BY PAUL T HORGAN

The ‘Guilty Men’ narrative in the Britain of July 1940 was a necessary myth. The state had given itself such massive powers in the wake of the Dunkirk evacuation as to be a revolution from above, so a superficially credible legend had to be created, as is the case for all revolutions, to justify the legal appropriation of so many traditional liberties.

The rapid German victories on the continent shocked the world, and the complacency of the democracies, mainly Britain and France, in the run-up to war was seen as an acceptable explanation by many. The problem is that with the distance of time and opening of previously secret archives, this narrative starts to break down. There is also the issue of objective examination of events.

The Entente Powers get the blame for not stopping Hitler when they could have done so, but this is to misunderstand the detail of events. One aspect frequently misrepresented is that Hitler was working according to a master plan, that his diplomatic and military escalations were borne of a coordinated programme to return Europe to a state of general war leading to Nazi victory. This is due to a failure to understand history and the failure of historians when depicting the sequence of events as inevitable. They were not.

The first failure is to insufficiently recognise that Germany was at the time a Nazi dictatorship, despite this being rather obvious. This meant that the power of the state was almost total. So workers could be forced to work long hours for their assigned wages and there would be no trades unions to bicker about hourly rates, restrictive practices, and demarcation, all backed by the threat of a walkout or work-to-rule. This had been replaced by the threat of the Gestapo and the concentration camp, plus an extension of offences that were punishable by death. So the armaments industry in such an environment could proceed at a rate and intensity that was impossible in a democracy. We see something similar today with the competitiveness of the People’s Republic of China in global trade.

By contrast the democracies could only rearm in peacetime a rate and in a manner that was acceptable to shop stewards and also the electorate, the latter capable of objecting to state spending and taxation through the ballot-box, after open public debate. This is not a weakness of democracy. Instead this is how human affairs are best run. It was Nazi Germany that was the aberration.

The second failure is the widespread acceptance that Hitler was the master of events in the 1930s, as if everything proceeded according to his will in a country run by decree based on a leadership principle. This failure is considerably more serious. Nazi Germany and Hitler remained subject to the same rules that govern every state, even autocratic totalitarian dictatorships. All countries are subject to apparently immutable fiscal rules. Hitler could not buck the trend. In fact it was the impossibility of him being able to do so that led to war in 1939. This also demonstrated that the difference between Nazi Germany and Fascist Italy on one side and the rest of Europe including the USSR on the other is that Hitler and Mussolini were romantic fantasists, the latter seeking to resurrect the Roman Empire despite lacking the industrial capacity to do so, while Baldwin, Chamberlain, Daladier, Stalin and Franco were pragmatists, the latter two to a deadly degree. It was the antics of the fantasists and the failure of their subjects to contain the fantasies that led to war.

The key to the events of the 1930s is to look at the German economy. Even today, schoolchildren are taught that Hitler cured unemployment and accelerated the German economy in a manner conceptually similar, but more effectively and also darker, than Roosevelt’s New Deal. They are led to believe that Nazism led to an economic miracle in Germany that was unmatched by the democracies. At the time it was even suggested in the USA that Roosevelt take similar dictatorial powers to drag his country out of depression, as the checks and balances of American democratic processes were seen as to blame for his Republican predecessors’ failure to address the catastrophe following the 1929 Wall Street Crash. There was even a Hollywood film made to justify this step. Roosevelt did not take this step, although some of his emergency measures enacted in 1933 were found to be unconstitutional due to the rapidity of their enactment. The checks and balances prevailed, and the measures struck down by the Supreme Court were replaced in time with more solid and democratically-acceptable initiatives.

The Nazis by contrast used secrecy, deceit, and trickery. Reporting on state finances became forbidden and with good reason. Charged with finding a way to secretly fund rearmament without introducing inflation, Germany’s top banker, Hjalmar Schacht, introduced the ‘Mefo bill’.

Mefo stood for Metallurgische Forschungsgesellschaft m.b.H, ‘Society for Metallurgical Research LLC’. This was a dummy company whose only reason to exist was to issue these bills, which were a form of IOU from the Nazi government. They were in effect a parallel currency and allowed the Nazis to print money but not cause inflation because the Mefo bills would rarely, if at all, be converted into reichsmarks and thus introduced into the general money supply. They could be exchanged between businesses and banks, but the public would never have access to them. Thus the Nazis could create an invisible budget deficit while the Messerschmitts, Heinkels, Panzerkampfwagens, and Maschinengewehr 34s all rolled off the Mefo-financed production lines.

It was a massive Ponzi scheme, the more technical term being a ‘Ponzi game’. Debt was hidden and recycled. The first Mefo bills were set to mature and be payable in reichsmarks after 6 months, but the Nazis kept extending the repayment date. If anyone complained, presumably they would be visited by the Gestapo, and then might be invited to stay at a concentration camp until they decided to not complain any more. The German finance community kept their mouths shut.

But the Nazi regime could not just run on secret printed pseudo-money. Every country has a need to import raw materials, goods, and services, and Nazi Germany was no exception. And these imports traditionally could not be paid in reichsmarks, as foreign exporters had limited use for the German currency outside of Germany, so Germany would have to make use of its reserves of foreign currency to pay for the imports, or use gold. The alternative the Nazis actually used was autarky whereby, even when it was more expensive or inconvenient to do so, a local source of what would otherwise be imported would be created.

The classic example of this was synthetic oil, which would be more costly to create from the low-grade coal available in Germany, but meant that foreign currency reserves could be preserved. Oil supply was a perennial problem for the Nazis (rather than trucks, most supplies were taken along roads by horse-drawn wagons), and shortages of fuel from 1944 onwards caused by Allied air-raids accelerated German defeat in 1945.

In addition to autarky, the Nazis bartered foreign raw materials, such as tungsten from Spain, for German finished goods. This policy allowed the Nazis to control private businesses’ access to imports and to ration raw materials, even before Germany went to war.

But this could not last forever. The Nazis’ reputation, other than through the use of terror to eliminate the public discontent and disorder of the Weimar years, was built upon curing inflation and unemployment, and they could justify their authoritarianism in that manner. The economic policies were based on Mefo-based fantasy, and reality began to intrude by the end of 1937. Germany was running out of money, the real kind. Printing more would not help. The only alternative was plunder. Banks and insurance firms were ordered to provide the Nazis with access to private deposits, but that was not enough. The plunder had to continue outside the country.

While the Nazis had planned to be ready for a general war against the democracies and also the Soviet Union, by 1944, the immediate requirement for hard currency led to the need to plunder the treasuries of their neighbours to preserve the façade of economic stability at home. The Nazis had a choice between the risk of defeat in foreign wars against the inevitability of peacetime domestic economic collapse.

They took the risk.

The treasuries of Austria and Czechoslovakia were looted without a fight after both countries were bloodlessly invaded. But there was need for more money, more wealth. Poland was next.

The inevitable war that followed assisted the Nazi economy, as open wartime restrictions could be placed on the population, which were relatively milder than those imposed in Britain because Germany had already been operating under a quasi-wartime economy with restrictions already in place. War also meant that repaying the Mefo debt could be suspended indefinitely.

Post-war, these debts, unlike others of the Nazi era, were never honoured by the successor regimes in Bonn or East Berlin as they were seen as the product of a war crime. The architect of Mefo, Hjalmar Schacht, was indicted as a war criminal and stood trial at the same time as Goering, Hess, Speer, and the rest. Unlike fellow technocrat Speer who served twenty years an Spandau prison, but really should have been executed for being the Third Reich’s chief slavemaster as Armaments Minister, Schacht was acquitted. He had resigned in early 1939 when he saw the writing on the wall, and his role in devising the Mefo scheme, as well as the Mefo scheme and its impact on Nazi policy disappeared into obscurity. Fiddling state finances in and of itself was not regarded as war crime, despite the potential unravelling of the fiddle being a major driving force for the Nazis to make war.

Schacht’s successors in the post, Hermann Goering and Walther Funk, were not so lucky. Being top banker in the Third Reich was the least of Goering’s crimes, and Funk was successfully labelled at Nuremburg as “The Banker of Gold Teeth”, referring to the practice of extracting gold teeth from Nazi concentration camp victims, and forwarding the teeth to the Reichsbank for melting down to yield bullion. Funk was jailed for life, the same sentence as Hess, rather than being executed, but was released in 1957 due to ill-health, dying in 1960.

Other regimes have seen war as an alternative to financial collapse. Saddam Hussein’s invasion of Kuwait was informed by Kuwait being a major creditor of Iraq’s and demanding repayment of loans it provided during the inconclusive Iran-Iraq war of 1980-88. The subsequent sanctions after Iraq was expelled allowed Saddam to shift blame for the desperate plight of Iraq’s citizens away from him and on to the international community. By 1914, Imperial Germany had lost the arms race with Britain on the seas and was losing it against the Franco-Russian alliance. The country’s economy simply could no longer afford to keep up with their rival empires. Domestic agitation by socialists was on the rise, with the Sozialdemokratische Partei Deutschlands being the largest party in the Reichstag. Facing certain doom by 1917, the Kaiser initiated a war he had a chance of winning before that opportunity slipped away.

It is entirely possible, if not probable, that the current war between Iran and the USA was also inevitable even without Donald Trump or Benjamin Netanyahu initiating it.

As I wrote previously, Iran in peacetime faced a triple whammy of economic collapse, famine, and drought. Making war by blocking the Straits of Hormuz causes the price of oil to rise, which would benefit Iran as an oil exporter and stave off the worst of the economic trough that caused an aggrieved population to take to the streets , the mass-murder of 30,000 of their number having no impact on a national economy being in the toilet.

Based on this, and the historic precedent above, it is plausible that an analyst team at the CIA or State Department realised that if war in the Gulf was inevitable as an alternative to Iranian economic collapse, there would be no point in waiting for Iran to start it and thus be able to fight it on its own terms. On this basis. Donald Trump could be excused for his actions. If Iran had initiated open war as distinct from its ongoing proxy conflicts and cyber attacks, Trump would have been criticised for being asleep at the wheel.

In this scenario, pre-emptively attacking Iran before Iran was ready to go to war, is an act of prudence. Trump cast himself as a man who ends wars. It might be that in this case the best way to end this war was to start it before the other side was ready.

It was Carl von Clausewitz who famously wrote “War is a mere continuation of policy by other means”. It is entirely probable that in Iran in early 2026 that war was seen as a sound fiscal policy as an alternative to economic collapse in exactly the same manner as invading Austria, Czechoslovakia, and Poland were seen that way by Nazi fantasists as a way of delaying the consequences of their dishonest fiscal trickery. Thus the blame over the oil price hikes shifts away from the desk in the Oval Office to what is probably now a shattered bunker complex in Tehran.

While international law is a mutually beneficial legal fiction that countries ignore at the peril of becoming the kind of pariah state that Iran has been for almost half a century, fiscal laws are immutable and have been so for centuries. The inevitable can only be delayed, never avoided. Iran faced doom in 2026, just as Germany faced it in 1939. Going to war, with all the terrible consequences, became the easy way out for a regime that places a higher value on an afterlife that is apparently replete with an infinite number of virgins available to procure in lots of six dozen for the worthy. It remains to be seen whether Iran goes all the way down the same path as the Third Reich, as at present it is definitely moving in precisely the same direction.

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Paul T Horgan worked in the IT Sector. He lives in Berkshire.

Also by Paul:

The Hormuz War