany’s victory over france…not just pearl harbor 407

- France lacked coal necessary to generate electricity which hurt their production…productivity was ¼ that of german labor

- France added to the oil deficit as heavy consumers…under Germany they now had less than before 411

- Americans/British figured it implausible that hitler would start a war w/o a margin of fuel security…so soviets and americans overestimated them by 100%

- The triparte act was seen as a provocation….while Germany saw it as a deterrence (jervis) 421

Albert Speer: ‘Miracle Man’

- General tendency to underrate the enemy 587

No room for doubt

- German navy finally withdrew when uboat losses mounted and not having effect on shipping…decrypted comms, new sonar and air superiority helped J 593

- March 43 – RAF had planes and nav technology to hit Essen and take out the most important producer of coal and steel. This stopped Speer’s armament miracle 59

Disintegration

- Early 1944, the P51 long rrange escort fighter turned the tables for bombing 626

- Coersive labor discipline, concentration camp inmates helped with increasing production 631

- Increased work rate of 72 hour week helped production 629

- Speers control over key resources and his ability to control the priority was the truly decisive factor 634

- In the effort to not tax the Germans, they still put the war burden on them through rations 647

The End

- The only response to American hegemony was to create their Lebensraum sufficient to match the US…by conquest 658

- Rearmament came at serious cost…pressed by constraint of Germany’s balance of payments

- Germany shifted more resources in peacetime to military than any other capitalist regime in history…this domestic resource mobilization held through the war 660

- Germany failed in having a coherent war plan tying the economy to diplomacy & mil planning

- Some argue (battle of Britain) that western powers wanted the war over Poland. Author disagrees because

o By 1939 hitler knew his long-term program of prep with western powers failed

o Efforts to unite Italy and japan had failed

o Armament economy was squeezed by persistent balance of payment problem 662

o Faced a deterioration in balance of forces wrt GB/USA earlier than planned…nothing to gain by waiting. 663

- Barbarossa wasn’t planned to be a long war. Needed to strike hard and fast because of impending war on west front, thus not all of military was used, nor were plans made to have lots of supplies for war of attrition/winter, etc.

- Blitzkrieg was only considered after taking Poland and France so easily 667

- Hitler also had to widen the war for economic reasons although adding Europe put additional drains on the oil/coal supplies, animal feed and food supply. Germany saw Russia as the answer to these shortages, although the grain output was only slightly higher than what was used themselves.

- Pragmatic economic motives and ideology were inseparably intertwined…SS genocidal population clearance with the agriculture and industrial colonization. Conversely, the hunger plan was a pragmatic calculation of food supply combined with racial hierarchy to produce a plan for mass murder

- Speer’s armament miracle relied on resource mobilization by every facet in the nazi state

- The entire purpose of the armament miracle was political propaganda by speer 670

o American bombing in 1943 stopped the “miracle” in its tracks

o The final famous miracle of 1944 to place amidst a maelstrom of apocalyptic violence that consumed the lives of millions and laid waste to a large part of the continent

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