Extracts from an interrogation of Goering, on the secret rearmament program (1933-35), the conflict with Schacht about the war economy, and Schacht's dismissal as Reichsbank president

EXCERPTS
Testimony of Hermann Goering, taken at Nürnberg, Germany, 17 October 1945, 1030-1215, by Lt. Col. M. I. Gurfein, OUSCC. Also present: Captain Frank, Interpreter and Miss Evelyn Low, Reporter
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Q. I wanted to ask you to-day about some of the economic history of the period. When was the armament program first discussed, that is, the rearmament program—what year?
A. Immediately in 1933.
Q. In other words, Schacht had assumed the obligation at that time already to raise funds for the rearmament program ?
A. Yes, but of course in co-operation with the Minister of Finance.
Q. During the years 1933 to 1935, before general conscription came in naturally, the rearmament was a secret rearmament was it not?
A. Yes.
Q. So that any monies that were used outside of the budget would have to be raised by some secret means, not to be known to foreign nations?
A. Yes, unless they could be raised from normal army funds.
Q. That is to say, you had a small budget for the standing
100,000 man Army which was open and the rest of the rearmament had to be from secret sources?
A. Yes.
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Q. You had some jurisdictional differences with him in connection with that position I believe and I want to show you an agreement of the 7th July 1937 and ask you first to read it. Do you recognize that copy?
A. I can give you exact explanations. It was naturally my opinion that the Plenipotentiary for War Economy would be abolished through the nomination of myself for the Four Year Plan. Schacht opposed this conception very forcibly. It was his argument that I, as Supreme Commander of the Air Force, would be tied down for military reasons to much too large a degree in the case of war. This conception I logically had to agree to. And subsequently this contract was made. But I want to draw your attention to one thing—the last sentence. Apart from this, the fact that the Plenipotentiary for War Economy has a position of supreme Reichs authority can in no way be doubted. This sentence was inserted on my request. This means that I could give him instructions at all times since the authority of the Plenipotentiary for the Four Year Plan stated that I could give orders at any time.
Q. But it also was a face-saving device? .
A. It gave me a possibility to give orders to the Plenipotentiary in spite of this agreement. Schacht, however, in the event of war desired to cancel the Four Year Plan by means of this agreement so as to take the situation in hand himself. Thus this safety sentence, this last sentence, was added.
Q. But on the face of it it looks as if it established a high position for Dr. Schacht and certainly prevented the abolition of his office.
A. No. The position of Plenipotentiary for War Economy meant an improvement of his position as Reichs Minister of Economy.
Q. So that it is clear, is it not, that as late as 7 July 1937 against your attempt to abolish Schacht's position as Plenipotentiary for the War Economy he was opposing any such step and in fact was urging that he be given broader powers in the event of war ? -A. Yes, that is correct. I wanted this position abolished—in the event of war and yet he succeeded in retaining his position. Q. Shortly after—
A. This I must underline. Schacht always tried to slide out and up and achieve yet a new position whilst all other Ministers co-operated absolutely.
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Q. Shortly after this, before we leave this agreement which you have just identified, Mister Goering, I wanted to ask you, there is a reference in it I believe to a position of Hitler, with respect to this jurisdictional controversy?
A. The Fuehrer sent for us both and explained how he visualized this matter should be handled. He then put a proposal to us —Schacht was anxious to take something back in writing—regarding how such an agreement should be drafted.
Q. In this conversation that you had together with Dr. Schacht in the presence of Hitler, did Dr. Schacht make the proposal that he was anxious to continue his powers as economic dictator in the event of war?
A. Yes, he even suggested that he should carry out his activities independently from me. He gave as reasons that he could not otherwise carry out his task and said that in the event of war I would obviously be continuously absent, i.e. at my headquarters in the field, etc. Practically speaking, to say it in one sentence, I should like to say that what Schacht wanted was that in the event of war the Four Year Plan should be abolished.
Q. Shortly after this agreement that was decided upon by Hitler with respect to your jurisdiction in case of war, you began to have further disputes with Dr. Schacht concerning economic matters, did you not?
A. Yes. .
Q. Let me show you a copy in English?
A. Just a moment—the Fuehrer did not lay down details in this connection. This agreement is on extremely vague lines.
Q. Coming to this period shortly thereafter when you say you had difficulties with Schacht, I should like to show you an English copy, of a letter dated 26 August 1937 by Schacht to you and will ask the captain to be good enough to translate it into German— perhaps you can read it in English?
A. Yes.
Q. Can you understand this?
A. Yes.
Q. This is dated about a month later—roughly seven weeks. What was the background for this letter of Dr. Schacht's?
A. Some row between the departments.
Q. And you had apparently written a letter previously to Schacht, to which he took exception, is that correct?
A. Yes, certainly, either myself or my immediate subordinate —I have avoided whenever possible to write myself—but it is quite possible that I myself wrote in this case. .
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Q. Do you know what was meant by the phrase "fundamental differences exist in our economic policies"?
A. He was absolutely—how shall I say it—the basic principle was that I was interfering too authoritatively with economic matters and I had frequent conferences with the leaders of the economic system which were against the feelings of Schacht's personality. Furthermore, Schacht sent me situation reports in such cases which were not strictly in keeping with the facts. For instance, I received situation reports according to which no further import possibilities would exist after, say, six weeks or two months, and I must say some such nonsense. He would paint the situation in such extreme and black colors so as to scare me off personally.
Q. Did you feel there was always an implication that if Schacht were permitted to do it himself that he felt he could do it better? '
A. Yes, that he has always told me, though indirectly.
Q. You recall that Schacht left the Reichsbank in January 1989. Do you remember the circumstances of that?
A. Yes. The circumstances in thi's connection were, I must say, ridiculous. The Minister of Finance, as it is often the case, demanded an advance at the end of the month as had been the case, and quite suddenly and without notice this advance was refused. He told the Minister of Finance to declare the Reich bankrupt. The Minister of Finance put the matter right on his own negotiation but thus proved to the Fuehrer that Schacht was being obstructive.
Q. But the discussions about Reichsbank financing with respect to the question of inflation, do you know anything about those ?
A. Yes, the question of inflation arose during all conferences, and suggestions were always made regarding measures to prevent the actual arrival of an inflation. Opinions differed on these occasions. Someone, I cannot remember who it was, would say that we were practically in the middle' of an inflation now and someone else would say that this was not so and could be avoided.
Q. I want to ask you this specifically. Was Schacht dismissed from the Reichsbank by Hitler for refusing to participate any further in the rearmament program? '
A. No, because of his utterly impossible attitude in this matter, regarding this advance which had no connection with the rearmament program.
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Q. Keppler says that as early as 1936 you were trying to get rid of Schacht by talking to the Fuehrer about him, is that correct?
A. No, it was much later.
Q. And when it was later, it was about these personality difficulties that you have discussed here this morning?
A. Yes. I always saw that he made considerable difficulties for my staff when they were working on economic subjects outside. I don't recall.
Q. I want to ask you whether this statement is true. Schacht in effect has said that he resigned as Minister of Economics because he could not agree with Goering or Goering's war policy and that he wanted to prevent the over-loading of industry for the preparation for war?
A. Oh! But that is absolute nonsense—he would never have said it then. If he had said this as a reason for his renunciation he would not have remained a member of the Reichs Cabinet nor the Chief of the Reichsbank.
Q. I don't say that he said it at the time, I said that he says it now. Is it true?
A. Of course what he says now, that I don't know. But I do not want to deny in this connection that I myself have pursued a very strong economic policy for the purpose of rearmament. That is the actual reason for the Four Year Plan. But if he does say this now he has certainly hidden it very successfully then.
Q. In general terms, Schacht was never opposed, as far as you were concerned, with the rearmament program or the extent of it?
A. No, he certainly did not oppose it generally but he had different opinions regarding the methods to be employed. Obviously it would have been quite out of the question that Hitler advanced and honoured Schacht the way he did—making him Minister of Economics and President of the Reichsbank, etc.—if Schacht had been opposed to the rearmament program. But he was of the opinion—as I said before—that sums such as the Fuehrer visualized were impossible. That is correct.
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