Free Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion by George M. Taber Page B

1937, Schacht bragged that Germany had a trade surplus of a half billion Reichsmark. 40
    Thanks to Schacht’s economic policies, the German economy was soon flourishing. The Gross National Product, which in 1932, the year before he took over the economy, had been 58 million Reichsmark, rose to 83 billion by 1936. From 1934 to 1937, imports of non-essential finished products such as consumer goods fell by 63%, while imports of raw materials increased sharply: iron ore by 132%, petroleum 116%, grain 102%, and rubber 71%.
    Hitler came to power in 1933 largely because the country had six million people unemployed, but by the end of 1934 that number was down to 2.6 million and falling. In fact, Germany would soon face a shortage of skilled workers. In early 1934, Germany bought $1 million worth of high-quality air force hardware from American manufacturers and paid for it with bullion. In 1936, Hitler, Schacht, and War Minister General von Blomberg argued about the importance of gold in the military buildup. Schacht thought that the purchase of military equipment from the Americans in the early days of the Reich was proof that it could now buy needed goods. Hitler, though, continued to believe that he could fight wars without gold. Blomberg listened to both sides in several discussions without taking a position, but Georg Thomas, his top economist, shared Schacht’s views, telling a group of young military leaders in November 1937, “In wartime, Germany will need a considerable reserve of gold and foreign exchange for propaganda, espionage, and other purposes.” 41
    Schacht hid German gold by spreading it into five different places in the country’s books. He also kept the world in the dark about what he was doing by creating a whole variety of accounts on the Reichsbank’s books, some hidden and some public. He and only a handful of associates understood what was going on. Officials referred to these as the country’s “war reserve accounts” and nicknamed them the “new Julius Tower,” a reference to the location where gold had been hidden during World War I. Reserves at the end of 1933 were $174.5 million, with $156.1 million in official records and $18.4 million hidden off the books. After the 1934 run on the currency, the numbers were $28.4 million in public documents, but $40.4 million hidden. By the end of 1935, gold holdings started heading back up, with $33.3 million acknowledged and $81.6 million not made public. Because of heavy spending on the military, though, both published and hidden reserves remained in overall bad shape.
    Most of the credit for the economic prosperity in the early Hitler years went to Schacht, and he thoroughly enjoyed the adulation. When the central banker celebrated his sixtieth birthday in January 1937, General Blomberg told him, “Without your help, my dear Schacht, none of this rearmament could have taken place.” 42
    Only three years after he had joined the Hitler government, Hjalmar Schacht’s economic policies had been a major success. Perhaps because of that success, Schacht could not help treating the Nazi leaders, even Hitler, as his intellectual inferiors. A British intelligence report from its Berlin embassy to London said Schacht was “one of few if not the only man who dares to speak out to Hitler.” U.S. Ambassador William Dodd wrote in his diary on June 21, 1935, “No man in Germany, perhaps none in Europe, is quite so clever as this ‘economic dictator.’ His position is always delicate and even dangerous.” 43
    Confident that he had become indispensable to the Nazi regime and therefore untouchable, Schacht on August 18, 1935, at the Ostmesse, a major business fair held annually in the Baltic city of Königsberg, voiced opposition to major party policies, including the treatment of Jews. Top Nazis attended his speech, which was also broadcast nationally on the radio. An
SS
general walked out in protest, and when Schacht sat down Erich Koch, the party boss of