Financing the Armed Struggle: The Financial Mechanisms of Germany in World War II

During World War II, Nazi Germany financed its aggressive military campaigns and expansionist strategies through a variety of methods. This article delves into the primary funding sources used by the regime, highlighting the economic policies and broader strategic goals that shaped their financial approach.

Economic Policies and Rearmament

Under the leadership of Adolf Hitler, the Nazi regime pursued a comprehensive economic policy aimed at rearmament. This involved significant state investment in military production, which formed a major part of a broader strategy emphasizing autarky, or economic self-sufficiency. By boosting industrial output and prioritizing military production, the regime sought to establish a robust and expandable war economy.

State Control and Propaganda

The Nazi government exerted extensive control over the economy, directing resources towards military and war-related efforts. This control was reinforced through propaganda campaigns designed to maintain public support and mobilize the workforce for war production. Through these measures, the regime aimed to cultivate a national spirit of dedication to the war effort and garner loyalty for the cause.

Attracts Financial Support Through Borrowing

The Nazi regime also utilized financial instruments such as bonds to raise funds. These bonds were sold to the public and various businesses, promising returns that were often guaranteed by the regime’s belief in the eventual success of their military endeavors. This strategy allowed the regime to tap into the civilian and industrial sectors, ensuring a steady flow of capital for military expenditures.

Exploitation of Occupied Territories

A more direct method of financing the war involved the conquest and exploitation of other nations. Occupied territories were leveraged for their resources, labor, and wealth. For instance, the Nazis engaged in the plunder of art and valuables from occupied countries, as well as the exploitation of forced labor from millions of people. This economic exploitation not only provided immediate funds but also fostered a sense of occupation and control over conquered lands.

Collaboration with Axis Powers and Neutral Nations

Germany also formed strategic alliances with other Axis powers, such as Italy and Japan, and received financial and material support from neutral countries. This international cooperation assisted in bolstering the German war effort by providing additional resources and reinforcing the Axis alliance against the Allies.

The Role of the Reichsbank

The Reichsbank, Germany's central bank, played a crucial role in financing the war by creating money and providing credit to the government. While this approach provided short-term financial relief, it ultimately contributed to inflation and economic instability. The creation of excessive money led to a decline in the value of German currency, which had long-term detrimental effects on the German economy.

Exploitation of Occupied Economies

After the invasion of countries like France, Belgium, and Poland, Germany implemented heavy taxation and requisitioned resources. This approach ensured the continued economic viability of the war effort by leveraging the occupied territories’ economic potential. The exploitation of these resources further solidified the regime’s financial and strategic control over conquered lands.

These complex financial mechanisms allowed Nazi Germany to finance its extensive military campaigns during World War II. However, they also played a significant role in the eventual collapse of the regime, as the long-term economic instability and unsustainable financial practices contributed to Germany's defeat.