[Page 418]

A. As long as I was President of the Reichsbank - that is to say, from March, 1933 - and I am, of course, only talking about the Hitler regime - my friends and acquaintances abroad were fully informed about my attitude and views. I had many friends and acquaintances abroad, not only because of my profession but also outside of that; and particularly in Basle, Switzerland, where we had our monthly meeting at the International Bank, all the presidents of the issuing banks of all the great and certain neutral countries met, and I always took occasion at all these meetings to describe the situation in Germany to these gentlemen. Perhaps I may at this point refer to the so-called conducting of foreign conferences or conversations. If one is not allowed to talk to foreigners any more, then one cannot, of course, reach an understanding with them. Those silly admonitions, that one had to avoid contact with foreigners, seem entirely uncalled-for to me, and if the witness Gisevius deemed it necessary the other day to protect his dead comrades, who were my comrades too, from being accused of committing high treason, then I should like to say that I consider it quite unnecessary. Never, at any time, did any member of our group betray any German interests. On the contrary, we fought for the interests of Germany, and to prove that, I should like to give you a good example.

After we had occupied Paris, the files of the Quai d'Orsay were confiscated and were carefully scrutinised by officials from the German Foreign Office. I need not assure you that they were primarily looking for proof whether there were not so-called defeatists circles in Germany which had unmasked themselves somewhere abroad. All the files of the Quai d'Orsay referring to my person and, of course, there were records of many discussions which I had had with Frenchmen, were examined by the Foreign Office officials at that time, without my knowing it.

One day - I think it probably happened in the course of 1941 - I received a letter from a German professor who had participated in this search carried out by the Foreign Office. I shall mention the name so that, if necessary, he can testify. He is a Professor of Finance and National Economy, Professor Stueckenbeck of Erlangen, and he wrote me that it this investigation ...

THE PRESIDENT: The Tribunal cannot see any point in this, so far as this trial is concerned. In any event, if the defendant says that he did not in any way give away the interests of Germany, surely that is sufficient. We do not need all the details about it. What it has to do with this trial, I do not know.

DR. DIX: I think, your Lordship, that that was not the point of the state-

[Page 419]

THE PRESIDENT: But he said that five minutes ago.

DR. DIX: I do not think the question of Professor Stueckenbeck is so important, but it certainly seems pertinent to me what Ambassador Davies said about his conversation with the Foreign Commissar of the Soviet Republic, Litvinov. This is contained in Exhibit 18 of my document book. It is Page 43 of the German text, and Page 49 of the English text. May I read one paragraph, and then ask Schacht briefly whether that statement of Ambassador Davies corresponds to his recollection? It is Davies' report - I beg your pardon. It isn't a report; it is an extract from his book "Mission to Moscow." It is a report to the Secretary of State in the United States. The passage is on Pages 108 and 109.

"In accordance with the plans made. I visited Foreign Kommissar Litvinov. Before leaving for the States, I presented my respects to him. I then stated that the European situation in its elementals looked simple, and that it was difficult to understand why the statesmanship of Europe could not provide that England, France, Germany, Italy, and Russia should agree to preserve the territorial integrity of Europe and, through trade agreements, provide Germany with raw materials, thereby giving a guarantee that she could live. They would relieve the peoples of Europe and the world of those terrific burdens of armament and relieve the world of the fear of catastrophic war. The prompt rejoinder coming from Litvinov was: 'Do you think that Hitler would ever agree to anything like that?' I said that I didn't know that, but that in my opinion there was a considerable circle of influential and responsible men in Germany who would understand such a train of thought. Litvinov, the Foreign Kommissar, replied that he thought that this might be the right way and that Schacht was such a man. He did not believe, however, that they could prevail against Hitler and the political and military forces dominant in Germany."

A. I think there must be a mistake. I did not speak to Davies about this I spoke to Litvinov. This is a report of Davies to the Secretary of State, about which I did not know.

Q. Yes, you're perfectly right.

It has been repeatedly emphasised by the prosecution that your knowledge of Hitler's intentions of war resulted also from your being Plenipotentiary for War Economy and a member of the Reich Defence Counsel. Goering has made a detailed statement on it. Have you anything new to add to Goering's statement?

A. I think the witness Lammers has also talked about it. I should like merely to confirm that the first Reich Defence Counsel of 1935 was nothing other than the legal justification of a committee which existed before 1933, made up of ministerial officials who were supposed to deal with economic measures as well as administrative measures, which might have to be taken in the event of a threat of war against Germany.

Q. How often did you have a meeting with the Minister of War and the Plenipotentiary for Administration?

A. This famous triumvirate, this three-man board described by one of the prosecutors as the cornerstone of war policy, never met at all, and it is no wonder that we lost the war, if that was the cornerstone.

Q. The prosecution have also referred to the report of the Ministry of War regarding the task of the Reich Defence Counsel of 1934. It is Document

[Page 420]

A. Yes, I should like to have permission to quote one very brief paragraph. I see there are only two sentences. This report contains the following statement:-

Referring to the first World War and the experiences made during it, that is 1914 to 1918, and I quote - I shall have to do it in English since I only have the English:-

"At that time we were able to extend our bases for raw materials and production towards the West: Longwy, Brie, Tourcoing, Roubaix, Antwerp (textiles), and towards the East (Lodz) and South-east (mines in Serbia and Turkey) (mineral oils in Roumania). Today we have to reckon with the possibility of dealings thrown back in our own country and even of being deprived thereby of most valuable industrial and raw material in the West and in the East."

Q. In that connection, under the heading of "peaceful efforts," can you perhaps tell the Tribunal what your peaceful efforts were, to have the reparations clauses of the Versailles Treaty modified or even abolished?

A. From the very first moment, after the reparations were determined in 1921 or so, I fought against this nonsense with the argument that the carrying out of those reparations would throw the entire world into economic chaos. One cannot, during one generation, pay yearly 120 billions of marks - or about 2 billions of marks, as it would be at that time ...

Q. We would like to make it brief. Will you please talk only about your peaceful efforts and not about national economy?

A. All right, I won't talk about national economy.

I fought against it and, as time went by, I did succeed in convincing the people of almost all the countries that this was sheer nonsense. Therefore in July, if I'm not mistaken, of 1932, the then Reich Chancellor Papen was in a position to put his signature to an agreement at Lausanne, which reduced reparations, de jure, to an approximate sum of three billions, but which, de facto, cancelled reparations altogether.

Q. Did you then continue your definitely peaceful efforts in other fields? You've already touched upon the negotiations in Paris regarding the colonial questions. I wonder if you have anything to add to that in this connection?

A. I don't remember at the moment how far I had gone at the time, but I think I reported on the negotiations in detail, so I need not repeat myself.

Q. George Messersmith, the often-mentioned former Consul General of the United States in Berlin, states in his affidavit, Document EC-451, Exhibit USA-626, to which the prosecution has referred, that he is of the opinion that the National Socialist regime could not have been in a position to remain in power and build up its war machine if it had not been for your activity. At the end of the case for the prosecution, the prosecution presents that thesis of Messersmith. Therefore, I should like you to make a statement on this subject.

A. I don't know whether that completely unsubstantiated private opinion of Mr. Messersmith has any value as evidence. Nevertheless, I should like to contradict it by means of a few figures. I had stated earlier that until 31 March, 1938, the Reichsbank had given twelve billions; that is to say, during the first fiscal year, about two and a quarter billions, and during the subsequent years, three and a quarter billions per annum. During those years - the co- defendant Keitel was asked about that when he was examined

[Page 421]

In the fiscal year 1935-36 - 5 billions.
In the fiscal year 1936-37 - 7 billions.
In the following fiscal year - 9 billions.

And at that stage the assistance from the Reichsbank ceased. In spite of that, during the following year and without any assistance from the Reichsbank, the expenditure for armament increased to eleven billions, and in the following year it climbed to twenty and a half billions.

It appears, therefore, that even without the financial genius of Herr Schacht, they managed to get hold of the cash. Just how they did so is another question.

Q. I duly put these figures to the witness Keitel. I don't think that the Tribunal had the document at the time. It is now available and has the Exhibit number 7. It is Page 15 of the German text and Page 2l of the English text. Herr Keitel could, of course, only refer to the first column, that is to say, total expenditure, but there is a second and a third column, in this balance sheet, and these two columns are calculations made by Schacht, calculations regarding what was accomplished with the help, and without the help of the Reichsbank.

I don't intend to go through it in detail now. I should merely like to have your permission to ask Dr. Schacht whether the figures calculated by him in column 2 and 3 of the document were calculated correctly.

A. I have the copy of the document before me. The figures are absolutely correct and again I want to declare that they show that, during the first year after the Reichsbank had discontinued its assistance, no less than five and a quarter billions more were spent that is to say, a total of eleven billions.

Q. Up to now you have stated to the Tribunal that you were actively against a dangerous and extensive rearmament, and you showed that by tying up the money bag, did you oppose excessive rearmament in any other way, for instance, by giving lectures and such?

A. Many times I spoke not only before economists and professors, who were my main audience but I often spoke upon the invitation of the Minister of War and the head of the Army Academy, before high ranking officers. In all these lectures I continually referred to the financial and economic limitations to which German rearmament was subject and I warned against excessive rearmament.

Q. When did you first gather the impression that the extent of German rearmament was excessive and exaggerated?

A. It is very difficult to give you a date. Beginning in 1935, I made continuous attempts to slow down the speed of rearmament. On one occasion Hitler had said - just a moment, I have it - that until the spring of 1936 the same speed would have to be maintained. I adhered to that as much as possible, although, beginning with the second half of 1935, I continuously applied the brake. But after 1935 I told myself that, since the Fuehrer himself had said it, after the spring of 1936 the same speed would no longer be necessary. This can be seen from Document PS-1301, in which these statements of mine are quoted, statements which I communicated to the so-called Smaller Cabinet Council ("Kleiner Ministerrat"). Goering contradicted me during that meeting, but I of course maintain the things which I said at the time.

After that I constantly tried to make the Minister of War do something to slow down the speed of rearmament, if only in the interest of general economy, since I wanted to see the economic system working for the export trade. Proof of the fact of just how much I urged the Minister of War is contained in my letter dated 24 December, 1935, which I wrote him when I saw the period desired by Hitler coming to an end, and when I was already applying the brake. It has also been presented by the prosecution as Document PS-1301. In the English version of the document it is on Page 25.

[Page 422]

"I gather from your letter dated 29 November" - and then come the reference numbers - "that increased demands by the armed forces for copper and lead are to be expected, which will amount to practically double the present consumption. These appear only to be current demands, whereas the equally urgent demands to be expected are not contained in the figures. You are expecting me to obtain the necessary foreign currency for these demands, and to that I respectfully reply that under the existing circumstances I see no possibility of doing so." End of quotation.

The document goes on to say - and this is the sentence regarding the limit up to 1 April:-

"In all the conferences held with the Fuehrer and Vice Chancellor up to now, as well as with the leading military departments, I have expressed my conviction that it would be possible to supply the necessary foreign currencies and raw materials for the existing degree of rearmament until 1 April, 1936. Despite the fact, that due to our cultural and agrarian policies, which are being repudiated all over the world, this has been made extremely difficult for me, and continues to be difficult, I still hope that my original proposal may be carried out."

Q. It is a fact that Minister of Transport, Dortmueller, was trying to raise credits for railway purposes. What was your attitude as president of the Reichsbank toward this?

A. During a conference between the Fuehrer, Dortmueller, and myself, at which the Fuehrer strongly supported Dortmueller's demands, I turned that credit down straightway, and he did not get it.

Q. The meeting of the so-called Smaller Cabinet Council, presided over by Goering, of 27 May, 1936, has been discussed here. Representatives of the prosecution contend that intentions of aggressive war became apparent from that meeting. Did you have any knowledge of that meeting?

A. What was the date, please?

Q. 27 May, 1936.

A. No. I was present during that conference, and I see nothing in the entire document pointing to an aggressive war. I have studied the document very carefully.

Q. It has furthermore been stated against you what is contained in the report of Ambassador Bullitt, Document M- 151, Exhibit USA-70, dated 23 November, 1937. You have heard of course that the prosecution is also drawing the conclusion from that report that there were aggressive intentions on Hitler's part.

Will you please make a statement about that?

A. I see nothing in the entire report to the effect that Hitler was about to start an aggressive war. I was simply talking about Hitler's intention to bring about an Anschluss of Austria, if possible, and to give the Sudeten Germans autonomy if possible. Neither of those two actions would be aggressive war, and apart from that, Mr. Bullet says the following with reference to me in his report about this conversation:-

"Schacht then went on to speak of the absolute necessity for doing something to produce peace in Europe." End of quotation.

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