Demystification of the Birth & Funding of the NSDAP, Part 1

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Part 1 of 2

Editor’s Note:

This essay is a companion to the volume Warwolves of the Iron Cross: The Hyenas of High Finance: The International Relationships of French and American High Finance (Volume 3), a compendium of Third Reich writings on economics by Dr. Heinrich Pudor, with additional material by Veronica Kuzniar Clark, Fred Scherbaum, Wilfried Heink, Luis Muñoz, and Hans Krampe.

What exactly did the NSDAP represent and who were its founding members? Why and how did Adolf Hitler transform the party from an unimpressive proletarian workers’ party to a full-fledged political machine that obtained absolute power in Germany? Perhaps more importantly, how was it funded? We answer these questions in this introduction.

But first, we begin with an examination of the early stages of the NSDAP and its recruiting process. One must understand how this process unfolded if one is to understand the NSDAP’s position on Judaism and Freemasonry as well as the prevailing social and political order of the day. Naturally, we also reveal what some of the other important aspects of its early development were, which necessitates a fair amount of myth-busting about Hitler, including who actually gave him money.

Triumvirate: Leadership, Development, and Unity

Adolf Hitler, contrary to his own self-myths and the myths of others, was never poor—at least, not until he had drained his savings and entitlements gallivanting in Vienna. Many historians have written that Hitler simply lived day-by-day wasting both his money and time, but in so doing they overlook Hitler’s experience and “life education” that later played such an important role in the development and direction of National Socialism as well as the Second World War. The development and direction of both can be traced to Hitler’s experiences during those “lost” years.

Hitler, like so many other young German men and women of his day, fell from middle-class status into that of the “wretched proletariat.” This was something that young Hitler refused to accept. He was deeply embittered by his Vienna experiences, which offered false promises of prosperity and hope for young people with enough willpower and talent. The prevailing dissonance of the time and place in which he grew up inculcated in him a burning desire to change these circumstances, which is precisely what he did after 1933.

Hitler was so resentful of the class-ridden society that was Vienna, and Austria and Europe generally, that one of his key aims throughout both the peace and war years was cultivating a system of merit. One’s birth station was not what mattered. What mattered were one’s talent, loyalty, dependability, and fortitude, notably in the face of adversity and uncertainty.

Hitler was able to overcome most embedded class barriers in two distinct ways:

1.  He recruited both men and women from all social classes and accordingly tailored his speeches and disposition to each, depending on his/her social standing.

2.  He supplanted economic valuation with racial valuation.

Let’s look at the first point. Hitler needed the broadest spectrum of German society he could get, so this meant that he needed to appeal to men, women, young, old, wealthy, poor, unemployed and employed alike. Women were amongst Hitler’s most devoted and fervent supporters in the early years. So were low-wage earners, small businessmen, and foreign nobles, such as White Russian émigrés who wished to see the return of the Russian monarchy.

They provided Hitler with a physical audience, elite and business connections, and monetary support, most of which ended up being granted in the form of IOU credit.

Hitler needed industrialists as much as he needed the workers, elites, and disenfranchised foreigners. Since his goal was to raise the station of all Germans, he had to win them all together, which required a strategy of multi-class appeal. When he met and spoke with counts, duchesses, and other members of the former aristocracy, he addressed them in an appropriate manner. His etiquette, speech, and personal manners proved impeccable in such company.

When he met or spoke with industrialists, such as Fritz Thyssen, he tailored his behavior and manner to match that of the hopes and fears of industrial Germany. At the same time he was careful to scale back his socialistic language in such company, so that the industrialists would not misidentify him as a Marxist-Communist. He had to convince them that he would crush Marxist-Communism and uphold their industrial powerbase in the face of the growing mass of disenchanted, underpaid workers who felt they were being cheated and exploited by German industry.

Whenever things got economically tough, the workers suffered wage and benefit cuts. They blamed the industrialists, but Hitler saw that the industrialists were also suffering: many went bankrupt during the inflation as well as during the Great Depression. The crippling Versailles reparations forced most German industrialists and exporters into an untenable economic position, which in turn harmed German workers. This meant that Hitler had to at least hint at future German rearmament, which was covertly occurring anyway.

On the other hand, Hitler had to promise the workers, his single largest and most important support base in almost every respect in the formative years, that he would not allow the state or industry to exploit them or continue treating them as automatons. We can see that balancing the wants and needs of these three core sectors of class-ridden Germany was far from simple. But Hitler did it, and nearly bloodlessly.

Now to the second point: Hitler had to come up with a unifying ideology for Germanic peoples. This task seems simple in retrospect, because Germany was a homogenous society by today’s standards. However, back then this was not how the German situation was seen. Germany may have been racially homogenous, but class antagonisms were so deep-seated that few if any German elites and nobles were interested in sharing political or social power with lower-class and middle-class Germans.

The Junkers (estates Lords) treated their farmhands (serfs) as second- or third-class citizens and ordered them to pack up and get out if they dared to vote against their landlord employers. Most of the Junkers refused to set aside the feudal lifestyle, which helped fuel growing mass discontent for monarchy and aristocracy. This only served the interests of republicans and Freemasons, both of whom wished to see the end of monarchy for good. We will discuss their motivations later. For now it is enough to say that their motives were far from benevolent.

German class divisions trumped any sort of racial or ethnic solidarity. Not surprisingly, one finds that the desire to unite all Germans as racial comrades was found almost entirely amongst the lower- and middle-classes, and even many middle-class Germans did everything they could to cling to their bourgeois station, even if it meant keeping the lower-classes downtrodden. As one can see, Hitler’s goal was anything but simple.

How, then, did Hitler unite Germans? And how successful was he? Hitler united Germans by invoking an ideological concept similar to Italy’s Romanita, as espoused by Benito Mussolini. Hitler’s concept was Nordicism: the basic, simplified premise of which was that all Germanic peoples were united by their Nordic racial component, and because they were united by this common “race soul” or blood component, why should they fight or be divided?

While such a unifying idea sounds both feasible and reasonable, many resisted nonetheless. The Junkers, former nobility, and many other business elites in Germany saw Hitler as nothing other than a lowly former corporal who had no clout given his petit bourgeois (lower middle-class) upbringing.

Hitler was only partially successful in uniting all Germans as Volksgenossen. His lack of complete success in this regard, an unattainable goal to be sure, later proved to be his undoing. Elites amongst the officer corps did immeasurable damage to Hitler and his war effort, but the story of their treachery and sabotage is beyond the scope of this discussion.

Might Hitler have been more successful had he been more racially inclusive early on? Not necessarily. Mussolini, unlike Hitler, was not racially exclusive at any point and expended a great deal of effort and time attempting to recruit non-Italians to the Italian fascist cause. He was largely unsuccessful, especially in Ethiopia—this in spite of the fact that he had Ethiopians trained as pilots (before the Tuskegee Airmen even came into being) and promised them higher status within a Fascist Italian Empire.

We may deduce from this example that Hitler having merely extended his hand openly in the beginning to non-Germans would not have guaranteed National Socialism’s political or military success. Mussolini did so, and his tolerant hand was rejected. Indeed the U.S. and Britain did not win the Second World War due to non-white conscription, but because they supported and funded the Soviet war machine and were willing to bomb Germany indiscriminately.

This brings us back to our main point, which is that unifying a body of people, regardless of whether it is homogenous or diverse, is no easy task. Hitler was only able to convince the lower- and middle-classes that racial value must supersede economic (class) value. Most of the German elites were never won over to his Nordicism.

So, what does all of this mean? First, it means that a party that wishes to succeed must appeal to women and men both, citizens of all ages, and all social classes. A sensible and serious leader and party cannot afford to leave any group out. Naturally this all depends on the individual nation and citizenry in question, as Hitler’s brand of politics and leadership were formed with a specific time, culture, people, and place in mind. It was not intended for export, but for adaptation in multiple contexts. Hitler’s brand of politics was in fact largely modeled after Mussolini’s as well as the leadership of the Austrian mayor Karl Lueger. Thus copying Hitler’s leadership style or National Socialism is unwarranted and unlikely to be successful.

Second, it means that the masses are more important to a party’s success than the elites, because there are more of the masses. Only the masses have the power to invoke fear in upper-class people by threatening to support violent revolutionary parties and organizations, which are often led and funded by hostile fifth-columnists. The Communist Party (KPD) was the only party besides Hitler’s that evoked genuine fear in the elite classes of Germany.

Hitler and the NSDAP could not be ignored for the very reason that they, besides the Marxist-Communists, had the largest mass following in Germany at the time. Industrialists could not afford to anger or rebuff Hitler and the NSDAP; if they did, then Hitler’s followers would quickly have swelled the ranks of the Communists or perhaps have even overthrown him, as Ernst Röhm and many SA members wished to do.

Hitler’s party was the only non-Communist, nationalist party that offered the lower- and middle-classes a better standing in German society. Given Hitler’s ability to keep the overwhelming majority of his followers in line and loyal meant that he alone could prevent a transitional bloodbath, which is what most of the upper-class Germans feared the most. And this is exactly what he did.

What’s important to bear in mind, however, is that Hitler needed a credible threat to maintain his personal and political leverage over the upper classes and big business. Without the Communists to threaten them via mass upheaval and bloodshed, the industrialists and former nobility had little reason other than patriotism to support Hitler and the NSDAP.

Third, it means that a party needs a viable means to unite a citizenry that has every excuse not to be united. Bavarians wanted to secede from Germany and become an independent state. Big business demanded an end to the Junker estates that squandered numerous government bailouts and demanded trade tariffs that harmed German industry. The Junkers did not care whether the industrialists suffered, so long as their estates were still in their name and they could live a lavish life of luxury at the German taxpayers’ expense.

To mediate such divisiveness, Hitler invoked Nordicism, which called on Germans to recognize and value their blood ties instead of their social standing (based on wealth). This unifying ideology provided Hitler with the necessary means to develop a system of merit: one could rise to the top of National Socialist society regardless of one’s parents’ or personal finances, because one was equal to all other Germans from the racial point-of-view.

Hitler’s German racialism and anti-Semitism were the practical means for achieving classless unity among formerly divided Germans. Hitler used a similar approach later on with the Waffen-SS. He turned an exclusively German idea (the Allgemeine SS) into an international, multiethnic idea by uniting everyone who participated against Jewish-Bolshevism, the enemy of all people.

Initial Member Recruitment

Like any grassroots party, the NSDAP developed organically from amongst a handful of hardcore ideologues, the primary catalyst having been Adolf Hitler. But the NSDAP did not spring up on its own; it instead arose from out of a party that already had a platform, leadership core, and small committed following. This was the German Workers’ Party led by Anton Drexler.

Hitler was actually appointed by the Army to spy on the German Workers’ Party. The Army was interested in two things: locating nationalists for its own designs and rooting out Communists who threatened to turn Germany into a subservient satellite of Moscow. Hitler’s speaking skills and interest in politics led the Army to select him for this covert task. He took a liking to Drexler and many of his ideas, so he finally signed up and was issued a membership card with his name and membership number on it, a tradition that Hitler maintained.

While Hitler began his political career as the propagandist for the Workers’ party, he was quick to identify the party’s main problems: it appealed to too few and had no outreach venue other than speaking engagements, which were often drab. He therefore focused on developing his own talents, which surpassed Drexler’s, and forming his own designs for the Workers’ party; hence the birth of the NSDAP.

Hitler was quick to capitalize on Drexler’s connections to wealthy Thule Society members. He did not join the Thule Society but requested their patronage. They alone significantly enhanced the potential for what was now his party to appeal to upper-class Germans, who, in turn, also helped fund the party. After he quit the Army, Hitler threw himself into the development of the NSDAP with unmatched determination.

While Drexler and his core focused entirely on winning over German workers, Hitler had eyes for larger audiences and outreach. His relationships with White Russian émigrés, wealthy Thule Society members, and especially Gottfried Feder (an economist) and Dietrich Eckart (a philosopher and writer) proved invaluable in his acquisition of the bankrupt Völkischer Beobachter (VB). Feder together with two other early NSDAP members owned 30,000 shares of the VB. Dietrich Eckart was able to obtain a loan for RM 60,000 from the sympathetic General Ritter von Epp to acquire the VB. The rest of the RM 120,000 price tag came from an industrialist named Dr. Gottfried Grandel, who was won over by Hitler’s personal appeal to him. Eckart likely helped out too, along with Dr. Gutberlet (who pledged RM 5,000).

Hitler’s early supporters came from a wide range of classes, nationalities, and ethnic backgrounds. Numerous wealthy White Russian émigrés, who had Thule Society contacts, formed an alliance with the NSDAP and allegedly raised “vast sums of money” for Hitler—i.e. according to an official 1923 file note. There was Henry Ford, who was anti-Jewish and wished to spread his message to receptive nations. Benito Mussolini’s personal agents were known to have established contact with NSDAP members in Germany, likely in order to arrange the transfer of financial gifts from the Duce. The Russian Grand Duchess Victoria, who was pro-monarchy and anti-Bolshevik, gave Hitler money.

Sir Henry Deterding of Royal Dutch Shell Corporation offered Hitler vast amounts of money in 1931, ’32, and ’33 in exchange for a guarantee that he would regain his expropriated oil interests from the Bolsheviks at some future point in time. The amount was likely between 30 and 55 million pounds sterling. Deterding was so pro-German that he ended up marrying a National Socialist woman and even moved to Germany.

Deterding, like many other members of German elites, realized that only an assertive foreign policy could secure Germany’s economic survival in a world in which France and England had a monopoly over one-quarter of the globe and were determined to crush Germany’s global competitiveness. The Germans had tried everything else, including complying with the Versailles reparations, which was de facto theft. This “treaty” was in fact designed with one goal in mind: the permanent crippling of German industrial competition.

Ernst Röhm was a fervent German nationalist who channeled Army funds to the NSDAP via various front organizations. The Thule Society, which was pan-Germanic and nationalist, not only contributed members to the NSDAP but helped it raise a lot of money. The two German jewelers Josef Füss and Herr Gahr supported Hitler. A certain Mr. Pöschl, a small businessman, gave to Hitler early on. Quirin Diestl was another early supporter who gave small funds. Oscar Koerner, a toy shop owner, likewise gave money to the NSDAP. Dr. Friedrich Krohn, a dentist, gave as much as he could. Adolf Müller helped the NSDAP keep the VB going by endlessly extending credit to Hitler. Frau Hoffmann, the widow of a headmaster, contributed regularly. Numerous friends of General Ludendorff, a Thule Society member, provided the NSDAP with funding.

A significant number of prominent foreigners and German nationals living or working in Austria, Britain, Czechoslovakia, Finland, France, Italy, Holland, Hungary, Switzerland, Sweden, and America gave Hitler money, much of it via Winifred Wagner, Kurt Lüdecke, and Hungarian nationalists like Gömbös.

The German Free Corps members gave Hitler money, and so did many Stahlhelm members. Several right-wing German business interests, such as Emil Kirdorf of the covert Ruhrlade group, gave Hitler money, along with many business interests that usually supported Alfred Hugenberg (a man who tried to use Hitler for his own ends). There was also General Ritter von Epp, who helped Dietrich Eckart and the NSDAP purchase the VB; Dr. Emil Gansser, who had connections to wealthy Protestants; Admiral Schröder, a former naval commander; Baron Sebottendorf, who had connections to J. F. Lehmann (a Thule member, financier and publisher for the German Navy) and sympathetic naval officers; Herr Schaffer, who acquired weapons for Hitler’s SA; Kurt Lüdecke, and through him two Jewish arms dealers who were either (1) not privy to who Lüdecke was or (2) had no reason to fear Hitler (this was the early 1920s after all); possibly the Duke of Anhalt and Count Fugger; Ernst Hanfstaengl, a Harvard graduate with numerous American connections and some wealth of his own; the wealthy Frau Quandt, who married Josef Goebbels and who had elite connections; Fritz Thyssen, who later denied that he gave substantial sums to Hitler and Göring, in 1929 and off and on throughout the 1930s, both of whom he liked very much; and so forth.

No Warburgs. No Rothschilds. No Rockefellers. While the Rockefellers indirectly came into Hitler’s financial sphere by way of Standard Oil technical investments, and the Warburgs via I. G. Farben and J. H. Stein later on, neither gave Hitler any financial support before 1933. And neither directly supported or paid Hitler at any point in time. The Sidney Warburg story is pure fabrication.

Fritz Thyssen and some of Hugenberg’s heavy industrial connections, not James Warburg, gave Hitler substantial monetary gifts in 1929 (at least RM 1,250,000) and Deterding and several German coal companies took care of Hitler in the early 1930s.

While Hitler spent a vast amount of these funds on campaigning, he was by no means rolling in untraceable money. All of his funding was carefully accounted for and most of it came from VB advertising; party dues, insurance, and speaking fees; Gregor Strasser’s left-wing faction, which received RM 10,000 per month in 1931; the good will of VB publisher Adolf Müller; and the financial frugality of party treasurer Franz Schwarz, whose meticulous party financial records were destroyed. The Americans interrogated him so brutally that he died in 1946 in Anglo captivity. His records denoting even Hitler’s anonymous donors never turned up anywhere. The American occupiers are suspected of having destroyed them.

As for Goebbels’ remark on 17 January 1932 that the finances of the party “suddenly improved,” this was not exactly true. The truth is that the party’s credit line suddenly improved, and this was thanks to the maneuverings of Franz von Papen and Baron Kurt von Schröder with his syndicate of investors, including a number of prominent heavy industrialists, the Hamburg-America Steamship Line, the Stein Bank of Cologne, Commerz und Privat Bank, the Gelsenkirchen Mine Company, Deutsche Bank, Reichskredit-Gesellschaft Bank, Allianz Insurance, members of the potash industry, the Brabag Coal Company, Deutsches Erdöl, and a number of other brown coal industrialists.

While Hitler tolerated fifth-column banks like M. M. Warburg and the Temple Bank (a special account created for the Temple Society by the Reichsbank to fund Ha’avara emigration), he eventually restricted and regulated their business opportunities and forced them to assist with financing Jewish emigration. Hitler’s goal was to increasingly inhibit and thereby financially squeeze the foreign banks until they were unable to exist any longer and had to relocate outside of Germany—the same policy he employed to encourage Jewish emigration and business closures. One such example was the Germanization (i.e. German takeover) of two Jewish ironworks plants in the Rhön region in 1937.