The Nazi Myth of Job Creation, Part - II

Continued from: https://telegra.ph/The-Nazi-Myth-of-Job-Creation-Part---I-04-24

THE STRONGEST LONG-TERM STIMULI DRIVING ECONOMIC RECOVERY AND THE DECREASE IN UNEMPLOYMENT CAME FROM THE REARMAMENT OF GERMANY, which Hitler began pursuing immediately after being named Reich chancellor. As early as February 1933, Hitler was stressing to Germany’s military and his cabinet that rearmament would be made an absolute priority. “SUMS IN THE BILLIONS” WOULD HAVE TO BE FOUND, HITLER DECLARED, BECAUSE “THE FUTURE OF GERMANY DEPENDS SOLELY AND ALONE ON THE RECONSTRUCTION OF THE WEHRMACHT.” Hitler did not think then that Reichsbank President Hans Luther was flexible enough to support accelerated rearmament with expansive monetary and credit policies, so in March 1933 he appointed Hjalmar Schacht to the post. This was also an expression of gratitude for the valuable services Schacht had rendered to the National Socialists before 1933. The package of expenditures drawn up for the military totalled an astronomical 35 billion reichsmarks. The sum dwarfed that allocated for civilian job-creation measures and was to be placed at the government’s disposal in annual instalments of 4.4 billion reichsmarks over the course of eight years. To finance such expenses, Schacht came up with a deviously clever system for procuring money. In the summer of 1933, for the purpose of financing arms contracts, four large industrial and armaments companies—Gutehoffnungshütte, Krupp, Rheinstahl and Siemens—formed a dummy firm called Metallurgische Forschungsgesellschaft (Mefo—Metallurgic Research Society), which issued bills of exchange, guaranteed by the state and discounted by the Reichsbank, to the arms producers. The first Mefo bills were drawn in the autumn of 1933, but in line with the pace of rearmament, the first major payments only began in April 1934. That initiated a spiralling process of financing a rearmament industry on credit, WHICH IN THE LONG TERM WOULD HAVE LED TO SERIOUS ECONOMIC DEFAULTS.