Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (7 page)

On a snowy January 30, 1933, and after years of increasing social chaos, violence in the streets, weak governments, and inconclusive elections, President Paul von Hindenburg reluctantly asked Adolf Hitler to form a government. The following day, the new chancellor convinced the president to dissolve the Reichstag and call new elections to be held on March 5. Goebbels wrote in his diary: “The struggle is light now, since we are able to employ all the means of the state.”
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In order to ensure the party’s electoral victory, the Nazis wanted to raise as much money as possible to finance the campaign, and turned to Schacht to help deliver large donations from the country’s wealthy industrial leaders. Göring asked him to invite a group of businessmen to a meeting with Hitler on February 20 at the Reichstag’s Presidential Palace. Some twenty-five attended, including Gustav Krupp von Bohlen und Halbach, the armaments magnate; Carl Bosch, the head of I.G. Farben, the chemical giant; and Albert Vögler, the founder of Vereinigte Stahlwerke, a steel giant.

Schacht and Göring were joint hosts and spoke first while waiting for Hitler, who as usual arrived late. Once there, the Führer explained his political agenda for after his expected election success. He promised to “eliminate” Marxists, rearm the Wehrmacht, and bluntly said, “We must not forget that all the benefits of culture must be introduced more or less with an iron fist.”
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He also made a menacing prediction: “We stand before the last election.” It was time to “crush the other side completely.”

When Hitler finished speaking, Krupp jumped up and thanked him “for having given us such a clear picture.”
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After Hitler left the room, Schacht asked the business executives to make major contributions to the election campaign. He said the overall goal was three million Reichsmark. Göring said it was time for them to make “financial sacrifices,” adding that it would “surely be easier for industry to bear, if it realized that the election of March fifth will surely be the last one of the next ten years, probably even for the next hundred years.” Schacht requested that each man write down the amount his company would contribute to the Nazi campaign fund. Hitler had already asked Schacht to undertake the job of administering the contributions. When he totaled them up, the businessmen of Germany had pledged the requested three million marks.

Two nights later on February 27, a mysterious fire largely destroyed the Reichstag building. The Nazis blamed Marinus van der Lubbe, a Dutch communist, for the crime. The next day, Hitler convinced President von Hindenburg to sign emergency measures suspending part of the constitution as a “defense measure against Communist acts.” Göring later bragged that he had set the fire, but then later denied it.
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Despite their ruthless election tactics, the Nazis did not get the two-thirds majority that Hitler sought, which would have allowed him to push through his radical agenda and grab total control of the country. His party increased its vote only to 43.9%, but he was able to put together a small majority government with the help of Franz von Papen’s Center Party.

Shortly after the election, Hitler called in Reichsbank President Hans Luther and asked him how much money the central bank could advance for a job-creation program, which is how the new chancellor planned to masquerade German rearmament. The new regime did not want to finance this through unpopular new taxes. The banker said he could only provide 100 million Reichsmark or about $23 million, which was a pittance compared to what Hitler wanted.

So the new chancellor called in Schacht and put the same question to him. After saying it was necessary to “do away with unemployment,” Hitler asked if there was a way to raise “a very large sum of money” through the Reichsbank. Schacht replied that the central bank “should provide the money needed.” Hitler pressed him for a number, but he would not commit, saying only, “I am honestly not in a position, Chancellor, to mention any particular sum. My opinion is this: whatever happens we must put an end to unemployment, and therefore the Reichsbank must furnish whatever will be necessary to take the last unemployed off the street.”
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Hitler paused briefly and then asked, “Would you be prepared to take command of the Reichsbank again?” Schacht replied that he didn’t want to force Luther out of office, but Hitler quickly said that he had other plans for him. Schacht said that in that case he would take the job. In a second meeting with Luther, Hitler offered him the post of German ambassador to Washington, which he readily accepted.

On March 17, almost exactly three years after he had left the job, Schacht was once again president of the Reichsbank. Every central banker should be born under a lucky star, and fortune smiled on him. Experts now agree that the German economy hit bottom in late 1932 and started expanding in early 1933, although no one knew that at the time. The following month, the central banker was also named a member of the secret Reich Defense Council, which was charged with preparing the country for war. Hitler’s first demand of his banker was money for a Nazi priority program to repair and reconstruct houses, and Schacht readily complied. Another of his preliminary actions was to sanction an initial credit of 600 million Reichsmark to pay for the construction of the new highway system called the
Autobahn
, which was a pet Hitler project. The Führer considered the limited-access roads as a way to move army troops and weapons rapidly around the country in time of war. The government also spent heavily on building new housing. Schacht was accommodating on the Reichsbank’s gold policy. When the Nazis took power, Germany’s currency had to be backed 40% by gold or foreign exchange, but in October that requirement was quietly dropped. That made it easier to increase spending.

On March 23, 1933, the Reichstag by a vote of 441 to 94 passed the Enabling Act, which allowed Hitler to pass laws without legislative approval. The heavy hand of Nazi dictatorship was quickly descending on Germany.
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The German people left World War I with a national consensus that they could not count on any other nation for their safety or prosperity. They believed that their country faced the world alone and had to provide for its own defense, economy, and wellbeing. Britain, the country’s main adversary during the earlier conflict, had cut off vital supplies with a naval blockade that left the country’s people starving. During the infamous “turnip winter” of 1917, Germans on the home front had little to eat except turnips, which had previously been used for cattle fodder. In that tragic period, 763,000 people died of starvation.

Germans were now united with the angry attitude of “never again.” The country, in the future, had to be master of its own domain. The widespread German name for this policy was
autarky
. The word goes back to the Greeks, and the more common English expression is “self-sufficiency.” The foundation of this national policy was gold, the historic last refuge of people in trouble. If all else failed, the country needed enough gold to buy food. Germans of all political stripes and classes supported the policy. The public universally believed that British, French, and American armies had not defeated them on the battlefield, but rather had cut off Berlin’s trade ties to the world and starved them into submission. The food blockade continued even after the armistice was signed on November 11, 1918, burning the humiliation even deeper into the national psyche. Autarky was not a national policy dictated by Berlin politicians on the general public, but was based on the country’s painful experience and unity in the belief that it should never happen again.
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Members of the growing Nazi party, the street thugs who brought Hitler to power, were among the strongest believers in autarky. For them, the words in the country’s national anthem said it all:
Deutschland über alles in der Welt
(Germany above all in the world).

Hitler himself had an expansionist view of Germany’s place in Europe and believed that the nation could achieve not just self-sufficiency, but growth. Although he didn’t often spell it out in detail to the world’s public or political leaders, he envisaged a much larger country that would stretch from the Atlantic Ocean to the Ural Mountains. That was his concept of
Groβraumwirtschaft
, a Nazi plan for the reorganization of Europe with a new continental economic system under Berlin’s control and for its benefit. Germany could not achieve its historic role within the restrictive borders that the Allies had dictated at the end of World War I, where 66 million people lived when Hitler came to power in 1933. Hitler envisaged a German super nation that, in the west, would include parts or all of Belgium, Holland, and even France. In the east, Germany would take over the breadbaskets of Poland and Ukraine. Those countries had the rich soils that could produce both the food and natural resources that the enlarged Germany would need, as well as a population that Hitler planned to subjugate to perform the menial labor necessary to support this new, expanded state. This Great Germany would have a population of 140 million and have vassal states on its borders that would pose no military threat.

Big business such as I.G. Farben backed the autarky program that foresaw the production of man-made substitutes for goods such as rubber and oil that were not indigenous to Germany. Göring’s Four Year Plan in 1934 forced all the major brown coal producers to form a joint venture to produce synthetic fuel. It invested heavily in synthetic fuel during the 1920s, when it looked as if the world’s known sources of oil were running out. New discoveries in countries such as Saudi Arabia, though, set back their plans because the artificial product became uneconomic. Farben was a major financial backer of Hitler during his rise to power, and the Führer supported spending on synthetics when he became chancellor in 1933. Now the company was going to get its payoff.
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On August 9, 1942, when Hitler was still optimistic about the success of his invasion of the Soviet Union, he gleefully told his dinner companions, “There is here a million tons of wheat in reserve from last year’s harvest. Just think what it will be like when we get things properly organized, and the oil wells are in our possession! The Ukraine produces thirteen or fourteen million tons a year. Even if we show ourselves to be half as successful as organizers as the Russians—that’s six million for us!” There would be plenty of everything. He added, “We shall become the most self-supporting state, in every respect, including cotton in the world. The only thing we shall not have will be a coffee plantation—but we’ll find a coffee-growing colony somewhere or other! Timber we shall have in abundance, iron in limitless quantity, the greatest manganese-ore mines in the world, oil—we shall swim in it.”
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Hitler revealed his lack of knowledge of the economics of modern warfare in his
Second Book
, the sequel to
Mein Kampf
that he wrote in 1928, but which was not published in his lifetime. In it he said flatly, “The sword has to stand before the plough and an army before economics.”
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That nirvana, however, would arrive only once Germany ruled the European mainland. In the meantime, Hitler’s wars of conquest would have to be waged with the mineral resources that nature had given the country. Nazi Germany could not produce certain key raw materials. The Führer’s entourage accepted without question his unrealistic orders to produce everything needed for his wars no matter what the cost or where it could be bought.

As an international banker with frequent and friendly contacts abroad, Schacht was not a natural advocate of autarky. But he knew his country; he knew its needs; and he knew its political leaders. Germany was dependent on world markets for a few essential raw materials and some food imports. Perhaps the most important one for Hitler’s wars was the weapons-grade iron ore needed to make steel for tanks, cannons, and rifles. The country had plenty of low-quality ore, but not the higher level. At the time the Nazis took power, Germany imported eighty percent of its iron ore, with half of it coming from Sweden. The process of improving the country’s low-grade ore to make better products was well known. It required adding tungsten, a mineral also known as wolfram. While Germany had virtually none, Portugal and Spain had plenty. Germany also lacked other raw materials including petroleum, aluminum, nickel, rubber, and chromium that would be necessary to turn it into a military superpower. But these supplies and more could be bought on the world market with gold. Chromium was abundant in Turkey. Romania had plenty of oil. And no nation ever turned away gold.

In a November 10, 1943 memo to Hitler, Albert Speer, his one-time architect who by then was the minister for armaments and munitions, wrote, “Chromium is indispensable to a highly developed armaments industry. Should supplies from Turkey be cut off, the stockpile is sufficient only for 5-6 months. The manufacture of plants, tanks, motor vehicles, tank shells, U-boats, and almost the entire gamut of artillery would have to cease from one to three months after this deadline.” He noted that chromium was in shortest supply of the elements the Nazis needed.
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Schacht had to establish an economy that made the most of Germany’s own natural resources, while also husbanding major foreign currencies such as the American dollar and the British pound, but gold reigned above all. He knew that once a new war started, the U.S. and Britain would take measures to make it difficult to get either of those currencies, making gold more important than ever: it was the one thing that the neutral countries would take in payment. When all else failed, Germany could buy whatever products it needed with gold.
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Gold was even useful in achieving Germany’s strategic goals. When the Nazis were recruiting the minor Norwegian politician Vidkun Quisling in December 1939, to run a pro-Nazi party in that country, they gave him some gold to get the operations started. Foreign Minister Joachim von Ribbentrop soon demanded his own independent source of gold to finance his clandestine operations abroad.
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