Archive/File: imt/tgmwc/tgmwc-04/tgmwc-04-31.10
Last-Modified: 1999/09/25

On these points, I ask the Tribunal to take judicial notice
of the Reichsgesetzblatt, 1933, Part 11, Page 827;
Reichsgesetzblatt, 1934, Part 1, Page 1203;
Reichsgesetzblatt, 1934, Part 1, Page 295; and
Reichsgesetzblatt, 1935, Part 1, Page 198.

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

LIEUTENANT BRYSON: They are not in the document book, Sir.

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

These measures enabled Schacht to embark upon what he
himself has termed a "daring credit policy," including the
secret financing of a vast amount of armaments through the
so-called 'Mefo' Bill (Page 136, Part 1). I offer in
evidence Document EC-436, Exhibit USA 620, consisting of a
statement, dated 2nd November, 1945, by Emil Puhl, a
director of the Reichsbank during Schacht's presidency, and
quote the second paragraph thereof as follows:

"In the early part of 1935, the need for financing an
accelerated rearmament programme arose. Dr. Schacht,
President of the Reichsbank, after considering various
techniques of financing, proposed the use of 'Mefo' Bills,
to provide a substantial portion of the funds needed for the
rearmament programme. This method had as one of its primary
advantages the fact that secrecy would be possible during
the first years of the rearmament programme, and figures
indicating the extent of rearmament, that would have become
public through the use of other methods, could be kept
secret through the use of 'Mefo' Bills."

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

"The development of the Reich debt is as follows: As of 31st
December, 1932, Funded Debt: 10.4 billions of Reichsmark.
Current Debt: 2.1 billions of Reichsmark. Debt (not
subscribed to by public, that is, trade and 'Mefo' Bills of
Exchange): 0.

As of 30th June, 1938, Funded Debt: 19 million Reichsmark.
Current Debt: 5 million Reichsmark. Debt (not subscribed to
by public, that is, trade and 'Mefo' Bills of Exchange):
13.3 billion Reichsmark.

Total, as of 31st December, 1932: 12.5 billion Reichsmark;
as of 30th June, 1938: 35.8 billion Reichsmark."

The Reich debt thus tripled -

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

LIEUTENANT BRYSON:

   "Provisions were made to cover the armament expenditures
   for the year 1938 (the same amount as in 1937) as
   follows:
   "Five billions from the budget, that is, taxes; 4
   billions from loans; 2 billions from six months treasury
   notes, which means postponement of payment until 1939;
   total: 11 billions."

The Reich debt thus tripled under Schacht's management. More
than one-third of the total was financed secretly and
through the instrumentality of the Reichsbank by "Mefo" and
trade bills. It is clear that this amount

                                                  [Page 176]

of financing outside the normal public issues represented
armament debt. I read further from Document EC-436, at the
beginning of the last long paragraph:

   "These 'Mefo' bills were used exclusively for financing
   rearmament, and when in March, 1938, a new finance
   programme discontinuing the use of 'Mefo' bills was
   announced by Dr. Schacht, there was a total volume
   outstanding of 12 billion Marks of 'Mefo' bills which
   had been issued to finance rearmament."

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

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

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

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

He acquired great power over industry as a result of the
Nazi reorganisation of German industry along military lines,
and in accordance with the so-called "Leadership Principle."
On this point I refer the Tribunal to the transcript for
23rd November (Pages 132-4, Part 1) and to
Reichsgesetzblatt, 1934, Part 1, Page 1194, of which the
Tribunal is asked to take judicial notice.

Schacht also exercised broad powers as a member of the Reich
Defence Council, which was secretly established on 4th
April, 1933, and the function of which was preparation for
war. The Tribunal is referred to the transcript for 23rd
November (Page 134, Part 1). I also offer in evidence as
Document EC-128, Exhibit U.S.A. 623, a report under date of
30th September, 1934, showing the functions of the Ministry
of Economics in this respect. The report reveals
concentration upon all the familiar war-time economic
problems, including stockpiling, production of scarce goods,
removal of industry to secure areas, fuel and power supply
for war production, machine tools, control of war-time
priorities, rationing, price control, civilian supply, and
so on. I wish to read into the record merely an excerpt
showing the jurisdiction of the Ministry of Economics,
beginning near the top of Page 2 of EC-128:

   "With the establishment of the Reich Defence Council and
   its permanent committee, the Reich Ministry of Economics
   has been given the task of making economic preparation
   for the conduct of the war. There should really be no
   need to explain the tremendous significance of this
   task. Everyone remembers how terribly the lack of any
   economic preparation for war hit us during the world
   war."

Finally, in 1934, Schacht acquired sweeping powers under
legislation which authorised him, as Minister of Economics,
to take any measure deemed necessary for the development of
the German economy. In this connection reference is made to
Reichsgesetzblatt, 1934, Part 1, Page 565, of which the
Tribunal is asked to take judicial notice.

The so-called "New Plan," devised by Schacht, was announced
in the fall of 1934 shortly after he became Minister of
Economics. In this connection the Tribunal is referred to
Reichsgesetzblatt, 1934, Part 1, Page 816, and 1935, Part 1,
Page 105, with the request that judicial notice be taken
thereof. The New Plan was Schacht's basic programme for
obtaining the necessary foreign-produced raw materials and
foreign exchange required to sustain the rearmament
programme.

                                                  [Page 177]

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

THE PRESIDENT: And German ones supplied, too.

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

THE PRESIDENT: Yes.

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

The Tribunal is also asked to take judicial notice of
Reichsgesetzblatt, 1934, Page 997; Reichsgesetzblatt, 1933,
Part 1, Page 349, and Reichsgesetzblatt, 1937, Part 1, Page
600, relating to the Clearing Bank, the Conversion Bank, and
the maturity of Foreign Loans, all of which decrees are
mentioned in the affidavit.

Schacht even went so far as to invest foreign-held
Reichsmark on deposit in German banks in rearmament notes,
thus, as he put it, financing rearmament with the assets of
his political opponents. Without reading therefrom, I refer
your Honour to Document 1168-PS, Exhibit USA 37, being a
memorandum from Schacht to Hitler, dated 3rd May, 1935,
which already appears in the transcript (Pages 187-8, Part
1). Moreover, Schacht even resorted to capital punishment to
prevent the loss of foreign exchange when frightened
capitalists began to flee from the country. In this
connection reference is made to the Law Against Economic
Sabotage, found in 1936 Reichsgesetzblatt, Part 1, Page 999,
of which the Tribunal is asked to take judicial notice.

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

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

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

He received this appointment from Hitler pursuant to the
unpublished Reich Defence Law, secretly enacted on 21st May,
1935. This law is in evidence as 2261-PS, Exhibit USA 24,
consisting of a letter from von Blomberg, dated 24th June,
1935, to the Chiefs of the Army, Navy and Air Forces,
together

                                                  [Page 178]

with copies of the Reich Defence Law and the Cabinet's
memorandum relating thereto Pertinent comments on and
excerpts from this document appear in the transcript for
23rd November (Pages 128 and 134, Part 1). I will simply
state, therefore, that by virtue of this appointment,
Schacht was put in complete charge of economic planning and
preparation for war in peace-time - except for certain
direct armament production under control of the War
Ministry. Upon the outbreak of war, he was to be the
economic Czar of Germany, with complete control over the
activities of a number of key Reich industries.

Schacht appointed Wohltat as his deputy and organised a
staff to carry out his directives. In this connection I
offer in evidence excerpts from a pre-trial interrogation of
Schacht under date 17th October, 1945. This document is
Exhibit USA 616. I wish to read into the record a question
and answer found at the bottom of Page 40 of the document:

   "Q. Let me ask you a general question, then: Do you take
   the responsibility as Plenipotentiary for War Economy
   for the writings that were made and the actions that
   were done by Wohltat and his assistants?
   
   A. I have to."

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

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

LIEUTENANT BRYSON: Well, if your Honour pleases, in any
event I did not plan to read from the document at this time,
and defence counsel have the German original.

THE PRESIDENT: I was not speaking of the defence counsel so
much as of the members of the Tribunal.

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

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

LIEUTENANT BRYSON: I would not like to say precisely, Sir,
but perhaps within four or five days.

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

LIEUTENANT BRYSON: It is, and it shows -

THE PRESIDENT: Were you proposing to summarise it?

LIEUTENANT BRYSON: I was proposing to summarise it, Sir,
now.

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

LIEUTENANT BRYSON: I will summarise it now, Sir.

This document discloses that before his resignation -

THE PRESIDENT: Will it take long to summarise?

LIEUTENANT BRYSON: Not very long, Sir, no.

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

                                                  [Page 179]

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

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

That concludes the summary, your Honour.

THE PRESIDENT: We will adjourn now.

(The Tribunal adjourned until the 11th January, 1946, at
10.00 hours.)

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