procedure they were by no means risky, and to prove this I would say that if Herr Hitler, after 1937, had dealt with finance as it had been proposed in paying the Mefo Bills back, and the money was there, then this system would have worked just as smoothly as I had started it off. But Herr Hitler preferred simply to refuse to pay the bills back, and instead to invest the money in further armament. I cou couldn't forsee that; I couldn't expect that someone would break his word in this matter too, which was a purely business matter. doubt have lacked for further rearmaments and the meeting of the bills would there fore have curtailed armament. Is that a correct conclusion? later. I said if the Mefo Bills weren't met, it would obviously show ill-will; then there were further rearmaments, and that must not be so.
Q Earlier you dealt with the question of keeping armament secret. You mentioned it as an aside. Have you anything to add to that?
A I think that it has to be dealt with generally. It has to be, said that State expenditure did not come under the jurisdiction of the President of the Reichsbank, and that the taking of State money is under the control of the Minist of Finance, and consequently it is his duty to publish it and deal with it. The Reichsbank had in their ledgers every bill which they ever had in their possession and they were shown weekly. so-called keeping secret of the armament program?
Q Another aside you mentioned was why you were in favor of rearmament. Have you anything to add to that?
A Yes. A few very important remarks might, of course, be made on that, since this question is the chief accusation against me, and therefore I may perhaps have permission to deal with it in a little more detail.
armed nations, and I considered it a danger to peace. I want to say that these states weren't only armed, but that they were, to a very large part, continuing to arm and were making renewed rearmaments. The additional rearament refers in particular to the two states Czechoslovakia and Poland which hadn't, of course, existed before, and the further rearmament refers, of course, also to the naval rearmament in Britain subsequent to 1935. which wasn't armed could not defend itself, and that consequently in the international circle it would have no significance. The British Prime Minister Baldwin once said, in 1935, "A country which isn't willing to take necessary precautionary measures for its own defence will never have power in this world, neither moral power nor material power." Germanywas regarded by me as being a permanent moral and material danger to German merely a statement of fact -- that Germany, after the Treaty of Versailles, was in a condition of extreme disorganization. Conditions in Europe were such that in Russia, the latent conflict and controversy existed with regard to Finland and Poland, which had, of course, considerable parts of Russian territory. There was conflict with Rumania which had Bessarabia, and then for Rumania, there was the conflict with the Bulgarians; there was the difference of opinion about the territory belonging to Hungary, conflicts with Serbia, between Serbia and Hungary and Hungary and all its neighbors. There was the conflict between Bulgaria and Greece. In other words, the entire East of Europe was in one continuous state of neutral suspicion and conflict of interests. serious internal conflicts. I remind you of the conflict between the Czechs and the Slovaks. I remind you of the Civil war conditions in Sapin. All that will make it possible to understand that I considered it absolutely essential that in the event of the outbreak of any conflagration in this devil's punch bowl, there should be the absolute necessity for Germany, at least, to protect its neutral attitude. That couldn't possibly be done with that small army of 100,000 men.
hands in this prison, where the conditions in Europe were described, and I beg you to allow me to quote one single sentence. I shall have to quote it in English It doesn't represent the views of the Daily Mail; it describes conditions in Europe.
I quote:
"All observers are agreed that there is continual terror of an explosion and that the crazy frontiers of the peace treaties cannot be indefinitely maintained.
Here too vigorous non-interference should be the pin of the British chariot. What further interests have we in Austria or in Czechoslovakia or in Roumania or in Lithuania or Poland?" this over-heated boiling pot there was the unarmed Germany. I considered that the most serious danger to my country. in anyway. No, gentlemen of the Tribunal, I did not consider Germany threatened directly with an attack, nor was I of the opinion that Russia was likely to attack Germany. However, there we had experienced the break-through of the Ruhr in 1923. That passed, and the situation at that time made it an absolutely essential demand for me that Germany should be equal to other nations and should be supported if there should be an attack. to be dealt with by me and so will the question of how the foreign countries behaved towards us.
Q What did you know at the time about Germany's efforts to bring about disarmament as far as other nations Were Concerned? Was that point of view important for your decisions?
A May I, generally and principally speaking, say the following?
In principle I was not in favor of rearmament; in principle I was in favor of an equal position for Germany. That is, that German equality could be brought about either by means of disarmament on the part of the other nations or by means of our own rearmament. I would have preferred, and I wished at the time disarmament on the part of the others, something which had been promised to us. Consequently, I made the most anxious efforts at the beginning, and during the subsequent years, that disarmament should be avoided if one could succeed in bringing about disarmament. the disarmament conference of the League of Nations it had been repeatedly stated and declared that Germany had met her obligations regarding disarmament. time, and to all Germans who participated in political life, it was a considerable relief that during the first years Hitler, again and again, urged that there should be disarmament and had offered disarmament.
Afterwards, of course, it is easy to say that that was also a false pretense and a lie on Hitler's part, but that false pretense and that lie would have blown up quite quickly if the countries abroad had shown the slightest inclination to take up the proposals and the offers. when Foreign Minister Eden of Great Britain was in Germany, at the beginning of 1934. At that time, during conversations with him, quite concrete proposals concerning Germany's duties regarding disarmament were being putto him in case disarmament on the part of the others might be begun and carried out. It was promised to Eden that all so-called military units like the SS, the SA and the Hitler Youth would be deprived of their military character if only one could succeed in accelerating general disarmament by those means. but since it is the wish of the president not to delay the proceedings, I shall certainly forego them. There are well-known statements made by statesmen and ministers, ambassadors, and such, all of which have the same tenor, namely, that it was absolutely essential that the promise made by the Allies should be kept; in other words, that disarmament should be carried out
DR. DIX: Excuse me if I interrupt you, but we can do it more quickly and more simply by asking the Tribunal--without reading that--to take judicial notice of Exhibit No. 12, which I have been granted. It is at page 31 of the English translation of my document book. others, and also the Belgian Foreign Minister. There is no need to road them; they can be presented. I just hear that they have been presented, and I can refer to them. BY DR. DIX:
Q Please forgive me for interrupting you. Will you continue?
A Well, in that case my statement is complete. Hitler did make these offers continuously, but the other countries did not take up a single one of these offers, and thus only the alternative remained, and that was rearmament. That rearmament carried out by Hitler was financed with my assistance, and I assure responsibility for everything I have done in that connection.
Q Do I understand you correctly? Can one draw the conclusion from your statement that there were other reasons for your assistance in the rearmament program, that you had the tactical thought that by putting German rearmament up for discussion the debate about disarmament amongst the other governments might be started again, which, at that time, had died down?
A If I may, I will illustrate it briefly by means of an example:
Two parties have a contract with each other. One party doesn't live up to that contract, and the other party has no way of malting the breaker of the contract stick to it. Then, the other party has no responsibility whatsoever, so that he, in turn, should not adhere to the contract. That is what Germany did. That is what I supported. in any such case must always be expected from a partner to a contract, namely that he would say, "Well, if you don't keep up the contract either, then we shall have to talk about the contract again."
to me that Germany's rearmament was not in any way replied to by any actions abroad. This so-called breach of contract on Germany's part against the Versailles Treaty was taken quite calmly. A note of protest was all; nothing in the least was done, apart from that, to solve the question of disarmament. That is what I was interested in, to start it up again. Great Britain did, in fact, give the legal right, contrary to the Versailles Treaty, to rearm. Military missions were sent to Germany to look at this rearmament, and German military installations and shows were visited and everything was done, but nothing was done to stop Germany's rearmament.
MR. JUSTICE JACKSON: If the Tribunal please, I cannot see the point of all this detail. We have conceded that rearmament here, except as it was involved with aggressive purposes, is immaterial. As I said in the opening, the United States does not care to try here the issues of European politics, nor are they submitted to this Tribunal for decision. purpose of aggression. upon his aggressive intentions, but the details of negotiations and European politics and charges and counter-charges between governments, it seems to me, lies way back of any inquiry that we could possibly make, and the details of this matter seem to me not helpful to the solution of the issues hare, and I think was ruled out by the Tribunal in the case of Goering, if I am not mistaken.
THE CHAIRMAN: Well, Dr. Dix, it all seems to be a matter of argument, and argument isn't really the subject of evidence.
DR. DIX: I don't believe that is quite right, Your Lordship. Dr. Schacht is accused of having assisted in bringing about an aggressive war, but this assistance of his is supposed to have been the financing which was carried out.
THE PRESIDENT: Go on, Dr. Dix, and do try to make it as short as possible.
BY DR. DIX:
Q I think you had come to the end of that question anyway, Dr. Schacht
DR. DIX: May I refer to the motive for Dr. Schacht's assistance in rearmament? It was his hope to again start the debate about disarmament. In that connection may I draw your attention to Exhibit No. 36, page 141 of the German text, and page 149 of the English text? It is an affidavit from Dr. Schacht's son-in-law, Dr. von Scherpenberg. On page 2 of that affidavit you will find the following brief paragraph which I propose to read; in fact, I can confine myself to one sentence:
"He--that is to say, Schacht--considered rearmament within certain limits to be the only means for the re-establishing of the disturbed balance and the only means of bringing the other European powers into participation within the limitations of disarmament." Schacht had had at that time. It is, therefore, not an ex post opinion, afterwards, it is the report of a conversation which Schacht's son-in-law had with Schacht at that time.
BY DR. DIX:
Q. And, now, regarding rearmament on the part of the other States, particularly Czechoslovakia and Poland, you have discussed that, but can you say anything regarding the question whether you know any exact detail regarding the state of disarmament of those two States, or heard about it?
A. I only know that it was known about Russia that in 1935 they announce that its peacetime army should be increased to 960,000 men; and then I knew that in Czechoslovakia, for instance, the installation of aerodromes was one of the leading tasks of rearmament. We knew about Great Britain, that her wartime navy was to be stepped up.
Q. Did you later on drop the thought of general rearmament?
A. To the contrary, I used every opportunity, in particular during conversations with men from abroad, to say that the aims should always be disarmament, that, of course, rearmament would always mean an economic burden which we considered a most unpleasant state of affairs. Davies. He did this -- and it is incorporated in an exhibit that has been sub mitted to the Tribunal -- in a report. To begin with, it is an entry in a diary or journal which is repeated in his book, "Mission to Moscow", and it it dated the 20th of June, 1937, as early as that. It was made in Berlin. He is writing about the fact that amongst other things he and I had talked about dis armament problems, and I need only quote one sentence. Unfortunately, I haven got the number of the document, your Lordship, but it has been submitted to the Tribunal.
Q. It is Schacht Exhibit 18, German page 43, English page 49.
A. Since I have only got the English text, I shall read from it. Davies writes:
" (Reading in English) When I outlined the President's suggestion of limitation of armament to defensive weapons only, such as a man could carry on his shoulder, he almost jumped out of his seat with enthusiasm." with this renewed attempt and the impending initiative towards disarmament which I had hoped for, which was coming from President Roosevelt, I was most enthusiasitcally entering into the spirit of that proposal.
1937, in a letter addressed to the President of the United States about a conversation he had with me. And from that I quote only one very brief paragraph. Again I shall have to do it in English:
" (Reading in English) I then stated to him that the President in conversation with me had analyzed the European situation and had considered that a solution might be found in an agreement among the European nations to a reduction of armaments to a sheerly defensive military basis; and this through the elimination of aircraft, tanks, and heavy equipment, and the limitation of armament to such weapons only as a man could carry on his back, with an agree ment among the nations for adequate policing of the plan by a neutral state. Schacht literally jumped at the idea. He said: 'That is absolutely the solution!' He said that in its simplicity it had the earmarks of great genius. His enthusiasm was extraordinary."
Q. To what extent did you want rearmament?
A. Not beyond equality with neighboring States, with every single one our neighbor-States.
Q. And did Hitler, as far as you know, state any further intentions?
A. At no time did he say so to me, nor did I hear from anyone else whether he had made remarks about rearmament going beyond that.
Q. Were you informed about the extent, the type and speed of rearmament
A. No, I was never told about that.
Q. Had you set yourself a limit regarding that finance or were you prepared to advance any amount of money?
A. I was certainly by no means to advance any unlimited amounts of money particularly since these weren't contributions; they were credits which had to be repaid. But the limits of these credits were two-fold: one, that the Reichsbank was independent of the administration of the Reich finance and the supreme authority of the State. The director of the Reichsbank could pass a resolution that credits were to be given or were not to be given, or that credits were to be stopped if they considered that a suitable procedure.
Since I was perfectly certain or the policy or the director of the Reichsbank, that all of these men agreed with no perfectly on the financial policy, that was the first possibility -- of applying the brakes, if things got too far out of hand; and of course, we will come to that later. The second safeguard, the certain limitation, was contained in the agreement which the Minister of Finance and the Government and with that, of course, Hitler, had made; and according to which Mefo Bills, the means of these credits, were to be paid back when they expired. On the other hand, Mefo Bills were repayable after five years, and I have already said that if that repayment had been carried out, means for rearmament would have had, of course, to decrease. That, in other words, was the second possibility of limiting the rearmament. you were dealing with at the time?
MR. JUSTICE JACKSON: We have no desire to enter into controversy about the figures of finance and rearmament. It seems that the details of dollars and cents -- or Reichsmarks -- are unimportant to this issue here, and terribly involved. We aren't trying whether the cost was too much or too little; the purpose of this rearmament is the only issue. I don't see that the statistics or cost has anything to do with it.
THE PRESIDENT: Dr. Dix, we would like to know what figures you are talking about.
DR. DIX: The sums that Schacht as President of the Reichsbank placed at the disposal of the rearmament program, or was ready to; That, no doubt, is relevant, because if these sums remained within such limits as might possibly be considered adequate for defensive rearmaments, then, of course, the extent of that financial assistance is a final piece of evidence regarding the intentions which Schacht was pursuing at the time.
That is the very thing that in the case of Schacht is relevant namely, whether he was preparing for an aggressive war.
If, on the other hand, he was considering the possibility of a defensive war in his financing and only placed suns at the disposal of the rearmanent program which would never have enabled that program in the position of carrying out an aggressive war, then that would be a contradiction of the accusation raised by the Prosecution against the accused, and I think that the relevance of that question cannot be doubted.
THE PRESIDENT: And you saying that if the Defendant placed at the disposal of the Reich, say, 100,000,000, or whatever the figure is, it would be defensive, and if he placed 150,000,000 it would not be defensive, or what? Is it simply the amount?
DR. DIX: No, I want to say that if, as will be proved, he only wanted to give nine and later on gave hesitatingly twelve million for the purpose, then that contribution can never have been aimed at an aggressive war.
THE PRESIDENT: It is simply the amount?
DR. DIX: Yes, only the amount.
THE PRESIDENT: Well, that can be stated very shortly, but as for details of finance -
DR. DIX: I am of the same opinion, but it is not my fault that we have talked about it at such great length. I was only going to ask, what sum did you give, and at that moment the objection was raised, and thus the discussion was drawn out. May I put the question?
THE PRESIDENT: Yes.
Q Well, then which figure did you want to contribute? important. I have placed at their disposal -- to give one figure and to be very brief -- until 31 March 1938, credits amounting to a total of 12 milliards of reichsmarks. about the subject, and we have agreed that that was about one third of the amount which has been spent on re-armament. 1938, the figure stated in that budget year for rearmament was eleven milliards, and in the subsequent year, twenty and one half, and of that, not a penny came from the Reichsbank.
Q That was after you have left, was it not?
DR. DIX: For the record, I should like to say that I made a mistake the other day. I said millions instead of billions, but I think it is obvious.
Q Now, then, Dr. Schacht, the prosecution have stated that on 19 February 1935, the Ministry of Finance received authority to borrow unlimited amounts of money if Hitler ordered them to do so. The President of the Reichsbank is not responsible for the actions of the Ministry of Finance of the Reich.
I think the President of the Federal Reserve Bank in New York could hardly be held responsible for the things done by the Secretary of State in Washington, for instance. times during the time when you were president of the Reichsbank. fact that the birth rate in Germany rose during the time I was President of the Reichsbank. I just want to emphasize the fact that I was not participating.
Q For the same reason you were not responsible? that you in 1938 were drafting a new finance program?
A To the contrary I had turned it down. I had refused to do anything for the financing of rearmament, and the program of finance was compiled by the Secretary of State in the Reich Finance Ministry, and by God, it looked like it. of Economy, which have been accused as being in preparation for war, were the so-called New Plan. What was that? with rearmament. Germany, according to the Treaty of Versailles, had been put into a state of emergency, economically speaking.
DR. DIX: May I interrupt you. Your Lordship, if the Tribunal is of the
THE PRESIDENT: If you say, and the defendant has just said, that the I might leave it to the Prosecution to bring it out during the cross-examination. I cannot see, at any rate, what it can have to do with the preparation for war.
remove the Versailles Treaty by means of peaceful negotiations, or anxious to change it.
Were there any such means for a peaceful change of the Versailles Treaty at the time? The change of the Versailles Treaty by means of a war was a crime. preparations for war were part of your doing, and that re-armaments, without preparation of an aggressive war, re-armaments as such alone were a violation of the Treaty of Versailles. I assume that you at the time when you decided to assist financially in that re-armament had made both legal and moral inquiries and had thought about it from that point of view.
A I think I have answered that question in detail earlier. I have nothing to add.
Q Good. This attitude of yours, the attitude of a pacifist and as one who was definitely opposed to the extension of living space in Europe, was that attitude of yours known abroad? from March 1933--and I am, of course, only talking about the Hitler regime-my friends abroad and my acquaintances were efficiently and perfectly well 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 large banks in all the large countries met, and I have always used all these meetings to tell these gentlemen quite clearly what the situation in Germany was. conferences or conversations. If one is not allowed to talk to foreigners any more, then one can, of course, not cone to any understanding with them. Those silly accusations that one had to avoid contact with foreigners appears to be perfectly unnecessary, and if the witness Gisevius thought-- and this corporal the other day--that he should protect his dead comrades, who were my dead comrades too, from being accused of committing high treason, then I should like to say that I consider it quite unnecessary. Never at anytime did any member of our group give away any German interests or violate them.
To the contrary, he fought for the interests of Germany, and to emphasize that, I should like to give you proof of that.
After we had occupied Paris, the files of the Quai d'Orsay were confiscated and were carefully screened by officials from the German Foreign Office. I need not assure you that on that occasion they were looking for proof whether there were not so-called defeatists circles in Germany who might be traced there in this foreign country. All the files of the Quai d'Orsay referring to my person and many discussions were of course recorded which I had had with Frenchmen, were searched by the Foreign Office officials at that time, without my knowledge, of course. received a letter from a German professor who had participated in that search that was carried out by the Foreign Office. I shall mention the name so that, if necessary, he can testify. It is Professor of Finance and National Economy, Professor Stuckenbeck of Erlangen, and he read to me-
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 statement. What he wants to say is that capable men abroad knew him and that they, in turn, knew that he was certainly a man of peace and not a man who prepared aggressive wars, and that applies to the period of re-armament.
THE PRESIDENT: But he said that five minutes ago.
DR. DIX: I do not think the question of Professor Stuckenbeck is so important. Lot us turn to the next problem. This is contained in Exhibit No. 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 may I 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, and the passages on page 108 and 109.
"In accordance to 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 these 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 agre to anything like that?' I said that I didn't know that, but that in my opinion there was a considerable circle of influence and responsible men existed in Germany who would understand such a train of thoughts. Litvinov, the Foreign Kommissar, himself, 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."
And now I ask you, do you remember that conversation with Davies?
A. I think there must be a mistake. I didn't speak to Davies; 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. ledge of Hitler's intentions of war must have been arising from your knowledge as Plenipotentiary for War Economy and from your membership of the Reich Defense Counsel. Goering has made a detailed statement on it. Have you anything to add to Goering's statement, anything new?
A. I think the witness Lammers has also talked about it. I should like to merely confirm that the first Reich Defense Counsel of 1935 was nothing other than the legal justification of a committee which existed before '33, and which contained ministerial officials who had to deal with economic matters, too, who had to deal with administration, and who, in the event of a threat of war against Germany, would have to act.
Q. How often did you meet the Ministry of War and the Plenipotentiary for Administration?
A. This famous three-men group mentioned by one of the Prosecutors as the cornerstone of war policy never met at all, and it isn't a miracle 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 Peich Defense Counsel. It is document EC-128, US-623. Have you anything in particular to add to that?
A. Yes, I should like to have permission to quote one very brief paragraph. As I can see, there are only two sentences. This report contains the following statement: It is, incidentally, with reference 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 translation. I quote:
"At that time we were able to extend our bases for raw materials and production towards the West. For a long time we took from Antwerp (textiles), and enlarged towards the East and Southwest (in Serbia and Turkey) (mineral oils in Rumania). Today we have to reckon with the possibility of dealings thrown back in our country and even of being deprived thereby of most valuable industrial and raw material in the West and in the East." expected in September that one would have to protect oneself against the possibility of such a situation, that this is the best proof that an aggressive war wouldn't possibly have been meant in this connection.
Q. In that connection, under the heading of peaceful efforts, can you perhaps tell the Tribunal what your peaceful efforts were, stipulating that reparations should become less severe or to an end?
A. Right from the very first moment, after I heard of the sums of the reparations which took place, in 1921, I think I fought against this nonsense, using the evidence that the carrying out of these reparations would throw the entire world into economic chaos.
One cannot during one generation pay two billions of marks as they are here.
Q. Well, all right. Will you please be brief and talk about your peaceful efforts and don't talk about economy?
A. Rightfully I thought about it and, as time went by, I did succeed in convincing the public of all this nonsense which in terms meant that in July, if I'm not mistaken, of 1932, the then Chancellor Papen of the Reich was in a position to affix his signature to an agreement at Lusanne, which reduced reparations, in fact, to an impending sum of three billions, but which, in fact, can celled reparations altogether.
Q. Regarding your definitely peaceful efforts, did you continue them elsewhere? That is the question of the negotiations in Paris. You've touched on it regarding the colonial questions. Have you anything to add to that in this connection?
A. I don't remember at the moment how far I had gone there at the time, but I think I reported on the negotiations in detail, so I needn't repeat.
Q. George Messersmith, the often-mentioned former Consul General of the United States in Berlin, states in his affidavit EC-451, US Exhibit No 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 stay in power and that its war machine could not have been prepared if there hadn't been your activities and participation. At the end of the case for the Prosecution, the Prosecution are using that thesis of Messersmith's, and 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 the 31st of March, 1938, the Reichsbank had contributed twelve billions; that is to say, during the first budget year, two and a half quarter billions, and during the subsequent three years, three and a quarter billions per annum.