What would have happened if Nazi Germany had avoided starting WWII?
[from Quora]
answered by Paul Adam, Independent defence consultant
Sep 13, 2018 [Upvoted by C. Greskamp, of Germany (1990-present)]

Economic collapse and civil war, probably. Nazi Germany was basically bankrupt by 1938, having been spending money like a drunken sailor.

Theyd raised money at first from foreign loans (especially from the US - Hjalmar Schacht, president of the Reichsbank and then Minister for Economics, used US short-term loans as leverage to force relaxation of reparations payments from Versailles, then to influence US policy - the US was owed a lot of money by Germany and initially, didnt want repayment disrupted) - and by the simple expedient of printing it.

This produced a temporary economic recovery as unemployed Germans were €œoffered€� jobs in armaments plants, or building autobahns and other civic works, but it was poorly directed in economic terms: firstly all being aimed at the prospect of the €œinevitable€� war in Europe Hitler was preparing for, and secondly being managed by a corrosively corrupt cabal of businessmen and politicians who ensured they got very rich indeed out of the contracts placed.

As a result, while Germany was producing impressive quantities of tanks, ammunition and aircraft in 1938, its railways were run-down and in disrepair (and getting worse), its automotive industry was stunted, and productivity in key industries like coal and oil was actually dropping (more warm bodies working, but unskilled and inexperienced; and, again, lots of corruption and disorganisation). Also, inflation was becoming a serious worry, as more and more banknotes chased fewer and fewer consumer goods: Government price and pay controls had worked as badly as they usually did, resulting in shortages and resentment (in particular, workers in wage-controlled businesses - usually military-based - seeking any opportunity to move to higher-paying jobs elsewhere)

Finally, domestic efforts to sell bonds were now failing; in 1938 a major bond issue was hugely under-subscribed, causing a crisis as Germany ran out of reichsmarks to fund internal programmes and foreign currency to buy imported goods (like grain, oil and rubber). That was, for a short while, solved by conquest: the national treasuries of Austria, then Czechoslovakia, were enough to delay disaster, but by the end of 1938 the German economy - overburdened by military expenditures, riven with corruption and severely under-invested in vital areas - was hitting the limits of what could be done in peacetime - indeed Germany was described as €œa wartime economy at peace€�.

A report by the Wehrmachts top economist grimly warned that while Germany was planning to spend 23% of its entire national income on the military in 1939, France was spending 17%, Britain 12% and the US only 2% - yet even so Germany was already being out-spent and out-produced. This may have influenced Hitlers decision to go to war early, before Germanys initial advantage in re-armament was matched and overtaken (even though ambitious schemes like the Navys Z-Plan would be deferred or cancelled).
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If Germany had not gone to war? Probably another destructive bout of hyper-inflation as the options for paying the Governments bills collapsed down to €œprint more Reichsmarks and add as many zeros as you need to€�, since backing down from the military expansion conducted to date would be a massive loss of prestige and influence for Hitler, and cause major pain to the cronies who had ensured their businesses got profitable contracts. Hard to see the Nazi leadership surviving in office except through extreme repression and violence, which they could (and did) carry off in wartime with external enemies; but in peace, would spark even more resentment and eventually revolt.

Predictions are tricky, especially when dealing with totalitarian states, but the first round would probably be a military coup with some senior generals trying to push Hitler aside or disposing of him; others, and Party loyalists (military and civilian) with much to lose, fighting them. The military was notionally sworn to personal loyalty to Hitler, but how long that would last when they werent being paid and when their families were hungry is anyones guess.

What I dont know is how many Communist sympathisers remained in Germany in 1939, or how active theyd become as the Nazi leadership fought among itself for power; theres the potential for €œhyperinflation twice in twenty years! no more rule by the big bosses! no more exploitation by the capitalists! Power to the people, comrade!€� (after all, Germany had an attempted Communist uprising with the Spartakists in 1919).

Whatever detail happened, it would be pretty miserable for ordinary Germans (though probably less so than the situation they found themselves in by 1945) but considerably less dangerous to Germanys neighbours.

But, Germanys economic position in 1939 was basically several different flavours of €œcrisis€� and a quick, victorious war was a convenient way to loot foreign treasuries, raise taxes, introduce rationing and other controls, repress dissent (dont you know theres a war on?) and defer disaster.

An outstanding and well-researched, if lengthy (but well worth reading) book on the subject is Adam Toozes €œWages of Destruction€� which goes directly to the source data on the German economy and politics of the period.