Robert J. Gordon Reviews the History of World War II

Hoisted from Comments: Robert J. Gordon:

Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal: I am currently writing a book review of the impressive Tooze book "Wages of Destruction". Contra Brad's description, this is not military history but rather economic history. My initial criterion to assess the value of the book is to ask "what is new" as compared to the Abelshauser chapter in the Mark Harrison edited (1998) volume on the Economics of World War II.

I learned two big new ideas from the Tooze book as contrasted to the huge existing literature on Nazi society and economy 1933-45. First, the push to rearmament 1933-39 was consistently forced to face a severe foreign exchange constraint. An oddity of the Nazi economy was its refusal to devalue its currency. Instead, it placed extreme constraints on imports of consumer goods. This was in addition to what everyone already knew, that the Nazi economy held down wages in order to boost profits and stimulate production and hiring.

The second big new idea in the Tooze book, which maybe everyone already knew about but has gotten lost in the focus on the Holocaust, was General Plan Ost. This was a mind-boggling plan to deport (to some unknown destination, mainly death) most of the inhabitants of non-Jewish Poland, Belorussia, and the Ukraine in order to provide "lebensraum" for German settlers. Tooze documents plans to deport as many as 40 million inhabitants. Fortunately, the reverses suffered by the German army starting with the Moscow campaign in Nov-Dec 41 postponed the General Plan Ost. According to Tooze, they tried it out on a part of Poland, and the inhabitants ran away into the forests rather than being subjected to deportation.

Brad talked about his top three WWII military histories of the last half-decade. One of the best new books is Ian Kershaw's (2007) "Fateful Choices" about strategic choices in the major capitals (London, Berlin, Moscow, Tokyo, Washington) in 1940 and 1941. This is deep and wonderful writing about the big issues of WWII -- why didn't the British negotiate with Hitler, why did Hitler decide so early (July 1940) to invade Russia, what was Roosevelt thinking in 1940-41, and the biggest puzzle of all, why did the Japanese decide to attack Pearl Harbor. A related book on strategic planning, but mainly about the U.S., is Michael Beschloss (2002) "The Conquerors" about FDR and Truman. This book's major figure is Morgenthau, and many will be interested in M's efforts to get FDR to take the ongoing holocaust seriously.

Comments

[Frank]

I think Gordon or Tooze may be incorrect on one aspect of the Third Reich economy, in terms of its monetary policy. If I recall correctly, the Third Reich did devalue its currency, via leaving the gold standard.

Peter Temin, in his study of the Great Depression, noted that the Third Reich was the first country to recover from the depression, due to its departure from the Gold Standard. Britain followed shortly thereafter, with the US following suit a few years later. France never left the Gold Standard, resulting in it never really recovering from the Depression.

Brad, or anyone else, please correct me if I am wrong?

[The New York City Math Teacher]

And the foreign exchange controls were not inaugurated by the Nazis - they date from the Bruening chancellery, and were put in place right after the spectacular failures of the Dresner and the Danat banks in the summer of 1931. But oh what a useful tool they were.

[The New York City High School Math Teacher]

There's also Avraham Barkai's excellent book _Nazi Economics_. And, of course Norman Rich's inimitably clear "Hitler's War Aims."

[Robert J. Gordon]

About devaluation, Tooze writes (p. 76) "In 1933 Hitler and Schacht had ruled out the most obvious solution to the problem, a devaluation. In Hitler's terms, a devaluation was tantamount to inflation." He goes on to say that the main issue was not the implication of a (assumed 40%) devaluation on the cost of food for the working class, but the sharp jump in the Reichsmark value of Germany's foreign indebtedness. Tooze doesn't make the obvious comment that they were eventually going to repudiate the foreign debt, so why let it constrain them regarding devaluation?

Then (Tooze, p. 223) on 9/26/36 France, Switz, NL, CZ, and IT all devalued, and Schacht went running to Hitler to get permission to join these countries but was turned down.

As a side comment, by 1938 Germany had essentially "zero" unemployment. Compare that to the US which had slipped back into the unbelievably severe 1938 recession when US gross private domestic investment decline (from 1937 to 1938) by 41 percent in a single year (current BEA data in 2000 dollars, natural log change).

Hitler and Schacht invented Keynesian economics before Keynes wrote the General Theory, and they added the extra twist that they held down wages, thus stimulating employment, whereas the FDR New Deal raised wages thus holding down employment.

[bakho]

I did not think the Japanese attack on Pearl Harbor was contentious. The Japanese went to war for oil. The Dutch East Indies was the target. Once captured, they needed to protect their supply lines. From a strategic military POV, it was necessary to remove the US presence in the Philippines and elsewhere along the shipping lanes.

In 1941, the Philippines had American long range bombers that were a threat to bomb the Japanese homeland. The US had begun a program to rapidly build the air power stationed in the Philippines and was about 2 years away from having a formidible presence.

Once Japan made the decision to take oil by force and break the embargo, it was only a matter of time before the Americans came in on the side of the Dutch and British. Japan needed to eliminate the threat from the Philippines on its flank.

Japanese strategy was based on surprise attacks to limit threats to their objectives. Since the US fleet was stationed at Pearl, the Japanese attacked the fleet to prevent the US from stopping their Philippines operations. The day after Japan attacked Pearl, they attacked Manila and destroyed the American bombers stationed there. General MacArthur failed to either use his bombers to retaliate against Japan or move them beyond their reach. The US failure in the Philippines was far worse than the surprise attack on Pearl. The US intelligence thought the initial attack would be against the Philippines, not Pearl. This is why Manila received all the warnings and warning Pearl was an afterthought. The attack on Pearl was a offshoot of the main objective of capturing Manila.

[bakho]

If you want to know more about the Japanese thinking, you should read Admiral Layton's book. He was the intelligence officer for Kimmel and later Nimitz and spent time with Yamamoto in Japan before the war.