kerrielisabeth
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apparently Hjalmar Schacht used them to finance rearmament secretly from 1933-1938 but i don't get them. can anyone explain them?! i'm having difficulty understanding

thanks.
xxx
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g_star_raw_1989
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Okay, mefo bills are credit notes used to pay the armants factories e.g Krupps to produce arms.

However, as Germnay were unable to openly rearm under the terms of The Treaty of Versailles, they had to do it secretly.

Mefo bills, were payed to the factories through a fictional "MEFO" institute. Hence, being able to discreetly rearm without leaving a paper trail.

What's more, the mefo bills allowed the govt. to run-up a deficit, that they otherwise would not have been able to do.

The mefo bills could be exchanged to Reichsmarks upon demand.

I hope tha helps x
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superman19
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Also, to keep companies from exchanging the bills back to Reichmarks, there were incentives for keeping the bills for longer periods of time, I think they earned interest of them, rising the longer they wern't claimed.
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kerrielisabeth
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thank you so much
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s.nighters
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Also, make sure you understand that this was only a short-term method of rearming Germany, and Schacht realized that it would eventually lead to inflationary pressures. Therefore the four-year plan was introduced in 1936.
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jasmine_GCSE
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(Original post by g_star_raw_1989)
Okay, mefo bills are credit notes used to pay the armants factories e.g Krupps to produce arms.

However, as Germnay were unable to openly rearm under the terms of The Treaty of Versailles, they had to do it secretly.

Mefo bills, were payed to the factories through a fictional "MEFO" institute. Hence, being able to discreetly rearm without leaving a paper trail.

What's more, the mefo bills allowed the govt. to run-up a deficit, that they otherwise would not have been able to do.

The mefo bills could be exchanged to Reichsmarks upon demand.

I hope tha helps x
I know you wrote this ages ago, but thanks so much! I was struggling to work these bills out during revision and this explained them perfectly! I would give you rep but I'm not sure how to, but Thank-you!
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YUNG JL
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