Archive/File: imt/tgmwc/tgmwc-13/tgmwc-13-121.01
Last-Modified: 2000/02/16

                                                   [Page 99]

HUNDRED AND TWENTY-FIRST DAY

SATURDAY, 4th MAY, 1946

DR. SAUTER (for the defendant Funk): Mr. President, may I
continue the examination of the defendant Funk?

WALTER EMANUEL FUNK - Resumed.

DIRECT EXAMINATION - Continued.

BY DR. SAUTER:

Q. Dr. Funk, yesterday you gave us a brief account of your
life, told us that you are fifty-six years of age, that you
have been married for twenty-five years, that you were
Editor of the Berliner Boersenzeitung for ten 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
Tribunal.

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.

A. 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
large sums were transferred to foreign countries without
receiving any equivalent in return. As a result, there was a
tremendous surplus of Reichsmarks abroad. It led to
inflation in Germany, and the countries with stable
currencies bought Germany out. German industry piled up a
heavy debt and consequently came under foreign control for a
time. German agriculture also showed a balance on the wrong
side. There was complete poverty among the middle classes,
who were the chief representatives of German culture. 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 forty per
cent. of the seats in the Reichstag; the people flocked to
this Party in ever-increasing millions, especially the young
people, fired with idealism and drawn by the fascinating
personality, of the Fuehrer as though by a giant magnet. The
economic programme of the Party itself was vague; and in my
opinion it was drawn up mainly with an eye to 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 establish myself independently as the head of
an economic and political Press service which went to the
most widely differing economic circles tending towards the
German National Party, the People's Party and even the
Democrats.

                                                  [Page 100]

Q. 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, only
a part of the world crisis. Did you at that time ever
reflect as to whether the leadership principle
(Fuehrerprinzip) - which was later developed to an
increasing extent - whether this leadership principle could
be made to harmonise 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?

A. As to a government principle, that is, a Fuehrerprinzip,
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 usually bought.
Therefore, another principle had to be made the dominant
one; and in an authoritarian government, if those who bear
authority and responsibility are reliable, then the
government also is reliable. 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.

Q. Dr. Funk, you have just been speaking of the personality
of Hitler. Through whom did you meet Hitler? - that is, who
were the Party figures through whom you were first won over
to the Party?

A. Chiefly, Gregor Strasser, as I said yesterday, who
arranged my first meeting with Hitler. Not until much later,
in Berlin, did I meet Hermann Goering. Apart from them, I
had very few acquaintances in the Party at that time and
played no role in it myself.

Q. When you met Hitler, what impression did he make on you
at that time? I should like to say one thing first. You were
at that time - 193I, I think - a mature man of over forty.
What impression did you have at that time of Hitler's
personality, aims, etc.?

A. 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
every problem with lightning speed and knew how to present
it very impressively, with great fluency and highly
expressive gestures. He had the habit of then becoming
absorbed in the problem, in long monologues, so to speak, in
this way lifting the problem to a different sphere. At that
time I explained to him my economic ideas and told him
especially that I based my views on the concept of private
property, which for me was the fundamental tenet of my
economic theories, and which was inseparable from the
concept of the varying productive power 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 act 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 Fuehrer 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."

                                                  [Page 101]

The economic policy section which existed at that time was
directed by a Dr. Wagner.

Q. The economic policy section of what? Of the central Party
leadership (Reichsleitung der Partei)?

A. The economic policy section of the central Party
leadership was directed by a certain Dr. Wagener. I was not
invited to political talks. A close connection with the
Fuehrer - or a closer connection with the Fuehrer - I really
had only in the year 1933 and the first half of 1934, when,
as Press chief of the Reich Government, I contacted 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 Fuehrer 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 entire
time as Minister, I was called in by the Fuehrer for
consultations perhaps four times - five at the most. But he
really did not need me, because his economic directives were
given to the Reichsmarschall, the responsible head of
economic affairs, and later, from 1942 on, to Speer, since
armament dominated the entire economy; and, as stated, I had
close connections with him only in 1933, and the first half
of 1934 until the death of Reich President von Hindenburg.

Q. 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?

A. In the summer of 1931.

Q. The summer of 1931. You have already told the Tribunal
that for the reasons you have stated, you did not object to
the leadership principle.

A. No, on the contrary, the leadership principle was
absolutely necessary.

Q. On the contrary, you considered the leadership principle
necessary for the period of emergency that then obtained.
Now - I am interested in this - other points of view were,
of course, also represented in the Party programme. These
worked out unfavourably later on and have in the course of
this trial been used extensively against the defendants - I
point out one example - 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 attitude to this problem and to
this question?

A. 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 -

Q. You mean Lebensraum?

A.  - or Lebensraum - I did not mean at that time the
conquest of foreign countries the thought of war was
entirely strange to me, as it was 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 through 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 Baghdad Railway, the growing German influence in
South America, in China, altogether in East Asia - all this
interested me very much. At that time I met Franz Gunther of
the Discount Bank (Diskontogesellschaft), Arthur von Gwinner
of the German Bank (Deutsche Bank), Karl Helfferich, the big
Hamburg importer Withoften, and many other German economic
pioneers, and worked at my profession with all the
enthusiasm of the young journalist.

Lebensraum was thus for me at that time the fulfilling of
these economic claims, Germany's participation in the goods
of the world and the abolition of the restraints which
hemmed us in on all sides. It was absolute nonsense that
Germany on her

                                                  [Page 102]

part should have to pay reparations debts while the creditor
nations for their part refused to accept payment in the only
form possible, that is, in goods and products.

That period marked the beginning of a great wave of
protective tariffs in the world. I recall American economic
policy and the Ottawa agreements, and this mistaken economic
policy led in 1929 and 1930 to a world economic crisis by
which Germany also was hardly hit.

Q. Dr. Funk, have you finished?

(Witness nodded.)

Dr. Funk, the prosecution in their trial brief have
contended that you participated in the formulation of the
Nazi programme. What can you tell us about that?

A. I do not know what the prosecution understands by the
Nazi programme.

Q. I think - the Party programme.

A. That is completely impossible. The Party programme, as
far as I know, was formulated in 1921. At that time I did
not know anything about National Socialism or Adolf Hitler.

Q. Defendant, the prosecution has further accused you of
setting up the so-called reconstruction programme, the
economic reconstruction programme of 1932, that is a
programme for the rehabilitation of German economic life. Is
it correct that you established this economic reconstruction
programme?

A. In 1932 I put together a few points of the economic
programme for a speech by Gregor Strasser, and he himself
handed them on to the various Party officers as instruction
and speech material, indicating that they came from me.

This economic reconstruction programme, which in the words
of the prosecution was to become the economic Bible for the
Party organisers 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 this is
pointed out in a book from which the prosecution has taken
various pieces of information.

Q. Yes, it is presented, defendant, in the book by Dr. Paul
Ostreich which has been repeatedly quoted. This book
contains your biography under the title "Walter Funk, A Life
for Economy," and has been used by the prosecution under
Document 3505-PS, Exhibit USA 653.

Dr. Funk, I have the text of this programme before me.

A. Please read it.

Q. The whole programme only covers half a page, and in the
main sets forth really nothing which might be considered as
characteristic of National Socialist trends of thought?

A. Of course, at that time I was not a National Socialist
or, at least, only a very new member.

Q. This economic reconstruction programme must he actually
read in order to convince oneself how little it contains of
the characteristic National Socialist demands. This is a
programme which Funk says might be accepted by almost any
liberal or democratic or other bourgeois party. The
programme is called "Direct creation of employment through
new State and private investment." That is the first demand.
Then the providing of credit for production by the
Reichsbank, but no inflation, rather the re-establishment of
a sound currency, and a sound financial and credit economy
to promote production.

General lowering of rates of interest, paying attention to
individual circumstances of the economic system. Creation of
a foreign trade office and a central foreign exchange
office. Reorganisation of economic relations with foreign
countries, giving preference to the vital necessities of the
domestic market but with special attention to the export
trade absolutely necessary for Germany. Restoration of sound
public finances including public insurances. Abandonment of
impracticable methods in State protection for agriculture.

Reorganisation of the system of house and land ownership in
accordance with the principles of productivity and national
health.

                                                  [Page 103]

Expansion of the German raw material basis, the
establishment of new national industries and businesses,
organization of manufactories on the basis of technical
innovations.

That is all that comprised this so-called economic
reconstruction programme.

A. This programme was to be, as the prosecution has said,
the official Party statement on economic matters. I would
have been glad if the Party had professed these principles.
In later years I actually had great difficulties with
various Party offices, in connection with their basic
attitude on economic policy. I was always considered, even
in Party circles, as a liberal and an outsider.

Q. A liberal?

A. Yes. I fought against all tendencies towards collectivism
for this reason, and I constantly came into conflict with
the Labour Front. I was supported, especially in my views on
the system of private property by Reichsmarschall Hermann
Goering. Even during the war, he had parts of the Hermann
Goering Works denationalised at my suggestion. I was an
opponent of a nationalised economy because a nationalised
economy will always produce only average results.
Nationalised economy means sterile economy. An economy which
lacks the element of individual competition and initiative
will be sterile and will achieve no more than average
results. The Fuehrer at first always agreed enthusiastically
with these principles of mine. It was a great disappointment
to me when finally in the last years the Fuehrer turned so
sharply against the bourgeois world, for that meant that the
whole of my life's work had failed.

THE PRESIDENT: Dr. Sauter, the Tribunal thinks he might get
on to something more important than his view on state
economy and private enterprise.

DR. SAUTER: Yes, Mr. President.

BY DR. SAUTER:

Q. Dr. Funk, you knew that it was precisely on account of
the big problem of unemployment at the time that Hitler was
able to grasp power. What plans did you have for the
elimination of unemployment, especially since you knew that
that precise promise -

THE PRESIDENT: Dr. Sauter, we have heard nearly all the
defendants on the conditions which obtained in Germany at
that time. And there is no charge against these defendants
for German economy between the years 1933 and 1939.

DR. SAUTER: Mr. President, I wanted to ask the defendant,
Dr. Funk, just how he thought that unemployment could be
abolished; for from the testimony of other defendants, I
gathered that they planned to eliminate it by other means,
such as rearmament, and so forth. With him, as far as I
know, this was not the case and I think that in judging the
defendant Funk, the question of how he proposed to handle
the elimination of unemployment, whether through rearmament
or by some other means, is of some importance. I do not
think it will take much time, Mr. President. The defendant
Funk, I am sure, will be very brief.

Perhaps just a sentence or two -

THE PRESIDENT: He can answer that in a sentence, I should
think.

BY DR. SAUTER:

Q. Herr Funk, be as brief as possible.

A. If I am to answer this in one sentence, I can say only
that at that time I viewed the elimination of unemployment
according to a very solid plan, but at any rate without
armament, without armament -

Q. But, instead?

A. By methods which I would have to explain. But in any
event, armament never came into question then -

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