Hitler's Economic Policies: Rearmament Financed by Hidden Bills of Exchange

The Ghost Bills of Exchange That Financed Hitler's Rearmament of Germany

A bill of exchange that the central bank discounted without leaving a trace in public accounts. This was the mechanism by which Nancy Germany financed its rearmament while the entire country believed it was witnessing an economic miracle. It was not. Unemployment did fall from six million people to almost none, it is true, but largely due to statistical exclusion and conscription, not wealth creation. And the bill, sooner or later, was paid by invading neighboring countries.

Mefo-Wechsel: Camouflaged Debt Maturing in Five Years

The state financed itself by issuing bills of exchange through Metallurgische Forschungsgesellschaft, a shell company. The Reichsbank, then led by Hjalmar Schacht, discounted them without them appearing in the budget. They were for five years, but the scheme was designed to be renewed. From 1938 onwards, as the first ones began to mature, they were not paid: they were converted into short-term Treasury bills and monetization continued. The hidden debt mountain totaled approximately 12 billion RM in theory. The "miracle" was, in essence, a debt to be collected from neighboring countries.

Autarky at Gold Prices and Plunder as a Payment Plan

To avoid foreign dependence, a forced autarky was established: synthetic rubber and gasoline obtained from coal via the Fischer-Tropsch process. Extremely expensive, but it served to prevent a blockade from strangling the country in a war. Some argue that international banking pulled the strings of this operation, with Schacht presiding over the Bank for International Settlements in Switzerland to keep the scheme from being too conspicuous. The debt, after all, had been created to be paid, and there was no choice but to do so by force. There was no serious economic ideology behind it: a jumble of autarky and Social Darwinism, not a plan.

The data that throws things off was written by a contemporary who saw it from the inside: Günter Reimann published The Vampire Economy in 1939, the same year the show began.

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