Archive/File: imt/tgmwc/tgmwc-13/tgmwc-13-119.12
Last-Modified: 2000/02/13

Q. And your purpose in maintaining foreign trade was to
obtain enough foreign exchange to permit the imports of raw
materials, not manufactured, which were required for the
rearmament programme. Is that not correct?

A. That is the question that is put to me. Now comes the
answer. Please, will you read the answer?

Q. What is your answer now?

A. My answer today is that that was not the only aim.

Q. Not the only aim?

A. Right.

Q. But that was the primary aim, was it not?

A. No, not at all.

Q. All right, what was the other aim?

A. To keep Germany alive, to assure employment for Germany,
to obtain sufficient food for Germany.

Q. Which was your dominant aim?

A. The food supply in Germany and work for the export
industry.

Q. Well, I should like to go over one or two of these
documents with you as to your aim. I refer to Document 1168-
PS of 3rd May, 1935.

A. Yes.

Q. Title "Financing of Armament," Exhibit 37.

  "The following comments are based on the assumption that
  the completion of the armament programme in regard to
  speed and extent is the task of German Policy, and that
  accordingly everything else must be subordinated to this
  aim, in so far as this main goal is not endangered by
  neglecting other questions."

Did you write that?

A. Not only did I write it, but I handed it to Hitler
personally. It is one of twin documents, one of which has
already been submitted in evidence and discussed in detail
by the prosecution. I did not receive the second document.

When my defence counsel examined me, I stated here that I
was intent on stopping the Party collections and Party
moneys, which were extracted everywhere from the German
people, because it was extremely difficult for me to get the
money to finance the armament programme and the MEFO bills.

                                                   [Page 45]

I could only get that point across to Hitler if I told him
that, of course, this was being done in the interests of
armament. If I had told him that this was done -

Q. Yes, but -

A. No, please let me finish. If I had told him that this was
done in the interest of building theatres, or something
similar, it would have made no impression on him. However,
if I said to him it must be done because otherwise we could
not arm, that was a point which influenced Hitler, and that
is why I said it, I admitted that and explained it during
the examination by my counsel.

Q. And you didn't call that misleading him?

A. I would not call it "misleading"; I would call it
"leading."

Q. But leading, without telling him the true motives which
were actuating you, at least.

A. I think you can be much more successful in leading a
person if you don't tell him the truth than if you do tell
him the truth.

Q. I am very glad to have that frank statement of your
philosophy, Dr. Schacht. I am greatly indebted to you. Well,
you devised all kinds of plans, one for the control of
foreign exchange, blocked foreign accounts, and 'MEFO bills'
method was one of the principal ones of your devices for
financing, was it not?

A. Yes.

Q. Now, I don't care about the details of MEFO bills, but I
would like to ask you this. Isn't it correct, as you
testified on the inquiry of 16th October, 1945 - Exhibit USA
636 - as follows?

  "Question: Actually, as a matter of fact, let me ask you
  this. At the time when you started the MEFO bills, for
  example, there were no ready means available for
  financing the rearmament?
  
  "Answer: Quite.
  
  "Question: That is to say, through normal budget finance
  methods?
  
  "Answer: Not enough.
  
  "Question: Also, you were limited at that time by the
  statute of the Reichsbank which did not permit you to
  give anything near the sufficient credit which was
  required by the armament programme?
  
  "Answer: Quite.
  
  "Question: And you found a way?
  
  "Answer: Yes.
  
  "Question: And the way you found was by creating a device
  which, in effect, enabled the Reichsbank to lend, by a
  subterfuge, to the Government what it normally or legally
  could not do?
  
  "Answer: Right."

Q. Is that true?

A. That was my answer.

Q. The following questions were then asked:-

  "I understand that, with reference to the building up in
  Germany of an armament industry, the creating of a
  domestic economy that was sound, and a Wehrmacht, the
  efforts that you put in from 1934 to the spring of 1938,
  when MEFO financing stopped, were responsible in large
  part for the success of the whole programme."
  
  "Answer: I don't know whether they were responsible for
  it, but I helped a great deal to achieve that."

A. Yes.

Q. And you were asked as follows, on the 17th of October,
1945:-

  "In other words, in effect you are not taking the
  position that you are not largely responsible for the
  rearming of the German Army.
  
  "Answer: Oh, no, I never did that.
  
  "Question: You have always been proud of that fact, I
  take it?
  
  "Answer: I wouldn't say proud, but satisfied."

                                                   [Page 46]

Q. Is that still your position?

A. In reply to that I should like to say: The question of
MEFO bills was quite certainly a system of finance which
normally would never have been attempted. I made a detailed
statement on this subject when I was questioned by my
counsel. On the other hand, however, I can say that this
question was examined by all legal experts in the Reichsbank
and use of this subterfuge, as you put it, proved to be a
way which was legally possible.

Q. No. I didn't put it that way; you said so.

A. No. I mean the sentence you quoted as being my answer. I
beg your pardon. The matter was investigated from a legal
viewpoint, and we assured ourselves that it could be done in
this way. Moreover, I am still satisfied today that I
contributed to the armament, but I wish that Hitler had made
different use of it.

Q. Well, on your 60th birthday, Minister of War Blomberg
said that, "Without your help, my dear Herr Schacht, there
could have been no rearmament." Did he not?

A. Yes, those are the sort of pleasantries which one
exchanges on such occasions. But there is quite a bit of
truth in it. I have never denied it.

Q. That is the way it looks to me.

Now, when you finally made some suggestion that the armament
should stop, or slow up, as I understand, you made that
suggestion without knowing what the armament was.

A. Yes.

Q. The only thing you were judging it by was financial
conditions, was it not?

A. Oh no.

Q. Well, what was it?

A. I did, of course, have a general impression of these
matters because General Thomas always discussed them with
me. However, I do not remember that General von Blomberg
gave me detailed information about what he thought. Of
course, in general, I was informed regarding the progress
made in the armament programme, and that is why I said "more
slowly." My opinion was strengthened because of the general
conditions.

Q. Well now, let's see what reasons you gave in Document 286-
EC. That is Exhibit USA 833.

  "I am therefore of the opinion that we should promote our
  export with all resources by a temporary" - and I
  emphasize the word "temporary decrease of armament."

A. Decrease?

Q. Decrease, yes, temporary.

A. Yes.

Q. I emphasize "temporary" and you emphasize "decreased."

A. Oh no, no; I agree with you.

  Q. "And that further, with reference to the Four-Year
  Plan, we should solve only those problems which appear
  most pressing. Among these I include the gasoline
  programme, the buna programme, and the programme of
  developing ore resources, in so far as this development
  does not, of itself, require large amounts of raw
  materials which must be withheld from export. On the
  other hand, all other measures of the Four-Year Plan
  should be postponed for the time being. I am convinced
  that by such a policy our exports could be increased so
  greatly that there would be a certain improvement in our
  exhausted stock position; and that the resumption of
  armament building would again be possible, in the not too
  distant future, from the point of view of raw materials.
  I am unable to judge to what extent a temporary
  postponement of armament development would have military
  advantages. However, I presume that such a pause in
  armament building would not only have advantages for the
  training of officers and men, which has yet
  
                                                   [Page 47]
  
  to be done, but that this pause would afford an
  opportunity to survey the technical results of previous
  armament efforts and to effect improvements in the
  technical field of armament."

Now that you addressed to Goering, did you not?

A. That is perfectly possible. I can't remember the letter,
but it looks quite like one of mine.

Q. Yes, and you were correctly giving to Goering your true
views, were you not?

A. No; I believe that this was merely a tactical letter. I
think that I was mainly trying to limit armament. If I had
told him that we wanted to stop arming, Goering would
probably have denounced me to the Fuehrer. Therefore I told
him, "Let's stop for the time being," "temporary." I also
emphasized "temporary." It was a tactical measure to
convince Goering that for the time being it should be
temporary.

Q. Then, with your fellow officers in the Government you
were also using tactical statements which did not represent
your true views?

A. That was absolutely necessary.

Q. When did it cease to be necessary, Dr. Schacht?

A. Cease?

Q. Yes; when did it cease to be necessary?

A. I think it more important that you should ask when it
"commenced"; when it started.

Q. Well?

A. During the first years I did not do it, but later on, to
a considerable extent. I could say truly, it never stopped.

Q. Has it stopped now?

A. I have no more colleagues, and here before this Tribunal
I have nothing to tell but the truth.

Q. Well, on the 24th of September, 1935 - December - you
wrote, Document 293-EC, which is Exhibit USA 834, and used
this language, did you not?

   "If there is now a demand for greater armament, it is,
   of course, not my intention to deny or change my
   attitude in favour of the greatest possible armament,
   which I have expressed for years, both before and since
   the seizure of power; but it is my duty to point out the
   economic limitations of this policy."

A. That is very good.

Q. And that is true?

A. Surely.

Q. Now, there came in the Four-Year Plan in 1936?

A. Yes.

Q. You did not like the appointment of Goering to that
position?

A. I thought he was unsuited and, of course, it made an
opening for a policy which was opposed to mine. I knew
perfectly well that this was the start of exaggerated
armament, whereas I was in favour of restricted rearmament.

Q. Why do you say that Goering's appointment meant
exaggeration of armament? Can you point to anything that
Goering has said in favour of rearmament that is any more
extreme than the things you have said?

A. Oh yes.

Q. Well, will you do it?

A. Yes, I think if you read the documents on the so-called
"Small Ministerial Council," of the year 1936, and in
particular, of 1938, which you yourself introduced, you will
see at once that the necessity of increased armament was
emphasized. For instance, those of November or October,
1936.

Q. Well, it was also emphasized in your documents, was it
not, throughout?

A. No.

Q. You say that your statements of that sort were merely
tactical.

                                                   [Page 48]

A. No, I beg your pardon. I said arm within the limits of
what is economically possible and reasonable. Goering, if I
may say it again, wanted to go beyond those limits.

Q. That is exactly the point I want to make. Your difference
with Goering over rearmament was entirely a question of what
the economy of Germany would stand, was it not?

A. No. I said that the most important thing was that Germany
should live and have foreign trade, and within those limits
we could arm, that it is out of the question that Germany
should arm for the sake of arming, and thus ruin her
economy.

Q. Well that's the difference between you and Goering, it
was over what the economy would stand, was it not?

A. No, it was a question of the extent of rearmament. The
point is, Mr. Justice Jackson, that German economy paid the
price for Goering's policy. The only question is, was it
reasonable or unreasonable? If I may state it pointedly, I
would say that I considered Goering's economic policy to be
unreasonable and a burden to the German nation, and that it
was most important that rearmament should not be extended,
and that the German nation should have a normal, peace-time
standard.

THE PRESIDENT: The Tribunal will adjourn.
(A recess was taken until Friday, 3rd May, 1946, at 1000
hours.)

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