Chapter VIIIECONOMIC ASPECTS OF THE CONSPIRACY

“* * * to establish the closest liaison and cooperation of the respective military offices with the main construction work of the TODT Organization.” (2812-PS)

This militarization of the OT is further shown in the following passage from “Nationalsozialistische Monatschefte” for 1942:

“From the Autobahn workers was developed the ‘Organization TODT’ a body of hundreds of thousands of workers whohelp the Wehrmacht everywhere in eliminating obstacles, building bridges and erecting fortifications and shelters. The front soldier and the front worker stand side by side. Together they have shed their blood in this war and together they have won victories. Long-range guns on the Channel coast, U-boat bases on the Atlantic, and now the East will render the ‘OT’ immortal for all times to come.” (2809-PS)

A letter from Fritz Sauckel to Hitler, dated 17 May 1943, states that the OT had supplied 248,200 workers by March 1943 for the completion of the Atlantic Wall, and praises the OT for its excellent work in this regard. (407-VIII-PS)

By 1938, all phases of German lifehad beenmobilized for the accomplishment of militant aims.

Hitler declared to the Reichstag on 20 February 1938:

“Only now we have succeeded in setting before us the great tasks and in possessing the material things which are the prerequisites for the realization of great creative plans in all fields of our national existence. Thus, National Socialism has made up within a few years for what centuries before it had omitted. * * *“National Socialism has given the German people that leadership which as party not only mobilizes the nation but also organizes it, so that on the basis of the natural principle of selection, the continuance of a stable political leadership is safeguarded forever * * * National Socialism * * * possesses Germany entirely and completely since the day when, five years ago, I left the house in Wilhelmplatz as Reich Chancellor. There is no institution in this state which is not National Socialist. Above all, however, the National Socialist Party in these five years not only has made the nation National Socialist, but also has given itself that perfect organizational structure which guarantees its permanence for all future.The greatest guarantee of the National Socialist revolution lies in the complete domination of the Reich and all its institutions and organizations, internally and externally, by the National Socialist Party. Its protection against the world abroad, however, lies in its new National Socialist armed forces.* * *“In this Reich, anybody who has a responsible position is a National Socialist. * * * Every institution of this Reich is under the orders of the supreme political leadership. * * * The party leads the Reich politically, the armed forces defend it militarily. * * * There is nobody in any responsible position in this state who doubts that I am the authorized leader of this Reich.” (2715-PS)

“National Socialism has given the German people that leadership which as party not only mobilizes the nation but also organizes it, so that on the basis of the natural principle of selection, the continuance of a stable political leadership is safeguarded forever * * * National Socialism * * * possesses Germany entirely and completely since the day when, five years ago, I left the house in Wilhelmplatz as Reich Chancellor. There is no institution in this state which is not National Socialist. Above all, however, the National Socialist Party in these five years not only has made the nation National Socialist, but also has given itself that perfect organizational structure which guarantees its permanence for all future.The greatest guarantee of the National Socialist revolution lies in the complete domination of the Reich and all its institutions and organizations, internally and externally, by the National Socialist Party. Its protection against the world abroad, however, lies in its new National Socialist armed forces.* * *

“In this Reich, anybody who has a responsible position is a National Socialist. * * * Every institution of this Reich is under the orders of the supreme political leadership. * * * The party leads the Reich politically, the armed forces defend it militarily. * * * There is nobody in any responsible position in this state who doubts that I am the authorized leader of this Reich.” (2715-PS)

Chapter VIIIECONOMIC ASPECTS OF THE CONSPIRACY

It is well known that the Nazi conspirators rearmed Germany on a vast scale. The purpose of that rearmament is revealed in the secret records of the plans and deliberations of the inner councils of the Nazis. These records show that the reorganization of the German government, the financial wizardry of Hjalmar Schacht, and the total mobilization of the German economy largely under Hjalmar Schacht, Hermann Goering, and Walter Funk, were directed at a single goal: aggressive war.

The significance of the economic measures adopted and applied by the conspirators can be properly appraised only if they are placed in the larger social and political context of Nazi Germany. These economic measures were adopted while the conspirators were directing their vast propaganda apparatus to the glorification of war. They were adopted while the conspirators were perverting physical training into training for war. They were adopted while these conspirators were threatening to use force and were planning to use force to achieve their material and political objects. In short, these measures constitute in the field of economics and government administration the same preparation for aggressive war which dominated every aspect of the Nazi state.

In 1939 and 1940, after the Nazi aggression upon Poland, Holland, Belgium, and France, it became clear to the world that the Nazi conspirators had created probably the greatest instrument of aggression in history. That machine was built up almost in its entirety in a period of less than one decade. In May of 1939 Major General George Thomas, former Chief of the Military-Economic Staff in the Reich War Ministry, reported that the German Army had grown from seven Infantry divisions in 1933 to thirty-nine Infantry divisions, among them four fully motorized and three mountain divisions; eighteen Corps Headquarters; five Panzer divisions; twenty-two machine gun battalions. Moreover, General Thomas stated that the German Navy had greatly expanded by the launching, among other vessels, of two battleships of thirty-five thousand tons, four heavy cruisers of ten thousand tons, and other warships; further, that the Luftwaffe had grown to a point where it had a strength of two hundred sixty thousand men, twenty-one squadrons, consisting of two hundred forty echelons, and thirty-three Anti-Aircraft Batteries. (EC-28)General Thomas further reported, in a lecture delivered on 24 May 1939 in the Nazi Foreign Office, that out of the few factories permitted by the Versailles Treaty there had arisen * * *

“The mightiest armament industry now existing in the world. It has attained the performances which in part equal the German wartime performances and in part even surpasses them. Germany’s crude steel production is today the largest in the world after the Americans. The aluminum production exceeds that of America and of the other countries of the world very considerably. The output of our rifle, machine gun, and artillery factories is at present larger than that of any other state.” (EC-28)

These results—about which General Thomas spoke in his book entitledBasic Facts for a History of German War and Armaments Economy—were achieved only by making preparation for war the dominating objective of German economy. As General Thomas stated on page 479 of his book:

“History will know only a few examples of cases where a country has directed, even in peace time, all its economic forces deliberately and systematically towards the requirements of war, as Germany was compelled to do in the period between the two World Wars.” (2353-PS)

The task of mobilizing the German economy for aggressive war began promptly after the Nazi conspirators’ seizure of power. It was entrusted principally to Schacht, Goering, and Funk.

Schacht was appointed President of the Reichsbank in March 1933, and Minister of Economics in August 1934. The world did not know, however, that the responsibility for the execution of this program was entrusted to the office of the Four Year Plan under Goering (EC-408). Nor did the world know that Schacht was designated Plenipotentiary for the War Economy on 21 May 1935, with complete control over the German civilian economy for war production in the Reich Defense Council, established by a top secret Hitler decree.

A letter dated 24 June 1935, at Berlin, and signed by von Blomberg, reads in part:

“* * * The Fuehrer and Reich Chancellor has nominated the President of the directorate of the Reichsbank, Dr. Schacht, to be Plenipotentiary-General for War Economy. * * *“* * * I point out the necessity of strictest secrecy once more * * *.” (2261-PS)

“* * * The Fuehrer and Reich Chancellor has nominated the President of the directorate of the Reichsbank, Dr. Schacht, to be Plenipotentiary-General for War Economy. * * *

“* * * I point out the necessity of strictest secrecy once more * * *.” (2261-PS)

Through Schacht’s financial genius monetary measures were devised to restore German industry to full production; and throughthe control of imports and exports, which he devised under his new plan of 1934, German production was channeled in accordance with the requirements of the German war machine.

In 1936, with an eye to the experience in the First World War, the Nazi conspirators embarked on an ambitious plan to make Germany completely self-sufficient in strategic war materials such as rubber, gasoline, and steel, in a period of four years, so that Germany would be fully prepared for aggressive war. The responsibility for the execution of this program was entrusted to the office of the Four Year Plan under Goering. A “memorandum on the Four Year Plan and Preparation of the War Economy,” dated 30 December 1936, and marked “Secret Command Matter”, sets out that the Fuehrer and Reich Chancellor has conferred powers in regard to mobilization preparations in the economic field that need further definition. The third paragraph refers specifically to Minister-President, Generaloberst Goering as Commissioner of the Four Year Plan, by authority of the Fuehrer and Reich Chancellor granted 18 October 1936. The existence of this program involved the reorganization and control of the whole German economy for war. (EC-408)

The military objectives of the German economy were clearly stated by General Thomas in a lecture on 28 February 1939, delivered at the Staff Instructor’s course. He stated:

“The National Socialist State, soon after taking over the power, has reorganized the German economy in all sections and directed it towards a military viewpoint, which had been requested by the Army for years. Due to the reorganization, agriculture, commerce and professions became those powerful instruments the Fuehrer needs for his extensive plans, and we can say today that Hitler’s mobile politics, as well as the powerful efforts of the Army and economy, would not have been possible without the necessary reorganization by the National Socialist Government. We can now say that the economic organization as a whole corresponds with the needs, although slight adjustments will have to be made yet. Those reorganizations made a new system of economics possible which was necessary in view of our internal and foreign political situation as well as our financial problems. The directed economy, as we have it today, concerning agriculture, commerce and industry, is not only the expression of the present State principles, but at the same time also the economy of the country’s defense.” (EC-27)

This program was not undertaken in a vacuum; it was deliberately designed and executed to provide the necessary instrumentof the Nazi conspirators’ plans for aggressive war. In September 1934 Schacht admitted to the American Ambassador in Berlin that the Hitler Party was absolutely committed to war, and that the people too were ready and willing. (EC-461) At the same time Schacht promulgated his new plan for the control of imports and exports in the interest of rearmament. A year later he was appointed Plenipotentiary for War Economy by top secret decree. (2261-PS)

On 4 September 1936 Goering announced, at a Cabinet meeting attended by von Blomberg, Schacht, and others, that Hitler had issued instructions to the Reich War Minister on the basis that “the show-down with Russia is inevitable,” and added that “all measures have to be taken just as if we were actually in the stage of imminent danger of war.” (EC-416)

In the same month the office of the Four Year Plan was created with the mission of making Germany self-sufficient for war in four years. Goering regarded it as his task, within four years, to put the entire economy in a state of readiness for war. (EC-408)

Although the Nazi government officials provided the leadership in preparing Germany for war, they received also the enthusiastic and invaluable cooperation of the German industrialists.

On the invitation of Goering, approximately 25 of the leading industrialists of Germany, together with Schacht, attended a meeting in Berlin on 20 February 1933. This was shortly before the German election of 5 March 1933. At this meeting Hitler announced the conspirators’ aim to seize totalitarian control over Germany, to destroy the parliamentary system, to crush all opposition by force, and to restore the power of theWehrmacht. Among those present at that meeting were Gustav Krupp, head of the munitions firm, Alfried Krupp, A.G.; four leading officials of the I. G. Farben Works, one of the world’s largest chemical concerns; Albert Vogler, head of United Steel Works of Germany; and other leading industrialists. This meeting is described in the following affidavit of George von Schnitzler:

“I, George von Schnitzler, a member of the Vorstand of I. G. Farben, make the following deposition under oath:“At the end of February 1933, four members of the Vorstand of I. G. Farben, including Dr. Bosch, the head of the Vorstand, and myself were asked by the office of the President of the Reichstag to attend a meeting in his house, thepurpose of which was not given. I do not remember the two other colleagues of mine who were also invited. I believe the invitation reached me during one of my business trips to Berlin. I went to the meeting which was attended by about 20 persons, who I believe were mostly leading industrialists from the Ruhr.“Among those present I remember:“Dr. Schacht, who at that time was not yet head of theReichsbankagain and not yet Minister of Economics.“Krupp von Bohlen, who in the beginning of 1933 presided over theReichsverband der Deutschen Industrie, which later on was changed into the semi-official organization ‘Reichsgruppe Industrie.’“Dr. Albert Vogler, the leading man of theVereinigte Stahlwerke.“Von Lowenfeld from an industrial work in Essen.“Dr. Stein, head of theGewerkschaft Auguste Victoria, a mine which belongs to the I. G. Dr. Stein was an active member of theDeutsche Volkspartei.“I remember that Dr. Schacht acted as a kind of host.“While I had expected the appearance of Goering, Hitler entered the room, shook hands with everybody and took a seat at the top of the table. In a long speech, he talked mainly about the danger of communism over which he pretended that he just had won a decisive victory.“He then talked about theBundnis—alliance—into which his party and theDeutsch Nationale Volksparteihad entered. This latter party, in the meantime, had been reorganized by Herr von Papen. At the end he came to the point which seemed to me the purpose of the meeting. Hitler stressed the importance that the two aforementioned parties should gain the majority in the coming Reichstag election. Krupp von Bohlen thanked Hitler for his speech. After Hitler had left the room, Dr. Schacht proposed to the meeting the raising of an election fund of, as far as I remember, RM 3,000,000. The fund should be distributed between the two ‘allies’ according to their relative strength at the time being. Dr. Stein suggested that theDeutsche Volksparteishould be included * * *.” (EC-439)

“I, George von Schnitzler, a member of the Vorstand of I. G. Farben, make the following deposition under oath:

“At the end of February 1933, four members of the Vorstand of I. G. Farben, including Dr. Bosch, the head of the Vorstand, and myself were asked by the office of the President of the Reichstag to attend a meeting in his house, thepurpose of which was not given. I do not remember the two other colleagues of mine who were also invited. I believe the invitation reached me during one of my business trips to Berlin. I went to the meeting which was attended by about 20 persons, who I believe were mostly leading industrialists from the Ruhr.

“Among those present I remember:

“Dr. Schacht, who at that time was not yet head of theReichsbankagain and not yet Minister of Economics.

“Krupp von Bohlen, who in the beginning of 1933 presided over theReichsverband der Deutschen Industrie, which later on was changed into the semi-official organization ‘Reichsgruppe Industrie.’

“Dr. Albert Vogler, the leading man of theVereinigte Stahlwerke.

“Von Lowenfeld from an industrial work in Essen.

“Dr. Stein, head of theGewerkschaft Auguste Victoria, a mine which belongs to the I. G. Dr. Stein was an active member of theDeutsche Volkspartei.

“I remember that Dr. Schacht acted as a kind of host.

“While I had expected the appearance of Goering, Hitler entered the room, shook hands with everybody and took a seat at the top of the table. In a long speech, he talked mainly about the danger of communism over which he pretended that he just had won a decisive victory.

“He then talked about theBundnis—alliance—into which his party and theDeutsch Nationale Volksparteihad entered. This latter party, in the meantime, had been reorganized by Herr von Papen. At the end he came to the point which seemed to me the purpose of the meeting. Hitler stressed the importance that the two aforementioned parties should gain the majority in the coming Reichstag election. Krupp von Bohlen thanked Hitler for his speech. After Hitler had left the room, Dr. Schacht proposed to the meeting the raising of an election fund of, as far as I remember, RM 3,000,000. The fund should be distributed between the two ‘allies’ according to their relative strength at the time being. Dr. Stein suggested that theDeutsche Volksparteishould be included * * *.” (EC-439)

In a speech delivered to the industrialists in Berlin on 20 February 1933, Hitler stated:

“Private enterprise cannot be maintained in the age of democracy; it is conceivable only if the people have a sound idea of authority and personality. * * * I recognizedeven while in the hospital that one had to search for new ideas conducive to reconstruction. I found them in Nationalism, in the value of strength and power of individual personality. * * * If one rejects pacifism, one must put a new idea in its place immediately. Everything must be pushed aside, must be replaced by something better. * * * We must not forget that all the benefits of culture must be introduced more or less with an iron fist just as once upon a time the farmers were forced to plant potatoes.* * * * * *“With the very same courage with which we go to work to make up for what had been sinned during the last 14 years, we have withstood all attempts to move us off the right way.”“* * * We must first gain complete power if we want to crush the other side completely. While still gaining power, one should not start the struggle against the opponent. Only when one knows that one has reached the pinnacle of power, that there is no further possible development, shall one strike. * * *“* * * Now we stand before the last election. Regardless of the outcome there will be no retreat, even if the coming election does not bring about a decision. * * *“The question of restoration of theWehrmachtwill not be decided at Geneva but in Germany, when we have gained internal strength through internal peace.” (D-203)

* * * * * *

“With the very same courage with which we go to work to make up for what had been sinned during the last 14 years, we have withstood all attempts to move us off the right way.”

“* * * We must first gain complete power if we want to crush the other side completely. While still gaining power, one should not start the struggle against the opponent. Only when one knows that one has reached the pinnacle of power, that there is no further possible development, shall one strike. * * *

“* * * Now we stand before the last election. Regardless of the outcome there will be no retreat, even if the coming election does not bring about a decision. * * *

“The question of restoration of theWehrmachtwill not be decided at Geneva but in Germany, when we have gained internal strength through internal peace.” (D-203)

In reply to these statements Goering, who was present at that same meeting, declared:

“That the sacrifice asked for surely would be much easier for industry to bear if it realized that the election of March 5th will surely be the last one for the next ten years, probably even for the next hundred years.” (D-203)

In a memorandum dated 22 February 1933, found in the personal files of Gustav Krupp von Bohlen und Halbach, Krupp briefly described this same meeting, and recalled that he had expressed to Hitler the gratitude of the 25 industrialists present. (D-204)

In April 1933, after Hitler had entrenched himself in power, Gustav Krupp, as Chairman of the Reich Association of German Industry, which was the largest association of German industrialists, submitted to Hitler the plan of that association for the reorganization of German industry. In connection therewith Krupp undertook to bring the association into line with the aims of the conspirators, and to make it an effective instrumentfor the execution of their policies. In a letter of transmittal (D-157), Krupp stated that the plan of reorganization which he submitted on behalf of the association of industrialists, was characterized by the desire to coordinate economic measures and political necessity, adopting the Fuehrer conception of the new German state. In the plan of reorganization itself, Krupp stated:

“The turn of political events is in line with the wishes which I myself and the board of directors have cherished for a long time. In reorganizing the Reich Association of German Industry, I shall be guided by the idea of bringing the new organization into agreement with the political aims of the Reich Government.” (D-157)

The ideas of Krupp were subsequently adopted.

Under the decree introducing the leadership principle into industry, each group of industry was required to have a leader who was to serve without compensation. The leaders were to be appointed and could be removed at the discretion of the Minister of Economics. The charter of each group was to be created by the leader, who was obligated to lead his group in accordance with the principles of the National Socialist State (Reichsgesetzblatt, 1934, Part I, 1194, Sec. 11, 12, 16). The introduction of the leadership principle into the organizations of business centralized authority and guaranteed the efficient execution of orders, which the government issued to business, in the effort to promote a war economy.

The overwhelming support given by the German industrialists to the Nazi war program is described in a speech prepared by Gustav Krupp in January 1944, for delivery at the University of Berlin:

“War material is life-saving for one’s own people, and whoever works and performs in those spheres can be proud of it. Here, enterprise as a whole, finds its highest justification of existence. This justification, I may inject this here, crystallized especially during the time of interregnum between 1919 and 1933, when Germany was lying down disarmed. * * ** * * * * *“It is the one great merit of the entire German war economy that it did not remain idle during those bad years, even though its activity could not be brought to light for obvious reasons. Through years of secret work, scientific and basic groundwork was laid in order to be ready again to workfor the German armed forces at the appointed hour without loss of time or experience.* * * * * *“Only through the secret activity of German enterprise, together with the experience gained meanwhile through production of peacetime goods, was it possible, after 1933, to fall into step with the new tasks arrived at, restoring Germany’s military power. Only through all that could the entirely new and various problems, brought up by the Fuehrer’s Four-Year Plan for German enterprise, be mastered. It was necessary to supply the new raw materials, to explore and experiment, to invest capital in order to make German economy independent and strong—in short, to make it war-worthy.* * * * * *“I think I may state here that the German enterprises followed the new ways enthusiastically, that they made the great intentions of the Fuehrer their own by fair competition and conscious gratitude, and became his faithful followers. How else could the tasks between 1933 and 1939, and especially those after 1939, have been overcome?” (D-317)

* * * * * *

“It is the one great merit of the entire German war economy that it did not remain idle during those bad years, even though its activity could not be brought to light for obvious reasons. Through years of secret work, scientific and basic groundwork was laid in order to be ready again to workfor the German armed forces at the appointed hour without loss of time or experience.

* * * * * *

“Only through the secret activity of German enterprise, together with the experience gained meanwhile through production of peacetime goods, was it possible, after 1933, to fall into step with the new tasks arrived at, restoring Germany’s military power. Only through all that could the entirely new and various problems, brought up by the Fuehrer’s Four-Year Plan for German enterprise, be mastered. It was necessary to supply the new raw materials, to explore and experiment, to invest capital in order to make German economy independent and strong—in short, to make it war-worthy.

* * * * * *

“I think I may state here that the German enterprises followed the new ways enthusiastically, that they made the great intentions of the Fuehrer their own by fair competition and conscious gratitude, and became his faithful followers. How else could the tasks between 1933 and 1939, and especially those after 1939, have been overcome?” (D-317)

It must be emphasized that the secret rearmament program was launched immediately upon the seizure of power by the Nazi conspirators. On 4 April 1933 the Reich Cabinet passed a resolution establishing a Reich Defense Council. The function of this council was secretly to mobilize for war. At the second meeting of the working committee of the Councillors for Reich Defense, the predecessor of the Reich Defense Council, which was held on 22 May 1933, the chairman was Keitel. Keitel stated that the Reich Defense Council would immediately undertake to prepare for war emergency. He stressed the urgency of the task of organizing a war economy, and announced that the council stood ready to brush aside all obstacles. Fully aware of the fact that their action was in flagrant violation of the Treaty of Versailles, Keitel emphasized the extreme importance of absolute secrecy:

“No document ought to be lost, since otherwise it may fall into the hands of the enemies’ intelligence service. Orally transmitted, matters are not provable; they can be denied by us in Geneva.” (EC-177)

The singleness of purpose with which the Nazi conspirators geared the German economy to the forging of a war machine is further shown by the secret minutes of the second meeting of the working committee of the Reich Defense Council, held on 7 February 1934. At this meeting at which Capt. Schmundt, Col. Guerian, Maj. Gen. von Reichenau, Maj. Warlimont, and Jodl—then a Lt. Col.—were present, Lieutenant-General Beck pointed out that:

“The actual state of preparation is the purpose of this session.” (EC-404)

Detailed measures of financing a future war were discussed and it was pointed out that the financial aspects of the war economy would be regulated by the Reich Finance Ministry and the Reichsbank, which was headed by Schacht. (EC-404)

Under his secret appointment as Plenipotentiary-General of the War Economy, Schacht had the express function of placing all economic forces of the nation in the services of the Nazi war machine. The secret defense law of 21 May 1935 in effect gave Schacht charge of the entire war economy. In case of war he was to be virtual economic dictator of Germany. His task was to place all economic forces into service for the conduct of war and to secure economically the life of the German people. The Ministers of Economics, Food, Agriculture, Labor, and Forestry, as well as all Reich agencies directly under the Fuehrer, were subordinated to him. He was to be responsible for the financing as well as for the conduct of the war; and he was further authorized to issue ordinances within his sphere of responsibility, even if these deviated from existing laws. (2261-PS)

The rearmament of Germany proceeded at a rapid pace. By summer of 1935 the Nazi conspirators were emboldened to make plans for the reoccupation of the Rhineland, and at the tenth meeting of the working committee of the council the question of measures to be taken in connection with the proposed reoccupation of the Rhineland was discussed.

At that meeting, on 26 June 1935, it was said that the Rhineland required special treatment because of the assurances given by Hitler to the French that no military action was being undertaken in the demilitarized zone. Among the matters requiring special treatment was the preparation of economic mobilization, a task specifically entrusted to Schacht as secret Plenipotentiary for the War Economy. In this connection it was stated:

“* * * Since political entanglements abroad must be avoided at present under all circumstances, only these preparatorymeasures that are urgently necessary may be carried out. The existence of such preparations, or the intention of them must be kept in strictest secrecy in the zone itself as well as in the rest of the Reich.” (EC-405)

Preparations of various types were thereupon discussed.

The rapid success of German rearmament is attributable to the work of Schacht. In the fall of 1934, the Nazi conspirators announced the “New Plan”, which aimed at the control of imports and exports in order to obtain the raw materials needed for armaments and the foreign currency required to sustain the armament program. The “New Plan” was the creation of Schacht. Under the plan, Schacht controlled imports by extending the system of supervisory boards for import control, which was previously limited to the main groups of raw materials, to all goods imported into Germany. The requirement of licenses for imports enabled the Nazi conspirators to restrict imports to those commodities which served their war aims.

Subsequently, in February 1935, theDevisenLaw was passed (Reichsgesetzblatt1935, I, 105). Under it, all transactions involving foreign exchange were subject to the approval ofDevisenstellen(Foreign Exchange Control Offices). By thus controlling the disposition of foreign exchange, the conspirators were able to manipulate foreign trade so as to serve their ends.

Every aspect of the German economy was geared to war under the guidance of the Nazi conspirators, particularly Schacht. In a study of the economic mobilization for war as of 30 September 1934, it was stated that steps had already been taken to build up stock piles, to construct new facilities for the production of scarce goods, to redeploy industry to secure areas, and to control fiscal and trade policies. The task of stock piling, it was announced, had been hampered by the requirement of secrecy and camouflage. Reserves of automobile fuels and stocks of coal were accumulated, and the production of synthetic oil was accelerated. Civilian supply was purposely organized so that most plants would be working for the German Armed Forces. Studies were made of the possibility of barter trade with supposedly neutral countries in case of war. (EC-128)

Financing of the armament program presented a difficult problem for the conspirators. In 1934 and 1935, the German economy could by no possibility have raised funds for the Nazis’ extensive rearmament program through taxes and public loans. From the outset, the armament program involved “the engagement of the last reserves.” Moreover, apart from the problem of raisingthe huge sums required to sustain this program, the Nazi conspirators were exceedingly anxious, in the early stages, to conceal the extent of their armament activities.

After considering various techniques of financing the armament program, Schacht proposed the use of “mefo” bills. One of the primary advantages of this method was the fact that through its use figures indicating the extent of rearmament, which would have become public through the use of other methods, could be kept secret. “Mefo” bills were used exclusively for armament financing. Transactions in “mefo” bills worked as follows: “Mefo” bills were drawn by armament contractors and accepted by a limited liability company. The spelling of the word “mefo” is taken from the name of this company,Metallurgische Forschungsgesellschaft, m.b.h.(MEFO). This company had a nominal capital of one million Reichsmarks and was merely a dummy organization. The bills were received by all German banks for possible rediscounting with the Reichsbank. The bills were guaranteed by the Reich. Their secrecy was assured by the fact that they appeared neither in the published statements of the Reichsbank nor in the budget figures.

The “mefo” bill system continued to be used until 1 April 1938. Up to that date 12 billion Reichsmarks of “mefo” bills for the financing of rearmament had been issued. Since it was no longer deemed necessary to conceal the vast progress of German rearmament, “mefo” financing was discontinued at that time. (EC-436)

Further sources of funds upon which Schacht drew to finance the secret armament program were the funds of political opponents of the Nazi regime, and Marks of foreigners on deposit in the Reichsbank. As Schacht boasted in a memorandum to Hitler dated 3 May 1935:

“Our armaments are also financed partly with the credits of our political opponents.” (1168-PS)

The outstanding “mefo” bills represented at all times a threat to the stability of the currency because they could be tendered to the Reichsbank for discount, in which case the currency circulation would automatically have to be increased. Thus, there was an ever-present threat of inflation. Schacht nevertheless continued on his course, because he stood with unswerving loyalty to the Fuehrer, because he fully recognized the basic idea of National Socialism, and because he felt that at the end, the disturbances, compared to the great task, could be considered irrelevant.

High-ranking military officers paid tribute to Schacht’s contrivanceson behalf of the Nazi war machine. An article written for the “Military Weekly Gazette” in January 1937 stated:

“The German Defense Force commemorates Dr. Schacht today as one of the men who have done imperishable things for it and its development in accordance with directions from the Fuehrer and Reich Chancellor. The defense force owes it to Schacht’s skill and great ability that, in defiance of all currency difficulties it, according to plan, has been able to grow up to its present strength from an army of 100,000 men.”

After the reoccupation of the Rhineland, the Nazi conspirators redoubled their efforts to prepare Germany for a major war. The Four Year Plan was proclaimed by Hitler in his address at the Nurnberg Party Convention on 9 September 1936. It was given a statutory foundation by the decree concerning the execution of the Four Year Plan dated 18 October 1936 (Reichsgesetzblatt1936, I, 887). By this decree Goering was put in charge of the plan. He was authorized to enact any legal and administrative measures deemed necessary by him for the accomplishment of his task, and to issue orders and instructions to all government agencies, including the highest Reich authorities. The purpose of the plan was to enable Nazi Germany to attain complete self-sufficiency in essential raw materials, notably motor fuel, rubber, textile fiber, and non-ferrous metals, and to intensify preparations for war. The development of synthetic products was greatly accelerated despite their high costs.

Apart from the self-sufficiency program, however, the Nazi conspirators required foreign exchange to finance propaganda and espionage activities abroad. Thus, in a speech on 1 November 1937 before theWehrmachtakademie, General Thomas stated:

“If you consider that one will need during the war considerable means in order to organize the necessary propaganda, in order to pay for the espionage service, and for similar purposes, then one should be clear that our internal Mark would be of no use therefore, and that Foreign Exchange will be needed.” (EC-14)

This need for foreign exchange was reduced in part by virtue of the espionage and propaganda services rendered free of charge to the Nazi state by leading German industrial concerns. A memorandum dated at Essen on 12 October 1935, which was found in the files of the Krupp company, contains the subheading: “Concerns:—distribution official propaganda literature abroad with help of our foreign connections.” It goes on to say that on the morning of 11 October the district representative of the RibbentropPrivate Foreign Office,Dienststelle Ribbentrop, made an appointment by telephone with Mr. Lachman to arrive at an appointed time. The memorandum continues:

“In answer to my question, with whom I was dealing and which official bureau he represented, he informed me that he was not himself the district representative of Ribbentrop’s Private Foreign Office, but that a Mr. Landrat Bollman was such and that he himself had come at Mr. Bollman’s order.” (D-206)

After discussing the confusion in the field of foreign propaganda, the memorandum states that Ribbentrop’s Foreign Office is creating a private organization for foreign propaganda, and that for this purpose the support of the Krupp firm and especially an index of addresses are needed. This request received the following response:

“I informed Mr. Lachman that our firm has put itself years ago at the disposal of official bureaus for purposes of foreign propaganda, and that we had supported all requests addressed to us to the utmost.” (D-206)

These activities are demonstrated by another document found in the files of the Krupp company. A memorandum prefaced by Herr Sonnenberg, on 14 October 1937, reports a meeting at Essen on 12 October 1937. The government’s request for assistance in foreign intelligence activities met this response:

“On our part we undertook to supply information to the Combined Services Ministry (R.K.M.) as required.” (D-167)

Meanwhile the conspirators’ program of self-sufficiency was proceeding with great speed. The production of steel, for example, as shown in official German publication, rose as follows:

The production of gasoline increased at an even greater tempo: from 387,000 tons in 1934 to 1,494,000 tons in 1938 (Statistical Yearbook of the German Reich, 1939-1942).

The Nazi conspirators pressed the completion of the armament program with a sense of urgency betraying their awareness of the imminence of war. At a meeting on 4 September 1936 Goering pointed out that “all measures have to be taken just asif we were actually in the state of imminent danger of war.” He pointed out that:

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