Breaking the Bondage of Interest:
A Right Answer to Usury, Part 4

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Part 4 of 4

National Socialist Germany

Propaganda rather than scholarship has dominated studies on National Socialist Germany. Hence, the manner by which certain socio-economic achievements were attained is buried amidst histories that focus on war, the Holocaust, and racial theories. Where the economic recovery of Germany during the Depression era is noted at all, it is simplistically accounted for by spending on rearming, which by itself explains nothing.

If the British Commonwealth states had their C. H. Douglas, the pre-eminent advocate of Germany’s liberation from usury was Gottfried Feder. The National Socialist party just happened to be the movement that was the vehicle for advocating Feder’s views. His theories might have been enacted by the Weimer regime, which showed interest, if they had had the determination. Feder was a lecturer for the military, and it is in that capacity that he was heard by Hitler.[1]

As early as 1917 – that is, about the same time that Douglas had first formulated Social Credit – Feder started advocating banking reform and formed the Fighting League Against Interest Slavery.[2] Feder’s Manifesto for the Breaking of the Bondage of Interest was published the following year. In this he stated that the source of the power of the international banking system “is the effortless and infinite multiplication of wealth which is created by interest.” He recommended that the “drones” “living off productive peoples and their labor” be eliminated by “breaking the bondage of interest”:

Money is not and must not be anything but an exchange for labor; that to be sure any highly developed country does need money as a medium of exchange, but that this exhausts the function of money, and can in no case give to money, through interest, a supernatural power to reproduce itself at the costs of productive labor.[3]

Feder had been a founder-member of the German Workers’ Party prior to Hitler’s recruitment. The earliest policy document of the German Workers’ Party[4] shows opposition to usury to have been a premise of the group from the start. The party rejected socialization of production in favor of “profit-sharing” and co-operatives. To the question “who is the DAP fighting against?” the reply was:

The DAP is fighting with all its strength against usury and the forcing up of prices. Against all those who create no values, who make high profits without any mental or physical work.[5]

The German Workers’ Party, in common with other Rightists and conservative revolutionaries such as Oswald Spengler, recognized from the start the nexus between international finance and the Left, including the communists. Another early treatise, “To All Working People!” Was written by the eminent playwright Dietrich Eckart, who became the mentor of Alfred Rosenberg and Hitler. At the time of the creation of the Munich Soviet, Eckart distributed his essay as a leaflet on the streets in an effort to win the masses away from the Soviet Republic. The leaflet was republished in 1924, and by Feder in 1933, when he identified himself as co-author.[6] The leaflet of Eckart and Feder is therefore obviously an important and cogently brief document. Eckart and Feder point out that despite the revolutionary tumult created by the Marxists:

Only one thing isn’t mentioned, you never hear a word about it, never a syllable, and there is nothing in the world which is such a curse on humanity. I mean

LOAN CAPITAL!

This was the primary issue, and it was ignored by the Marxists in the clamor for nationalization of private enterprise. But “loan capital” and “nothing but this!” is the cause of a nation’s and an individual’s burden. They continued:

Loan capital brings in money without work, brings it in through interest. I repeat: without lifting a finger the capitalist increases his wealth by lending his money. It grows by itself. No matter how lazy one is, if one has money enough and lends it out at interest, one can live high and one’s children don’t need to work either, or one’s grandchildren, or one’s great-great grandchildren, and so on to eternity! How unjust this is, how shameless – doesn’t everyone feel it?

To infinity it grows, this loan capital . . .

But who provides them [the House of Rothschild] and their like with such an enormous amount of money? Interest has to come from somewhere after all, somewhere these billions and more billions have to be produced by hard labor! Who does this? You do it, nobody but you! That’s right, it is your money, hard earned through care and sorrow, which is as if magnetically drawn into the coffers of these insatiable people . . .[7]

The twenty-five point “Program of the NSDAP,” formulated the following year, again reflected the doctrines of Feder. Among these points are:

10. It must be the duty of every citizen to work either mentally or physically. The activities of the individual may not conflict with the interests of the general public but must be carried on within the framework of the whole and for the good of all.

WE THEREFORE DEMAND

11. Abolition of income unearned by labor or effort;

BREAKING THE BONDAGE OF INTEREST.[8]

It was after hearing an address by Feder to the political agents of the army that Hitler stated: “Right after listening to Feder’s first lecture, the thought ran through my head that I had now found the way to one of the most essential premises for the foundation of a new party.”[9]

It is a pity that groups and individuals on the Right do not recall or know this, and cannot get beyond “white power” or “anti-Semitism.” By inane obsessions the Right is missing the historical boat at the very juncture that the global system of “loan capital”  should be fought most vigorously.

How then did Germany “break the bondage of interest”? Few now know. Rearmament is not a sufficient explanation. Prof. A. J. P. Taylor, the eminent British historian, and hardly a Nazi sympathizer, writes:

Fascism, it was claimed, represented the last aggressive stage of capitalism in decline, and its momentum could be sustained only by war. There was an element of truth in this, but not much. The full employment which Nazi Germany was the first European country to possess, depended in large part on the production of armaments; but it could have been provided equally well (and was to some extent) by other forms of public works from roads to great buildings. The Nazi secret was not armament production; it was freedom from the then orthodox principles of economics . . . the argument for war did not work even if the Nazi system had relied on armaments production alone. Nazi Germany was not choking in a flood of arms. On the contrary, the German Generals insists unanimously in 1939 that they were not equipped for war and that many years must pass before “rearmament in depth” had been completed.[10]

Yet even Taylor, whose book is interesting in its repudiation of the “sole war guilt” doctrine, fails to understand exactly how Germany achieved recovery. Despite what Taylor states about Hitler lacking a consistent policy, the views on loan capital and the stock exchange were features of his speeches before and after assuming Government. Hitler’s speech of January 30, 1939 to the Reichstag is perhaps the most informative he made on the principles upon which Germany was being reconstructed. Answering predictions of ruin by orthodox economists throughout the world, Hitler explained that Germany had not withdrawn from world trade but had bypassed the international financial system by means of barter, stating:

If certain countries combat the German system this is done in the first instance because through the German method of trading their tricks of international currency and Bourse speculations have been abolished in favor of honest business transactions. . . . We are buyers of good foodstuff and raw materials and suppliers of equally good commodities![11]

Taylor comments on German trade barter:

Germany was not short of markets. On the contrary, Schacht used bilateral agreements to give Germany practically a monopoly of trade with south-eastern Europe; and similar plans were being prepared for the economic conquest of South America when the outbreak of war interrupted them.[12]

Hitler next explained precisely the foundations of the new economic and financial system:

If ever need makes humans see clearly it has made the German people do so. Under the compulsion of this need we have learned in the first place to take full account of the most essential capital of a nation, namely, its capacity to work. All thoughts of a gold reserves and foreign exchange fade before the industry and efficiency of well-planned national productive resources. We can smile today at an age when economists were seriously of the opinion that the value of currency was determined by the reserves of gold and foreign exchange lying in the vaults of the national banks and, above all, was guaranteed by them. Instead of that we have learned to realize that the value of a currency lies in a nation’s power of production, that an increasing volume of production sustains a currency, and could possibly raise its value, whereas a decreasing production must, sooner or later, lead to a compulsory devaluation.[13]

One of the few places where National Socialist Germany’s economic policies were plainly explained was in New Zealand, and it might be observed that, as uncomfortable as this is for most, the banking policies of the two states were similar. Henry Kelliher, later knighted as “Sir Henry,” was a wealthy businessman and arts patron who served on the board of the Bank of New Zealand. He is known to New Zealanders primarily as the head of Dominion Breweries and as the initiator of the iconic milk-in-schools program that lasted for decades. Kelliher was also an avid campaigner for banking reform.[14] He was publisher of a home journal, The Mirror, a magazine that was head and shoulders intellectually above the plethora of current magazines for the “liberated woman.” Kelliher’s campaign for economic reform assisted the Labour Party in assuming Government.[15] Therefore, when consulting Kelliher’s Mirror for a description of Germany’s economic policies, we are looking at something other than a “Nazi” propaganda sheet.

In 1938 The Mirror ran an article by its European correspondent, Bertram de Colonna: “Germany could not produce gold, but real wealth from land and forest, fields and factories. Labour was also available in plenty. In fact the unemployed totalled around seven million at the time.”[16] Capital was not available either domestically or internationally, and gold reserves were only sufficient to cover 10% of the currency in circulation. De Colonna writes that, “The result was a decision by the government to issue and assume control of currency and credit.” One million marks of state credit were issued to finance public works including state housing. “The bankers prophesied speedy bankruptcy. Those prophecies proved utterly wrong . . .” Newly created state banks issued state credit. “The new money backed by the credit of the nation was gradually absorbed by the open money market.” This in turn brought a big increase in state revenue without the need for increasing taxation. Private banks were placed under state supervision and “the rate of interest was limited by law.”

De Colonna pointed out that the state money was in no way inflationary (a frequent objection against such schemes by orthodox economists). The issue of credit and new money “is based upon the actual production of real wealth;” through greater industrial output. De Colonna stated that after five years of pursuing this policy it had proven its worth in keeping money in constant circulation; “after all that is the only use of money – to circulate and exchange the wealth produced by the nation.”[17]

More recently a professional economist, Henry C K Liu[18], who can hardly be suspected of Hitlerism, analyzed the methods by which Germany emerged from the Depression:

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. In fact, German economic recovery preceded and later enabled German rearmament, in contrast to the US economy, where constitutional roadblocks placed by the US Supreme Court on the New Deal delayed economic recovery until US entry to World War II put the US market economy on a war footing. While this observation is not an endorsement for Nazi philosophy, the effectiveness of German economic policy in this period, some of which had been started during the last phase of the Weimar Republic, is undeniable.[19]

Henry Liu adds an interesting comment regarding communist China by way of comparison. It is instructive for us today in that Marxism has failed historically as an alternative to capitalism — as both Spengler and Eckart pointed out — especially with its inability to address the world financial system upon which monopoly capitalism is predicated. Liu writes:

After two and a half decades of economic reform toward neo-liberal market economy, China is still unable to accomplish in economic reconstruction what Nazi Germany managed in four years after coming to power, i.e., full employment with a vibrant economy financed with sovereign credit without the need to export, which would challenge that of Britain, the then superpower. This is because China made the mistake of relying on foreign investment instead of using its own sovereign credit.[20]

It is more than possible that Germany’s currency and trade systems explain more about the causes of World War II than the invasion of Poland. This was the opinion of the well-informed Hasting W. S. Russell, Marquis of Tavistock, and later the 12th Duke of Bedford, who was a pacifist and a monetary reformer. He wrote at the start of the war that it is

A war of financiers and fools, though most people, on the allied side at any rate, do not yet see very clearly how financiers come into it. . . . Financiers also desired war as a means of overthrowing their rivals and consolidating still further the immense power. . . . Hitler not only engaged in barter trade which meant no discount profits for bankers arranging bills of Exchange, but he even went so far as to declare that a country’s real wealth consisted in its ability to produce goods; nor, when men and material were available, would he ever allow lack of money to be an obstacle in the way of any project which he considered to be in his country’s interests. This was rank heresy in the eyes of the financiers of Britain and America, a heresy which, if allowed to spread, would blow the gaff on the whole financial racket.[21]

Japan

What is even less known is that in 1929 Maj. Douglas toured Japan. As in New Zealand, Douglas was enthusiastically received, and his books were published in Japan more than in any other country. The Bank of Japan, formed in 1882, had from its start the Imperial House as the major shareholder. However in 1932 it was reorganized specifically as a state bank. Stephen M. Goodson, a financial consultant, founder of the Abolition of Income Tax and Usury Party, and a director on the board of South Africa’s Reserve Bank[22] has stated of the Japanese banking system:

The reform of the central bank was completed in February 1942 when the Bank of Japan Law as remodeled on the Reichsbank Act of Germany of 1939. Credit would be issued by the bank as the interests and productivity of Japan required.

During the 1931–41 period manufacturing output and industrial production increased by 140% and 136% respectively, while national income and Gross National Product (GNP) were up by 241% and 259% respectively. These remarkable increases exceeded by a wide margin the economic growth of the rest of the industrialized world.

In the labor market unemployment declined from 5.3% in 1930 to 3.0% in 1938. Industrial disputes decreased with the number of stoppages down from 998 in 1931 to 159 in 1941.[23]

Conclusions

Usury is the “Hidden Hand” in history. It is behind wars and revolutions, booms and busts, and the travesty termed “poverty amidst plenty.” It causes civil wars and class wars. Many problems of the world could be resolved with clarity once the dust the money-lenders throw in one’s eyes is removed. The financial system is the means by which power politics functions at all levels.

As one historical example of the “hidden hand” at work: How many Anglophobic Irishmen understand the real reasons for the “potato famine”? Henry Kelliher wrote that anecdotes were told to him of the harrowing starvation of the Irish. It was subsequently that he found the Irish famine was the result not of over-population, as claimed at that time among some quarters – nor even due to food shortages, since it was only the potato crop that failed. In 1845 (while the famine was to claim the lives of 1,029,000) 779,000 quarters of wheat and flour, 93,000 quarters of barley, and 2,353,000 quarters of oats – enough to feed for a year every person who died of starvation, nearly four times over – were exported from Ireland.[24] Kelliher commented:

When the true story of Ireland is written it will be found that all that stood between starvation and the available plenty, was the crushing interest burden that had to be paid to outside money-lenders, that the country was not suffering from famine, but from what we choose today to call “depression.” A famine is the absence of food caused by a lack of food; a depression is the absence of food caused by a lack of food, caused by a deficiency in the medium of exchange – money.[25]

How many are aware that a major cause of the French Revolution, the epochal event that was one of the first victories of Money Power over Tradition, was caused not by the masses yearning to overthrow the tyranny of Monarchy, but by the economic dislocations caused by debt, when 50% of state expenditure went to pay interest to money-lenders? And so we might continue, up to the present: how much of the aggravation between Islam and the West is caused (apart from the betrayal of the Arabs dating back to the Balfour Declaration and the Sykes-Picot Agreement) by the aim of international finance to control the Islamic world, where usury is regarded as “sin,” as it once was by Western Christendom? Remove the “Hidden Hand” of usury and once the perspective becomes clear, issues might be resolved with justice between many that are presently at each others’ throats while the real culprits remain invisible.

Notes