Each step taken in the Gleichschaltung - the “coordination” - of the private and public lives of ordinary citizens was done with a view toward enslaving the ordinary people to the will of the National Socialist party. In this sense, then, economic policies laid the foundation for the “Final Solution” and the Holocaust.
Early in 1933, Joseph Goebbels, in his official capacity as one of Hitler’s highest appointees, addressed gatherings of leaders from various industrial sectors. He noted that many of them had seen the political instability in Germany during the previous several years as a cause for economic stagnation. Goebbels assured the managers that the Nazis would remain in power for many years, stabilize the economy and the political situation, and thereby create a foundation for economic growth. Goebbels said:
Production would thus have every reason to be secure on the basis of this fact. By the same token, though, there can be no doubt anywhere that the National Socialist movement will intervene in the economy and in general cultural questions.
While assuring the business leaders that they would have the stability they desired, he also warned them that free enterprise, along with other forms of liberty, was on its way out.
In the quest for total control of all areas of life, the Nazis could not tolerate the idea of entrepreneurs being able to take unfettered initiatives to launch new businesses, or new products within older businesses. Even if such government control came at the cost of economic hardship on ordinary middle-class families, the National Socialists would yet demand it.
By flatly stating that the Nazi government would “intervene in the economy,” Goebbels was laying a foundation for a system which would brutally murder millions of innocent men, women, children. To make his message clear, he continued by saying that
The state has the duty to step in as regulator.
The next step in creating an economic basis for the horrifying Endlösung was taxation. For the National Socialists, taxation served a dual purpose. It was simultaneously an instrument by which they could control the populace, and it was a way to fund their plans.
Free discussion about economics, or about nearly anything else, soon was both risky and rare inside Germany after the Machtergreifung in January 1933. But writers in nearby countries were still free to observe and analyze. Basel’s National-Zeitung, located in neutral Switzerland, commented in February 1939:
In addition to the armaments race, in terms of numbers of guns, planes, trained soldiers, cadres, etc., there is another “race” among so-called civilized nations that is frequently overlooked - that is, the monstrous growth of taxes with which the citizens are burdened. In this field, too, the Third Reich has registered top accomplishments. It is devoutly to be wished that those in some capitalistic circles in Switzerland and other democracies who are afflicted with admiration for the “order” existing in dictatorial countries, also occasionally give this problem of taxation some attention. In particular, the 1 per cent arms-defense tax over which we are now wrangling in Switzerland must appear as very moderate when compared with what the “racial comrades” in Greater Germany have to pay for their Führer’s dreams of glory.
Not only did the Nazis impose harsh taxation on the people; they did so at a time when prices were rising faster than wages. Needless to say, the hardships inflicted upon the common middle-class people didn’t concern the elites in the National Socialist party.
The Low Countries were still free, and could publish observations about the Nazi economy, in 1937. They wouldn’t be overtaken until early 1940. In May 1937, the Luxemburger Wort noted:
For the first time in a considerable period, the Institute for Market Analysis has analyzed retail prices and the cost of living in Germany. While several weeks ago it was still maintained that the cost of living had advanced by only 3.4 per cent during the four years of National Socialist direction of the economy, the Institute now admits an actual increase of 7.2 per cent. The figures are based on the consumption of the average worker’s family, but they can be regarded as only conditionally valid for the whole population, since numerous relief measures and special allowances have been created for certain low-income categories.
While the Nazi government proceeded with its plan to regulate the economy while taxing ordinary people despite a rising cost of living, the functionaries within the National Socialist regime felt no pain. While a kilogram of bread cost around 32 Reichspfennige (imperial pennies) in 1937, the Nazi leaders were receiving enormous paychecks. In Budapest, the Hungarian newspaper Pester Lloyd was still free, in February 1940, to report the salaries of National Socialist officers:
On the basis of a new Reich salary scale, according to reports from Berlin, the commander of a department of the armed forces, the chief of staff of the supreme command of the armed forces, and the chief of the German Reich police are now receiving a salary of 26,550 Reichsmarks annually. Secretaries of state, presiding judges of the superior courts, general-colonels, general-admirals, generals, and admirals receive 24,000 Reichsmarks per year.
Not content with general regulation of the economy, the Nazi government began setting precise price controls on various consumer products. Like other National Socialist regulations, these were imposed with strict regimentation. In January 1939, the Frankfurter Zeitung was able to report that
Police administrative offices have been advised to pay increased attention to price control and to entrust this important task to specially qualified police officers, who are to be exempted from other duties.
The Nazi eradication of economic liberty, then, had three main features: regulation and intervention (including price controls), rising taxation, and nationalization of industries and businesses. The last feature is exemplified in the Reichswerke Hermann Göring. Rendering into English as the “Hermann Göring Works,” it began in July 1937 as a government takeover of the Salzgitter iron mines.
From the beginning, the National Socialist government used wiretapping, surveillance, intimidation, extortion, and personal threats to undermine, preempt, and disable competition from the private sector. The “Hermann Göring Works” expanded to takeover other steel factories and manufacturing facilities.
While the government nationalized and took over various production facilities from the private sector, the ever-shrinking room left for free enterprise suffered. In his history of National Socialism, William Shirer writes
Buried under mountains of red tape, directed by the State as to what they could produce, how much and at what price, burdened by increasing taxation and milked by steep and never ending “special contributions” to the party, the businessmen, who had welcomed Hitler’s regime so enthusiastically because they expected it to destroy organized labor and allow an entrepreneur to practice untrammeled free enterprise, became greatly disillusioned. One of them was Fritz Thyssen, one of the earliest and biggest contributors to the party. Fleeing Germany at the outbreak of the war, he recognized that the “Nazi regime has ruined German industry.” And to all he met abroad he proclaimed, “What a fool [Dummkopf] I was!”
The Nazi party was accurate when it called itself the “National Socialist” party - it nationalized an increasing amount of the country’s industry, and socialized sectors like healthcare and education. Regulations, price controls, and increasing taxation inflicted suffering on all income classes - party members were immune, but not even the wealthy industrialists were protected from Nazi savagery.
National Socialist economics laid the foundations for the horrifying genocide. The Holocaust would not have been possible in a land with a truly free market, with a thriving private sector, and with minimalist taxation.
