[Page 175]

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 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 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."

[Page 176]

"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."

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."

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."

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]

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."

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]

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."

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]

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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