Episode 104 -- Project 1933, Part VIII: October 1 - October 31

Speaker 1 On October 1st, same day as soup day.

Speaker 1 The literal soup Nazis. Oh my God, that should be the title.

Speaker 1 How can we get to an hour of this without thinking of the soup Nazis?

Speaker 2 I mean, I don't want them to take away soup, right? I literally like it, especially this time of year. It is indeed very comforting and quite cheap to make just a bowl of like a lentil stew.
Yeah.

Speaker 2 So don't let the Nazis turn you off of soup is what I'm trying to say.

Speaker 1 Yeah, this is a pro-soup podcast, and we're not afraid to admit it.

Speaker 1 Hello, I'm Adrienne Daw.

Speaker 2 And I'm Moira Downigan.

Speaker 1 Whether we like it or not, we're in bed with the right.

Speaker 2 So Adrienne, today you are here to treat me and treat our listeners to another installment of our Project 1933 series. I believe this is part eight.
That's right.

Speaker 2 And do you want to tell the listeners who are maybe just tuning in a little bit about Project 1933?

Speaker 1 So our idea this year was as events keep getting compared to 1933 in Germany, why not go month by month and kind of present what the Nazi seizure of power would have felt like, not totally abstracting from what comes after, but trying not to tell it just as prologue to 1935, 1936, 1939, and 1945, but to really take the year seriously in the experience of people who went through it.

Speaker 1 And because this is a podcast about gender, we've been foregrounding many issues around gender, but we've also sort of found a different focus for each month. We're theming each month a little bit.

Speaker 1 And this is the October episode. We are currently recording this on October 31st.
Happy Halloween.

Speaker 2 You know, we are but two humble hard scrabble podcasters doing the best that we can in this crazy world. And I always appreciate our listeners' patience and willingness to root for us.

Speaker 1 Yeah, in this case, once people are done listening to this episode, they'll understand why this one took a little longer to come together.

Speaker 1 I had wanted to focus October on a question that I didn't know that much about, and that is very much not in my field of expertise, right?

Speaker 1 People will have noticed that I sometimes steer things towards things I understand quite well, right? The classical music world is one that I know intimately in the early 20th century, so in Germany.

Speaker 1 And so that's pretty easy for me to kind of, I know where to look. I know what the big questions are.
I know who these biographies are.

Speaker 2 Did you write your dissertation on Wagner? Am I wrong about that?

Speaker 1 My second book was on Wagner.

Speaker 2 Yeah. Okay.
And your first book was on duets?

Speaker 1 Yeah. Piano duets.
There's some Wagner in that too. So there are things here that like I know intimately and I've been thinking about for 20 years.
October is about the economy.

Speaker 1 And listeners, you will be shocked to learn that I don't know that much about economics.

Speaker 1 I took one class in college. I have a passing interest in some of these things, but I was also keenly aware of how much I didn't know.

Speaker 1 And so the big question, of course, for 1933 and the economy is like, well, this is the beginning of a recovery, right?

Speaker 1 And so you do want to tell that part of the story, because that's surely something.

Speaker 1 Like, I didn't have a job, now I have a job is one of those fundamental human experiences in modernity that sort of gives you a sense of how the country might be going, et cetera, et cetera.

Speaker 1 So it feels like we need to talk about it. At the same time, your main witnesses for, hey, we made this great recovery are literally the worst people ever to walk this planet.

Speaker 1 So you want to treat that with a grain of salt. Luckily, there's a really, there's a lot of very, very good historical research on this, and I'll cite a lot of it later.

Speaker 1 This is one of those episodes where I literally just emailed a bunch of experts and were like, talk me through this. I don't understand what's happening.

Speaker 2 It's still shocking to me after now, like well over a decade as a journalist that you can just email the smart person and like a shocking proportion of the time, they will, in fact, write you back and be very, very helpful.

Speaker 1 One of them, Albrecht Ritcher, actually sent me back a slideshow that he had, and it was great. I was like, every expert should always reply with a PowerPoint because you're like, this is great.

Speaker 1 I was like, explain it to me like a five. And he's like, I'll do it with pictures.
And I'm like, this is better.

Speaker 1 And while I'm going on about how difficult this was to research, I might point out that, you know, this job is a lot of work. And we have a Patreon.

Speaker 2 You can support us. We've got three tiers, Pervert, Preacher, and Creep.
If you support us, you get exclusive content. You get access to our Discord where we have fun and play around.

Speaker 2 You get early access to our merch, which is quite fashionable. Oh, yeah.
I would also like to tell everybody who enjoys what we do to come out to our live show.

Speaker 2 We have a live show in San Francisco at the Swedish American Hall on November 20th. Tickets are going fast.
Get them now.

Speaker 2 We're going to have special guests Sarah Marshall of You're Wrong About and Matt Bernstein of A Bit Fruity, who I think are just so, so good, both of them, at being podcasters and are also just such fucking sweeties that I'm really just looking forward to seeing them and to seeing all of you.

Speaker 2 It's going to be a great night.

Speaker 1 It's going to be a great night. The topic is going to be a moral panic bingo night.

Speaker 1 So we're not doing 1933. That would be really fucking funny if you just sat here with a bunch of like slide decks and we're like, and then you see the mine goes up, you know.

Speaker 2 You guys thought you were gonna have a fun night. Jake's on you.
We're talking about the Nazis.

Speaker 1 But no, we will not. We will not.
I don't think we're gonna do 1933 lives. That's just like, also, like, what if the wrong people show up?

Speaker 2 But yeah, I think it's gonna be a really good time. I'm really looking forward to it.
You can find a link to buy tickets in the show notes. And yeah, please join us.

Speaker 1 You know, one of the aspects of Trumpism that I think most persistently confounds its observers are these headfakes towards economic populism, right? Yeah.

Speaker 1 No matter how little comes of Trump's promises, the media seems super ready to frame even the most threadbare invocation of like the dignity of the American worker as somehow like a departure from political orthodoxy, right?

Speaker 2 Yeah, like every election year, like whether it's a midterm or a presidential election year, there is a credulous series of journalists who all declare that the Republican Party is a workers' party now.

Speaker 2 It's like clockwork.

Speaker 2 And then the Republican Party actually gets into power and, in fact, like decimates, you know, wages and union rights and just upwardly redistributes wealth like over and over and over again.

Speaker 2 It's like this Lucy with a football thing that we do in the media.

Speaker 1 Exactly. And then, of course, when we come to analyze people's motives in 2025, economics also looms very large, right? The idea that people wanted this government for economic reasons, right?

Speaker 1 The like economic anxiety in 2017, now it's inflation, right? The government will now, of course, apply its newfound might to change people's economic circumstances, right?

Speaker 1 Like this has great apologetic power during the period of regime consolidation that we're seeing in the United States right now. It also, of course, had great apologetic power in Germany in in 1933.

Speaker 1 People voted for Hitler for the economy was like a pretty common thing you'd hear. Well, then Hitler kind of had to fix the economy, right?

Speaker 2 So I guess what we're going to do is spend some time talking about the economic anxiety of all these poor Nazis.

Speaker 1 I know, just so much anxiety.

Speaker 1 Well, I mean, to be fair, and that is the last time I'll say this in this episode.

Speaker 2 You got to hand it to Hitler. You heard it here from Adrian.

Speaker 1 Under any circumstances,

Speaker 1 revising an earlier statement of mine from 30 seconds ago, under no circumstances do you have to hand it to the Nazis.

Speaker 1 But I will say that unlike in 2017 or 2025, where diagnoses of economic crisis have to kind of rely on, well, it's underneath all this. People are really fearing for their economic survival, right?

Speaker 1 Like the numbers are good. It's that underneath the numbers, and I'll stipulate you that I think that's true, right?

Speaker 1 There is a rot in the economy and it's not serving everyone equally, et cetera, et cetera. But the situation in Germany in 1933 was by all objective measures super dire, right?

Speaker 1 You have, I believe, six million unemployed people, a central government that really couldn't borrow, but was holding huge foreign debts that it needed to service, right?

Speaker 1 Still part of the after effects of World War I

Speaker 1 and the Treaty of Versailles and the reparations.

Speaker 1 and parts of the country basically demilitarized.

Speaker 2 Aaron Powell, wait, why is demilitarization a part of the economy? Can you explain that to me? Because I'm a little unclear, frankly, on how the military relates to the domestic economy at this point.

Speaker 2 Aaron Powell, Jr.

Speaker 1 It's a good question, right? Part of Germany being demilitarized gave foreign creditors a certain kind of leverage over economic policy, right?

Speaker 1 The Ruhr area, the large industrial heartland of West Germany, had been occupied by French forces earlier in the 20s.

Speaker 2 Notably, including black men from French colonized parts of Africa, much to the national humiliation of the Nazi Aryans.

Speaker 1 Aaron Ross Powell, that's right. So basically there is this kind of fear that the Allies might intervene in some small measure, right? A is part of economic policy, right?

Speaker 1 Like you need to service these debts. Otherwise, this could be in the offing.
And B, is clearly what the anti-Nazis are sort of hoping for, right?

Speaker 1 We've come across several times among our diarists and anti-Nazi letter writers that they're like, well, maybe the Allies will intervene.

Speaker 1 And I think once or twice you've sort of said, like, gee, would the Allies really risk another war? Well, no.

Speaker 1 What people I think were picturing was something like the French army occupies the Tsarland and like

Speaker 1 everything west of the Rhine basically being like, until Hitler resigns, we're going to hold this, right? So economics and military are sort of intertwined anyway.

Speaker 1 And of course, for Germany in 1933, the economy, at least on the dead side, was tied to the last war, right? And was tied up in some measure with the question of whether it was over, right?

Speaker 1 France and the UK tend to use the debt payments as a measure to make sure that Germany didn't rearm, right? Okay.

Speaker 1 And so in the heyday of the Weimar Republic, there was this kind of economic boom that the Weimar Republic had, kind of the age of Gatsby, basically, but in Berlin, less green light.

Speaker 1 more Babylon Berlin.

Speaker 2 Yeah, there were transvestites and a lot of lingerie and like bowler hats. I've seen cabaret.
I know what the Weimar Republic was like. Oh, yeah.

Speaker 1 And that's all, right?

Speaker 1 A lot of that has to do with one particular way of squaring that circle, which is to say, we'll trade on the fact that people don't want us to rearm, and we use that to reintegrate ourselves into a system of creditors above all the United States, right?

Speaker 2 Isn't that also kind of what they did after the war?

Speaker 1 It is indeed exactly what they did after the war. Gustav Streisemann is the main guy here.
And like, essentially, like, post-45, that becomes, right? We become very not scary to you.

Speaker 1 And in return, you finance our rebuilding efforts. But there's always like the thing like, well, if you stop doing that, we might start rearming.
I have to start rearming again.

Speaker 1 It's like, well, we don't want that. Whereas Hitler nuances this the opposite way.
We'll talk about his economic outlook in a second. But he basically thinks, well,

Speaker 1 no, the only way to do this is for them to be afraid of us enough to basically let go of these financial instruments.

Speaker 1 And so both sides of this are basically taking military threat and financial leverage as kind of being interchangeable in this odd way.

Speaker 1 It is this kind of hangover from World War I, essentially, right? Like, how done are we with this?

Speaker 1 And famously, Schleseman's answer was like, well, we're done with it and we have to sort of figure out a way to like win what we were trying to do in that war. Like he's an economic nationalist.

Speaker 1 Like he thinks Germany can win what it wanted to get out of World War I by economic means. It's the only way to do it right now.
And you ally yourself with the United States to do it.

Speaker 1 And Hitler thought, like, no, you use the economy to basically do a rematch, right? And that's what we got, at least in his mind. So our story today is about the economy.

Speaker 1 And we have to make a couple of important distinctions here.

Speaker 1 In sort of synoptic big picture histories of the Third Reich, which after all, you know, lasted only 12 years, you kind of get that story that the economy went from like 6 million unemployed people to full employment in three to four years.

Speaker 1 Yeah.

Speaker 2 This is the received wisdom I have as a borish, ignorant American about the economy of the Third Reich. Like basically, yeah, fascism was great for the economy.
Yeah.

Speaker 2 The war economy in Germany was, you know, very robust. Dedemocratization yielded much better economic results and standards of living.
And some of that was from,

Speaker 2 you know, like good old-fashioned sort of stimulus. And some of it was a byproduct.
I think this is how like market capitalists in the West now depict this kind of thing.

Speaker 2 It's like, yeah, you know, fewer, fewer democratic freedoms leads to a more robust economic sphere. Yeah, yeah.

Speaker 1 Peter de Heal's wet dream. Yeah.
Yeah.

Speaker 2 Yeah. Kind of.
This is kind of how it gets pitched in American public school, right? And I'm imagining that you're going to complicate that picture a little bit today.

Speaker 1 Exactly. I'm not going to tell you it's totally wrong, but it is more complicated, right? In fact, the war economy itself in the Third Reich is a shambles.
It's really the rearmament phase.

Speaker 1 Like Hitler does indeed lower unemployment significantly, I mean or completely really, between 33 and I think 1937. So this is during nominal peacetime.

Speaker 1 At the same time, all these famous measures, right, you're thinking about the Audubon, right?

Speaker 1 Like these works creation programs, et cetera, et cetera, a little bit like a New Deal, but like with browner shirts.

Speaker 1 You know, that's mostly in the future in 1933, and yet 1933 does begin to see the recovery already. And in 1933, we're going to see something very interesting.

Speaker 1 In talking to experts about this question, everything they point to as like stuff that they study is like 1934 and onwards.

Speaker 1 So 1933 really belongs to what I would call, that's not them talking, this is me now talking.

Speaker 1 My impression is that everything in 1933 comes from what 21st century economists would call folk economics, right? The intuitive picture of how the economy works and how the government shapes it.

Speaker 1 Another way of saying this is fascists love economic theatrics, right? Big bold gestures, clear villains and victims and zero-sum games.

Speaker 2 Like when Trump put his name on the checks during COVID. That's right.
Right.

Speaker 2 It's like, it was he being the benevolent father issuing out this savioring stimulus to the people who were like his children. He doesn't always do stuff like that, but he does it sometimes.

Speaker 1 Yeah. And so in 1933, I think you see mostly that.
And I'll try to explain. that.
So again, I'm not going to say, oh, it's all a lie.

Speaker 1 There was sort of research in the 1970s and 80s, I think, that was trying to figure out, was any of this real? And I think people came away with the sense like, yeah, it was. Like, this is a recovery.

Speaker 1 On the other hand, remember, this is also the great moment of recovery for a lot of economies across the world, including some like the United States that, you know, were anything but fascist or were anti-fascist, right?

Speaker 1 So let me talk about my sources for today's episode, which are more complicated than usual.

Speaker 1 I looked at Adam Tuse's wonderful book, Wages of Destruction, massive book on the Nazi economy, the making and the breaking of the Nazi economy.

Speaker 1 I also looked at a controversial book by the historian Goetz Ali, Hitler's Beneficiaries.

Speaker 2 Why is that controversial?

Speaker 1 Well, because it basically suggests that Hitler successfully set up a welfare state for quote-unquote Aryan Germans at the expense of everyone else, right? Like

Speaker 1 it's a racial extractivist regime, and that most everyday Germans likely supported the Nazis not because they agreed with their policies, but because they were getting a bunch of shit out of it.

Speaker 2 Aaron Powell, Jr.: So it's like socialism, but nationalist.

Speaker 2 It's a racially exclusive version of social.

Speaker 2 I mean, I think it's like tricky to identify parts of Hitler's economic program as recognizably socialist or recognizably welfare forward because that gets weaponized against the American left in such sort of like reductive, stupid ways.

Speaker 2 But it's not like total horseshit. Is that what you're saying?

Speaker 1 Well, so the book was very controversial when it came out. If I had to sum up the critiques, I think they they all accuse Ali of engaging in a form of the Mutt and Bailey fallacy, right?

Speaker 1 Where you have a pretty broad but not particularly counterintuitive claim, but then you make a sharper version of that claim.

Speaker 1 And whenever you're called upon to defend the sharper version of the claim, you fall back to the general claim, right? The fact that like

Speaker 1 Yes, the Nazis were very keen on keeping the home audience happy, and that racialized plunder, as Tanahasi Coates would call it, was part of that seems pretty uncontroversial.

Speaker 1 The bigger question of whether or not people signed on to the Nazi state because of that, I think is more difficult to say.

Speaker 1 Like I didn't see this argument made, but my own sense, I went into the episode kind of liking Ali's thesis, to be quite honest.

Speaker 1 What bothered me about it after reading all this other stuff and talking to these other economists and economic historians was that the timing, I think, doesn't work out, right?

Speaker 1 The big time we we have to explain, like, how did people become Nazis? How did Germans become party to this state? Is late 1933, 1934 at the latest, right?

Speaker 1 The mechanisms that Ali is talking about, which do exist, really kick in with the kind of expropriative laws against Jews in 1936, 37, and then really with the French campaign in 39.

Speaker 1 Meaning, it's an elegant explanation as far as it goes, but it doesn't explain the thing when it it needs to explain it, right? Like for me, it's a problem of sequence. Oh my God.

Speaker 2 Are you saying that Ali's assertion that Nazism got its buy-in among the German public primarily from its material benefits to them might overlook the notion that like the psychic wage of discrimination supremacy was its true appeal?

Speaker 1 Yeah, I mean, I think that's the thing.

Speaker 1 And Tuz is very good at this to say like, look, a lot of Nazi economic policy was rational in a certain very narrow sense.

Speaker 1 Like, it, like, it used financial instruments the way they were meant to be used, right?

Speaker 1 These were not, this was not pull pot or something like that, where it's like, that's not how the economy works at all. I need you to stop doing this.

Speaker 1 But it was all in the service of a deeper irrationality, right?

Speaker 1 And like, it's reasonable to say that a lot of people who signed on to that agenda within Germany were doing it for that broader framework, right?

Speaker 1 Partly because some of the instruments that would allow for this kind of extractivism that Ali's talking about were secret in 1933 and 34, right? Like you couldn't win elections with it.

Speaker 1 You couldn't win anyone over with it because they didn't know, right? Like it gives you a sense of how the Nazis thought about the state.

Speaker 1 But I do think for me, there was a real problem of sequence emerging here. I'm happy to be corrected on this.

Speaker 1 Obviously, like the guy spent 20 years researching this book, and I don't want to be like, haha, I've debunked you.

Speaker 1 What I want to say is that I came into the research more predisposed to that explanation than I left my research.

Speaker 2 Okay, cool.

Speaker 1 Yeah, so that's Ali. And then I also looked at a book about the Ministry of Finance.
It only exists in German.

Speaker 1 Christiana Kullas Bureaucratie und für Brechen, anti-Zemitische Finance Politik und für Waltenspraxis.

Speaker 1 There are a bunch of these studies in Germany.

Speaker 1 I don't want to dismiss this study, but you've gotten studies kind of like this for almost every ministry in the Nazi state, which is to say, you know, they all after the war were like, well, we were just doing our jobs, right?

Speaker 1 Like we were not actually part of the, we were, we were exempt from the big sort of Nazi purges. We were exempt from their insane policies.
It was mostly the party anyway.

Speaker 1 Well, she does a very, very good job, Kula does, in showing that the finance ministry was in fact fully integrated into the Nazi state.

Speaker 1 That was an interesting read to me because it was a very helpful counterweight to the Ali in the sense that it makes clear the finance ministry really starts setting in motion the extractive processes processes to basically take money away from immigrants, to start stripping funds away from Jewish families, et cetera, et cetera, in 33.

Speaker 1 But the real mechanisms kick in kind of later, right? So you get the policymaking, and she makes a very good case that basically the finance ministry was in on this from the word go.

Speaker 1 But these things take time, right? These were almost entirely done through laws. It's not just the SA standing in front of your house, like shaking you down.
Like they were there with a court order.

Speaker 1 Like it was there. Someone had written a fucking law and passed it and had had conferences at the ministry to figure out how to enforce this correctly, right?

Speaker 1 Like it showed up with this imprimatur of legality. And that's, I think, really, really important, which also, again, for this year 1933 creates this kind of delay, right?

Speaker 1 That even if you're a horrible Nazi dictatorship, these things take time. Someone in the ministry has to go through and be like, that's actually not enforceable, you guys.

Speaker 1 Or like, we don't have the manpower for this. Or wait, do we have an account where this all goes? Right.
Like, no one was saying like, oh, we shouldn't do this. It's horrible.

Speaker 1 They were all saying, well, how can we do this? How can we make this work? Right.

Speaker 1 And then the other people I want to shout out here is I ended up interviewing an economist and an economic historian who know a lot about the period and about the mechanisms at work here.

Speaker 1 My friend Rudiger Bachmann, who's at the University of Michigan, and Albrecht Ritscher, who's at University College London and who is the, I think, the absolute authority on sort of Nazi monetary policy and who immediately wrote back to me and was like, I'm alarmed at some of your questions because they reflect a conventional wisdom that's wrong.

Speaker 1 You know, here's why it's wrong. I was like, wow, this is great.

Speaker 2 Yes, that's exactly what you want them to say.

Speaker 1 It was so good. I was like, I would have made such an ass of myself on air.
But like, you know, thank you to Rudiger and thank you to Eilich. That was really, that was really great.
Yeah.

Speaker 1 So those are my sources and a big thank you to them. Now, maybe because we're talking about such huge issues and issues that, you know, you're having a literature professor grapple with it.

Speaker 1 So who knows what sense I'll be able to make of it.

Speaker 2 Like, Adam Tooze, if you want to come on the podcast. Yeah.

Speaker 2 Yeah.

Speaker 1 Be like

Speaker 1 minute 35. Adrian says this.
That is bullshit.

Speaker 2 It's the nice thing about being a podcaster is that whenever anybody gets mad at you, you can just be like, come on the pod. Let's discuss it.
It's all gristed for the content mill.

Speaker 2 But I don't think you're going to lead us too far wrong. I have a lot of faith in you, Adrian.
Thank you.

Speaker 1 Thank you. Well, I'll mark clearly for our listeners what I don't know or what my understanding is.

Speaker 1 And at the moment, you hear me say something about financial instruments, like just assume it comes comes with an asterisk, which is like means trying to understand these things.

Speaker 1 You know, so much of my understanding of these comes from a world that was economically restructured in the wake of the crisis that Germany is living through as we're talking, right, in 1933, meaning there's still the gold standard kind of kicking around, right?

Speaker 1 There was recent experiences of hyperinflation, right? Like we're dealing in the United States and in Germany today with governments that don't borrow, though they easily could, right?

Speaker 1 Like in the 1930s in Germany, you're you're dealing with a government that really has lost a lot of credibility by very deliberately allowing for hyperinflation in order to like water down its debts.

Speaker 1 So it's more like the situation in Argentina is probably more comparable to Germany in 1933 than the United States in 2025 in that regard.

Speaker 1 But I'll try to use myself sort of as a vessel for everyone else's ignorance. And again, also our listeners, if they're economists among them, feel free to reach out and enlighten me more.

Speaker 1 But I'll sort of just give you the sense of what I think I've learned over the last six to eight weeks.

Speaker 1 And I thought that maybe the easiest path into this is actually with our good friend Victor Klempera, another literary scholar. So not a guy who thinks a lot about the economy either.

Speaker 2 No, but a guy who grounds us in the texture of life all the time because he was just such a valuable diarist.

Speaker 2 And I come to love this crank, this like grumpy guy who's always telling us about how much it sucks to live through Nazi Germany.

Speaker 2 I come to identify with Victor every time we do this a little bit more.

Speaker 1 Yeah, no, and one of the great things about him also is that he's a huge gossip.

Speaker 1 So like a lot of his friends are not famous and you have to look in the index to the diaries to find out who these people actually were, but they do kind of reoccur.

Speaker 1 And so you can almost sort of search for them and like watch their fates throughout 1933.

Speaker 1 Luckily, a lot, most of them make it out, it seems, from the names that I've been able to follow through the next, you know, eight years of his diary or the 12 years of his diary.

Speaker 1 But in October, you do get a disproportionate number of sort of economics-related entries from Victor.

Speaker 1 And there, I thought I'd briefly mention a family, the Gerstler family, that he appears to be friends with and who show up, I think, three or four times in October.

Speaker 1 Their story occupied the Klemperers quite a bit.

Speaker 2 Can I read this?

Speaker 1 Sure, yeah. So on October 30th, Klempera says the following.

Speaker 2 I now hear sometimes moods change. It cannot last much longer.
The money will be gone in eight, nine months' time. Industry will break down because it has been squeezed dry.

Speaker 2 Gerstel, the director of the lucrative fig coffee company, brother-in-law, by the way, of the emigrated Jules Seba, says Hitler is a genius.

Speaker 2 And if only the foreign buyout of Germany ceases, then one will be able to live. Blumfield thinks one must not, quote, live in illusions and, quote, face facts.

Speaker 1 Right, so these are two friends of Klemper's who work in private industry, who are themselves entrepreneurs, and who are starting to do two things.

Speaker 1 Like, some people say, well, the Nazis are going to ruin the economy. There's either going to be a revolt or the Allies will intercede, right? So this can't last much longer.
It'll be squeezed dry.

Speaker 1 And people who have lived through 2025 so far will hear some version of this, right? Like, and we're hearing it again with the government shutdown, which is ongoing as we record this, right?

Speaker 1 Oh, it'll immiserate people to such an extent that the pressure on the regime will get too great.

Speaker 1 So you get that. But on the other hand, you get these entrepreneurs who are starting to kind of arrange themselves with this regime and are saying, really, the problem are the foreign boycotts.

Speaker 1 The reason the foreign boycotts are such a topic, on the one hand, I explained them in June, I think, as a kind of anti-Semitic trope that the Nazis would use to sort of frame things as conspiratorial, like basically to frame as a conspiracy reports of what the Nazis were in fact doing, right?

Speaker 1 They were like, oh, you're just trying to make us look bad.

Speaker 1 But of course, what I didn't mention then is the reason why people were so afraid of foreign boycotts was that Germany as a country that had to service foreign debts in foreign currency was extremely dependent on exports, right?

Speaker 1 And especially exports to countries with strong currencies. And of course, this was the thing that had kind of broken away after 1929, right? The famous Moot Hawley tariffs in the United States.

Speaker 1 Getting dollars was paramount. Now you couldn't get dollars because of fucking Herbert Hoover, right? So this was a real problem.

Speaker 1 And the idea that it was conspiratorial conspiratorial was only a slight extra step.

Speaker 1 The Americans were kind of saying, look, we understand this screws a bunch of you guys, but we have to look out for our own economy.

Speaker 1 It was a little conspiratorial, but like pretty openly, they were just like, well, this is what we have to do. And this is sort of an extra twist.

Speaker 1 Like now it's not about like the allies who are way more powerful than us. It's like Jewish bankers, right? Like or something like that.

Speaker 1 But so this guy who from his name, I think is Jewish, is like, you know, if only those Jews would stop boycotting our beautiful goods, you know, everything is going to be fine.

Speaker 1 And Hitler's actually kind of a genius if you think about it, right? I don't think he's like supporting him.

Speaker 1 He's just saying like, you know, the same way that like people will talk about Trump and the economy or like Trump and Gaza for some reason that I cannot fathom, right?

Speaker 1 Like you have to hand it to him, right? So that's kind of what he's doing. Well, the Gerstla family makes an appearance later on.
That evening, the Gerstlas had not gone to the Blumenfelds after all.

Speaker 1 Suddenly, they've gone away. Difficulties had been raised at his factory.
They wanted to impose quote-unquote changes. He required foreign currency for his fig purchases, no doubt.

Speaker 1 No doubt, he had to stick to the regulations.

Speaker 1 Meanwhile, the whole family, under the new German law, hostages are taken after all, was officially at their country house, de facto presumably already over the border to Czechoslovakia.

Speaker 1 And then he ends this with, flight to the Holy Land. What property they take with them, what the genius Hitler will let them keep, I do not know.

Speaker 2 Wow.

Speaker 1 So he's just like, oh, did you fuck around and find out?

Speaker 2 Well, you know, this guy starts off saying Hitler's going to fix the economy and then very soon after has to flee and I presume has his business confiscated by the Nazis.

Speaker 1 Like literally two weeks later. Yeah.
So part of this is that like he required foreign currency for his fig purchases.

Speaker 1 This is about the fact that the Nazis start like creating contingents basically or certain tranches of foreign currency that you had to apply for. Apparently, I looked around.

Speaker 1 This was not a totally unheard of instrument in 1933.

Speaker 1 It was a way to prevent, I think, your own foreign currency reserves from getting depleted. At the same time, I think Klemper is implying that, like, well, they're now playing favorites, right?

Speaker 1 And a Jewish coffee importer is not going to be high on their list. So guess you found out how that worked.

Speaker 1 And then he's like, well, yeah, I wonder whether that genius Hitler is going to let you keep your business now, Bucko. Because he has to basically flee.

Speaker 1 I'm guessing because he, I don't know, tried to smuggle it or whatever it is. Like Kumpere doesn't say.

Speaker 1 But clearly this family had to sort of really rush off, either because they sort of violated tariffs or whether there's something else going on.

Speaker 1 But it's worth kind of pointing out that like already the kind of monetary policies of the Nazis have this kind of racialized edge, right? It's not, oh, we all have to make tough sacrifices.

Speaker 1 It's like, but that guy, for reasons of his last name, has to make real sacrifices and the rest of us doesn't, right? Yeah.

Speaker 1 So I think that's really important to notice here: that like we're both talking about very recognizable economic problems that we can see in other countries in the world at other times, but it's starting to be overlaid with this kind of racialized matrix.

Speaker 1 And that's going to come up again and again in our nuancings of these various myths about the Nazi economy.

Speaker 1 So, today is about what the Nazis did with the economy, and the answer on some level is kind of not a lot, or at least not in the sense that modern economists would sort of recommend doing this stuff right away.

Speaker 1 We'll try to focus on what the Nazis actually did and how they then communicated what they did. And that's much more important.

Speaker 1 A lot of 1933 is economic propaganda, not really a rebuilding of the economy. But behind all this, there there are three myths about the Nazis' economic policy that I think we'll have to dispel.

Speaker 1 And again, they're not 100% wrong. We have to just kind of be like, that's not the whole truth.
The first is the one you've already mentioned.

Speaker 1 Hitler came to power and instituted these huge public works programs and work creation programs, right? The Audubon.

Speaker 1 And Adam Tuse's book is very, very good on that, on the fact that this isn't really true.

Speaker 1 The second myth is Hitler came to power and instituted the kind of massive deficit spending that his predecessors wouldn't, right? So before 1933, there had been this fixation on avoiding inflation.

Speaker 1 And after 1933, he starts spending hard in order to boost the economy.

Speaker 1 And I hope I'm not putting words in Albrecht Struttrel's mouth when I say what I take his work to be indicating is that that's not entirely true either.

Speaker 1 A lot of the early measures by the Nazi Ministry for the Economy, Ministry of Finance, Central Bank, et cetera, et cetera, were a continuation of measures that had already been established or attempted or at least discussed in the last democratic governments of the Weimar Republic, more so von Papen and Schleicher

Speaker 1 than Brüning.

Speaker 1 But like Hitler famously in October will sort of show up to open the first Audubon, right? Like they didn't build that, right?

Speaker 1 Like he's doing exactly what Republicans do when they stand in like Inflation Reduction Act construction sites and are like, we're putting Americans back to work.

Speaker 1 It's like, well, yeah, who made that possible, right?

Speaker 2 Yeah, you actually voted against the bill that appropriated the funds for this like big construction project.

Speaker 1 Yeah. Yeah.
And that is literally true of the Nazis for that first year.

Speaker 1 It's a lot of standing in front of work sites that you had voted against or had just not showed up because you were too busy brawling with communists or whatever, right?

Speaker 1 The third myth, finally, is, and that's the most complicated one. This is the one that where I'm trying to be a little bit of an economist myself, so like brace yourselves.

Speaker 1 But like this idea that Hitler came to power and was able to mitigate the unemployment crisis. My sense after reading a bunch about this is that that's kind of true, but only if you squint.

Speaker 1 And the squinting has a lot to do with gender. So that's what we end up in, true in bed with the right territory.

Speaker 1 So basically, my thesis today is that the economy is another place where there's actually a good deal of continuity between the practices of the late Weimar governments and the Nazis' first year in power.

Speaker 1 And one reason for that is because the constraints are the same in June of 1933 as they were in June of 1932.

Speaker 1 Your country owes a ton of money to foreign debtors. You had hyperinflation less than 10 years ago.
A lot of economic policy basically has to be monetary policy.

Speaker 1 And the Reichsbank, the central bank of the German Reich, was unusual in several respects within the German state and later the Nazi state.

Speaker 1 For one, central bankers are a pretty networked bunch, right? Like you have to constantly be talking to central bankers in other countries.

Speaker 1 So this isn't sort of a particular German or Nazi party elite taking over and everyone else being like, what the fuck are you guys doing?

Speaker 1 These are often people who have a great deal of continuity with the old people and many of them just stick around.

Speaker 1 Second, the Reisbank before 1933 had resembled a normal bank, like a commercial bank, a lot more than

Speaker 1 your average Berlin ministry or a government-run office, right?

Speaker 1 And what I didn't know is that the Reisbank wasn't truly synchronized in that sense of Gleichschautung, right? Of like throwing people out and replacing them with Nazi Party adherents until 1937.

Speaker 1 And even then, it retained a certain degree of independence.

Speaker 1 Part of that is that Hitler had a central banker, Gianmar Schacht, whom he put into the job in 1933, who is pretty unique in the crop of people being put in place in 1933, in that he'd had the job before.

Speaker 1 He had been the president of the Reisbank until 1930. And then after, after or while leaving office, he sort of tacked hard to the right.
He was sort of a liberal.

Speaker 1 He was a member of, I think, the DDP. Tacks hard to the right, starts sharing a stage with Hitler, goes all in.

Speaker 1 But he's a guy who sort of had been in that very same office before and is now returning to it, looking to serve the new rulers.

Speaker 1 That's something that you don't get in the Ministry of the Interior, the Ministry of Justice, et cetera, et cetera, where all these outsiders are coming in.

Speaker 1 So there is this greater continuity just by necessity the other thing that's important to talk about here is that what schacht and hitler agreed on basically was this connection that i mentioned between military policy and economic policy right the idea in hitler's second book that he never published is all about the diverging fortunes of capitalism in the uk and the us and germany right his idea was well the americans have this vast hinterland in which they can just unload all their industrial goods.

Speaker 1 This is going to be extremely powerful and it's going to make them unparalleled in economic dominance. Germany lacks that.
And after 1918, even more so.

Speaker 1 And very early on in the Weimar Republic, economic nationalists start trying to figure out, well, how can we get something like this?

Speaker 1 And you do get the people like Stresemann who go out of their way to say, like, well, we can do that in economic means.

Speaker 1 And again, if that sounds to you like the Federal Republic of Germany after 1945, like bingo, right?

Speaker 1 We use our currency, we use our just sheer number of exports and we use political tools to basically get people to buy our fucking dryers, right? Our cars, et cetera, et cetera.

Speaker 1 And then there were the nationalists like Schacht, like Hitler, who were like, no, we need, in fact,

Speaker 1 we need a market that we can control. We need people to buy our shit who we have political control over.
And in the case of Hitler, he didn't even think like, I want Poles to buy my stuff.

Speaker 1 He wanted German people to live there and sell stuff to them. Like the, like, he already had sort of an eliminatory bent, which economic nationalists of the Weimar Republic largely didn't.

Speaker 1 They were like, we would like control over them so that they can then buy our shit, right?

Speaker 1 I think that's important, that like they both agree that doing US-style capitalism really requires a kind of a hinterland. It requires colonies.
And those colonies shouldn't be overseas.

Speaker 1 They should be in Europe, right?

Speaker 1 And so the big question is not the various mechanisms you use for monetary policy, but the interlocking really between international finance and politics, and namely the question of rearmament, right?

Speaker 1 I didn't realize this, but apparently the first time the Weimar government started reaching for work creation programs after 1929, right, with tons of unemployment, it makes sense, wasn't actually to get unemployment down, but they did it in order to start stealth rearmament, right?

Speaker 2 Oh, wow. Yeah.

Speaker 1 Now, on a very minor scale, but a lot of this stuff is secret. And I asked Albrich Gütscher, like, wait, secret for what reason?

Speaker 1 Today we would think this is going to get a little bit into the weeds, but like, my question was,

Speaker 1 there's all this shadow financing, these shadow instruments that the Nazis create, mostly after 33.

Speaker 1 The situation after the hyperinflation really was that the German government did not have a very good credit line, right? Because it had allowed hyperinflation to happen.

Speaker 1 German companies were a different matter.

Speaker 1 And so normally, when you wanted to get something financed, you would use a financial instrument through private industry, but really it was owned by the government, right?

Speaker 1 So what the Nazis do after 1933 is create debt that isn't on the books, right? And it's always in the literature is always referred to as secret debt.

Speaker 1 And I asked Abrich Gütsch, like, well, sorry, but secret from what?

Speaker 1 Is this about creditors who are like, Jesus Christ, you're taking on all this extra debt? Like, you agreed not to do this? Or is it about the Western governments that are like, what's this money for?

Speaker 1 Are you building tanks? I don't want you to build tanks, right? And it seems to me the answer is a little bit of both. There was this idea that some of these,

Speaker 1 the famous instrument here is the Mipho Vexe. It's a debt bond, essentially, I think.
There is in the literature this claim that it's almost like a second currency, right?

Speaker 1 Like the Nazis would issue these in order not to have to devalue the Reismag by just pumping a bunch of money into the monetary supply. Ritscher's research says that's absolutely not true.

Speaker 1 Like these things were very hard to trade and they were super secret. So that doesn't make any sense.
But it still has the effect of being secret in two ways at once.

Speaker 1 It's secret because of what it's allowing the German government to do and because it hides the true extent of just how much of this debt was being taken on in order to allow for rearmament.

Speaker 1 So a couple of things that I think are worth talking about is The first thing we have to say about these myths about recovery is that the German economy was recovering in late 1932.

Speaker 1 A lot of this is seasonal. People know that from the United States, right? If the big measure is unemployment, that tends to go down in the summer and then up in the winter, I believe.

Speaker 1 So that was happening.

Speaker 1 But overall, it looked like Germany was out of the woods.

Speaker 1 And if you think about the way the vote for the Nazi Party actually declined in late 1932, historians sort of point to that and say, well, the economic argument seems to have lost some force.

Speaker 1 People felt their lives improving, possibly. And of course, by 1933, the influence of Hitler on the economy is still quite limited, right? Like these things take time.

Speaker 1 But the question is, is the recovery after 1933 real? And the answer seems to be, there are some discrepancies, but yes.

Speaker 1 But a lot of this is about optics, right? So we mentioned the question of the Audubon, right? The Nazis built a ton more Audubons than the Weimar Republic ever did.

Speaker 1 But according to a book by Dan Silverman, Hitler's Economy, 1933 to 1936,

Speaker 1 does kind of give you a really nice rundown of just how small those really were. I think it's something like, it's imagine the tens of thousands of people who work in these at the heyday, right?

Speaker 1 And with 6 million unemployed, like that's really not going to make that much of a dent. And in 1933, that number is more like...
10,000 or something like that.

Speaker 1 So it looks cool and Hitler has a lot of good photo ops with it, but these kinds of public works programs are unlikely to explain the recovery between 1933 and 1936.

Speaker 1 What you get instead is weird sort of symbolic stuff. So, October 1st, 1933, Germany celebrates its first soup Sunday, Eintopsonthag.

Speaker 1 Restaurants and households have to serve simple stews and donate the money they save in the process to a charitable organization that the Nazis had created, right?

Speaker 2 So, like, instead of making your Sunday roast

Speaker 2 make something a lot cheaper,

Speaker 2 and then you have a mandatory donation to a party apparatus. Yeah.

Speaker 2 Okay.

Speaker 1 Right. I can tell why you're laughing, right? Like it feels high on symbolism, right? It's super intrusive.

Speaker 1 But you're like, I'm not an economist, but is that going to really, is this going to really pull the cart out of the muck? I really don't think so, right?

Speaker 1 In practice, much of the Balihood sort of economic planning of the first year of Nazi rule was either a continuation of much older projects or attention-grabbing schemes like this with little real-life impact.

Speaker 1 The big work creation program, which had started, I believe in July, the Reinhardt program, was basically an extension of ideas and in some cases of the actual practices that the last governments of the Weimar Republic had developed and in some cases even implemented.

Speaker 1 So this is money allocated to like very basic work creation policies of the kinds you see, I think, at the very beginnings of the New Deal in the United States.

Speaker 2 Aaron Powell, so it just doesn't sound like they're that serious. I don't know.

Speaker 2 It sounds like they're kind of coasting on stuff that the last regime did, the Weimar, like Audubon public works projects. They're doing this like

Speaker 2 weird, marginal, cutesy shit, like, oh, make us soup. It doesn't sound like they're that invested from what you've said so far in like the economic development of Germany.

Speaker 1 Yeah,

Speaker 1 there's something to that. On the other hand.

Speaker 1 Hitler was pretty invested in the economy as an engine of national strength and German superiority, right? Like he didn't just want to lie about this. He's not a tinpot dictator in that sense, right?

Speaker 1 In the end, real tanks need to roll for him to be happy, meaning he can't just be like an heir to one who's like, oh, there's no such thing as inflation, right?

Speaker 1 Like this needs to be real dividends down the line. His unpublished second book is all about this.

Speaker 1 But there are a couple of reasons why the Nazis turned to these kinds of theatrics, and I've already alluded to a few of them.

Speaker 1 One is the real shit that was happening behind the scenes couldn't be discussed openly, right?

Speaker 1 And so basically you had to do soup sundae in order to sort of not have to talk about, like if people are like, what are you doing about the economy? You're like, oh, mumble, mumble, mumble, right?

Speaker 1 Because Hitler was in some ways caught in the same trap as his predecessors, right?

Speaker 1 Can't really borrow, foreign trade deficits, et cetera, et cetera.

Speaker 1 And he had added one of his own making, namely he wanted to rearm, which he couldn't do legally according to various agreements, right?

Speaker 1 So the solution had to be these kind of off-the-books shadow debts, like the MIFO bills.

Speaker 1 But you can't have a press release about that because the allies would be like, say, what?

Speaker 1 Oh, and your creditors, like your two least favored people in the world, the people who can reoccupy you and the people who hold your debt, right?

Speaker 1 And so basically, until there was a major move towards debt default, which the Nazis did eventually do, there really was nothing. that Hitler could sort of like point to there.

Speaker 1 Connected to this, the thing that would eventually goose employment past the recovery that had already started in late 1932, and which, as I said, was mirrored in other countries, was rearmament.

Speaker 1 But that was risky, right? The Jung Plan had bound Germany to don't devalue your currency, don't default, right? And Schacht was sort of curious, apparently, about default.

Speaker 1 He was a little default curious. But even the Nazi Party was like a little afraid of it, right?

Speaker 1 And while the Nazis did not make payments on Dawes and Jung bonds, so the bonds that kept Germany afloat in 1931, 32, 33, they paid interest on them.

Speaker 1 They were careful not to sort of opt out of that system bit by bit by bit. And so basically,

Speaker 1 that was the other thing. You couldn't communicate that to German audiences without saying two things.

Speaker 1 One is we're looking to rearm, and probably we're looking to go to war with the Western allies, right?

Speaker 1 And I think our letter writers and our diarists are unanimous in the fact that, like, this is a country with very recent memories of war. This would not have gone over super well, right?

Speaker 1 Like, you have to ease people into this.

Speaker 1 The third thing that I think makes for this kind of theatrical economic policy is that the Nazis were still trying to placate and to play to various constituencies and to keep them happy, right?

Speaker 1 They were still people they were nervous about or sort of interest groups they wanted to please.

Speaker 1 So on their face, measures like the Reinhardt program were big public works projects, like the ones that we tend to associate with the New Deal.

Speaker 1 But Adam Tooze in his book points out that they were actually super selective.

Speaker 1 Germany's unemployment problem was greatest in its industrial and urban centers, and yet Reinhardt funds seemed to mostly go to rural areas.

Speaker 1 Toos cites the example of East Prussia. Do you know where East Prussia is by any chance?

Speaker 2 No, gone to my head, I couldn't find it on a map.

Speaker 1 Yeah. I mean, it doesn't exist anymore.
So

Speaker 2 that's not your fault.

Speaker 1 That is an area that is today northern Poland and the Kaliningrad Oblast, with a tiny bit of Lithuania thrown in for good measure. A couple of things about that area.

Speaker 1 It's pretty underdeveloped, even in 1933.

Speaker 1 Not much heavy industry, highly rural. high unemployment and separated from the rest of Germany by the Polish corridor after the Versailles Treaty, right?

Speaker 2 Gotcha, okay.

Speaker 1 So this is a pretty agrarian area. And it is also not an area that the Nazis have to convince, which is very interesting, right? The landed elite there had swung pretty seriously towards the Nazis.

Speaker 1 They have been sort of like more monarchist conservatives. And then they're like, eh, fuck it, we'll do Hitler.

Speaker 1 And farmers, much more than industrialists, and I didn't realize this, had become sort of the base of the Nazis in parts of the transition to 1933.

Speaker 1 So like the farm community really had swung very seriously to the Nazis. In the election in March, where the Nazis garnered, I don't have the exact numbers, but something like just shy of 40%,

Speaker 1 the Nazis got 55% of the vote in East Prussia, right? Their best results in any part of Germany. So, it's really odd that they then go and try to make their big splash here.

Speaker 1 Part of this, Tuz points out, is that their Gauleiter Erich Koch, so the local Nazi grandee there, sort of pitches his province as being an easy lift for the Reinhardt program.

Speaker 1 This is what the Nazis call the battle for work, the Albeitschlacht, is quite winnable here in the sense that there were 130,000 unemployed people here, and I'm taking this from the wages of destruction, and they were able to basically eradicate unemployment within half a year.

Speaker 1 And, you know, they frame it as this like, you know, the heroic battle against unemployment, the cleansing of the German landscape from the blight of unemployment already has this like really creepy language all around it.

Speaker 1 At the same time,

Speaker 1 it's very interesting because you think about the kind of work that was happening.

Speaker 1 Tuz writes, the agricultural economy of East Prussia was ideally suited for fast-acting but primitive work creation measures.

Speaker 1 There was a lot of ditch digging, homestead restoration, later on, I think like rebuilding historic downtowns. People were just digging trenches, basically, right?

Speaker 1 Meaning like it was a lot simpler than like getting people back to work on a factory floor that had to produce something that had to be integrated into international markets, right?

Speaker 1 Where like tariffs or unfavorable exchange rates might make that impossible. Here, you're just like, well, Germany is a net importer of food.
You're always going to get rid of this food.

Speaker 1 Make some food, you guys, right? It's this very kind of showy and ideologically driven work creation.

Speaker 2 And also, like, from my like idiot non-economist's point of view, it seems like an underdeveloped area might be ripe for a lot of kind of like easy, like slow, low over-the-plate kind of economic development.

Speaker 2 It's like, well, you know, the major industrial centers in this region still all have dirt roads. So we're going to like pay some locals to pave the roads.

Speaker 2 And suddenly we have much more robust infrastructure and business can be ducted much more easily. Like that kind of thing seems easy, right?

Speaker 2 It seems easy to do a lot with fairly little in a place like that.

Speaker 2 Something I'm wondering is, was this thought of by

Speaker 2 like the Hitler regime as like a favor to their base.

Speaker 2 Like, we're going to reward these people for their support the way that like Donald Trump tries to tailor his like attacks on the welfare state, for instance, in a way that he clearly imagines will like only impact like democratic voters or will like invade democratic cities.

Speaker 2 Is this like trying to target his political enemies for retribution and his supporters for larges, or is it just kind of simpler than that?

Speaker 1 I mean, Tuz doesn't say, but my suspicion is there is an element of Trumpism in this in that

Speaker 1 they needed the easy propaganda get.

Speaker 1 And East Prussia was the easy propaganda get. They had economists telling them, look, you could probably eradicate this.
Let's imagine you instead try to do the opposite.

Speaker 1 And you say, we want to win over people who didn't vote for us. Let's go to Hamburg, let's say, right?

Speaker 1 Well, industrial unemployment is a lot harder to address in 1933. Again, it's like it's about world markets, about things that are beyond your control.

Speaker 1 And then the picture is likely going to be a lot more ambiguous. So why not show a bunch of happy farmers and their pigs and like restoring like beautiful old like German churches or some shit? Right.

Speaker 1 Right.

Speaker 2 It also has the kind of like return aesthetic, right? It's a you can get a lot of, I'm sure, good propaganda photos of healthy white families probably wearing leader hosen like doing

Speaker 1 that's an ugly stereotype.

Speaker 2 Well, I'm describing an AI image that like the Trump Department of Homeland Security can tweet out tomorrow, right? Yeah, yeah.

Speaker 2 But like those things are meant, they draw on databases full of Nazi propaganda, and they're meant to look like Nazi propaganda, but they also evoke this idea of like a noble and betrayed agrarian past to which we can return.

Speaker 2 I'm sure they really liked that shit.

Speaker 1 Yeah, and I mean, I think, you know. This is why I brought up the concept of folk economics, because like when we say propaganda, it's propaganda for whom.

Speaker 1 My suspicion, and again, I am just kind of guessing here. My suspicion is this isn't just propaganda for working people, right?

Speaker 1 Because if you're unemployed and you're like, oh, this farmer in a place I've never been to, like, is doing better, you might be like, well, great, I don't know, Ladi fucking da, right?

Speaker 1 But I'm guessing this is also appealing to the folk economics that prevails among conservative but non-Nazi elites, right?

Speaker 1 Like, or the healthy farmer with his, well, I don't think they would be wearing leaderhoes and that's very much a Bavarian thing, but like wearing traditional outfits.

Speaker 1 Like if you were a conservative who is not yet a convinced Nazi, like you're going to like that a lot more than a bunch of scary-looking proletarians with Polish last names in the Ruhr area going happily back to work, right?

Speaker 1 So, I do think that this is both about sort of appealing to the German people, that's how Goebbels will frame it, but it's also still appealing to very specific subsets, would be my guess.

Speaker 1 On October 1st, same day as soup day,

Speaker 1 the literal soup Nazis. Oh my God, that should be the title.

Speaker 1 How can we get to an hour of this without thinking of the soup Nazis?

Speaker 2 I mean, I don't want them to take away soup, right? I literally like it, especially this time of year. It is indeed very comforting and quite cheap to make just a bowl of like a lentil stew.
Yeah.

Speaker 2 So don't let the Nazis turn you off of soup is what I'm trying to say.

Speaker 1 Yeah, this is a pro-soup podcast, and we're not afraid to admit it.

Speaker 1 The same day, October 1st, the Nazis celebrated the Reich Thanksgiving Day, which was all about farmers, right?

Speaker 1 It's marked by a massive rally on a remote hillside near the town of Hamelin, right, where the Pied Piper is from. It was intended to keep farmers happy.

Speaker 1 And so you get this kind of like thing, on the one hand, there's a fixation on food rather than on living space or better pay, right?

Speaker 1 It's clearly owed to the Nazis' preoccupation with food independence, right? And health, national health.

Speaker 1 We are importing food, and that's unhealthy, that makes us dependent on other people, and we should be independent.

Speaker 1 We should have Leibensraum, we should have life space in the East and the West, blah, blah, blah, blah, blah, right? Like in order to thrive as a people, right?

Speaker 1 There is this kind of eugenicist edge to it. But on the other hand, I think it's supposed to be kind of a reminder of scarcity, right?

Speaker 1 Poster after poster, speaker after speaker at this Thanksgiving Day was not very thankful, but was reminding Germans of the fact that their country was allegedly surrounded by enemy neighbors who were withholding food from the Germans, right?

Speaker 1 Food became a way to get Germans to sort of think conspiratorially about other countries, which is a real kind of shift from even the most conservative governments of the Weimar Republic.

Speaker 1 This is something that Tuz talks about in his book.

Speaker 1 He says that basically someone like Schrisemann was an economic nationalist, but for him, that meant you hitched your wagon to other actors on the world stage against others, right?

Speaker 1 In this case, mostly the United States, against the Western allies, right? Against France and England. I forget how he puts this, but he sort of says,

Speaker 1 Hitler thinks about these things in deeply conspiratorial and kind of siege mentality terms, right? That's the big change.

Speaker 1 Not like, hey, we should throw our lot in with the English over the Americans or the Americans over the English. It's like, they're all in on it, right?

Speaker 1 And this is where you get the kind of like world Jewish conspiracy. Like Hitler believes that.

Speaker 1 And as Toos points out, like that puts constraints on the way you conduct your economic policy because like, they're all in on it. They're all in on it.
Right.

Speaker 2 And so anti-Semitism requires a kind of paranoia that can inhibit the pure rationality that I think like a market economist would aspire to, right?

Speaker 1 Yeah. And so I think also this fixation on farms and food is to create a full us versus them kind of folk economy.
It's supposed to sort of say, have you experienced hunger in the last three years?

Speaker 1 A lot of people had. It's like, well, you can blame everyone outside of our borders for that, right?

Speaker 1 Like as opposed to to like, you know, the evil communists, but not the nice Americans, or the evil Americans, not the nice Soviet communists or whatever. Like, no more stories like that.

Speaker 1 This really is about us versus them, about self-reliance and being dependent for your very sustenance, for your very livelihood, for your lifeblood as a people.

Speaker 1 on these shadowy, uncaring external forces who have forced Germany first into military surrender, then to political surrender, and now into economic servitude or whatever.

Speaker 1 The farm stuff is also, I think, being foregrounded because it really lends itself to a kind of conspiratorial folk economics.

Speaker 2 I think also a sense of being endangered, right? And being the victim of a conspiracy can also justify other kinds of violence and retribution, right? It's also, it's useful on a few fronts for him.

Speaker 1 Yeah. And so the other thing I wanted to point to is that like October is also month when Germany finally officially exits disarmament talks with the French and the English.

Speaker 1 They pretend that that's somehow the English delegation's fault. It's not.
It's long planned by the Nazis. And they exit the League of Nations.

Speaker 1 So they are using economics to sort of send the first signals that they are disentangling themselves from an international system partly set up to control German rearmament and signaling something that it takes Neville Chamberlain Chamberlain way too long to realize that like, you know, they are, they're looking for a rematch, right?

Speaker 1 At the same time, what I didn't know is that the Nazis are fairly nervous about both these steps. They sort of try and drag them out and then just kind of do it.

Speaker 1 Schacht is actually among the people who kind of pushes for this more than anyone else and says, like, I think we can do it, you guys.

Speaker 1 But like, the Nazis are keenly aware that it might just mean that the Polish army moves in or whatever, or that the French army moves in.

Speaker 1 And they're very lucky that it doesn't happen, that everyone's busy with their own shit in late 1933 but like they they think like are we pushing too far too fast in the event unfortunately they were not

Speaker 1 Now we've talked about the first of these three claims, these three myths I want to talk about, which is that Hitler came to power and instituted these huge public works programs, right?

Speaker 1 And as we've been pointing out, like, that's not true. These works programs are short-lived, they're small, they're very, very specific to specific areas.
They're theater more than anything else.

Speaker 1 But that gets us to the second point, which is the one where I'm drawing on Albrecht Ritschild's work, the idea that massive deficit spending is behind the Nazis' success in fixing the economy.

Speaker 1 This we can do a little bit shorter because the story here is more complicated too, which is that the massive deficit spending really comes later

Speaker 1 and it is never in the service of goosing the economy. It is in the service of rearmament, right?

Speaker 1 The moment the Nazis start with these things like the MEFO bills, they are there in order to finance secret rearmament throughout the German Reich.

Speaker 1 Do you want me to briefly explain how this thing worked?

Speaker 2 Yeah, please do, because you kind of breezed through this and I was a little like, wait a minute. Yeah.

Speaker 2 Tell me what that is.

Speaker 1 Yeah. So the MEFO bills were, I believe, first sort of floated in 1933, but really become a thing in 1934.
Some of this, I think, literally says, has to do with backdating.

Speaker 1 They had to use similar instruments and then just like folded them into this program is sort of my understanding. Anyway, the MEFO is simply

Speaker 1 the Metalugeschiff Forschungsgesellschaft. It's a...

Speaker 1 What would you call that?

Speaker 1 Like a, it's a Cayman Island corporation that happened to be incorporated on the premises I think of the finance ministry and didn't do anything but take on debt right and they would sell these bills they would issue these bills that you could sell to private borrowers but those private borrowers were large conglomerations I kept coming across the description in various places of these as a shadow currency and Richel is very emphatic that that's not what they were you couldn't take your mefo bill and sell it to someone else but you could discount it.

Speaker 1 That is to say, you could take it back to the central bank and get Reismark for it. In 1933, the MEFO as a share of all government borrowing in the German Reich was 10%,

Speaker 1 right? So 10% of the public borrowing was off the books, right? Could not be tracked, could not be openly acknowledged. I asked Richard whether that meant that the Allies were unaware.

Speaker 1 He said they couldn't have been unaware, but you couldn't prove it either, right? You can sort of look at the numbers and be like, this doesn't add up. Like, how are they doing this?

Speaker 1 Well, there's only a limited number of possibilities, but they couldn't have said, like, this is how this was done, likely, and please stop. So we go from 10% in 1933 to 102%

Speaker 1 in 1936. I understand that to mean that MIFO bills exceeded the totality of all government borrowing and exceeded the public sector borrowing by 278%.

Speaker 1 this becomes a huge bubble, basically, which will eventually bring down Schacht, I believe. Essentially, he thinks they have to deflate this thing somehow, and Hitler fires him.

Speaker 1 But that gives you a sense that when we're talking about these kind of instruments and this massive deficit spending, not only was it not used for public works, It also doesn't really start happening until 1934 and really starts getting going as rearmament heats up.

Speaker 1 Again, to me, as not an economist, it kind of makes sense, right? This is something we we saw with the Inflation Reduction Act.

Speaker 1 Restarting a scuppered factory is hard, especially with rearmament, right? Like a factory that the Allies told you 12 years ago you can't operate anymore takes even more time.

Speaker 1 You're like, well, this nothing fucking works.

Speaker 1 By the time you have the first tank roll off the line, it's even later than that, right? So the outlays in the beginning would have been kind of small and your options were kind of limited.

Speaker 1 The other reason, of course, why people in East Prussia were digging trenches was like digging trenches

Speaker 1 takes no starting capital and has very little overhead and takes no prep time, right? A lot of this stuff did take prep time.

Speaker 1 And so, you know, you do get this absolute garden hose of cash eventually, but not yet in 1933.

Speaker 1 And people wouldn't have been aware of it, except that, you know, Germany was producing tons of weapons until much, much later than that.

Speaker 1 One interesting thing that I learned from Tuz that I had never thought about is, if you remember our June episode about the Night of the Long Knives,

Speaker 1 Tuz seems to suggest that in a weird way, this garden hose of cash may have brought about the conflicts of June 1934, which is to say, as with all kinds of public money, different people want it.

Speaker 1 And the question in the Nazi party was like, okay, we're printing illegal money. We're going to just start throwing it around.
Who's going to get it? Right.

Speaker 1 Because that's how you can skip off the top. That's how you feel important, et cetera, et cetera, right? We talked about the conflict between the SA and the Wehrmacht, the army, and the Navy as well.

Speaker 1 Some of that was about like, oh, these are oaths, these are braggarts, these are drunkards, like we are a professional army and these are a bunch of Yahoos.

Speaker 1 But part of it was also that the SA was like, well, we want some of that cash. And the Navy was like, absolutely fucking lootly not, right?

Speaker 1 This is earmarked for some beautiful battlecruisers and I need you to get your grubby SA hands off of it.

Speaker 1 Part of why the coalition starts really kind of jostling and getting into trouble is because of all this cash sloshing around and everybody wants some.

Speaker 1 But yeah, so that's, I think, all we have to say about this, that like, it's not that Hitler sort of starts massive deficit spending on social programs that his predecessors wouldn't.

Speaker 1 What happens is that he eventually, meaning in 1934 and onwards, starts releasing funds for rearmament.

Speaker 1 And Tuz has a couple of cases where, you know, there are these Nazi guys kind of running areas of Germany that did not vote for the Nazis, especially like industrial centers, and are like, we can't get any money from you guys.

Speaker 1 Like, people are suffering. What's going on? In early 1934, and then in late 1934, they're quiet.
Why?

Speaker 1 Not because the Nazis suddenly decided to care for the workers, but because a munitions factory had moved in, right?

Speaker 1 And so you get this kind of weird thing where, like, what quiets this down, what makes this a more equitable kind of system is once all of Germany becomes a munitions factory, basically.

Speaker 1 So the recovery is identical

Speaker 1 with armament and with revanchist impulses.

Speaker 1 The thing that no one could explain to me for sure, but I think there's a suggestion in a lot of the literature on this in economic history, is that when someone takes on debt, you're always wondering, like, well, how would you service that debt eventually?

Speaker 1 Right. And like, if you'd see those numbers, it's eye-popping, right? Like,

Speaker 1 are you just going to default? But in this case, you're not defaulting on like bankers in Chicago. You're defaulting.
on your own corporations that you rely on in order to manufacture your arms.

Speaker 1 what good does this do? And I think the suggestion, this is where Ali might have a point.

Speaker 1 The suggestion is, well, not if the arms are then used to conquer a bunch of people and you can take their central bank holdings and all that shit and bring it to Berlin.

Speaker 1 That makes these debts eminently serviceable.

Speaker 2 Yeah, that's the thing about this whole episode is that you're painting a picture of how the economic conditions and choices of the early Hitler regime made a war inevitable.

Speaker 1 Yeah, or I would go further and say, it kind kind of sounds to me like we're premised on the fact that there would be a war, at least a limited war, right? In July 1933, and certainly in 34,

Speaker 1 it does appear that the way this weird house of cards works is if you're planning to be in Paris before long, right? Like you're not planning on an independent France, right?

Speaker 1 So it's worth pointing out.

Speaker 1 And like Janmar Schacht, who will be at Nuremberg and will, I think, be cleared of most charges, like very clearly must have seen that the way out from under this mountain of debt is to wage a second world war.

Speaker 1 So it's important to sort of mention that like it's not that they kind of paint themselves into a corner.

Speaker 1 My impression is that this instrument only makes sense if you know that you're planning to go to war six months after taking office. So that's the

Speaker 1 second myth. So there is massive deficit spending, but later and only to rearm, really.

Speaker 1 And then the third, this is my trying to blunder into some economic history myself, this idea that Hitler came to power and was able to mitigate the unemployment crisis, right?

Speaker 1 So I think some of this is true.

Speaker 1 As a measure, real unemployment in Germany goes from 6 million to 4 million by the end of 33 and then is essentially, at least by official reckonings, eradicated by 1936. Now,

Speaker 1 you and I, having embarked on this journey through 1933, might have a rejoinder to this.

Speaker 2 Right. I mean, something I'm thinking of is over the course of our time together, we've seen a lot of people get kicked out of their jobs, right? Right.
And not be able to

Speaker 2 go back on the job market looking for work and then be counted as the unemployed.

Speaker 2 What he's doing, at least in part, is excluding large swaths of his population from the freedom to participate in public life as like wage-earning persons, right?

Speaker 2 And then when the nice Aryan men get to take those jobs, they are technically out of the unemployment line. And technically your unemployment numbers go down.

Speaker 2 But what you've actually done is just hoisted all the economic amisuration onto like a racially identified group of people.

Speaker 1 Yeah, that was exactly my cognitive dissonance in researching this, right? Like the Nazis keep talking about we've gotten unemployment under control.

Speaker 1 And as you say, we've spent this entire series chronicling people very manifestly getting to be unemployed.

Speaker 1 Now, to be fair, the great drivers of German unemployment in 1933 were neither the peasants nor

Speaker 1 lawyers, professors, et cetera, et cetera. It was heavy industry, and to some extent, I think transportation, right? Meaning, who knows how many people lost their jobs in those fields.

Speaker 1 So maybe we're looking at a kind of selective picture. On the other hand, if you think about the fact that there were half a million German Jews in 1933,

Speaker 1 you can sort of see like it's not enough enough to explain the decline, but like, as you say, pushing more and more people out of the workforce must have had an impact. Jewish people is one thing.

Speaker 1 Social Democrats.

Speaker 2 Probably a lot of social democrats. That was the dominant party before the Nazis came to power.

Speaker 2 I'm sure a non-trivial number of communists, you know, a lot of these people are just not employable and basically have to flee.

Speaker 1 Exactly.

Speaker 1 And so if you think about that, if you think about people leaving the country, people not being able, as you say, to fully participate in civic life, including, I think, not being able to really apply for unemployment benefits.

Speaker 1 Like, there is a lot of this. But now we get to something even more interesting, which is the gender part of this.

Speaker 1 There is also another group that we have talked about before on this podcast, I'm told, that drops out of the labor force in large-ish numbers in 1933, and that is women.

Speaker 2 I mean, this is something that

Speaker 2 a lot of people are trying to do globally at this time, but is it that married women are prohibited from working and sort of like forced into dependence on their husbands?

Speaker 1 Not quite. It's not prohibited.
This is the rare place where the Reinhardt program puts real money into its carrots. There are what's called Irstanstalin, so they're essentially marriage subsidies.

Speaker 1 The idea was that a newlywed couple could apply for a thousand marks loan at extremely favorable rates. I think it was, you had to pay 1% interest every month, which is really near nothing.

Speaker 1 But the woman had to commit to dropping out of the workforce.

Speaker 2 So it's not even like a, it's a loan. You do have to pay back that principal, even if the interest rate is low.
Yeah.

Speaker 2 And how, how does this 1,000 Reichmark loan, how does that compare to like a lower middle class salary? Because I'm like wondering how enticing this is.

Speaker 2 Like right now, one of the critiques that kind of annoys me a little bit, because I think it misses the forest for the trees of our contemporary push in America to get women out of the workforce is this thing you'll hear from people who esteem themselves on the left to be like, well, of course I want to be a housewife, but I can't afford it.

Speaker 2 Right. You know, to like concede that this is aspirational for women to be

Speaker 2 socially like cloistered dependents of men in a state of permanent childhood in the domestic sphere.

Speaker 2 But then, like, instead of contesting the desirability of like women's segregation out of public life, they point to it as an unreachable aim, right?

Speaker 2 And I'm guessing that if this Nazi program was more effective as a subsidy in achieving its goal of driving women out of the workforce and making paid work the like sole space of Aryan men, I'm guessing it must have been a little more comparatively generous than things like what we get now, like, you know, paid family leave or like even proposals for universal basic income, which are aimed at this outcome, right?

Speaker 2 It's gotta, it's gotta be a little better.

Speaker 1 Yeah, I mean, counterpoint, this is a dictatorship, right? Like, so who knows, right?

Speaker 1 Like, you're thinking about a more or less free market economic system where people can weigh several options, right? This combined with the propaganda and with hostility to women in the workplace.

Speaker 1 Like, I don't think we're looking at like, ooh, this is a great way to make money. Let's do it, honey.
And more like, fuck it, works a nightmare anyway.

Speaker 1 They keep telling me I'm a bad mom for like working anyway. Might as well take this goddamn money for it, right? Like, so I I think there's a chance of that.

Speaker 1 I mean, I could tell you the numbers on it. About 800,000 of these loans were paid out before the program was shuttered, I think in 1937 or 38.

Speaker 1 And I think the estimate is that about half a million people dropped out of the labor force because of it. I'm guessing that some of this means that they like dropped out of an informal labor force.

Speaker 1 That must be the difference. But yeah, so again, not dispositive, right? We're trying to get from 6 million to zero, but you're starting to see how this stuff adds up, right?

Speaker 1 So my proposal or my suspicion on this third myth is that, like, yes, there is a great reduction in the number of unemployed people in Germany, but above all, there is a gendered and racialized narrowing of who even counts as a potential unemployed person, right?

Speaker 1 People just sort of disappear as labor seekers at all, as people whose role in the economy gets reduced to something else, whether it is

Speaker 1 something that the Ministry of Finance can slowly bleed dry, which is true for the Jewish Germans we've met, or

Speaker 1 Susanna, homemaker, mother to Aryan children and future cannon fodder in the case of working women, right? So I think that that must be part of the story, that like in some way you get two things.

Speaker 1 You get a government that uses its rearmament to really drive down unemployment quite deliberately, but also a government that seeks to restrict who counts, right?

Speaker 1 Who is really a participant in the economy that everyone cares so much about. And so this again is a kind of, I think, a form of folk economics, right?

Speaker 1 Like the Nazis really effectively use economics to telegraph hierarchies of worth, of value, and to tell stories about the world that are not what my friends in the econ department would describe, but that really are about heroes and villains, about conspiracies and about these kind of zero-sum games, about the virtue of women and the strength of men, about

Speaker 1 blood and soil, et cetera, et cetera, right? So, like, there is even within these measures where compared to other fields of Nazi policymaking, they're comparatively rational, right?

Speaker 1 Economic historian can look at that and be like, oh, that's why they did it this way. Like we wouldn't do it this way, but like we can sort of see how they got there.

Speaker 1 Even there, it's all in the service of this truly demented hierarchy and this demented view of the world. And what's scary about it is I think it makes economics a form of propaganda, right?

Speaker 1 It becomes a way for people to start living those hierarchies and those realities. And if the Goetz Ali theory about Hitler's beneficiaries has purchased, it's because of that.

Speaker 1 It's that people in 33 and 34 didn't yet see a whole lot of benefit from this government, but they started to learn its categories of winners and losers.

Speaker 1 And they were starting to sort of think about how they could maximize their options and their potential earnings within such a system.

Speaker 1 And that some of the racialized plunder you see after 36, 37, and especially after 1939, has to do with the way that they learned and internalized those rules and hierarchies of the Nazi state.

Speaker 2 Thank you so much for taking me on this journey, Adrian.

Speaker 1 Thank you for going on it with me. And I really hope I'm not going to listen to this tape with Mark tomorrow and be like, oh yeah, I went crazy this time.

Speaker 2 I love it when you go crazy. That's what makes In Bed with the Right special.
It's what gives us the sauce.

Speaker 1 Yeah, our sauce is the Pepe Silvia board.

Speaker 2 Thank you all so much for listening. I've had a great time here on your favorite podcast, Inbed with the Right, and we'll see you next time.

Speaker 1 Embed with the Right is made possible by hundreds of listeners who support us via patreon.com. Our episodes are produced and edited by Mark Yoshizumi and Katie Lau.
Our title music is by Katie Lau.