«Hitler essentially wanted all the positives of heavy government spending without the negatives. In response, THE ARCHITECT OF THE RECOVERY, REICHSBANK PRESIDENT HJALMAR SCHACHT, created MeFo bills. At their simplest, MeFo bills were bills of exchange. They were issued by the industrial company Metallurgische ForschungsAnstalt (Metallurgical Research Institution). But this company was a DUMMY CORPORATION, cobbled together by Schacht and German heads of industry with a capitalization of only 250,000 Reichsmarks (RM). The MeFo corporation would fund rearmament projects by issuing these bills of exchange, which contractors could discount for RMs at private banks. These banks were willing to hold MeFo bills because the Reichsbank, Germany’s central bank, guaranteed to re-discount them. To further entice investors, MeFo bills carried an interest rate of 4%, which was higher than that of other trade bills at the time. To make sure that the bills were never exchanged for RMs, which would lead to inflation, the ninety-day maturation period for the bills kept being extended until the actual maturation period became five years. Summing up how unethical MeFo bills were, the Russian Nuremburg judge Iona Nikitchenko called them “A SWINDLING VENTURE ON A NATIONAL SCALE THAT HAS NO PRECEDENT."»

~ The Nazi Fiscal Cliff: Unsustainable FinancialPractices before World War II, Parker Abt

"From 1934 to 1938, the Nazis funded rearmament through 12 billion RMs worth of MeFo bills. These MeFo bills allowed the government to exclude this figure from their official expenditure statements (so no inflation could occur) and to circumvent the Central Banking Law, which prohibited the Reichsbank from funding the government. Perhaps most importantly, the MeFo bills also allowed the government to hide its rearmament financing from the world until Hitler was ready to reveal it in March 1935. The Nazis knew that dealing in MeFo bills was a risky maneuver with the potential for immediate collapse and Reichsbank officials hoped that the budget would balance before banks decided to rediscount their MeFo bills."

~ The Nazi Fiscal Cliff: Unsustainable FinancialPractices before World War II, Parker Abt

"from the start of Hitler’s reign to the end of MeFo bill financing, the amount of RMs in circulation rose from 3,560 million to 5,278 million. But from March to December 1938, currency circulation rose to 8,223 million RMs, effectively rising more in ten months than it had in the previous five years. THE DEFICIT LIKEWISE ROSE ENORMOUSLY in this time though it had been increasing at a healthy pace previously. Schacht told Hitler that spending on the military would have to be cut or INCREDIBLE INFLATION WOULD ENSUE. Instead of listening to Schacht, Hitler fired him, electing to replace him with a loyal deputy named Walther Funk. Hitler instructed Funk to get prices, wages, and the foreign trade debacle under control using whatever means necessary. A short, obsequious letter written by Funk to Hitler regarding the status of the economy in mid-1939 highlights the stark difference between Funk and Schacht as protectors of the German economy; Funk would do whatever Hitler demanded, regardless of the havoc it would wreak"

~ The Nazi Fiscal Cliff: Unsustainable FinancialPractices before World War II, Parker Abt

"The catalyst for such an atypical recovery was a sustained government campaign to grow the military. Full scale rearmament had begun by 1934, and 70% of government expenditures had gone toward it by 1939.However, the Nazis felt it necessary to completely hide such spending from official figures until March 1935 since rearmament was illegal per the Treaty of Versailles. There was the added concern of causing inflation. It was clear that early in the Nazis’ reign Hitler did not want to induce inflation, which would scare Germans, who had vivid memories of the 1923 hyperinflation. He was even willing to harm Germany’s fragile foreign trade position to inhibit inflation"

~ The Nazi Fiscal Cliff: Unsustainable FinancialPractices before World War II, Parker Abt

"...Schacht's strategy was to expand the use of Mefo bills, which had been introduced in the context of the employment creation program, FOR ARMAMENT FINANCING. Mefo bills were drawn by armaments contractors and accepted by a limited company,"

Debt and Entanglements Between the Wars, p.229

"...on 3 February [1933] Hitler regarded 'radical change' in the economic situation in the near future as unlikely, 'since the German nation's living space was too small'. He was convinced 'that the present economic situation could only be altered by political power and struggle' and described the goal, in his view also associated with the solution of the Reich's economic problems, in no uncertain terms as: 'The conquest and ruthless Germanisation of new living space in the east'. Finally in the cabinet sitting of 8 February [1933], the Chancellor [Hitler] demanded that all measures concerned with creating employment should be taken in close conjunction with the idea of 'rearming' the nation, i.e. with rearmament itself. Hitler held firmly to this principle throughout the following years and did in fact regard the economy purely as an instrument for creating the conditions necessary for his expansionist policy. In Schacht, the President of the Reichsbank, Hitler found an expert who by means of the Mefo Bills created the financial basis for the services' first rearmaments programmes and who also with his 'New Plan' brought the corpus of economic policy into line with overall political strategy."

— The Wehrmacht and German Rearmament, Wilhelm Deist

"Schacht's financial policies and the reorientation of foreign trade to a great extent served the interests of rearmament. But the economic risks involved in an armaments economy very soon become visible. The shortage of foreign exchange, which had already assumed serious proportions by the end of 1934 and which was in the main caused by the import of raw materials vital to armament, became a feature of the National Socialist armaments economy. Attempts to end the crisis by economic measures in the form of the promotion of exports by the State failed because the economy was confronted not by a reduction but by a further increase in the armed services' armaments orders."

— The Wehrmacht and German Rearmament, Wilhelm Deist

"During the remaining days of December a great number of individual instructions were sent out in order to ensure that the implementation of the three-fold increase in the size of the Army could begin on 1 April 1934.
[...]
The extraordinary speed with which the programme was pushed through in the second half of December and with which the first steps towards its realisation were taken, indicates a political as well as a military motive."

— The Wehrmacht and German Rearmament, Wilhelm Deist

"...in the early days of February 1933, a marked acceleration in the implementation of the Second Armaments Programme occurred as a result of additional funds being made available."


— The Wehrmacht and German Rearmament, Wilhelm Deist

«On 22 August [1939], Hitler called the leaders of the three branches of the Wehrmacht to the Obersalzberg to run through the reasons for the imminent war [against Poland] one more time [...] Germany’s highest military leaders [...] would have been surprised at the emphasis HITLER PUT ON THE ECONOMIC NECESSITY TO GO TO WAR NOW. ‘We have nothing to lose and everything to gain,’ he proclaimed. ‘Because of the restrictions our economic situation imposes on us we can only hold out for a few years … We have no choice. We must act.’ WITH THAT, THE DICTATOR ADMITTED THAT ITS GIGANTIC MILITARY EXPENDITURES HAD INDEED BROUGHT GERMANY TO THE VERGE OF ECONOMIC COLLAPSE, just as the former president of the Reichsbank Hjalmar Schacht, who had been fired in January, had predicted. It was already clear from Hitler’s words that the planned war would transfer the costs of this financial crisis to the peoples that Germany was going to subjugate.»

— Volker Ullrich
Hitler: Downfall 1939–45

«On September 1,1938, Schwerin von Krosigk [minister of Finance] informed the Führer that within the month state coffers would run dry. Issuing more bonds, von Krosigk insisted, was not an option, since potential investors favored tangible assets. “We are heading for a GRAVE FINANCIAL CRISIS,” von Krosigk warned. “The initial signs of it have already attracted attention abroad to the WEAKNESS OF OUR ECONOMY and have led to a worrisome loss of confidence at home.”»

𝐆ö𝐭𝐳 𝐀𝐥𝐲
Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State

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