In discussing economic recovery the historian should ask not only why it happened, but also what was the recovery for? In most cases the answer is economic – higher profits, sustained economic growth, higher living standards. In the case of the German recovery in the 1930s the answer was German imperialism and war. Historians disagree about what kind of war it was supposed to be, or the extent to which the economy was actually prepared for war, but there is no disagreement that the German economy was being prepared for some degree of military expansion.

What primarily concerns us here is not the course of diplomacy or German strategy but the effect of war preparation on economic growth. To understand this impact it is necessary to divide the period into two parts. From 1932 to 1936 the priority of the government was to achieve recovery through a combination of demand and investment policies. Rearmament was only a small part of the strategy. From 1936 to 1939, that is during the period of full employment, the priority switched to war preparation. The change in economic strategy was signalled by the second Four Year Plan set up in October 1936, which gave Göring responsibility for reorientating the economy for war and achieving self-sufficiency in essential war materials – oil, rubber and steel. During the second period it became necessary for the government to achieve control over ail investment and trade to ensure that the economy moved in the directions necessary for war.