Nazi conspiracy and aggression, Volume 03 (of 11)

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

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Appropriate example: Position of the farmer, who does not utilize the available possibility of intensifying of fertilizing, because the capital lost is not bearable for him in case of bad harvests. In such a case, the risk lying with the weather must be partially taken from the farmer by a special organization.

The Reichministry of Finance must also be consulted greatly in reference to the regular budget. Re-awakening of thriftiness in all fields belongs to this program.

_Minister Popitz_: The final conclusions made by Dr. Schacht are clear and convincing, under the condition that the bases for these conclusions are correct. That must be examined. It must be determined again, whether the principles, according to which the present raw material and foreign currency policy has been carried out with such a big success, are unalterable and correct.

The time when perhaps an inflation is feared is unclear; actually it is already here, even if it has a bearable extent.

An increase of export cannot be expected with the present system. However it is to be examined, whether there is not a better system. The basis of the present economic policy is deflationary. However it appears impossible to integrate the deflation into an actually existing inflation. It must be discussed, whether forced economy of export is to be continued.

It is to be examined further, whether the money for rearmament can be drawn out from the remaining economy. In no case may the condition arise, that the Reichminister for Finance and the Reichminister for Economy push the responsibility for the providing of funds to each other.

The difference between 2 billion Reichsmarks, which the Reichsbank believes to be able to raise on a long term basis, and the 8 to 9 billion Reichsmarks required for armament, cannot be covered by taxes. Therefore the following suggestion:

1. The raw material question, which can be solved comparatively simply, must be attended to at once by a special committee.

2. Illuminate critically the export question, so to say, in a scientific manner.

_Minister von Krosigk_: Economy of foreign exchange in detail is necessary. In that, small things also play a part. Equal saving is necessary in spending money within Germany. In contrast to Minister Popitz, he is of the opinion that expenses for armament must be taken over more and more by the regular budget. Expenses above this budget are to be covered

a. by long term consolidation of annually some 2 billion marks.

b. by short term bills of exchange and similarly.

The financing has succeeded up to now by these two means.

However the danger exists, the short-term bills of exchange can no longer be negotiated, so that flooding of the Reichsbank with MEFO bills would have an increased printing of banknotes as consequence.

_Minister Popitz_: In this case, printing of bank notes is only necessary if the money is absolutely necessary for payment of wages among other unavoidable things.

_Minister von Krosigk_: The decisive question for that is, whether inflation would actually happen by printing of banknotes to this extent. He does not believe so. The increase of prices observed so far was not caused by monetary reasons, but can be derived from increase of prices for raw materials and agricultural products. Thus one cannot speak of an inflation.

_Prime Minister Goering_: does not believe that an inflation would happen from the monetary angle.

Measures which in a state with a parliamentary government would probably bring about inflation, do not have to have the same results in a totalitarian state.

Important for this is the application of an appropriate propaganda, so that the co-operation of the propaganda ministry, promised by the Fuehrer, is of great importance.

_Minister Schacht_: gives a summary of the holdings of bills of exchange in the Reichsbank at present:

4,353,000,000.--RM bills of exchange

3,731,000,000.--RM of which are in MEFO bills of exchange

2,200,000.--MEFO bills of exchange are deposited in clearing accounts.

More than 5 billions in bills of exchange are deposited thus, that they can be presented immediately in case of disturbances of the money market, caused by any measure. Therefore any disturbance must be prevented under all conditions.

_Prime Minister Goering_: agrees to be the "shield" for the measure of financial nature, so that no disturbances would happen.

The regular budget is to take over the current upkeep of the armed forces, but not the costs of the reconstruction.

_Minister Popitz_: It is to be examined whether the regular budget cannot be relieved from interests and amortization quotas of advance drawings. Even the observing of the international bank law cannot prevent the using of these recognized necessary measures in this direction.

If the economy is started by increased export, naturally the circulation of money will increase and with that the possibility of further financing.

If the money, which had to be put into circulation, is only used for payment of wages, no inflation can take place.

_Prime Minister Goering_: orders:

1. Determination as rapidly as possible of the basis of payment.

2. Beginning of the execution work in the realm of raw material production within Germany.

3. Examination of the question of the export system.

In the next conference, contemplated for Friday afternoon, the examination of the export system is to take place.

First under his chairmanship (Goering's) the ministers Dr. Schacht, Graf Schwerin von Krosigk and Prof. Dr. Popitz will consult each other. Then, immediately thereafter, the suggestions voiced there are to be discussed by a board of experts. The following were named for this board:

By Minister Schacht:
Reichsbank Director Brinkman
Reichsbank Director Blessing
Ministerialdirektor Dr. Sarnow

By Minister von Blomberg:
Dr. Trendelenburg

By Minister Popitz:
Dr. Springorum
Dr. Sogemeier

Further
Reg. Burgermeister Kroogmann
Prof. Wayemann
and others, who will be appointed by the Prime Minister.

_Prime Minister Goering_: states that he can expect and demand discipline from the party, so that the protection of the individual auditor, called, is guaranteed.

Close of the conference; 1910.

Summary of the raw material situation 2 May

To the Reichminister of War Generalfeldmarschall von Blomberg

Berlin

Enclosed, a report of the conference of the council of ministers of 27 May 1936, is forwarded.

By Order

Loeb
Lt. Col. in the General Staff
1 Inclosure:

* * * * *

Top Secret

Copy of meeting of Minister on 27 May 36, at 1130 o'clock.

Chairman: Ministerpraesident Generaloberst Goering

Reichskriegsminister Generalfeldmarschall von Blomberg

Reischsbankpraesident und kommissarischer Reichs- und Preussischer Wirtschaftsminister Dr. Schacht

Reichsfinanzminister Graf Schwerin von Krosigk

Preussischer Finanzminister Prof. Dr. Popitz

Recording Secretary: Lt. Col in the General Staff Loeb

_Prime Minister Goering_: The two sessions of the board of experts held so far have brought forth interesting discussions. Naturally, opinions frequently disagree. The experts are invited to state their concepts in writing.

Today, discussion concerning the question of substitute-material. What objections are made to the production of war-raw materials within the Reich?

_Minister Schacht_: Principly there is nothing to object; a solution of the raw material problem by self-producing is absolutely necessary and agreed with, theoretically.

Difficulties are encountered with regard to:

1. serious monetary strain because of investments. Providing money by taxing capital is impossible. Circulation of money can not be increased beyond a certain amount. Previous measures executed correctly and without danger to monetary value. Further increase seems precarious; matter of confidence. This point of view alone, however, not determining; possible that funds could be drawn from industrial profits.

2. special scruples, regarding the cases where prices for substitute [Ersatz] material are far beyond world-market prices, and therefore the products cannot compete (for example: tires made from Buna). Adjustment would further increase the excise tax on exports. Inflation cannot be chosen, as this would immediately upset the state's budget.

It must be attempted to produce those raw materials within Germany which are economically favorable; _for other raw materials ready reserves for the case of mobilization_ [_Mobfall_]. Especially clear is the situation of flax; the complete covering of the requirement is possible; however not with hemp.

_Certain raw materials for war must be stocked._

These viewpoints are recognized and followed by the Reich ministry for Economy. The execution is mainly dependent on the question of funds. Therefore, necessity to save in all fields, to make saved funds available for investment.

_Prime Minister Goering_: All measures are to be considered from the standpoint of an assured waging of war.

Ready reserves must ordinarily be accumulated already in peace in certain amounts.

It is to be attempted to use cheap imported raw materials for export purposes, expensive raw materials from within Germany. In cases where the price differences are small, probably creation of a settlement is preferred.

_Minister Schacht_: This settlement can be carried out either by compulsory mixing or by a price settlement by the state of the expensive raw materials.

_In any case, price supervision must be introduced again._

_Minister Popitz_: Placing of the burden of increased prices on the consumer is possible when the difference is only small.

The other possible method is sales monopoly or wholesale monopoly of certain goods.

_Minister Schacht_: It is recommendable not to influence individual, large fields, for instance textiles, by prices; but to concentrate funds for the monetary subsidation of other fields of raw materials.

_Minister von Krosigk_: The question cannot generally be judged theoretically, but only practically with the use of individual examples.

_Prime Minister Goering_: At first, the specially urgent petroleum question is to be treated.

General agreement to that.

_Minister von Krosigk_: Present experience is that the beginning of new methods of sale or price guarantee by the Reich results thus, that soon new and cheaper production methods are found. This recommends a not too sudden expansion of production.

_Prime Minister Goering_: Waiting for new methods is no longer appropriate. Plan of the Reich forestry office for the utilization of wood is ready. Import of timber must be cut down in any case; strongest demands on German forests to be preferred at present and can be advocated.

It is to be decided, whether at the beginning, a risk bonus over 6% profit is to be granted.

_Minister Schacht_: turns against higher profits than 6%. Guarantee of interest-bearing is to be preferred, and must be sufficient.

_Minister von Krosigk_: discusses the advantages of the amortization program.

_Minister von Popitz_: In contracts many times rapid cancellation is contemplated.

_Minister Schacht_: At the beginning more consideration is recommended, later stronger concentration, with profit sharing by the Reich.

_Minister Popitz_: requests that the cancellation periods be re-examined by a special committee.

_Prime Minister Goering_: The summary is to be prepared for the next committee meeting about:

1. Inventory of German Raw Material possibilities.

2. Form of the present decrease.

3. Mobilization requirement.

4. How shall raw materials be handled? Especially clarifications whether production within Germany is to start already in peace or whether the stocking or reserves is more important.

Subject of petroleum also can be considered concluded, therefore is to be handled immediately.

In the next council of Ministers, discussion of the agricultural question, then Minister Darré and State secretary Backe present.

_Minister von Blomberg_: In the fuel industry it is to be decided whether conversion to solid fuels should already be carried out in peace, or whether, as in France, it is to be prepared for the mobilization case. If possible and recommendable, increased use of tar coke [Schwelkok], no diesel oil for railroads.

_Prime Minister Goering_: Economy also absolutely necessary and to be insisted on in other fields of raw materials.

_Minister von Blomberg_: Examine as an example substitution of heavy metal by light metal (for instance cans of aluminum): general increase of the use of glass, especially for aerial bombs, maybe also for grenades; use of plastics for wide fields, even as far as transmissions. Certain hopes can be set on China. Therefore prevent political estrangement. Careful advances in the approaching of Japan necessary, at present the recognition of Manchukuo would be disastrous for Mr. Klein's current plans in China.

_Prime Minister Goering_: Common front of China with Japan against Soviet Russia can probably be produced.

[in green pencil] I did _not_ express myself so specifically BL/

_Minister von Blomberg_: Japan is doubtful as a factor of military power.

_Prime Minister Goering_: Furthermore, the danger of Japan's turnabout always exists.

Results of the China affair cannot be viewed clearly because of the unclear inner political situation.

_Minister Schacht_: always has supported the attempts of Mr. Klein, because he especially hopes for food, raw materials from China.

_Minister von Blomberg_: recommends further collaboration with the Kaiser Wilhelm Gesellschaft, with whom the Reichministry of War had very good experiences. At its head is the scientific authority; other imminent changes for solution proposed by the party unbearable.

_Minister Popitz_: Nomination of Geheimrat Bosch is possible for this post, when his resignation from the IG is possible.

_Minister Schacht_: General complaints about the deterioration of German science; this is also harmful for export, since the missing replacement limits the execution of German engineering missions abroad and thus German orders from abroad.

_Minister Popitz_: Seconds these complaints. Actions by the party which remove the most important people is unbearable. Explanation by examples.

In the liberal arts, the consequences are not being felt immediately, all the more so in the natural sciences. If service etc., should be limited to the first two semesters of study, then full time and freedom for scientific activity.

_Prime Minister Goering_: In Prussia then, difficulties are partially removed. Influence of the liaison staff not always fortunate. Role of Professor Wagner.

Puts to discussion a taking over of a Spanish tin source, which is being offered from the Swedish side.

_Minister Schacht_: Basically in agreement, particularly when in a partnership enterprise German achievements will result by deliveries of machines.

_Prime Minister Goering_: asks Minister Schacht to conduct negotiations in this spirit during his visit in Belgrade relative to Jugoslavia in the near future.

_Minister Schacht_: The copper mining in Jugoslavia must take place by excluding the French, who sell copper for foreign exchange only.

_Prime Minister Goering_: During the next ministerial session, the investigation of the problems in the agricultural sector has to be conducted in such a way that direct statements of Minister Schacht/Minister Darré should be made about the single problematic issues.

End of the session 13 o'clock.

Fuel-supply situation (1st draft of a plan for solution) 27 May 1936

Copy of draft
Top Secret
31 August 1936

The War Minister and Supreme Commander of the Armed Forces No. 2001/36 Top Secret WH

4 copies--
1st copy--draft
2nd copy--Reich Air Ministry
3rd copy--Reich Ministry for Finances
4th copy--President of the Reichsbank

1. To the Reich Minister of Air and the Supreme Commander of the Air Forces General Goering

Berlin W 8
Dear General Goering!

The negotiations conducted until now in the commission for foreign exchange and raw materials which is under your leadership, have already shown the necessity of dealing also with the financing of the armed forces there also. I believe the time has now arrived that the commission should take up the treatment of this problem.

As a preparation of such a discussion I suggest the following:

I. _Overstepping of the 1936 budget._

It has been proven, particularly from the decree issued 7 March 1936, that the sum of about 10 billions of RM which was provided for the Wehrmacht for 1936 is not sufficient.

1. Additional expenses in the _army_ are needed in first place for

a. the remilitarizing of the Rhineland

b. the fortification of the Rhineland

c. the setting up of all the 36 divisions already by 1 Oct 1936

d. the speeding-up of motorization, particularly the establishment of 4 fully motorized Infantry divisions.

e. the necessity of markedly increasing the reserve ammunition because of the increased number of divisions.

f. industrial preparations in a great variety of fields.

2. In the _navy_ the required faster increase of personnel, the building of a 4th entry to Wilhelmshaven and the refortification of Helgoland cause additional expenses.

3. _Air Force_

a. According to an order of the Fuehrer, the setting up of all air force units has to be completed on 1 April 1937. Therefore considerable expenditures have to be made in 1936 which at the time when the budget for 1936 was made, were planned for later years only. Special additional expenses are caused by the creation of sufficient ground force personnel.

b. In the air force the first introduction of new types has to take place in 1937. Therefore the required industrial preparations have to begin in 1936.

It follows that an additional sum of at least 3.6 billions of RM will be needed by the Wehrmacht for 1936.

Of this about 1 billion RM is allotted to Army and Navy together. In the case of the Army and Navy, the execution of the orders and, in consequence, the dead-lines for the payments of the deliveries lagged quite considerably behind the placing of the orders. Therefore it can be assumed that these 1 billion RM will not be needed _in cash_ before 1 Apr 1937. However, the orders for these 1 billion RM have been placed and in the fiscal year 1937 these 1 billion RM will also be needed in cash.

In the air force the additional expenditures amount to 2600 millions RM. Here the execution of the orders from the budget funds of 1936 as well as of the orders for the additional requirements is in full progress. The 2600 millions RM for the air force have to be made available in the fiscal year 1936.

As yet it cannot be ultimately settled whether the introduction of the two years' service will lead to further additional expenses.

II. _Requirements for 1937_

The preparatory works for the budget of 1937 have not been concluded. At present the requirements for 1937 are estimated to be for:

1. the army 6.5 billions RM
2. the navy 1.2 billions RM
3. the air force 6.0 billions RM
----------------
Total 13.7 billions RM

Besides these 13.7 billions RM about 500 millions RM will be needed for the Reich defense requirements of the civilian departments.

III. _Permanent requirements_

According to a recently conducted survey, the component of the armed forces will have the following permanent requirement after the rearming is completed:

1. Army 3.6 billions RM
2. Navy 0.73 billions RM
3. Air Force 2.507 billions RM
------------------
Total 6.837 billions RM

At present it is hardly possible to make an accurate estimate of the permanent requirements. In the case of the Army it is very likely that the amount for the permanent requirement will be considerably raised.

Later I will submit further material, particularly a statement about the requirements for the years until the completion of the rearming, as soon as the necessary inquiries are concluded.

I submitted copies of this letter to the Reich Minister for Finance, and to the President of the Reichsbank.

Heil Hitler!
Yours,
[unsigned]

2. To the Reich Minister for Finances _Berlin W 8_

3. To the President of the Reichsbank Dr. Schacht _Berlin SW 111_

Copy (of 1) for your kind information

4. WV

_Chief WA Chief WH_
signed P
_Remark_:

1. Major v. Wolff has given the letter addressed to General Goering to Lt. Col. Bodenschatz on 31 Aug.

2. I have personally handed the letters 2 and 3 to the President of the Reichsbank, Dr. Schacht, and to the Reich Minister of Finance, Count Schwerin von Krosigk, on Aug 31.

signed P
Copy authenticated Hollender Ministerial Councillor
30 Sept 36.

* * * * *

Note

[initialed] B [Blomberg?]
[initialed] K 2/9 [Keitel]

President Schacht called me to him today at 1300 and requested me to forward the following to the Minister of War:

Schacht returned from the Fuehrer with the greatest anxiety, since he could not agree to the economic program planned by the Fuehrer.

The Fuehrer wants to speak at the party convention [Parteitag] about economic policy, and wants to emphasize there that we now want to get free with all our energy from foreign countries by production in Germany.

Schacht requests urgently that the Reichminister of War warn the Fuehrer from this step.

If the Fuehrer emphasizes in front of the masses in Nurnberg, he will receive a great amount of applause from the audience, but with it he will bring failure to the entire commercial policy. There is only one thing in our needy position: _the promotion of export_. _Every threat against foreign countries_ however, will show contrary results.

We have reverses in the field of fuels until the middle of next year, there will not be large amounts in the field of rubber. The Renn-process in the field of ores is having great difficulties.

If we now shout out our decision abroad to make ourselves economically independent, then we cut our own throats, because we can no longer survive the necessary transitory period.

Also, it must always be pointed out that German materials are at present much too expensive to be used for export, and export alone makes further armament possible.

If the food-basis of the people is not to be endangered, the Fuehrer must refrain from his plan.

President Schacht concluded that he again requests urgently to listen to this warning, and that he forwards it to the minister of war, as he will not participate in to-morrow's conference.

Thomas 2/9 [in blue pencil]

[Translator's note: the following is written in pencil in the
original:]

_THOMAS in his memorandum:_

The missing million in cash must be saved, since there is no more possibility to obtain it by increase of export.

English armament-ore! Our own procurement is a _must_.

_4 Year Plan without_ antagonizing foreign countries.

Card file?
Speed of armament? Yes--

Extent of armament not sufficient. Backing by foreign exchange and raw materials is absolutely necessary.

* * * * *

Top Secret [rubber stamp]
1st copy 5 Sept 1936
Wi II
File No 66 b 9910 II z-a

_Minutes on a Conference in the Reichministry for Economy on 3 Sept 1936_

} Reichministry
Chairman: Ministerialdirektor Sarnow } for Economy
Present: Ministerialdirektor Dr. Landwehr } and the competent
Ministerialdirigent Dr. Spitta } experts of
Oberregierungsrat Dr. Michals } the Reichministry
} for Economy
} and the supervisory
} agencies
Major Czimatis
Commander Griebel } Reichministry
Regierungsbaurat Wissman } of War, W.A.
Intendanturrat Nierhoff Reichministry of War, V.A.
Lt.Col. Ploch } Reichministry for Air and
Col. Witting } Supreme Commander of the
Dipl.ing. Bresser } Air Force
Gen.Direktor Schirner, }
combined alum. plants }
Dr. Westrick, combined } Only during the conference
alum. plants } on aluminum
Dir. Byer, Alum. Sales }
Corp. }

_Subject_:

I. Possibilities of allotment of foreign exchange to the armed forces and economy.

II. Aluminum supply.

I. After extensive study of the connected disadvantages, the Reichministry for economy has dropped the principle that one could desist from exporting all products with more than 40% foreign raw materials. Therefore an additional need for foreign exchange results for the upkeep of the export of 2 million marks with the supervisory board for base metals. Furthermore the allotment of cash foreign exchange to the supervisory board for bast fibres must be increased from 10 million marks to 17 million marks.

Intendanturrat Nierhoff made reports on the need of the Armed Forces of textiles and leather in the year 1937, which has increased considerably from the requirements of the year 1936 (see inclosure). To fulfill these Armed Forces requirements, cash foreign exchange is necessary in the following amounts:

------------------------------+-------------------------------------
| Additional Armed Forces requirements
Group of goods | of cash foreign exchange in millions
| of marks
------------------------------+-------------------------------------
1. Wool | 24
shredded wool [Reisswolle] | 3
mohair wool | 0.75
|
2. silk | 0.55
|
3. bast fibres | 0.25
|
4. cotton | 4
|
5. leather | 22.5
| -----
Total | 55.00
------------------------------+-------------------------------------

Accordingly, the following overall picture results:

Amount of cash foreign exchange necessary previously for the upkeep of economy and for the covering of requirements of the Armed Forces. _146.8 million marks_

Amount of cash foreign necessary for the upkeep of export. _248 million marks_

Additional requirement of cash foreign exchange necessary for the Armed Forces. _146.8 million marks_

Available amount of cash foreign exchange _140 million marks_.

II. Aluminum

Report on the requirements of aluminum for the Armed Forces are contained in the summary given to the Reichministry for Economy on 29 Aug.

Major Czimatis explained that the Reichministry of War did not renounce the limitations of the allotments of aluminum to the general industry, as it was said in the letter of the Reichministry for Economy of 21 Aug 1936, but that the demands for full delivery to the Armed forces for the programatic rearmament, especially for the Air Force, will be kept up.

The Reichministry for Economy considers the full delivery to industry urgently necessary also in the interest of the Armed Forces, since by a "strangulation" installations important to the Armed Forces (power issues) would also be affected immediately, and one could therefore count on an increased requirement of copper and thus of foreign exchange.

The administration of aluminum by the supervisory board for base metals is being absolutely refused by the Reichministry for Economy.

Generaldirektor Schirner reports that the negotiations for the import of 1000 tons of aluminum from Switzerland against delivery of German clay and pitch-coke are favorable. Also, the payment of processing wages is to be done with clay. However, the import of these 1000 tons is distributed over 6 to 7 months.

1000 tons more can be obtained in a comparatively short time from the Aluminum Ltd. from Canada. The negotiations for this are still in process.

Schirner reported that the stocks of aluminum in the plants is so high that he, in case the Reichministry for Air should agree to a temporary decrease of the stocks, could guarantee full delivery for both the Armed Forces and Industry until the opening of the new plants in Toging and Bitterfeld.

Lt. Col. Ploch consents that the stocks be decreased temporarily.

The Reichministry for Economy orders that the supervisory board for base metals first determine by revision the exact size of the stocks of aluminum for the Duren Metal works and the combined Light Metal works [Vereinigten leicht Metall Werke].

However, if difficulties should arise in the delivery to the Armed Forces with aluminum, then the Reichministry for Economy is ready to take up negotiations again.

MW [initials in pencil]

* * * * *

Inclosure

Textile and Leather Requirements of the Armed Forces

------------------------------------+-----------+-----------+-------------
| | |Required
| | |additional
|Requirement|Requirement|cash foreign
Raw materials |in the year|in the year|exchange
|1936 in |1937 in |requirements
|tons |tons |in millions
| | |of marks
------------------------------------+-----------+-----------+-------------
Sheared wool | 7 200| 18 152| 24
| | |
Wool scrap [Reisswolle] | 1 040| 4 900| 3
| | |
Combings | 11| 42| -
| | |
Mohair wool | -| 260| 0.75
| | |
Wool from tanned hides | | |
[Gerberwolle] | 761| 1 236| -
| | |
Silk | 23| 72| 0.5
| | |
Cocoons[4] | 72| 72| -
| | |
Silk yarns[4] | 48| 48| -
| | |
Cotton of which quality cotton | 8 600| 16 200|
Portiers and shelter halves (Egypt) | |about 4 000| 4
| | |
Cotton scraps | 560| 835| -
| | |
Artificial silk | 310| 670| -
| | |
Cellulose wool | 1 080| 3 130| -
| | |
Cleaned flax [Schwingflachs] | 3 600| 4 800| -
| | |
Flax scrap | 7 070| 10 500| -
| | |
Jute | 2 100| 2 100| -
| | |
Soft hemp and hard fibers | 1 100| 1 635| 0.25[5]
of which hard fiber | | about 200 |
| | |
Sleek leather | 11 000| 24 000|
| | |
Skins for uppers | 7 100| 13 900|
| | |
Tanned leather | | 4 100| ----
| | |
Leather for soles | | 9 500| 22.5[6]
| | |
| | | Total 55.00
------------------------------------+-----------+-----------+-------------

[Footnote 4: figures by Reichministry for air]

[Footnote 5: for 400 tons soft hemp and 200 tons Manila and Sisal]

[Footnote 6: for 22 500 tons hides corresponding to 11 200 tons leather]

It must be considered in the calculation of the foreign exchange requirements for the upkeep of the export of woolen goods, that the wool industry cannot stand more than a 10% decrease of the present amount, if it is to retain its export capability. Instead of Australian wool, one must reach back to about 50% of the available South-African wool for exports. The wool available through the limitations of value of the clearing agreement is entirely used for export. The calculated amount of foreign exchange and the most urgent requirement within Germany of 12 million marks only applies under the condition that there are until the end of September still 2 million marks in cash foreign exchange available.

One can count for the requirement of the Armed Forces on an amount of 10,000 tons raw wool, based on existing agreement. 24 million marks in cash foreign exchange are required for the additional amount of 8,152 tons with the price basis of 3,000-marks per ton.

Intendanturrat Nierhoff explained: that a decrease of the demands for quality for the Armed Forces is no longer bearable. Already 20% cellulose wool is being earmarked for uniform cloths, and a mixing of 30% scrap wool for over-coats.

The amount of foreign exchange of 4 million marks for quality cotton is therefore necessary, because one cannot count any more on the hitherto existing compensating transactions--especially with Egypt after circular 237.

The amount of foreign exchange estimated for export of 17 million marks for the supervisory board for bast fibres is distributed as follows:

10 million marks for jute
6 million marks for Sisal
1 million marks for Manila

The production of hides in Germany is reported as 140,000 tons per year. Even with the basis that the consumption of leather within Germany is decreased to a minimum, the 22,500 ton hides, corresponding to 11,200 tons leather for the Armed Forces, can only be procured with cash foreign exchange (22.5 million marks).

The raw hide requirement has been determined individually with consideration for the time required to tan the individual types of leather.

* * * * *

[in pencil] Top Secret!

Conference at General Field Marshal Goering's at 1000, 14 Oct. 38, in the Reich Air Ministry

[in pencil] attention H.G.

General Field Marshal Goering opened the session by declaring that he intended to give directives about the work for the next months. Everybody knows from the press what the world situation looks like and therefore the Fuehrer has issued an order to him to carry out a gigantic program compared to which previous achievements are insignificant. There are difficulties in the way which he will overcome with utmost energy and ruthlessness.

The amount of foreign exchange has completely dwindled on account of the preparation for the Czech enterprise, and this makes it necessary that it should be strongly increased immediately. Furthermore, the foreign credits have been greatly over-drawn and thus the strongest export activity--stronger than up to now--is in the foreground. For the next weeks an increased export was first priority in order to improve the foreign exchange situation. The Reich Ministry for Economy _should make_ a plan about raising the export activity by pushing aside the current difficulties which prevent export.

These gains made through the export are to be used for increased armament. The armament should not be curtailed by the export activity. He received the order from the Fuehrer to increase the armament to an abnormal extent, the air force having first priority. Within the shortest time the air force is to be increased five fold, also the navy should get armed more rapidly and the army should procure large amounts of offensive weapons at a faster rate, particularly heavy artillery pieces and heavy tanks. Along with this manufactured armaments must go; especially fuel, powder and explosives are moved into the foreground. It should be coupled with the accelerated construction of highways, canals, and particularly of the railroads.

To this comes the Four Years' Plan which is to be reorganized according to 2 points of view.

In the Four Years' Plan in 1st place all the constructions which are in the service of armament are to be promoted and in 2nd place all the installations are to be created which really spare foreign exchange.

The substitutes produced by the Four Years' Plan are to be brought rapidly into circulation. The Reich Ministry for Economy and the other agencies should make suggestions by the beginning of November for rapidly increasing the introduction of the substitutes. The import of materials for which we have substitutes has to be drastically curtailed.

General Field Marshal Goering enlarged then upon the main problem of the session: how can these requirements be fulfilled.

He is faced with unheard difficulties. The treasury is empty, the industrial capacity is crammed with orders for many years. In spite of these difficulties he is going to change the situation under all circumstances. Memoranda were of no help, he desires only positive proposals. If necessary, he is going to convert the economy with brutal methods in order to achieve his aim. The time has come when private enterprise can show whether it has a right for continued existence. If it fails, he is going over to state enterprise without any regard. He is going to make barbaric use of his plenipotentiary power which was given to him by the Fuehrer.

All the wishes and plans of the state, party and other agencies which are not entirely in this line have to be rejected without pity. Also the ideological problems cannot be solved now, there will be time for them later. He urgently cautions against making promises to the workers which can not be kept by him. The wishes of the labor front recede entirely into the background. Industry has to be fully converted. An immediate investigation of all productive plants is to be initiated in order to determine whether they can be converted for armament and export or whether they are to be closed down. The problem of the machine industry has the first consideration in this respect. There is no place for printing and laundry machines and other machines of that kind, they all have to produce machine tools. In the field of machine tools the priorities of the orders are to be investigated, and wherever possible, increase in productive capacity is to be introduced. It follows without saying that work has to be conducted in 3 shifts.

It remains now to decide who is going to carry out this task; the state of the self-administrative industry. He requested a proposal from General Director Zangen for the methods to realize these plans. He warns all agencies, particularly the labor front, price controller, etc., from interfering with these proposals in any way. He is going to proceed ruthlessly against every interference on the part of the Labor Front. The Labor Front would not receive raw materials and workers for its tasks any more. Similarly all other party requirements have to be set aside without consideration. Foreign workers can continue being employed except in the particularly secret sections of the enterprise. At the present time the plants should not be burdened with unnecessary demands, such as athletic fields, casinos or similar desires of the Labor Front. Measures proposed by the Labor Front have to be submitted to him for approval.

Raw materials and power are to be subjected to accurate management. Similarly the distribution of men has to be organized in an entirely different way than it has been done until now. The retraining did not function; all agencies failed. The recommitment of the youth into the industry will be organized by him on a very large scale. Large state apprenticeships are to be created; besides, the plants will be obliged to hire a certain number of apprentices. A retraining of hundreds of thousands of people will have to take place. Much more work will have to be performed by women than until now. Above all, the young women have to be employed much more. Work periods of eight hours do not exist any more; wherever necessary, overtime is to be performed, double and triple shifts are a matter of course. Where the workers will protest, as in Austria, for example, General Field Marshal Goering will proceed with forced labor; he will create camps for forced labor. The Labor Front should not carry false social ideas among the workers. It is a fact that one generation has driven the cart into the mud through the mutiny of the workers and by being guilty of not having shot these workers on the spot. Therefore, we had to put the thing in order again.

Much is to be done at once in the field of transportation. The Ministry for Transportation should submit a request about the construction of rolling stock and about other requirements. The branch-canal near the Hermann Goering Works is particularly important. It cannot continue that the Armed Forces interfere with the car park. If that will continue, he will make a decision, because it is impossible that the people should starve on account of it.

In the agriculture it is of importance to employ foreign workers. Similarly the problem of the agricultural machine has to be promoted. Of particular importance is the erection of store-houses.

The Sudeten land has to be exploited with all the means. General Field Marshal Goering counts upon a complete industrial assimilation of Slovakia. Czechia and Slovakia would become German dominions. Everything possible must be taken out. The Oder-Danube Canal has to be speeded up. Searches for oil and ore have to be conducted in Slovakia, notably by State Secretary Keppler.

In the second part of his discussion General Field Marshal Goering took up the Jewish problem. The Jewish problem had to be tackled now with all methods, because they have to get out of the economy. However, the wild bustle of commissars as it developed in Austria has to be prevented under all circumstances. These wild actions have to cease and the settling of the Jewish problem should not be regarded as a system of providing for inefficient party members. Thereupon Ministry Councillor Fischboeck was allowed to speak. He revealed that in the beginning there were 25,000 commissars in Austria. Today there are still 3,500 who are useless almost without exception. In Austria the party is of the opinion that Aryanization is a duty of the party and that it is connected with the recompensation of the old party members.

In Austria there is still a total of 2 billions of Jewish property. The large enterprises are being bought up by the Control Bank; it is difficult to oust the Jews from the small industrial enterprises.

General Field Marshal Goering took a strong stand against the opinion that the Aryanization is the duty of the party. It is the duty of the State alone. However, he could not release foreign exchange for shipping away the Jews. In an emergency situation ghettos should be erected in the individual large cities.

State Councillor Schmeer cautioned against more lenient methods in the fight against the Jews; Jewish labor units should be established, then the people would emigrate of their own accord. State Councillor Neumann warned and expressed the opinion that one should use more precaution in this matter, particularly in Austria.

Thereupon the meeting was quite surprisingly closed by General Field Marshal Goering without recording the minutes of the meeting or making decisions.

HG.

* * * * *

Material for the Conference with Goering on 25 Nov 1938 (General Keitel, Brig. Gen. Thomas)

27 Oct 1938
W.Wi Id.

For the consideration of the assignment of tasks to people, state and the Armed Forces, judging of the requirements of raw materials, especially steel, appears necessary.

This is shown as follows, as far as it can be judged from here. The inclosed summary shows that one must count, according to the Fuehrer's directives, on a steel requirement for armament production, which amounts to 1.08 million tons monthly from 1 Jan 1939 on, that is, it must be increased by about 48% of the present contingent. Added to this requirement are the increased demands of the Four Years' Plan, the demands of export and the amount necessary for the upkeep of the production machine of German economy in the amount of 1.83 million tons monthly from 1 Jan 1939 on; thus this results in a total requirement of 2.9 million tons monthly from 1 Jan 1939 on, against which there is only a monthly production of at present 1.8 million tons monthly.

Furthermore, it must be pointed out, that with the increased use of steel, an increased use of the already scarce non-ferrous metals is necessarily coupled; the latter also are closely associated with the procurement of foreign exchange.

The increased rearmament of the armed forces must further affect deeply the supply requirements of the armed forces, especially munitions and fuels. Therefore, it must be expected that the future requirements of the armed forces will exceed the present plans (accelerated program for powder and explosives, fuel program), which will have an increase of the steel requirements not yet planned as result.

* * * * *

Secret

Summary of the Iron and Steel Requirements of the Armed Forces and Industry tons per month

---------------------+------------+------------+------------+--------------
| | | |in contrast to
| Contingent | Contingent |Requirement |the contingent
|of the IVth | of the 1st | from 1 Jan | of 1st
|quarter 1938|quarter 1939| 1939 on | quarter 1939
---------------------+------------+------------+------------+--------------
| | | |
I. Armed Forces | 584,333 | 573,133 | 1,088,300 | --515,167
| | | |
II. War economical | | | |
organization of | | | |
German industry | 306,600 | 306,600 | 613,500 | --306,900
| | | |
III. Export in case | | | |
it is possible to | | | |
reach the stage of | | | |
beginning of 1938 | 380,000 | 380,000 | 550,000 | --170,000
| | | |
IV. Upkeep of the | | | |
production machine | | | |
of the German | 582,800 | 582,800 | 582,800 | ----
industry | | | |
| | | |
V. Other requirements| 83,500 | 83,500 | 83,500 | ----
| | | |
Total | 1,937,233 | 1,926,033 | 2,918,100 | --992,067
---------------------+------------+------------+------------+--------------

Summary on the Iron and Steel Requirement of the Armed Forces (tons per months)

---------------------+------------+------------+------------+-------------- | | | |in contrast to | Contingent | Contingent |Requirement |the contingent |of the IVth |of the 1st |from 1 Jan |of 1st |quarter 1938|quarter 1939| 1939 on |quarter 1939 ---------------------+------------+------------+------------+-------------- Army | 300 367 | 266 000 | 525 000 | --259 000 (For fortifications) | (86 667) | (85 000) | (165 000) | (--80 000) | | | | Navy | 78 000 | 74 000 | 140 500 | --66 500 (For "Gruenewiese") | (- - -) | ( - ) | (35 000) | (--35 000) | | | | Air Force | 166 400 | 191 133 | 247 300 | --56 187 (For fortifications) | (13 333) | (15 000) | (15 000) | ( - ) | | | | Reich communication | | | | measures | 39 566 | 42 000 | 175 500 | --133 500 [RV-Massnahmen] | | | | | | | | (For increased | | | | extension of the | | | | Reich railroad) | | | | | (- - -) | ( - ) | 130 000 | (--130 000) | | | | Armed Forces | | | | Total | 584 333 | 573 133 | 1 088 300 | --515 167 -------------------+------------+------------+------------+--------------

Chief OKW
_58a 40 38 top secret_
1157/38 top secret
7 Dec 1938
Top Secret
7 copies
7th copy
[in pencil]
To the State Secretary Neumann
Received copy without receipt K. 12 Dec 38
Documents for the conference at Field Marshal Goering's on 13
Dec 1938 with Supreme Commanders General Keitel,
Neumann, Koerner, Gen. Thomas.

To
the Supreme Commander of the Army }
the Supreme Commander of the Navy }
the Reichs Marshal of the Air Force and } one copy each
Supreme Commander of the Air Force }

The Fuehrer and Supreme Commander of the Armed Forces authorized me to inform the Supreme Commander of the following:

The strained financial situation of the Reich makes it necessary that for the rest of the current fiscal year 38/39 the expenses of the Armed Forces, which in the last months under the strain of extraordinary circumstances have undergone a very considerable increase, should be lowered again to a level which would be tolerable for some time.

It will be at the discretion of the Supreme Commander to decide what measures should be taken for this purpose according to the priorities in the armament program. According to the Fuehrer's request.

ARMY

The equipping with arms will have first priority, the providing of ammunition and the building of fortifications for the army will be considered in second place only.

NAVY

The building of ships, of ports and docks will have first priority over all other requirements, also over that of providing ammunition.

AIR FORCE

The equipping with arms will have first priority, the providing of ammunition will have to be considered in second place only.

If necessary, the initiation of new enterprises will have to be delayed, the execution of current enterprises and orders will have to be distributed over a longer period of time. The allotted quota of raw materials which will be decreased starting 1 Jan 39, will also compel us to a certain extent to do this. It has to be achieved that

in the _Army_
in the _Navy_
in the _Air Force_

during the period from 1 November 1938 to 31 March 1939 (end of the fiscal year) not more than

(_Army_): 3.7 billion RM (used until now 4.9)
(_Navy_): 650 million RM
(_Air Force_): 2.5 billion RM

should be expended in the form of cash and delivery treasury scrips.

It is not yet definitely established how much can be allotted for the next fiscal year 1939/40 in the form of cash and delivery scrips. At present, the branches of the Armed Forces cannot expect greater quotas than the following:

5.2 billion RM for the Army
1.4 billion RM for the Navy
4.9 billion RM for the Air Force

signed: Keitel

* * * * *

W H
_58 a 40 38 g K_
1157/38 g K
Top Secret
Copy
for information
[illegible signature]
to
the Chief of the Air Force
the Chief of the W Stb
Chief of the War Industry Staff Adjutant
1 March 1939
Draft
To the adjutant's office of General Field Marshal Goering.

On behalf of Brig. Gen. Thomas I request an appointment for a conference for the general before the departure of the General Field Marshal on following urgent subjects:

1. The branches of the Armed Forces--particularly the Navy--submitted requests for additional amounts of non-ferrous metals and of steel. General Thomas requests instructions what attitude he should take in regard to this question during the absence of the General Field Marshal.

2. The General Field Marshal has to make decisions in 2 matters concerning foreign policy.

[signature illegible]
Captain.

TRANSLATION OF DOCUMENT 1316-PS

Working Committee Oldenburg
B.Nr. 15/41 g.Kdos. 21.3.41
_2 copies_
1st. copy.

TOP SECRET
_Note for Files._

Regarding the discussion held on the 21.3.41. at 11 o'clock with the head of the department.

Top Secret

Present: General Thomas, Colonel Huenermann, Lt. Col. Luther,
Major v. Gusevius.

From the Quartermaster General: Major v. Altenstadt, Min. Dir. Sarnow.

_Major v. a._ develops the idea of the Quartermaster General regarding the employment of his organization. The Fuehrer had laid down that he would appoint his three commissioners in about four weeks time. Only then would he lay down the directives for their activities.

The Quartermaster General thinks it necessary to create a modest economic organization in the operational area as well, so as to be able to supply the needs of the fighting forces. This organization would later be replaced by the office of the industrial armaments organization. This was to a certain extent a measure of self-help by the Quartermaster General. He would also employ field-commands, which would be manned by individual officials. As soon as the operational area has moved on, the handing over of large areas has been planned. At this time the Quartermaster General's organizations will be withdrawn and their tasks will be taken over by the industrial armaments organization.

Regarding the present organization of the areas he mentioned the following:

_Operational Area_: Army area
Rear area of the Army
_Political Area_: in which the Wehrmacht commanders
operate.

In the rear area of the army, the Reichsleader of the SS is first of all responsible for the entire control, except for the economic field. The Wehrmacht commanders are made responsible for the exploitation of the country's industry. According to the general interpretation, this only means a utilization "for purposes of the Wehrmacht". Quartermaster General makes the following proposal:

The department IV-Wi at Army Commands will be enlarged, so that they are able to direct industry in the operational area. For this purpose the V.O. are to be strengthened by suitable personnel who can be employed in the spheres of banking, customs and finance.

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Nazi conspiracy and aggression, Volume 03 (of 11)Chapter XL: Section III: 527/2. 44g (C 2) of 21.3.1944 (2)

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