Labour Treasury Certificates

After Germany lost World War I in 1918 it had major problems. The Paris Peace Conference  led to the Treaty of Versailles which imposed a debt of 132 billion marks on the losers. A billion is still a lot. Then it was enormous. Hyperinflation was one response. Communist takeover was another. See Alsace Soviet Republic, Bavarian Soviet Republic, Hungarian Soviet Republic and what was intended to be the Berlin Soviet Republic. But naughty Adolf rose to power by beating the Bolsheviks.

He then sorted out the finances, allegedly by issuing Labour Treasury Certificates. These would have been Mefo Bills What is curious about this point is that they are not mentioned by either name anywhere in Lords of Finance: The Bankers Who Broke the World which covers precisely this period and this subject. Work Creation Programme by Henry C K Liu has a little. Economy of Nazi Germany from the Wikipedia however covers the ground rather well.

We are not told much by the Main Stream Media or the Education industry. They are both propaganda machines. Remember that the current Financial Crisis [ 2008 until whenever ] has been used to extract money from tax payers to keep the banks going while Wall Street Bonuses Will Hit A £91 Billion Record [ 13 October 2010 ]. It is right to take a cynical view of the men running banking, politics too for that matter. Read for yourself. Think for yourself. Decide for yourself.

Economy of Nazi Germany
Leads to articles on various aspects of Adolf's operations. It is pretty comprehensive. It is the Wiki at its best, leading us to what others hide. One has the same name, Economy of Nazi Germany and covers the ground well. One method used was issuing Mefo Bills - see the next one.


Mefo Bills ex Wikipedia
A Metallurgische Forschungsgesellschaft [ Metallurgical Research Association - Ed. ], most commonly known as the 'MEFO bill' was created by the Minister of Finance, Hjalmar Schacht, in 1934. As Germany were rearming against the terms of the Treaty of Versailles they needed a way to fund rearming without leaving a paper trail, which is where the MEFO bill came in. Hjalmar Schacht created this system as a temporary method to fund rearming with only one million Reich marks in capital. However, Adolf Hitler was still using these bills in 1938 with twelve billion Reich marks of MEFO bills were still outstanding. Schacht has later said that his "mefo" bill device "enabled the Reichsbank to lend by a subterfuge to the Government what it normally or legally could not do".
Mefo Bills  were de facto money issued to manufacturers. People never saw these bills. The next article comments favourably on them.


How Hitler Tackled Unemployment and Revived Germany’s Economy
To deal with the massive unemployment and economic paralysis of the Great Depression, both the US and German governments launched innovative and ambitious programs. Although President Franklin D Roosevelt's “New Deal” measures helped only marginally, the Third Reich’s much more focused and comprehensive policies proved remarkably effective. Within three years unemployment was banished and Germany’s economy was flourishing. And while Roosevelt’s record in dealing with the Depression is pretty well known, the remarkable story of how Hitler tackled the crisis is not widely understood or appreciated.
Adolf succeeded. Roosevelt did not. They keep quiet about Adolf succeeding because of the party line.


Light Unto Nations - A Short History of the Jews in the Modern World
When Adolf Hitler assumed power in Germany in 1933, he set about correcting the problems Germany faced. Among his actions were imprisoning Jewish revolutionaries and strengthening the German economy by the ingenious use of ‘Mefo’ bonds, which in a short time transformed Germany’s economy into the most powerful in Europe. Indeed, Germany achieved full employment in four years under Hitler’s rule. (It is important to contrast Hitler’s quick and successful transformation of Germany’s economy to American president F. D. Roosevelt’s failed attempts to rescue America’s economy from a severe depression. FDR’s economic programs were largely ‘artificial’ in that the government, not private business, created jobs via large projects funded by U.S. tax dollars. In other words, tax dollars were used to pay taxpayers).
Roosevelt may well have been a Jew. He was certainly influenced by them. They got rich. Americans got poor. Cause and effect? Quite possibly.


Jew Explains Mefo Bills
Mefo bills. The financing of the conspirators' huge rearmament program presented a twofold problem to Schacht First, was the need of obtaining funds over and above the amount which could be obtained through taxation and public loans. Second, was the conspirators' desire, in the early stages of rearmament, to conceal the extent of their feverish armament activities. Schacht's answer to the problem was the "mefo" bills, a scheme which he devised for the exclusive use of armament financing (EC-436).

Transactions in "mefo" bills worked as follows: "mefo" bills were drawn by armament contractors and accepted by a limited liability company called the Metallurgische Forschungsgesellschaft, m.b.H. (MEFO). This company was merely a dummy organization; it had a nominal capital of only one million Reichsmarks. "Mefo" bills ran for six months, but provision was made for extensions running consecutively for three months each. The drawer could present his "mefo" bills to any German bank for discount at any time, and these banks, in turn, could rediscount the bills at the Reichsbank at any time within the last three months of their earliest maturity. The amount of "mefo" bills outstanding was a guarded state secret (EC-436). The "mefo" bill system continued to be used until 1 April 1938, when 12 billion Reichsmarks of "mefo" bills were outstanding (EC-436). This method of financing enabled the Reich to obtain credit from the Reichsbank which, under existing statutes, it could not directly have obtained. Direct lending to the Government by the Reichsbank had been limited by statute to 100 million Reichsmarks (Reichsgesetzblatt, 1924, II, p. 241). Schacht has conceded that his "mefo" bill device "enabled the Reichsbank to lend by a subterfuge to the Government what it normally or legally could not do" (3728-PS).
Jews understand money the way honest men do not. They are very keen on manipulation too - remember Bernie Madoff [ $50 billion ], Andy Fastow [ Enron $11 billion ], Bernard Cornfeld [ Investors Overseas Services ]. There are another 87 of them in Jewish American mobsters - that is just for America.



"We were not foolish enough to try to make a currency [backed by] gold of which we had none, but for every mark that was issued we required the equivalent of a mark's worth of work done or goods produced. . . .we laugh at the time our national financiers held the view that the value of a currency is regulated by the gold and securities lying in the vaults of a state bank."

- Adolf Hitler, quoted in "Hitler's Monetary System,", citing C. C. Veith, Citadels of Chaos (Meador, 1949)

Guernsey wasn't the only government to solve its infrastructure problems by issuing its own money. (See E. Brown, "Waking Up on a Minnesota Bridge,", August 4, 2007.) A more notorious model is found in post-World War I Germany. 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 totalling three times the value of all the property in the country. Speculation in the German mark had caused it to plummet, precipitating one of the worst runaway inflations in modern times. At its peak, a wheelbarrow full of 100 billion-mark banknotes could not buy a loaf of bread. The national treasury was empty, and huge numbers of homes and farms had been lost to the banks and speculators. 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 Labour 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 labour 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.1

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."2

Although Hitler has rightfully gone down in infamy in the history books, he was quite popular with the German people, at least for a time. Stephen Zarlenga suggests in The Lost Science of Money [ Very favourably reviewed - Editor ] that this was because he temporarily rescued Germany from English economic theory — the theory that money must be borrowed against the gold reserves of a private banking cartel rather than issued outright by the government.3 According to Canadian researcher Dr. Henry Makow [ Who is not particularly reliable - Editor ], this may have been a chief reason Hitler had to be stopped: he had sidestepped the international bankers and created his own money. Makow quotes from the 1938 interrogation of C. G. Rakovsky, one of the founders of Soviet Bolshevism and a Trotsky intimate, who was tried in show trials in the USSR under Stalin. According to Rakovsky, Hitler had actually been funded by the international bankers, through their agent Hjalmar Schacht, in order to control Stalin, who had usurped power from their agent Trotsky. But Hitler had become an even bigger threat than Stalin when he had taken the bold step of printing his own money. Rakovsky said:

[Hitler] took over for himself the privilege of manufacturing money and not only physical moneys, but also financial ones; he took over the untouched machinery of falsification and put it to work for the benefit of the state . . . . Are you capable of imagining what would have come . . . if it had infected a number of other states . . . . If you can, then imagine its counterrevolutionary functions.4

Economist Henry C K Liu writes of Germany's remarkable transformation:

The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.5

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.


Another Look at the Weimar Hyperinflation

What does appear in modern textbooks is the disastrous runaway inflation suffered in 1923 by the Weimar Republic (the common name for the republic that governed Germany from 1919 to 1933). The radical devaluation of the German mark is cited as the textbook example of what can go wrong when governments are given the unfettered power to print money. That is what it is cited for; but in the complex world of economics, things are not always as they seem. The Weimar financial crisis began with the impossible reparations payments imposed at the Treaty of Versailles. Schacht, who was currency commissioner for the Republic, complained:

The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . [T]he Reich could not find any way of holding its head above the water other than by the inflationary expedient of printing bank notes.

That is what he said at first. But Zarlenga writes that Schacht proceeded in his 1967 book The magic of money" to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the 'accepted wisdom' the financial community has promulgated on the German hyperinflation."6 Schacht revealed that it was the privately-owned Reichsbank, not the German government, that was pumping new currency into the economy. Like the U.S. Federal Reserve, the Reichsbank was overseen by appointed government officials but was operated for private gain. What drove the wartime inflation into hyperinflation was speculation by foreign investors, who would sell the mark short, betting on its decreasing value. In the manipulative device known as the short sale, speculators borrow something they don't own, sell it, then "cover" by buying it back at the lower price. Speculation in the German mark was made possible because the Reichsbank made massive amounts of currency available for borrowing, marks that were created with accounting entries on the bank's books and lent at a profitable interest. When the Reichsbank could not keep up with the voracious demand for marks, other private banks were allowed to create them out of nothing and lend them at interest as well.7

According to Schacht, then, not only did the government not cause the Weimar hyperinflation, but it was the government that got it under control. The Reichsbank was put under strict government regulation, and prompt corrective measures were taken to eliminate foreign speculation, by eliminating easy access to loans of bank-created money. Hitler then got the country back on its feet with his Treasury Certificates issued Greenback-style by the government.

Schacht actually disapproved of this government fiat money, and wound up getting fired as head of the Reichsbank when he refused to issue it (something that may have saved him at the Nuremberg trials). But he acknowledged in his later memoirs that allowing the government to issue the money it needed had not produced the price inflation predicted by classical economic theory. He surmised that this was because factories were sitting idle and people were unemployed. In this he agreed with John Maynard Keynes: when the resources were available to increase productivity, adding new money to the economy did not increase prices; it increased goods and services. Supply and demand increased together, leaving prices unaffected.

1 Matt Koehl, "The Good Society?", (January 13, 2005); Stephen Zarlenga, The Lost Science of Money (Valatie, New York: American Monetary Institute, 2002), pages 590-600.
2 John Weitz, Hitler's Banker (Great Britain: Warner Books, 1999).
3 S. Zarlenga, op. cit.
4 Henry Makow, "Hitler Did Not Want War" (March 21, 2004).
5 Henry C. K. Liu, "Nazism and the German economic miracle," Asia Times (May 24, 2005).
6 Stephen Zarlenga, "Germany's 1923 Hyperinflation: a 'Private' Affair.," Barnes Review (July-August 1999); David Kidd, "How Money Is Created in Australia,"   (2001).
7 S. Zarlenga, "Germany's 1923 Hyperinflation," op. cit.

The hyperlinked references are all genuine.


Work Creation Programme
In four short years, Hitler's Germany was able to turn a Germany ravaged by defeat in war and left in a state national malaise by the liberal policies of the Weimar Republic, with a bankrupt economy weighted down by heavy foreign war debt and the total unavailability of new foreign capital, into the strongest economy and military power in Europe. How did Germany do it? The centrepiece was Germany's Work Creation Program of 1933-36, which preceded its rearmament program. Neo-liberal economists everywhere seven decades later have yet to acknowledge that employment is all that counts and living wages are the key to national prosperity. Any economic policy that does not lead to full employment is self-deceivingly counterproductive, and any policy that permits international wage arbitrage is treasonous. German economic policies between 1930 and 1932 were brutally deflationary, which showed total indifference to high unemployment, and in 1933 Hitler was elected chancellor out of the socio-economic chaos.
You might wonder why it is not being done today. You might also wonder whether economists know what they are talking about.


Financial Problems Solved
Germany and Adolf Hitler had the same problems as we have now but worse. They were sorted and the system keeps very quiet about how it was done. This is an important clue pointing to the perpetrators. How many bankers are stinking rich? More to the point how many are poor now? Ellen Brown is quoted as a source in this article as well as well as HOW A BANKRUPT GERMANY SOLVED ITS INFRASTRUCTURE PROBLEMS. Single sourcing for a story means use caution.



"Labour Treasury Certificates" - Google Search

1. Web of Debt - Thinking Outside The Box: How A Bankrupt Germany ... 2. Did Nazi Germany have a better economic system? - Sherdog Mixed ... 3. The Weimar Hyperinflation? Could it Happen Again? by Ellen Brown 4. The Weimar Hyperinflation? Could it Happen Again? 5. The Rise and Fall of the International Gold Standard 6. why the “gold dinar” idea is wrong « Niqnaq
    "To pay for this, the German government (not the international bankers) issued bills of exchange, called Labour Treasury Certificates. ..."
7. The True Cause of WW2 - Stormfront 8. Hitler's freedom from International Debt ... 9. The Riddles of the Universe: Economic Solutions of the Third Reich
    "5 Apr 2009 ... One billion non-inflationary bills of exchange, called Labour Treasury Certificates, were then issued against this cost. ..."



Errors & omissions, broken links, cock ups, over-emphasis, malice [ real or imaginary ] or whatever; if you find any I am open to comment.

Email me at Mike Emery. All financial contributions are cheerfully accepted. If you want to keep it private, use my PGP key.  Home

Updated  on Monday, 17 April 2017 18:19:06