The New Economic Warfare

Antonín Basch

• Publisher: Routledge
• Year: 2021
• eBook ISBN: 9781000459296
• Edition: 1
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

This book, first published in 1942, examines the economic necessities, defensive and offensive, basic and strategic, involved in waging war. Written with total global war raging, it analyses the unprecedented demands placed on the economic system of a nation, and looks at the great shifts of productive effort and limits on consumption that were needed.

CHAPTER I THE ECONOMIC PREPARATION FOR WAR

The Economic Causes of War

THE character of totalitarian war has changed to a great extent the relations between war and national economy which have prevailed for over a century. Understanding of this change is essential in the study of the economic causes of war, the economic impact of totalitarian war, and its economic and social consequences. Totalitarian war in its very nature demands the fullest efforts and sacrifices of the whole community, and there is no possibility of estimating its future effects on special sections of economic life or on particular economic interests. Therefore, a great modern war cannot be explained by theories which appeal to particular economic causes such as conflicts in foreign trade, or the interests of bankers, big business, and industry. Even the assignment of war profits as a motive cannot be taken seriously into consideration, despite the obvious efforts of the armaments industry everywhere to be on good terms with all national governments.

There are, of course, various theories which try to explain the present war mainly in terms of economic and social factors. The cause most commonly designated is the Versailles Peace Treaty, and especially its economic sections. No one could wish to pretend that the Versailles Treaty was a perfect work. It did, however, provide a general framework for a new world organization; there is no doubt that—despite the initial economic mistakes in its application—some suitable basis could have been discovered. This might well have been achieved if a new generation had been given time to carry out the treaty’s principal ideas, and had been unhandicapped by all the repercussions of the war.

In any event, when the war menace became really very acute in 1938, the particular articles of the Treaty which had been most heavily attacked were no longer in force. They constitute no valid excuse for German policy.

In considering the importance of various economic and social forces in Germany, it is necessary to examine independently the years before 1933 and the period of the Nazi regime. After 1933 the initial steps were taken in preparation for the present catastrophe, first as indirect and then as direct economic mobilization and aggression. In view of the fact that there was only one great power which set up in peace time an organized war economy (under the name of defence) and kept steadily strengthening it during the six-year period, the future historian will not find it difficult to explain the last years leading up to the present war. The more important and difficult task will be to explain the origin and reasons for the Nazi regime, and then its success in Germany and abroad. This cannot be done without a thorough analysis of postwar economic and social policy, but a merely economic and social interpretation of Nazism would be overnarrow and misleading. Let us emphasize the following main features of this period: World economic equilibrium, based before 1914 fundamentally on the functioning of the British system had been destroyed, and no system organized in terms of international co-operation had taken its place. The adjustment of production to consumption in various parts of the world was never undertaken in a manner appropriate to the urgency of the situation. The problem of international debts and transfer was not organically settled; and foreign trade policy was not adjusted to the positions of creditor and debtor nations. The old truth—that only in an expanding world economy is it possible to achieve a step-by-step solution of critical points or bottlenecks—was not adequately recognized and adopted as a basis for action. In such a disorganized world order, the great difficulties of the German economy became even more serious. The success of a democratic policy in Germany depended on concerted international action. The post-war governments were not equal to this enormous task, and instead of initiating a real settlement of all such complicated problems they preferred mostly to follow the path of least resistance. I do not wish to speak of natural economic laws; it is sufficient to say that there are some basic principles and truths which are closely related to any national economy. It is impossible to disregard them permanently without creating a situation which leads certainly in the long run to severe crisis.

When, as the result of the structural dislocations of the world depression, the number of unemployed labour rose to thirty millions, it became urgent to assure to labour a greater degree of social and economic security— and that within the democratic organization. The political and social importance of this problem was not recognized in time, and its exploitation as an effective propaganda item was partly responsible for the Nazi success at home and abroad.

But the problem was not a purely German one. The general European economy, of which Germany is of course an important part, was not balanced after the war, nor was it adjusted to the changed world situation. A detailed analysis of this enormous complex may help to demonstrate the forces which made possible the Nazi victory. And this analysis involves problems far more complicated than those often brought forward as constituting causes of the war—namely, population pressure and the associated demand for living space. Hitler himself said to the Reichstag on April 28, 1939: “It is intolerable that one nation should demand territorial expansion when there are less than fifteen inhabitants to the square kilometre, while other nations are forced to maintain 140, 150, or even 200 in the same area.”

According to the German conception, the Reich should have 4 per cent of the world area, corresponding to its percentage of world population, whereas its actual territory is less than 0.5 per cent of world area. But the same disparity applies to most European states: the figures are for Poland, 1·6 per cent of world population and 0·3 per cent of world area; for Czechoslovakia, 0·7 per cent and less than 0·2 per cent; for Holland, 3·5 per cent and 1·5 per cent. Actually, it is the problem of all Europe, exclusive of Russia, and must be related to Europe’s position in world production and world trade. For a long time it has been acknowledged that the Continent is relatively overcrowded (a problem which cannot be solved by war).¹ But it becomes difficult to accept this argument when at the same time the Third Reich supports an increasing birth rate, subsidizes marriages and large families, prohibits emigration, calls back German nationals from abroad, and as early as 1938 imports foreign workers to meet a labour shortage.

The demand for greater living space (Lebensraum) correlative with the thesis of over population has in the last few years been demonstrated to be only an attempt to conceal a political and strategic technique for dominating lesser powers. In asking for more living space, Germany asserted that “there are certain areas which by virtue of their geographical situation and economic resources, or it may be in virtue of historical association, are of special and perhaps exclusive interest to the Great Powers bordering on them. Those powers claim to enjoy a special economic position in their Lebensraum, and above all to take in them the measures necessary to their own strategic security”.¹ The real nature of the German living-space theory is clear from the fact that Germany included in its living space not thinly populated overseas countries, but the area of central and eastern Europe with overcrowded agricultural populations.

¹ See R. R. Kuczynski, Living Space and Population Problems (Pamphlets on World Affairs, No. 8, Oxford University Press, 1939), pp. 5, 8 ff.

It is unnecessary to enlarge on the point that a larger living space can be gained in Europe only at the expense of other nations and by means of conquest and domination. Germany’s claim—accepted by people who do not understand this particular problem—was simply an attempt to conceal her real purpose.² No such arguments are sufficient to explain even the economic background of this war. The whole picture should have become clear when the new regime immediately established a really aggressive economic policy.³

The Policy of Autarchy

The organization of a new totalitarian Germany since 1933 marks the beginning of profound changes in Europe and virtually the end of efforts toward international economic co-operation. Germany was transformed into a planned and centrally administered economy, although the real purpose of the new programme was always concealed by party-sponsored explanations. It was clear, however, that international co-operation was a secondary consideration, and that the policy of autarchy reflected another very important element of the world’s economy.

¹ C. A. Macartney, The Danubian Basin (Pamphlets on World Affairs, No. 10, Oxford University Press, 1939), p. 28. ² “The plea for Lebensraum has often been the disguise for other sinister intentions.” Lionel Robbins, The Economic Causes of War (Macmillan, Londdn, 1940), p. 80. ³ I do not think it correct to compare this with the Russian economic policy after the revolution. Russia’s object was not an economy of the same high degree of development and the same vertical structure—it was not a transition, as in Germany, from a capitalistic to a totalitarian planned economy.

The aim of the policy was not an improved standard of living, although this was emphasized during the years of great unemployment. Rather the new regime established a real national defence economy—Wehrwirtschaft— with all other purposes subordinated to the ultimate goal of an impregnable military system. The leaders have thought and operated in terms of Realwirtschaft (real economy) instead of monetary economy. The unconditional priority of all processes important for national defence was plainly stated and systematically effected, regardless of costs and sacrifices. Such a policy means that despite increasing production and larger national income, per capita consumption should remain constant, or even, if necessary, decline. Within a centrally planned and administered economy, this can be achieved without great difficulty; it is illustrated to a certain extent by the first Russian five-year plan, which proposed to extend production of capital goods at the expense of goods for mass consumption. The motto “guns instead of butter”—not taken seriously abroad— was adopted by Germany without reservation, and was as fully carried out.

The war economy was only one manifestation of Germany’s territorial ambitions. A complete plan for political and military expansion was developed, based on the experiences of the last war and projecting future military strategy. The function of Wehrwirtschaft was to render any possible blockade ineffectual. Hitler said, “All thoughts of a blockade against Germany may as well be buried now, for it is an entirely useless weapon.”¹ Before the outbreak of the war many features of the plan were concealed or even publicly denied. Usually it was argued that the economy of autarchy was forced upon Germany. After German military successes, however, prominent people there began to describe the preparation and operation of the programme. Let us quote some very interesting statements. In the January 1940 issue of Der Vierjahresplan, an official publication, M. Körner gave the following description of the general character of pre-war economic mobilization: “To turn the whole work and life of 80 million people toward war, to regulate the consumption of food and of important consumer goods, to direct factories and labour to meet the one central purpose, to distribute raw materials, and to solve a quantity of other questions is an unprecedented accomplishment in a national economy—the concentration of all economic forces upon the product which is thought most important in the fight for defence.” ¹ It is no doubt the best example in modern economic life of the organization of a whole national economy for several years with one primary purpose—preparedness for war.

¹ To the Nazi Party Congress in Nürnberg, September 12, 1938; quoted from Hellmut von Rauschenplat and Hilda Monte, How to Conquer Hitler (Jarrolds, London, 1940), p. 26.

The semi-official Deutscher Volkswirt² describes the building up of the programme: first, the final turning away from liberalism; then the increase of domestic production under the first four-year plan; next, the further increase of production for economic and military armament; then at the end of 1938 a new task—national economic planning, which became necessary because of a shortage of labour and raw materials; and, finally, the transformation of the entire organization for the actual conduct of a war. It is emphasized that “nothing was left to fortune. All was organized with consciously pledged determination, and well regulated and pushed forward”.

¹ Der Vierjahresplan (January 5, 1940), p. 767. ² Hans W. Aust, “Dynamische Wirtschaftsführung,” Deutscher Volkswirt (March 15, 1940), p. 767.

The leading member of the economic department of the German General Staff, W. Becker, wrote in 1940 in summarizing the effects of the defence economy: “Since 1933 German economic policy has been transformed from pure defence against the world economic crisis to the following of new national social and political aims, as well as to the creation of the Wehrwirtschaft which anticipated the total war blockade.” ¹

It is not our task to describe the organization, the execution, and the results of the Wehrwirtschaft in Germany; we shall limit ourselves to the main principles and achievements of the plan. Future history alone can show how it was possible to build up during a period of six years a complete economic military machine on a totalitarian pattern without any serious opposition from other great nations. It must have been widely known that the German economy was heavily dependent on raw material imports from democratic countries. A partial explanation may be the fact that a world believing in traditional economic principles underestimated the strength and the dynamic force of a seemingly static totalitarian economy.

As is well known, when the new regime started in Germany the huge reservoir of unemployed facilitated a rapid expansion of armament production; this was followed by a great effort to achieve self-sufficiency in food supplies; and finally ...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Introduction
• Foreword
• Publisher’s Note
• 1. The Economic Preparation for War
• 2. War Economy
• 3. The War Economies of Germany and Great Britain
• 4. Economic Warfare
• 5. From War to Peace
• Index