particularly on the first page:
"Only through the secret activity of German enterprise, together new tasks arrived at, restoring Germany's military power.
Only up by the Fuehrer's Four-Year Plan for German enterprise, be mastered.
endent and strong - in short, to make it war-worthy," Quoting even further from the same speech:
"I think I may state here that the German enterprises followed the new became his faithful followers.
How else could the tasks between 1933 and 1939, and especially those after 1939, have been overcome?"
immediately upon the seizure of power by the Nazi conspirators. On April 4, 1933, the Reich Cabinet passed a resolution establishing a Reich Defense Council. The function of this Council was secretly to mobilize for war; and at the second meeting of the Working Committee of the Councillors for Reich Defense, which was, by the way, the predecessor of the Reich Defense Council, at that second meeting which was held on May 22nd, 1933, the Chairman was the defendant Keitel, then Colonel Keitel; and he stated that the Reich Defense Council would immediately undertake to prepare for war emergency. He stressed the urgency of the task of organizing a war economy, and announced that the Council stood ready to brush aside all of their obstacles. Fully aware of the fact that their action was in flagrant violation of the Treaty of Versailles, the defendant Keitel emphasized the extreme importance of absolute secrecy when he said, and I quote from the document bearing the number EC-177, on page 5 of that document.
Colonel Keitel is speaking, and he said:
"No document ought to be lost, since otherwise it may fall into the hands of the enemies' intelligence, service.
Orally transmitted, matters are not provable; they can be denied by us in Geneva."
German economy to the forging of a war machine is even further shown by the secret minutes of the second meeting of the Working Committee of the so-called Reich Defense Council, held on the 7th February, 1934, as shown in the document bearing the number EC-404, marked "Secret Command Matter", and dated 7th February 1934. At this meeting, Lieutenant-General Beck pointed out that:
"The actual state of preparation is the purpose of this session". appears that besides Lieutenant-General Beck, the defendant Jodl was present, then Lt. Colonel Jodl. There wan a Captain Schmundt; and there was a Colonel Guderian there; and there was a Major-General Von Reichenau; there was a Major Warlimont; and these are names that Your Honors will hear more of in the course of the presentation of this case.
pointed out that the financial aspects of the war economy would be regulated by the Reich Finance Ministry and the Reichsbank, which was headed by the defendant Schacht.
THE PRESIDENT: Are you passing from EC-404?
MR. DODD: I am, Your Honor.
THE PRESIDENT: Very well, go on.
MR. DODD (continuing): As was stated earlier in this morning's discussion, the defendant Schacht was secretly appointed PlenipotentiaryGeneral of the War Economy, and he had the express function of placing all economic forces of the nation in the services of the Nazi war machine. ceived this secret appointment, he was in effect, given charge of the entire war economy. In case of war, he was to be virtual economic dictator of Germany. His task was to place all economic forces into the service for the conduct of the war and to secure economically the life of the German people. The Ministers of Economics, of Food, Agriculture, Labor, Forestry, as well as all Reich agencies directly tinder the Fuehrer, were subordinated to him. He was to be responsible for the financing as well as for the conduct of the war; and he was even authorized to issue ordinances within his Sphere of responsibility, even if these deviated from the existing laws.
The rearmament of Germany proceeded at an amazingly rapid pace. By the summer of 1935, the Nazi conspirators were emboldened to make plans for the reoccupation of the Rhineland; and at the tenth meeting of this same Working Committee of the Council, the question of measures to be taken in connection with the proposed reoccupation of the Rhineland were discussed.
the Rhineland required special treatment because of the assurances given by Hitler to the French that no military action was being undertaken in the de-militarized zone. Among the matters requiring special treatment was the preparation of economic mobilization, a task specifically entrusted to the defendant Schacht, as secret Plenipotentiary for the War Economy.
THE PRESIDENT: Are you reading from this document?
MR. DODD: I am quoting ,in part from it, Your Honor, and it is upon this document that I base my statements. I dislike annoying the court with constant references to these documents, but I thought it would be the best way to proceed.
THE PRESIDENT: If you tell us exactly where it is in the document we can find it in the document.
MR. DODD: It is on page 4, if Your Honor please.
THE PRESIDENT: Yes, go on.
MR. DODD: On page 4, the middle of the page, the fifth paragraph, the first sentence - "the de-militarized zone requires special treatment".
THE PRESIDENT: Yes.
MR. DODD: And on page 3, "J", under "The Preparations", "preparation of economic mobilization". On page 4, the last paragraph just before the setting-out of the "A", "B", "C" and "D".
THE PRESIDENT: I think you ought to read on page 4, the last paragraph 1 -- "Since political entanglements..."
MR. DODD: That was the one I had proceeded to read.
THE PRESIDENT: I thought you had gone on to page 5.
MR. DODD: "Since political enganglements abroad must be avoided at present under all circumstances, only those preparatory measures that are urgently necessary may be carried out. The existence of such preparations, or the intention of them must be kept in strictest secrecy in the zone itself as well as in the rest of the Reich". a few minutes ago, as the last one in the list, the preparation for economic mobilization.
measures, and for the financial preparation for evacuation measures, and so forth. We shall pass now from that document to the rapid success of the German re-armament is attributable primarily to the work of the defendant SCHACHT. In the fall of 1934, the Nazi conspirators announced the so-called "New Plan", aiming at the control of imports and experts in order to obtain the raw materials which were needed for armaments and the foreign currency which was required to sustain the armament program. The new plan was the creation of defendant SCHACHT. Under the plan, defendant SCHACHT controlled imports by extending the system of Supervisory Boards for import control, which was previously limited to the main groups of raw materials, and all goods imported into Germany, where those raw materials are -- semimanufactured goods, or finished products. The requirement of licenses for imports enabled the Nazi conspirators to restrict imports to those commodities which served their war aims.
Subsequently, in February, 1935 the "Devisen" Law was passed which can be found (Reichsgesetsblatt 1935, I, 105). Under it, all transactions involving foreign exchange were subject to the approval of Devisenstellen (Foreign Exchange Control Offices). By thus controlling the disposition of foreign exchange, the conspirators were able to manipulate foreign trade so as to serve their needs and desires. geared to war under the guidance of the Nazi conspirators, particularly defendant SCHACHT. In a study of the economic mobilization for war as of 30 September 1934, it was stated that steps had already been taken to build up stock piles, to construct new facilities for the production of scarce goods, to redeploy industry to secure areas and to control fiscal and trade policies. References were made to the fact that the task of stock piling had been hampered by the requirement of secrecy and camouflage. Reserves of automobile fuels and stocks of coal were accumulated and the production of synthetic oil was accelerated. Civilian supply was purposely organized so that most plants would be working for the German Armed Forces.
Studies were made of the possibility of barter trade with "supposedly" neutral countries in case of war. problem for the conspirators. In 1934 and 1935, the German economy could by no possibility have raised funds for their extensive rearmament program through taxes and public loans. From the outset, the armament program involved "the engagement of the last reserves". tain this program, the Nazi conspirators were exceedingly anxious, in the early stages, to conceal the extent of their feverish armament activities. program, defendant Schacht proposed the use of "mefo" bills, spelled M-E-F-O. One of the primary advantages of this method was the fact that 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. Mefo bills were used exclusively for armament financing.
Transactions in "mefo" bills worked as follows: "Mefo bills were drawn by armament contractors and accepted by a limited liability company. In other words, of which spelling MEFO is from whence the transaction takes its name, called the Metallurgische Forschungsgesellschaft, m.b.h. (MEFO). This company had a nominal capital of one million Reichsmarks and was therefore merely a dummy organization. The bills were received by all German banks for possible rediscounting with the Reichsbank. The bills were guaranteed by the Reich. Their secrecy was assured by the fact that they appeared neither in the published statements of the Reichsbank nor in the budget figures.
The "mefo" bill system continued to be used until April 1, 1938. To that date, 12 Billion Reichsmarks of "mefo" bills for the financing of rearmament had been issued. Since it was no longer deemed necessary to conceal the vast progress of German rearmament, "mefo" financing was discontinued at that time.
finance the Secret Armament Program was the funds of political opponents of the Nazi regime, and marks of foreigners on deposit in the Reichsbank. As Schacht boasted, "Our armaments are also financed partly with the credits of our political opponents." dated 3 May 1935, and it bears the number in the document of Book 1168-PS, and the specific sentence I found in the second paragraph is:
The outstanding "mafo" bills at all times represented a threat to the stability of the currency because they could be tendered to the Reichsbank for discount, in which case the currency circulation would automatically have to be increased. Thus, there was an everpresent threat of inflation. But Schacht nevertheless continued on his course, because "he stands with unswerving loyalty to the Fuhrer, because he fully recognizes the basic idea of National Socialism and because at the end, the disturbances, compared to the great task can be considered irrevelant.
High ranking military officers paid tribute to defendant Schacht's contrivances on behalf of the Nazi war machine. In an article written for the "Military Weekly Gazette" in January 1937, it was said:
"The German Defense Force commemorates Dr. Schacht directions from the Fuhrer and Reich Chancellor.
The Defense Force owes it to Schacht's skill and great present strength from an army of 100,000 men."
re-doubled their efforts to prepare Germany for a major war. The Four-Year Plan was proclaimed by Hitler in his address at the Nurnberg Party Convention on 9 September, 1936, and it was given a statutory foundation by the Decree concerning the Execution of the Four-Year Plan dated 18 October, 1936, which I found in Reichsgesetzblatt 1936, I, 887.
By this decree defendant Goering was put in charge of the plan. He was authorized to enact any legal and administrative measures deemed necessary by him for the accomplishment of his task, and to issue orders and instructions to all government agencies, including the highest Reich authorities. complete self-sufficiency in essential raw materials, notably motor fuel, rubber, textile fiber, and non-ferrous metals, and to intensify preparations for war. The development of synthetic products was greatly accelerated despite their high costs. conspirators required foreign exchange to finance propaganda and espionage activities abroad. Thus, in a speech on November 1, 1937, before the Wehrmachtakademie, General Thomas stated:
"If you consider that one will need during the war Foreign Exchange will be needed."
by virtue of the espionage and propaganda services rendered free of charge to the Nazi State by leading German industrial concerns. 12 October 1935. It was found in the files of the Krupp Company by representatives of United States and British Isles. I shall not read all of it unless Your Honor requires it, but I'll start at the beginning by way of establishing its purposes and information contained therein. It is entitled "Memorandum". There is the subheading: Concerns: - distribution official propaganda literature abroad with help of our foreign connections.
It goes on and says that on the morning of October 11th the district representative of the Ribbentrop Private Foreign Office, Dienststelle Ribbentrop, made an appointment by telephone with Mr. Lachman to arrive at appointed time. In answer to my question with whom I was dealing, and which official bureau, the representative informed me that he was not himself the district representative of Ribbentrop Private Foreign Office, but that Mr. Lachman for Bormann, who said that he himself had come at Mr. Bormann's orders. of foreign propaganda, and Ribbentrop's Foreign Office in order to create a private organization for foreign propaganda, for this purpose the support of our firm and above all ah index of addresses were needed. The next sentence in the third paragraph I would like to read. "I informed Mr. Lachman that our firm has put itself years ago at the disposal of official bureaus for purposes of foreign propaganda, and that we had supported all requests addressed to us to the utmost.
I now hold in my hand document number P-167. This also is a copy of document found in the files of the Krupp Company by representatives of America and the British Isle. It is dated 12th day October ------of the meeting at Essen on 12th day October, 1937. It indicates that only in the "Mazo" representing the intelligence with the combined service of the ministry is the department coming under the defense office, as for the intelligence in the foreign department, but not including matters published in newspapers.
Intelligence received by Koch was from agents, and threading through other channels to be passed on by the services of the Intelligence.
Finally, the third paragraph states: On our part we undertook to supply cases to combine the service of ministry as required. to discuss the conspirators program of self-sufficiency, proceeded, as I have said so many times here today, with an amazing -- a real amazing speed; the production of steel, for example, as shown in the official German publications, rose as follows:
The production of gasoline increased at an even greater tempo: from 387,000 tons in 1934 to 1,494,000 tons in 1938. program with a sense of urgency which clearly betrayed their awareness of the imminence of war. At a 4 September 1936 meeting, Goering pointed out that "all measures have to be taken just as if we were actually in the state of imminent danger of war." He pointed out that "if war should break out tomorrow we would be forced to take measures from which we might possibly still shy away at the present moment. They are therefore to be taken." The extreme urgency was manifested by Goering's remark that "existent reserves will have to be touched for the purpose of carrying us over this, difficulty until the goal ordered by the Fuhrer has been reached; in case of war they are not a reliable backing in any case." 21 August 1936 the defendant Schacht was continuing with Hitler who had ordered that all formations of air force be ready by April 1, 1937. This served to accentuate the urgent sense of immediacy that had provided the Nazi economy from the outside. Reading from other sections in Hitler Nazi -
THE PRESIDENT: I am going to interrupt you. Insofar as I under
MR. DODD: No, Your Honor, the figures there on the production of steel, and of oil are from the statistical year book of the German Reich, 1939 and 1940, and the statistical year book from the German Reich 1941 and 1942. That is, with respect to the steel figures, and the figures which I quoted with respect to the production of gasoline are from the statistical year book of the German Reich, 1941 and 1942. marked EC 416, in document book.
MR. DODD (continuing): I quoted a remark about the --
THE PRESIDENT: That is the document you already referred to?
DODD: Yes, it has been referred to heretofore, I believe. Some of these documents contain references to more than one part of the presentation, and I have to refer to them at different times in the presentation I make.
THE PRESIDENT: All right. Go on, if you want to refer to it.
MR. DODD: The sixth paragraph on the first page: "Existing reserves will have to be touched for the purpose of carrying through over this difficulty until the goal ordered by the Fuehrer has been reached, and then in the case of war, they are not a reliable backing in any case." And on the second page, the eighth paragraph down: "If war should break out tomorrow, we would be forced to take measures from which we might possibly still find a way at the present moment. They are therefore to be taken." With reference to the assertion that the Defendant Schacht was advised that Hitler ordered that all formations of the air force be ready by April 1, 1937, I respectfully refer to document 1301-PS, dated 31 August 1936. I am advised that the document should bear an additional number. It should read 1301-PS-7. On the first page, if your Honor please, the third paragraph, or the paragraph marked 3 and after the word "air force"-
THE PRESIDENT: The third page?
MR. DODD: No, on the first page, 1301-PS-7. In your folio, it is page 19 of the group of documents bearing the serial number 1301-PS.
THE PRESIDENT: Our documents are not paged.
MR. DODD: I think you will find the number on the upper left-hand corner, very near to the top and at the extreme left.
THE PRESIDENT: Yes, I've got this document now.
MR. DODD: Paragraph No. 3 after the word, "air force."
THE PRESIDENT: Yes.
MR. DODD: It states that according to an order of the Fuehrer, the setting up of all air force units had to be completed on April 1, 1937; and if your Honor will turn the page, page 20, about midway in the page, you will observe that a copy of this document was sent to the president of the Reichsbank, Dr. Schacht.
THE PRESIDENT: Yes, what are you passing to now?
MR. DODD: I am now passing to another document immediately, your Honor. After their successes in Austria and the Sudetenland, the Nazi conspirators redoubled their efforts to equip themselves for the war of aggression which they planned to launch. In a conference on October 14, 1938, shortly before the Nazi conspirators made their first demands on Poland, the defendant Goering stated that, "The Fuehrer had instructed him to carry out a gigantic program, by comparison with which the performances thus far were insignificant. This faced difficulties which he would overcome with the greatest energy and ruthlessness." And that statement may be found in document 1301-PS, on page 25 of that document, and particularly the second sentence of the opening paragraph: "Everybody knows from the press what the world situation looks like, and therefor the Fuehrer has issued an order to him--"
THE PRESIDENT: That's not on page 25, is it? Is that on page 25 of 1301?
MR. DODD: Yes, your Honor.
THE PRESIDENT: Yes.
MR. DODD: "Everybody knows from the press what the world situation looks like, and therefore the Fuehrer has issued an order to him to carry out a gigantic program compared to which previous achievements are insignificant. There are difficulties in the way which he will overcome with the utmost energy and ruthlessness." for the invasion of Czechoslovakia, and it was considered necessary to replenish it. These--and I am now referring to the third paragraph of that same page 25 of document 1301-PS--"these gains made through the export are to be used for an increased armament. The armament should not be curtailed by export activities." He received the order from the Fuehrer to increase the armament to an abnormal extent, the air force having first priority. "Within the shortest time, the air force the air force should be increased five fold; also the navy should create war weapons more rapidly, and the army should produce large amounts of war weapons at a faster rate, particularly heavy artillery and heavy tanks.
Along with this a larger production of armament must go, especially fuel, rubber, powders and explosives must be moved to the foreground. This should be coupled with an accelerated expansion of highways, canals, and particularly of, the railroads. ensued between two men, the defendant Goering and the defendant Schacht, as a result of which the defendant Schacht resigned his position as head of the Ministry of Economics and plenipotentiary for the war economy in November of 1937 and was removed from the presidency of the Reichsbank in January of 1939.
I do not propose at this moment to go into the details of this controversy. There will be more said on that subject at a later stage in these proceedings, but for the present, I should like to have it quoted that it is our contention that Schacht's departure in no way implied any disagreement with the major war aims of the Nazis. The defendant Schacht took particular pride in his vast attainments in the financial and economic fields in aid of the Nazi war machine. And in the document bearing the number EC-257, which is a copy of a letter from the defendant Schacht to General Thomas, in the first paragraph of the letter, he wrote, "I think back with much satisfaction to the work in the Ministry of Economics which afforded me the opportunity to assist in the rearmament of the German people in the most critical period, not only in the financial but also in the economic sphere. I have always considered a rearmament of the German people as conditions sine qua non of the establishment of a new German nation." The second paragraph is of a more personal nature. It has no real bearing on the issues before us at this time. dated the 8th day of July, 1937, the defendant Schacht wrote, "The direction of the war economy by the plenipotentiary would in that event never take place entirely independant from the rest of the war mechanism but would be aimed at accomplishment of the political war purpose with the assistance of all economic forces. I am entirely willing, therefore, to participate in this way in the preparation of the forthcoming order giving effect to the Defense Act." tatives of the three branches of the armed forces in war games in war economy at Godesberg, which is probably some thing new by way--or was something new by way of movement exorcises. The war games in war economy were held at Godesberg, Germany. And I refer to the document bearing the label EC-174. It has as a heading, or subheading, under the summary, "War economy tasks in Godesberg undertaken by General Staff between the 25th of May and the 2nd of June," and it goes on to outline in some slight detail that there was a welcome to the General Staff war economy trip.
It tells something in a rather vague and not altogether clear way of just how a war game in war economy was conducted but il leaves no doubt in the mind that such a war game in war economy had been conducted at Godesberg at that time. On the second page of this document, the last paragraph, is the translation of Part L of the speech welcoming Dr. Schacht. It says: "Before I start with the discussion of the war game in war economy, I have to express how grateful we all are that you, President Dr. Schacht, have gone to the trouble to personally participate in our final discussion today despite all your other activities. This proves to us your deep interest in war economy tasks shown at all times and your presence is renewed proof that you are willing to facilitate for us soldiers the difficult war-economic preparations and to strengthen the harmonious cooperation with your offices."
I should also like to call the court's attention to the next to the last paragraph on the first page. It is a one-sentence paragraph, and it simply says, "I want to point out, however, that all matters and all information received has to be kept in strictest secrecy," and it refers to the preceding paragraph concerning the war games in war economy. Schacht had long sought, for in a speech to the employees of the former Austrian National Bank, as set out in the document bearing the label EC-297, and particularly the second paragraph of the first page of that document, nearly at the end, four or five lines from the end of that paragraph, we find these words, immediately after "large applause", these words: "Austria has certainly a great mission, namely, to be the bearer of German culture, to insure respect and regard for the German name, especially in the dierction of the southeast. Such a mission can only be performed within the Great German Reich and based on the power of a nation of 75 millions, which, regardless of the wish of the opponents,forms the heart and the soul of Europe." Dr. Schacht goes on to say, "We have read a lot in the foreign press during the last few days that this aim, the union of both countries, is to a certain degree justified, but that the methods of effecting this union was terrible.
This method which certainly did not suit one or the other power was nothing but the consequence of countless perfidies and brutal acts and violence which foreign countries have practiced against us." And I now refer to page 3 of this same document and to the fourth paragraph, about the center of the page, and reading from it: "I am known for sometimes expressing thoughts which give offense and there I would not like to depart from this consideration.
I know that there are even in this country a few people -- I believe they are not too numerous -who find fault with the events of the last few days; but nobody, I believe, doubts the goal, and it should be said to all grumblers that you can't satisfy everybody. One person says he would have done it maybe one way, but the remarkable thing is that they did not do it, and that it was only done by our Adolf Hitler; and if there is still something left to be improved, then those grumblers should try to bring about these improvements from the German Reich, and within the German community, but not to disturb us from without." defendant Schacht and other directors of the Reichsbank to Hitler urging a balancing of the budget in view of the threatening danger of inflation, it was stated, and I now refer to the document bearing the label EC-369 and particularly to the paragraph at the bottom of the first page of that document: "From the beginning the Reichsbank has been aware of the fact that a successful foreign policy can be attained only by the reconstruction of the German armed forces. It (the Reichsbank) therefore assumed to a very great extent the responsibility to finance the rearmament in spite of the inherent dangers to the currency. The justification therof was the necessity, which pushed all other considerations into the background, to carry through the armament at once, out of nothing, and furthermore under camouflage, which made a respect-commanding foreign policy.possible." point had been reached where greater production of armaments was no longer possible. That was merely a judgement on the situation and not a moral principle, for there was no opposition to Hitler's policy of agression. Doubts were entertained as to whether he could finance that policy. Hitler's letter to Schacht on the occasion of Schacht's departure from the Reichsbank, as contained in document EC-397, paid high tribute to Schacht's great efforts in furthering the program of the Nazi conspiritors.
The armed forces by now had enabled Hitler to take Austria and the Sudetenland. We say Schacht's task up to that point had been well done. From Document EC-397, in the words of Hitler, in a letter which he wrote to the defendant Schacht, "Your name, above all, will always be connected with the first epoch of national rearmament." was retained as a minister without portfolio and special confidential adviser to Hitler. Defendant Funk stepped into Schacht's position as president of the Reichsbank. And I ask at this point that the court might take judicial notice of the Volkisher Beobachter of January 21, 1939. The defendant Funk was completely uninhibited by fears of inflation, for like Goering, under whom he had served in the Four-Year Plan, he recognized no obstacles to the plan to attack Poland. written on August 25 1939, only a few days before the attack on Poland, the defendant Funk reported to Hitler that the Reichsbank was prepared to withstand any disturbances of the international currency and credit system occassioned by a large-scale war. He said that he had secretly transferred all available funds of the Reichsbank abroad into gold, and that Germany stood ready to meet the financial and economic tasks which lay ahead. from the speeches of the Nazi conspiritors themselves, that they did in fact direct the whole of the German economy toward preparation for aggressive war. To paraphrase the words of the defendant Goering, the conspiritors gave the German people "guns instead of butter," and they also gave -- we say, they also gave history its most striking example of a nation gearing itself in time of peace to the single purpose of aggressive war. Their economic preparations, formulated and applied with the, ruthless energy of Goering, the cynical financial wizardry of Schacht, and the willing complicity of Funk, among others, were the indispensable first act in the heart-breaking tragedy which their aggression inflicted upon the world.
documents which I have referred to in the course of this discussion. We have here the original documents in the folders, and they compare with the translations which have been submitted to the court.
THE PRESIDENT: Have the defendants had the opportunity of inspecting these documents?
MR. DODD: I doubt that they have had full opportunity to inspect them, your Honor. The statistics are there, but I don't think they have had the opportunity to inspect them because they haven't been there long enough for that.
THE PRESIDENT: Well, the Tribunal -- I think that there should be full opportunity of inspecting them and comparing with the copies which have been submitted to us before the originals are put in.
MR. DODD: Very well, your Honor. We may offer these later, as I understand?
THE PRESIDENT: Certainly. The Tribunal will adjourn for ten minutes.
(Whereupon the court, at 1525 o'clock, recessed for ten minutes.)
COLONEL STOREY: May it please the Tribunal:
the case and it will be presented by Mr. Alderman.
MR. SIDNEY S. ALDERMAN: May it please the Tribunal:
entire case is really, we think, the heart of the case. If we did not the concentration camps and the crimes against humanity, the persecutions, dealing with territorial gains acquired by threats of force and with actual aggressions and aggressive wars, constitute the real heart of the case.