Chapter XI: Part 11

The significance of the economic measures adopted and applied by the conspirators can, of course, be properly appraised only if they are placed in the larger social and political context of Nazi Germany. The economic measures were adopted while the conspirators were, as has already been shown, directing their vast propaganda apparatus to the glorification of war. They were adopted while the conspirators were perverting physical training into training for war. They were adopted while, as my colleagues will show, these conspirators were threatening to use force and were planning to use force to achieve their territorial and political objects. In short, if Your Honors please, these measures constitute in the field of economics and government administration the same preparation for aggressive war which dominated every aspect of the Nazi State.

In 1939 and 1940 after the Nazi aggression upon Poland, Holland, Belgium, and France it became perfectly clear to the world that the Nazi conspirators had created probably the greatest instrument of aggression in history.

That machine was built up almost in its entirety in a period of less than one decade. In May of 1939 Major General George Thomas, former Chief of the Military-Economic Staff in the Reich War Ministry, reported that the German Army had grown from seven Infantry divisions in 1933 to thirty-nine Infantry divisions, among them four fully motorized and three mountain divisions, eighteen Corps Headquarters, five Panzer divisions, twenty-two machine gun battalions. Moreover, General Thomas stated that the German Navy had greatly expanded by the launching, among other vessels, of two battleships of 35,000 tons, four heavy cruisers of 10,000 tons, and other warships; further, that the Luftwaffe had grown to a point where it had a strength of 260,000 men, 21 squadrons, consisting of 240 echelons, and 33 anti-aircraft batteries.

He likewise reported that out of the few factories permitted by the Versailles Treaty there had arisen, and I am quoting, if Your Honors please, from the document bearing our number EC-28, which consists of a lecture delivered by Major General Thomas on the 24th of May 1939 in the Nazi Foreign Office. General Thomas said in part—or rather he reported—that out of the few factories permitted by the Versailles Treaty there had arisen:

“. . . the mightiest armament industry now existing in the
world. It has attained the performances which in part equal the
German wartime performances and in part even surpass them.
Germany’s crude steel production is today the largest in the
world after America’s. The aluminum production exceeds that of
America and of the other countries of the world very
considerably. The output of our rifle, machine gun, and
artillery factories is at present larger than that of any other
state.”

That quotation, I repeat, was from a document bearing the lettering “EC” and the number after the dash “28”. It is United States of America Exhibit 23.

These results—the results which General Thomas spoke about in his lecture in May of 1939—were achieved only by making preparation for war the dominating objective of German economy. And, to quote General Thomas again, he stated:

“History will know only a few examples of cases where a country
has directed, even in peace time, all its economic forces so
deliberately and systematically towards the requirements of war,
as Germany was compelled to do in the period between the two
World Wars.”

That quotation from General Thomas will be found in the document bearing our Number 2353-PS. It is another quotation from General Thomas, but from another writing of his.

The task of mobilizing the German economy for aggressive war began promptly after the Nazi conspirators’ seizure of power. It was entrusted principally to the Defendants Schacht, Göring, and Funk.

The Defendant Schacht, as is well known, was appointed President of the Reichsbank in March of 1933 and Minister of Economics in August of 1934. The world did not know, however, that the responsibility for the execution of this program was entrusted to the office of the Four Year Plan under the Defendant Göring.

I should now like to call to Your Honors’ attention a document bearing the number EC-408, and I should also like to refer at this time to another document for Your Honors’ attention while I discuss the material—Number 2261-PS.

And I continue to say that the world did not know, as well, that the Defendant Schacht was designated Plenipotentiary for the War Economy on May 21, 1935, with complete control over the German civilian economy for war production in the Reich Defense Council, established by a top-secret Hitler decree.

I invite Your Honors’ attention to the Document 2261-PS, which I referred to a few minutes ago.

The Defendant Schacht recognized that the preparation for war came before all else for, in a memorandum concerning the problems of financing rearmament, written on the 3rd of May 1935, he stated that his comments were based on the assumption that the accomplishment of the armament program. . . .

THE PRESIDENT [Interposing]: Pardon me, but you referred us to Document 2261.

MR. DODD: Yes, Your Honor.

THE PRESIDENT: But you haven’t read anything from it.

MR. DODD: I did not; I merely referred the Court to it since it. . . .

THE PRESIDENT [Interposing]: It would help us, I think, if, when you refer to a document, you refer to some particular passage in it.

MR. DODD: Very well.

THE PRESIDENT: I think it must be the middle paragraph in the document: “The Führer has nominated the President of the Directorate of the Reichsbank, Dr. Schacht. . . .”

MR. DODD: Yes, that is the paragraph to which I wish to make reference. If Your Honors please, I refer to the second paragraph, or the middle paragraph, which states, in a letter dated June 24, 1935 at Berlin:

“The Führer and Reich Chancellor has nominated the President of
the Directorate of the Reichsbank, Dr. Schacht, to be
Plenipotentiary General for the War Economy.”

I might point out, in addition to the second paragraph, the last paragraph of that letter or the last sentence of the letter, which reads: “I point out the necessity of strictest secrecy once more”—the letter being signed, “Von Blomberg.”

Through Schacht’s financial genius monetary measures were devised to restore German industry to full production; and through the control of imports and exports, which he devised under his plan of 1934, German production was channeled in accordance with the requirements of the German war machine.

I shall, with the Court’s permission, later discuss the details of documentary proof of this assertion.

In 1936, with an eye to the experience in the first World War, the Nazi conspirators embarked on an ambitious plan to make Germany completely self-sufficient in strategic war materials such as rubber, gasoline, and steel, in a period of 4 years, so that the Nazi conspirators would be fully prepared for aggressive war. The responsibility for the execution of this program was entrusted to the office of the Four Year Plan under the Defendant Göring—and at this point I should like to refer to the document bearing the number and the lettering EC-408. It is dated the 30th day of December 1936, marked “Secret Command Matter”, and entitled the “Report Memorandum on the Four Year Plan and Preparation of the War Economy.”

It sets out that the Führer and Reich Chancellor has conferred powers in regard to mobilization preparations in the economic field that need further definition, and in the third paragraph it refers specifically to Minister President, Generaloberst Göring as Commissioner of the Four Year Plan, by authority of the Führer and Reich Chancellor granted the 18th day of October 1936. The existence of this program involved the reorganization and control of the whole German economy for war.

Again referring to Major General Thomas—and specifically to our document marked EC-27—General Thomas, in a lecture on the 28th of February 1939, made at the Staff instructor’s course, stated:

“The National Socialist State, soon after taking over power,
reorganized the German economy in all sections and directed it
towards a military viewpoint, which had been requested by the
Army for years. Due to the reorganization, agriculture, commerce
and professions become those powerful instruments the Führer
needs for his extensive plans, and we can say today that
Hitler’s mobile politics, as well as the powerful efforts of the
Army and economy, would not have been possible without the
necessary reorganization by the National Socialist Government.
We can now say that the economic organization as a whole
corresponds with the needs, although slight adjustments will
have to be made yet. Those reorganizations made a new system of
economics possible which was necessary in view of our internal
and foreign political situation as well as our financial
problems. The directed economy, as we have it today concerning
agriculture, commerce, and industry, is not only the expression
of the present State principles, but at the same time also the
economy of the country’s defense.”

If Your Honors please, this program was not undertaken in a vacuum; it was deliberately designed and executed to provide the necessary instrument of the Nazi conspirators’ plans for aggressive war.

In September of 1934 the Defendant Schacht frankly acknowledged to the American Ambassador in Berlin that the Hitler Party was absolutely committed to war, and the people too were ready and willing; and that quotation is found in Ambassador Dodd’s diary and is document bearing our Number 2832-PS and United States Exhibit Number 29, particularly on page 176 of Ambassador Dodd’s diary.

At the same time, the Defendant Schacht promulgated his new plan for the control of imports and exports in the interest of rearmament. A year later he was appointed Plenipotentiary for the War Economy by the top-secret decree referred to a few minutes ago.

In September 1936 the Defendant Göring announced—at a meeting attended by the Defendant Schacht and others—that Hitler had issued instructions to the Reich War Minister on the basis that the show-down with Russia is inevitable, and added that “all measures have to be taken just as if we were actually in the stage of imminent danger of war.”

I refer the Court to the document bearing the letters EC-416 and particularly. . . . Before I discuss the quotation I might indicate that this document is also marked a secret Reich matter in the minutes of the Cabinet meeting of the 4th of September 1936, at 12 o’clock noon. It tells who was present: the Defendant Göring, Von Blomberg, the Defendant Schacht, and others.

And on the second page of that document, in the second paragraph, is found the quotation by the Defendant Göring. It starts from the basic thought that:

“The show-down with Russia is inevitable. What Russia has done
in the field of reconstruction we too can do.”

On the third page of that document, in the second paragraph, the Defendant Göring stated: “All measures have to be taken just as if we were actually in the stage of imminent danger of war.”

In the same month the office of the Four Year Plan was created with the mission of making Germany self-sufficient for war in 4 years. I refer back, at this point, to the Document Number EC-408, and particularly refer Your Honors to the third paragraph, again, of that document, where the statement is made as regards the war economy:

“Minister President Generaloberst Göring sees it as his task,
within 4 years, to put the entire economy in a state of
readiness for war.”

The Nazi Government officials provided the leadership in preparing Germany for war. They received, however, the enthusiastic cooperation of the German industrialists, and the role played by industrialists in converting Germany to a war economy is an important one, and I turn briefly to that aspect of the economic picture.

On the invitation of the Defendant Göring, approximately 25 of the leading industrialists of Germany, and the Defendant Schacht, attended a meeting in Berlin on the 20th day of February, 1933. This was shortly before the election of March 5, 1933 in Germany. At this meeting Hitler announced the conspirators’ aim to seize totalitarian control over Germany, to destroy the parliamentary system, to crush all opposition by force, and to restore the power of the Wehrmacht.

Among those present on that day, in February of 1933 in Berlin, were Gustav Krupp, head of the huge munitions firm Friedrich Krupp, A.G.; four leading officials of the I.G. Farben, one of the world’s largest chemical concerns; present, I repeat, was also the Defendant Schacht, and Albert Vögler was also there, the head of the huge steel trusts, the United Steel Works of Germany, and there were other leading industrialists there.

In support of the assertion with respect to that meeting at that time and in that place, I refer Your Honors to the document bearing the number EC-439, it being an affidavit of George von Schnitzler, and it reads as follows:

“I George von Schnitzler, a member of the Vorstand of I.G.
Farben, make the following deposition under oath:

“At the end of February 1933 four members of the Vorstand of
I.G. Farben, including Dr. Bosch, the head of the Vorstand, and
myself, were asked by the office of the President of the
Reichstag to attend a meeting in his house, the purpose of which
was not given. I do not remember the two other colleagues of
mine who were also invited. I believe the invitation reached me
during one of my business trips to Berlin. I went to the meeting
which was attended by about twenty persons, who I believe were
mostly leading industrialists from the Ruhr.

“Among those present I remember:

“Dr. Schacht, who at that time was not yet head of the
Reichsbank again and not yet Minister of Economics;

“Krupp von Bohlen, who in the beginning of 1933 presided the
Reichsverband der Deutschen Industrie, which later on was
changed in the semi-official organization ‘Reichsgruppe
Industrie’;

“Dr. Albert Vögler, the leading man of the Vereinigte
Stahlwerke;

“Von Loewenfeld from an industrial work in Essen;

“Dr. Stein, head of the Gewerkschaft Auguste Victoria, a mine
which belongs to the I.G. Dr. Stein was an active member of the
Deutsche Volkspartei.

“I remember that Dr. Schacht acted as a kind of host.

“While I had expected the appearance of Göring, Hitler entered
the room, shook hands with everybody and took a seat at the
table. In a long speech he talked mainly about the danger of
communism over which he pretended that he just had won a
decisive victory.

“He then talked about the Bündnis (alliance) into which his
party and the Deutschnationale Volkspartei had entered. This
latter party, in the meantime, had been reorganized by Herr Von
Papen. At the end he came to the point which seemed to me the
purpose of the meeting. Hitler stressed the importance that the
two aforementioned parties should gain the majority in the
coming Reichstag election. Krupp von Bohlen thanked Hitler for
his speech. After Hitler had left the room, Dr. Schacht proposed
to the meeting the raising of an election fund of, as far as I
remember, RM 3 million. The fund should be distributed between
the two ‘allies’ according to their relative strength at the
time being. Dr. Stein suggested that the Deutsche Volkspartei
should be included. . . .”

THE PRESIDENT [Interposing]: Mr. Dodd, it seems to me that really all that that document shows is that there was a meeting at which Mr. Schacht was present, and at which it was determined to subscribe an election fund in 1933.

MR. DODD: That is quite so, Your Honor. I will not labor the Court by reading all of it. There were some other references, but not of major importance, in the last paragraph, to a division of the election fund. I just call Your Honors’ attention to it in passing.

I should like, at this point, to call Your Honors’ attention to the document bearing the Number D-203. It is three-page document: D-203.

THE PRESIDENT: Yes.

MR. DODD: I wish to read only excerpts from it very briefly. It is the speech delivered to the industrialists by Hitler, and I refer particularly to the second paragraph of that document: “Private enterprise cannot be maintained in the age of democracy. . . .”

THE PRESIDENT [Interposing]: What is the date of that?

MR. DODD: It is the speech made at the meeting on the 20th of February 1933 at Berlin.

THE PRESIDENT: Yes.

MR. DODD:

“Private enterprise cannot be maintained in the age of
democracy; it is conceivable only if the people have a sound
idea of authority and personality.”

I refer to Page 2 of the document, and I should like to read an excerpt from that first paragraph on Page 2, about 13 sentences down, beginning with the words:

“I recognized even while in the hospital that one had to search
for new ideas conducive to reconstruction. I found them in
Nationalism, in the value of . . . strength and power of
individual personality.”

And, a little further down, the next to the last and the last sentence of that same paragraph, Hitler said:

“If one rejects pacifism, one must put a new idea in its place
immediately. Everything must be pushed aside, must be replaced
by something better.”

And, in the third paragraph, the last sentence beginning:

“We must not forget that all the benefits of culture must be
introduced more or less with an iron fist, just as once upon a
time the farmers were forced to plant potatoes.”

Then finally, on that page, in the fourth paragraph—nearly at the end of it:

“With the very same courage with which we go to work to make up
for what had been sinned during the last 14 years, we have
withstood all attempts to move us off the right way.”

Then, on the top of the next page, the second paragraph, these words:

“Now we stand before the last election. Regardless of the
outcome there will be no retreat, even if the coming election
does not bring about a decision.”

THE PRESIDENT: Why did you not read the last line on Page 2?

MR. DODD: Beginning with the words “while still gaining power”?

THE PRESIDENT: The sentence before:

“We must first gain complete power if we want to crush the other
side completely. While still gaining power, one should not start
the struggle against the opponent. Only when one knows that one
has readied the pinnacle of power, that there is no further
possible development, shall one strike.”

MR. DODD: I was going to refer to that, if Your Honor pleases, in a minute. However, I think it is quite proper to have it inserted here.

Before starting to read this last paragraph, I suggest that it is nearly the accustomed recess time, as I understand it, and it is a rather lengthy paragraph. . . .

THE PRESIDENT [Interposing]: Yes, we will adjourn until 2 o’clock.

[_The Tribunal recessed until 1400 hours._]

_Afternoon Session_

MR. DODD: If Your Honor pleases, if I may go back for just a very little bit to take up the train of thought where I left off at the noon recess.

We were discussing the document, bearing the number D-203, and I had referred particularly to the third page of that document, and even more particularly to the second paragraph on that page; and I wish to read from a sentence approximately 8 or 10 lines down in that second paragraph, which reads as follows:

“The question of restoration of the Wehrmacht will not be
decided at Geneva but in Germany, when we have gained internal
strength through internal peace.”

I wish to refer again to the same page of the same document, and to the last paragraph and the last sentence, with reference to the Defendant Göring, who was present at that same meeting to which this document refers, the meeting of February 20, 1933 in Berlin. Göring said that the sacrifices asked for surely would be so much easier for industry to bear if it realized that the election of March 5th will surely be the last one for the next 10 years, probably even for the next 100 years.

In a memorandum dated the 22d day of February 1933, and for the information of the Court, in the document book bearing the number D-204, Gustav Krupp described this meeting briefly, and in the memorandum wrote that he had expressed to Hitler the gratitude of the 25 industrialists present at the meeting on February 20, 1933.

There are other expressions in that memorandum, which we do not deem to be particularly pertinent to the allegations of the Indictment with which we are now concerned. It is also to establish the corroboration of the affidavit of Puhl that the meeting was held.

I might point out to the Court that this memorandum, together with the report of the speech of Hitler, were found by the British and the United States armies in the personal files of the Defendant Krupp.

I am aware, if Your Honors please, that the method I am pursuing here is a little tedious, because I am trying to refer specifically to the documents, and particularly to the excerpts referred to in my remarks, and therefore this presentation differs very considerably from that which has gone before. I trust, however, that you will bear with me, because this part of the case requires some rather careful and detailed explanations.

In April of 1933, after Hitler had entrenched himself in power, Gustav Krupp, as chairman of the Reich Association of German Industry, which was the largest association of German industrialists, submitted to Hitler the plan of that Association for the reorganization of German industry, and in connection therewith, undertook to bring the Association into line with the aims of the conspirators, and to make it an effective instrument for the execution of their policies.

In a letter of transmittal, Krupp stated that the plan of reorganization which he submitted on behalf of the Association of industrialists, was characterized by the desire to coordinate economic measures and political necessity, adopting the Führer conception of the new German State. A copy of that letter of transmittal is set out in the document book under the Number D-157.

In the plan of reorganization itself, Krupp stated:

“The turn of political events is in line with the wishes which I
myself and the board of directors have cherished for a long
time. . . . In reorganizing the Reich Association of German
Industry, I shall be guided by the idea of bringing the new
organization into agreement with the political aims of the Reich
Government.”

The ideas expressed by Krupp on behalf of the members of the Reich Association of German Industry for introducing the Leadership Principle into industry, were subsequently adopted.

I respectfully refer the Court to the _Reichsgesetzblatt_ of 1934, Part I, Page 1194, Sections 11, 12, and 16.

Under the decree introducing the Leadership Principle into industry, each group of industry was required to have a leader who was to serve without compensation. The leaders were to be appointed and could be removed at the discretion of the Minister of Economics. The charter of each group was to be decreed by the leader, who was obligated to lead his group in accordance with the principles of the National Socialist State.

I think it is fair to argue that the introduction of the Leadership Principle into the organizations of business permitted the centralization of authority, and guaranteed the efficient execution of orders, which the Government issued to business, in the interest of a promotion of a war economy. And the overwhelming support given by German industrialists to the Nazi war program is very vividly described in a speech prepared by Gustav Krupp in January of 1944, for delivery at the University of Berlin; and I must again respectfully refer Your Honors to the document in your book bearing the identification Number D-317.

I shall not, of course, bore this court with a reading of that whole document, but I should like to quote from it without wrenching any of the material from its true context.

And this statement is found beginning in the third and the fourth paragraphs, being the first large paragraph on the first page:

“War material is lifesaving for one’s own people, and whoever
works and performs in those spheres can be proud of it. Here,
enterprise as a whole finds its highest justification of
existence. This justification, I may inject this here,
crystallized especially during the time of interregnum between
1919 and 1933, when Germany was dying down disarmed. . . .”

And further on:

“It is the one great merit of the entire German war economy that
it did not remain idle during those bad years, even though its
activity could not be brought to light for obvious reasons.
Through years of secret work, scientific and basic groundwork
was laid in order to be ready again to work for the German Armed
Forces at the appointed hour without loss of time or
experience.”

And further quoting from that same speech, and the last paragraph, particularly on the first page:

“Only through this secret activity of German enterprise,
together with the experience gained meanwhile through production
of peacetime goods, was it possible, after 1933, to fall into
step with the new tasks arrived at, restoring Germany’s military
power. Only through all that could the entirely new and various
problems, brought up by the Führer’s Four Year Plan for German
enterprise, be mastered. It was necessary to exploit new raw
materials, to explore and experiment, to invest capital in order
to make German economy independent and strong—in short, to make
it war-worthy.”

Quoting even further from this same speech:

“I think I may state here that the German enterprises followed
the new ways enthusiastically, that they made the great
intentions of the Führer their own, by fair competition and
conscious gratitude, and became his faithful followers. How else
could the tasks between 1933 and 1939, and especially those
after 1939, have been overcome?”

It must be emphasized that this secret rearmament program was launched immediately upon the seizure of power by the Nazi conspirators. On April 4, 1933 the Reich Cabinet passed a resolution establishing a Reich Defense Council. The function of this Council was secretly to mobilize for war; and at the second meeting of the working committee of the Councillors for Reich Defense, which was, by the way, the predecessor of the Reich Defense Council,—at that second meeting which was held on May 22nd of 1933, the chairman was the Defendant Keitel, then Colonel Keitel; and he stated that the Reich Defense Council would immediately undertake to prepare for war emergency. He stressed the urgency of the task of organizing a war economy, and announced that the Council stood ready to brush aside all of their obstacles. Fully aware of the fact that their action was in flagrant violation of the Treaty of Versailles, the Defendant Keitel emphasized the extreme importance of absolute secrecy when he said, and I quote from the document bearing the number EC-177, on Page 5 of that document. Colonel Keitel is speaking, and he said:

“No document ought to be lost, since otherwise it may fall into
the hands of the enemies’ intelligence service. Orally
transmitted matters are not provable; they can be denied by us
in Geneva.”

The singleness of purpose with which the Nazi conspirators geared the German economy to the forging of a war machine is even further shown by the secret minutes of the sixth meeting of the working committee of the so-called Reich Defense Council, held on the 7th of February 1934, as shown in the document bearing the number EC-404, marked “Secret Command Matter”, and dated the 7th of February 1934. At this meeting, Lieutenant General Beck pointed out that: “The actual state of preparation is the purpose of this session.”

Parenthetically, I might say that on the first page of that document it appears that besides Lieutenant General Beck, the Defendant Jodl was present, then Lieutenant Colonel Jodl. There was a Captain Schmundt; and there was a Colonel Guderian there; and there was a Major General Von Reichenau; there was a Major Warlimont; and these are names that Your Honors will hear more of in the course of the presentation of this case.

Detailed measures of financing a future war were discussed and it was pointed out that the financial aspects of the war economy would be regulated by the Reich Finance Ministry and the Reichsbank, which was headed by the Defendant Schacht.

On May 31st of 1935—as stated earlier in this morning’s discussion—the Defendant Schacht was secretly appointed plenipotentiary-general of the war economy, and he had the express function of placing all economic forces of the nation in the services of the Nazi war machine.

By the secret defense law of May 21, 1935, under which Schacht received this secret appointment, he was in effect, given charge of the entire war economy. In case of war, he was to be virtual economic dictator of Germany. His task was to place all economic forces into the service for the conduct of the war and to secure economically the life of the German people. The Ministers of Economy, of Food, Agriculture, Labor, Forestry, as well as all Reich agencies directly under the Führer, were subordinated to him. He was to be responsible for the financing as well as for the conduct of the war; and he was even authorized to issue ordinances within his sphere of responsibility, even if these deviated from the existing laws.

The rearmament of Germany proceeded at an amazingly rapid pace. By the summer of 1935, the Nazi conspirators were emboldened to make plans for the reoccupation of the Rhineland; and at the tenth meeting of this same working committee of the Council, the question of measures to be taken in connection with the proposed reoccupation of the Rhineland were discussed.

I refer to the document bearing the number EC-405.

At that meeting, held on the 26th day of June 1935, it was said that the Rhineland required special treatment, because of the assurances given by Hitler to the French that no military action was being undertaken in the de-militarized zone. Among the matters requiring special treatment was the preparation of economic mobilization, a task specifically entrusted to the Defendant Schacht, as secret Plenipotentiary for the War Economy.

THE PRESIDENT: Are you reading from this document?

MR. DODD: I am quoting in part from it, Your Honor, and it is upon the document that I base my statements which can be found therein on Pages 4 and 5. I dislike annoying the Court with constant references to these documents, but I thought it would be the best way to proceed so as fully to inform the Court.

THE PRESIDENT: Well if you tell us where it is in the document we can follow it in the document.

MR. DODD: On Page 4, the middle of the page, the fifth paragraph, the first sentence: “The de-militarized zone requires special treatment.” And on Page 5, (j), under “the preparations,” “Preparation of economic mobilization.” On Page 4, the last paragraph just before the setting-out of the (a), (b), (c), and (d), it is said. . . .

THE PRESIDENT: I think you ought to read on Page 4, the last paragraph but one: “Since political entanglements. . . .”

MR. DODD:

“Since political entanglements abroad must be avoided at present
under all circumstances . . . only those preparatory measures
that are urgently necessary may be carried out. The existence of
such preparations, or the intention of them must be kept in
strictest secrecy in the zone itself as well as in the rest of
the Reich.”

The preparations are then set out, and they include, as I have indicated a few minutes ago, as the last one in the list, the preparations for economic mobilization.

There are many others, of course. The preliminary mustering of horse-drawn and motor vehicles, preparation for evacuation measures, and so forth. We say—passing now from that document—we say the rapid success of the German re-armament is attributable to the greatest extent to the work of the Defendant Schacht. In the fall of 1934, the Nazi conspirators announced the so-called “New Plan,” aiming at the control of imports and exports in order to obtain the raw materials which were needed for armaments and the foreign currency which was required to sustain the armament program. This new plan was the creation of the Defendant Schacht, and under the plan, the Defendant Schacht controlled imports by extending the system of supervisory boards for import control, which was previously limited to the main groups of raw materials, to all goods imported into Germany, whether raw materials, semi-manufactured goods, or finished products. The requirement of licenses for imports enabled the Nazi conspirators to restrict imports to those commodities which served their war aims.

Subsequently, in February of 1935, the “Devisen” Law was passed which can be found by reference in the _Reichsgesetzblatt_ of 1935, Part I, Page 105; and under it, all transactions involving foreign exchange were subject to the approval of Devisenstellen (the Foreign Exchange Control Offices). By thus controlling the disposition of foreign exchange, the conspirators were able to manipulate foreign trade so as to serve their needs and desires.

Thus every aspect of the German economy was being geared to war under the guidance particularly of the Defendant Schacht. In a study of the economic mobilization for war as of 30 September 1934, it was stated that steps had already been taken to build up stock piles, to construct new facilities for the production of scarce goods, and to redeploy industry, to secure areas and to control fiscal and trade policies. References were made to the fact that the task of stock piling had been hampered by the requirement of secrecy and camouflage. Reserves of automobile fuels and stocks of coal were being accumulated and the production of synthetic oil was accelerated. Civilian supply was purposely organized so that most plants would be working for the German Armed Forces. Studies were made of the possibility of barter trade with supposedly neutral countries in case of war.

The matter of financing the armament program presented a difficult problem for the conspirators. In 1934 and 1935 the German economy could by no possibility have raised funds for their extensive rearmament program through taxes and public loans. From the outset, the armament program involved “the engagement of the last reserves.”

Apart from the problem of raising the huge sums required to sustain this program, the Nazi conspirators were exceedingly anxious, in the early stages, to conceal the extent of their feverish armament activities.

After considering various techniques of financing the armament program, the Defendant Schacht proposed the use of so-called “mefo” bills. One of the primary advantages of this method was the fact that figures indicating the extent of rearmament that would have become public through the use of other methods could be kept secret through the use of mefo bills, and mefo bills were used exclusively for armament financing.

Transactions in mefo bills worked as follows:

Mefo bills were drawn by armament contractors and accepted by a limited liability company, [_The Metallurgische Forschungsgesellschaft m. b. H._], the initials of which spell mefo from whence the transaction takes its name. This company had a nominal capital of 1 million Reichsmarks and was therefore merely a dummy organization. The bills were received by all German banks for possible rediscounting with the Reichsbank, and the bills were guaranteed by the Reich. Their secrecy was assured by the fact that they appeared neither in the published statements of the Reichsbank nor in the budget figures.

The mefo bill system continued to be used until April 1 of 1938. To that date, 12 billion Reichsmarks of mefo bills for the financing of rearmament had been issued. Since it was no longer deemed necessary in April of 1938 to conceal the vast progress of German rearmament, mefo financing was discontinued at that time.

A further source of funds which the Defendant Schacht drew upon to finance the Secret Armament Program were the funds of political opponents of the Nazi regime, and marks of foreigners on deposit in the Reichsbank. As Schacht stated—and I am quoting: “Our armaments are also financed partly with the credits of our political opponents.”

That statement may be found in a memorandum from the Defendant Schacht to Hitler, dated 3 May 1935, and it bears the number in the document book of 1168-PS, and the specific sentence is found in the second paragraph.

The outstanding mefo bills at all times represented a threat to the stability of the currency because they could be tendered to the Reichsbank for discount, in which case the currency circulation would automatically have to be increased. Thus, there was an ever-present threat of inflation. The Defendant Schacht continued on his course, because he stands, he said, “with unswerving loyalty to the Führer because he fully recognizes the basic ideas of National Socialism and because at the end, the disturbances, compared to the great task, can be considered irrelevant.”

High-ranking military officers paid tribute to the Defendant Schacht’s contrivances on behalf of the Nazi war machine. In an article written for the _Military Weekly Gazette_ in January of 1937, it is said:

“The German Defense Force commemorates Dr. Schacht today as one
of the men who have done imperishable things for it and its
development in accordance with the directions from the Führer
and Reich Chancellor. The Defense Force owes it to Schacht’s
skill and great ability that, in defiance of all currency
difficulties, it, according to plan, has been able to grow up to
its present strength from an army of 100,000 men.”

After the reoccupation of the Rhineland, the Nazi conspirators re-doubled their efforts to prepare Germany for a major war. The Four Year Plan, as we have indicated earlier, was proclaimed by Hitler in his address at the Nuremberg Party convention on the 9th day of September in 1936, and it was given a statutory foundation by the decree concerning the execution of the Four Year Plan dated the 18th day of October, 1936, which is found in the _Reichsgesetzblatt_ of 1936, in the first part, on Page 887. By this decree the Defendant Göring was put in charge of the plan. He was authorized to enact any legal and administrative measures deemed necessary by him for the accomplishment of his task, and to issue orders and instructions to all Government agencies, including the highest Reich authorities.

The purpose of the plan was to enable Nazi Germany to attain complete self-sufficiency in essential raw materials, notably motor fuel, rubber, textile fiber, and non-ferrous metals, and to intensify preparations for war. The development of synthetic products was greatly accelerated despite their high costs.

Apart from the self-sufficiency program, however, the Nazi conspirators required foreign exchange to finance propaganda and espionage activities abroad; Thus, in a speech on November 1 of 1937, before the Wehrmachtakademie, General Thomas stated:

“If you consider that one will need during the war considerable
means in order to organize the necessary propaganda in order to
pay for the espionage service and for similar purposes, then one
should be clear that our internal mark would be of no use
therefore, and that foreign exchange will be needed.”

This particular need for foreign exchange was reduced in part by the virtue of the espionage and propaganda services rendered free of charge to the Nazi State by some leading German industrial concerns.

I hold in my hand a document bearing the number D-206. It is dated at Essen the 12th day of October 1935. It was found in the files of the Krupp Company by representatives of the United States and the British armies. I shall not read all of it unless Your Honors require it, but I’ll start at the beginning by way of establishing its purpose and the information contained therein. It is entitled “Memorandum.” There is a subheading: “Concerns: Distribution of official propaganda literature abroad with the help of our foreign connections.” It goes on to say that:

“On the morning of October 11 the district representative of
Ribbentrop’s private foreign office (Dienststelle Ribbentrop)
made an appointment for a conference by telephone.”—and
that—“A Mr. Lackmann arrived at the appointed time. . . . “In
answer to my question with whom I was dealing, and which
official bureau he represented, he informed me that he was not
himself the district representative of Ribbentrop’s private
foreign office, that a Mr. Landrat Bollmann was such, and that
he himself had come at Mr. Bollmann’s order.”

The next paragraph states:

“. . . that there exists a great mixup in the field of foreign
propaganda, and that Ribbentrop’s private foreign office wants
to create a tighter organization for foreign propaganda. For
this purpose the support of our firm and above all an index of
addresses . . . were needed.”

In the next sentence, of the third paragraph, I would like to read:

“I informed Mr. L that our firm had put itself years ago at the
disposal of official bureaus for purposes of foreign propaganda,
and that we had supported all requests addressed to us to the
utmost.”

I now hold in my hand the document bearing the number D-167, which is also a copy of a document found in the files of the Krupp Company by representatives of the American and the British Armies. It is dated the 14th day of October 1937, and states that it is a memorandum of Herr Sonnenberg on the meeting at Essen on the 12th day of October 1937 and it indicates that one Menzel representing the intelligence of the Combined Services Ministry, his department coming under the Defense Office, asked for intelligence on foreign armaments, but not including matters published in newspapers, intelligence received by Krupp from their agents abroad and through other channels to be passed on to the Combined Services Intelligence.

Finally, the third paragraph states that: “On our part we undertook to supply information to the Combined Services Ministry . . . as required.”

I have concluded reading from that document, and I pass now to discuss the conspirators’ program, which proceeded, as I have said so many times here today, with amazing—really amazing speed. The production of steel, for example, as shown in official German publications, rose as follows:

In the year of 1933, 74,000 tons were produced; in 1934, 105,000 tons; 1935, 145,000 tons; 1936, 186,000 tons; 1937, 217,000 tons; and in 1938, 477,000 tons. The production of gasoline increased at even a greater tempo: from 370,000 tons in 1934 to 1,494,000 tons in 1938.

The Nazi conspirators pressed the completion of the armament program with a sense of urgency which clearly indicated their awareness of the imminence of war. At a 4th of September meeting in 1936 Göring pointed out that “all measures have to be taken just as if we were actually in the state of imminent danger of war.” He pointed out that “if war should break out tomorrow we would be forced to take measures from which we might . . . shy away at the present moment. They are therefore to be taken.” The extreme urgency was manifested by Göring’s remark that “Existing reserves will have to be touched for the purpose of carrying us over this difficulty until the goal ordered by the Führer has been reached . . . in case of war,” he added, “they are not a reliable backing in any case.”

By a letter marked “Top Secret”, on the 21 of August of 1936, the Defendant Schacht was advised that Hitler had ordered that all formations of the Air Force be ready by April 1 of 1937. This served to accentuate the urgent sense of immediacy that had pervaded the Nazi war economy from the outset. Flushed with their successes in the Rhineland, the Nazi conspirators were laying the groundwork for further aggressive action.

THE PRESIDENT: Insofar as I understand you, you have not referred us to any document since Document 167.

MR. DODD: No, Your Honor, the figures on the production of steel and of oil are from the statistical year book for the German Reich of 1939 and 1940 and the statistical year book for the German Reich of 1941 and ’42—that is, with respect to the steel figures. And the figures which I quoted with respect to the production of gasoline are from the statistical year book for the German Reich in 1941 and 1942. The statements of the Defendant Göring are based upon the document marked EC-416, in the document book.

THE PRESIDENT: That is the document you have already referred to, isn’t it?

MR. DODD: Yes, it has been referred to heretofore, I believe. Some of these documents contain references to more than one part of the presentation, and I have to refer to them at different times in the presentation. . . .

THE PRESIDENT: All right. Go on, if you want to refer to it.

MR. DODD: The sixth paragraph on the first page:

“Existing reserves will have to be touched for the purpose of
carrying us over this difficulty until the goal ordered by the
Führer has been reached, and then in case of war, they are not a
reliable backing in any case.”

And on the second page, the eighth paragraph down:

“If war should break out tomorrow, we would be forced to take
measures from which we might possibly still shy away at the
present moment. They are therefore to be taken.”

With reference to the assertion that the Defendant Schacht was advised that Hitler had ordered that all formations of the Air Force be ready by April 1, 1937, I respectfully refer to Document 1301-PS, dated 31 August 1936. I am advised that that document should bear an additional number. It should read 1301-PS-7. On the first page, if Your Honor pleases, the third paragraph, or the paragraph marked “3” and after the words “air force” . . . states that according to an order of the Führer, the setting up of all Air Force units had to be completed on April 1, 1937; and if Your Honors will turn the page to Page 20, about midway in the page, you will observe that a copy of this document was sent to the president of the Reichsbank, Dr. Schacht.

After their successes in Austria and in the Sudetenland, the Nazi conspirators redoubled their efforts to equip themselves for a war of aggression, and in a conference on October 14, 1938, shortly before the Nazi conspirators made their first demands on Poland, the Defendant Göring stated that the Führer had instructed him to carry out a gigantic program, by comparison with which the performances thus far were insignificant. This faced difficulties which he would overcome with the greatest energy and ruthlessness. And that statement may be found in the Document 1301-PS, on Page 25 of that document, and particularly the second sentence of the opening paragraph:

“Everybody knows from the press what the world situation looks
like, and therefore the Führer has issued an order to him to
carry out a gigantic program compared to which previous
achievements are insignificant. There are difficulties in the
way which he will overcome with the utmost energy and
ruthlessness.”

The supply of foreign currency had shrunk because of preparations for the invasion of Czechoslovakia, and it was considered necessary to replenish it. “These”—and I am now referring to the third paragraph of that same Page 25 of Document 1301-PS:

“These gains made through the export are to be used for an
increased armament. The armament should not be curtailed by the
export activities. He received the order from the Führer to
increase the armament to an abnormal extent, the Air Force
having first priority. Within the shortest time, the Air Force
is to be increased fivefold; also the Navy should get on more
rapidly, and the Army should procure large amounts of offensive
weapons at a faster rate, particularly heavy artillery pieces
and heavy tanks. Along with this manufactured armaments must go,
especially fuel, powder and explosives are to be moved into the
foreground. It should be coupled with the accelerated
construction of highways, canals, and particularly of the
railroads.”

In the course of these preparations for war, a clash of wills ensued between two men, the Defendant Göring and the Defendant Schacht, as a result of which the Defendant Schacht resigned his position as head of the Ministry of Economics and plenipotentiary for the war economy in November of 1937 and was removed from the presidency of the Reichsbank in January of 1939. I do not propose, at this moment, to go into the details of this controversy. There will be more said on that subject at a later stage in these proceedings, but for the present, I should like to have it noted that it is our contention that Schacht’s departure in no way implied any disagreement with the major war aims of the Nazis. The Defendant Schacht took particular pride in his vast attainments in the financial and economic fields in aid of the Nazi war machine. And in the document bearing the number EC-257, which is a copy of a letter from the Defendant Schacht to General Thomas, in the first paragraph of the letter:

“I think back with much satisfaction to the work in the Ministry
of Economics which afforded me the opportunity to assist in the
rearmament of the German people in the most critical period, not
only in the financial but also in the economic sphere. I have
always considered a rearmament of the German people as _conditio
sine qua non_ of the establishment of a new German nation.”

The second paragraph is of a more personal nature and has no real bearing on the issues before us at this time.

In the document labeled EC-252, a letter written to General Von Blomberg, dated the 8th day of July 1937, the Defendant Schacht wrote:

“The direction of the war economy by the plenipotentiary would
in that event never take place entirely independent from the
rest of the war mechanism, but would be aimed at accomplishment
of the political war purpose with the assistance of all economic
forces. I am entirely willing, therefore, to participate in this
way in the preparation of the forthcoming order giving effect to
the Defense Act.”

In the spring of 1937, the Defendant Schacht participated with representatives of the three branches of the Armed Forces in war games in war economy which was something new by way of military exercises. The war games in war economy were held at Godesberg, Germany. And I refer to the document bearing the label EC-174. It has as a heading, or subheading, under the summary: “War economy trip to Godesberg undertaken by General Staff between the 25th of May and the 2d of June,” and it goes on to outline in some slight detail that there was a welcome to the General Staff war economy trip. It tells something in a rather vague and not altogether clear way of just how a war game in war economy was conducted but it leaves no doubt in the mind that such a war game in war economy had been conducted at Godesberg at that time. And on the second page of this document, the last paragraph is the translation of Part 1 of the speech welcoming Dr. Schacht. It says:

“Before I start with the discussion of the war game in war
economy, I have to express how grateful we all are that you,
President Dr. Schacht, have gone to the trouble to personally
participate in our final discussion today despite all your other
activities. This proves to us your deep interest in war economy
tasks shown at all times and your presence here is renewed proof
that you are willing to facilitate for us soldiers the difficult
war-economic preparations and to strengthen a harmonious
cooperation with your offices.”

I should also like to call the Court’s attention to the next to the last paragraph on the first page. It is a one-sentence paragraph, and it simply says, “I want to point out, however, that all material and all information received has to be kept in strict secrecy,” and it refers to the preceding paragraph concerning the war games in war economy.

It appears that the annexation of Austria was a goal which the Defendant Schacht had long sought, for in a speech to the employees of the former Austrian National Bank, as set out in the document bearing the label EC-297, and particularly the second paragraph of the first page of that document, nearly at the end, four or five lines from the end of that paragraph, we find these words immediately after “large applause”:

“Austria has certainly a great mission, namely, to be the bearer
of German culture, to insure respect and regard for the German
name, especially in the direction of the southeast. Such a
mission can only be performed within the Great German Reich and
based on the power of a nation of 75 millions, which, regardless
of the wish of the opponents, forms the heart and the soul of
Europe.”

Dr. Schacht goes on to say: