Mefo bills were drawn by armament contractors and accepted by a limited liability company, [The Metallurgische Forschungsgesellschaft m. b. H.], the initials of which spell mefo from whence the transaction takes its name. This company had a nominal capital of 1 million Reichsmarks and was therefore merely a dummy organization. The bills were received by all German banks for possible rediscounting with the Reichsbank, and the bills were guaranteed by the Reich. Their secrecy was assured by the fact that they appeared neither in the published statements of the Reichsbank nor in the budget figures.
The mefo bill system continued to be used until April 1 of 1938. To that date, 12 billion Reichsmarks of mefo bills for the financing of rearmament had been issued. Since it was no longer deemed necessary in April of 1938 to conceal the vast progress of German rearmament, mefo financing was discontinued at that time.
A further source of funds which the Defendant Schacht drew upon 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 stated—and I am quoting: “Our armaments are also financed partly with the credits of our political opponents.”
That statement may be found in a memorandum from the Defendant Schacht to Hitler, dated 3 May 1935, and it bears the number in the document book of 1168-PS, and the specific sentence is found in the second paragraph.
The outstanding mefo bills at all times represented 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. The Defendant Schacht continued on his course, because he stands, he said, “with unswerving loyalty to the Führer because he fully recognizes the basic ideas of National Socialism and because at the end, the disturbances, compared to the great task, can be considered irrelevant.”
High-ranking military officers paid tribute to the Defendant Schacht’s contrivances on behalf of the Nazi war machine. In an article written for the Military Weekly Gazette in January of 1937, it is said:
“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 the directions from the Führer 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 re-doubled their efforts to prepare Germany for a major war. The Four Year Plan, as we have indicated earlier, was proclaimed by Hitler in his address at the Nuremberg Party convention on the 9th day of September in 1936, and it was given a statutory foundation by the decree concerning the execution of the Four Year Plan dated the 18th day of October, 1936, which is found in the Reichsgesetzblatt of 1936, in the first part, on Page 887. By this decree the Defendant Göring 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 November 1 of 1937, before the Wehrmachtakademie, General Thomas stated: