The lacunae in my old school history books

[Magda Hassan]

The Welfare State is an invention of capitalism not socialism. Its main creator was Otto von Bismarck a reactionary Prussian Junker. It was done primarily to stop German emigration to the US where wages were higher but there was no welfare. If too many workers emigrated they ones who remained would be able to ask for and get higher wages and conditions which would means less profit and power for the owners of capital. Good grief, they may even bypass the bosses and just keep the factories they built and run them themselves. The socialist movement was gaining big ground in Europe of that time. Another reason it was done by Bismarck was because over the recent years there had been large numbers of deaths and displacements due to the Franco Prussian wars. The people who had until very recently been serfs in the many German states had to buy their own 'freedom'. They were still wanted by Empire as cannon fodder for the military but there was a reluctance to participate because the war widows and orphans and maimed were left to starve or resort to prostitution and it was not a good look for the rulers whose position was looking very tenuous. So a few crumbs were thrown the workers way in the form of pensions to keep them quiet.

As for the hyperinflation in Germany one reason was because Germany had lost most of their previous markets and these had been taken over by the French and British and Americans. It had also lost 13% of its previous territory. Less taxes collected. Germany went on a buying spreee of foreign currencies to pay for reparations but this just further devalued the Mark. Therefore more Marks were needed to be printed to pay for more foreign currency to pay the reparations and more and more. London demanded the reparations could only be in hard currency Germany began to print more and more money which got more and more devalued. Eventually Germany defaulted on its reparations. France and Belgium invaded and occupied the Ruhr which was where most of the German industry was. More loss of taxes and less products for markets. The reparations were paid in goods, coal, steel etc to the value of what was taken by the French and Belgians. There were restrictions by the allies on what could be imported. There was only a domestic market and human needs were not on the agenda and that creates a downward cycle as we see in todays austerity policies. Hyperinflation was brought under control temporarily or appeared to by the Dawes Plan and the Young Plan. This involved restructuring and reducing the reparations and borrowing money from the US investment banks. The Wall St crash came and also brought the Depression to the capitalist economies and Germany could not pay and then Hitler repudiated the loans. Prior to Hitler it was austerity all around as they had to pay war reparation from the 1st WW. Germany has only just in the last couple of years paid off for the First WW. Once a state moves to a war footing all manpower and horsepower is at its disposal. They had confiscated all the property, money and assets of the Jewish population with out compensation and did so in all the areas they invaded. It is a command economy. No unpredictable markets. No pesky unions. No wage increases. Indeed there was huge amount of slave labour and plenty more where they came from if they died. Government contracts. Guaranteed profit. Once Nazi-Germany started expanding (and remember in the early days in Austria and Alsace-Lorraine there was no military resisitance or foreign intervention against it. Had there been Germany would have been forced to retreat.) all the new territories also opened up new sources for markets and were a source of raw materials. Life was pretty good if you were an Aryan German in the early days. Its not hard to have a booming economy using free labour, free assets and raw materials and always expanding into Lebensraum.