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                           of the
               International Military Tribunal
                           For The
             Trial of German Major War Criminals

               His Majesty's Stationery Office
                                                  [Page 104]



Schacht is indicted under Counts One and Two of the
Indictment. Schacht served as Commissioner of Currency and
President of the Reichsbank from 1923 to 1930, was
reappointed President of the Bank on 17th March, 1933,
Minister of Economics in August, 1934, and Plenipotentiary
General for War Economy in May, 1935. He resigned from these
two positions in November, 1937, and was appointed Minister
without Portfolio. He was reappointed as President of the
Reichsbank for a one-year term on 16th March, 1937, and for
a 4-year term on 9th March, 1938, but was dismissed on 20th
January, 1939. He was dismissed as Minister without
Portfolio on 22nd January, 1943.

Crimes against Peace

Schacht was an active supporter of the Nazi Party before its
accession to power on 30th January, 1933, and supported the
appointment of Hitler to the post of Chancellor. After that
date he played an important role in the vigorous rearmament
program which was adopted, using the facilities of the
Reichsbank to the fullest extent in the German rearmament
effort. The Reichsbank, in its traditional capacity as
financial agent for the German Government, floated long-term
Government loans, the proceeds of which were used for
rearmament. He devised a system under which five-year notes,
known as Mefo bills, guaranteed by the Reichsbank and
backed, in effect, by nothing more than its position as a
bank of issue, were used to obtain large sums for rearmament
from the short-term money market. As Minister of Economics
and as Plenipotentiary General for War Economy he was active
in organizing the German economy for war. He made detailed
plans for industrial mobilization and the coordination of
the Army with industry in the event of war. He was
particularly concerned with shortages of raw materials and
started a scheme of stock-piling, and a system of exchange
control designed to prevent Germany's weak foreign exchange
position from hindering the acquisition abroad of raw
materials needed for rearmament. On 3rd May, 1935, he sent a
memorandum to Hitler stating that "the accomplishment of the
armament program with speed and in quantity is the problem
of German politics, that everything else therefore should be
subordinated to this purpose."

Schacht, by April, 1936, began to lose his influence as the
central figure in the German rearmament effort when Goering
was appointed Coordinator for Raw Materials and Foreign
Exchange. Goering advocated a greatly expanded program for
the production of synthetic raw materials which was opposed
by Schacht on the ground that the resulting financial strain
might involve inflation. The influence of Schacht suffered
further when, on 16th October, 1936, Goering was appointed
Plenipotentiary for the Four Year Plan with the task of
putting "the entire economy in a state of readiness for war"
within four years. Schacht had opposed the announcement of
this plan and the appointment of Goering to head it, and it
is clear that Hitler's action represented a decision that
Schacht's economic policies were too conservative for the
drastic rearmament policy which Hitler wanted to put into
effect. After Goering's appointment, Schacht and Goering
promptly became embroiled in a series of disputes. Although
there was an element of personal controversy running through
these disputes, Schacht disagreed with Goering on certain
basic policy issues. Schacht, on financial grounds,
advocated a retrenchment in the rearmament program, opposed
as uneconomical much of the proposed expansion of production
facilities, particularly for synthetics, urged a drastic
tightening on Government credit and a cautious policy in
dealing with Germany's foreign exchange reserves. As a
result of this dispute and of a bitter argument in which
Hitler accused Schacht of upsetting his plans by his
financial methods, Schacht went on leave of absence from the
Ministry of Economics on 5th September, 1937, and resigned
as Minister of Economics and as Plenipotentiary General for
War Economy on 16th November, 1937.

As President of the Reichsbank Schacht was still involved in
disputes. Throughout 1938 the Reichsbank continued to
function as the financial agent for the German Government in
floating long-term. loans to finance armaments. But in
March, 1938, Schacht discontinued the practice of floating
short-term notes guaranteed by the Reichsbank for armament
expenditures. At the end of 1938, in an attempt to regain
control of fiscal policy through the Reichsbank, Schacht
refused an urgent request of the Reichsminister of Finance
for a special credit to pay the salaries of civil servants
which were not covered by existing funds. On 2nd January,
1939, Schacht held a conference with Hitler at which he
urged him to reduce expenditures for armaments. On 7th
January, 1939, Schacht submitted to Hitler a report signed
by the Directors of the Reichsbank which urged a drastic
curtailment of armament expenditures and a balanced budget
as the only method of preventing inflation. On 19 January
Hitler dismissed Schacht as President of the Reichsbank. On
22nd January, 1943, Hitler dismissed Schacht as
Reichsminister without Portfolio, because of his "whole
attitude during the present fateful fight of the German
Nation." On 23rd July, 1944, Schacht was arrested by the
Gestapo and confined in a concentration camp until the end
of the war.

It is clear that Schacht was a central figure in Germany's
rearmament program, and the steps which he took,
particularly in the early days of the Nazi regime, were
responsible for Nazi Germany's rapid rise as a military
power. But rearmament of itself is not criminal under the
Charter. To be a Crime against Peace under Article 6 of the
Charter it must be shown that Schacht carried out this
rearmament as part of the Nazi plans to wage aggressive

Schacht has contended that he participated in the rearmament
program only because he wanted to build up a strong and
independent Germany which would carry out a foreign policy
which would command respect on an equal basis with other
European countries; that when he discovered that the Nazis
were rearming for aggressive purposes he attempted to slow
down the speed of rearmament; and that after the dismissal
of Von Fritsch and Von Blomberg he participated in plans to
get rid of Hitler, first by deposing him and later by

Schacht, as early as 1936, began to advocate a limitation of
the rearmament program for financial reasons. Had the
policies advocated by him been put into effect, Germany
would not have been prepared for a general European war.
Insistence on his policies led to his eventual dismissal
from all positions of economic significance in Germany. On
the other hand, Schacht, with his intimate knowledge of
German finance, was in a peculiarly good position to
understand the true significance of Hitler's frantic
rearmament, and to realize that the economic policy adopted
was consistent only with war as its object.

Moreover Schacht continued to participate in German economic
life and even, in a minor way, in some of the early Nazi
aggressions. Prior to the occupation of Austria he set a
rate of exchange between the mark and the schilling. After
the occupation of Austria he arranged for the incorporation
of the Austrian National Bank into the Reichsbank and made a
violently pro-Nazi speech in which he stated that the
Reichsbank would always be Nazi as long as he was connected
with it, praised Hitler, defended the occupation of Austria,
scoffed at objections to the way it was carried out, and
ended with "to our Fuehrer a triple 'Sieg Heil'." He has not
contended that this speech did not represent his state of
mind at the time. After the occupation of the Sudetenland,
he arranged for currency conversion and for the
incorporation into the Reichsbank of local Czech banks of
issue. On 29th November, 1938, he made a speech in which he
pointed with pride to his economic policy which had created
the high degree of German armament, and added that this
armament had made Germany's foreign policy possible.

Schacht was not involved in the planning of any of the
specific wars of aggression charged in Count Two. His
participation in the occupation of Austria and the
Sudetenland (neither of which are charged as aggressive
wars) was on such a limited basis that it does not amount to
participation in the common plan charged in Count One. He
was clearly not one of the inner circle around Hitler which
was most closely involved with this common plan. He was
regarded by this group with undisguised hostility. The
testimony of Speer shows that Schacht's arrest on 23rd July,
1944, was based as much on Hitler's enmity towards Schacht
growing out of his attitude before the war as it was on
suspicion of his complicity in the bomb plot. The case
against Schacht therefore depends on the inference that
Schacht did in fact know of the Nazi aggressive plans.

On this all-important question evidence has been given for
the Prosecution, and a considerable volume of evidence for
the Defense. The Tribunal has considered the whole of this
evidence with great care, and comes to the conclusion that
this necessary inference has not been established beyond a
reasonable doubt.

The Tribunal finds that Schacht is not guilty on this
Indictment, and directs that he shall be discharged by the
Marshal when the Tribunal presently adjourns.

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