MR. DODD:
“Since political entanglements abroad must be avoided at present under all circumstances . . . only those preparatory measures that are urgently necessary may be carried out. The existence of such preparations, or the intention of them must be kept in strictest secrecy in the zone itself as well as in the rest of the Reich.”
The preparations are then set out, and they include, as I have indicated a few minutes ago, as the last one in the list, the preparations for economic mobilization.
There are many others, of course. The preliminary mustering of horse-drawn and motor vehicles, preparation for evacuation measures, and so forth. We say—passing now from that document—we say the rapid success of the German re-armament is attributable to the greatest extent to the work of the Defendant Schacht. In the fall of 1934, the Nazi conspirators announced the so-called “New Plan,” aiming at the control of imports and exports in order to obtain the raw materials which were needed for armaments and the foreign currency which was required to sustain the armament program. This new plan was the creation of the Defendant Schacht, and under the plan, the Defendant Schacht controlled imports by extending the system of supervisory boards for import control, which was previously limited to the main groups of raw materials, to all goods imported into Germany, whether raw materials, semi-manufactured goods, or finished products. The requirement of licenses for imports enabled the Nazi conspirators to restrict imports to those commodities which served their war aims.
Subsequently, in February of 1935, the “Devisen” Law was passed which can be found by reference in the Reichsgesetzblatt of 1935, Part I, Page 105; and under it, all transactions involving foreign exchange were subject to the approval of Devisenstellen (the Foreign Exchange Control Offices). By thus controlling the disposition of foreign exchange, the conspirators were able to manipulate foreign trade so as to serve their needs and desires.
Thus every aspect of the German economy was being geared to war under the guidance particularly of the Defendant Schacht. In a study of the economic mobilization for war as of 30 September 1934, it was stated that steps had already been taken to build up stock piles, to construct new facilities for the production of scarce goods, and to redeploy industry, to secure areas and to control fiscal and trade policies. References were made to the fact that the task of stock piling had been hampered by the requirement of secrecy and camouflage. Reserves of automobile fuels and stocks of coal were being accumulated and the production of synthetic oil was accelerated. Civilian supply was purposely organized so that most plants would be working for the German Armed Forces. Studies were made of the possibility of barter trade with supposedly neutral countries in case of war.
The matter of financing the armament program presented a difficult problem for the conspirators. In 1934 and 1935 the German economy could by no possibility have raised funds for their extensive rearmament program through taxes and public loans. From the outset, the armament program involved “the engagement of the last reserves.”
Apart from the problem of raising the huge sums required to sustain this program, the Nazi conspirators were exceedingly anxious, in the early stages, to conceal the extent of their feverish armament activities.
After considering various techniques of financing the armament program, the Defendant Schacht proposed the use of so-called “mefo” bills. One of the primary advantages of this method was the fact that figures indicating the extent of rearmament that would have become public through the use of other methods could be kept secret through the use of mefo bills, and mefo bills were used exclusively for armament financing.
Transactions in mefo bills worked as follows: