Capítulo 36: chapter 36 Another cabinet meeting
Berlin, December 8, 1936
AH: Konstantin, if you would like to start again.
KN: Sure, as usual, I'll just hit the highlights. Starting with the reaction to the Dutch agreement, basically my office and some of our embassies have been under siege for the last week. Desperate to get their unemployment back under control, our neighbors are willing to sell, lease or even give away their factories as long as we hire their people.
Even those countries that have already signed advantageous trade agreements are trying to expand them following the Dutch example. This being a buyer's market, we will be spreading the bounty on our behalf. The only exceptions to the stampede are France, Czechoslovakia and Poland, but even for them abstention has a significant domestic political cost.
Next, the motorcycle issue in Moscow. Last spring, Adolf came up with the idea of sending two dozen BMW bicycles to Moscow as official courier vehicles for the embassy. With the actual use of running around Moscow, shaking off the NKVD bodyguards, who can't keep up.
Fortunately, most of the other embassies and legations copied our new methods of transportation, as they realized that we could now move freely. Despite the NKVD's best efforts, it provides additional distractions. Naturally, due to the weather in Moscow, we were hoping this would calm down by now, as no one in their right mind wants to ride a bike during winter in Russia. But apparently the Finns have now imported a bunch of small snowmobiles to continue the fun.
Something that has caused Stalin to become furious and a great debacle for him. This was compounded when they found out after the fact that Hauptmann Schneider and Oberleutnant Keller went on a three-week camping trip through the Russian countryside and have no idea where they stopped or who they spoke to.
This is having some profound effects on the Soviets, as to distract Stalin from his failures, Yeshov has begun what can only be described as a massive witch hunt. Something that is fueling Stalin's desire to get rid of the Old Guard of the Bolsheviks and the upper level of the Red Army.
We don't know how far this will go, but witch hunts generally tend to get out of control. All the more so when they are supported and endorsed by authority. As you would expect, we will be keeping an eye on any further developments through our newly installed ambassador von Ribbentrop.
Then our Spanish campaign and its effects on foreign policy. Now suffice it to say that we have gained great diplomatic prestige and prestige by not escalating, but managing to meet all our demands.
Then, as soon as we get the British to do the dirty work for us, we turn around and have our "volunteers" chase the Reds out of Madrid while we quietly recover the Spanish gold for the Nationalists. Nationalists who are now considered the official Spanish government, even more so after we published the images of the mass graves, something that will create waves for the foreseeable future.
There is one caveat I would like to point out, from now on we must expect London to treat any diplomatic overtures from us with extreme caution.
And finally I would like to mention the Return Home Program that we have been carrying out since April. We have now encouraged no less than one hundred thousand German workers to emigrate back to the Heimat. Who have brought with them almost seventy thousand wives and just over two hundred thousand children.
With mass unemployment continuing in much of the world, we have no real problem convincing workers of German descent that returning home to a guaranteed high-paying job is a good idea. Even without the subsidized tickets, our embassies in the Americas predict that more than triple that amount will sign up next year.
Hjalmar Schacht (HS): Surely we can use them, the Ostmark unemployed pool is really empty now.
AH: Just keep in mind to place them apart from each other, let them dissolve into a sea of Germans. Next Richard if you want.
Richard Darré(RD): Gentlemen, I only have one article, but it is great news, for the first time in generations, Germany will be able to feed itself. Now, the people in my department and of course the farmers have been working day and night, but we have enough new grains planted that when the harvest comes, we will have a massive surplus.
AH: Gentlemen, this is fantastic news, never again will a hostile power be able to starve us into submission. Richard, I thought that would only happen with harvest in 38.
RD: The last time we discussed plans, we hadn't yet realized how much more seed each acre would produce. Once we received the results from our farmers, all our efforts focused on preparing for sowing as winter wheat.
AH: Richard, I want you and Joseph to get together and plan a festival, celebration, or whatever is appropriate to mark this achievement. I'm talking about something on the scale of the Nuremberg rallies.
Joseph Goebbels(JB): I'll have my creatives start working on something right away.
AH: Hjalmar, you have the next item on the agenda.
HS: The gist of it is that our economy is booming like nothing we've seen since the last century. With the competitive advantage of cheap steel, electricity and declining transportation prices we are able to underbid everyone in the export market. The limiting factor is only the effort we are directing towards expanding our production capabilities.
The original funds we earned from our mineral finds in the US and the British Empire fueled the first boom, but are being replaced by foreign investment. Allowing us to continue purchasing industrial tools and machinery at our previous pace.
Now there were some suggestions that we keep the Spanish gold for ourselves, it would have earned us RM2.5 billion in kind. That is if we somehow manage to smuggle 900 tons of gold out of Spain against the wishes of both factions. A figure that pales in comparison to the extra foreign direct investment and increased market confidence we are gaining by returning gold.
And as icing on the cake, both Italy and we placed a purchase option on the Spanish Nationalist Peseta, both in London and New York. Or in simple terms, a gigantic bet that the value of the nationalist currency would increase. Something that of course happened when he won the bail for the recovered gold and the taking of Madrid. Unfortunately, the Pesetas market is not that large, so the markets would only accept a ten million dollar option. It still generates a clear profit of around 5 million US dollars for both countries.
Then, as a last item, the new orders coming in for our military hardware, now in addition to the Spanish order for 150 Bf109 and another 54 'LeFH 16 n.A' that will be paid in gold. Negotiations have begun with Sweden to obtain a license for two light cruisers to lead their new destroyer squadrons. Similarly, Romania wants a license for one light cruiser and four destroyers, something they can afford thanks to increased sales of oil and minerals to us.
After reports of the Battle of Madrid came out, we have a strong interest in the Stugs. Now Landsverk of Sweden is producing an export version(1) of the Stug that was designed in cooperation with us. So far they will be selling 108 of them to Finland, 42 to Chile and 15 to Norway. The big surprise is the fact that not only Hungary has applied for a production license, but also Italy and Japan.
Werner von Blomberg (WB): If I may interject, it appears that Japanese observers attached to the Condor Legion have been shouting in alarm about the Soviet T-26. Apparently the Japanese don't like their chances against the red hordes in their current armor arsenal. And current versions of Italian tanks are best described as obsolete. For both countries, Stug Export would be a leap forward.
KN: It would be my strong recommendation to proceed with the sale, if only for diplomatic reasons.
HS: My department and the Swedes are processing the application as quickly as possible and we have every intention of facilitating the sale as best we can.
AH: Well, at this point I would suggest a short break....
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