Autarky

Economic system instituted by the fascist regimes in Germany and Italy during the 1930s, which strove for national self-sufficiency. In 1933, the German economy languished in a severe depression. Inflation increased unchecked, and the rate of unemployment steadily increased. In an attempt to alleviate this depression, the Nazi regime installed Hjalmar Schacht as economics minister. Adolf Hitler, the Nazi leader at the time, instructed Schacht to pursue a policy known as autarky. Under this policy, the German economy would become as self-sufficient as possible.

Schacht did not believe that autarky would become Germany's permanent economic policy. Once the economy was stimulated, he believed that a system of open capitalism would be reinstated. Therefore, the government did not assume control of the nation's major industries but allowed them to operate freely within Germany. Instead, Schacht worked to limit foreign imports by erecting strict import controls. To compensate for the shortage of imports, the government established a private company that extended credit to German corporations. The government encouraged private corporations to focus on producing synthetic fuels, textiles, and raw metals. Schacht also urged changes in the public's consumption habits, recommending that personal income be spent only on necessities. To assist the unemployed, Schacht instituted price ceilings on agricultural products, but he also increased farm subsidies to protect farmers and their families.

At first, Schacht's policies strengthened the German economy. However, in 1934, Hitler made the momentous decision to rearm the German military. From that point forward, Hitler declared all major industries would work to rebuild the German war machine. Hitler's declaration caused great consternation across Europe. In October 1935, the League of Nations passed strict sanctions that virtually eliminated all trade with Germany. After these sanctions were enacted, autarky became a policy of total self-sufficiency.

In response to the sanctions, Hitler devised his Four-Year Plan in 1936. Under this plan, Germany would be completely self-sufficient and ready for war within four years. To advance his plan, Hitler solidified his alliance with Italy and its dictator, Benito Mussolini. Italy also had instituted economic autarky and had been punished with international sanctions.

[Page 57]After the Four-Year Plan was introduced, the Nazi government gradually assumed control of all major German industries. For example, when German steel producers complained about labor shortages and the low quality of their raw materials, the government seized the industry. Workers from other industries were forced to switch to steel production and the government-controlled steel factories used whatever materials were available. Under Nazi control, property rights were revoked, bank accounts were frozen so that capital could not be removed from the country, and all workers' rights were suspended.

Understandably, Hitler's policy of autarky was unsustainable. Living standards in Germany during World War II sank to sordid levels as all portions of the economy were channeled into the war effort. Ultimately, armed forces had to be withdrawn from the front to maintain Germany's faltering industries. Thus, autarky eventually crippled both the German military and German industry. Not surprisingly, when the new nation of West Germany was founded after the war, its government did not even consider a return to autarky.

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