The Nizkor Project: Remembering the Holocaust (Shoah)

Nazi Conspiracy & Aggression
Volume I Chapter IX
Preparation for Aggression
(Part 3 of 14)

B. Economic and Financial Preparations for Aggressive War. One of the most significant preparations for aggressive war is found in the Secret Reich Defense Law of 21 May 1935 (2261-PS). The law went into effect upon its passage. It stated at its outset that it was to be made public instanter, but at the end of it Adolf Hitler signed the decree ordering that it be kept secret. General Thomas, who was in charge of War Armament Economy and for some time a high ranking member of the German High Command, refers to this law as the cornerstone of war preparations. He points out that, although the law was not made public until the outbreak of war, it was put into immediate execution as a program for preparations. These statements are made at page 25 of General Thomas' work, "A History of the German War and Armament Economy, 1923-1944." (2353-PS)

This secret law remained in effect until 4 September 1939, at which time it was replaced by another secret defense law (2194-PS) revising the system of defense organization and directing more detailed preparations for the approaching status of 'mobilization which was clearly an euphemism for war.

The covering letter, under which this second Reich Defense Law, was sent to the Ministry for Economy and Labor for Saxony in Dresden, on 6 December 1939, was classified Top Secret and read as follows:

"Transportation Section, attention of Construction Chief Counsellor Hirches, or representative in the office of the Reich Protector in Bohemia and Moravia, received Prague, 5 September 1939, No. 274.

"Inclosed please find a copy of the Reich Defense Law of 4 September 1938 and a copy each of the decrees of the Reich Minister of Transportation, dated 7 October 1938, RL

[Page 416]

10.2212/38, top secret, and of 17 July 1939, RL/LV 1.2173/39, top secret. For your information and observance, by order, signed Kretzchmar. 3 inclosures completed to Dresden, 4 September 1939, signed Schneider 3 inclosures. Receipt for the letter of 4 September 1939, with 3 inclosures, signed 5 September 1939, and returned to construction Counsellor Kretzchmar." (2194-PS)

Thus the second secret Reich Defense Law was transmitted under top secret cover.

The general plan for the breach of the Treaty of Versailles and for the ensuing aggressions was carried out in four ways: (1) secret rearmament from 1933 to March 1935; (2) the training of military personnel (that includes secret or camouflage training); (3) production of munitions of war; (4) the building of an air force.

The facts of rearmament and of secrecy are self-evident from the events that followed. The significant phase of this activity lies in the fact that it was necessary in order to break the barriers of the Treaty of Versailles and of the Locarno Pact, and to make ready for aggressive wars which were to follow.

Those activities by their nature and extent, could only have been for aggressive purposes. The highest importance which the German government attached to the secrecy of the program is emphasized by the disguised methods of financing utilized both before and after the announcement of conscription, and the rebuilding of the army, on 16 March 1935.

The point is illustrated by an unsigned memorandum by Schacht dated 3 May 1935, entitled, "The Financing of the Armament program, "Finanzierung der Ruestung." (1168-PS) It is not signed by Schacht, but in an interrogation on 16 October 1946, he identified it as being his memorandum. The memorandum reads as follows:

"Memorandum from Schacht to Hitler [identified by Schacht as Exhibit A, interrogation 16 October 1945, page 40] 3 May 1935.

"Financing of Armament. The following explanations are based upon the thought, that the accomplishment of the armament program with speed and in quantity is the problem of German politics, that everything else therefore should be subordinated to this purpose as long as the main purpose is not imperiled by neglecting all other questions. Even after 16 March 1935, the difficulty remains that one cannot undertake the open propagandistic treatment of the German people for support of armament without endangering our po-

[Page 417]

sition internationally (without loss to our foreign trade). -The already nearly impossible financing of the armament program is rendered hereby exceptionally difficult. "Another supposition must be also emphasized. The printing press can be used only for the financing of armament to such a degree, as permitted by maintaining of the money value. Every inflation increases the prices of foreign raw materials and increases the domestic prices, is therefore like a snail biting its own tail. The circumstance that our armament had to be camouflaged completely till 16 March 1935, and even since this date the camouflage had to be continued to a larger extent, making it necessary to use the printing press (bank note press) already at the beginning of the whole armament program, while it would have been natural, to start it (the printing press) at the final point of financing. In the portefeuille of the Reichsbank are segregated notes for this purpose, that is, armament, of 3,775 millions and 866 millions, altogether 4,641 millions, out of which the armament notes amount to Reichsmarks 2,374 millions, that is, of 30 April 1935. The Reichsbank has invested the amount of marks under its jurisdiction, but belonging to foreigners in blank note of armament. Our armaments are also financed partly with the credits of our political opponents. Furthermore, 500 million Reichsmarks were used for financing of armament, which originated out of [Reichsanleihe], the federal loans, placed with savings banks. In the regular budget, the following amounts were provided. For the budget period 1933-34, Reichsmarks 750 millions; for the budget period 1934- 35, Reichsmarks 1,100 millions; and for the budget period 1935-36, Reichsmarks 2,500 millions.

"The amount of deficits of the budget since 1928 increases after the budget 1935-36 to 5 to 6 millions Reichsmarks. This total deficit is already financed at the present time by short term credits of the money market. It therefore reduces in -advance the possibilities of utilization of the public market for the armament. The Minister of Finance [Reichsfinanzminister], correctly points out at the defense of the budget: As a permanent yearly deficit is an impossibility, as we cannot figure with security with increased tax revenues in amount balancing the deficit and any other previous debits, as on the other hand a balanced budget is the only secure basis for the impending great task of military policy. For all these reasons we have to put in motion a fundamental and conscious budget policy which solves the problem of arma-

[Page 418]

ment financing by organic and planned reduction of other expenditures not only from the point of receipt, but also from the point of expenditure, that is, by saving.

"How urgent this question is, can be deduced from the following, that a large amount of task has been started by the state and party and which is now in process, all of which are not covered by the budget, but from contributions and credits, which have to be raised by industry. in addition to the regular taxes.

"The existing of various budgets side by side, which serve more or less public tasks, is the greatest impediment for gaining a clear view over the possibilities of financing the armaments. A whole number of ministries and various branches of the party have their own budgets, and for this reason have possibilities of incomes and expenses, though based on the sovereignty of finance of the state, but not subject to the control of the Minister of Finance and therefore also not subject to the control of the cabinet. Just as in the sphere of politics the much too far-reaching delegation of legislative powers to individuals brought about various states within the states, exactly in the same way the condition of various branches of state and party, working side by side and against each other, has a devastating effect on the possibility of financing. If on this territory concentration and unified control is not introduced very soon, the solution of the already impossible task of armament financing is endangered.

"We have the following tasks:

"(1) A deputy is entrusted with finding all sources and revenues, which have its origin in contributions to the federal government, to the state and party and in profits of public and party enterprises.

"(2) Furthermore experts, entrusted by the Fuehrer, have to examine how these amounts were used and which of these amounts can in the future be withdrawn from their previous purpose.

"(3) The same experts have to examine the investments of all public and party organizations, to which extent this property can be used for the purpose of armament financing.

"(4) The federal Ministry of Finance is to be entrusted to examine the possibilities of increased revenues by way of new taxes or increasing of existing taxes.

"The up-to-date financing of armaments by the Reichsbank

[Page 419]

under existing political conditions was a necessity and the political success proved the correctness of this action. The other possibilities of armament financing have to be started now under any circumstances. For this purpose all absolutely non-essential expenditures for other purposes must not take place and the total financial strength of Germany, limited as it is, has to be concentrated for the one purpose of armament financing. Whether the problem of financing, as outlined in this program, succeeds, remains to be seen, but without such concentration, it will fail with absolute certainty." (1168-PS)

The original plaintext version of this file is available via ftp.

[ Previous | Index | Next ]

Home ·  Site Map ·  What's New? ·  Search Nizkor

© The Nizkor Project, 1991-2012

This site is intended for educational purposes to teach about the Holocaust and to combat hatred. Any statements or excerpts found on this site are for educational purposes only.

As part of these educational purposes, Nizkor may include on this website materials, such as excerpts from the writings of racists and antisemites. Far from approving these writings, Nizkor condemns them and provides them so that its readers can learn the nature and extent of hate and antisemitic discourse. Nizkor urges the readers of these pages to condemn racist and hate speech in all of its forms and manifestations.