[Page 99]

WALTER EMANUEL FUNK - Resumed.

DIRECT EXAMINATION - Continued.

BY DR. SAUTER:

Q. Dr. Funk, yesterday you gave us a brief account of your life, told us that you are fifty-six years of age, that you have been married for twenty-five years, that you were Editor of the Berliner Boersenzeitung for ten years, and in conclusion you told us yesterday what your convictions were regarding the future development of Germany.

Perhaps you can again tell us something of your viewpoint, since you were interrupted by the recess yesterday, and since your health was in such a poor state yesterday evening that you could scarcely remember what you had told the Tribunal.

Well, what were your views on Germany's economic prospects at the time when you entered the Party? Perhaps you can go over it briefly again.

A. At that time Germany was in the midst of a very difficult economic crisis. This crisis was caused chiefly by the reparations, the way in which these reparations had to be paid, and by the inability of the governments then in office to master the economic problems. The most disastrous feature of the reparations policy was that German Mark credits in large sums were transferred to foreign countries without receiving any equivalent in return. As a result, there was a tremendous surplus of Reichsmarks abroad. It led to inflation in Germany, and the countries with stable currencies bought Germany out. German industry piled up a heavy debt and consequently came under foreign control for a time. German agriculture also showed a balance on the wrong side. There was complete poverty among the middle classes, who were the chief representatives of German culture. Every third German family was unemployed, and the government itself had neither the power nor the courage to master these economic problems. And these problems could not be solved by means of economic measures alone. The first essential was the presence of a government possessing full authority and responsibility and then the development of a unified political will among the people.

The National Socialists at that time captured forty per cent. of the seats in the Reichstag; the people flocked to this Party in ever-increasing millions, especially the young people, fired with idealism and drawn by the fascinating personality, of the Fuehrer as though by a giant magnet. The economic programme of the Party itself was vague; and in my opinion it was drawn up mainly with an eye to propaganda purposes; there were lively arguments about it in Party circles, with which I came in contact in 1931.

At that time, therefore, I decided to give up my position as Editor of a paper with a large circulation among the middle classes and to establish myself independently as the head of an economic and political Press service which went to the most widely differing economic circles tending towards the German National Party, the People's Party and even the Democrats.

[Page 100]

What can you say on this point?

A. As to a government principle, that is, a Fuehrerprinzip, one can never say a priori whether it is good or bad. It depends on existing circumstances, and, above all, on those who do the governing. The democratic-parliamentary principle had not been successful in Germany. Germany had no parliamentary and democratic tradition, such as other countries had. Conditions, finally, were such that when the government made decisions the few votes of the economic party were decisive; and these were usually bought. Therefore, another principle had to be made the dominant one; and in an authoritarian government, if those who bear authority and responsibility are reliable, then the government also is reliable. The leadership principle meant, in my opinion, that the best men and the best man should rule; and that authority would then be exercised from above downwards and responsibility from below upwards. And in conversations with Hitler and other leading personalities of the Party in 1931, and, as I said, from the faith and enthusiasm which the German people brought to this political movement, I formed the opinion that this Party would have to come into power, and that through it alone salvation could come. I myself, wanted to put my own economic ideas into practice in this Party.

Q. Dr. Funk, you have just been speaking of the personality of Hitler. Through whom did you meet Hitler? - that is, who were the Party figures through whom you were first won over to the Party?

A. Chiefly, Gregor Strasser, as I said yesterday, who arranged my first meeting with Hitler. Not until much later, in Berlin, did I meet Hermann Goering. Apart from them, I had very few acquaintances in the Party at that time and played no role in it myself.

Q. When you met Hitler, what impression did he make on you at that time? I should like to say one thing first. You were at that time - 193I, I think - a mature man of over forty. What impression did you have at that time of Hitler's personality, aims, etc.?

A. My first conversation with Adolf Hitler was very reserved; that was not surprising, as I came from a world which was entirely strange to him. I immediately received the impression of an exceptional personality. He grasped every problem with lightning speed and knew how to present it very impressively, with great fluency and highly expressive gestures. He had the habit of then becoming absorbed in the problem, in long monologues, so to speak, in this way lifting the problem to a different sphere. At that time I explained to him my economic ideas and told him especially that I based my views on the concept of private property, which for me was the fundamental tenet of my economic theories, and which was inseparable from the concept of the varying productive power of human beings. He, himself, heartily concurred with me and said that his theory of economics was also based on selectivity, that is, the principle of individual productivity and the creative personality, and he was very glad that I wanted to act on those lines in the Party and to arrange contacts and support for him in the economic field - which I actually did. In the meantime, however, my relations with the Fuehrer became no closer then, because he said to me himself: "I cannot, at present, commit myself to an economic policy; and the views expressed by my economic theorists, such as Herr Gottfried Feder, are not necessarily my own."

[Page 101]

Q. The economic policy section of what? Of the central Party leadership (Reichsleitung der Partei)?

A. The economic policy section of the central Party leadership was directed by a certain Dr. Wagener. I was not invited to political talks. A close connection with the Fuehrer - or a closer connection with the Fuehrer - I really had only in the year 1933 and the first half of 1934, when, as Press chief of the Reich Government, I contacted him regularly. At that time it once even happened that he suddenly interrupted the Press conference, went into the music room with me and made me play the piano for him.

Then our relations became a little cooler again and when I became Minister of Economics the Fuehrer kept me more and more at a distance-whether he had special reasons for this, as Lammers testified here, I do not know. During my entire time as Minister, I was called in by the Fuehrer for consultations perhaps four times - five at the most. But he really did not need me, because his economic directives were given to the Reichsmarschall, the responsible head of economic affairs, and later, from 1942 on, to Speer, since armament dominated the entire economy; and, as stated, I had close connections with him only in 1933, and the first half of 1934 until the death of Reich President von Hindenburg.

Q. Dr. Funk, you have got a long way ahead. We would like to return now to 1931 or 1932, to the time when you entered the Party. When was that?

A. In the summer of 1931.

Q. The summer of 1931. You have already told the Tribunal that for the reasons you have stated, you did not object to the leadership principle.

A. No, on the contrary, the leadership principle was absolutely necessary.

Q. On the contrary, you considered the leadership principle necessary for the period of emergency that then obtained. Now - I am interested in this - other points of view were, of course, also represented in the Party programme. These worked out unfavourably later on and have in the course of this trial been used extensively against the defendants - I point out one example - the slogan of "Lebensraum" you have heard it again and again during this trial. The defendant Dr. Schacht dealt with this problem also. Perhaps you can give us briefly your own attitude to this problem and to this question?

A. The problem of living (Lebensproblem), is no slogan; and the problem of living was really a problem for the German people at that time. By Lebensproblem -

Q. You mean Lebensraum?

A. - or Lebensraum - I did not mean at that time the conquest of foreign countries the thought of war was entirely strange to me, as it was to most other Germans. By Lebensraum I meant the opening up of the world for the vital interests of Germany, that is, the participation of the German people in the profitable utilization of the world's goods, of which there was a superabundance.

Whether that was to be done through colonies, or concessions, or international trade agreements, I did not trouble to find out at that time.

The expansion of Germany in the world economy before the First World War was the decisive factor which determined me to become an economic journalist. The participation of Germany in the Rumanian petroleum industry, the concession of the Baghdad Railway, the growing German influence in South America, in China, altogether in East Asia - all this interested me very much. At that time I met Franz Gunther of the Discount Bank (Diskontogesellschaft), Arthur von Gwinner of the German Bank (Deutsche Bank), Karl Helfferich, the big Hamburg importer Withoften, and many other German economic pioneers, and worked at my profession with all the enthusiasm of the young journalist.

Lebensraum was thus for me at that time the fulfilling of these economic claims, Germany's participation in the goods of the world and the abolition of the restraints which hemmed us in on all sides. It was absolute nonsense that Germany on her

[Page 102]

That period marked the beginning of a great wave of protective tariffs in the world. I recall American economic policy and the Ottawa agreements, and this mistaken economic policy led in 1929 and 1930 to a world economic crisis by which Germany also was hardly hit.

Q. Dr. Funk, have you finished?

(Witness nodded.)

Dr. Funk, the prosecution in their trial brief have contended that you participated in the formulation of the Nazi programme. What can you tell us about that?

A. I do not know what the prosecution understands by the Nazi programme.

Q. I think - the Party programme.

A. That is completely impossible. The Party programme, as far as I know, was formulated in 1921. At that time I did not know anything about National Socialism or Adolf Hitler.

Q. Defendant, the prosecution has further accused you of setting up the so-called reconstruction programme, the economic reconstruction programme of 1932, that is a programme for the rehabilitation of German economic life. Is it correct that you established this economic reconstruction programme?

A. In 1932 I put together a few points of the economic programme for a speech by Gregor Strasser, and he himself handed them on to the various Party officers as instruction and speech material, indicating that they came from me.

This economic reconstruction programme, which in the words of the prosecution was to become the economic Bible for the Party organisers is, I believe, in no way revolutionary or even sensational; and it could, I believe, be adopted and accepted by every democratic government. I believe this is pointed out in a book from which the prosecution has taken various pieces of information.

Q. Yes, it is presented, defendant, in the book by Dr. Paul Ostreich which has been repeatedly quoted. This book contains your biography under the title "Walter Funk, A Life for Economy," and has been used by the prosecution under Document 3505-PS, Exhibit USA 653.

Dr. Funk, I have the text of this programme before me.

A. Please read it.

Q. The whole programme only covers half a page, and in the main sets forth really nothing which might be considered as characteristic of National Socialist trends of thought?

A. Of course, at that time I was not a National Socialist or, at least, only a very new member.

Q. This economic reconstruction programme must he actually read in order to convince oneself how little it contains of the characteristic National Socialist demands. This is a programme which Funk says might be accepted by almost any liberal or democratic or other bourgeois party. The programme is called "Direct creation of employment through new State and private investment." That is the first demand. Then the providing of credit for production by the Reichsbank, but no inflation, rather the re-establishment of a sound currency, and a sound financial and credit economy to promote production.

General lowering of rates of interest, paying attention to individual circumstances of the economic system. Creation of a foreign trade office and a central foreign exchange office. Reorganisation of economic relations with foreign countries, giving preference to the vital necessities of the domestic market but with special attention to the export trade absolutely necessary for Germany. Restoration of sound public finances including public insurances. Abandonment of impracticable methods in State protection for agriculture.

Reorganisation of the system of house and land ownership in accordance with the principles of productivity and national health.

[Page 103]

That is all that comprised this so-called economic reconstruction programme.

A. This programme was to be, as the prosecution has said, the official Party statement on economic matters. I would have been glad if the Party had professed these principles. In later years I actually had great difficulties with various Party offices, in connection with their basic attitude on economic policy. I was always considered, even in Party circles, as a liberal and an outsider.

Q. A liberal?

A. Yes. I fought against all tendencies towards collectivism for this reason, and I constantly came into conflict with the Labour Front. I was supported, especially in my views on the system of private property by Reichsmarschall Hermann Goering. Even during the war, he had parts of the Hermann Goering Works denationalised at my suggestion. I was an opponent of a nationalised economy because a nationalised economy will always produce only average results. Nationalised economy means sterile economy. An economy which lacks the element of individual competition and initiative will be sterile and will achieve no more than average results. The Fuehrer at first always agreed enthusiastically with these principles of mine. It was a great disappointment to me when finally in the last years the Fuehrer turned so sharply against the bourgeois world, for that meant that the whole of my life's work had failed.

THE PRESIDENT: Dr. Sauter, the Tribunal thinks he might get on to something more important than his view on state economy and private enterprise.

DR. SAUTER: Yes, Mr. President.

BY DR. SAUTER:

Q. Dr. Funk, you knew that it was precisely on account of the big problem of unemployment at the time that Hitler was able to grasp power. What plans did you have for the elimination of unemployment, especially since you knew that that precise promise -

THE PRESIDENT: Dr. Sauter, we have heard nearly all the defendants on the conditions which obtained in Germany at that time. And there is no charge against these defendants for German economy between the years 1933 and 1939.

DR. SAUTER: Mr. President, I wanted to ask the defendant, Dr. Funk, just how he thought that unemployment could be abolished; for from the testimony of other defendants, I gathered that they planned to eliminate it by other means, such as rearmament, and so forth. With him, as far as I know, this was not the case and I think that in judging the defendant Funk, the question of how he proposed to handle the elimination of unemployment, whether through rearmament or by some other means, is of some importance. I do not think it will take much time, Mr. President. The defendant Funk, I am sure, will be very brief.

Perhaps just a sentence or two -

THE PRESIDENT: He can answer that in a sentence, I should think.

BY DR. SAUTER:

Q. Herr Funk, be as brief as possible.

A. If I am to answer this in one sentence, I can say only that at that time I viewed the elimination of unemployment according to a very solid plan, but at any rate without armament, without armament -

Q. But, instead?

A. By methods which I would have to explain. But in any event, armament never came into question then -

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