German economic collapse in 1944-45

[Guaporense]

According to official statistics compiled by the USSBS, German industrial production expanded continuously up to the first half of 1944. After that point there was a sharp collapse in general industrial production.

The question is, why there was such general collapse? Some people might point out to strategic bombing but it did not start in the second half of 1944, in fact the monthly tonnage dropped over Germany in the 1st half of 1944 was already about 80,000 short tons, while in the first 4 months of 1945, it was 110,000 short tons. By 1945 they were dropping bombs over the craters of bombs dropped way earlier. Anyway, if the monthly rate of 80,000 tons of bombs didn't actually lower German industrial production (perhaps decreasing the speed in which it increased) then a monthly dropping of 110,000 tons of bombs cannot explain a general industrial collapse, when output of steel collapsed from 2.7 million tons in march 44 to .6 million tons in February 1945.

While territorial loss also helps to explain why it collapsed since the Grossraum was effectively an integrated economic sphere by early 1944 and that was perhaps the main reason why the continental European economy did not collapse as hard in WW2 compared to WW1:



So, when the Allies started taking out parts of the Grossraum the whole economic structure began to unravel, including it's German core.

Another reason, that was suggested by Harrison in 1988, was that after the defeat in Bagration, the German economy became over-mobilized to an unsustainable level which lead to a general economic collapse. Similar to the collapse of Austria-Hungary in WW1, also the product of excessive mobilization of manpower. However I am unconvinced by this proposition because the level of mobilization did not increase by mid 1944 and the industrial labor force, while it decreased a little bit, did not collapse. So the causes of collapse were perhaps distinct from Austria-Hungary in WW1.

The writers of the USSBS themselves also admitted that they don't know how explain why the general industrial collapse happened.

But, reflecting on a point made by Albrecht Ritsch regarding Germany's war effort in WW1, I think I have a good solution to the riddle: German industrial production, after increasing almost continuously up to mid 1944, collapsed afterwards, that was by choice. It's essentially the same reason why massive numbers of soldiers surrendered to the WAllies after the Normandy breakout: the war was lost, there was no point in making an effort because it was futile. So the German labor force also perceived, even if they were not entirely conscious of it, from the news from the collapsing front-lines combined with the fact that strategic bombing showed to the population that their regime failed to protect their heads, that their continued effort was futile and therefore the whole industrial structure began to unravel: "why work hard if there is no point, since victory is no longer feasible?", therefore, they choose to reduce effort (to the degree in which they were not punished for doing so), which reduced the supply of ammunition for the armed forces and hence lead to the faster collapse of the frontlines in 1945. Yes, by January 1945 the Wehrmacht lacked the ammunition stocks (worth less than 2 months of supply) to continue to operate as an effective fighting force, their defeats after January 1945 were perhaps more of a consequence of their absolute lack of supplies to maintain operations rather than of the martial merits of the advancing enemies.

[Stiltzkin]

I thought the Grossraum was not effectively integrated, thats what you stated in your previous posts.

there was no point in making an effort because it was futile

Is that the reason why German factories were sometimes captured by the Allies while workers were still producing equipment, when American soldiers busted in (such as the example of Stg44s which were all in the warehouses, nobody could wield or distribute them anymore)?

[Richard Anderson]

I thought the Grossraum was not effectively integrated, thats what you stated in your previous posts.

there was no point in making an effort because it was futile

Is that the reason why German factories were sometimes captured by the Allies while workers were still producing equipment, when American soldiers busted in (such as the example of Stg44s which were all in the warehouses, nobody could wield or distribute them anymore)?

Collapse of the transportation system and fuel industry of course had nothing to do with anything.

[Exlurker]

Collapse of the transportation system and fuel industry of course had nothing to do with anything.

This subject is dealt with in depth using primary sources from the period.
See A.C. Mierzejewski: "The Collapse of the German War Economy 1944-45: Allied Air Power and the German National Railway"; Chapel Hill.

The author makes a rather strong case that had this effort been applied in a focused manner starting from the earliest point possible, this same effect may have been achievable far sooner than per the historical. Regardless, the numbers are all there and they show exactly how "the wheels stopped turning" in the historical case. He explains how the German economy functioned under Speer. He also exposes the bureaucratic infighting behind the scenes on the Allied side (regarding bombing strategies) and this is very interesting, in and of itself.
Well worth reading IMO.

[Hop]

According to official statistics compiled by the USSBS, German industrial production expanded continuously up to the first half of 1944. After that point there was a sharp collapse in general industrial production.

The question is, why there was such general collapse? Some people might point out to strategic bombing but it did not start in the second half of 1944, in fact the monthly tonnage dropped over Germany in the 1st half of 1944 was already about 80,000 short tons, while in the first 4 months of 1945, it was 110,000 short tons. By 1945 they were dropping bombs over the craters of bombs dropped way earlier. Anyway, if the monthly rate of 80,000 tons of bombs didn't actually lower German industrial production (perhaps decreasing the speed in which it increased) then a monthly dropping of 110,000 tons of bombs cannot explain a general industrial collapse, when output of steel collapsed from 2.7 million tons in march 44 to .6 million tons in February 1945.

I don't think your figures for bomb tonnage on Germany are correct.

First, the tonnage dropped by Bomber Command, the 8th and 9th Airforces increased greatly in the second half of 1944. In long tons bombs dropped in 1944:

Jan 30,000
Feb 30,000
Mar 46,000
Apr 59,000
May 71,000
Jun 110,000
Jul 100,000
Aug 110,000
Sep 90,000
Oct 100,000
Nov 90,000
Dec 88,000

Second, much of the tonnage dropped in the first half of the year was on France, in support of the invasion, in attacks on V-1 launch sites etc. From Arthur Harris, Despatch on War Operations:

From April, 1944, for nearly half a year, the German home industrial centres experienced
a virtual respite from bombing. In the few intervals between demands for assistance to
the armies, or for the attack of flying-bomb targets, rail centres, oil plants, French
aircraft factories, U-boat bases, etc, or when weather prevented operations over Western
Europe, I carried out attacks on targets in Germany in accordance with the current
directif. During the period May-September 1944, however, other committments absorbed over
85% of Bomber Command's effort. Indeed, for a period of two months, which included D Day,
it proved impossible to attack any German city in strength.
162. As a result, determined efforts by the Nazi leaders to revive vital war production
by patching up bombed factories and providing emergency living conditions for thousands
of homeless workers made much headway during the spring and summer. Whilst the
German armies were reeling back across France and Belgium, their heavy losses of war
material were partly offset by a relative increase in the supply of new equipment coming
from reorganized industry at home. This period was one of critical importance as new
types of weapons were coming into production.
163. By the latter half of September military demands on my effort, though still
considerable, were less than they had been; and the flying-bomb sites had been occupied.
It became possible therefore, for me to resume the campaign against German industrial
cities. On 25th September, 1944, the return of Bomber Command to its proper strategic
role was accompanied by the re-transfer of operational control from the Supreme Allied
Commander to the Chief of the Air Staff.
164. During the next seven months a tremendous effort, amounting to 153 000 tons of H.E.
and incendiary bombs, was directed against the enemy's industrial cities. October
was a month of record achievement in this respect as the bomb load dropped on industrial
cities (42,246 tons) was not only higher than in any other month of the War, but also more
than twice the pre-invasion record.

[Knouterer]

Apart from the bombing, the German war industry was slowly being throttled by a combination of factors. For example, essential special ores like tungsten (needed for machine tools) were imported from Spain and Portugal and no longer got through from the middle of 1944. The essential oil supply from Romania faltered and then stopped. Similarly, blockade runners from the Far East with small amounts of essential supplies (rubber among other things) no longer could reach German-held ports.

I don't think there is any real evidence that Germans worked any less hard in the second half of 1944.

[Guaporense]

Apart from the bombing, the German war industry was slowly being throttled by a combination of factors. For example, essential special ores like tungsten (needed for machine tools) were imported from Spain and Portugal and no longer got through from the middle of 1944. The essential oil supply from Romania faltered and then stopped. Similarly, blockade runners from the Far East with small amounts of essential supplies (rubber among other things) no longer could reach German-held ports.

That surely makes more sense than bombing.



Industrial production only started to decline well after bombing when the supply of raw materials collapsed.

Overy (Bombing-War-Europe-1939-1945 (2013)) gives estimates that bombing decreased British industrial production by 3% in 1940-41 and German industrial production 5% and 11% in 1943 and 44, respectively.

I don't think there is any real evidence that Germans worked any less hard in the second half of 1944.

There is no easy way to measure that. Morale certainly collapsed as surrenders surged at the front.

[Exlurker]

Apart from the bombing, the German war industry was slowly being throttled by a combination of factors. For example, essential special ores like tungsten (needed for machine tools) were imported from Spain and Portugal and no longer got through from the middle of 1944. The essential oil supply from Romania faltered and then stopped. Similarly, blockade runners from the Far East with small amounts of essential supplies (rubber among other things) no longer could reach German-held ports.

That surely makes more sense than bombing.



Industrial production only started to decline well after bombing when the supply of raw materials collapsed.

Overy (Bombing-War-Europe-1939-1945 (2013)) gives estimates that bombing decreased British industrial production by 3% in 1940-41 and German industrial production 5% and 11% in 1943 and 44, respectively.

Production is ONE thing. What you are not addressing is the ability to get the produced goods to the end user!

This didn't even happen due to any explicit strategy on the part of the "bomber barons". What occurred was two fold:
(1)
The USAAF equipped a percentage of their daylight "precision" bombing force with "H2X" for use in less than CAVOK conditions and designated "Marshaling Yards" as the default target, when marginal WX made accurate visual bombing unrealistic. In such cases, they dropped on a "target" marked by the radar equipped aircraft. As you should realize (if you've done any reading on the subject) marginal WX is pretty much the norm with regards to visual bombing over Central Europe from about mid-October thru to the new year.
As a result, German city centers (as well as actual DRB facilities like Hamm, Kassel, Koln etc.) were pummeled mercilessly during this period.
(2)
With the advent of air superiority over Germany proper and the service introduction of Barnes Wallace's devices, the RAF was able to finally inflict complete interdiction upon inland waterway traffic at critical points on the German canal system. This equals no coal moving to end users anywhere along traditional paths of distribution by early January. They also inflicted serious damage on the DRB at critical junctures (notably viaducts and tunnels) with these devices, but this came later, once WX conditions allowed for accurate visual delivery.

All of this equals mountains of completed sub-assemblies piling up at the place of manufacture, with no means to move them to the primary contractor for assembly. This means Millions of tons of Ruhr coal piling up at the pitheads with no users (except those who were in most cases intrinsically linked to these same producers). This equals Millions of tons of finished steel piling up on the loading docks with no means to ship them to the end-users. Speer's "miracle" was the result of draconian measures put in place to utilize the millions of tons of production materials that had been "squirreled away" by companies under the "cost-plus production system" which had been the "norm" under Todt. Once this "buffer" was used and the transport system was decimated, the writing was on the wall. This equals allocation of transport by an increasingly chaotic system of "decree's", with a huge (behind the scenes) battle between the "Speer" faction and the minions of Himmler's increasingly prevalent SS. No coal moved south on the Rhine from mid-December until the end of the war. Once the Sarr fields were lost, it was chaos in Southern Germany. When the RAF destroyed the DRB facilities in Pforzheim in February 1945, it essentially closed rail traffic, thus completing the isolation of an area encompassing about 1/4 of the total land mass still held by Germany's fighting forces.
This is NOT insignificant to the end game my friend.
The fact that you choose to post otherwise indicates your complete lack of understanding of the historical reality.
I'm sorry for being so blunt but you really should investigate this further as you are not contributing anything with your post.
Upthread, I have provided a source that you really should look into so you can further your understanding on the subject.
IOW? You don't really get it and (no disrespect to RJO) the numbers you give have little relevance to the extant situation.

Read the title of Mierzjewski's book again: "THE COLLAPSE OF THE GERMAN WAR ECONOMY 1944-45"

How much clearer could it be? 1/4 of the pages within are footnoted references to source documents from the DRB records and it is a very serious read.
Just because I don't have a million posts here means nothing in this day and age my friend. I post selectively. This is a subject that I have a deep understanding of.

[Guaporense]

Yes, because disagreement means "complete lack of understanding". You have to learn that not everybody shares the same opinion as you have on the subjects that you are interested in. And there is no reason for you do insult people who hold a different opinion from your opinion and try to impose it by force. Learn some civility.

By February 1945 it was far obvious that there were other things happening besides strategic bombing. You cannot claim it caused the collapse of the economy just because it was being bombed: it was bombed before and industrial production was increasing, it started decreasing in the 2nd half of 1944 when all the fronts were collapsing and the whole economic system was collapsing. Some people say: "oh, but that happened because they shifted their targets from factories to transportation centers." Well, correlation does not imply in causation and anecdotal examples don't prove a proposition: there were lots of other things happening after mid 1944 besides strategic bombing. One cannot claim strategic bombing was the decisive effect, in fact, the evidence is contrary: if strategic bombing happened before mid 1944 while the other things did not, and the other things happened after mid 1944, when industrial production collapsed, then I reach the conclusion that those other effects were the dominant ones.

Otherwise, if we believe in your theory that strategic bombing alone through it's physical impact on the transportation system had overwhelming influence on the trajectory of industrial output, we have the following questions:

From 1941 to June 1944, strategic bombing forces dropped 755,000 short tons. From July 1944 to April 1945, they dropped 1,123,000 short tons of bombs. Therefore, you claim the first 755,000 tons had NO significant effect while the 1,123,000 tons later had tremendous effect.

So, why the 755,000 short tons did not have ANY substantial impact before mid 1944, that's almost 40% of the tonnage dropped on Europe by strategic bombing forces? The improvements in strategic bombing techniques and shift in targets from early 1944 to late 1944 were so vast that they made strategic bombing 20-30 times more effective per ton of bomb dropped? :roll:

Really? The entire territorial collapse of the Nazi European empire from mid 1944 onwards together with the collapse of the supply of raw materials and the collapse in civilian morale had no effect on the divergence of the industrial production between the second half of 1944 and before? I am not convinced about the hypothesis that strategic bombing had a complete revolution in effectiveness in 3-4 months while simultaneously assuming all those other effects did not have any significant economic impact.

By the way, there are many historians who do not subscribe to your position, Overy's (2013) book which is far more recent and far more authoritative than Mierzjewski's has a very clear conclusion: strategic bombing did not work. You should read that book and at least this article: http://www.economist.com/news/books-and ... war-costly

In fact, the statistics of that book imply that the marginal effect of bombing was decreasing: 100,000 tons of bombs dropped over a month have a lower effect than 10 times 10,000 tons dropped on a month. For instance, the 300,000 short tons of bombs dropped before 1944 killed 130,000 people, while the 1,600,000 tons of bombs dropped in 1944 and 1945, killed about 230,000 people. The estimated effects on industrial production had also diminishing returns: in Britain, the ca. 70,000 short tons of bombs dropped in the blitz decreased British industrial output by 3%, the 200,000 tons dropped in 1943, decreased German output by 5%, the 1,100,000 tons of bombs dropped in 1944, decreased output by ca. 11%.

By the way, on the "increase in munitions production", the "weapons miracle": munitions output increased in all countries that participated in both world wars, there was nothing exceptional about Germany's experience in WW2. In WW1, French, British and German munitions production tripled from 1915 to 1918, very similar growth as experienced by German munitions' production from 1941 to 1944. German experience in WW2 looks very typical.

[Guaporense]

I thought the Grossraum was not effectively integrated, thats what you stated in your previous posts.

German industrial production increased in WW2 while in WW1 it decreased sharply (by about 20-25% from 1914 to 1918), the difference can be explained by the access of raw materials and labor force from occupied countries in WW2, while in WW1 the Germans couldn't extract a lot of foreign labor and materials (although they got some). I would think, though, that the increase in industrial production in WW2 might be partly due to statistical illusion: in WW1 there was a massive increase in munitions production in Germany and France but aggregate industrial production did not increase, in fact, it decreased. In WW2, industrial production behaved differently I think because of government intervention froze prices which means that statistics of value added deflated using price indexes lost basis in reality as prices did not reflect relative scarcities anymore and resources were allocated through rationing, not prices.

there was no point in making an effort because it was futile

Is that the reason why German factories were sometimes captured by the Allies while workers were still producing equipment, when American soldiers busted in (such as the example of Stg44s which were all in the warehouses, nobody could wield or distribute them anymore)?

Actually, absenteeism increased a lot from mid 1944 onwards: The fraction of workers who took leave, for instance, due to claimed "sickness", increased tremendously over the last 12 months of the war. Those effects cannot be ignored.

Absenteeism rates in Ford at Cologne, that is, the work hours lost because workers didn't show up:

1940 - 9.0
1941 - 9.1
1942 - 17.6
1943 - 23.9
1944 - 28.0

Source: USSBS, The Effects of Strategic Bombing on the German Morale page 56

By September 1944, loss in in man hours in industrial plants in all of Germany due to all causes was 15.3% of which "claimed sickness" was 11.4%, while loss directly due to time lost due to air raid alarms were only 1.4%, while loss of physical damage to the plants themselves were only 0.2% and cleanup work from air raids consumed 2.0% of industrial manhours. Total loss of time due to air raids and associated destruction/cleanup work was only 3.9% of total manhours planned, and that is in September 1944, and the 3rd quarter of 44 was when strategic bombing against German cities peaked in WW2. That means that strategic bombing has as a direct effect in reducing industrial output by at most 3.9% given September 1944 was the peak bombing month of the war while sick leave was responsible for 3 times higher loss in industrial production.

Source: USSBS, The Effects of Strategic Bombing on the German Morale, page 58

In terms of physical destruction of industrial capital stock the bombing during the whole war reduced the industrial capital stock by 6% in terms of machine tools: 130,000 machine tools out of 2,100,000 stock or equivalent to 8 months of output by the machine tools industries.

Therefore, I believe that the information effects of strategic bombing were far more relevant than the physical effects of strategic bombing. Actually the informational effect of strategic bombing was the most significant effect: large scale strategic bombing was informing the German civilian population that the Nazi regime was incapable of maintaining aerial superiority over Germany, which means that obviously the war was lost (i.e. it couldn't even spare the required resources to defend the homeland). Hence, it did not make sense to work anymore (that's is called "morale effect" although unlike some historians I didn't think it was just psychological, it was also rational: "why work if the war is lost?", just say you are sick and don't show up). Individual people are rational actors and rational actors make choices such as not showing up to work.

You cannot assume that all the population of Nazi Germany were just a bunch of robots that worked hard to support the Nazis for no reason and all decrease in industrial production was entirely due to external interference. As if economic activity works like a physical machine. Economic activity is the product of decisions made by the individuals making up society. By mid 1944, a large number of individuals that made up German society took the conclusion based on the information they had, that allocating effort to support the war was not productive because the war was lost.

Of course, there were people still working (in fact, in September 1944, 84.7% of the man hours were "intact"), and indeed, industrial production was still high in the second half of 1944 way above pre-war levels but the fraction of labor force showing up to work decreased significantly and that had large impact on industrial production: it could have been 10% higher in the second half of 1944 without absenteeism, from 55.8 billion RM to ca. 62 billion RM. Hence, maintaining the growth trend, even though strategic bombing was intense (as it was in the first half of 1944 when industrial production peaked: the bomb tonnage dropped by strategic bombing in the first half of 1944 was the same as in 1945).

[Guaporense]

Here are the tables on the direct effects of strategic bombing on the number of hours worked:



Claimed sickness and other causes were 3 times as important as actual air raid damages and disruptions.

And here by industry, for May 1944:



Notice that the increased intensity of strategic bombing from may to September increased the time lost from 2.8% to 3.9%! While the focused bombing on aircraft plants lead to a higher total loss, of 4.2% of hours worked. Clearly, not very significant.

This clearly suggests that strategic bombing did not have substantial direct effects on aggregate economic activity, which explains why munitions production increased in a similar pattern to countries that were not subjected to strategic bombing such as France, UK and Germany in WW1 or USSR, UK and US in WW2. In fact, these effects were smaller than I though (I was expecting something around 10% instead of 3-4%).

[Michael Kenny]

Twice now it has been pointed out that the collapse of the distribution system was the key factor. You chose to completely ignore it and plough on with your discredited tactic of working out a brilliant 'new' explanation for the German defeat and then altering every parameter you can find in order to make it fit.

[Guaporense]

By the way, here is the breakdown of manhours lost to air attacks in May 1944:



That was in May 1944, when strategic bombing was already at the rate of 100,000 short tons per month, near the peak which was 140,000 tons per month reached in the 3rd quarter of 1944 (when manhour losses to bombing were 3.9%).

I mean, I even made an excel spreadsheet with the bomb tonnage and German industrial production and employment:



Strategic bombing was clearly ineffective in directly affecting aggregate economic activity to a significant extent in the German sphere of power: the annualized growth rate of industrial production up to mid 1944 was relatively constant at 7% from 1939 to mid 1944 while total hours of work lost to the effects of bombing were only 2.8% of all work hours planned. Still, one can claim: "oh, but they shifted the targets to transportation centers", well, the fraction in the bomb tonnage dropped on transportation centers DECREASED in the 2nd half of 1944 compared to the first half.

industrial production began to collapse around mid 1944, but the reasons were many.

Let's take a look at some German reports on morale:



The August 1944 one is pretty informative.

I mean, it's pretty obvious that by August 1944 the war was lost. Everybody knew that: the Allies already were making arrangements such as Bretton Woods to take care of the world's post-war monetary system while in Germany: Hitler and the Nazis, fearing to be executed as the war criminals they were, decided to prolong the war as much as possible and hence their lives, even though everybody knew the war was lost. As a result we saw the action of collective intelligence: millions of German soldiers started surrendering (the Western Allies took 7.7 million German prisoners in the Western front, while German battle deaths in that front were 265,000 according to American estimates) while German industrial production started to collapse: Morale dropped to abysmal levels by the second half of 1944.

[Rob Stuart]

That was in May 1944, when strategic bombing was already at the rate of 100,000 short tons per month, near the peak which was 140,000 tons per month reached in the 3rd quarter of 1944 (when manhour losses to bombing were 3.9%).

In May 1944 the UK-based strategic air forces were no longer concentrating their attacks on targets on Germany. Since 1 April, their focus was on targets in France, for example railway marshalling yards, bridges, and airfields. The stats for hours of labor lost, etc, in Germany for May 1944 are therefore not representative of the 1943-1945 period. Ditto for the third quarter of 1944. The strategic air forces continued to devote a high percentage of their bombing efforts to supporting operations in Normandy during that quarter, especially in July and August, as well as to attacking V-1 sites. You need to look at the 1st and 4th quarters of 1944 to compare apples to apples.

[Guaporense]

In this table I estimated the total loss of industrial manhours due to strategic bombing from the two data points provided by the USSBS Report on the Effects of Strategic Bombing on German Morale (May 1944, September 1944, of 2.8% and 3.9%):



Total loss of industrial man-hours to bombing was 0.5% in 1943, 2.8% in 1944 and around 0.1% in 1941-1942. If we think in aggregate GDP terms, since industrial production was about 35% of Germany's GDP during the 1939-1943 period, that means a loss of GDP due to industrial production losses to strategic bombing of 0.035% in 1941-1942, 0.15% in 1943 and about 1% in 1944. So, not substantial at all. That is, not including as part of GDP that among those manhours lost, more than half involve cleaning and rebuilding of plants which are usually included. Including those but excluding only the actual losses due to air raid alarms decreases the impact of 1944 GDP to 0.3% and 0.05% in 1943.

Think about the effects of Hurricane Katrina in 2005: the US lost over a hundred billions of dollars of property (http://www.livescience.com/22522-hurric ... facts.html), that was ca. 1% of US GDP in 2005. In proportion of GDP, that's equivalent to the property damages of 1.6 billion RM in 1943, while the value of industrial machinery destroyed by strategic bombing during the whole war was a 550 million RM in machine tools which means a few billion RM in industrial plant, or around 1% of Germany's annual GDP. So, it's effects on the German economy in 1943-1944 were only a few times greater than the damage caused by Katrina on the US economy in 2005.

Still, nobody claims that Katrina significantly affected economic growth in 2005. Even though the scale of destruction was comparable to hundreds of thousands of tons of bombs.