GEN. ALEXANDROV: Then what part did you play in connection with this

conference?

SCHACHT: This, too, I have already stated in detail, I am...

THE PRESIDENT: The Tribunal has already heard a long cross-examination

and it does not desire to hear the same facts or matters gone over

again. Will you tell the Tribunal whether you have any points which the

Soviet Union are particularly interested in, which have not been dealt

with in cross-examination?

GEN. ALEXANDROV: Mr. President, in his statements the Defendant Schacht

did not reply in sufficient detail, nor were his answers sufficiently

clear. I am therefore obliged, in certain instances, to refer to these

questions again. It is, in particular, not clear to us what part the

Defendant Schacht played in this meeting of the industrialists. It

appears to me that Defendant Schacht did not give a sufficiently clear

or well-defined reply to the question which I had asked him. As for the

other questions, they are few in number and I imagine that after the

recess I can try and finish with them in about 30 or 40 minutes. All

these questions are of interest to us since they enable us to determine

the guilt of the Defendant Schacht.

THE PRESIDENT: Very well. The Tribunal is not prepared to listen to

questions which have already been put.

GEN. ALEXANDROV: Perhaps now you will find it desirable to declare a

recess, in order to continue the cross-examination after the recess.

THE PRESIDENT: No, General Alexandrov, the cross-examination will

continue up to the recess.

GEN. ALEXANDROV: Do you admit that, while acting as President of the

Reichsbank and as Minister of Economics and Plenipotentiary for War

Economy, you played a decisive part in preparing the rearmament of

Germany and consequently, in preparing for a war of aggression?

SCHACHT: No, I categorically deny that.

GEN. ALEXANDROV: You were Plenipotentiary for War Economy?

SCHACHT: Well, we have spoken about that here ten times already.

GEN. ALEXANDROV: I did not hear it from your own lips, not once.

THE PRESIDENT: He has admitted throughout—and, of course, it is

obvious—that he was Plenipotentiary for War Economy; but what you put

to him was, whether he as Plenipotentiary for War Economy took part in

rearmament for aggressive war, and he has said over and over again that

that was not his object, that his object was to gain equality for

Germany. He said so, and we have got to consider whether that is true.

But that he said it is perfectly clear.

GEN. ALEXANDROV: In my subsequent questions it will be quite clear why I

touch precisely on this question.

How long did you occupy the post of Plenipotentiary for War Economy?

SCHACHT: I have just stated that I do not understand the question—for

what duration? All this has certainly been stated here already.

THE PRESIDENT: We have got the date when he became Plenipotentiary for

War Economy and the date when he ceased to be.

GEN. ALEXANDROV: I should like to remind you of the duties imposed on

you as Plenipotentiary by the Reich Defense Act of 21 May 1935. I shall

quote a brief excerpt from Section 2 of this law, entitled

“Mobilization”:

“Point 1: For the purpose of directing the entire war economy

the Führer and Reich Chancellor will appoint a Plenipotentiary

for War Economy.

“Point 2: It will be the duty of the Plenipotentiary for War

Economy to utilize all economic possibilities in the interest of

the war and to safeguard the economic well-being of the German

people.

“Point 3: Subordinate to him will be: the Reich Minister of

Economics, the Reich Minister for Food and Agriculture, the

Reich Labor Minister, the Chief Reich Forester, and all other

Reich officials directly subordinate to the Führer and Reich

Chancellor.

“Further, he shall be responsible for the financing of the war

within the sphere of the Reich Finance Ministry and the

Reichsbank.

“Point 4: The Plenipotentiary for War Economy shall have the

right to enact public laws within his official jurisdiction

which may differ from existing laws.”

You admit that this law gave you extraordinary powers in the sphere of

war economy?

SCHACHT: This document is before the Court and I assume that you have

read it correctly.

GEN. ALEXANDROV: I am not asking you whether I have read this document

correctly; I am asking you whether you admit that by this law you were

given extraordinary powers in the sphere of the war economy? Do you

admit that?

SCHACHT: I had exactly the full powers which are described in the law.

GEN. ALEXANDROV: Do you admit that these were not ordinary powers, but

quite extraordinary powers?

SCHACHT: No, I will not admit this at all.

GEN. ALEXANDROV: In other words, you considered that the Reich Defense

Law of 21 May 1935 was just an ordinary law?

SCHACHT: It was simply an ordinary law.

GEN. ALEXANDROV: And you also considered the functions imposed on you by

this law as Plenipotentiary for War Economy ordinary functions?

SCHACHT: As very common regulations which are customary with every

general staff.

THE PRESIDENT: The Court will adjourn now.

[_A recess was taken._]

_Afternoon Session_

THE PRESIDENT: Yes, General Alexandrov.

GEN. ALEXANDROV: Mr. President, taking into consideration the Tribunal’s

desire, as well as the fact that Mr. Jackson has already questioned

Schacht in detail, and having read the minutes of this morning’s

session, it has been possible for me to shorten considerably the number

of questions in my examination. I have only two to put to Defendant

Schacht.

Defendant Schacht, on 21 May 1935 the Reich Government made a decision

with regard to the Reich Defense Council. The decision was as follows,

citing Point 1:

“It is the will of the Führer and Reich Chancellor that the

Plenipotentiary General for War Economy shall take over this

responsible directorate (Leitung), and is, as with the Reich War

Minister, holder of the executive power, independent and

responsible for his own sphere of activity to the Führer and

Reich Chancellor.”

Do you admit that you carried through actively this decision of the

Reich Government; and that you took an active part in Germany’s economic

preparations for aggressive wars?

SCHACHT: No, Mr. Prosecutor, I definitely do not admit that.

GEN. ALEXANDROV: On the 4th of March 1935, in your speech at the Spring

Fair in Leipzig, you said the following, citing Exhibit Number USA-627

(Document Number EC-415):

“My so-called foreign friends are doing neither me nor the cause

a service, nor a service to themselves, when they try to bring

me into conflict with the impossible, so they say, National

Socialist economic theories, and present me, so to speak, as the

guardian of economic reason. I can assure you that everything I

say and do is with the full consent of the Führer, and I shall

neither do nor say anything which he has not approved.

Therefore, the guardian of economic reason is not I but the

Führer.”

Do you confirm this speech you made at the Spring Fair in Leipzig?

SCHACHT: I admit it and would like to make a statement.

I have said repeatedly, first, that my foreign friends, as far as I had

foreign friends, did not do me a service when they said publicly that I

was an adversary of Hitler, because that made my position extremely

dangerous. Secondly, I said in that speech I would not do anything which

would not be according to my conviction, and that Hitler did everything

I suggested to him, that is, that it was his opinion also. If I had said

anything to the contrary, that would have been expressed. I was in

complete accord with him as long as his policies agreed with mine;

afterwards I was not, and left.

GEN. ALEXANDROV: I have no more questions, Your Honor.

THE PRESIDENT: Do you wish to re-examine, Dr. Dix?

DR. DIX: I will put only a few questions which arose from the

cross-examination.

During the cross-examination, the New Plan was again dealt with without

Dr. Schacht’s having had an opportunity of explaining it and of stating

what role, if any, that plan had in the economy of rearmament and who

was the originator, the responsible originator of the New Plan.

Therefore, may I put this question to Dr. Schacht now?

SCHACHT: The New Plan was a logical consequence of the economic

development which followed the Treaty of Versailles. I mention again

only briefly that by the removal of German property abroad, the entire

organization for German foreign trade was taken away and therefore great

difficulties arose for German exports.

Without those exports, however, payment of reparations, or such, was out

of the question. Nevertheless, all the great powers, particularly those

who were competing with Germany on the world market, resorted to raising

their tariffs in order to exclude German merchandise from their markets

or to make it more difficult for Germany to sell her goods, so that it

became more and more of a problem to develop German exports.

When Germany, in spite of this, tried by lower prices, at the cost of

lower wages to maintain or to increase her export trade, the other

powers resorted to other means to meet German competition. I recall the

various devaluations of foreign currencies which were made, again

impeding the competition of German products. When even that did not

suffice, the system of quotas was invented; that is, the amount of

German goods which were imported into a country could not go beyond a

certain quota; that was prohibited. Such quotas for German imports were

established by Holland, France, and other nations; so here also German

export was made increasingly difficult.

All these measures to hinder German export led to the situation that

German nationals also could no longer pay even private debts abroad. As

you have heard here, for many years I had warned against incurring these

debts. I was not listened to. It will be of interest to you to state

here briefly that Germany, against my advice, had within five years

contracted as large a foreign debt as the United States had throughout

the 40 years before the first World War.

Germany was a highly-developed industrial nation and did not need

foreign money, and the United States at that time was going in more for

colonial development and could make good use of foreign capital.

We now hit the bottom. When we were no longer able to pay our interest

abroad, some countries resorted to the method of no longer paying German

exporters the proceeds from the German exports, but confiscated these

funds, and out of this paid themselves the interest on our debts abroad;

that is, effecting a settlement, so to speak. That was the so-called

“clearing system.” The private claims were confiscated in order to meet

the demands of foreign creditors.

To meet this development, I looked for a way out to continue German

exports. I set out a very simple principle: “I will buy only from those

who buy from me.” Therefore, I looked around for countries which were

prepared to cover their needs in Germany, and I prepared to buy my

merchandise there.

That was the New Plan.

THE PRESIDENT: I do not know what we have to do with this, Dr. Dix.

DR. DIX: Well, to make a long story short, the New Plan had nothing to

do with the intention to rearm, let alone with any aggressive

intentions.

SCHACHT: Absolutely nothing.

DR. DIX: In this connection, can you give an estimate as to what

percentage of German economic production was armament production?

SCHACHT: That question has been put to me in previous interrogations and

at that time I was not able to answer it, because I could not recall

what amount Germany expended on her armament. Now, from the testimony of

Field Marshal Keitel, we have heard here that armament expenditure

during these years when the Reichsbank was still co-operating, 1934-35,

1935-36, 1936-37 and so on, amounted respectively to 5,000 million

Reichsmark, 7,000 million Reichsmark and 9,000 million Reichsmark; that

is the estimate of experts. The production of the entire German economy

during these years could be estimated approximately at 50-60,000 million

Reichsmark. If I compare that with the armament expenditure, which has

been stated here by a witness, then we find that armament expenditure

amounted to about 10 to 15 percent of the entire German economy during

the years when I had anything to do with it.

DR. DIX: Then, in the course of the cross-examination, there came up the

question of your willingness or unwillingness to give up the office of

Plenipotentiary for War Economy, and in order to prove your statement

that General Von Blomberg did not wish you to give up that office, you

referred to a document which has been submitted by the Prosecution. I am

referring to Document EC-244, and it is a letter from the Reichswehr

Minister, Von Blomberg, to Hitler, of 22 February 1937. It has already

been read, so there is no need to do so now. May I only point out that

in the last paragraph Blomberg expressed the desire that the Führer

would direct or get the Reichsbank president to remain in office, so

that covers the statement made by Schacht. Furthermore, in the course of

cross-examination by Mr. Justice Jackson, mention was made of your

credibility concerning the statement on your colonial aspirations; and

from the point of view of colonial policy without mastery of the

sea—Germany had not the mastery of the sea—can Germany have any

colonial problems? That was the question and answer; and in that

connection I would like to ask you: Did Germany have colonies before

1914?

SCHACHT: Yes.

DR. DIX: Before 1914, or let us say between 1884 and 1914, that is, the

time when Germany had colonial possessions, did Germany have mastery of

the sea, especially as compared with Great Britain?

SCHACHT: No, in no way.

DR. DIX: That covers it. Then there is another problem from the point of

view of the credibility of your statements: Mention has been made of the

ethical conflicts concerning your oath to Hitler, as head of the State,

as you say, and the intentions which you have revealed to overthrow

Hitler, even to kill him. Do you not know of many cases in history where

persons holding high office in a state attempted to overthrow the head

of the state to whom they had sworn allegiance?

SCHACHT: I believe you find these examples in the history of all

nations.

THE PRESIDENT: Dr. Dix, we are not concerned with past history, are we?

You do not think the question of whether there are historical instances

is a legitimate question to put to this witness?

DR. DIX: Then I will not pursue that point any further; it is

argumentation and maybe I can use it later in my final pleadings.

Now, returning to the question of colonies, is it not correct that,

apart from your personal colonial aspirations, Germany, the Reich

Government, had prepared officially for the acquisition of her colonies

and later their administration; and was not there a colonial policy

department until 1942 or 1943 or thereabouts?

SCHACHT: Well, it is set out explicitly in the Party program that the

colonial demands are part of the Party program. Of course, the Foreign

Office also concerned itself with it and I believe also in the Party

there was a colonial policy department.

DR. DIX: Under Ritter Von Epp?

SCHACHT: Yes, under Ritter Von Epp.

DR. DIX: Then concerning the question of the mefo bills, I only want to

summarize: Did you mean to imply that the mefo bills were to serve as a

brake on rearmament, because the signature of the Reich to these bills,

that is of the Reich Government, was binding for their repayment?

SCHACHT: You see, I said very clearly that the limitation of the mefo

bills to 5 years, and making them mature in 5 years, would automatically

put a brake on armament.

DR. DIX: Furthermore, Mr. Justice Jackson dealt with the point that the

name of Schacht, when he retained office as Minister without Portfolio,

had a propaganda value in favor of the Nazi regime abroad and therefore

served the aggressive intentions and their execution. In this connection

and in order to shorten the presentation of my documents, may I read

from my document book, Exhibit 37(a), Document Schacht-37(a); that is,

the English text is on Page 157 and the German on Page 149. On Page 5 of

that long affidavit Huelse states:

“The foreign press drew from the dismissal”—that is, the

dismissal as Reichsbank President in 1939—“the correct

conclusions and interpreted it as a warning signal. In this

connection in repeated conversations, even at the end of 1938,

and in agreement with Dr. Schacht, I spoke with representatives

of foreign issuing banks, whom I had met at board meetings of

the Bank for International Settlement, and I informed them that

the resignation of Schacht and individual members of the

Reichsbank Directorate meant that things in Germany were

following a dangerous path.”

Furthermore, the Prosecutor for the Soviet Union has accused Dr.

Schacht, because in the biography of Reuter it is stated expressly that

Schacht assisted the regime during the stage of the struggle for power.

At any rate, that is the substance. That is correct as a quotation from

Reuter’s book, but there is something else. I believe we still have to

submit Exhibit 35 (Document Schacht-35), Page 133 of the English text

and 125 of the German, and there we find on the second page of that long

affidavit the following sentences, which limit the authenticity of that

biography and prove it to be a biased piece of writing. Reuter says in

this affidavit, and I quote:

“I had a biography of Dr. Schacht published twice, first at the

end of 1933 by the Publishing House R. Kittler in Berlin, and at

the end of 1936 by the German Publishing Institute in Stuttgart.

Besides its being a factual presentation of his life and his

work, it also served the purpose of shielding him from his

attackers. Therefore the principles of purely objective

historical research are not applicable to this publication,

because defensive views required by the situation at the time

has to be taken into consideration.”

This must be known and read before one can estimate the evidential value

of that biography.

And that concludes my questions.

THE PRESIDENT: The defendant can then retire.

DR. DIX: I now call the witness Vocke with Your Lordship’s permission.

[_The witness Vocke took the stand._]

THE PRESIDENT: Will you state your full name?

WILHELM VOCKE (Witness): Wilhelm Vocke.

THE PRESIDENT: Will you repeat this oath after me: I swear by God—the

Almighty and Omniscient—that I will speak the pure truth—and will

withhold and add nothing.

[_The witness repeated the oath in German._]

THE PRESIDENT: You may sit down.

DR. DIX: Herr Vocke, you were a member of the Directorate of the

Reichsbank. When did you enter the Reichsbank Directorate, and when did

you resign from it?

VOCKE: Reich President Ebert appointed me a member of the Reichsbank

Directorate in 1919, and Hitler dismissed me from office on 1 February

1939. Therefore, I was for about 20 years a member of the Reichsbank

Directorate, and for 10 of these years I was under Schacht.

DR. DIX: Excuse me, but I must ask you, were you a member of the Party?

VOCKE: No.

DR. DIX: Were you a member of the SA?

VOCKE: No.

DR. DIX: Were you a member of the SS?

VOCKE: No.

DR. DIX: Were you a sponsoring member of the SA or SS?

VOCKE: No.

DR. DIX: You had no connection with the Party?

VOCKE: No.

DR. DIX: When did you meet Schacht?

VOCKE: In 1915. I merely made his acquaintance then, but it was not

until he became Reichsbank Kommissar and Reichsbank President, that I

came to know him better.

DR. DIX: I come now to the period of the first Reichsbank presidency of

Schacht, that is, the year 1923. At that time what was the attitude of

the Reichsbank Directorate to the candidature of Schacht as Reichsbank

President?

VOCKE: A disapproving attitude.

DR. DIX: And for what reason?

VOCKE: We wanted Helferich as candidate for the presidency of the

Reichsbank, because Helferich, in close co-operation with the

Reichsbank, had created the Rentenmark and stabilization of currency.

But as reason for our disapproval of Schacht, we mentioned an incident

contained in Schacht’s dossier which referred to his activity under Herr

Von Jung in 1915. According to this, Schacht, who had come from the

Dresdner Bank, had rendered assistance to the Dresdner Bank which Von

Jung did not consider quite correct, and that was the reason for

Schacht’s dismissal at that time.

The Reich Government, however, did not heed the criticism which we made

against Schacht, and as Minister Severing told me recently, he followed

the proverb, “It is not the worst fruit which is eaten by worms,” and

Schacht was appointed President.

DR. DIX: So that Schacht came to you as President, and he must have

known that the Directorate did not want him, or at any rate wanted

somebody else. Therefore, I assume the question is in order as to what

the relations were among that group, that is, the Reichsbank Directorate

and the new President.

VOCKE: Schacht took up his office in January 1924. He called us all to a

meeting in which he spoke very frankly about the situation, and this was

the substance of what he said: Well, you disapproved of me for President

because I stole silver spoons; but now I am your President, and I hope

that we will work together, and we will get to see eye to eye—that was

the expression used by Schacht—however, if one or another of you feels

that he cannot work with me, well, then he will have to take the

consequences, and I will gladly assist him to find another position.

Our relations with Schacht soon became good and we worked together

successfully. It was very good to work with Schacht. We quickly

recognized that he was an unrivalled expert in his and our branch, and

also in other respects his conduct was beyond reproach. He was clean in

his dealings and there was no nepotism. Neither did he bring with him

any men whom he wanted to push. Also he was a man who at all times

tolerated controversy and differing opinions—he even welcomed them. He

had no use for colleagues who were “yes men.”

THE PRESIDENT: There is neither any charge nor any issue about this.

DR. DIX: That is quite correct, Your Lordship, but I thought it would be

helpful to touch upon these things. But we are now at the end, and will

come to the Reichsbank presidency from 1933 on.

[_Turning to the witness._] After his short period of retirement Schacht

again became President of the Reichsbank in 1933. Did you have any

conversations with him about his relations to Hitler and to the Party?

VOCKE: Yes.

DR. DIX: Would you like to describe to the Tribunal the kind of

statements Schacht made to you?

VOCKE: First, I would like to mention two conversations which I remember

almost word for word. During the period when Schacht was not in office,

that is about three years, I hardly ever saw him, maybe three or four

times at occasions at the Wilhelmstift. He never visited me, nor did I

visit him, except once, when Schacht came into the bank—maybe he had

some business there—and visited me in my office. We at once...

DR. DIX: When was that?

VOCKE: That must have been in 1932, a comparatively short time before

the seizure of power. We immediately began to speak about political

questions, about Hitler and Schacht’s relations to Hitler. I used that

opportunity to warn Schacht seriously against Hitler and the Nazis.

Schacht said to me: “Herr Vocke, one must give this man or these people

a chance. If they do no good, they will disappear. They will be cleared

out in the same way as their predecessors.”

I told Schacht: “Yes, but it may be that the harm done to the German

people in the meantime will be so great that it can never be repaired.”

Schacht did not take that very seriously, and with some light remark,

such as: You are an old pessimist, or something like that, he left.

The second conversation about which I want to report took place shortly

after Schacht’s re-entry into the bank. It was probably in March 1933,

or the beginning of April. Schacht at that time showed a kind of

ostentatious enthusiasm, and I talked to him about his relation to the

Party. I assumed that Schacht was a member of the Party. I told him that

I had no intention of becoming a member of the Party, and Schacht said

to me: “You do not have to. You are not supposed to. What do you think?

I would not even dream of becoming a member of the Party. Can you

imagine me bending under the Party yoke, accepting the Party discipline?

And then, think of it, when I speak to Hitler I should click my heels

and say, ‘Mein Führer,’ or when I write to him address him as ‘Mein

Führer.’ That is quite out of the question for me. I am and remain a

free man.”

That conversation took place and those words were spoken by Schacht at a

time when he was at the apex of a rapprochement with Hitler, and many a

time I have thought about it, whether it was true, and remained true,

that Schacht was a free man.

As things turned out, after a few years Schacht was forced to realize to

his sorrow that he had lost a great deal of his freedom, that he could

not change the course of the armaments financing scheme, upon which he

had embarked, when he wished to do so; that it had become a chain in the

hands of Hitler and that it would take years of filing and tugging for

it to break.

But, in spite of that, his words were true inasmuch as they reflected

the inner attitude of Schacht towards Hitler. Schacht never was a blind

follower. It was incompatible with his character, to sign himself away

to somebody, to sell himself and follow with blind devotion.

If one should seek to characterize Schacht’s attitude to Hitler thus: My

Führer, you command, I follow; and if the Führer ordered him to prepare

an armament program: I will finance an armament program, and it is for

the Führer to decide to what use it shall be put, whether for war or

peace—that would be incompatible with Schacht’s attitude and character.

He was not a man who thought along subaltern lines or who would throw

away his liberty; in that Schacht differed fundamentally from a great

many men in leading political and military positions in Germany.

Schacht’s attitude, as I came to know it from his character and from his

statements, could be explained somewhat as follows: Schacht admired this

man’s tremendous dynamic force directed towards national aims, and he

took account of this man, hoping to use him as a tool for his own plans,

for Schacht’s plans towards a peaceful political and economic

reconstruction and strengthening of Germany. That is what Schacht

thought and believed, and I take that from many statements made by

Schacht...

DR. DIX: That, I think, answers the question fully. Now the Prosecution

accuses Schacht and alleges that Hitler picked out Schacht to finance

armament for an aggressive war. You, Herr Vocke, were a member of the

Reichsbank Directorate and you worked with him during all those years.

Therefore, I ask you to tell the Tribunal whether anything transpired in

the course of conversations, or whether you noticed anything about

Schacht’s activities and work which would justify such a reproach.

VOCKE: No. Schacht often expressed the view that only a peaceful

development could restore Germany and not once did I hear him say

anything which might suggest that he knew anything about the warlike

intentions of Hitler. I have searched my memory and I recall three or

four incidents which answer that question quite clearly. I should like

to mention them in this connection.

The first was the 420 million gold mark credit which was repaid in 1933.

Luther, when the Reichsbank cover disintegrated in the crisis...

DR. DIX: May I interrupt for the information of the Tribunal: Luther was

Schacht’s predecessor.

VOCKE: ...in 1931 when the cover for the issue of notes had to be cut

down, Luther in his despair sent me to England in order to acquire a

large credit in gold from the Bank of England which would restore

confidence in the Reichsbank. Governor Norman was quite prepared to help

me, but he said that it would be necessary for that purpose to approach

also the Federal Reserve Bank of New York, the Bank of France, and the

International Bank in Basel. That was done and the credit amounted to

420 million gold marks, but the inclusion of the Bank of France created

political difficulties which delayed the credit for about 10 or 12 days.

When I returned to Berlin I was shocked to hear that the greater part of

the credit had already been used up. The gold was torn from our hands,

and I told Luther: The credit has lost its usefulness and we must repay

it immediately. Our honor is our last asset. The banks which have helped

us shall not lose a single pfennig.

Luther did not have sufficient understanding for that, and he said in so

many words: What one has, one holds. We do not know for what purpose we

may still have urgent need of the gold. And so the credit was extended

and dragged out over years.

When Schacht came to the bank in 1933, I told myself that Schacht would

understand me, and he did understand me immediately. He agreed with me

and repaid that credit without hesitation. It never entered his head for

what other purpose one might use that enormous sum of gold, and I say

here that if Schacht had known of any plans for a war, he would have

been a fool to pay back 420 million gold marks.

As to the second incident, I cannot give the exact date, but I believe

it was in 1936. The Reichsbank received a letter from the Army Command

or the General Staff marked “Top Secret,” with the request to remove the

gold reserves of the Reichsbank, the securities and bank note reserves

from the frontier regions of Germany to a zone in the interior. The

reasons given were the following: In the event of a threat to attack

Germany on two fronts, the Army Command had decided to evacuate the

frontier areas and to confine itself to a central zone which could be

defended under all circumstances. I still remember from the map which

was attached to the letter that the line of defense in the East...

THE PRESIDENT: It seems to the Tribunal that this is very remote from

any question we have to decide.

DR. DIX: Your Lordship, that map which the witness wants to describe

shows clearly and beyond doubt that the attitude of the German High

Command in 1936 was a defensive attitude and one which accepted the

greatest strategic disadvantages, and this was communicated to the

Reichsbank under the presidency of Schacht. We can see from that

communication that nobody at that time even thought of aggressive

intentions of the Army Command.

THE PRESIDENT: At what time?

DR. DIX: 1936, I understood him to say that. Perhaps it is better that

he should give you the date.

VOCKE: I cannot say exactly what the date was, but it must have been

about 1936, in my estimation.

DR. DIX: I believe that it is rather relevant. May the witness continue?

THE PRESIDENT: Yes.

VOCKE: The line of defense in the East went from Hof straight up to

Stettin; I cannot remember so well where the western line was drawn, but

Baden and the Rhineland were outside of it.

The Reichsbank was shocked to hear that and about the threat of a

two-front attack on Germany and the tremendous sacrifice of German

territory. It was also shocked at the idea that the Reichsbank, in the

event of an occupation of these regions by the enemy, would have to

leave these occupied territories without any financial support.

Therefore we refused the last-mentioned request, but, as far as the gold

was concerned, we placed it in Berlin, Munich, Nuremberg, and so on.

We could no longer have any doubt, however, after this top secret

document, about the defensive character of our armaments and

preparations.

I come to a third incident. That was in 1937. At that time, when the

economy was already racing ahead and more and more money was being put

up, Schacht asked for the support of the German professors of economy

and called them together to persuade them to work along his lines, that

is, to try to check this trend. At that meeting one of those present

asked Schacht the question: “What will happen if war breaks out?”

Schacht got up and said: “Gentlemen, then we are lost. Then everything

is over with us. I ask you to drop this subject. We cannot worry about

it now.”

Now I come to the fourth incident, which also leaves no doubt about

Schacht’s attitude or the completeness of his information. That was a

conversation immediately after the outbreak of the war. In the first few

days Schacht, Huelse, Dreyse, Schniewind and I met for a confidential

talk. The first thing Schacht said was: “Gentlemen, this is a fraud such

as the world has never seen. The Poles have never received the German

offer. The newspapers are lying in order to lull the German people to

sleep. The Poles have been attacked. Henderson did not even receive the

offer, but only a short excerpt from the note was given to him verbally.

If at any time at the outbreak of a war, the question of guilt was

clear, then it is so in this case. That is a crime the like of which

cannot be imagined.”

Then Schacht continued: “What madness to start a war with a military

power like Poland, which is led by the best French general staff

officers. Our armament is no good. It has been made by quacks. The money

has been wasted without point or plan.”

To the retort: “But we have an air force which can make itself felt,”

Schacht said: “The air force does not decide the outcome of a war, the

ground forces do. We have no heavy guns, no tanks; in three weeks the

German armies in Poland will break down, and then think of the coalition

which still faces us.”

Those were Schacht’s words and they made a deep impression on me; for me

they are a definite and clear answer to the question which Dr. Dix put

to me.

DR. DIX: Now, in the course of those years from 1933 to 1939 did Schacht

ever speak to you about alleged or surmised war plans of Hitler?

VOCKE: No, never.

DR. DIX: What was Schacht’s basic attitude to the idea of a war; did he

ever mention that to you?

VOCKE: Yes, of course, fairly often. Schacht always emphasized that war

destroys and ruins both the victor and the vanquished, and, in his and

our field, he pointed to the example of the victorious powers whose

economy and currency had been devaluated and partly even crippled.

England had to devaluate her currency; in France there was a complete

breakdown of the financial system, not to speak of other powers such as

Belgium, Poland, Romania, and Czechoslovakia.

DR. DIX: Schacht made these statements?

VOCKE: Yes, he did, and quite frequently. Schacht went into detail and

was very definite about the situation in neutral countries. Schacht said

again and again: There will be conflicts and war again, but for Germany

there is only one policy, absolute neutrality. And he quoted the

examples of Switzerland, Sweden, and so on, who by their neutral

attitude had grown rich and more powerful and become creditor nations.

Schacht again and again emphasized that very strongly.

DR. DIX: In that connection you will understand my question. How can you

explain then, or rather, how did Schacht explain to you the fact that he

was financing armament at all?

VOCKE: Schacht believed at that time that a certain quantity of

armaments, such as every country in the world possessed, was also

necessary for Germany for political...

DR. DIX: May I interrupt you. I want you to state only the things which

Schacht told you; not your opinions about what Schacht may have thought,

but only what Schacht actually said to you.

VOCKE: Yes. Schacht said a foreign policy without armament was

impossible in the long run. Schacht also said that neutrality, which he

demanded for Germany in case of conflict between the big powers, must be

an armed neutrality. Schacht considered armaments necessary, because

otherwise Germany would always be defenseless in the midst of armed

nations. He was not thinking of definite attack from any side, but he

said that in every country there was a militarist party which might come

to power today or tomorrow, and a completely helpless Germany,

surrounded by other nations, was unthinkable. It was even a danger to

peace because it was an incentive to attack her one day. Finally,

however, and principally Schacht saw in armaments the only means of

revitalizing and starting up German economy as a whole. Barracks would

have to be built; the building industry, which is the backbone of

economy, must be revitalized. Only in that way, he hoped, could

unemployment be tackled.

DR. DIX: Now, events led to the militarization of the Rhineland, the

reintroduction of compulsory military service. Did you have

conversations with Schacht in which he said that if this policy of

Hitler was pursued it might lead to a war, at least to an armed

intervention by other nations which did not approve of such policies?

Were there any such conversations between you and Schacht?

VOCKE: Not in the sense of your question. Schacht did speak to me about

the incidents when the Rhineland was reoccupied, that is to say, he

explained to me how at that time Hitler, as soon as France adopted a

somewhat menacing attitude, was resolved to withdraw his occupation

forces—Hitler had climbed down—and how he was only prevented in this

by Herr Von Neurath, who said to him: “I was against that step, but now

that you have done it, it will have to stand.” What Schacht told me at

that time about Hitler’s attitude was that Hitler would do anything

rather than have a war. Schacht also felt this, as he told me, when he

mentioned the friendship with Poland, the renunciation of his claim to

Alsace-Lorraine, and, in particular, Hitler’s policy during the first

years, all of which was a peaceful policy. Only later did he begin to

have misgivings as regards foreign policy.

DR. DIX: What were Schacht’s principles and ideas in foreign policy and

how did these line up with his attitude to Hitler’s foreign policy?

VOCKE: He definitely disapproved, especially, of course, since

Ribbentrop had gained influence in foreign politics; Schacht saw in him

the most incapable and irresponsible of Hitler’s advisers. But already

before that there were serious differences of opinion between Schacht

and Hitler on foreign policy.

For instance, as regards Russia: Already from 1928-29 onwards Schacht

had built up a large trade with Russia by long term credits which helped

the economy of both countries. He has often been attacked on account of

that, but he said: “I know what I am doing. I also know that the

Russians will pay punctually and without bargaining. They have always

done it.” Schacht was very angry and unhappy when Hitler’s tirades of

abuse spoiled the relations with Russia and brought this extensive trade

to an end.

Also, with regard to China, Schacht was convinced of the importance of

trade with China and was just about to develop it on a large scale, when

Hitler, by showing preference to Japan and recalling the German advisers

to Chiang Kai-Shek, again destroyed all Schacht’s plans. Schacht saw

that this was a fatal mistake and said that Japan would never be able

nor willing to compensate us for the loss of trade with China.

Also Schacht always advocated close co-operation with the United States,

with England, and with France. Schacht admired Roosevelt and was proud

of the fact that Roosevelt, through the diplomat Cockerill, kept in

constant touch with him. Schacht was convinced of the necessity of

remaining on the best terms with England and France and for that very

reason he disapproved of Ribbentrop being sent to London and actively

opposed this plan.

Schacht was against Hitler’s policy towards Italy. He knew that

Mussolini did not want to have anything to do with us, and he considered

him the most unreliable and the weakest partner.

With regard to Austria, I know only that Schacht thought highly of

Dollfuss and was horrified and shocked when he heard of his murder. Also

after the occupation of Austria, he disapproved of much that happened

there.

May I, in this connection, say a word about Schacht’s colonial policy,

which was a sort of hobby of Schacht’s, and about which he once gave a

lecture? I can best illustrate Schacht’s views by telling you about the

orders which he gave me. Schacht’s idea was to make an arrangement with

England, France, _et cetera_, whereby these powers should purchase part

of the Portuguese colony of Angola and transfer it to Germany, who would

not exercise any sovereign rights, but would exploit it economically;

and he had experts’ opinions...

THE PRESIDENT: Dr. Dix, the Tribunal thinks that this is being given in

far too great length.

DR. DIX: Well, we can leave out the individual examples. The late Field

Marshal Von Blomberg made a statement to the effect that the Reichsbank

received every year from the Reichswehr Ministry a written communication

about the state of the armaments. Do you, who were a member of the

Directorate, know anything about this communication?

VOCKE: No, I have never heard anything about it.

DR. DIX: From the whole of your experience in the Reichsbank and your

experience with Schacht’s attitude to his colleagues, do you consider it

possible that Schacht personally received that information, but did not

pass it on to any of his colleagues in the Reichsbank Directorate?

VOCKE: It may be, but I consider it highly improbable.

DR. DIX: Now, when did Schacht start to try to stop the financing of

armaments and thereby check rearmament; and, if he did try, and if you

can affirm it, what were his reasons?

VOCKE: Schacht made the first attempts to limit armaments, I believe,

about 1936, when economy was running at top speed and further armament

seemed an endless spiral. The Reichsbank was blocked and, I believe, in

1936, Schacht himself started making serious attempts to put an end to

armaments.

DR. DIX: And do you know from your own experience what these attempts

were?

VOCKE: These attempts continued throughout the following years: First,

Schacht tried to influence Hitler and that proved to be in vain. His

influence decreased as soon as he made any such attempt. He tried to

find allies in the civic ministries, and also among the generals. He

also tried to win over Göring, and he thought he had won him over, but

it did not work. Schacht then put up a fight and at last he succeeded in

stopping the Reichsbank credits for armaments. That was achieved at the

beginning of March 1938. But that did not mean that he discontinued his

efforts to stop rearmament itself, and he continued to use every means,

even sabotage.

In 1938 he issued a loan at a time when he knew that the previous loan

had not yet been absorbed—when the banks were still full of it; and he

made the amount of the new loan so big that it was doomed to failure. We

waited eagerly to see whether our calculations were correct. We were

happy when the failure became obvious and Schacht informed Hitler.

Another way in which he tried to sabotage armaments was when the

industries which applied for loans to expand their factories were

prohibited from doing so by Schacht, and thus were prevented from

expanding. The termination of the Reichsbank credit did not only mean

that the Reichsbank could no longer finance armaments, but it dealt a

serious blow to armament itself. This was shown in 1938, when financing

became extremely difficult in all fields and, upon Schacht’s

resignation, immediately reverted to the direct credits of the issuing

bank, which was the only means of maintaining elastic credit, perpetual

credit, so to speak, which Hitler needed and could never have received

from Schacht.

I know that from my personal recollection, because I protested against

that law which was put to me and which Hitler issued after Schacht’s

dismissal. I said to the Vice President: I am not going to have anything

to do with it.

Thereupon, I was immediately dismissed ten days after the dismissal of

Schacht.

DR. DIX: Well, Herr Vocke, for an outsider the motive for stopping the

financing of armaments might have been purely economic. Have you any

grounds, have you any experience which shows that Schacht was now also

afraid of war, and wanted to prevent a war by this stoppage of credit?

VOCKE: Yes. At any rate, in 1938 the feeling that this tremendous

armaments program which had no limits would lead to war became stronger

and stronger, especially after the Munich Agreement. In the meantime

Schacht had realized, and I think the Fritsch affair had made it very

clear to him, that Hitler was the enemy, and that there was only one

thing to do; that was to fight against Hitler’s armament program and

warmongering by every possible means. These means, of course, were only

financial, such as the sabotage, _et cetera_, as I have already

described. The final resort was the memorandum by which Schacht forced

his resignation.

DR. DIX: We will speak later about that. May I ask you another question?

The Tribunal knows about the method of financing this credit, namely, by

mefo bills, so you need not say anything about that. What I want to ask

you is now, in your opinion as a lawyer, could the financing of

armaments by these mefo bills be reconciled with banking law?

VOCKE: The mefo bills and the construction of that transaction had, of

course, been legally examined beforehand; and the point of their

legality had been raised with us, and the question as to whether these

bills could be brought under banking law had been answered in the

affirmative. The more serious question, however, was whether these bills

fulfilled the normal requirements which an issuing bank should demand of

its reserves. To that question, of course, the answer is definitely

“no.”

If one asks, why did not the bank buy good commercial bills instead of

mefo bills, the answer is that at that time there had been no good

commercial bills on the market for years—that is, since the collapse

due to the economic crisis. Already under Brüning schemes for assisting

and restoring economy and credit had been drawn up, all of which

followed similar lines, that is, they were sanctioned according to their

nature as normal credits along the lines of a semipublic loan; for the

Bank was faced with the alternative of standing by helplessly and seeing

what would happen to the economy or of helping the Government as best it

could to restore and support the economy. All issuing banks in other

countries were faced with the same alternative and reacted in the same

manner. Thus the armaments bills, which, economically speaking, were

nothing more than the former unemployment bills, had to serve the same

purpose. From the point of view of currency policy the Reichsbank’s

reserves of old bills, which had been frozen by the depression, were

again made good.

All the regulations under banking law, the traditional regulations

concerning banking and bills policy, had only one aim, namely, to avoid

losses.

DR. DIX: I believe, Herr Vocke, it will be sufficient for the Tribunal

if you could confirm that in the end the legal experts of the Reichsbank

pronounced the mefo bills to be legal. The reasons for this, if Your

Lordship agrees, we can omit.

Now we come to the memorandum which you have already mentioned. I want

you to describe to the Tribunal the reasons which caused the Reichsbank

Directorate, with Schacht at the head, to submit that memorandum to

Hitler, and what the tactical purposes were which the Directorate, and

therefore Schacht, hoped to achieve by that memorandum.

VOCKE: If we had been able to speak frankly, of course, we would have

said: You must stop armaments. But the Reichsbank itself could not do

this. Instead, we had to limit ourselves to the question of our

responsibility for the currency. Therefore, the Reichsbank memorandum

dealt with the question of currency. It said: If the financing of

armaments is continued, German currency will be ruined and there will be

inflation in Germany.

The memorandum also spoke of limitless credits, of unrestrained

expansion of credits, and unrestrained expenditure. By expenditure we

meant armaments. That was quite clear.

THE PRESIDENT: We have all seen the memorandum, have we not?

DR. DIX: He is not speaking about the contents of the memorandum, but of

the reasons, the tactical reasons.

[_Turning to the witness._] You understand, Herr Vocke, the Tribunal

knows the text of the memorandum, so please confine yourself to what I

have asked you.

VOCKE: The memorandum had to deal with the question of currency, but at

the same time, we made quite clear what we wanted: Limitation of foreign

policy. That shows clearly what we wanted: Limitation of expenditure,

limitation of foreign policy, of foreign policy aims. We pointed out

that expenditure had reached a point beyond which we could not go, and

that a stop must be put to it. In other words, the expenditure policy,

that is the armaments program must be checked.

DR. DIX: Now tell us, did you anticipate the effect that that memorandum

would have on Hitler? What did you expect, tactically?

VOCKE: Either the memorandum would result in a halt of this intolerable

expenditure which had brought us to ruin—for at the end of 1938 there

was no more money available, instead there was a cash deficit of nearly

1,000 million. That had to be faced, and the Minister of Finance was on

our side. If this was not recognized, then the smash would come and we

would have to be released. There was no other alternative. We took the

unusual step of getting the whole Directorate to sign this document.

DR. DIX: That, in my experience, is quite unusual, because generally an

official document of the Reichsbank is signed by the President or his

deputy, is it not?

VOCKE: That is true. We wanted to stress that the entire Directorate

unanimously approved this important document which was to put an end to

armaments.

DR. DIX: That, Witness, is clear. Have you any reason for believing that

Hitler recognized that fact?

VOCKE: Yes, Hitler said something to the effect that that would be

“mutiny.” I think that is the word they use in the Army. I have never

been a soldier, but I think that when a complaint is signed by several

soldiers, it is looked upon as mutiny. Hitler had the same ideas.

DR. DIX: Yes, something like that does exist. But you were not present

there. Who told you about that expression “mutiny”?

VOCKE: I cannot remember that any more. I believe it was Herr Berger of

the Finance Ministry. But I cannot say exactly.

DR. DIX: So there was talk about this expression in ministerial circles?

VOCKE: Yes.

DR. DIX: Now, that memorandum also contained a compliment to Hitler, a

reference to his success in foreign policy.

VOCKE: Yes, Schacht had adopted the habit of using flattery in his

dealings with Hitler. The greater an opponent of the Hitler regime

Schacht became, the more he made use of this flattery. Therefore, in

that memorandum, at any rate at the beginning where he spoke of Hitler’s

successes, he also used those tactics.

DR. DIX: And what was the consequence of that memorandum? Please tell us

briefly.

VOCKE: The result was that first Schacht was dismissed, then Kreide and

Huelse, then I, Erhard, and Lessing. The result, however, was that they

knew abroad what things had come to in Germany. My colleague Huelse had

made unequivocal statements in Basel, and said that if we should be

dismissed, then our friends would know to what pass things had come.

DR. DIX: Did Herr Huelse tell you that?

VOCKE: Yes, Huelse told me that.

DR. DIX: Your Lordship, shall we make a short pause here? I have not

much more, but I still have the documentary evidence.

THE PRESIDENT: How much longer do you think you will take before you

finish?

DR. DIX: It is very short and then the documentary evidence is also very

short. Shall I continue?

THE PRESIDENT: The Tribunal will adjourn.

[_A recess was taken._]

DR. DIX: Now, Witness, you have described to the Tribunal how that

dismissal of Schacht and yourself came about. Why did Schacht not take

that step before? Did he talk to you about it?

VOCKE: No. Throughout the years 1936 and 1937 we could not make up our

minds. At first there was still hope that Hitler would steer a

reasonable course as a statesman. Finally, in 1938, we reached a crisis,

particularly in connection with the Munich Agreement and then after the

Munich Agreement. Then, indeed, there was real anxiety that things would

lead to war, and we then saw that we had to force the decision.

However, one has to consider the following: As a bank we could not bring

up political or military arguments or demands which were not within our

competence. The danger of inflation, which we had stressed in that

memorandum, did not show until 1938, when the note circulation during

the last ten months had increased enormously—more than throughout the

five preceding years.

DR. DIX: So that it was not until that year that, let us say, a pretext,

a means, was found to take that leap?

VOCKE: Yes.

DR. DIX: Now I will end with a general question. The high intelligence

of Dr. Schacht is not disputed—that he was disappointed in Hitler and

deceived by him, he says himself. You yourself, with your knowledge of

Schacht’s personality must probably have had your own ideas as to how

this mistake on the part of Schacht could be explained, how he could

have been so deceived. Therefore, if the Tribunal permits, I should be

grateful if you could give us your personal impressions about it, but...

MR. JUSTICE JACKSON: Your Honor, may I make an objection? I do not

understand how the operations of Dr. Schacht’s mind can be explained by

someone else. I have had no objection to any facts which this witness

has known. We have even let him detail here at great length private

conversations. However, speculation on Schacht’s mental operations, it

seems to me, is beyond the pale of probative evidence.

THE PRESIDENT: Dr. Dix, as I think I have said before, you cannot give

by one witness the thoughts of another man; you can only give his acts

and his statements.

DR. DIX: Yes, Your Lordship. When I put the question, I said “if the

Tribunal permits.” I, too, was aware of the question of admissibility...

THE PRESIDENT: You have the answer now: The Tribunal does not allow it.

DR. DIX: Then we will leave that question. May I ask Your Lordship this?

Of course, I can still put questions about the treatment of the Jews by

Schacht. I personally think that this chapter has been dealt with so

exhaustively that it is not necessary for this witness to give us more

examples of the attitude of Schacht. I would only ask to be permitted to

put the same question concerning the Freemasons, because nothing has

been stated about that.

[_Turning to the witness._] Do you know anything about the treatment of

Freemasons or the attitude of Schacht to Freemasons?

VOCKE: Yes. The Party demanded that the Freemasons should be eliminated

from the Civil Service. Schacht said: “I refuse to let anybody tell me

what to do. Everybody knows that I myself am a Freemason; how can I take

action against officials simply because they belong to the Order of

Freemasons?” And as long as Schacht was in office he kept Freemasons in

office and promoted them.

DR. DIX: Now, one last question. Do you know whether Schacht ever

received any gifts or had any economic advantages during Hitler’s time

beyond his regular income as an official?

VOCKE: No; that was quite out of the question for Schacht. Besides, he

was never offered gifts. In all his dealings, as far as money was

concerned, he was absolutely clean and incorruptible. I can give

examples. For instance, when he left in 1930 he reduced his pension to

less than half the pension of the vice president or of any board member.

He said: “These people have devoted their whole life to the bank,

whereas I have given only a few years incidental service.” I could give

more examples of Schacht’s absolute correctness in that respect.

DR. DIX: I believe, if the Tribunal does not wish so, it will not be

necessary to give further examples. That brings me to the end of my

interrogation of this witness.

THE PRESIDENT: Does any other counsel for the defense wish to ask any

questions?

DR. GUSTAV STEINBAUER (Counsel for Defendant Seyss-Inquart): Witness, do

you remember the financial-political measures on the occasion of the

annexation of Austria in March 1938; that is to say, in general terms?

At that time two laws were issued, both of 17 March 1938, one concerning

the conversion of schillings into marks, and the other for the taking

over of the Austrian National Bank by the Reichsbank.

Dr. Schacht, as a witness, stated yesterday that on 11 March he was

asked what exchange rate he would consider correct in the event of an

entry into Austria, and he answered that question by saying that

according to the latest market rate two schillings for one Reichsmark

would be correct.

After the Anschluss, my client, Dr. Seyss-Inquart, objected to the

under-valuation of the schilling, and he succeeded in getting the

schilling converted at 1.50 to the Reichsmark. Is that correct?

VOCKE: Before the entry into Austria I had not heard of any ratio being

fixed by the Reichsbank Directorate. They were entrusted with that

question only after the entry into Austria, and as experts and bankers

they proposed a ratio which was in accordance with the conditions; and

only a slight modification was made for the exchange. It was for the

Government to make concessions, if it wanted to win over the Austrian

population or make it favorably inclined.

DR. STEINBAUER: The second law deals with the Austrian National Bank.

The witness Dr. Schacht has said today that the Austrian National Bank

was not liquidated, but—as he expressed himself—amalgamated. I have

looked up that law and it states expressly in Paragraph 2 that the

Austrian National Bank was to be liquidated. That is Document Number

2313-PS. Now I ask you, Witness, do you know anything about it? Was the

Austrian National Bank left in function as an issuing bank, or was it

liquidated?

VOCKE: The right to issue notes in Austria, of course, went to the

Reichsbank, which, as far as I know, took over the Austrian National

Bank in Vienna and carried it on. I do not remember any details. My

colleague Kesnick took care of that.

DR. STEINBAUER: But maybe you will remember if I quote from the official

reports of the Austrian National Bank that the gold reserve of the

Austrian National Bank in March 1933 amounted to 243 million schillings

in gold and the foreign currency reserve to 174 million schillings,

which means that roughly over 400 million schillings in gold were taken

over by the Reichsbank from the Austrian National Bank.

VOCKE: I do not recall these facts any more; but if it was done, it was

done by law, by the Government.

DR. STEINBAUER: Yes. I have that law of 17 March. I just wanted to

correct a mistake which Herr Schacht must have made today

unintentionally. The law he himself signed says “shall be liquidated.” I

have no other questions.

DR. LATERNSER: Witness, you said earlier that the fundamental difference

between Dr. Schacht and the high military leaders was that he remained a

free man in his attitude to the regime. I want to ask you now, since

that statement seems to imply an opinion of the high military leaders:

Which of the high military leaders do you know personally?

VOCKE: Not a single one.

DR. LATERNSER: Then would you maintain that opinion?

VOCKE: In our circle of the Reichsbank Herr Keitel and other gentlemen

were considered too servile and too acquiescent toward Hitler.

DR. LATERNSER: But since you had no personal acquaintance with these

people do you think that you can express a somewhat critical opinion on

them, as you have done?

VOCKE: Yes, I think so.

DR. LATERNSER: I have no further questions.

THE PRESIDENT: Do any of the other counsel wish to cross-examine?

MR. JUSTICE JACKSON: Witness, when you met Dr. Schacht first, as I

understood it, it was on the occasion of an official visit which you

paid to Von Lumm in Brussels?

VOCKE: Yes.

MR. JUSTICE JACKSON: During the first years of the first World War?

VOCKE: Yes.

MR. JUSTICE JACKSON: Schacht then held some position on Von Lumm’s

staff?

VOCKE: Yes.

MR. JUSTICE JACKSON: What was his position, Schacht’s?

VOCKE: I cannot say that. He was just one of the staff. How I came to

meet him was that on one occasion when I was sent to Brussels to discuss

something with Von Lumm, the latter took the opportunity to introduce

his collaborators and among them was Schacht. We were merely introduced.

MR. JUSTICE JACKSON: And what was Von Lumm’s position? What was he doing

in Brussels?

VOCKE: He was Commissioner for Banking with the General Command.

MR. JUSTICE JACKSON: General Command of the German Army?

VOCKE: Commissioner for the Banks with the Occupation Army.

MR. JUSTICE JACKSON: Named by Germany.

VOCKE: Without doubt.

MR. JUSTICE JACKSON: Well, he was a German, not a Belgian?

VOCKE: Yes, he was a German.

MR. JUSTICE JACKSON: Now, some time after that Schacht was dismissed by

Von Lumm, was he not?

VOCKE: Yes.

MR. JUSTICE JACKSON: And you had a discussion with Von Lumm about that

and also you had one with Schacht about it, did you not? Tell me whether

you had the visit...

VOCKE: I read the official reports in Berlin about the dismissal of

Schacht. I was working in the Reich Office of the Interior. I only spoke

about these things with Schacht when he became Reichsbank President and

he spoke to me about it one day.

MR. JUSTICE JACKSON: Now, before Schacht went on the staff of Von Lumm,

he was director of the Dresdner Bank.

VOCKE: Yes.

MR. JUSTICE JACKSON: And the dismissal was because Schacht had delivered

to that bank a considerable amount of Belgian francs.

VOCKE: Yes. I do not know how large that amount was.

MR. JUSTICE JACKSON: But it was considerable.

VOCKE: Maybe.

MR. JUSTICE JACKSON: And that, Von Lumm thought, gave to the Dresdner

Bank an advantage which was incompatible with Schacht’s duties as a

public official?

VOCKE: That, at any rate, was Von Lumm’s view. He took a very serious

view, which Schacht, not being a civil servant, could not quite

appreciate.

MR. JUSTICE JACKSON: And Von Lumm called a meeting and reproached

Schacht?

VOCKE: Yes.

MR. JUSTICE JACKSON: Schacht then gave an answer to Von Lumm which Von

Lumm considered was not sincere, but was merely a lie?

VOCKE: Yes. That was Von Lumm’s point of view.

MR. JUSTICE JACKSON: Now, that is what Von Lumm told you about?

VOCKE: That was in the written report which I have read.

MR. JUSTICE JACKSON: Now, when you came to talk to Schacht about it and

about his answer to Von Lumm, Schacht told you that it was perhaps not

quite an open answer, but not a lie?

VOCKE: Yes.

MR. JUSTICE JACKSON: However, having heard both sides of it, you along

with all of the other directors of the Reichsbank were opposed to

Schacht’s appointment as President, as you have testified.

VOCKE: Yes.

MR. JUSTICE JACKSON: And you took the view, along with all the other

directors, that the behavior of Dr. Schacht in the Belgian bank affair

was not quite fair and not quite correct?

VOCKE: Yes.

MR. JUSTICE JACKSON: Now, when Dr. Schacht came back to the Reichsbank

under the Nazi regime, as I understand it, there was a good deal of

resentment and reserve against him on the part of the Reichsbank

Directorate, because he “in our eyes then was a Nazi. He was in close

touch with Hitler and kept some things secret from us, his colleagues.”

That is correct, is it not?

VOCKE: I could not say that. It is true there was a feeling against

Schacht. As I explained before, because we had assumed, and I had

assumed—though we were wrong about it—that he was a Nazi. It is

possible that Schacht did keep things secret from us, but at any rate I

do not know whether he did, or what those things were.

MR. JUSTICE JACKSON: Now, did you not say in a statement that he was in

close touch with Hitler and kept some things secret from “us, his

colleagues”?

VOCKE: I do not know whether he kept things secret from us. It is

possible, but I could not prove it.

MR. JUSTICE JACKSON: Is it not true that years later, when already some

fatal moments were reached in the currency system, circulation, price

and wages system, “rumors came to our ears through semiofficial channels

that Dr. Schacht had given Hitler the promise to finance armaments”? Did

you not say that?

VOCKE: That Schacht had given the promise to Hitler? Well, in certain

circles there were rumors of that nature. Whether it is true I could not

say.

MR. JUSTICE JACKSON: Now, you felt after the Munich Agreement and after

Hitler’s speech at Saarbrücken that that destroyed all hopes of peace,

did you not?

VOCKE: Yes.

MR. JUSTICE JACKSON: And from that date, together with Pilseck, you did

all in your power to persuade Schacht that a decision had to be forced?

VOCKE: Yes.

MR. JUSTICE JACKSON: Dr. Schacht agreed with you, but hesitated to take

the decisive step?

VOCKE: Yes. He said—Schacht was not against it in principle, but he

wanted to decide himself when our memorandum should be submitted, and as

this memorandum was to be signed by all of us, and each one of us wanted

to make corrections, the handing in of this memorandum was delayed from

October until 7 January.

MR. JUSTICE JACKSON: The agreement was prepared by you and Pilseck?

VOCKE: Yes.

MR. JUSTICE JACKSON: And you approached Dr. Schacht again and again on

it?

VOCKE: Yes.

MR. JUSTICE JACKSON: And he kept the draft all this time and told you

that he was in doubt about the best moment to bring it before Hitler?

VOCKE: Yes.

MR. JUSTICE JACKSON: And it was not until Hitler refused to see him at

Berchtesgaden that he finally sent him the memorandum?

VOCKE: That I do not know. I have heard here for the first time that

Hitler refused to receive Schacht at Berchtesgaden. It may be. I only

heard that Schacht was at Berchtesgaden, and after his return, according

to my recollection, he talked about his meeting with Hitler and that now

the moment had come to send him the memorandum.

MR. JUSTICE JACKSON: Well, your memorandum is the only source of my

information, and according to my translation it says: “Finally, in

December 1938, he resolved to sign it after a last attempt to speak with

Hitler in Berchtesgaden.”

VOCKE: Yes.

MR. JUSTICE JACKSON: At that time, there was something of a financial

crisis.

VOCKE: Yes.

MR. JUSTICE JACKSON: Considerable difficulty, inflation was just around

the corner, as you might say.

VOCKE: The Government was confronted with the 3,000 million mefo bills

which were about to fall due and which had to be covered, and the

Minister of Finance had a cash deficit of 1,000 million. The Minister of

Finance came to see us and asked us to tide it over, because otherwise

he could not pay the salaries on 1 January. We refused. We did not give

him a single pfennig. We told him that the best thing that could happen

would be that bankruptcy should become manifest in order to show how

impossible it was to continue this system and this policy. He then

received money from private banks.

MR. JUSTICE JACKSON: And you and Huelse, particularly Huelse, had long

warned against this course of the Reichsbank, is that not true?

VOCKE: No, that is not true.

MR. JUSTICE JACKSON: Had not you and Huelse, long before this, warned

that this mefo business would end up in trouble?

VOCKE: Of course, the Reichsbank had for years fought against the mefo

bills, which were to mature in March 1938, and from then on the

Reichsbank did not give any more armament credits.

MR. JUSTICE JACKSON: Now, after his dismissal from the Reichsbank, you

very frequently discussed matters with Schacht and you found that he had

turned very bitter against the Government. Is that not true?

VOCKE: I did not have frequent meetings with Schacht. We met every few

months in the beginning and then, when Schacht went to Guehlen, our

meetings stopped; I saw him there only once or twice. But it was not

only after his dismissal that Schacht became a bitter enemy of Hitler,

but he had been that during the whole of 1938.

MR. JUSTICE JACKSON: And you said, “I think in his heart he hoped he

would be called after Hitler’s defeat to help build a new and better

order of things in Germany”?

VOCKE: Certainly. Schacht spoke to me in Guehlen about the men who would

have to come after Hitler had been finally overthrown, and in

conversation we mentioned the ministers who then could save Germany from

despair, and Schacht was certain that he also would be called in to

assist.

MR. JUSTICE JACKSON: No further questions, Your Honor.

THE PRESIDENT: Do any of the other Prosecution Counsel want to

cross-examine?

DR. DIX: Herr Vocke, in reply to the questions of Mr. Justice Jackson,

you have explained the attitude and the statement of Herr Von Lumm about

the incident in Brussels. You also told the Tribunal about the statement

by Minister Severing, which he made about that incident not so long ago.

VOCKE: Yes.

DR. DIX: Did you not also speak to the President of the Supreme Court of

the Reich, Simons, who was at that time in the Foreign Office and knew

the case very well? Did you not speak to him about that case?

VOCKE: Yes, I spoke to him and Ministerial Director Lewald. At that time

I was a young assistant judge.

DR. DIX: You will have to tell the Tribunal who Lewald was.

VOCKE: It is correct that I spoke to Simons, who later became President

of the Supreme Court of the Reich, and to His Excellency Lewald, who

later became Undersecretary of State in the Reich Office of the

Interior, about these matters which came officially to my knowledge in

my capacity as expert in the Reich Office of the Interior.

Both gentlemen smiled at the self-important attitude of Von Lumm who

made mountains out of mole hills, and also at the misfortune of Herr

Schacht. They smiled benevolently and saw the whole thing as a

tremendous exaggeration.

DR. DIX: Thank you, that is enough. I have no further questions.

However, if the Tribunal will permit me, I should like to point out that

Schacht mentioned here that on 2 January 1939 he spoke at great length

to Hitler, in Berchtesgaden. I do not know whether I am confusing that

with a statement made by a witness or with a statement made by him. I

just wanted to point it out. If he were still sitting here as a witness,

he could tell us about it.

Your Lordship, I bring that up because it was stated by Mr. Justice

Jackson that Hitler did not receive Schacht in Berchtesgaden and that

that was the cause of Schacht’s decision to forward that memorandum. I

only mention, as this witness here cannot know it, that Schacht did

speak to Hitler. If he did not say so this morning or yesterday, he will

say it at any time.

I cannot remember now. Sometimes one confuses private information with

what one has heard in the courtroom.

THE PRESIDENT: Put the microphone where the Defendant Schacht can speak

from there and ask him the question.

[_The microphone was placed before the defendant._]

DR. DIX: Dr. Schacht, you have witnessed the cross-examination. Would

you like to tell the Tribunal what happened?

SCHACHT: When I spoke here I said that I had a long conversation on 2

January 1939 with Hitler at Berchtesgaden on the Obersalzberg, and that

after that conversation, in which the suggestion was put to me to create

an inflation, I considered that the time had come to take that step

which the Reichsbank afterwards took, to dissociate itself from Hitler

and his methods.

[_The microphone was returned to the witness._]

THE PRESIDENT: There is one question I want to ask you, Witness. Did the

Defendant Schacht ever tell you that he had been appointed

Plenipotentiary General for War Economy?

VOCKE: Yes.

THE PRESIDENT: When?

VOCKE: Well, I believe he was appointed to that office in 1935. I

believe that is the date. I could not say for certain.

THE PRESIDENT: I did not ask you when he was appointed. I asked you when

he told you.

VOCKE: I cannot recall that because we had nothing to do with these

things. I only know that either in 1935 or 1936—I believe it was

1935—he received such an appointment.

THE PRESIDENT: Yes. The question I asked you was: Did the Defendant

Schacht ever tell you that he had been appointed?

VOCKE: Yes.

THE PRESIDENT: When did he tell you?

VOCKE: I think in 1935.

THE PRESIDENT: The witness can retire.

DR. DIX: May I put one last question to this witness?

Witness, did you have any idea of the importance of that office?

VOCKE: No. I never heard that Schacht had done anything in that function

except that he had special letter headings for this. His activity in the

Reichsbank continued in the same way as previously, without his

selecting a staff for that office, and without—at least as far as my

knowledge goes—his using the premises and facilities of the Reichsbank

for this new office.

DR. DIX: Have you any knowledge as to whether he had a separate office

or a separate staff for carrying on his activity as Plenipotentiary?

VOCKE: You mean commissioner general for armaments?

DR. DIX: Plenipotentiary for War Economy.

VOCKE: No, he had no separate office, and as I have said before, as far

as I know he never had a staff.

THE PRESIDENT: The witness can retire.

[_The witness left the stand._]

DR. DIX: May I begin with my documents? I can make the presentation of

documents very brief and I am sure that I will conclude it before the

end of the session, because I had an opportunity to submit a large

portion of my documents during the interrogation of witnesses. May I

make the general request that judicial notice be taken of everything I

have not read and everything I do not propose to read. In this

connection, I should like to point out that the entire contents of my

document book have, with one exception, either been submitted or will be

submitted now as exhibits. The exception, the document which has not

been submitted, is Exhibit Number 32. That is the frequently mentioned

article of the _Basler Nachrichten_ of 14 January 1946, which, for the

reasons mentioned yesterday, has not been and will not be submitted by

me.

I come now to Volume I of my document book, to the exhibits which have

not yet been submitted; that is, first Exhibit Number 5 (Document

Schacht-5) Adolf Hitler’s Reichstag speech of 23 May 1933. That exhibit

was read by Schacht in the course of his interrogation and is now being

submitted.

I further submit Exhibit Number 23 (Document Schacht-23), the letter

from Schacht to Hermann Göring, of 3 November 1942. Although that letter

has been submitted by the Prosecution, we submit it again, and for the

following reasons: In the copy which was submitted by the Prosecution,

the date and the year were left out and, of course, as it has been

translated literally, also in our copy. However, a confirmatory note by

Professor Kraus based on the testimony given by Schacht has enabled us

to make a note on it to the effect that it must be the letter of 3

November 1942, because it was that letter which caused the dismissal in

January 1943. It is only submitted in order to make it easier for the

Tribunal to ascertain the date. That was Exhibit Number 23.

Then I wish to submit Exhibit Number 27 (Document Schacht-27). I am not

going to read it; I only ask that judicial notice be taken of it. That

is the address given by Dr. Schacht at the celebration meeting of the

Reich Economic Chamber in January 1937.

Then I submit Exhibit Number 29 (Document Schacht-29), excerpts from the

book by Gisevius, which we want to put into evidence, and I ask you to

take judicial notice. I will not read anything.

Exhibit Number 33 (Document Number Schacht-33) in my document book is a

letter from a certain Morton, a former citizen of Frankfurt-on-Main, who

emigrated to England, a man who was highly respected in Frankfurt. The

letter is directed to the Treasury Solicitor in England and we have

received it here from the Prosecution. I also ask that judicial notice

be taken of its contents and want to read only one sentence on the last

page. I quote:

“I last heard from Schacht indirectly. Lord Norman who was then

Mr. Montague Norman, Governor of the Bank of England, told me

confidentially in 1939 shortly before the outbreak of the war,

that he had just come back from Basel where he had seen Schacht

who sent me his greetings. Lord Norman also told me that

Schacht, who had returned to Germany from Basel, was in great

personal danger as he was very much in disgrace with the Nazis.”

That concludes Volume I of my document book and I pass on to Volume II,

which begins with the affidavits. I must go through the individual

affidavits, but I shall not read any.

The first is Exhibit Number 34 (Document Schacht-34), which has

frequently been quoted, the affidavit of the banker and Swedish Consul

General, Dr. Otto Schniewind, who is at present in Munich. It is a very

instructive and very exhaustive affidavit and in order to save

time—there are 18 pages which would take up a lot of time—I will

confine myself to what I have read from this affidavit; I ask the

Tribunal to take judicial notice of the remainder. It has already been

submitted.

However, I still have to submit Exhibit Number 35 (Document Schacht-35),

which has not yet been submitted. I beg your pardon, but it has been

submitted before. It is the affidavit of Dr. Franz Reuter. I submitted

it when I spoke here about the biased nature of this biography. I ask

you to take judicial notice of the rest of this affidavit.

The next Exhibit Number 36 (Document Schacht-36) is an affidavit by

Oberregierungsrat Dr. Von Scherpenberg, formerly Embassy Counsellor at

the Embassy in London, afterwards departmental chief at the Foreign

Office and now at the Ministry of Justice in Munich, the son-in-law of

Dr. Schacht. I have read a passage and I ask that judicial notice be

taken of the unread portion.

The next is Exhibit Number-37(a) (Document Schacht-37(a)). It has been

submitted. Here also a passage on Page 154 of the German text has been

read, about the warning signal given abroad when Schacht resigned as

Reichsbank President. I ask that judicial notice be taken of the

remainder.

The next affidavit is by the same gentleman, who was also a colleague of

Dr. Schacht in the Reichsbank Directorate at the same time as the

witness Vocke, whom we have just heard. I submit it. There is no need to

read anything. I only ask you to take judicial notice of its contents.

The next affidavit, Exhibit Number-37(c) (Document Schacht-37(c)) is by

the same gentleman and has already been submitted. I ask you to take

judicial notice of its contents. There is no need to read anything.

The next is Exhibit Number 38 (Document Schacht-38), an affidavit by

General Thomas. It has not been submitted yet, and I submit it now and

ask to be permitted to read one passage, beginning on the first page;

that is Page 172 of the English text and Page 164 of the German text:

“Question: Schacht claims to have influenced Blomberg to delay

rearmament. Can you give any information on this matter? When

was it?

“Answer: I was Chief of the Army Economic Staff, that is the

Army Economic and Armament Office at the High Command of the

Wehrmacht (OKW) from 1934 to the time of my dismissal in January

1943. In this capacity I had connection with the Reich Minister

of Economics and Reich Bank President Hjalmar Schacht. Up till

1936 Schacht undoubtedly promoted rearmament by making available

the necessary means. From 1936 on he used every opportunity to

influence Blomberg to reduce the tempo and extent of rearmament.

His reasons were as follows:

“1. Risk to the currency.

“2. Insufficient production of consumer goods.

“3. The danger to the foreign policy, which Schacht saw in

excessive armament of Germany.

“Concerning the last point he frequently spoke to Blomberg and

me and said that on no account must rearmament be allowed to

lead to a new war. These were also the reasons which led him to

hold out to Blomberg in 1936 and again in 1937 the threat that

he would resign. On both of these occasions I was delegated by

Blomberg to dissuade Schacht from carrying out his threat to

resign. I was present during the conference between Blomberg and

Schacht in 1937.”

I ask you to take judicial notice of the remainder of that affidavit by

General Thomas.

The next Exhibit is Number 39 (Document Schacht-39); parts of it have

been read, that is to say, the part Schacht played in the incident of

the 20th of July together with General Lindemann; it is the affidavit by

Colonel Gronau. I ask the Tribunal to take judicial notice of the

remainder.

The same applies to the next Exhibit Number 40 (Document Schacht-40).

That is a sworn statement, also by a colleague of Schacht in the

Ministry of Economics, Kammerdirektor Asmus, now in retirement. I have

also read parts of this already, namely, the passages concerning the

happenings at the time of the dismissal as Minister of Economics; and I

ask you to take judicial notice of the remainder.

Then we come to Exhibit Number 41 (Document Schacht-41), which is the

affidavit by State Secretary Carl Christian Schmid, also in retirement.

I have not yet read anything and I ask to be permitted to read two

passages.

The first one is on Page 182 of the German text; Page 190 of the English

text:

“When the Brüning Cabinet, which had been arranged by General

Von Schleicher...”—That is not legible. I think that should be

different, but it is not legible.—“When that was torpedoed by

Schleicher himself, Schacht considered the early appointment of

Hitler as head of the Government to be unavoidable. He pointed

out that the great mass of the German people said ‘Yes’ to

National Socialism, and that the Left as well as the Center had

come to a state of complete passive resignation. The short life

of the transition cabinets of Papen and Schleicher was clear to

him from the very beginning.

“Schacht decisively advocated the co-operation in National

Socialism of men experienced in their respective fields, without

acceptance of its program as a whole, which he always referred

to ironically, later frequently calling it ‘a really bestial

ideology’ in conversation with me; but he held that the

influencing of developments from important inner power positions

was an absolute patriotic duty, and he strongly condemned

emigration and the resort to easy armchair criticism.”

And then on Page 184 of the German text, 192 of the English text, two

very short passages:

“I recall numerous talks with Dr. Schacht in which he stated

that war was an economic impossibility and simply a crazy idea,

as, for instance, when he was in Mülheim at the house of Dr.

Fritz Thyssen, who was closely associated with Göring and Hitler

before 1933 but was in strong opposition from 1934 on and also

opposed any idea of war as madness.”

And, then, further down on the same page, only one sentence:

“When Schacht spoke to me he used to refer ironically to the

Himmler-Rosenberg Lebensraum plans against Russia as an example

of the mad presumption of extremist Party circles. Schacht’s

special fad was an understanding with England,”

and so on; and I ask you to take judicial notice of the remainder of the

document.

The same applies to the whole of Exhibit Number 42 (Document

Schacht-42), an affidavit by the director of the Upper Silesian Coke

Works, Berckemeyer.

I come now to Exhibit Number 43 (Document Schacht-43). That has already

been submitted and read in part. It is the correspondence between the

publisher of Ambassador Dodd’s Diary and Sir Nevile Henderson. I ask you

to take judicial notice of the part not yet read, and whatever comes

after Exhibit 43 has been submitted. I ask you to take judicial notice

of its contents, and I forego the reading of it.

That brings me to the end of my presentation in the case of Schacht.

THE PRESIDENT: Now the Tribunal will continue the case against the

Defendant Funk.

DR. FRITZ SAUTER (Counsel for Defendant Funk): Mr. President, with your

permission I call first the Defendant Dr. Funk himself to the witness

box.

[_The Defendant Funk took the stand._]

THE PRESIDENT: Will you state your full name, please?

WALTER FUNK (Defendant): Walter Emanuel Funk.

THE PRESIDENT: Will you repeat this oath after me: I swear by God—the

Almighty and Omniscient—that I will speak the pure truth—and will

withhold and add nothing.

[_The defendant repeated the oath in German._]

THE PRESIDENT: You may sit down.

DR. SAUTER: Mr. President, may I begin with one observation: The

Defendant Funk has been a sick man for many years now, and before he

came into the prison he had been in hospital for some time. He was

supposed to undergo an operation, which, however, due to conditions at

the time, could not be carried out. He still is under medical treatment.

In consideration of that fact, and because the defendant is extremely

anxious to conclude his own interrogation as soon as possible, I shall

put only those questions to the defendant which are absolutely necessary

to give you a clear picture about his person and his activities.

[_Turning to the defendant._] Witness, when were you born?

FUNK: On 18 August 1890.

DR. SAUTER: So you are now 56?

FUNK: Yes.

DR. SAUTER: First, I want to put to you the most important particulars

of your life, and to simplify matters you may answer only with “yes” or

“no.”

You are 56 years old. You were born in East Prussia?

FUNK: Yes.

DR. SAUTER: You come from a merchant’s family in Königsberg?

FUNK: Yes.

DR. SAUTER: Then you studied in Berlin at the university, law and

political science, literature and music. You also come from a family

which has produced a number of artists.

FUNK; Yes.

DR. SAUTER: During the World War you were first in the Infantry, and in

1916, because of a bladder ailment, you became unfit for service?

FUNK: Yes.

DR. SAUTER: Then you became an editor with several large newspapers, and

you told me that for a long time you could not make up your mind whether

to become a musician or a journalist. Then you decided for the latter,

and in 1922, I believe, you became editor in chief of the _Berliner

Börsenzeitung_. Is all that correct?

FUNK: Yes.

DR. SAUTER: Now perhaps you will tell us what were the political

tendencies of that paper on which you worked for about ten years as

editor in chief?

FUNK: The tendency of the paper was somewhere between the Center and the

Right. The newspaper was not tied to any party. It was owned by an old

Berlin family of publishers.

DR. SAUTER: What was the attitude of that paper to the Jewish question

before you took on the editorship and during the time when you were

editor in chief?

FUNK: Absolutely neutral. It did not deal in any way with the Jewish

question.

DR. SAUTER: From an affidavit by Dr. Schacht, I have seen that at that

time—that is to say, during the twenties—you moved in circles which

were also frequented by Jews, and where economic and political matters,

such as gold currency, _et cetera_, were often discussed. Is that

correct?

FUNK: I do not know anything about that.

DR. SAUTER: Dr. Schacht has asserted that in an affidavit of 7 July 1945

(Document Number 3936-PS).

FUNK: I had a lot to do with Jews. That was in the nature of my

profession. Every day at the stock exchange I was together with 4,000

Jews.

DR. SAUTER: Then in 1931 you resigned your post as editor in chief?

FUNK: Yes.

DR. SAUTER: What were the reasons for that?

FUNK: I was convinced that the National Socialist Party would come to

power in the Government, and I felt called upon to make my own political

and economic opinions heard in the Party.

DR. SAUTER: Would you like to explain a little more in detail what kind

of opinions you had, Dr. Funk, especially concerning the clashes between

parties, between classes at that time?

FUNK: The German nation at that time was in sore distress, spiritually

as well as materially. The people were torn by Party and class struggle.

The Government, or rather the governments, had no authority. The

parliamentary system was played out, and I myself, for 10 or 12 years

before that, had protested and fought publicly against the burden of the

Versailles reparations, because I was convinced that those reparations

were the chief cause of the economic bankruptcy of Germany. I, myself,

have fought all my life for private enterprise, because I was convinced

that the idea of private enterprise is indissolubly bound up with the

idea of the efficiency and worth of individual human beings. I have

fought for the free initiative of the entrepreneur, free competition,

and, at that time in particular, for putting an end to the mad class

struggle, and for the establishment of a social community on the basis

of the industrial community.

All those were ideas to which I found a ready response in my

conversations, particularly, with Gregor Strasser.

DR. SAUTER: Who was Gregor Strasser, would you tell the Tribunal

briefly?

FUNK: Gregor Strasser at that time was leader of the Reich Organization

Office of the National Socialist Party and was generally considered to

be the second man after Adolf Hitler. I have...

THE PRESIDENT: This is the time to break off.

[_The Tribunal adjourned until 4 May 1946 at 1000 hours._]

ONE HUNDRED

AND TWENTY-FIRST DAY

Saturday, 4 May 1946

_Morning Session_

[_The defendant resumed the stand._]

DR. SAUTER: Mr. President, may I continue the examination of the

Defendant Funk?

Dr. Funk, yesterday you gave us a brief account of your life, told us

that you are 56 years of age, that you have been married for 25 years,

that you were editor of the _Berliner Börsenzeitung_ for 10 years; and

in conclusion you told us yesterday what your convictions were regarding

the future development of Germany.

Perhaps you can again tell us something of your viewpoint, since you

were interrupted by the recess yesterday and since your health was in

such a poor state yesterday evening that you could scarcely remember

what you had told the Court. Well, what were your views on Germany’s

economic prospects at the time when you entered the Party? Perhaps you

can go over it briefly again.

FUNK: At that time Germany was in the midst of a very difficult economic

crisis. This crisis was caused chiefly by the reparations, the way in

which these reparations had to be paid, and by the inability of the

governments then in office to master the economic problems. The most

disastrous feature of the reparations policy was that German mark

credits in immense sums were transferred to foreign countries without

receiving any equivalent in return. As a result there was a tremendous

surplus and over-pressure of Reichsmark abroad. It led to inflation in

Germany and the countries with stable currencies bought Germany out.

German industry incurred heavy debts and consequently came temporarily

under foreign control; German agriculture became indebted. The middle

classes, who were the chief representatives of German culture, were

impoverished. Every third German family was unemployed, and the

Government itself had neither the power nor the courage to master these

economic problems. And these problems could not be solved by means of

economic measures alone. The first essential was the presence of a

government possessing full authority and responsibility; and then the

development of a unified political will among the people.

The National Socialists at that time captured 40 percent of the seats in

the Reichstag; the people streamed to this Party in ever-increasing

millions, especially the young people who were animated by idealism. The

fascinating personality of the Führer acted as a giant magnet. The

economic program of the Party itself was vague; and in my opinion it was

drawn up mainly with an eye for propaganda purposes. There were lively

arguments about it in Party circles with which I came in contact in

1931.

At that time, therefore, I decided to give up my position as editor of a

paper with a large circulation among the middle classes and to start on

my own by editing an economic and political news service which went to

the most diverse sections of economy, to leading Party circles as well

as to economically interested parties siding with the German National

Party, the People’s Party, and even the Democrats.

DR. SAUTER: Dr. Funk, you said before, approximately, that according to

the opinion you expressed in 1931, only a government with full authority

and full responsibility, that is, only a strong state and a unified

political will, could lead Germany out of the crisis of that time, which

was, of course, merely a part of the world crisis. Did you at that time

ever reflect as to whether the Leadership Principle which was later

developed to an increasing extent—whether this Leadership Principle

could be made to harmonize with your ideas of economic policy? Or,

putting it negatively, did you at that time anticipate great wrongs as a

result of this Leadership Principle?

What can you say on this point?

FUNK: As to a principle of government, well, that is, a Leadership

Principle, one can never say _a priori_ whether it is good or bad. It

depends on existing circumstances and, above all, on those who do the

governing. The democratic-parliamentary principle had not been

successful in Germany. Germany had no parliamentary and democratic

tradition, such as other countries had. Conditions, finally, were such

that when the government made decisions, the few votes of the economic

party were decisive; and these were mostly bought. Therefore, another

principle had to be made the dominant one; and in an authoritarian

government, if those who bear the authority and the responsibility are

good, then the government also is good. The Leadership Principle meant,

in my opinion, that the best men and the best man should rule and that

authority would then be exercised from above downwards and

responsibility from below upwards. And in conversations with Hitler and

other leading personalities of the Party in 1931 and, as I said, from

the faith and enthusiasm which the German people brought to this

political movement, I formed the opinion that this Party would have to

come into power and that through it alone salvation could come. I,

myself, wanted to put my own economic ideas into practice in this Party.

DR. SAUTER: Dr. Funk, you have just been speaking of the personality of

Hitler. Through whom did you meet Hitler?—that is, who were persons in

the Party by whom you were first won over to the Party?

FUNK: Chiefly, Gregor Strasser, as I said yesterday, who arranged my

first meeting with Hitler. Not until much later, in Berlin, did I meet

Hermann Göring. Apart from them I had very few acquaintances in the

Party at that time and played no role in it myself.

DR. SAUTER: When you met Hitler what impression did he make on you at

that time? I should like to say beforehand, you were at that time—1931,

I think—a mature man of over forty. What impression did you have at

that time of Hitler’s personality and aims, _et cetera_?

FUNK: My first conversation with Adolf Hitler was very reserved. That

was not surprising as I came from a world which was entirely strange to

him. I immediately received the impression of an exceptional

personality. He grasped all problems with lightning speed and knew how

to present them very impressively, with great fluency and highly

expressive gestures. He had the habit of then becoming absorbed in the

problems, in long monologues, so to speak, in this way lifting the

problems to a higher sphere. At that time I explained to him my economic

ideas and told him especially that I upheld the idea of private

property, which for me was the fundamental tenet of my economic policy

and which was inseparable from the concept of the varying potentialities

of human beings. He, himself, heartily concurred with me and said that

his theory of economics was also based on selectivity, that is, the

principle of individual productivity and the creative personality; and

he was very glad that I wanted to work on those lines in the Party and

to arrange contacts and support for him in the economic field—which I

actually did. In the meantime, however, my relations with the Führer

became no closer then, because he said to me himself, “I cannot, at

present, commit myself to an economic policy; and the views expressed by

my economic theorists, such as Herr Gottfried Feder, are not necessarily

my own.”

The economic policy section which existed at that time was directed by a

Dr. Wagner.

DR. SAUTER: The economic policy section of what? Of the Reich Party

Directorate?

FUNK: The economic policy section of the Reich Party Directorate was

directed by a certain Dr. Wagner. I was not invited to political talks.

A close connection with the Führer—or a closer connection with the

Führer—I really had only in the year 1933 and the first half of 1934,

when, as press chief of the Reich Government, I reported to him

regularly. At that time it once even happened that he suddenly

interrupted the press conference, went into the music room with me, and

made me play the piano for him.

Then our relations became a little cooler again, and when I became

Minister of Economics the Führer kept me more and more at a

distance—whether he had special reasons for this, as Lammers testified

here, I do not know. During my office as Minister, I was called in by

the Führer for consultations perhaps four times—five at the most. But

he really did not need me because his economic directives were given to

the Reich Marshal, the responsible head of economic affairs, and later,

from 1942 on, to Speer, since armament dominated the entire economy;

and, as I said, I had close connections with him only in 1933 and in the

first half of 1934 until the death of Reich President Von Hindenburg.

DR. SAUTER: Dr. Funk, you have got a long way ahead. We would like to

return now to 1931 or 1932, to the time when you entered the Party. When

was that?

FUNK: In the summer of 1931.

DR. SAUTER: The summer of 1931. You have already told the Court that you

did not object to the Leadership Principle for the reasons you have

stated.

FUNK: No, on the contrary, the Leadership Principle was absolutely

necessary.

DR. SAUTER: On the contrary, you considered the Leadership Principle

necessary for the period of emergency that then obtained. Now, I would

be interested in knowing: There were other points of view, of course,

also represented in the Party program which worked out unfavorably later

on and have, in the course of this Trial, been used extensively against

the defendants. I point out one example, for instance, the slogan of

“Lebensraum”; you have heard it again and again during this Trial. The

Defendant Dr. Schacht dealt with this problem also. Perhaps you can give

us briefly your own position on this problem and on this question?

FUNK: The problem of living (Lebensproblem) is no slogan; and the

problem of living was really a problem for the German people at that

time. By “Lebensproblem”...

DR. SAUTER: You mean “Lebensraum”?

FUNK: ...or “Lebensraum”—I did not mean the conquest of foreign

countries at that time; the thought of war was just as strange to me as

it was probably to most other Germans. By “Lebensraum” I meant the

opening up of the world for the vital interests of Germany, that is, the

participation of the German people in the profitable utilization of the

world’s goods of which there was a superabundance.

Whether that was to be done by colonies, or concessions, or

international trade agreements, I did not trouble to find out at that

time.

The expansion of Germany in the world economy before the first World War

was the decisive factor which determined me to become an economic

journalist. The participation of Germany in the Rumanian petroleum

industry, the concession of the Bagdad Railway, the growing German

influence in South America, in China, generally in the Far East—all

this inspired me very much. At that time already I became acquainted

with such men as Franz Günther of the Discount Bank, Arthur Von Gwinner

of the Deutsche Bank, Karl Helferich, the big Hamburg importer,

Witthöft, and many other German economic pioneers, and started on my

profession with all the enthusiasm of the young journalist.

“Lebensraum” was thus for me at that time the fulfilling of these

economic claims, that is, Germany’s participation in the world’s goods

and the abolition of the restraints which hemmed us in on all sides. It

was sheer nonsense that Germany on her part should have to pay

reparations and debts while the creditor nations on their part refused

to accept payment in the only form possible, that is, payment in goods

and products.

That period marked the beginning of a great wave of protective tariffs

in the world. I recall the American economic policy at that time; I

recall the Ottawa agreements, and this mistaken economic policy led to a

world economic crisis in 1929 and 1930 by which Germany also was badly

hit.

DR. SAUTER: Dr. Funk, have you finished? [_The defendant nodded

assent._]

Dr. Funk, the Prosecution in their trial brief have contended that you

participated in the formulation of the Nazi program. What can you tell

us about that?

FUNK: I do not know what the Prosecution understands by Nazi program.

DR. SAUTER: I think—the Party program.

FUNK: That is quite impossible. The Party program, as far as I know, was

formulated in 1921. At that time I did not know anything about National

Socialism or of Adolf Hitler.

DR. SAUTER: Witness, the Prosecution has further accused you of setting

up the so-called reconstruction program, the economic reconstruction

program of 1932, that is, a program for the rehabilitation of German

economic life. Is it correct that you established this economic

reconstruction program?

FUNK: In 1932 I compiled for a speech by Gregor Strasser some points for

an economic program which Strasser himself marked as originating from

me. He passed these on to the various Party offices as instructions and

propaganda matter.

This economic reconstruction program, which in the words of the

Prosecution was to become the economic bible for the Party organizers,

is, I believe, in no way revolutionary or even sensational; and it

could, I believe, be adopted and accepted by every democratic

government. I believe it is pointed out in a book from which the

Prosecution has taken various bits of information.