The Transfer Agreement (59 page)

In a second interview shortly thereafter, published by the German paper
Deutsche Allgemeine Zeitung
using an Amsterdam dateline, Schacht warned if the world would not buy German products, then Germany would simply not pay her debts, or do so with such financial instruments such as scrip, a form of I.O.U. Schacht declared that in the face of declining foreign trade, Germany's creditors could take such paper guarantees or get nothing.
¹⁴
Even
Schacht could no longer deny that Nazi Germany had become diplomatically and economically isolated. The economic recovery the Nazis so fervently sought was becoming more and more a mirage.

More time-buying tricks would be needed. To keep shipping industry employees working just a little longer, stringent rules enacted in mid-August required German businesses to ship their goods via German vessels. Companion regulations prohibited currency payments to foreign shipping companies, thus forcing almost all travelers passing through Germany to sail on
German vessels. But the ill-conceived assistance actually robbed German lines of an important profit center—bookings and transshipping on foreign vessels.
¹⁵

An equally self-destructive rescue was imposed upon the textile industry, where unemployment in some places reached
50
percent. Recovery had been blocked at every turn by the boycott. So the Nazis slightly changed the design and color of regulation uniforms. Idled looms switched on and mill payrolls increased as textile companies scurried to produce materials for the new uniforms. But an impoverished public could not produce enough demand, and much of the new goods was dumped at great loss on foreign markets. Thus, sales revenues slumped in the face of increased production.
¹⁶

Another trick was the outright bribery of foreign officials and cash incentives to special-interest groups purchasing German goods. For example, in August,
I.
G. Farben, one of Germany's largest employers, negotiated with the Rumanian government to lift their quasi-official ban on German merchandise, which was protectionist in origin but regularly flamed by anti-Nazi boycott groups. Via the German legation in Bucharest, with the full endorsement of the Foreign Ministry, Farben offered Rumania a complex but irresistible bargain.

First, Farben would purchase RM 17 million worth of Rumanian grain, about half of which would actually be imported into Germany to compete with German produce. The remaining RM 9 million would be sold by Farben to other countries. Second, Farben would broker
100,000
tons of
Rumanian wheat to the world market, and even pay a
10
percent price support, in effect subsidizing Rumanian wheat farmers.
¹⁷

Third, of the foreign currency received by Germany in selling Rumanian products, the equivalent of RM
2.5
million would be handed to the Rumanian National Bank. What's more, roughly
25
percent of the sales within Germany would be converted into foreign currency and also handed to the Rumanian National Bank. Fourth, much of the worldwide grain shipments would be shipped aboard Rumanian vessels, in direct competition with German lines. All this was in exchange for Bucharest's granting permits for RM
13.6
million worth of
I.
G. Farben products to be sold in Rumania.
¹⁸

Despite the lopsided arrangement, Farben was forced to grease the deal further with a bribe of RM
250,000
to high Rumanian government officials
for "party purposes." An additional RM
125,000
went to the National Socialists of Rumania, presumably to guarantee their consumer support for Farben's products. To quiet public opposition to trading with Germany, Farben earmarked a RM
125,000
slush fund "for exerting influence on the
press and on [key] persons."
¹⁹

But after all the bribes had been paid and the commercial favors and foreign-currency concessions granted,
I.
G. Farben could continue employing its assembly-line workers just a little longer. And Germany would retain
about RM
10
million in badly needed foreign currency. Beyond the short-term benefits, the complex arrangement dramatized
a
bitter reality: The anti-Nazi boycott had made it easier and more profitable for Germany to sell another nation's products on the world market than to sell her own.

There seemed no way for the Nazi leadership to counteract the boycott successfully other than hope that the transfer would prompt world Jewry to call off its economic war. But despite actions by the Zionist leadership to scuttle the boycott, popular Jewish momentum would not subside. In early August, a frustrated Adolf Hitler held a meeting at Obersalzberg with two Americans influential within New York's National City Bank organization. One was Henry Mann, a vice-president representing the bank's German operations. The second was Col. Sosthenes Behn, who was both a bank director and the chairman of International Telephone and Telegraph (ITT). The two Americans reviewed for Hitler the U.S. mood against Germany. Behn then questioned just how safe foreign investments were in Nazi Germany. Hitler reassured Behn that foreign capital such as General Motors' was safe if used according to regulations. Hitler remonstrated that the sordid picture of a violent Germany hostile to foreign business was just another figment of atrocity propaganda. That led to talk about the anti-Nazi boycott. And here Hitler became visibly excited. "These senseless measures are not only harmful to Germany," ranted an enraged Führer, "but, by weakening German purchasing power on world markets, to other nations as well." Hitler vehemently insisted that the boycott would "eventually collapse all by itself." Therefore, said Hitler, it would be best to say and do as little as possible.
²⁰

In early August, Goebbels was showing equal distress about the boycott. Speaking to a festival at Stuttgart, Goebbels admitted he looked forward to the day when the Reich "will have burst the iron boycott with which the world has encircled US."
²¹
Shortly thereafter, Goebbels felt unable to abide by der Führer's advice to pretend the boycott didn't exist. Addressing the annual NSDAP Congress at Nuremberg, Goebbels confessed, "We still feel ourselves handcuffed and threatened by this cleverly thought-out plot.... This boycott is causing us much concern, for it hangs over us like a cloud."
²²

The regime tried to delude the grumbling population with manipulated unemployment statistics. For example, the number of jobless was artificially decreased by subtracting Jews, Marxists, and pacifists. Additionally, German males aged sixteen to twenty-five were removed en masse from their jobs to make way for older family men. The young Aryans were then steered to voluntary labor camps, where they could keep some unemployment payments and yet be removed from the jobless rolls. Those who refused voluntary labor were deprived of their unemployment benefits and taken off the rolls anyway.
²³

Women were also being fired in great numbers, under the Nazi notion that good Aryan women should make way for men in the job market. Many of these women were relocated as domestics, receiving little more than room and board. Others were instructed to have children and keep house. In either case, essentially jobless women were excluded from the unemployment figures. Thousands of male German family heads were likewise excised from the jobless ranks, either by engaging them in meaningless public-works programs, where they earned virtual pittances, or by resettlement onto farms.
²⁴

More tangible illusions were created by coercing employers to overstaff. By mid-August, Ruhr mining firms were employing
30,000
more than market demand justified. Some of this was accomplished through a shorter work week, which robbed those who did have a job of the full wage they normally received. And no one was allowed a second job. Such "black labor" was strictly
verboten.
²⁵

Indeed, the jingoism of the Nazi economy had by August
1933
become a
mere symbol of disappointment to millions of Germans. The July unemployment panic had receded somewhat after dissident Storm Troopers were rounded up. However, the laissez-faire business climate espoused in the July Schmitt-Hitler covenant, and the prohibition against violent anti-Semitic activity, were by August cast aside as unenforceable rhetoric.

Time was running out for Germany. Winter was approaching. Construction, farming, public works, and voluntary labor camps were all wholly dependent upon outdoor activity and good weather. With no part-time or off-season work available, it would be a winter of desperation and dissatisfaction.
²⁶

Goebbels could plead "the handcuffs" of the Jewish-led anti-Nazi boycott, but such excuses only encouraged dissident factions to assert their own authority as they had during the July unemployment panic. Realizing that the regime would stand or fall with the popular mood that winter, the Reich leadership anxiously made preparations. The Ministry of Finance and party groups established "voluntary" appeals for the unemployed whereby contributions were automatically deducted from a wage earner's pay.
²⁷

A second campaign urged farmers, especially those in East Prussia, to store un threshed crops in their barns. Then, instead of farm employment ending with the harvest, it would continue through the winter months as the harvest hands threshed the grain. But by mid-August, the campaign had proved unsuccessful, as cash-hungry farmers sold their crops early. In droves, harvest help was already returning to the city awaiting the next bit of relief from the Third Reich.
²⁸

A brilliant solution to the entire unemployment scene was finally conceived by Chancellor Hitler himself. His idea: Compel
200,000
working
women to marry and quit their jobs, thus making room for
200,000
men to
support families. The
200,000
newly married women would have babies and
set up new households requiring furniture, appliances, and other household products, which would create the demand for another men who could then marry a second group of 200,000 women who would once again create households demanding products for a third 200,000. This process would continue until all eligible women were retired from the work force and firmly planted in households making babies, thus creating ever-increasing consumer demand.
²⁹

In the fervor of the times, mass marriages were certainly possible. But a marriage without money could not generate instant demand for furniture and appliances. The 200,000-marriages plan was typical of the Nazi approach to economic recovery, and among diplomats the proposal became a laughable example.
³⁰

"Bread and wurst for all" was the Nazi slogan sung in Berlin. But in the provinces far from Berlin, where Nazi factions ruled, the people wanted results. In the lead story of the August 21
New York Times,
correspondent Frederick Birchall, upon returning to Berlin from covering the Amsterdam boycott conference, speculated on the question: "The prospect for the winter therefore is far from promising. But how far the economic crisis can affect the Nazis' hold upon Germany is extremely doubtful. 'Bread and wurst for all' was their promise. But if they cannot fulfill it, who is to put them out? And with whom can they be replaced?"
³¹

A few days later, a follow-up article appeared in the
Times,
datelined Berlin but without a byline. After explaining the duplicity of the most recent unemployment statistics, the article warned, "Both the statistical and the propagandistic efforts of the National Socialist regime are tokens of its realization that it stands or falls with its solution of the unemployment problem. The entire country is watching these efforts with both hope and skepticism. The labor situation during the coming winter is expected to determine the fate of Hitlerism itself. Indicative of the mood of a large section of the population is this doggerel which your correspondent has heard repeatedly during my travels throughout Germany:

If
Hitler doesn't give us bread,
We'll see to it he'll soon be dead."
³²

On August 24, 1933,
Chicago Daily News
correspondent John Gunther reported from Vienna: "Dr. Hjalmar Schacht ... narrowly escaped assassination by disaffected Storm Troopers, it is said today in the Prague newspaper
Sozial Demokraten,
copies of which were received here. According to reports, 'Dr. Schacht noted some days ago that he was being followed by mysterious individuals and appealed to the secret police [Gestapo] for protection.' Yesterday, three Storm Troopers were arrested and five others fled, it is said, when Dr. Schacht was followed by police officers to trap the alleged assailants. A search ... revealed a plan of assassination. Dr. Schacht was thought to be too conservative in his policies and hotheads wanted to make the Nazi revolutior more socialistic." Gunther added that the report was unconfirmed.
³³

The anti-Nazi movement watched the signs of Germany's crumbling economic and political house and drew encouragement. The boycotters believed that to save Europe from Nazism, the example would have to be set in Germany. The price of war against the Jews would have to be commercial isolation and economic ruin. And so the boycotters took their slogan seriously: Germany was to crack that winter.