Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (11 page)

As a young high-flying pilot, he had been slim and athletic, but now his weight ballooned until he was obscenely obese. The U.S. ambassador’s daughter in Berlin in the early 1930s described him as “three times the size of an ordinary man.” Göring collected art, jewelry, rare stones, and precious metals, not because he recognized their beauty or history, but because they symbolized his success. He built an elaborate estate northeast of Berlin called Carinhall after his first wife, who died in October 1931. He stocked it with exotic animals, the bigger the better. He also hunted. Göring personally enriched himself more than any other Third Reich leader. Schacht described Hitler as “immoral,” but called Göring “amoral.”
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Göring’s overriding ambition was to bring Hitler to power, and his long-term objective was to eventually succeed him as Führer. In 1933 when he had his first real taste of power as Prussian Minister of the Interior, he told the police, “Shoot first and inquire afterwards. If you make mistakes, I will protect you.
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He knew nothing of economics or banking, but had an innate sense of power and recognized the importance of Germany’s financial success in achieving the party’s political and military goals. Starting in the spring of 1935, he began challenging Schacht for control of the economy. Unlike the stiff Reichsbank president, Göring played to the crowds. In May of that year, he gave a speech in Hamburg promoting the rearmament program and arguing that the country should sacrifice butter for guns. Said the rotund minister to an adoring crowd, “What does butter do but make us fat?” Those in the hall roared.
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Hitler soon began giving Göring special economic assignments. The first was to settle a dispute between Schacht and the minister of agriculture over the amount of scarce foreign currency or gold that could be spent buying food in the international markets. In March 1936, Göring began calling himself the Inspector-General of the Petroleum Industry, and Hitler named him Fuel Commissar. Schacht complained to Hitler that Nazi leaders were shipping money abroad to finance their own private and party activities despite his strict monetary controls, which forced the central bank to buy currency abroad. Propaganda Minister Joseph Goebbels, for example, was spending wildly. Schacht first learned of this when foreign central banks such as that of the Netherlands started shipping Reichsmark back to Germany and demanding that they be exchanged for convertible currencies or gold. In a rash move that showed the central banker’s political naiveté, Schacht told Hitler that someone else should handle foreign currency issues and suggested Göring. In April 1936, the air minister was named commissioner for foreign exchange, but that later included all raw materials, including gold, although the Reichbank still controlled how the gold was valued. Göring was now steadily expanding his authority into fields that Schacht had previously controlled.

After publishing
Mein Kampf
in 1925 and dictating the secret second book in 1928, Adolf Hitler rarely put this thoughts or plans down in writing, preferring to give oral orders that left no footprints. On August 26, 1936, however, the Führer called Hermann Göring to his Berghof retreat near Berchtesgaden in the Bavarian Alps and presented him with a thirteen-page memorandum that he had written during the summer. The Nazi leader had by then consolidated his power and was ready to launch a new diplomatic and military offensive. Only the year before, the German Ministry of Defense had been renamed the Ministry of War, a change in nomenclature that foreign diplomats noted with concern. Hitler instructed his secretary to make only three copies of his report: one for himself, one for War Minister General Blomberg, and one for Hermann Göring. The memo outlined the Führer’s plan to go to war no later than 1940 and established a four-year agenda to get Germany ready to fight major conflicts.
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The preface was entitled “The Political Situation.” In it, Hitler dismissed the western democracies because they were “ideologically split,” adding that the real danger to Germany now was Marxism, which “through its victory in Russia has established one of the greatest empires as a base for its future operations.” Hitler acknowledged the importance of gold in his war plans, but then dismissed it: “There is no guarantee during war of realizing the transformation of even gold into raw materials.” The clear implication was that Germany quickly had to become self-sufficient in the production of war goods.

Following that political preface, Hitler’s set out five conclusions. The first four: Germany must achieve economic self-sufficiency; foreign currency must be saved for necessities that can be fulfilled only by imports; Germany must be self-sufficient in fuel within 18 months; and mass production of synthetic rubber had to be achieved in the same time frame. Hitler’s final and most categorical conclusion: “The question of production costs of those raw materials is also of no importance.”

The Führer then ordered that within four years Germany had to reach annual production targets for three vital products that would be needed to wage war: 80,000 tons of rubber, three million tons of petroleum, and thirty million tons of iron ore.

The Führer concluded the report with two direct orders:

• The German military must be ready for war within four years.

• The German economy must be mobilized for war within four years on the same deadline.

The overall objective of the Four Year Plan was the same as that of the Schachtian system of autarky. The only significant differences were the scope of Hitler’s objectives and the speed with which the goals were to be achieved. The targets were unrealistic and showed his lack of experience in economics and business. That was not unusual since he was regularly unrealistic in dealing with such topics, considering them as matters that could be accomplished purely by German willpower. Hitler knew that Schacht would have insisted that the goals were impossible to reach, which is why the new job was going to Göring. Stolen gold became more important than ever, since bullion could be a stopgap way to finance the ambitious goals and deadlines, and the price of gold was now quite high, thanks to the American price increases.

After meeting with Hitler in Bavaria, Göring returned to Berlin, where he told a few people about his meeting at Berchtesgaden, saying, “Never have I been so impressed by the strength of the Führer, by his logic, and by the boldness of his ideas, which he placed before me at that interview. There will be consternation abroad, but the Führer’s instructions will be steadfastly carried out.”
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Two days later, Göring called a meeting of the cabinet’s executive committee known as the
Kleine Ministerrat
, which was made up of eleven top officials, including Schacht and Blomberg. Göring read parts of the secret memorandum, but did not hand out copies. He said that war with the Soviet Union was now “unavoidable” and added glowingly that “through the genius of the Führer in a short time seemingly unbelievable things are going to take place.”

On September 2, Hitler called in Schacht and told him that he would be giving a major speech on economics at the upcoming party meeting. He didn’t provide any details, but said he wanted to make sure that Germany would not be dependent on any country for imports.
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Schacht was terrified by the developments, knowing that they would have a major, negative, impact on the economy. Worse still, he had not even been consulted. His immediate reaction was to call General Georg Thomas, the top economist at the War Ministry, and ask him to inform his boss General Blomberg. Schacht also requested that the general warn Hitler about the dangers the plan raised. He figured that the military commander was now the only person who could stop Hitler, adding in a letter to the general, “If we now shout out abroad our decision to make ourselves economically independent, then we cut our own throats.”

Blomberg simply brushed Schacht off, writing, “I realize fully that you are right, Herr Schacht, but you know I am quite convinced that the Führer will find a way out of all our troubles.” The dispirited banker answered, “God grant that your faith is justified.”
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At the Nuremberg Party Festival on September 9, Hitler announced the Four Year Plan. He said bluntly that the goal was to make Germany “wholly independent of other countries in all those materials which German capacity, our chemistry, our machine industry, and our mining industry can produce at home.”
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There was widespread popular and press support for Hitler’s goals. Germans of his generation would never forget the hardships caused by the Allied blockade in the Great War, and the general public was happy to hear that it was not going to be dependent on outsiders. German industrial leaders strongly favored autarky. I.G. Farben had for years wanted to make synthetic fuel in large quantities from the country’s plentiful brown coal. Now it had the chance.
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Hitler commissioned Göring to direct the ambitious project to make Germany ready for war in four years. Schacht was still the president of the Reichsbank, Minister of Economics, and Plenipotentiary for War Economy, but he no longer directed the Nazi economy. That power was now in Göring’s hands, and he was going to take the Schachtian system to its logical conclusion. The central banker who had initially championed the policy suddenly did not agree with it and went public with his criticism even to an American publication. In an article in
Foreign Affairs
magazine in January 1937, Schacht wrote, “I should like to make perfectly clear that autarky, whether natural or produced artificially, cannot possibly be an idea. It is opposed to the general principles of civilization. Autarky means isolation from the rest of the world.”
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Göring quickly grabbed the steering wheel of the nation’s economy, and was not going to let go. Either directly or indirectly he now set the nation’s economic policy. One of his first steps was to issue an order outlawing price increases. Germany was rapidly moving toward a wartime economy. Schacht still had all his titles, but Göring now really ran the Nazi economy. The banker claimed that after he left the Ministry of Economics, he rarely saw the Führer.
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Making synthetic products was the top priority of the Four Year Plan. Lieutenant Colonel Wilhelm Löb, a staff member of the Luftwaffe General Staff, prepared a report on how Germany could produce synthetic products in some twenty branches of industry to replace imports of those goods. It became known as Löb’s Bible. Some of the proposals were totally unrealistic and immediately came under attack by Carl Krauch, a top executive at I.G. Farben. Krauch cut the program back to more realistic levels and concentrated on the production of synthetic oil, synthetic rubber, explosives, and light metals. Göring approved it in July 1938.
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The most important of these products was oil. Napoleon once famously said, “An army marches on its stomach.” The new Nazi army, though, would be moving in tanks fueled by gasoline. Germany has little indigenous oil, but the country’s scientists had discovered early in the twentieth century two different chemical processes to produce synthetic fuels from the country’s abundant, but low-quality, coal. Friedrich Bergius and Carl Bosch in 1931 shared the Nobel Prize for their contributions to the invention and development of high-pressure methods to make synthetic petroleum. Later two other German scientists, Franz Fischer and Hans Tropsch, discovered a similar process. At the time, though, both methods were uneconomical because major new oil discoveries had been made in South America and the Middle East, and driven down the price of oil to less than $5 a barrel. That made synthetic fuel uncompetitive, but Göring was willing to subsidize I.G. Farben in order to achieve energy independence, no matter how expensive. A first plant using the Fischer-Tropsch or FT method needed higher quality coking coal and could not produce aircraft fuel, but it was nevertheless still built in 1934. Another synthetic method used brown coal, which was more abundant and could also make airplane fuel. The Four Year Plan turned into a boon for I.G. Farben. By 1939, annual production was upwards of one million tons of synthetic oil and reached a peak of more than four million by 1944, when the Allies began systematically bombing the factories.
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The Reichswerke Hermann Göring, a huge iron ore and steel company established in July 1937, was another temple to self-sufficiency. The corporation’s name also reflected the egomania of its founder. The industrial complex was located in the town of Salzgitter in Saxony, where poor quality iron ore had been mined for decades. Göring began spending unlimited government money to support it under Hitler’s edict that costs were “of no importance.”

The industrial complex started with a series of mergers of several small steel companies and produced its first pig iron in October 1939 and its first steel in August 1940. As Germany began invading its neighbors, Reichswerke Hermann Göring took over iron and steel facilities in conquered Austria, Czechoslovakia, and other countries. The German army even dismantled Soviet iron and steel facilities and shipped them back to the Reich. The company also moved into manufacturing armaments, and by the end of 1941 was the largest corporation in Europe. The massive complex, though, was too large and diffuse to be managed efficiently. Moreover, decisions were often made on the basis of politics rather than economics. The Reichswerke’s coal, iron, and steel operations lost money throughout the war.
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The Four Year Plan developed into a large bureaucracy that had carte blanche to move into any part of German economic life. Göring found talented bureaucrats to run a shadow government that answered to him. He recruited Reinhard Heydrich, an
SS
officer, to set up a new group to investigate foreign currency accounts, and Erich Neumann, a Prussian civil servant, to handle foreign exchange and gold issues. That gave Göring personal control over valuables confiscated in occupied countries. Foreign gold was still shipped to the Reichsbank’s vaults for safekeeping, but officials of the Four Year Plan controlled how it would be used. Göring also had his own account there and could personally request as much money as he wanted. Reichsbank bureaucrats were savvy enough not to disagree with the second-ranking person in the Third Reich.