Nazi conspiracy and aggression, Volume 03 (of 11)

Chapter XXXIX: Section III: 527/2. 44g (C 2) of 21.3.1944 (1)

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The C-in-C of the Security Police and the SD in Paris reports the arrest of isolated parachutists of _French nationality_ in English uniform near Plumelec/Morbihan. It is evident from interrogation that _members of the De Gaulle Army_, after reporting voluntarily to the "Service Air Special," were taking part in a 14-days special training camp, in which were 300 Frenchmen and 300 Englishmen. Apparently only Frenchmen are used for operations in France. The parachute-jump is made in groups of ten, each consisting of:

1 Lieutenant
2 wireless operators
7 sabotage experts.
Armament: each man
1 sub-machine gun
1 pistol
1 carbine
1 stabbing weapon.
Equipment: Sabotage and radio apparatus,
including Eureka gear i.e.
D/F beacons.
(therefore arrested by the SD? [marginal note in pencil])

The group which was arrested had orders to carry out railway sabotage in the district around Rennes. The acts of sabotage were obviously to be carried out by the group as a body. In addition, the group was to await further orders in some hiding-place.

Apparently they were not ordered to link up with the local resistance organisations. The arrested men had no civilian identity cards on them.

The employment of such groups is for the most part obviously planned for regions where, due to the action of the Security Police, there are no more local resistance or sabotage organisations in existence, or where the enemy knows that sabotage organisations were only counterfeited by tricks of the security police, which had meanwhile been disclosed.

* * * _I consider it essential that the necessary orders should also be given from there, in order that the lesser units_ of the Armed Forces may not--as has often been the case recently--interpret them wrongly and turn the Commando troops over to the Security Police instead of slaughtering them in combat as they retreat. It is only a question of handing them over to the Security Police when members of Commandos of this kind are not captured in battle by the Armed Forces but by other means, e.g., by being handed over by the native police.

If a few isolated Commando troops _are spared at first for interrogation purposes_, I consider it necessary for the _Security Police authorities to take part in_ the interrogation. The further treatment of members of Commandos, who are finally to be treated as killed in action [Gefallene], is, however, even in these cases, the responsibility of the Armed Forces.

I request that the measures taken from there be reported to me.

By Order

Signed: Mueller

TRANSLATION OF DOCUMENT 1279-PS

MOST SECRET

_WFSt/Qu (Admin. 1)_
No. 007893/44 Most Secret
[The number is changed, in pencil, to 009074/44]
One copy has been destroyed
[remainder of pencil note illegible] 27/7
22.7.1944
2 Copies
2nd Copy

_Subject_: Treatment of members of foreign "military missions" captured with partisan groups.

Minutes of a meeting

1. The Fuehrer has decided that members of Anglo-American and Soviet-Russian so-called "military missions", captured in the partisan fighting in the South-East, are to be treated in the same way as those taking part in a commando-operation and not as prisoners of war.

2. Independently of the above, the Ag. Ausl., following queries made by the RSHA--Military Section--has put forward for decision the question of how British and American soldiers, captured with the partisan groups are to be treated.

The following are the resulting opinions:

a. _C-in-C, South-East_

The members of allied military missions are to be handed over to the SD, should the opinion below (b) be inapplicable.

b. _Supreme Command of the Armed Forces/Prisoners of war general_ in conjunction with _Supreme Command of the Army/Army General Staff Alien Armies in the West_ and Armed Forces Ops. Staff/Op. (Army).

Treatment as prisoners of war in accordance with Order: Armed Forces Ops. Staff/Op (Army) No. 03408/43 Secret, dated 18.8.43.

c. _Supreme Command of the Armed Forces/Chief of Prisoners of War Section_ in conjunction with _Armed Forces Reserve_ (_WR_) and _Armed Forces Ops Staff/Org I_.

Treatment as prisoners of war in accordance with Order: Armed Forces Ops Staff/Org II No. 02958/43 Secret, dated 8.7.43, which disregards differences of nationality. The only exception made is in the case of commando operations. (then they are handed over to the Security Service [SD]).

d. _RSHA/Section IV_

Fundamentally treatment as prisoners of war under the directives mentioned in b and c, but a more definite ruling is required to decide whether and in what circumstances, they are to be handed over to the Security Service [SD].

e. _RSHA/Military Section_

Considers that the Commando Order _cannot_ be applied to partisan fighting in the south East, that to do so would be dangerous in that it might imperil those taking part in our own operation (Brandenburg).

No opinion on the question of foreign missions.

f. _Ag. Ausl._

Fundamentally, treatment as prisoners of war, that implies that members of missions were taking part in a commando-operation.

g. _Armed Forces Ops Staff/Op._ (_Army_)

Treatment as the members of partisan groups themselves, i.e., as prisoners of war if they are in uniform and are captured or surrender in open battle, or executed if they are in civilian clothes or are captured in a sabotage- or commando-operation.

[The whole of g is crossed out.]

3. _Opinion and proposal of the Armed Forces Ops. Staff_

According to the orders issued to date, even for example, the British captured in the "Rosselsprung" operation must be treated as prisoners of war. This is especially evident in the Op. (Army)-Order dated 18.8.43.

[This last sentence is put in parenthesis, underlined, Op (Army) crossed out and a large query inserted in the margin.]

The Commando Order has never yet been applied to such missions, its extended application to cover them has not yet been ordered. If the missions are to be treated otherwise than in accordance with the orders to date, it must first be decided whether a foreign mission acting with the partisan groups in the South-East is to be called a commando-operation and therefore treated as such. Such a decision seems to be indicated even if it does not correspond completely to the wording of the Commando-Order or to the previous definition of a commando operation (as an especially under-hand and still unusual form of warfare which must be combatted with the appropriate counter measures). The principle must be adopted from the start that all members of partisan groups, even in the South-East are fundamentally guerrillas. Indeed they are treated as prisoners of war for reasons of expediency, in order to obtain the largest possible number of deserters and workers. There is no reason for this with regard to the members of foreign missions who are not numerous. There is therefore no necessity to treat them, in every case, in the same way as the members of partisan groups themselves. Basically, it would be far more appropriate to consider Anglo-American as well as Soviet-Russian military missions as commando-operations and to treat their members accordingly.

The appended Order is therefore proposed.

W [Initialed by Warlimont]

* * * * *

MOST SECRET

_WFSt/Qu_ (_Admin._ 1) 27.7.1944
No. 009074/44 Most Secret
2 Copies
1st Copy

_Subject_: Treatment of members of foreign "military missions" captured with partisan groups.

K [initialled in pencil by Keitel]

Minutes of a meeting

1. The Fuehrer has decided that members of Anglo-American and Soviet-Russian so-called "military missions", captured in the partisan fighting in the South East, are to be treated in the same way as those taking part in a commando-operation and not as prisoners of war.

2. Independently of the above, the Ag. Ausl. following queries made by the RSHA--Military section--, has put forward for decision the question of how British and American soldiers, captured with the partisan groups, are to be treated.

The following are the resulting opinions:

a. _C-in-C, South East._

The members of allied military missions are to be handed over to the SD, should the opinion below (b) be inapplicable.

b. _Supreme Command of the Armed Forces/Prisoners of War General_ in conjunction with _Supreme Command of the Army/Army General Staff/Alien Armies in the West_:

Treatment as prisoners of war in accordance with Order _Supreme Command of the Armed Forces_/Armed Forces Ops Staff/Op. (Army) No. 03408/43 Secret, dated 18.8.43.

c. _Supreme Command of the Armed Forces/Chief of Prisoners of War Section_ in conjunction with _Armed Forces Reserve_ (_WR_):

Treatment as prisoners of war in accordance with Order: Armed Forces Ops. Staff/Org II No. 02958/43 Secret, dated 8.7.43 which disregards differences of nationality. The only exception made is in the case of commando-operations (then they are handed over to the Security Service [SD]).

d. _RSHA/Section IV_

Fundamentally as prisoners of war under the directives mentioned in b and c, but a more definite ruling is required to decide whether, and in what circumstances, they are to be handed over to the Security Service [SD].

e. _RSHA/Military Section_:

Considers that the Commando-Order _cannot be applied_ to partisan fighting in the South East that to do so would be dangerous in that it might imperil those taking part in our own operations (Brandenburg).

No opinion on the question of Foreign Missions.

f. _Ag. Ausl._

Fundamentally, treatment as prisoners of war, that implies that members of missions were taking part in a commando-operation.

3. _Opinion and proposal of the Armed Forces Ops Staff_

According to the Orders issued to date, even, for example, the British captured in the "Ruesselsprung" operation must be treated as prisoners of war.

The Commando-Order has never yet been applied to such missions, its extended application to cover them has not yet been ordered. If the missions are to be treated otherwise than in accordance with the orders to date, it must first be decided whether a foreign mission acting with the partisan groups in the South East is to be called a commando operation and therefore treated as such. Such a decision seems to be indicated even if it does not correspond completely to the wording of the commando-order or to the previous definition of a commando-operation (as an especially under-hand and still unusual form of warfare which must be combatted with the appropriate counter measures). The principle must be adopted from the start that all members of partisan groups, even in the South East, are fundamentally guerillas. Indeed, they are treated _as_ prisoners of war, for reasons of expediency, in order to obtain the largest possible number of deserters and workers. There is no reason for this with regard to the members of foreign missions who are not numerous. There is therefore no necessity to treat them in every case, in the same way as the members of partisan groups themselves. Basically, it would be far more appropriate to consider Anglo-American as well as Soviet-Russian military missions as commando-operations and to treat their members accordingly.

The appended Order is therefore proposed.

Sgd: Warlimont
_Distribution_:

Chief of the Supreme Command of the Armed Forces via the Deputy Chief of the Armed Forces Ops Staff.

1st Copy
Qu. (Draft) 2nd Copy

[The second copy of the above dated 27.7.1944 marked "Draft" is also contained in 1279-PS it is initialled at the end by Warlimont and has an illegible pencil note at the top. In the second copy the first words of 2 and 3 are underlined in pencil. The type-script of both copies is identical.]

* * * * *

MOST SECRET
Draft
_Supreme Command of the Armed Forces_

No. 007893/4 Most Secret/Armed Forces Ops. Staff/QU (Admin. 1)

[The number is changed to 009074/44]
Fuehrer Headquarters 22.7.1944
--Copies, --Copy

_Subject_: Treatment of members of foreign "military missions" captured with partisan groups.

The Special Orders for the treatment of captured members of partisan groups do not apply to members of foreign so-called "military mission" (Anglo-American or Soviet-Russian) captured in the fight against partisan groups in the areas under the command of the C-in-C South East and South West. They are therefore to be treated, not as prisoners of war, but in accordance with the Fuehrer's Order on the extermination of terrorist and sabotage troops, dated 18.10.1942 (OKW/WFSt No. 003830/42 Most Secret).

This order is not to be distributed beyond the divisional or equal-ranking staffs of the other branches of the Armed Forces. Any papers distributed to Army Headquarters and equal-ranking staffs, of the Armed Forces are to be recalled, when read, and destroyed.

[This last sentence is changed to "This order is not to be distributed beyond General Headquarters and equal-ranking staffs of other branches of the Armed Forces and is to be destroyed when read."]

Keitel

_Distribution_:

C-in-C South East Copy 1
C-in-C South West Copy 2
Army General Staff Copy 3
OKM/Naval War Staff Copy 4
OKL/Air Force Ops. Staff Copy 5

Reichsfuehrer SS and Chief of the German
Police--Headquarters Staff of the Reichsfuehrer
SS--for the attention of SS
Brigadefuehrer and Major-General of the
Waffen SS Rohde, also for RSHA Copy 6

OKW/Gen. Armed Forces Dept. Copy 7
/Chief of P.W. section Copy 8
/Armed Forces Reserves (WR) Copy 9
/WFSt/W Pr Copy 10
/Op (Army-Air Force-Navy) Copy 11
/Org Copy 12
/War Diary Copy 13
/Qu (Draft) Copy 14
Reserve Copy 15-25

PARTIAL TRANSLATION OF DOCUMENT 1285-PS

"The German Police"

[Extracts from handbook "Die Deutsche Polizei" 1943]
B. Use of weapons on command

1. Every policeman is compelled to make use of his weapon if a superior officer, in compliance with his duty, orders him to do so.

2. In such a case, the superior officer alone bears the responsibility.

Use of weapons on the part of the police in the case of fugitive PWs

3. Fugitive Russian prisoners of war shall be fired upon without previous challenge.

4. Under no circumstances will warning shots be fired.

* * * * *

_To a_: According to paragraph 1 of the law mentioned * * * the following become as of 1 April 1937 immediate Reichs officials [unmittelbare Reichsbeamte]:

1. Officials occupying TO positions [Planstellen] in the agency "Reichsfuehrer SS and Chief of German Police in the Reichs Ministry of the Interior".

2. The officials of the Security Police [Secret State Police--Gestapo], and Criminal Police, however not the Police administrative officials working with the state police administrations for the criminal police.

3. The officials of the Protective Police [Schutzpolizei] and the Gendarmerie [Landjaegerei] and the police medical and police veterinary officials, police vocational school teachers and technical officials working with these organizations.

The personal salaries and welfare expenses of these officials and the operational expenses of the whole state police will be borne from 1 April 1937 on by the Reich, the same for the salaries, etc. of all employees and workers working at police agencies, who likewise on 1 April 1937 enter the Reichs service (paragraph 1(2) and paragraph 2). Hence from the fiscal year 1937 on there will be made up a Reichs budget for the police.

_To b_: For all police officials uniform official titles are introduced through the law cited * * * along with equal pay; only a few exceptions (retaining of some former official designations for the present incumbents) are permitted in the implementative regulations (transition lists).

_To c_: Through the German police official law [24 June 1937, RGBl I, 653] the same legal situation is created for all process servers without differentiation. Hence in Germany there is no longer a Prussian or a Bavarian process server, but now only a German process server, who is everywhere subject to the same legal regulations, wears the same uniform, and has the same official designation of rank.

The laws cited [relating to police officials] are valid since 1 October 1938 also for the former Austrian federal executive police, which including the police administrative officials by the decree of 27 October 1938 (RGBl. I, p. 1633) is at the same time taken over into the Reichs budget and thereby brought into the Reichs service.

More detailed regulations on this matter are to be found in the implementative regulations of 15 May 1939 [RGBl. I, p. 945]. According to these the valid functional police law in the former state of Austria is not affected.

_To d_: According to paragraph 1 of the law [28 March 1940, RGBl. I, p. 613] the police administrative officials of upper middle and simple civil service rank are transferred onto the Reichs budget. The officials of the higher police administrative service of a federal state can with the consent of the latter be transferred onto the Reichs budget.

* * * * *

[Pp. 81-82]
III. Security Police [Sicherheitspolizei]

At the head of the Security Police is the chief of the security police and of the Security Service [SD]. Provisionally the Reichsfuehrer SS and Chief of the German Police in the Reichs Ministry of the Interior has taken over leadership personally. He unites in his person the direction of the security police and of the "Security Service of the Reichsfuehrer SS".

The security police is composed of the secret state police (including frontier police) and criminal police which in the central instance together with the central offices of the security service are united in the Chief Office for Reichs Security [RSHA].

Thereby the governmental security police and the party's SS intelligence activity complement each other in the unified central agency both organizationally and in leadership.

With the Chief Office for Reichs Security rest the elaboration of all organizational, personnel, economic, and technical affairs of the security police and security service; besides this however, the central agencies of the state police and criminal executives and the central direction of the security service information nets are also included.

In the field of functional legislation the Chief Office for Reichs Security, insofar as its interests are touched upon, either controls the framing of the law or has a part therein.

The chief office for Reich security is composed at present of 7 offices, to these several special institutes are attached.

The following serve to train the members of the security police and the security service:

1. The leaders' school of the security police in Berlin-Charlottenburg.

2. The elementary school of the security police in Fuerstenberg/Mecklenburg.

The establishment of special sport and technical schools is planned.

The criminal-technical institute [KTI] is available for all chemical and physical experiments and research to the whole security police.

The chief of the security police and of the security service is president of the international criminal-police commission. Through this personal union an especially close exchange of findings and methods of the German criminal police with other nations which are also connected with the IKpK is assured.

IV. Higher SS and Police Leaders

Higher SS and police leaders are installed for the area of every military district [Wehrkreis] as well as in the Protectorate of Bohemia and Moravia, in the General Government, in Norway, the Netherlands and in parts of the occupied area of the Soviet Union, who are in their areas the representatives of the Reichsfuehrer SS and chief of the German police in regard to all duties for which the Reichsfuehrer SS and Chief of German Police is responsible.

Inspectors of the order and security police are subordinate to the higher SS and police leaders.

[P. 83]

Inspectors (Commanders) of the Security Police and Security Service

Inspectors of the Security Police and Security Service--without prejudice to their subordination to the higher SS and police leaders--are installed in the field of responsibility of the security police in corresponding manner for the exercise of inspectoral authority.

Outside of territory strictly a part of the Reich, commanders of the security police and security service are appointed whose duty it is to lead the security police forces employed there.

PARTIAL TRANSLATION OF DOCUMENT 1292-PS

Fuehrer Headquarters, 4th Jan. 1944
To Rk. 13402 c Double
Ref.: Allocation of Labor 1944

1. A conference took place with the Fuehrer to-day which was attended by:

The Plenipotentiary for the Employment of Labor, Gauleiter Sauckel,

The Secretary for Armament and War Production, Speer,

The Chief of the Supreme Command of the Army, General Field Marshal Keitel,

General Field Marshal Milch,

The Acting Reich Minister for Food and Agriculture, State Secretary Backe,

The Minister of the Interior, Reich Fuehrer of the SS, Himmler,

and myself.

(The Minister for Foreign Affairs and the Minister of National Economy had repeatedly asked to be permitted to participate prior to the Conference, but the Fuehrer did not wish their attendance).

The Fuehrer declared in his introductory remarks:

I want a clear picture:

(1) How many workers are required for the maintenance of German War Economy?

(a) For the maintenance of present output?

(b) To increase its output?

(2) How many workers can be obtained from Occupied Countries, or how many can still be gained in the Reich by suitable means (increased output)?

For one thing, it is this matter of making up for losses by death, infirmity, the constant fluctuation of workers, and so forth, and further it is a matter of procuring additional workers.

The Plenipotentiary for the Employment of Labor, Sauckel, declared that, in order to maintain the present pool of workers, he would have to add at least 2-1/2 but probably 3 million new workers in 1944. Otherwise production would fall off. Reichminister _Speer_ declared that he needs an _additional_ 1.3 million laborers. However, this would depend on whether it will be possible to increase production of iron ore. Should this not be possible, he would need no additional workers. Procurement of additional workers from Occupied Territory would, however, be subject to the condition that these workers will not be withdrawn from armament and auxiliary industries already working there. For this would mean a decrease of production of these industries which he could not tolerate. Those, for instance, who are already working in France in industries mentioned above, must be protected against being sent to work in Germany by the Plenipotentiary for the Employment of Labor. The Fuehrer agreed with the opinions of Reichminister Speer and emphasized that the measures taken by the Plenipotentiary for the Employment of Labor should order no circumstances which would lead to the withdrawal of workers from Armament and auxiliary industries working in occupied territories, because such a shift of workers would only cause disturbance of production in occupied countries.

The Fuehrer further called attention to the fact that at least 250,000 laborers will be required for preparations against air attacks in the field of civilian air raid protection. For Vienna alone 2000-2500 are required immediately. The Plenipotentiary for the Employment of Labor must add at least 4 million workers to the manpower pool, considering that he requires 2-1/2 million workers for maintenance of the present level, that Reich Minister Speer needs 1.3 million additional workers, and that the above-mentioned preparations for security measures against air attacks call for 0.25 million laborers.

The Plenipotentiary for Employment of Labor, Sauckel, declared that he will attempt with fanatical determination to obtain these workers. Until now, he has always kept his promise as to the number of workers to be furnished. With the best of intentions, however, he is unable to make a definite promise for 1944. He will do everything in his powers to furnish the requested manpower in 1944. Whether it will succeed depends primarily on what _German_ enforcement agents will be made available. His project cannot be carried out with domestic enforcement agents.

The Reichfuehrer SS explained that the enforcement agents put at his disposal are extremely few, but that he would try helping the Sauckel project to succeed by increasing them and working them harder. The Reichfuehrer SS made immediately available 2000 to 2500 men from concentration camps for air raid preparations in Vienna.

Generally all participants in the conference agreed that it will be possible to treat additional manpower even at home by activation and intensification of available labor, especially the Prisoners of War, provided they are given awards in form of additional food, clothing, and so forth. State Secretary Backe will examine to which extent help can be given with additional food. Field Marshal _Milch_ remarked that especially in agriculture, many women, who are really able to work, evade it because they receive family-allotments from their husbands who were inducted into the Armed Forces, and the wages for work done would be deducted from their family allotment. In their primitive way of thinking they therefore believe that they would have to work for nothing. Therefore on one hand, wages should not be deducted from the family allotment; on the other hand, it should be ruled that women who refuse work would, in consequence, receive no family allotment, or only a reduced family allotment.

The Fuehrer did not comment, declaring that he did not wish to go into details any longer.

Results of the Conference:

(1) The Plenipotentiary for Employment of Labor shall procure at least 4 million new workers from occupied territories.

(2) These workers may not be taken from armament and auxiliary industries in actual production in the occupied territories.

(3) It is to be examined by what means the output of workers now on hand can be increased and intensified, especially that of Prisoners of War.

(4) The Plenipotentiary for the Employment of Labor shall get in touch with the Reich Minister for Foreign Affairs before taking any action.

Signed: Dr. Lammers

II. Reichleiter Bormann has received a copy of paragraph I.

III. To the State Secretary for cognizance.

IV. Original to Mr. C. Please return. (Arrival at Fuehrer Headquarters, 6 January 1944.)

TRANSLATION OF DOCUMENT 1301-PS

Financing of the armament

The following explanations take as their premise the fact that the execution of the armament program is by its speed and extent _the_ mission of German policy, that everything else therefore must be subordinated to this purpose, unless the neglect of other questions would endanger the main goal. Even after 16 March 1935, the difficulty continues to exist, that one cannot attempt the influencing of the German people by propaganda for support of the armament, without endangering internationally our position. The financing of the armament program, already almost impossible, is being made especially difficult by that.

Further, another prerequisite must be presented. The printing press can only be used for the financing of armament to the extent which the maintenance of money value allows. Each inflation increases the prices of foreign raw materials, and increases the prices within the country; thus it is a snake, which bites its tail. The fact that our armament had to be camouflaged completely until 16 March 1935, and for the biggest part even afterwards, has led to that, that the printing press has already been made use of at the start of the armament program; whereas it would have been natural to put it at the final point of the financing. Of the 3775 millions in the portfolio of the Reichsbank plus 866 millions set aside in bills of exchange==total of 4641 millions, the bills of exchange to finance armament represent 2374 millions (status of 30 April 1935). The Reichsbank has invested most of the German mark sums, available to its administration and belonging to foreigners, in armament bills of exchange. Thus our armament was partly financed with the property of our political opponents. Also used for the financing of the armament program were the 500 millions RM, which came together through the Reich loan placed at the savings banks in Jan 1935. In the regular budget the following amounts were provided for the armed forces: fiscal year 1933/34 RM 750 millions, fiscal year 1934/35 RM 1100 millions, fiscal year 1935/36 RM 2500 millions.

The sum of the deficits of the budgets increase since 1928, according to the estimate 1935/36, up to 5 to 6 billions RM. At present this total deficit is already being financed by short-term credits from the money market. Thus it already burdens in this amount the possibilities of use of the public market for armament. The Reich Minister of Finance is justified in saying in his budget explanations: "Since an annual deficit ... is an impossibility permanently, since one cannot count with certainty on an increased tax income, covering the deficit and other previous debts; since on the other hand only a balanced budget offers a secure basis for our great future task in the armament policy, fundamentally and consciously--a budget policy must be followed, which will solve the problem of financing of armament by organic and planned decrease of other expenses, not only from the point of view of income, but also of expenses, that means saving."

How urgent this demand is can further be construed from the fact that an unending number of tasks were attacked and are in the process of execution by state and party, all of which cannot be covered by the budget but by subscriptions and credits, which must be raised besides the regular taxes by business. This simultaneous existence of various budgets, which however all serve a more or less public purpose, present the greatest obstacle to the gaining of a clear picture of the financing possibilities of armament. A whole series of ministries and numerous agencies of the party have their own budget in addition to their share of the Reich budget, and thus accordingly income and expense possibilities, which, although they are based on the financial sovereignty of the state, are not subordinated to the control of the Minister of Finance and thus also not to the control of the cabinet. Exactly as in the field of politics, the too far reaching delegation of legislative authority to individuals in Germany has led to the condition of many states within the state, thus the condition of parallelism and divergence [Nebeneinander und Gegeneinander] of numerous state and party agencies has absolutely a disastrous effect on the financing possibility of armament. If in this field, no concentration and no unified control is introduced finally, one must fear the worst for the solution of the almost impossible task of financing of armament.

Thus the following tasks result:

1. A commissioner must at first determine all sources and incomes, which are derived from Reich, State and Party funds, as well as from profits of public or party enterprises.

2. Then, a commission, appointed by the Fuehrer must investigate how these funds were used up to now, and how much can be taken from these funds in the future from their present purpose, and made available to the financing of armament.

3. The same commission has to examine the assets of all public and official party organizations, how the assets have been invested, and to what extent these assets can be utilized for the financing of armament.

4. The Reichministry of Finance is to be commissioned to investigate the possibilities of an increased tax income by the introduction of new taxes or the increase of existing tax rates.

The financing of armament previously by the Reich Bank was a necessity under the existing political conditions, and the political success has proved the correctness of this action. However, now other methods of financing of armament must be attempted under all conditions. With that, all not absolutely necessary expenses in other fields must be refrained from, and the entire, actually small, financial power of Germany must be concentrated on this one goal, the financing of armament. Whether the financial problem will succeed with this method of approach is as yet doubtful, but without such concentration it will fail with certainty.

Memorandum 9.III.1936 on the supply situation in the field of fuels and its effect on the Wehrmacht.

The simultaneous throttling and blocking of foreign sources of liquid fuel has caused an increasingly critical situation of supply of the German market since the beginning of the year 1936.

This situation calls for a description of the serious effects on the preparedness for action of the Wehrmacht and of the extraordinary measures which necessitate a decision in this matter.

The supply of the Wehrmacht is based on the home production, the reserves which can be made available in case of mobilization and the foreign imports which still for some time must fill the present gaps of supply.

I. _The German production._

The anticipating measures taken during the last 2 years by the Reich Cabinet to increase the home production of fuel, will not bring about an essential improvement of the supply situation during the current year because of the time required for factory construction and the uninterrupted increase of demand, but cannot bring an appreciable relief until the year 1938. The list in enclosure 1 of the requirements in case of mobilization and of the supply of these requirements by production, as well as the graphs added to the other enclosures, show the influence to be expected from the German production on the entire supply.

The expanding German production favors mainly light fuels, especially fuel for airplanes, and in addition, oil for airplane engines. As to the other kinds required by the Wehrmacht in case of war, we cannot expect any improvement for the time being; as to heating oils it may be anticipated that the situation will deteriorate. The developments of new processes (Uhde and Pott), the extent of which will shortly permit an opinion, offers certain possibilities of auxiliary supply which do not appear on the graphs, because the extent of the production possible until 1938 cannot yet be foreseen.

The inadequacy of the supply on the basis of home production is a fact which cannot be eliminated during the next 2-3 years, even with the greatest efforts and in spite of the planning started for additional expansion of production.

II. _Reserves._

To assure the requirements of the Wehrmacht it becomes necessary to bridge the supply gaps by reserves. For the first period of mobilization the Wehrmacht relies on the reserves of business, especially of great importing corporations, which also in peace time consider stored reserves for about 3 months as indispensable for smooth distribution. The Wehrmacht ought to be enabled to count on the amount of these reserves remaining constant.

Beyond that the Wehrmacht accumulates its own reserves in large storage houses so that considerable national reserves will be available as buffers in case of supply difficulties.

III. _Dependency of the overall supply on imports._

The obstacle to importing encountered to a large extent during the last weeks, and which have been brought about by an accumulation of economic-political events in foreign trade, endanger not only the maintenance of industrial reserves but also the continuation of the storage policy of the Wehrmacht. They shake the very foundations of the motorization program of industry and consequently also of Wehrmacht mobilization of mechanized vehicles to the extent planned for in case of war.

In particular large gaps have been opened:

1. due to the Russian prohibition of exporting petroleum, by which the benzol-association supplying about 20% of the German market got into considerable difficulties.

2. due to suddenly considerably increased demands of the Rumanians, who offer fuel only in exchange for foreign bills proper [Bardevisen] and/or at greatly increased prices in marks. The contribution of Rumanian imports to the supply of German requirements was 40% during the last year. The firm Olex which contributes 11% to the German market has already been forced, due to the obstruction of Rumanian deliveries, to decrease its business considerably, and will face a close-down of its market supply if relief is not procured before June 1936. Due to this reduction of imports similar stoppages are to be expected by the other great organizations of distribution during the same period.

IV. _Means to secure the supply._

In considering how to meet the situation the following devices are _unbearable_ for the Wehrmacht:

1. Reduction of mechanized traffic because this would, in addition to precarious economic and psychological effects, bring about a throttling of German motorization, which in view of the requirements of the Wehrmacht in case of war, would be a shock to mobility and supply of replacements.

2. Just as undesirable is to be considered the diminishing of reserves. The industrial reserves constitute the basis for mobilization, which has to rely on firm figures which remain about constant. As a decrease of reserves has already started, the further development in this direction is to be counteracted immediately. Aid from the reserves of the Wehrmacht cannot be granted because these modest quantities being ultimate reserves cannot be diminished under any circumstances.

Consequently, only the following means are to be considered:

1. Conceding to the Rumanian demands of paying imports in marks on a considerably raised price-basis.

2. Additional payments in foreign bills proper [Bardevisen] of imports from Anglo-Saxon countries.

3. Investigation to what extent an improvement can be achieved by accelerating or expanding the facilities for German production.

The first course has been followed by the authorization to negotiate new contracts on the basis of the Rumanian demands. Adequate and punctual delivery to the market, however, is not yet assured hereby.

Re. 2. Foreign bills [Devisen] for the minimum of the indispensable import requirements can probably be obtained only by reduction of import of other necessities. The narrow limits of the presently assured raw materials for armament do not allow for a decrease of such imports which are indispensable for the Wehrmacht. In particular we cannot do without the necessary quantities of metals required by the Wehrmacht for current procurements.

Re. 3. As a result of investigations made, essential changes cannot be expected at a date within sight.

V. _Uniform management of the petroleum industry._

During the last few months the Wehrmacht has repeatedly emphasized the unavoidable call for a uniform and planned steering of the entire German petroleum industry. The present dangerous situation of the German fuel industry puts this necessity again into the spotlight. The lack of stern guidance in the present moment must lead to severest damages to the public and the defense of the country. The duty of a management according to plans of the petroleum industry must be in the first line to avert the permanent threat to mechanized traffic and the preparedness of the Wehrmacht for action lying in the extensive dependency on forces outside of the German sphere of control.

* * * * *

_Enclosure 1_ to "memorandum on the supply situation in the field of fuels and its effect on the Wehrmacht" of 9 March 36.

-----------------------------+--------------------+----------------------
| |Supply of requirements
|Mob. requirements | by production
-----------------------------+---------+----------+------------+---------
| 1936 | 1938 | 1936 | 1938
| t/Jahr | t/Jahr | % | %
| | | |
Light fuels for car | | | |
engines | 900 000 | 1 530 000| 43 | 60.5
| | | |
Light fuels for airplane | | | |
engines | 460 000 | 600 000| 39 | 61.5
| | | |
(illegible), Fuel oil | 650 000 | 1 280 000| 11.6 | 22
| | | |
Heating oil | 800 000 | 1 200 000| 30.6 | 22
| | | |
Lubricating oil for car | | | |
engines | 80 000 | 150 000| 22.5 | 23
| | | |
Lubricating oil for airplane | | | |
engines | 35 000 | 55 000| - | 22
-----------------------------+---------+----------+------------+---------

IIa Needed raw materials 4/28/1936 with consideration of the program for the supply of ammunition, amounting to 200 million marks [Mil. RM.] (for the months of April 1936 to March 1937=12 months)

_Supply needed, submitted to R.Wi.Min._ (letter of 1/1336.)
Copper 5400 t/month (without plate VIII)
lead 2300 t/month (without plate VIII)
zinc 3100 t/month (without plate VIII)
_Supply needed, considering the 200 Mill-plan._
Copper 5850 t/month (without plate VIII)
lead 3350 t/month (without plate VIII)
zinc 4020 t/month (without plate VIII)
Therefore the _additional_ need amounts to
Copper 450 t/month
lead 1050 t/month
zinc 920 t/month

_Raw materials needed by parts of the Armed Forces_
(for the months of April 1936 to March 1937)
copper 4830 670 175 175 5850
lead 2750 280 300 20 3350
zinc 2420 160 260 1180 4020

* * * * *

SECRET

_Raw materials needed by the armed forces during the years 1935 and 1936_

---------------------------------------+-----------+-------------
_Raw materials_ |_need 1936_| _t/month 1935_
---------------------------------------+-----------+-------------
_Iron and steel_ | |
| |
Iron ore Fe | 130,000 | 80,000
| |
Manganese ore Mn | 7,000 | 4,000
| |
Chromium 0,5 C | 220 | 88
| |
0,5 C | 160 | 86
| |
Wolfram | 80 | 15
| |
Molybdenum | 40 | 8
| |
Vanadium | 3 | 1
| |
Tantalum | 2 | 0.5
| |
Silicon | 400 | 250
| |
_Non-iron metals_ | |
| |
Copper | 7,500(1)| 4,670
| |
Lead | 6,500(2)| 3,520
| |
Nickel | 275 | 174
| |
Tin | 150 | 89
| |
Zinc | 3,100(3)| 1,830
| |
Aluminum | 2,720 | 1,900
| |
Antimone | 55 | 25
| |
Cadmium | 10 | 0.62
| |
Mercury | 20 | 12
| |
Cobalt | 10 | 3
| |
_Leather goods (economy)_ | |
| |
skins and pelts | 1 300 | 1 400
| |
natural tanning matter | 800 | 860
| |
_Wood_ | |
| |
special foreign timber | 170 | 150
| |
_Grain, fodder and further | |
agricultural products_ | |
| |
linseed | 1 500 | 1 900
| |
_Coal and Salt_ | |
| |
oil coke and Pitch coke--of these 1500 | |
t/month to produce the aluminum | |
needed by the armed forces. | 1 700 | 1 300
| |
_Various goods_ | |
| |
diamonds, amounting to a value of | RM. 15 000| 11 000RM
| /month |
| |
cane | 200 | 160
| |
mica | 18 | 15
| |
magnesite | 1 200 | 1 000
| |
_Rubber and asbestos_ | |
| |
rubber | 280 | 150
| |
asbestos [spinasbest] | 100 | 70
| |
_Fat for industrial purposes_ | |
| |
glycerine | 165 | 120
| |
_Petroleum oils_ | |
| |
gas for plane engines | 7 000 | 4 000
| |
light fuel f. motor vehicles | 3 000 | 1 500
| |
lubrication oil f. plane engines | 700 | 200
| |
lubrication oil f. motor vehicles | 500 | 150
| |
gas-oil, (diesel) | 7 500 | 1 200
| |
heating oil | 15 000 | 6 000
---------------------------------------+-----------+-------------

Note: 1. for cables 2100 t/months; starting on 1 Apr. 36 possibly only 6000 t/month, including 2100 t/ for cables;

Note: 2. for cables 4200 t/months; starting 1 Apr. 36 7800 t/months which means 5500 t/month for cables;

Note: 3. from this amount: sheet-zinc in the limits of the quota of the association of zinc-rolling-mills 340 t/month; starting 1 Apr. 36 possibly only 2700 t/month including sheet-zinc.

Situation re fuel

Copy
Berlin, 15 May 1936
Prime minister General Goering
Raw material and Foreign exchange staff

Top Secret
To the Reichminister of war Generaldfeldmarschall von Blomberg

Enclosed, a record of the conference of the council of ministers of 12 May 1936 in the afternoon is forwarded.

By order

/s/ Loeb
Lt. Col. in the General Staff

* * * * *

Top Secret

_Record of the council of ministers on 12 May 1936 1700 hours_

Chairman: Prime minister General Goering.

Reichminister of War Generalfeldmarschall von Blomberg.

Reichsbank President and acting Reich and Prussian minister for Economy Dr. Schacht

Reichminister of Finance Graf Schwerin von Krosigk

Prussian minister of Finance Prof. Dr. Popitz as the recording secretary Lt. Col. in the General Staff Loeb

_Minister Schacht_: shows the development up to now when two years ago, the decision for rearmament was made, it was decided to carry out the financing mainly outside the means of the Reichministry of Finance. This meant the commitment of the last reserve from the very beginning. A decision which did not seem without hazards. The memorandum of 3 May 1936 says the same thing.

In the course of the last two years, the program was increased more and more in its extent and speed. Thus the requirements to the Reichsbank were increased steadily.

It would be necessary to create, as basis for financing, a steady, prosperous economy, and therefore renounce the execution of other, partially irrational ideas and aims of the party. The psychological prerequisite was not disturbed by the party as such, but by many individual groups of the party, again and again; personal attacks against Dr. Schacht and thus against the economy followed. Dr. Schacht has emphasized again and again, that one must follow a cultural and legal policy, which will leave economy alone. However one must not describe it as greedy and selfish from the beginning.

Also money theories of the most variable kind have been published repeatedly, thus causing anxiety for the economy; to counteract this was practically impossible, as the propaganda machine of the party did not permit this.

Despite all this, Dr. Schacht continued to work, because he stands with unswerving loyalty to the Fuehrer, because he fully recognizes the basic idea of national socialism and because at the end, the disturbances, compared to the great task, can be considered irrelevant. Previously, approximately 11 billion marks besides the budget have been raised for rearmament and re-employment without shaking the rates of exchange and currency; the rate of interest could be lowered.

The Fuehrer has repeatedly emphasized in personal talks and cabinet meetings, that the speed of rearmament must be kept up until the spring of 1936. This was agreed to and carried out.

_Prime Minister Goering_: has never heard about this time limitation.

_Minister Schacht_: The main question for the further execution of the program is, how much money can be gotten out of business. Some 2 billion can be consolidated annually by long term loans, 8 to 9 billion cannot be asked for; the possibility of making available depends on the development of the money market. Full concentration of the money market through the Reichsbank is necessary.

If the Reichsbank should have to issue more notes than could be born by the currency, one must reach back to other factors.

Dr. Schacht will never be part to an inflation; the Fuehrer also has decided in this sense. The danger of such a development is imminent. If a road is to be taken, which contains this danger, Dr. Schacht would like to drop out on time, so that he does not disturb the new course.

Dr. Schacht considers it impossible, that prices can be fixed by the state, if the same money policy is continued.

_Prime Minister Goering_: What is the basis of currency with the Reichsbank?

_Minister Schacht_: This question has nothing to do with the gold standard. It is a question of something imponderable, to recognize the time of which must be left up to fine sensitivity. If by a surplus of money, the danger of devaluation of the mark exists, the state can and must take action from the financial side by taxes, etc. Considering the material factor, it must be determined, that we are dependent for numerous goods on foreign countries. Even small percentages as a whole have considerable effect. In many cases, the necessity for import is caused by trade political relations; therefore the raw-material situation may not only be viewed and attacked from the production within Germany. The foreign relations must be decreased all of a sudden. For instance the negotiations with Standard and Shell were carried out on this basis.

_Prime Minister Goering_: When substitutes [ersatzstoffe] are sufficient in quantity, we shall no longer need the import, which presents us such difficulties.

_Minister Schacht_: In a series of cases, to be able to carry out the import, work from within Germany was utilized for compensation, for instance tankers for oil import corporations.

However it is especially required that nothing be said about intentions and measures of this field in public, so as not to aggravate the importers.

_Prime Minister Goering_: If the Fuehrer has expressed himself in this direction, he did it to counteract the increasing pessimism in the country in respect to this field.

_Minister Schacht_: In any case, all anxiety must be prevented. Foreign exporters have already shown less readiness to deliver against certificate of foreign exchange, since they apparently have no confidence in the cashing of these certificates.

_Prime Minister Goering_: Our raw material situation is generally known to the world. The article published in the papers on 28 April 1936 did not contain anything secret. Actually the confidence abroad should have been increased by this publication, because generally the opinion was held abroad that Dr. Schacht was protected by the Prime Minister against the party.

_Minister Schacht_: The situation at present is thus:

Some 64 million marks are already claimed by reimbursement.

We must buy especially crude rubber and textiles; we have practically no crude rubber. Cellulose wool is not an adequate substitute, especially not for export goods.

The necessity for the closing down of manufacturing plants will soon result from this accordingly.

It must be decided whether the available gold should be all spent at the present speed or whether it should already be slowed down.

Swedish ores are still available for about 3 months. The export to Sweden becomes more difficult, and thus the import possibilities decrease.

_Prime Minister Goering_: is of the opinion that our export to Sweden continues, so that one can further count on import.

_Minister Schacht_: The raw material supply of Germany amounted at the beginning of the war to a value of about 7 to 8 billions; now it is less than 1 billion.

_Prime Minister Goering_: has heard repeatedly, that export business was refused by the Reichminister for Economy. In the future, the departments will be caused by him to re-examine such occurrences; perhaps then it will work differently than until now.

_Minister Schacht_: Increase of our export appears improbable in the near future. Further obligations arise through the Foreign Office, the Reichsbank, Post Office, Party and other agencies; soon the consular service cannot be paid any more.

The time will come, when we will have no longer any reserves of either raw materials or foreign exchange at our disposal.

_Prime Minister Goering_: If we have war to-morrow, we must help ourselves by substitutes. Then money will not play any role at all. If that is the case, then we must be ready to create the prerequisites for that in peace. The account just described could have also been presented, in his opinion, in the meeting this morning.

_Minister Schacht_: Publication is recommended for only the smallest circle.

_Prime Minister Goering_: It is necessary to inform the people required for the execution.

_Minister Schacht_: In his opinion only the ministers, not the state secretaries. In addition, each department must be called in individually.

_Prime Minister Goering_: The psychological prerequisites for the correct approach to the work must be created everywhere. The actual work is done by the state-secretaries and the experts. In the future one must go much more into detail; confidence in the persons employed in this is absolute necessity.

_Prime Minister Goering_: summarizes the explanation by Minister Schacht: In short, demands on the Reichsbank can no longer be covered; only 64 million marks are still available.

_Minister Schacht_: declares that besides these 64 million Reichsmarks in the private banks, there are another 72 million gold with the Reichsbank.

_Prime Minister Goering_: continues with the summary: The shortage of raw material is known in its extent. A considerable increase is no longer possible, in the opinion of Minister Schacht.

_Minister Schacht_: The production of raw materials within Germany finds its limitation there, when an increase of prices of export goods is created by it.

_Prime Minister Goering_: One can separate requirements within Germany and export. Even the smallest details are important. The following appears necessary.

1. Increase of export despite all difficulties.

2. The raw material coverage within Germany.

3. The possibly necessary resettlement of workers and food-fundamentals for the execution of all measures.

These problems all affect each other, so that the participation of all departments is necessary.

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