Hitler is not my friend. Nor do I admire Der Fuhrer’s attitude toward human liberty. Doesn’t mean I can’t acknowledge the VW Beetle as a good idea. Nor the idea of debt-free money. That is my preface to the following couple of paragraphs about the financial system of the Third Reich. As a fledgling journalist, I learned one thing when trying to get to the bottom of anything. Follow the money. It’s always about the money. With that, I give you….
When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants — costs totaling three times the value of all the property in the country. People were living in hovels and starving. Nothing quite like it had ever happened before – the total destruction of the national currency, wiping out people’s savings, their businesses and the economy generally. Making matters worse, at the end of the decade global depression hit. Germany had no choice but to succumb to debt slavery to international lenders.
Or so it seemed. Hitler and the National Socialists, who came to power in 1933, thwarted the international banking cartel by issuing their own money. In this they took their cue from Abraham Lincoln, who funded the American Civil War with government-issued paper money called “Greenbacks.” Hitler began his national credit program by devising a plan of public works. Projects earmarked for funding included flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency.
One billion non-inflationary bills of exchange, called Labor Treasury Certificates, were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. This government-issued money wasn’t backed by gold, but it was backed by something of real value. It was essentially a receipt for labor and materials delivered to the government. Hitler said, “for every mark that was issued we required the equivalent of a mark’s worth of work done or goods produced.” The workers then spent the Certificates on other goods and services, creating more jobs for more people.
Within two years, the unemployment problem had been solved and the country was back on its feet. It had a solid, stable currency, no debt, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare. Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad. It did this by using a barter system: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits.
Germany’s economic experiment, like Lincoln’s, was short-lived; but it left some lasting monuments to its success, including the famous Autobahn, the world’s first extensive superhighway. Hjalmar Schacht, who was then head of the German central bank, is quoted in a bit of wit that sums up the German version of the “Greenback” miracle.
An American banker had commented, “Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking.” Schacht replied, “You should come to Berlin. We don’t have money. That’s real banking.”
In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented: “Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a world power in 5 years. Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took the whole Capitalist and Communist world to destroy the German power over Europe and bring Europe back under the heel of the Bankers.” Such history of money does not even appear in the textbooks of public (government) schools today.