made him “physically and very actively sick.” The only comparisons, he said, that came to mind, were the Pancho Villa ravages in Mexico and “among semi-civilized people or savages half drunk on sotol and marijuana. But that such a thing should happen in a country of some supposed culture passes comprehension.”17 The German chargé in Washington vigorously protested against such an intemperate outburst but was told that Johnson had merely expressed his personal opinions rather than that of the American government.
Nazi street violence, especially against Jews, caused great concern in the United States. As early as March 1934, the American Federation of Labor and the American Jewish Congress sponsored a mock trial of Hitler under the provocative title “The Case of Civilization against Hitlerism.” The event attracted a number of well-known personalities, including the mayor of New York, Fiorello La Guardia. Bainbridge Colby, Woodrow Wilson’s last secretary of state, presided over the meeting, which was held at Madison Square Garden and attracted an audience of twenty-two thousand people.18 By using the phrase “crime against civilization,” the sponsors of this mock trial, headed by Rabbi Stephen Wise, wished to avoid a purely partisan attack on Hitler and portrayed the sponsors as representatives of humanity who wanted to defend the civilized values of the Judeo-Christian heritage. The prosecution even made a pretense of judicial objectivity by inviting representatives of the German government. The Germans declined the honor, and vigorously protested to the State Department that the trial was a slander against the new German government and should be stopped. The State Department, while expressing some sympathy for the German complaint, pointed out that the trial was purely private in nature and was an expression of freedom of speech. When the trial convened, the court crier announced, “Hear ye! Hear ye! All those who have business before this court of civilization give your attention and ye shall be heard.” The charge was that “the Nazi government in Germany has not only destroyed the foundations of the German Republic, but, under penalty of death, torture, and economic extermination, and by process of progressive strangulation, has reduced and subjugated to abject slavery all sections of its population.”19 At the conclusion of the trial, a vote was taken by the audience, and Hitler was found guilty. Despite protests by Hans Luther, the German ambassador to Washington, the State Department was unable to prevent the trial from taking place. In Berlin, Foreign Minister von Neurath protested to Dodd, who regretted the proposed mock trial but said he could do nothing to prevent it. Although Hitler said nothing publicly, he did curse the Jews in an interview with Dodd, intimating that if the damned Jews in America did not stop their agitation he would “make an end of all Jews in Germany.”20
German protest through diplomatic channels did no good. German American relations continued to be diplomatically correct, but in the field of public relations there were frequent flare-ups. Congressman Samuel Dickstein of New York, chairman of the House Committee on Immigration and Naturalization, conducted investigations of Nazi agents active in the United States, and large department stores boycotted German goods all over America. The Communist Party in America also stirred up anti-German sentiments and sponsored anti-German demonstrations. On July 26, 1934, Communists boarded the German liner Bremen, beat up German sailors, and ripped off the swastika flag, hurling it into the river. A melee ensued that had to be broken up by the New York Police. American public opinion was turning against the Nazi regime, whereas the German public was much more favorable toward the United States.
The anti-Nazi demonstrations and boycotts in America, especially by Jewish organizations, confirmed Hitler’s stereotypes about Jews dominating public opinion in the United States. Although the American authorities were generally scrupulous in maintaining a neutral position during these anti-Nazi protests, there were exceptions that raised dark suspicions among the German diplomatic officials. Mayor La Guardia, as previously mentioned, made various insulting remarks about the Nazi regime and participated in anti-German agitation. Judge Louis Brodsky, who presided over the Bremen case, delivered a gratuitous injudicious outburst against the Nazi regime and its “brazen display of an emblem that is antithetical to American ideals.” The sight of the swastika, he opined, made the ship a pirate ship in the eyes of the rioters, who saw it as an atavistic throwback to the dark ages.21 The Nazi press had a field day with this and similar anti-German pronouncements in America, with the Völkische Beobachter denouncing the Bremen decision as “scandalous Jewish justice in New York.”22
Extremist activities in America were followed almost immediately by similar reactions in Germany; the difference was that the extremists in America were merely a nuisance but in Germany they were in power. After becoming aware of just how unpopular anti-Jewish action in Germany was in the United States and elsewhere, Hitler increasingly looked at the German Jews under his control as hostages to be used as pawns in his relationship with the Western powers. The major stumbling blocks for relations between Germany and the United States, apart from the difference between their political systems, were disarmament and debt payments. Hitler disingenuously told the Western powers that he was perfectly willing not to arm (aufrüsten) if they disarmed (abrüsten). Although the German negotiator at Geneva, Rudolph Nadolny, was making some progress in gaining concessions from the Western powers, Hitler had no intention of negotiating seriously because he wanted to rearm as rapidly and as massively as he could get away with. Thus, on October 14, 1933, he withdrew from the Disarmament Conference and simultaneously terminated Germany’s membership in the League of Nations. In this he had the complete support of the German Foreign Office and of conservative nationalists whose revisionist plans coincided with Hitler’s long-range expansionist ideas. In order to soften the foreign impact of this bombshell, Hitler submitted his decision to the German people in a plebiscite. On November 12, the German electorate ratified Hitler’s actions by an overwhelming margin of 95.1 percent. There was very little that the Western powers, including the United States, could do about the German rejection of disarmament. Nor could the United States do much about German defaults on debt repayments.
On May 8, 1933, Hjalmar Schacht announced that the German government would stop payments on its foreign debts, which at the time amounted to about 5 billion dollars, of which nearly 2 billion dollars were held by Americans. That drastic step was regarded as necessary because of the Depression, but perhaps more so because the new Nazi government made rearmament its top priority. This meant finding enough money in the budget and experimenting with deficit spending, a step that represented a radical reversal of the conservative and deflationary policies of the Brüning government. As Hitler saw it, the key to his ambitious rearmament program, which at first had to be hidden from the Western powers, was to change the tight money policies of the Reichsbank. Thus, when Hitler asked the president of the Reichsbank, Hans Luther, to open the money spigot, the president told him that he could give him 100 million marks, the legal limit at the time. Hitler could not believe what he heard; he was thinking in terms of billions rather than piddling millions. Clearly, Luther had to go, preferably as far away from the Reichsbank as possible. He sent Luther to Washington, where he served as ambassador from 1933 to 1938. In Luther’s place, Hitler picked the wily Hjalmar Horace Greeley Schacht, one of the most important financial experts during the inter-war period. Schacht’s parents had immigrated to the United States in the 1870s but returned to Germany to take advantage of the new opportunities opened up by the recent German unification. Schacht’s middle name, Horace Greeley, was chosen by his father, who greatly admired the well-known American abolitionist, social progressive, and failed presidential candidate, Horace Greeley. Schacht was by all accounts the most brilliant member of the Nazi regime. He had studied medicine, German philosophy, political science, and economics, receiving his Ph.D. in economics from the University of Berlin. When Hitler appointed him president of the Reichsbank and subsequently minister of economics, Schacht had already served his country in a variety of important posts. Initially, the stiff-collared and prickly Schacht, calling himself a National Socialist, supported Hitler and introduced him to prominent members of business and industry. Although he would ultimately break with Hitler over the brutal nature of the regime, he threw all his energy and talent behind the German effort to rearm on a large scale. To do so, Schacht invented an ingenious and surreptitious system called Mefo-Exchange (Mefo-Wechsel) by which the government converted “Mefo” bills, secured by a dummy corporation founded by the government and several private corporations,
