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Old 06-08-2019, 11:44 AM
Schnitte is offline
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Join Date: Feb 2001
Location: Frankfurt, Germany
Posts: 3,578
1) Deficit spending and inflation. The Nazi government employed all sorts of techniques to hide the extent of public debt they were running up to finance the build-up; one of these tools were Mefo bills, whereby arms deliveries of the German industry were paid for by means of bills of exchange (a kind of IOU) underwritten by a shell company of the government. These bills could then be discounted (i.e., bought) by German banks, which would then be re-discounted (i.e., bought from the banks) by the German central bank, the Reichsbank. In effect it was an elaborate scheme to finance the build-up through the printing press, with public debt accumulating in the central bank, but in a manner that was not transparent.

2) and 3) The attitudes of other governments varied. Legally, Germany was prohibited from armament by the Versailles Treaty of 1919, so other governments could have invoked that to justify military action. This wouldn't have been unheard of; in 1923, France and Belgian occupied the Ruhr area (one of the most heavily industrialised regions of Germany) to enforce reparations claims from the Versailles Treaty. This occupation was highly unpopular in Germany and controversial internationally, and it ended in 1925 upon pressure from the US and the UK. There was, to some extent, sympathy in other countries, especially in the UK, where some politicians thought that the Versailles Treaty was treating Germany too harshly and that some re-armament on the German side was a legitimate aim. All in all, there was no harmonised strategy on the part of the Western Allies on how to deal with Germany; France, in particular, was often advocating a harsh stance, whereas Britain was less adamant, an attitude which ultimately led to 1938 Appeasement, hoping that concessions towards Hitler would avert another war.

4) Hardly anybody in the West believed that Hitler had peaceful intentions, but opinions differed as to how far he would go. Many were hoping that, with some concessions (most importantly, the Munic Agreement), he would be satisfied and refrain from further aggression.
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