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Cars were a luxury object in interwar Germany and Hitler, a motor enthusiast, wanted to change that. By lifting the car tax and building Autobahnen he made a great contribution, but taxes on imported fuel had the opposite effect. The main effort has left a legacy on the streets of your city today: the Volkswagen Beetle. Its story began on a motor show in March 1934, when Hitler announced his desire for a people’s car priced at less than 1,000 Reichsmarks.
Daimler-Benz and Auto Union funded a research project led by Porsche but they were skeptical that the low price tag could be achieved, as the cheapest car –Opel’s P4- was worth 1,450 Reichsmarks and 1,200 was considered the lowest possible price. A massive new factory was to be built to lower the price through economies of scale. By 1937 they gave up and the project was taken by the DAF as a not-for-profit social program. Funding was to come through a subscriptions system: prospective buyers made weekly deposits on a DAF account and received no interest, but were entitled to a VW after depositing 750 Reichsmarks. 340,000 savers signed the contract by the end of the war, of which only 5% were the desired demographic of blue-collar workers. The war disrupted the program and no private VWs were delivered. But it is likely it would have flopped without it: the production required to unleash sufficient economies of scale and achieve the desired price was far beyond what the entire German automobile industry produced, and any smaller production would force the DAF to sell the cars at a major loss.
By 1939 inflationary pressure from uncontrolled spending and the focusing of scarce imports away on the military-industrial complex led to a decline in the quality of consumer goods, though their price was kept low through administrative means. Children’s clothing now lasted months instead of years. But curiously, Tooze explains that “guns vs. butter” is a false dichotomy in this case: guns were a form of butter. Rearmament contributed to national happiness much like consumer goods would be expected to do. In any case, it would be a mistake to assume that the remilitarization of German society was something imposed from the top down, with the majority of Germans preferring butter to guns. For many millions, the reconstruction of the Wehrmacht was clearly the most successful aspect of the regime's domestic policy and the collective mass-consumption of weaponry was a more than sufficient substitute for private affluence. (p.659)