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 contrivances on 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 (Reichsgesetzblatt 1936, 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 the Wehrmachtakademie, 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 Ribbentrop Private Foreign Office, Dienststelle Ribbentrop, made an appointment by telephone with Mr. Lachman to arrive at an appointed time. The memorandum continues: