[Page 85]

A. The MEFO bills and the construction of that company had, of course, been legally examined beforehand and the point of its legality had been raised with us, and the question as to whether these bills could be brought under banking law had been answered in the affirmative. The more serious question, however, was whether these bills fulfilled the normal requirements which an issuing bank should demand of its reserves. To that question, of course, I must definitely answer NO.

If one asks, why did not the bank buy good commercial bills instead of MEFO bills, the answer is that at that time there had been no good commercial bills on the market for years - that is, since the collapse due to the economic crisis. Already, under Bruning, schemes for assisting and restoring economy and credit had been drawn up, all of which followed similar lines; that is, they were sanctioned according to their nature, normal credits along the lines of a semi- public loan, for the Bank was faced with the alternative of standing by helplessly and seeing what would happen to the economy, or of helping the Government as best it could to restore and support the economy. All issuing banks in other countries were faced with the same alternative and reacted in the same manner. Thus the armaments bills, which, economically speaking, were nothing more than the former unemployment bills, had to serve the same purpose. From the point of view of currency policy the Reichsbank's reserves of old bills, which had been frozen by the depression, were again made good.

All the regulations under banking law, the traditional regulations concerning banking and bills policy had only one aim, namely, to avoid losses.

Q. I believe, Herr Vocke, it will be sufficient for the Tribunal if you could confirm that in the end the legal experts of the Reichsbank pronounced the MEFO bills to be legal. The reasons for this, if your Lordship agrees, we can omit.

[Page 86]

A. If we had been able to speak frankly, of course, we would have said, you must stop armaments. But the Reichsbank itself could not do this. Instead, we had to limit ourselves to the question of our responsibility for the currency. Therefore, the Reichsbank memorandum dealt with the question of currency. It said: If the financing of armaments is continued German currency will be ruined and there will be inflation in Germany.

The memorandum also spoke of limitless credits, of unrestrained expansion of credits, and unrestrained expenditure. By expenditure we meant armaments. That was quite clear.

THE PRESIDENT: We have all seen the memorandum, have we not?

DR. DIX: He is not speaking about the contents of the memorandum, but of the reasons, the tactical reasons.

BY DR. DIX:

Q. You understand, Herr Vocke, the Tribunal knows the text of the memorandum, so please confine yourself to what I have asked you.

A. The memorandum was supposed to deal with the question of currency, but at the same time, we made it quite clear that we wanted a limitation of foreign policy. That shows clearly what we wanted: limitation of expenditure, limitation of foreign policy, of foreign policy aims. We pointed out that expenditure had reached a point beyond which we could not go, and that a stop must be put to it.

In other words, the expenditure policy, that is the armaments programme, must be checked.

Q. Now tell us, did you anticipate the effect that that memorandum would have on Hitler? What did you expect, tactically?

A. That the memorandum would result in a halt of this intolerable expenditure which had brought us to ruin, for at the end of 1938 there was no more money available, instead there was a cash deficit of nearly one billion... That had to be faced and the Finance Minister was on our side. If it was not recognized, then the smash would come and we would have to be released. There was no other alternative. We took the unusual step of getting the whole Directorate to sign this document.

Q. That, in my experience, is quite unusual, because generally an official document of the Reichsbank is signed by the President or his deputy, is it not?

A. That is true. We wanted to stress that the entire directorate unanimously approved this important document, which was to put an end to armaments.

Q. That, witness, is clear. Have you any reason for believing that Hitler recognized that fact?

A. Yes, Hitler said something to the effect that that would be "mutiny."

I think that is the word they use in the Army. I have never been a soldier, but I think that when a complaint is signed by several soldiers, that is looked upon as mutiny. Hitler had the same ideas.

Q. Yes, something like that. . But you were not there. Who told you about that expression "mutiny."

A. I can't remember that now. I believe it was Herr Berger, of the Finance Ministry. But I can't say exactly.

Q. So, there was talk about it in ministerial circles, about this expression.

A. Yes.

Q. Now, that memorandum also contained a compliment to Hitler, a reference to his successes in foreign policy.

[Page 87]

Q. And what was the consequence of that memorandum? Please tell us briefly.

A. First Schacht was dismissed, then Kreide and Hulse, then I. The result, however, was that they knew abroad what things had come to in Germany. My colleague, Hulse, had made unequivocal statements in Basle, and said that if we should be dismissed, then our friends would know to what pass things had come.

Q. Did Hulse tell you that?

A. Yes, Hulse told me that.

DR. DIX: Your Lordship, shall we make a short pause here? I have not much more, but I still have the documentary evidence.

THE PRESIDENT: How much longer do you think you will take before you finish?

DR. DIX: It is very short, and then the documentary evidence which is also very short. Shall I continue?

THE PRESIDENT: The Tribunal will adjourn.

BY DR. DIX:

Q. Now, witness, you have described to the Tribunal how that dismissal of Schacht and yourself came about. Why did Schacht not resign before? Did he talk to you about it?

A. No. Throughout the years 1936 and 1937 we could not make up our minds. At first there was still hope that Hitler would steer a reasonable course as a statesman. Finally, in 1938, we reached a crisis, particularly in connection with the Munich Agreement, and then after the Munich Agreement. Then, indeed, there was real anxiety that it would come to war, and we then saw that we had to force the issue.

However, one has to consider the following: As a bank we could not use political or military arguments or demands, which were not within our scope. The inflation, which we had anticipated in that memorandum, did not materialise until 1938, when the note circulation during the last ten months had increased enormously - more than throughout the five preceding years.

Q. So that it was not until that year that, let us say, a pretext, a means, was found to take that step?

A. Yes.

Q. Now I will end with a general question. The high intelligence of Dr. Schacht is not disputed - that he was disappointed in Hitler and deceived by him, he says himself. You yourself, with your knowledge of Schacht's personality, must probably have had your own ideas as to how this mistake on the part of Schacht could be explained, how he could have been so deceived. Therefore, if the Tribunal permits, I should be grateful if you could give us your personal impressions about it.

MR. JUSTICE JACKSON: Your Honour, may I make an objection? I do not understand how the working of Dr. Schacht's mind can be explained by someone else. I have had no objection to any facts which this witness has known. We have even let him detail here at great length private conversations. However, speculation on Schacht's mental attitude, it seems to me, is beyond the pale of probative evidence.

THE PRESIDENT: Dr. Dix, as I think I have said before, you cannot give by one witness the thoughts of another man; you can only give his acts and his statements.

[Page 88]

THE PRESIDENT: You have the answer now, the Tribunal does not allow it.

DR. DIX: Then we will leave that question. May I ask your Lordship this

Of course, I can still put questions about the treatment of the Jews by Schacht. I personally think that this chapter has been dealt with so exhaustively that it is not necessary for this witness to give us more examples of the attitude of Schacht. I would only ask to be permitted to put the same question concerning the Freemasons, because nothing has been stated about that.

BY DR. DIX:

Q. Do you know anything about the treatment of Freemasons or the attitude of Schacht to Freemasons?

A. Yes. The Party demanded that the Freemasons should be eliminated from the Civil Service. Schacht said: I refuse to let anybody tell me what to do. Everybody knows that I myself am a Freemason; how can I take action against officials simply because they belong to the Order of Freemasons? And as long as Schacht was in office he kept Freemasons in office and promoted them.

Q. Now, one last question. Do you know whether Schacht ever received any gifts or had any economic advantages during Hitler's time beyond his regular income as an official?

A. No; that was quite out of the question for Schacht. Besides, he was never offered gifts. In all his dealings, as far as money was concerned, he was absolutely clean and incorruptible. I can give examples. For instance, when he left in 1930, he reduced his pension to less than half of the pension of the vice-president or of another board member. He said: These people have devoted their whole life to the bank, whereas I have only given a few years' service. I could give more examples of Schacht's absolute correctness in that respect.

DR. DIX: I believe, if the Tribunal does not wish it, it will not be necessary to give further examples. That brings me to the end of my interrogation of this witness.

THE PRESIDENT: Does any member of defendants' counsel wish to ask any questions?

BY DR. STEINBAUER (Counsel for the defendant, Seyss-Inquart)

Q. Witness, do you remember the financial-political measures on the occasion of the annexation of Austria in March of 1938; that is to say, in general terms?

At that time two laws were issued, both of 17th March, 1938, one concerning the conversion of schillings into marks, and the other for the taking over of the Austrian National Bank by the Reichsbank.

Dr. Schacht, as a witness, stated yesterday that on 11th March, he was asked what exchange he would consider correct in the event of an entry into Austria, and he answered that question by saying that according to the latest market rate, two schillings for one Reichsmark would be correct.

After the Anschluss, my client, Dr. Seyss-Inquart, objected to the under-valuation of the schilling, and he succeeded in getting the schilling converted at 1.50 to the Reichsmark. Is that correct?

A. Before the entry into Austria, I had not heard of any ratio being fixed by the Reichsbank Directorate. They were entrusted with that question only after the entry into Austria, and as experts and bankers they proposed a ratio which was in accordance with the conditions, and only a slight modification was made. It was for the Government to make concessions, if it wanted to win over the Austrian population or make it favourably inclined.

Q. The second law deals with the Austrian National Bank. The witness, Dr. Schacht, has said today that the Austrian National Bank was not liquidated,

[Page 89]

A. The right to issue notes in Austria of course, went to the Reichsbank which, as far as I know, took over the Austrian National Bank in Vienna and carried it on. I do not remember any details. My colleague, Kesnik, took care of that.

Q. But maybe you will remember if I quote from the official reports of the Austrian National Bank that the gold reserve of the Austrian National Bank in March, 1938, amounted to 243 million schillings, and the foreign currency reserve 174 million schillings, which means that roughly over 400 million schillings in gold was taken over by the Reichsbank from the Austrian National Bank.

A. I do not recall these facts now, but if it was done, it was done by law, by the Government.

Q. Yes. I have that law of the 17th of March. I just wanted to correct it and to point out that Dr. Schacht must have made a mistake unintentionally. The law he himself signed says "shall be liquidated." I have no other questions.

BY DR. LATERNSER (Counsel for General Staff and OKW):

Q. Witness, you said earlier that the fundamental difference between Dr. Schacht and the high military leaders was that he remained a free man in his attitude to the regime. I want to ask you now, since that statement seems to imply a criticism of the high military leaders, which of the high military leaders do you know personally?

A. Not a single one.

Q. Then would you maintain that judgement?

A. In our circles of the Reichsbank, General Keitel and other gentlemen were considered too servile and too acquiescent toward Hitler.

Q. But if, you had no personal acquaintance with these people, do you not think that what you said earlier is a rather serious criticism to make here?

A. Yes, I think it is.

DR. LATERNSER: I have no further questions.

THE PRESIDENT: Do any of the other Counsel wish to cross- examine?

CROSS-EXAMINATION

BY MR. JUSTICE JACKSON:

Q. Witness, when you met Dr. Schacht first, as I understood it, it was on the occasion of an official visit which you paid to von Lumm in Brussels?

A. Yes.

Q. During the first years of the first World War?

A. Yes.

Q. Schacht then held some position on von Lumm's staff?

A. Yes.

Q. What was his position, Schacht's?

A. I cannot say. He was just one of the staff. How I came to meet him was that on one occasion when I was sent to Brussels to discuss something with von Lumm, the latter took the opportunity to introduce his colleagues and among them was Schacht. We were merely introduced.

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