Newsgroups: alt.revisionism Subject: Holocaust Almanac: Schacht & Reichsbank insolvency Summary: Although nazi propaganda often asserts that Adolf Hitler was some sort of financial miracle worker, the reality seems at distinct odds with that view. According to Schacht, the Reichsbank was insolvent following the Anschluss-Sudeten period. Followup-To: alt.revisionism Organization: The Nizkor Project, Vancouver Island, CANADA Keywords: Lines: 101 Archive/File: holocaust/germany/nuremberg schacht.002 Last-Modified: 1994/03/02 "On January 7, 1939, Schacht told Hitler he was sitting atop an inflationary volcano that was about to explode the economy. During the first five years of the Nazi regime the amount of currency in circulation had increased from 3.6 to 5.3 billon marks. Although consumer goods production fell far short of keeping pace, rigid price controls, sometimes enforced by the SA, and covert manipulation that sacrificed quality for quantity kept the rise in prices under control. But the money required to finance the Anschluss, the Sudeten acquisition, and the preparation for war resulted in a _near doubling of money in circulation_, from 5.3 billion to 10.2 billion marks, in ten months. 'Beginning in March,' and through the period of the Austrian and Sudetenland invasion and the actions connected therewith, the 'wage and price structure totally fell apart,' Schacht stated. 'The overemployment of the economy was accompanied by scarcity of materials and labor and by lowering of quality. At the same time the relative production of consumer goods for daily needs lagged. The excess in orders and the pressure for quick production have caused the failure of all planning by the authorities [and] force the manufacturers to corner material and labor which has caused _an excessive price and wage racket_ because of the shortage of materials and labor. Especially in the field of _daily requirements_ for the home and clothing, the lack of supply and above all the decline of quality is most evident. Children's clothes, workers' clothes, and so forth, which formerly lasted for years now last for only months, but cost the same or even more than the previous good merchandise. _The unlimied growth of the government_ expendatures nullifies every attempt for an orderly budget and brings the _government's finances to the verge of bankruptcy_ despite a tremendous increase in taxes. Due to _Treasury deficits_ running into billions, the Minister of Finance during the last months was continually placed in the position to declare insolvency or to cover the deficit in the Reich finances through inflationary means of using the printing press. Gold or foreign exchange reserves of the Reichsbank are extinct. _The unfavorable balance of imports over exports is increasing rapidly_. _The reserves, created through the annexation of Austria and the requisitioning of foreign securities and domestic gold coins are exhausted_.' (NCA, 3358 PS, The Jewish Question as a Factor in German Foreign Policy in 1938, Jan. 25, 1939) To Hitler the answer seemed simple: issue new currency backed by the real estate, securities, and valuables obtained from the Jews through the billion-mark fine -- the real purpose of the confiscation. [Conot refers to the Kristallnacht fines, which established the legal principle that the Jews must pay the cost of the destruction of their property by the Nazis. knm] Schacht, however, replied: 'Covering the expended money with real estate, securities, and so forth cannot retain the currency value. An increase in the production of goods is not possible by the increase of scraps of paper money -- one can only increase prices and wages, but not production.' Schact and the directors of the Reichsbank were of the opinion that 'it is now time to put a stop to it.' The budget must be brought into balance. The treasury, which had run out of funds to pay current obligations and government employees, must stop printing money ad infinitum. The Reichsbank's independence to control the money supply must be restored. (Ibid; Schact, p. 369) 'This is rebellion!' Hitler sputtered, and on January 20, summoned Schacht to unburden himself of his grievances. Remarking, 'You don't fit in to the National Socialist scheme of things,' he dismissed Schacht and two other Reichsbank directors. Ticking off the charges one by one, he transfixed the impassive banker: 'You have criticized and condemned the events of November 9!' 'Had I known that you approved of these events, I should have said nothing,' Schacht replied imperturbably. For once, Hitler was speechless. 'I am too upset to continue this conversation, he burst out, and indicated Schacht should take his leave. (Schacht, 359) Hitler had reached the end of Germany's economic tether. By drawing men from agriculture into industry and the armed forces, he was aggravating the shortfall in food production. One bad harvest had already necessitated a doubling of grain imports, and another (which was to come in 1940) portended disaster. Having led Germany from depression into bankruptcy, he was left with his final option: to retreat or go to war. And he would never retreat." (Conot, 176-178) Work Cited Conot, Robert E. Justice at Nuremberg. New York: Harper & Row, 1983 Schacht: Conot's notes are unclear as to the Schacht cited, although the bibliography lists two works, which I include here: Schacht, Hjalmar. Account Settled. London: Weidenfeld & Nicolson, 1953 ----------------. Confessions of the Old Wizard. Boston: Houghton Mifflin Co., 1956 Abbreviations: IMT. International Military Tribunal, Trial of the Major War Criminals; the published transcipts of the trial. NCA. Nazi Conspiracy and Aggession, the 10-volume compendium of the prosecution's agruments.
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