Chapter VIII: Part I: , Page 1203; Reichsgesetzblatt 1934, Part I, Page 295; and (1)

_Reichsgesetzblatt_ 1935, Part I, Page 198.

THE PRESIDENT: Are they found here in the document book?

LT. BRYSON: They’re not in the document book, Sir.

I asked only that judicial notice be taken of them as published laws of Germany.

These measures enabled Schacht to embark upon what he himself has termed a “daring credit policy,” including the secret financing of a vast amount of armaments through the so-called ‘mefo’ bill, a description of which appears in the transcript for 23 November at Page 295 (Volume II, Page 232). I offer in evidence Document Number EC-436, Exhibit Number USA-620, consisting of a statement, dated 2 November 1945, by Emil Puhl, a director of the Reichsbank during Schacht’s presidency, and quote the second paragraph thereof as follows:

“In the early part of 1935 the need for financing an accelerated
rearmament program arose. Dr. Schacht, President of the
Reichsbank, after considering various techniques of financing,
proposed the use of mefo bills to provide a substantial portion
of the funds needed for the rearmament program. This method had
as one of its primary advantages the fact that secrecy would be
possible during the first years of the rearmament program; and
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.”

The extent of the credit expansion and the importance of mefo financing may be seen from Document Number EC-419, which I now offer as Exhibit Number USA-621 and which consists of a letter from Finance Minister Von Krosigk to Hitler, under date of 1 September 1938. I quote the following figures from the middle of the first page:

“The Reich debt accumulated as follows:

“As of 31 December 1932: Funded debt, 10,400 millions of
Reichsmark; short-term debt, 2,100 millions of Reichsmark; debt
not published in the budget (trade and mefo bills of exchange),
0.

“As of 30 June 1938: Funded debt, 19,000 million Reichsmark;
short-term debt, 3,500 million Reichsmark; and debt not
published in the budget (trade and mefo bills of exchange),
13,300 million Reichsmark.

“Total: as of 31 December 1932, 12,500 million Reichsmark; as of
30 June 1938, 35,800 million Reichsmark.”

The Reich debt thus tripled. . .

THE PRESIDENT: Would you read the next section, beginning with the words “Provisions were made to cover. . .”?

LT. BRYSON: “Provisions were made to cover the armament expenditures for the year 1938 (the same amount as in 1937) as follows:

“Five thousand millions from the budget, that is, taxes; 4,000
millions from loans; 2,000 millions from 6-month treasury notes,
which means postponement of payment until 1939; total: 11,000
millions.”

The Reich debt thus tripled under Schacht’s management. More than one-third of the total was financed secretly and through the instrumentality of the Reichsbank by mefo and trade bills. It is clear that this amount of financing outside the normal public issues represented armament debt. I read further from Document EC-436, at the beginning of the last long paragraph:

“These mefo bills were used exclusively for financing
rearmament; and when in March 1938 a new finance program
discontinuing the use of mefo bills was announced by Dr.
Schacht, there was a total volume outstanding of 12,000 million
marks of mefo bills which had been issued to finance
rearmament.”

The character of Schacht’s credit policy and the fact that it was ruthlessly dedicated to the creation of armaments plainly appear from his own speech delivered on 29 November 1938.

I offer it in evidence as Document Number EC-611, Exhibit Number USA-622; and I quote from Page 6 at the beginning of the last paragraph:

“It is possible that no bank of issue in peacetime carried on
such a daring credit policy as the Reichsbank since the seizure
of power by National Socialism. With the aid of this credit
policy, however, Germany created an armament second to none; and
this armament in turn made possible the results of our policy.”

Beyond the field of finance Schacht assumed totalitarian control over the German economy generally in order to marshal it behind the rearmament program.

He acquired great power over industry as a result of the Nazi reorganization of German industry along military lines and in accordance with the so-called Leadership Principle. On this point I refer the Tribunal to the transcript for 23 November at Pages 287-290 (Volume II, Pages 227-228); and to the _Reichsgesetzblatt_ 1934, Part I, Page 1194, of which the Tribunal is asked to take judicial notice.

Schacht also exercised broad powers as a member of the Reich Defense Council, which was secretly established on 4 April 1933 and the function of which was preparation for war. The Tribunal is referred to the transcript for 23 November, Page 290 (Volume II, Pages 228-229). I also offer in evidence as Document Number EC-128, Exhibit Number USA-623, a report under date of 30 September 1934, showing the functions of the Ministry of Economics in this respect. The report reveals concentration upon all the familiar wartime economic problems, including stockpiling, production of scarce goods, removal of industry to secure areas, fuel and power supply for war production, machine tools, control of wartime priorities, rationing, price control, civilian supply, and so on. I wish to read into the Record merely an excerpt showing the jurisdiction of the Ministry of Economics, beginning near the top of Page 2 of Document Number EC-128:

“With the establishment of the Reich Defense Council and its
permanent committee the Reich Ministry of Economics has been
given the task of making economic preparation for war. There
should really be no need to explain the tremendous importance of
this task. Everyone remembers vividly how terribly the lack of
any economic preparation for war hit us during the World War.”

Finally, in 1934, Schacht acquired sweeping powers under legislation which authorized him, as Minister of Economics, to take any measure deemed necessary for the development of the German economy. In this connection reference is made to the Reichsgesetzblatt, 1934, Part I, Page 565, of which the Tribunal is asked to take judicial notice.

The so-called “New Plan” devised by Schacht was announced in the fall of 1934 shortly after he became Minister of Economics. In this connection the Tribunal is referred to the _Reichsgesetzblatt_, 1934, Part I, Page 816 and the _Reichsgesetzblatt_, 1935, Part I, Page 105, with the request that judicial notice be taken thereof. The New Plan was Schacht’s basic program for obtaining the necessary foreign-produced raw materials and foreign exchange required to sustain the rearmament program.

With respect to the details of the New Plan, I offer in evidence Document Number EC-437, Exhibit Number USA-624, consisting of an affidavit of Emil Puhl, dated 7 November 1945. The entire text is pertinent. Therefore, permission is requested to submit the affidavit without reading therefrom, on condition that French and Russian translations be prepared and filed.

THE PRESIDENT: And German ones supplied, too.

LT. BRYSON: We will supply copies. I wish to say that the original is in English, but the affidavit has already been translated into German.

THE PRESIDENT: Yes.

LT. BRYSON: This affidavit by a co-worker of Schacht describes in detail the many ingenious and often ruthless devices he used, including negotiating “stand-still” agreements, forcing payment in Reichsmark of interest and amortization on debts incurred in foreign currency, using scrip and funding bonds for the same purpose, suspending service on foreign-held debts, blocking foreign-held marks, freezing foreign claims in Germany, eliminating unessential foreign expenditures, requisitioning German-held foreign exchange, subsidizing exports, issuing restricted marks, bartering under clearing agreements, licensing imports, and controlling all foreign exchange transactions to the end of favoring raw materials for armaments.

The Tribunal is also asked to take judicial notice of _Reichsgesetzblatt_, 1934, Page 997; _Reichsgesetzblatt_, 1933, Part I, Page 349; and _Reichsgesetzblatt_, 1937, Part I, Page 600, relating to the clearing bank, the conversion bank, and the maturity of foreign loans, all of which decrees are mentioned in the affidavit.

Schacht even went so far as to invest foreign-held Reichsmark on deposit in German banks in rearmament notes, thus, as he put it, financing rearmament with the assets of his political opponents. Without reading therefrom, I refer your Honors to Document Number 1168-PS, Exhibit USA-37, being a memorandum from Schacht to Hitler, dated 3 May 1935, which already appears in the transcript on Pages 412 and 413 (Volume II, Pages 312, 313). Moreover, Schacht even resorted to capital punishment to prevent the loss of foreign exchange when frightened capital began to flee from the country. In this connection reference is made to the Law against Economic Sabotage, found in 1936 _Reichsgesetzblatt_, Part I, Page 999, of which the Tribunal is asked to take judicial notice.

Schacht took particular pride in the results which were accomplished under the stringent controls which he instituted under his New Plan. I refer the Tribunal to Document Number EC-611, in evidence as Exhibit Number USA-622, consisting of Schacht’s speech in Berlin on 29 November 1938. I wish to read into the Record an excerpt from the top of Page 10:

“If there is anything remarkable about the New Plan, it is again
only the fact that German organization under National Socialist
leadership succeeded in conjuring up in a very short time the
whole apparatus of supervision of imports, direction of exports,
and promotion of exports. The success of the New Plan can be
proved by means of a few figures. Calculated according to
quantity, the import of finished products was cut down by 63
percent between 1934 and 1937. On the other hand, the import of
ores was increased by 132 percent, of petroleum by 116, of grain
by 102, and of rubber by 71 percent.”

While President of the Reichsbank and Minister of Economics, Schacht acquired still another key position, that of Plenipotentiary General for War Economy.

He received this appointment from Hitler pursuant to the unpublished Reich Defense Law secretly enacted on 21 May 1935. This law is in evidence as Document Number 2261-PS, Exhibit Number USA-24, consisting of a letter from Von Blomberg dated 24 June 1935 to the chiefs of the Army, Navy and Air Forces, together with copies of the Reich Defense Law and the Cabinet’s memorandum relating thereto. Pertinent comments on and excerpts from this document appear in the transcript for 23 November, at Pages 278 and 292 (Volume II, Pages 220-229). I will simply state therefore that by virtue of this appointment Schacht was put in complete charge of economic planning and preparation for war in peacetime, except for certain direct armament production under control of the War Ministry. Upon the outbreak of war he was to be the economic czar of Germany with complete control over the activities of a number of key Reich ministries.

Schacht appointed Wohlthat as his deputy and organized a staff to carry out his directives. In this connection I offer in evidence excerpts from a pre-trial interrogation of Schacht under date 17 October 1945. This document is Exhibit Number USA-616 (Document 3729-PS). I wish to read into the Record a question and answer found at the bottom of Page 40 of the document book:

“Q: ‘Let me ask you a general question then: Do you take the
responsibility as Plenipotentiary General for War Economy for
the writings that were made and the actions that were done by
Wohlthat and his assistants?’

“A: ‘I have to.’”

I also offer in evidence Document Number EC-258, Exhibit Number USA-625, consisting of a status report issued in December 1937 under the signature of Schacht’s deputy, Wohlthat. The report is entitled, “The Preparation of the Economic Mobilization by the Plenipotentiary General for War Economy.” Schacht had withdrawn from office immediately prior to the preparation of this report, and it plainly is a recapitulation of his accomplishments while in office. Since the entire text is relevant, we ask permission to submit the document without reading therefrom on condition that translations into French and Russian be later filed with the Tribunal.

THE PRESIDENT: I do not think this is consistent with the rule laid down by the Tribunal, which was that the translations in the French and Russian languages should be submitted at the same time. You are now suggesting that you can submit translations at a later stage.

LT. BRYSON: Well, if Your Honor pleases, in any event I did not plan to read from the document at this time and Defense Counsel do have the German original.

THE PRESIDENT: I was not speaking of the Defense Counsel so much as of the members of the Tribunal.

LT. BRYSON: We have the Russian translation in process now and it was delayed and we were unable to get it here at this time, but the delay will be very short and the document is of critical importance to our case.

THE PRESIDENT: How long will it be before it is ready?

LT. BRYSON: I wouldn’t like to say precisely, Sir, but perhaps within 4 or 5 days.

THE PRESIDENT: What do you propose to do now, because it is a very complicated and long document, is it not?

LT. BRYSON: It is and it shows. . .

THE PRESIDENT: Were you proposing to summarize it?

LT. BRYSON: I was proposing to summarize it, Sir, now.

THE PRESIDENT: The Tribunal thinks that if you would summarize it now and only be permitted to put it in at the stage when you have the translation ready, you may summarize it now.

LT. BRYSON: I will summarize it now, Sir.

THE PRESIDENT: Will it take long to summarize?

LT. BRYSON: Not very long, Sir; no.

THE PRESIDENT: You see, it is 5 o’clock.

LT. BRYSON: I think there will be time to summarize it, and then we will stop.

This document discloses that before his resignation Schacht had worked out in amazing detail his plans and preparations for the management of the economy in the forthcoming war. For example, 180,000 industrial plants in 300 industries had been surveyed with respect to usefulness for war purposes; economic plans for the production of 200 basic materials had been worked out; a system for the letting of war contracts had been devised; allocations of coal, motor fuel, and power had been determined; 248 million Reichsmark had been spent on storage facilities alone; evacuation plans for war materials and skilled workers from military zones had been worked out; 80 million wartime ration cards had already been printed and distributed to local areas; and a card index on the skills of some 22 million workers had been prepared.

That concludes the summary, Your Honor.

THE PRESIDENT: We will adjourn now.

[_The Tribunal adjourned until 11 January 1946 at 1000 hours._]

THIRTY-SECOND DAY
Friday, 11 January 1946

_Morning Session_

LT. BRYSON: If the Tribunal please, before picking up our line of proof against the Defendant Schacht, I would like to supply a point of information.

Yesterday the President of the Tribunal inquired with respect to Document Number EC-457, Exhibit Number USA-619. The question raised by the Tribunal was with respect to the words “in retirement” in the letterhead used by Schacht in writing to Hitler in 1932. This is the letter in which Schacht expressed his belief in the truth of the Nazi movement and in which he said that Hitler could always count upon him as a reliable assistant.

The letterhead has printed upon it “The President of the Reichsbank” and after that phrase there is typed the letters “a. D.”, and I understand that those letters are an abbreviation for a German phrase meaning “in retirement” and that it is customary, or it was customary, in Germany for retired officials to continue to use their titles with the letters “a. D.”

THE PRESIDENT: I see.

LT. BRYSON: Yesterday we had just about completed our proof with respect to the contribution of the Defendant Schacht to the preparation for war, and I wish to submit one more document on this point. This is Document Number EC-451, Exhibit Number USA-626. It consists of a statement by George S. Messersmith, United States Consul General in Berlin, 1930 to 1934. I will quote therefrom, beginning with the second sentence of the fourth paragraph:

“It was his”—Schacht’s—“financial ability that enabled the
Nazi regime in the early days to find the financial basis for
the tremendous armament program and which made it possible to
carry it through. If it had not been for his efforts, and this
is not a personal observation of mine only but I believe was
shared and is shared by every observer at the time, the Nazi
regime would have been unable to maintain itself in power and to
establish its control over Germany, much less to create the
enormous war machine which was necessary for its objectives in
Europe and later throughout the world.

“The increased industrial activity in Germany incident to
rearmament made great imports of raw materials necessary, while
at the same time exports were decreasing. Yet by Schacht’s
resourcefulness, his complete financial ruthlessness, and his
absolute cynicism, Schacht was able to maintain and to establish
the situation for the Nazis. Unquestionably, without this
complete lending of his capacities to the Nazi Government and
all of its ambitions, it would have been impossible for Hitler
and the Nazis to develop an armed force sufficient to permit
Germany to launch an aggressive war.”

We turn now. . .

THE PRESIDENT: Well, Lieutenant Bryson, I am not sure that that gives a full or quite fair interpretation of the document. Don’t you think perhaps you ought to read the paragraph before?

LT. BRYSON: The preceding paragraph, Sir?

THE PRESIDENT: Yes.

LT. BRYSON: “Dr. Schacht always attempted to play both sides of
the fence. He told me, and I know he told both other American
representatives in Berlin and various British representatives,
that he disapproved of practically everything that the Nazis
were doing. I recall on several occasions his saying, after the
Nazi Party came into power, that if the Nazis were not stopped,
they were going to ruin Germany and the rest of the world with
it. I recall distinctly that he emphasized to me that the Nazis
were inevitably going to plunge Europe into war.”

If the Court please, I would like to read also from the last paragraph:

“In my opinion Schacht was in no sense a captive of the Nazis.
He was not compelled to devote his time and his capacities to
their interest. His situation was such that he would most likely
have been able either to work on much less restrained scale or
to abstain from activity entirely. He continued to lend his
services to the Nazi Government out of opportunism.”

We turn now to the third part of our case against Schacht. The evidence is clear that he willingly contributed his efforts to the Nazi conspiracy, knowing full well its aggressive designs. The Tribunal will recall our proof that Schacht was converted to the Nazi philosophy in 1931 and helped Hitler come to power in 1933. We will now prove, first, that Schacht personally favored aggression and, second, that in any event he knew Hitler’s aggressive intentions.

There is ample evidence to justify the conclusion that Schacht rearmed Germany in order to see fulfilled his strong belief in aggressive expansion as an instrument of German national policy. Schacht had long been a German nationalist and expansionist. He spoke against the Treaty of Versailles at Stuttgart as early as 1927. I offer in evidence Document EC-415, Exhibit Number USA-627, consisting of a collection of excerpts from speeches by Schacht. I quote from the top of Page 2: “The Versailles Dictate cannot be an eternal document, because not only its economic but also its spiritual and moral premises are wrong.”

It is common knowledge that he strongly favored acquisition of colonial territory by Germany. However, he also favored acquisition of contiguous territory in Europe. On 16 April 1929 at the Paris conference in connection with reparations, he said. . .

THE PRESIDENT: Are you going to read the passage that follows that at a later stage?

LT. BRYSON: At a later stage, if you please, Sir, in connection with another point.

THE PRESIDENT: Very well; go on.

LT. BRYSON: On 16 April 1929, at the Paris conference in connection with reparations, he said:

“Germany can as a whole pay only if the Corridor and Upper
Silesia will be handed back to Germany from Polish possession
and if, besides, somewhere on the earth, colonial territory will
be made available to Germany.”

THE TRIBUNAL (Mr. Biddle): What are you quoting from?

LT. BRYSON: I offer in evidence Exhibit Number USA-628 (Document 3726-PS), consisting of excerpts from a pre-trial interrogation of Schacht on 24 August 1945. You will find it in the document book at the back, labelled “Interrogation of 24 August”. At the top of the first page of the interrogation this statement was quoted to Schacht, and his reply contains an admission of having made the statement. In his reply he said:

“That Germany could not pay at the time after I made the
statement has been proved, and that Germany will not be able to
pay after this war will be proved in the future.”

I wish to point out that this is the very territory which was the subject of the armed aggression in September 1939.

In 1935 Schacht stated flatly that Germany would, if necessary, acquire colonies by force. I offer in evidence Document EC-450, designated as Exhibit Number USA-629. This document consists of an affidavit of S. R. Fuller, Jr., together with a transcript of his conversation with Schacht at the American Embassy in Berlin on 23 September 1935. I wish to read from Page 6 of the document where there appears a statement by Schacht in the lower half of the page.

THE PRESIDENT: What is the date of the conversation?

LT. BRYSON: The conversation occurred on 23 September 1935. The page number of this document is at the bottom, and I quote from Page 6:

“Schacht: ‘Colonies are necessary to Germany. We shall get them
through negotiation, if possible; but if not, we shall take
them.’”

In July 1936, when the rearmament program was well under way, Schacht again publicly spoke of the Versailles Treaty. This time his language contained an explicit threat of war. I refer the Tribunal again to Document EC-415, which I have previously introduced in evidence as Exhibit Number USA-627, consisting of a collection of speeches by Schacht. I wish to read from the paragraph beginning in the middle of the first page:

“But the memory of war weighs undiminished upon the peoples’
mind. That is because, deeper than material wounds, moral wounds
are smarting, inflicted by the so-called peace treaties.
Material loss can be made up through labor, but the moral wrong
which has been inflicted upon the conquered peoples in the peace
dictates, leaves a burning scar on the peoples’ conscience. The
spirit of Versailles has perpetuated the fury of war; and there
will not be a true peace, progress, or reconstruction until the
world desists from this spirit. The German people will not tire
of pronouncing this warning.”

Later in the same year Schacht publicly advocated the doctrine of Lebensraum for the German people. I quote again from Document EC-415, Exhibit Number USA-627, being an excerpt from Schacht’s speech at Frankfurt on 9 December 1936, on the second page, the last paragraph:

“Germany has too little living space for her population. She has
made every effort, and certainly greater efforts than any other
nation, to extract from her own existing small space whatever is
necessary for the securing of her livelihood. However, in spite
of all these efforts, the space does not suffice.”

In January 1937 Schacht, in a conversation with Ambassador Davies, at least by inference threatened a breach of the peace in demanding a colonial cession. I offer in evidence Document L-111, being Exhibit Number USA-630, and consisting of excerpts from a report under date of 20 January 1937, by Ambassador Davies to the Secretary of State. I wish to read therefrom, beginning with the second sentence of the second paragraph:

“He”—meaning Schacht—“stated the following:

“That the present condition of the German people was
intolerable, desperate, and unendurable; that he had been
authorized by his Government to submit proposals to France and
England which would: (1) Guarantee European peace, (2) secure
present European international boundaries, (3) reduce armaments,
(4) establish a new form of a workable league of nations, and
(5) abolish sanctions with new machinery for joint
administration; all based upon a colonial cession that would
provide for Germany an outlet for population, a source for
foodstuffs, fats, and raw materials.”

In December 1937 Ambassador Dodd noted in his diary that Schacht would be willing to risk war for the sake of new territory in Europe. I refer the Tribunal to Document EC-461, consisting of excerpts from Ambassador Dodd’s diary.

THE PRESIDENT: The proposal contained in Document L-111 was for cession of colonies, was it not?

LT. BRYSON: It was, Sir.

I turn now to Document EC-461, consisting of excerpts from Ambassador Dodd’s diary. The entire diary has previously been received in evidence as Exhibit Number USA-58. I quote some notes on a conversation with Schacht on 21 December 1937, beginning near the bottom of the second page of Document EC-461, in the last paragraph:

“Schacht meant what the army chiefs of 1914 meant when they
invaded Belgium, expecting to conquer France in 6 weeks; that
is, domination and annexation of neighboring little countries,
especially north and east. Much as he dislikes Hitler’s
dictatorship, he, like most other eminent Germans, wishes
annexation without war if possible; with war if the United
States will keep hands off.”

THE PRESIDENT: There is another passage in that book, that diary. I am not sure; it probably is not the same date, but it is on the first page of the exhibit, I think—the third paragraph.

LT. BRYSON: The third paragraph.

THE PRESIDENT: Is it at a different time?

LT. BRYSON: It is a different time, Sir.

THE PRESIDENT: September the 19th of what year?

LT. BRYSON: We will check that in the complete volume here, and I think in a minute I will be able to supply the date. In the meantime would you like me to read it, Sir?

THE PRESIDENT: Yes, I think you had better read it.

LT. BRYSON: “He then acknowledged that the Hitler Party is
absolutely committed to war; and the people, too, are ready and
willing. Only a few government officials are aware of the
dangers and are opposed. He concluded, ‘But we shall postpone it
10 years. Then it may be we can avoid war.’”

THE PRESIDENT: Well, I think you should read the next paragraph, too.

LT. BRYSON: “I reminded him of his Bad Eilsen speech some 2
weeks ago and said, ‘I agree with you about commercial and
financial matters in the main. But why do you not, when you
speak before the public, tell the German people they must
abandon a war attitude?’ He replied, ‘I dare not say that. I can
speak only on my special subjects.’”

THE PRESIDENT: And the next one.

LT. BRYSON: And the next one:

“How, then, can German people ever learn the real dangers of
war, if nobody ever presents that side of the question? He once
more emphasized his opposition to war and added that he had used
his influence with Hitler—‘a very great man’, he
interjected—to prevent war. I said, ‘The German papers printed
what I said at Bremen about commercial relations between our
countries, but not a word about the terrible effects and
barbarism of war.’ He acknowledged that and talked very
disapprovingly of the Propaganda Ministry which suppresses
everything it dislikes. He added, as I was leaving ‘You know a
party comes into office by propaganda and then cannot disavow it
or stop it.’”

The date of his conversation was in September 1934.

THE PRESIDENT: It is a pity that those years are not stated in the document. It is rather misleading as it is.

LT. BRYSON: If the Court please, the exhibit which is in evidence will show the dates.

THE PRESIDENT: Yes, I am not blaming you; but it is misleading, because it looks like September the 19th and December the 21st, and as there were 3 years’ interval between, it makes a difference. That is right, isn’t it?

LT. BRYSON: Yes, that is right. I am sorry the excerpt simply shows the page numbers from the exhibit, and not the dates.

Schacht admittedly strained all the resources of Germany to build up a Wehrmacht which would provide Hitler with an instrument of realization of his desire for Lebensraum. In this connection I offer in evidence Document Number EC-369, Exhibit Number USA-631, consisting of a memorandum from the Reichsbank Directorate, signed by Schacht, to Hitler, dated 7 January 1939. I wish to read the last paragraph of the first page:

“From the beginning the Reichsbank has been aware of the fact
that a successful foreign policy can be attained only by the
reconstruction of the German Armed Forces. It—the
Reichsbank—therefore assumed to a very great extent the
responsibility of financing the rearmament in spite of the
inherent dangers to the currency. The justification thereof was
the necessity, which pushed all other considerations into the
background, to carry through the armament at once, out of
nothing and furthermore under camouflage, which made a
respect-commanding foreign policy possible.”

It is clear that the “successful foreign policy” which Schacht thus attributed to rearmament included the Austrian and Czechoslovakian acquisitions. I offer in evidence Document EC-297(a), Exhibit Number USA-632, being a speech of Schacht’s in Vienna after the Anschluss in March 1938. I quote from the third page and the second full paragraph:

“Thank God, these things could not after all hinder the great
German people on their way, for Adolf Hitler has created a
communion of German will and German thought. He bolstered it
with the newly strengthened Wehrmacht and finally gave the
external form to the internal union between Germany and
Austria.”

With respect to the Sudetenland I refer the Tribunal to Document EC-611, already in evidence as Exhibit Number USA-622, being a speech by Schacht; EC-611—but I will not read it, Sir—being a speech by Schacht on 29 November 1938, shortly after the Munich settlement. I have earlier read the pertinent remark attributing Hitler’s success at that conference to the rearmament made possible by Schacht’s financial and economic measures.

This line of proof shows that Schacht entertained an aggressive philosophy with respect to territorial expansion and justifies the conclusion that he allied himself with Hitler because of their common viewpoint.

We turn now to prove that, whether or not Schacht wanted war, he at least knew Hitler planned military aggression for which he was creating the means. He had numerous discussions with Hitler from 1933 to 1937. He knew that Hitler was intent upon expansion to the east, which would mean war, and that Hitler felt he must present the German people with a military victory. I offer in evidence Exhibit Number USA-633 (Document 3727-PS), consisting of an excerpt from a pre-trial interrogation of Schacht on 13 October 1945, and I read from the second page at the end of the second question:

“Q: ‘What was there in what he’”—meaning Hitler—“‘said that
led you to believe he was intending to move towards the east?’

“A: ‘That is in _Mein Kampf_. He never spoke to me about that,
but it was in _Mein Kampf_.’

“Q: ‘In other words, as a man who read it, you understood that
Hitler’s expansion policy was directed to the east?’

“A: ‘To the east.’

“Q: ‘And you thought that it would be better to try to divert
Hitler from any such intention and to urge upon him a colonial
policy instead?’

“A: ‘Quite.’”

I also offer in evidence Document EC-458, Exhibit Number USA-634, consisting of an affidavit of Major Edmund Tilley under date of 21 November 1945, with respect to an interview of Schacht on 9 July 1945. I read the second paragraph:

“During the course of the discussion Schacht stated to me that
he had had numerous talks with Hitler from 1933 to 1937. Schacht
stated that from these talks he had formed the impression that
in order to make his hold and government secure, the Führer felt
that he must present the German people with a military victory.”

As early as 1934, Schacht stated his belief that the Nazis would bring war to Europe. I refer the Tribunal to Document EC-451, which I have already submitted in evidence as Exhibit Number USA-626, consisting of an affidavit under date of 15 November 1945 by Messersmith, American Consul General in Berlin, 1930 to 1934. I wish to read from the first page, third paragraph, last sentence.

THE PRESIDENT: You have read it already.

LT. BRYSON: If the Court please, there is a little more there which we have not read, which I should like to read.

THE PRESIDENT: You read the whole paragraph. At our invitation you read from the third paragraph down to the bottom of the page.

LT. BRYSON: I should like to read the first sentence of the fourth paragraph on Page 1.

THE PRESIDENT: All right.

LT. BRYSON: “While making these protestations he nevertheless
showed by his acts that he was thoroughly an instrument of the
whole Nazi program and ambitions and that he was lending all his
extraordinary knowledge and resourcefulness toward the
accomplishment of that program.”

THE PRESIDENT: Lieutenant Bryson, speaking for myself and for some other members of the Tribunal, we think it is a far better way to deal with a document, to deal with it, if possible, once and for all, and not to be coming back to it. It not only wastes time by the fact that the Tribunal have got to turn back and forth, back and forth, to the document; but you get a much fairer idea of the document if it is dealt with once and for all, although it may cover more than one subject. I say that although it may be impossible for you to do that now in consonance with the preparations that you have made; but those who follow you may be able to alter their course. If it is possible, when you get a document with a variety or a number of paragraphs in it which you want to quote, you should quote them all at the same time. Do you follow what I mean?

LT. BRYSON: I follow you, Your Honor. We have so organized our materials that we have directed our evidence to specific points, and since the points are separated, we had to separate our quotations.

THE PRESIDENT: I realize that it may be difficult for you.

LT. BRYSON: In September of 1934 Ambassador Dodd made a record in his diary of a conversation with Sir Eric Phipps at the British Embassy in Berlin. If the Court please, I will pass over this document, because in response to a question from the Tribunal, I read an excerpt from the document which covers the same point that I was about to direct myself toward.

I had just pointed out that Schacht has acknowledged to Ambassador Dodd in September 1934 his knowledge of the war purposes of the Nazi Party; and we had already shown that in 1935 Schacht had stated that Germany would, if necessary, acquire colonies by force. He must then have known to what length Hitler was prepared to go.

After attending a meeting of the Reich ministers on 27 May 1936 in Berlin, Schacht must have known that Hitler was contemplating war. Your Honors may recall, as has been earlier shown, that at this meeting the Defendant Göring, who was very close to Hitler, stated that all measures are to be considered from the standpoint of an assured waging of war and that waiting for new methods is no longer appropriate. I refer the Tribunal to Document 1301-PS, from which I will not read, as the quotation is already in evidence in Exhibit Number USA-123.

On 31 August 1936 the War Minister, Von Blomberg, sent to Schacht a copy of Von Blomberg’s letter to the Defendant Göring. I refer the Tribunal again to 1301-PS, previously submitted in evidence as Exhibit Number USA-123, and read from the middle of Page 19 of the document. The page numbers, if the Court please, on this document are found in the upper lefthand corner:

“According to an order of the Führer the setting up of all Air
Force units is to be completed on 1 April 1937. Therefore
considerable expenditures have to be made in 1936, which at the
time when the budget for 1936 was made were planned for later
years only.”

This intensification of the air force program certainly revealed to Schacht the closeness to war which Hitler must have felt.

I also offer in evidence Document EC-416, Exhibit USA-635, consisting of minutes of the Cabinet meeting of 4 September 1936 which Schacht attended. I read the statement by Göring found at the top of Page 2 of this document:

“The Führer and Reichskanzler has given a memorandum to the
Colonel General and the Reich War Minister which represents a
general instruction for the execution of this task.

“It starts from the basic thought that the show-down with Russia
is inevitable.”

Schacht thus knew that Hitler expected war with Russia. He also knew of Hitler’s ambitions towards the east. It must have been plain to him, therefore, that such a war would result from Russian opposition to German military expansion in that direction; that is, Schacht must have known that it would be a war of German aggression.

In January 1937, the Tribunal will recall, Schacht stated to Ambassador Davies in Berlin that he had “been authorized by his government” to submit certain proposals to France and England which, in fact, amounted to a bid for colonies under threat of war. If Schacht was acting under instructions from Hitler, he was necessarily familiar with Hitler’s aggressive intentions at that time.

In November of 1937 Schacht knew Hitler was determined to acquire Austria and at least autonomy for the Germans of Bohemia and that Hitler also had designs on the Polish Corridor. I refer the Tribunal to Document L-151, already in evidence as Exhibit Number USA-70, this being a letter containing a memorandum of a conversation between Schacht and Ambassador Bullitt, dated 23 November 1937. I quote the last paragraph on Page 2:

“Hitler was determined to have Austria eventually attached to
Germany and to obtain at least autonomy for the Germans of
Bohemia. At the present moment he was not vitally concerned
about the Polish Corridor, and in his”—Schacht’s—“opinion it
might be possible to maintain the Corridor, provided Danzig were
permitted to join East Prussia and provided some sort of a
bridge could be built across the Corridor uniting Danzig and
East Prussia with Germany.”

To digress for just a moment, Schacht here was really speaking for himself as well as for Hitler. We have seen from his speech of 29 March 1938 in Vienna his enthusiasm for the Anschluss after the event. He was even working hard for its achievement. In this connection I refer the Tribunal to Pages 506 and 507 of the transcript (Volume II, Page 373) for evidence of Schacht’s having subsidized the Nazis’ preliminary agitation in Austria.

In addition to the foregoing direct evidence, the Tribunal is asked to take into consideration the fact that to such a man as Schacht the events of the period certainly bespoke Hitler’s intention. Schacht was a close collaborator of Hitler and a member of the Cabinet during the period of the Nazi agitation in Austria, the introduction of conscription, the march into the Rhineland, the overthrow of the Republican Government in Spain, the ultimate conquest of Austria, and the acquisition of the Sudetenland by a show of force. During this period the Reich’s debt tripled under the stress of mounting armaments, the expenditures from 750,000,000 Reichsmarks in 1932 to 11,000,000,000 Reichsmarks in 1937, and 14,000,000,000 Reichsmarks in 1938. During the entire period 35,000,000,000 Reichsmarks were spent on armaments. It was a period in which the burning European foreign policy issue was the satisfaction of Germany’s repeated demands for additional territory. Hitler, committed to a policy of expansion, was taking great risks in foreign policy and laying the greatest stress upon utmost speed in preparation for war.

Certainly, in this setting Schacht did not proceed in ignorance of the fact that he was assisting Hitler and Germany along the road toward armed aggression.

We turn now to our last line of proof with respect to Schacht’s loss of power in the Hitler regime. In November 1937, Schacht resigned his offices as Minister of Economics and General Plenipotentiary for the War Economy. At that time he accepted appointment as Minister without Portfolio and he also continued as President of the Reichsbank.

Our evidence will show: (a) This change in position was no more than a clash between two power-seeking personalities, Göring and Schacht, in which Göring, being closer to Hitler, won out; (b) their policy differences were concerned only with the method of rearming; and (c) Schacht’s loss of power in no sense implies an unwillingness to assist armed aggression.

There was an issue of policy between Göring and Schacht, but it was concerned only with the method and not the desirability of war preparations. Schacht emphasized foreign trade as a necessary source of rearmament material during the transitory period until Germany should be ready to strike. Göring was a proponent of complete self-sufficiency. Hitler supported Göring; and Schacht, his pride wounded and bitterly resenting Göring’s intrusion in the economic field, finally stepped out.

I refer the Tribunal to Document 1301-PS, previously submitted in evidence as Exhibit Number USA-123, containing notes of a conversation between Schacht and Thomas on 2 September 1936. These are found on Page 21 of the document, from which I quote:

“President Schacht called me to him at 1300 hours today and
requested me to forward the following to the Minister of War:
Schacht returned from the Führer with the greatest anxiety,
since he could not agree to the economic program planned by the
Führer.

“The Führer wants to speak at the Party convention about
economic policy and wants to emphasize there that we now want to
get free from foreign countries with all our energy by
production in Germany.

“Schacht requests urgently that the Reich Minister of War warn
the Führer from this step.”

And three paragraphs farther down:

“If we now shout out abroad our decision to make ourselves
economically independent, then we cut our own throats, because
we can no longer survive the necessary transitory period.”

Nevertheless, Hitler announced the Four Year Plan of self-sufficiency a few days later in Nuremberg, and against Schacht’s wishes Göring was named Plenipotentiary of the Four Year Plan.

At this point I refer the Tribunal again to the interrogation of Schacht on 16 October 1945, being Exhibit Number USA-636; and I wish to read beginning near the bottom of Page 9 of the document:

“Q: ‘And the Four Year Plan came in when?’

“A: ‘It was announced in September ’36, on the Party Day.’

“Q: ‘Do you say that from the time that the Four Year Plan came
in in September 1936, you were ready to rid yourself of your
economic duty?’

“A: ‘No. At that time I thought that I might maintain my
position even against Göring.’

“Q: ‘Yes, in what sense?’

“A: ‘That he would not interfere with affairs which I had to
manage in my ministry.’

“Q: ‘As a matter of fact, his appointment was not met with favor
by you?’

“A: ‘I would not have ever appointed a man like Göring who
didn’t understand a bit about all these things.’”

Schacht and Göring immediately became embroiled in a conflict of jurisdiction. On 26 November 1936 Göring issued a directive regarding raw and synthetic material production. I offer in evidence Document EC-243, Exhibit Number USA-637, consisting of a copy of this directive. It shows that Göring’s Office for Raw and Synthetic Materials pre-empted control over large economic areas previously in the hands of Schacht. As an example, I will quote from Paragraph V of the directive on Page 4 of the document:

“The planning and determination of objectives, as well as the
control over the execution of the tasks which must be
accomplished within the framework of the Four Year Plan, are the
responsibility of the Office for German Raw and Synthetic
Materials, which supersedes the authorities which have
heretofore been in charge of these tasks.”

On 11 December 1936 Schacht found it necessary to order all supervisory offices in the Ministry of Economics to accept instructions from him alone. I offer in evidence Document EC-376, Exhibit Number USA-638, consisting of a circular letter from Schacht to all supervisory offices under date of 11 December 1936, and I quote from the second paragraph:

“The supervisory offices are obliged to accept instructions from
me alone. They must answer all official inquiries for any
information of the Office for German Raw and Synthetic Materials
in order to give any information at any time to the fullest
extent.”

And a little further down:

“. . . I herewith authorize the supervisory offices to take the
necessary measures for themselves. In case doubts should result
from requests of the above offices and these doubts cannot be
cleared by oral negotiations with the experts of these offices,
I should be informed immediately. I will then order in each case
the necessary steps to be taken.”

The military sided with Schacht, who had rearmed them so well. I offer in evidence Document EC-420, Exhibit Number USA-639, consisting of a draft of a memorandum by the Military Economic Staff, dated 19 December 1936. I wish to read from Paragraph 1:

“(1) The direction of war economy in the civilian sector in case
of war can be handled only by the person who in peacetime has
borne the sole responsibility for the preparations for war.

“Upon recognizing this fact a year and a half ago Reichsbank
President Dr. Schacht was appointed Plenipotentiary General for
War Economy and an operations staff was attached to his office.”

And then Paragraph Number 2:

“(2) The Military Economy Staff does not deem it compatible with
the principle laid down in Number 1, Paragraph 1, if the
Plenipotentiary General for War Economy is now placed under the
Minister President General Göring’s command.”

In January 1937 the _Military Weekly Gazette_ published an article warmly praising Schacht’s achievements in rearmament. Without reading it I offer in evidence Document EC-383, Exhibit Number USA-640, containing this article, a pertinent quotation from which already appears in the transcript for 23 November at Page 296 (Volume II, Page 233).

Shortly thereafter Schacht attempted to force a show-down with Göring by temporarily refusing to act in his capacity as Plenipotentiary. I offer in evidence Document EC-244, Exhibit Number 641, consisting of a letter from Von Blomberg, the Minister of War, to Hitler under date of February 22, 1937. I read the second paragraph of this letter as follows:

“The President of the Reichsbank, Dr. Schacht, has notified me
that he is not acting in his capacity as Plenipotentiary for the
time being, since in his opinion there exist discrepancies
regarding the powers conferred upon him and those of Colonel
General Göring. Because of this the preparatory mobilization
steps in the economic field are delayed.”

Schacht obviously was using his importance to the war preparations as a lever.

THE PRESIDENT: Lieutenant Bryson, does the Defendant Schacht admit in his interrogation that the reason for his giving up his office was the difference of opinion between him and the Defendant Göring?

LT. BRYSON: He does, Sir, and the Defendant Göring so states in his interrogation.

THE PRESIDENT: Is it necessary to go into the details of their quarrel?

LT. BRYSON: If the Court will be satisfied that this was the cause of Schacht’s resignation. . .

THE PRESIDENT: If they both say so. . .

LT. BRYSON: . . . and that the cause was not his unwillingness to go along with the aggressive intentions of the Nazis at that time, I shall be perfectly satisfied to confine our evidence to the interrogations of Schacht and Göring.

THE PRESIDENT: Does he suggest that in his interrogation?—that that might have been the reason?

LT. BRYSON: I will find out, Sir, but our case against Schacht is premised upon conspiracy.

THE PRESIDENT: If the Defendant Schacht wants to set up such a case as that, you could apply to be heard in rebuttal.

LT. BRYSON: Well, we shall be satisfied then to eliminate a number of our items of evidence, including the controversy between Göring and Schacht, and satisfy ourselves with the interrogations.

THE PRESIDENT: Yes.

LT. BRYSON: If the Court please, we are almost at the time of the break. Perhaps during the break we can arrange our evidence.

THE PRESIDENT: Yes, we will adjourn now for 10 minutes.

[_A recess was taken._]

PROFESSOR DR. HERBERT KRAUS (Counsel for Defendant Schacht): We agree that the question of the disagreement between the Defendants Göring and Schacht need not be discussed further at this time. But we shall come back to and deal in detail with the question as to how far these disagreements had any bearing on the plan for an aggressive war.

LT. BRYSON: If the Tribunal please, we have eliminated part of our proof. I would simply like to put in a letter from Göring and an interrogation of Schacht which will finish up the question of the disagreement.

Under date of 5 August 1937 Schacht wrote a critical letter to Göring, who replied with a 24-page letter on 22 August 1937. Göring’s letter reviews their many differences in detail. I offer it as Document EC-493, Exhibit Number USA-642, and I wish to read simply one statement found in the middle of Page 13:

“In conclusion I should like to refer to remarks which you made
in a paragraph of your letter entitled ‘The Four Year Plan’
about your general attitude toward my work in regard to the
economic policy. I know and I am pleased that at the beginning
of the Four Year Plan you promised me your most loyal support
and co-operation and that you repeatedly renewed this promise
even after the first differences of opinion had occurred and had
been removed in exhaustive discussions. I deplore all the more
having the impression recently, which is confirmed by your
letter, that you are increasingly antagonistic toward my work in
the Four Year Plan. This explains the fact that our
collaboration has gradually become less close. . . .”

Schacht and Göring were reconciled by written agreement on 7 July 1937 but subsequently again fell into disagreement, and Hitler finally accepted Schacht’s resignation as Minister of Economics on 26 November 1937, simultaneously appointing him Minister without Portfolio, and later Schacht’s resignation was extended to his position as Plenipotentiary for War Economy. Without reading it, I offer in evidence Document EC-494, Exhibit Number USA-643, as proof of this fact.

Now, finally, I wish to refer the Tribunal to the interrogation of Schacht, under date of 16 October 1945, Document 3728-PS, Exhibit Number USA-636, and I wish to read from Page 12 of the document near the bottom:

“A: ‘It may amuse you if I tell you that the last
conversation’”—this is Schacht speaking—“‘that I had with
Göring on these topics was in November 1937, when Luther for 2
months had endeavored to unite Göring and myself and to induce
me to co-operate further with Göring and maintain my position as
Minister of Economics. Then I had a last talk with Göring; and
at the end of this talk Göring said, “But I must have the right
to give orders to you.” Then I said, “Not to me, but to my
successor.” I have never taken orders from Göring; and I would
never have done it because he was a fool in economics, and I
knew something about it, at least.’

“Q: ‘Well, I gather that was a culminating, progressive personal
business between you and Göring. That seems perfectly obvious.’

“A: ‘Certainly.’”

In all this abundant and consistent evidence there is not the slightest suggestion that Schacht’s withdrawal from these two posts represented a break with Hitler on the ground of contemplated military aggression. Indeed, Hitler was gratified that Schacht would still be active in the Government as President of the Reichsbank and as Minister without Portfolio. I offer in evidence Document L-104, Exhibit Number USA-644, consisting of a letter to the United States Secretary of State from Ambassador Dodd, under date of 29 November 1937, enclosing a translation of Hitler’s letter of 26 November 1937 to Schacht. I quote the last two sentences of Hitler’s letter, found on Page 2 of the document:

“If I accede to your wish it is with the expression of deepest
gratitude for your so excellent achievements and in the happy
consciousness that, as President of the Reichsbank Directorate
you will make available for the German people and me for many
years more your outstanding knowledge and ability and your
untiring energy. Delighted at the fact that in the future, also,
you are willing to be my personal adviser, I appoint you as of
today a Reich Minister.”