Nazi Germany - The Economic History

Chronology of Economic Events

1000 BC

• Ruhr River basin (Ruhrgebeit) coal deposits provide basis for industrial development
  Armenians able to produce wrought iron by 1000 B.C.

1709

• Abraham Darby, at Coalbrookdale, in Shropshire, England, first uses coke to smelt iron, instead of charcoal

1740

• Crucible process - method of refining steel by heating in enclosed earthernware cupolas (crucibles) which prevent contact with the air - developed in Sheffield, England by Benjamin Huntsman, a clockmaker
  English steelmakers would monopolize production of crucible steel - high-quality steel, important for machined parts - known in Germany as English steel, or cast steel (Gusstahl), until Alfred Krupp discovered secret to process in 1830

1783

• First water-driven spinning machine installed at factory in Ratingen, near Düsseldorf

1785

• August 23 - first steam engine, based on James Watt's English engine, used in Germany

1789

• Bückling, a Prussian civil servant - builds first steam engine in the Ruhr, for a state-owned mine
  German steam engines, in early industrial development, were primarily used for pumping water out of mine shafts

1796

• First coke blast furnace installed at Gleiwitz by Prussian state
• Prussian state also sets up blast furnaces and engineering workshops in Königshütte

1801

• Franz Karl Achard grows first sugar-beet crop on an estate granted by the Prussian King, Frederick William III
  Economic viability limited by an inability to use more than 3 per cent of the beet's gross weight for sugar
  by 1850, extraction methods would increase percentage use to 7.2 per cent, which allowed Prussian output of 53,000 tons
  by 1909, 16 per cent of beet could be used for sugar, and output had increased to two million tons

1806 - 1837

• Agricultural economy suffers prolonged period of depression
  between 1824 and 1834, 230 estates of Prussian Junker landholders (east of the Elbe) declared bankruptcy

1807

• October 9 - Edict by Prussian King abolishing serfdom and freeing Prussian peasants
  Edict also granted Prussian aristocracy (Junkers) ownership rights over landholdings (right to sell)

1810

• November - Prussian Trade Tax Edict
  Allowed individuals to practice a trade, without belonging to a guild, so long as they paid the trade tax
  Guilds, prior to this time, while providing protections for their members, had been able to forbid the formation of companies, limit the number of apprentices, prevent the use of new and improved machinery, and fix prices

1811

• September - Prussian Law on the Policing of the Trades
  Manufacturers were no longer required to be a member of a guild, or to employ guild members, but could recruit laborers on the free or open market
  Law did not forbid guilds, but did not require laborers to join guilds in order to work
  While laborers could more easily enter the labor market, they also lost the protections provided by guild membership
• Trade law changes had some immediate impact, although most would take decades to impact the German economy

1816

• Agricultural economy suffers from major crop failure due to unusually cold and wet summer
• Improved weather conditions in the following years allow for recovery, but improved agricultural output in foreign countries, such as England, combined with Corn Laws, which imposed import duties on corn (grain), reduce the export market for German producers
  by 1825, German grain exports through the Prussian ports of Danzig and Elbing, are one-seventh of what they averaged between 1801 and 1805

1818

• May - Prussian customs law
• Legislators favoring free-trade succeed in limiting duties to 10 per cent for most goods
• Raw materials were duty-free, although luxury goods, such as wine, were subject to a duty of up to 30 per cent
• Law eliminated Prussian internal customs and restrictions, essentially creating a free market within Prussia
• Law temporarily benefited British manufacturers, which were accused of dumping, and represented a victory for the Junkers and Rhenish bourgeoisie, who wanted to keep prices of manufactured goods low

1819

• April 14 - Formation of the General German Association for Trade and Industry (Allgemeiner deutscher Handels- und Gewerbeverein) at the Frankfurt-am-Main fair
  Association attracts the attention of 800 industrialists, who join within a month

1820

• January - Prussian National Debt Law
  Prussian government was not allowed to borrow more than 18 million thalers without parliamentary approval
  effect on railway expansion was to encourage reliance on private investment for funding

1822

• Cologne businessmen form company with Dutch investors to own and operate steamers on the Rhine

1824

• Rhineland-Prussian Steamship Company (Rheinisch-Preussische Dampfschiffahrtsgellschaft), first large joint-stock company in the transport industry, founded by the Cologne chamber of commerce
  by 1830 twelve steamships would be in regular use on the Rhine

1828

• Friedrich Harkort of Wetter establishes Germany's first joint-stock railway company
• Neckare Salt Union - first German cartel formed

1830

• January - Alfred Krupp succeeds in developing weldable crucible steel
• Friedrich Harkort's joint stock company completes first German railway
  five-mile narrow-guage line in the Ruhr between Himmelfürst colliery at Überruhr and Kupferdreh
  coal is carried on coaltrucks drawn by horses

1834

• January 1 - German Customs Union (Zollverein) reaches agreement with thirty-six Teutonic states
  agreement abolishes all intra-union tariffs
  yearly congress would be held every summer in one of capitals
  decisions had to be unanimous
  Customs Parliament (Zollparlament), with legislative powers, would not be part of Zollverein until 1866
• March - Alfred Krupp markets crucible steel to manufacturers in Frankfurt, Stuttgart, Munich, Leipzig, and Berlin

1835

• December - First German railway line - Ludwig Railway - opens in Bavaria
  operates as a passenger line, served by a locomotive - Der Adler - built in England by Robert Stephenson and driven by an English crew
  first freight is two barrels of beer carried by passengers in May 1836

1837

• Pig-iron production - 96,600 tons

1838

• Berlin-Potsdam railroad passenger line (16 miles long), built by a private company, opens
• Brunswick-Wolfenbüttel railroad line opens
• November - Prussian Railway Law
  Regulated construction and operation of railways
  Granted concessions to private entrepreneurs for construction and operation for a period of thirty years, but allowed for nationalization once that period wasover
• Iron-ore production - 266,000 tons

1839

• April Dresden-Leipzig railway line opens
  Train's first locomotive, the Comet, manufactured in England
  Englishman serves as first driver

1841

• August Borsig builds first locomotive at his Berlin factory, based on an American model
• Puddling - process of purifying pig iron by heating and stirring in an oxidizing atmosphere - employed at Dietrich Piepenstock's Hermann ironworks near Hörde

1843

• Prussian Railway Fund established
  Funds were to be used to guarantee interest on new railway shares and loans

1844

• Zolverein (German Customs Union) introduces a new duty on bar iron
  Impact was to increase cost (duty could be as high as 68 percent) of importing rails from England, which supplied 90 percent of German market
  provided incentive to German firms to increase domestic production of iron and steel
  encouraged iron producers to begin using coke, rather than charcoal, in iron production
• July 4 - Silesian weavers' revolt
  Mob attacks headquarters of Zwanziger Brothers, a textile firm in Peterswaldau, smashing furnishings, presses, and everthing found in complex
  eleven are killed when infantry companies open fire
  before order is restored, destruction totals some 80,000 thalers

1847

• Werner Siemens produces pointer telegraph
  telegraph utilized gutta-percha as insulator
• Berlin firm of Siemens and Halske Telegraph Construction Company founded by Siemens and Georg Halske
  firm would develop Germany's first telegraph network, first electric railway, and trolley system

1847 - 1849

• Period of depression across Europe hits both industry and agricultural sectors
  Revolutions of 1848 cause industrial output to decline and unemployment to increase
  Value of stock investments decline while gold and silver hoarding increases
• Investors in Europe look to United States market for opportunities
  German investments in the U.S. total 150 million dollars in the 1850s
• Railway carriages used on German railroads are all made by German manufacturers

1848

• Reorganization of failed private Schaaffhausen Bank in Cologne as joint-stock company
  Rather than simply making loans, policy was to invest in stock of newly emerging industrial and commercial undertakings, such as mining, railways, insurance companies, and manufacturers

1850

• German operational railway network totals 3,660 miles, nearly twice the mileage of France
• Iron-ore production - 545,000 tons

1850s - 1870s

• Coal production shifts from Upper Silesia to Ruhr region
• Nearly 100 new mines open in the Ruhr region between 1850 and 1857
  output increased from 1.6 million tons to 3.6 million tons
  output in 1865 increases to 9.2 million tons
  by 1870 output is 11.8 million tons
• Production becomes more efficient -
  in 1855 per miner output was 700 tons; in 1864 output per miner had increased to 986 tons
• Availability of wider variety of coals - steam-coal, gas-coal, and coking-coal - in deeper mines, support diversification of Ruhr area
• Iron foundries established in Essen-Bochum region because of availability of coke
• Expansion of rail network contributes to mining development in region
• Improvements in river transport aid in development
  coal transported on the Rhine River is moved in 500 ton barges, towed by steam-tugs
• Fall in coal prices in 1857 leads to closing of less profitable mines and consolidation of production into larger complexes
• Eleven largest mines in Rhur in 1862 produce over 100,000 tons of coal a year each

1850 - 1863

• Development of Eschweiler coal region (west of the Rhine)
  Eschweiler Mining Company operates mines in the valley of the Inde River
  United Wurm Collieries operates mines in the valley of the Wurm River
• Following commercial crisis of 1857, both companies consolidated control by taking over smaller coalmining operations
• Eschweiler Mining Company produced 540,000 tons of coal in 1863

1850 - 1871

• Development of the Saar coalfield (near French border
  Railroad construction provided access to region and connected mines with French railway network
• By 1857 coal output was 2.4 million tons
• Saar Coal Canal linked Saar coalfield with the Rhine-Marne Canal
• Increased use of steam engines increased production capabilities
  78 were in use in the Prussian state mines in 1863; 160 were in use in 1871

1850 - 1871

• Development/expansion of lignite (brown coal) reserves
  Although not as efficient a heat source as bituminous coal - nine tons of lignite is required to produce the same amount of heat as two tons of coal - lignite could provide a heat source for regions not located near coal areas
  lignite could also be distilled to produce tar and paraffin
• 1.5 million tons produced in 1850; 8.5 million tons produced in 1871 (equivalent in heat value to 1.9 million tons of bituminous coal
• 1858 - Plant erected near Weissenfels-an-der-Saale to distill tar from lignite

1851

• Joint-Ownership Law - Prussian state gave up control of mining exploitation, finance, sales, the hiring of workers, and the fixing of wages
  safety regulations, employment of juveniles, and the qualifications of mining engineers remained in the hands of the Prussian state
  tax on gross output of mines reduced from 10 per cent to 5 per cent
• Disconto Gesellschaft (bank) of Stuttgart founded
• Werner Siemens announces development of dynamo-electrical machine
• Beginning of economic boom in agriculture and industry which will last until 1857
• Crystal Palace Exhibition in London
  1,720 German craftsmen and manufacturers participate
  Alfred Krupp puts 4,300 pound block of steel on display, as well as a cast-steel 6-pounder field gun
  Siemens & Halske displays an electric telegraph

1852

• Pig-iron production - 167,000 tons
• November 20 - Formation of Crédit mobilier bank of Paris, founded by Emile and Isaac Pereire
  Established to provide credit to public utilities and manufacturing enterprises
  savings of small investors would be used to invest in shares of newly emerging enterprises
• Crédit mobilier would ultimately crash in 1867

1853

• February - Austro-Prussian commercial treaty
  Austria received preferential duties on trade between Habsburg dominions and the Zollverein
  agreement to reopen negotiations in 1860 for an Austro-German customs union

1854

• Last year in which foreign locomotives were imported into Germany
• Gemany exports locomotives and railway carriages

1856

• Sir Henry Bessemer, British engineer, announces discovery that passing a blast of air through molten cast-iron could remove impurities and separate purified metal from slag
  Bessemer converter increased speed of steel production
• Berlin Commercial Bank (Berliner Handelsgesellschaft) founded
  investment bank which sold stock to private investors and used the proceeds to grant long-term loans to new companies

1857

• 29 German banks authorized to issue notes
  in 1851 only 9 German banks had such authority
• Capital investment in railways totaled 362.5 million thalers
  in 1848, the investment had been 158.5 million thalers
• Coal output in the Zollverein reaches 14.8 million tons
  output in 1851 had been 5.8 million tons
  Increased German coal output contributes to fall in prices and end to coal boom, leading to unemployment
• pig-iron production in the Zollverien reaches 535,000 tons
  output in 1851 had been 225,000 tons
• August - Beginnings of depression in United States and Europe
  Bumper grain harvest in the United States causes wheat prices to fall
  Due to drop in prices, farmers cannot make interest payments on loans and borrow more money
  Ohio Life Insurance Trust, in the United States fails, leading to a panic
• September - Banks in U.S. fail
• October - run on New York banks, with eighteen closing their doors
  four Glasgow firms trading in the American market fail, leading to other failures in England
• November - Panic in mercantile and financial firms in Hamburg, Germany
  150 Hamburg firms fail
• December 10 - 65 out of 135 bankrupt Hamburg firms placed in receivership, to be run by administrators
• Intervention by Austrian government, which arranges a 750,000 pound silver shipment, together with guarantees by the Hamburg Union Bank and the Bank of North Germany, restore confidence by the end of 1857

1858

• August Borsig factory production reaches milestone of 1,000 locomotives having been built since first locomotive in 1841
• Beginning of recession which would last into 1859
• Ruhr Mineowners Association (association of coal-owners) formed

1860

• Prussian steel industry in the process of switching to puddling process
  ten times more steel produced by puddling process in 1860 than in 1850
• production of cast steel 22 times greater than in 1850
• Anglo-French (Cobden-Chevalier) treaty of commerce
  France reduces tariffs on British manufactured goods

1861

• Zollverein transit dues abolished
  Goods crossing Germany were no longer subject to duties

1862

• August 2 - Franco-Prussian commercial treaty signed
  Zollverein transit dues were to be abolished (French products would not be subject to German internal tariffs)
  most-favored nation clause - any tariff concessions granted to other nations, would be granted to France and German counterparts
  France reduces tariffs on German manufactured goods in return for Zollverein reductions on French products
• Bessemer converter set up at Krupp iron works

1865

• April - Austria signs new commercial with Prussia
  Austria receives most-favored nation status, but loses special concessions of 1853 treaty
• May - Zollverein treaty with member states renewed for 12 years

1866

• January - 1865 commercial treaty between Austria and Prussia becomes effective
• June - Austro-Prussian War (Seven Weeks War) begins
• North German confederation creates 'Customs Parliament' (Zollparlament) with legislative powers

1867

• July - Zollverein treaties signed
  Bismarck re-negotiates terms of old agreement
  treaty would become effective on January 1, 1868
• Customs Council and Customs Parliament (Zollparlament) created to replace General Council
• Customs Council composed of members of the Bundesrat (upper house) of the North German Parliament and representatives appointed by governments of the southern German states
• Representatives of Customs Parliament were to be elected members of the Reichstag (lower house) of the North German Parliament and elected representatives of the southern states
• Decisions in Council and Parliament were to be made by majority vote
• Prussia had authority to summon or dissolve both bodies, and signed commercial treaties on behalf of the Zollverein
• Prussia held nearly one-third of the votes of the Customs Council

1868

• April 27 - First session of new Customs Parliament opened by the King of Prussia

1870

• Germany exporting 4 million tons of coal a year
• June - North German Reichstag passes new Company Law
  eliminated need for official approval before establishing a joint-stock company
  nearly 1,000 companies set up in Prussia between 1870 and 1873
  over 120 new credit banks established between 1869 and 1872

1871

• April - German imperial constitution promulgated
  Germany becomes a unified country when the states of the 1867 North German Confederation are joined with the southern German territories
  Zollverein absorbed by the new united Reich
• May - Treaty of Frankfurt
  France cedes Alsace and most of Lorraine, with rich iron ore deposits to Germany, following end of Franco-Prussian war
• Darmstädter Bank founded
• Deutsche Bank founded
• pig-iron production - 1,500,000 tons

1872

• Dresdener Bank founded

1873

• May - Currency Law
  establishes uniform metric currency - the mark - based on gold standard
  replaces thaler, gulden and other coins
• May 8 - Vienna stock exchange experiences sudden drop in stock prices
  three hundred bankruptcies announced over the next few days
  Austrian government intervenes by proclaiming a moratorium on financial transactions until May 28th
  National Bank of Austria stops redeeming its notes in gold and silver
• September - France pays Germany 5,000 million franc indemnity (a condition of the Treaty of Frankfurt)
• October - German Quistrop Bank fails
  other German banks suspend payments
• Industrial output falls as failing companies stop ordering goods and materials
• German economy will not fully recover until 1876

1875

• Gilchrist Thomas steelmaking method invented
  limestone and dolomite lining of Bessemer converters found to absorb phosphorus from pig iron, which could be passed off as slag
• Reichsbank established as a national central bank
  Bank of Prussia was absorbed by the Reichsbank

1876

• Otto and Langen produces four-stroke engine, developed by Nikolaus August Otto

1879

• Gilchrist Thomas steelmaking method introduced in Germany
  allowed German steelmakers to use high-phosphorus ore deposits of Lorraine

1881

• Emil von Rathenau secures German rights to Thomas Edison's electric lamps, after visit to Paris electrical exhibition
• Siemens and Halske's first electric streetcar goes into service in Berlin-Lichterfelde

1882

• Karl Benz builds factory in Mannheim, Germany to manufacture gas engines

1883

• Emil von Rathenau sets up German Edison Company (Deutsche Edison-Gesellschaft) (DEG)- Germany's first electrical joint stock company
• International Railmakers Association formed - members included German, British, and Belgian firms

1885

• Karl Benz develops three-wheeled 'horseless carriage' powered by gasoline
• August - Gottlieb Daimler develops first lightweight, high-speed engine to run on gasoline
  mounts engine on two-wheeled vehicle to create first motorcycle

1886

• January 29 - Karl Benz receives patent for Patent Motor Car - top speed under 10 mph

1887

• Allgemeine Elektrizitäts-Gesellschaft (AEG) founded
  German Edison Company becomes AEG

1890

• Synthetic nitrogen begins replacing imported saltpetre imports for agricultural fertilizers
  by-product of Gilchrist Thomas steelmaking process was 'Thomas powder' a phosphorus-rich waste
  German chemists had developed catalytic synthesis method, which allowed for mass production of nitrates from Thomas powder
• Gottlieb Daimler sets up Daimler Motor Company

1891

• Allgemeine Elektrizitäts-Gesellschaft (AEG) lays first electric cable to transmit power over a long distance (175 kilometers) between River Neckar and Frankfurt-am-Main

1893

• Karl Benz introduces first four-wheel model automobile

1894

• German Edison Company (DEG) becomes German General Electric Company (Allgemeine Elektrizitätgesellschaft (AEG) under Emil Rathenau

1896

• 108 chemical companies operating in Germany
• 39 electrical companies operate in Germany

1900

• steel production - 7,000,000 tons, greater than that of Great Britain by 1,500,000 tons
• Karl Benz' factory sells more than 600 vehicles annually, making it the world's largest car producer

1901

• Daimler Motor Company introduces Mercedes automobile

1910

• pig-iron production - 15,000,000 tons
• steel production - 13,149,000 tons - greater than that of Britain

1913

• Germany production of pig-iron and steel is greater than Britain's for the first time
• German companies supply three-quarters of the world's synthetic dyes

1923

• January 11 - France and Belgian troops occupy Ruhr
  French prime minister, Raymond Poincaré, uses German delivery failures as a pretext for occupation
  Germany owed 200,000 meters of telegraph pole, but had only delivered 65,000, and owed 24 million Gold Marks in coal deliveries
• January 13 - Reich government declares a campaign of 'passive resistance' against the occupation
  railroad workers refuse to follow orders, disrupting train schedules
  partisans commit acts of sabotage, blowing up trains
• March 31 - French soldiers confront workers at Krupp factory at Essen
  thirteen workers killed and forty-one wounded
• summer - Government resorts to printing money to support resistance campaign
  government spending reaches to 40 million gold marks a day
• August - Reichsbank issues money at rate of 46 billion fresh marks every day
  value of mark plummets during year
  severe inflation leads to shortages, hardship, and depletion of savings
• August - Gustav Stresemann becomes chancellor
• September 26 - Stresemann issues proclamation calling for end of passive resistance

1924

• August 16 - Dawes Plan agreement-
  Agreement provides for reduction of German reparations payments and withdrawal of French forces from the Ruhr within a year

1926

• March 16 - Allied Control Commission (body assigned to oversee Germany's compliance with Versailles Treary) leaves Essen works of Krupp firm (Friedrich Krupp A.G., Essen-Ruhr
  firm begins secretly working on weapons system design and upgrade - period of black production (schwarze Produktion) begins
• Daimler Motor Company merges with Benz to become Daimler-Benz

1929

• October - New York stock market crashes
  1.3 million Germans unemployed
• December - Number of unemployed - 1,892,000, out of a work force of 19,761,000 (9.5 per cent)
• Nazi Party membership at 108,000
  SA membership - over 30,000

1930

• December - Number of unemployed - 3,076,000 (15.7 per cent)

1931

• December - Number of unemployed - 4,520,000 (24 per cent)
• December - Nazi Party membership at 800,000
  SA membership - 225,000

1932

• July - Nazi Party membership over a million members
• December - Number of unemployed - 5,575,000 (30.8 per cent)

1933

• January - Number of unemployed - 6,013,612
• January - April - imports of raw materials for military production increase
  total more than the entire amount for 1932
• May 2 - SA and SS occupy trade union offices and arrest union leaders
• May 10 - trade unions outlawed
  German Labor Front (Deutsche Arbeitsfront) (DAF) established under Robert Ley to replace unions
• Summer - Hitler initiates major public-works program
  centerpiece is construction of the autobahn, or state highway system
• December - Number of unemployed - 4,804,000

1934

• March - Hjalmar Schacht becomes President of the Reichsbank
• April 4 - Hitler inaugurates secret rearmament program
• Schacht - institutes "mefo bill" system of off-budget financing (expenditures not appearing in government budget) of rearmament program
  manufacturers paid in mefo bills, IOU's from government, rather than in marks
  mefo bills then exchanged at Metallurgishe Forschungsgesellschaft G.m.b.H., a dummy company, for marks
  Central Bank eventually rediscounted (purchased) mefo bills from Metallurgishe Forschungsgesellschaft
• June 30 - July 1 - "Night of the Long Knives" - purge of the SA
• September 4 - New Plan
  German importers had to obtain prior approval by the government before shipping goods
  Plan implemented to deal with foreign exchange shortage
  munition makers given first call on raw materials from overseas
• Steel production increases from 1.5 million tons a year to four million
• number employed on roads, as part of public works project, totals only 84,000 workers
  total of 350,000 people directly or indirectly employed in public works program
• December - Number of unemployed - 2.6 million

1935

• March 16 - Hitler announces reinstitution of universal military service
• government armaments budget for 1935 - 5400 million marks
  amount spent from 1933 through 1935 for public works - 5000 million marks
• June - Number of unemployed - 1.7 million
• government requires that businesses begin keeping records, ostensibly for the purpose of maintaining accurate tax records

1936

• Fall - Four Year Plan - Hitler implements autarchy (self-sufficiency) plan
  major goal is to develop a group of synthetic fuels and raw materials, in order to escape dependence on foreign suppliers
  Göring put in charge
• Four Year Plan provides benefits to agricultural sector
  fertilizer prices reduced, mechanization subsidies added, and grants provided for bringing new land under cultivation

1938

• German government spends 44 per cent of budget on armaments - 17,200 million marks
• Government announces that it will produce a "people's car," the Volkswagen, to be sold for 990 Reichsmark
  300,000 orders received by November 1940, but few models actually produced, because Volkswagen factory converted to arms manufacture
• number of unemployed - 429,000

1939

• Military spending amounts to nearly a quarter of GNP

1940

• March - Fritz Todt appointed Minister for Armaments and Munitions

1941

• Number of German joint stock companies - 5,418
  number represented a drop from 1932, when there had been 9,634

1942

• February - Albert Speer takes over Ministry for Armaments and Munitions following Fritz Todt's death in a plane crash
  February - July - finished armaments production increased by 55 per cent
• October 1942 - May 1943 - finished armaments production rose by another 50 per cent

1943

• December - Messerschmitt Me 262 (first German jet aircraft employed on active service) in initial production

1944

• German production of tanks, assault guns and armoured vehicles totals 1,500 a month
  monthly tonnage of armoured vehicles fifteen times 1940 production levels
• July - Joseph Goebbels becomes Reich plenipotentiary for total war