Archive/File: imt/tgmwc/tgmwc-12/tgmwc-12-118.04 Last-Modified: 2000/01/29 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 programme, that you had the tactical consideration that, by putting German rearmament up for discussion, the debate on disarmament amongst the other governments might be started again? This debate, so to speak, 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 does not live up to that contract, and the other party has no way of making him fulfil his obligations. Thus the other party can do nothing except, in turn, not adhere to the [Page 414] contract. That is what Germany did. That is what I supported. Now, of course, I must say that I had expected a type of reaction which in such a case must always be expected from the partner to a contract, namely, that he would say, "Well, if you do not keep the contract either, then we shall have to discuss this contract again." I must say - and I can quite safely use the word - it was a disappointment to me that Germany's rearmament was not in any way replied to by any actions from the allies. 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 bring up again the question of disarmament in which I was interested. Not only was Germany allowed to go on rearming but the Naval agreement with Great Britain did, in fact, give Germany the legal right to rearm contrary to the Versailles Treaty. Military missions were sent to Germany to examine this rearmament, and German military installations were visited, and everything else was done, but nothing at all 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 so far as it was involved with aggressive purposes. As I said at the beginning, the United States does not care to try here the issues of European politics, nor are they submitted to this Tribunal for decision. The sole question here is the Indictment, which charges arming for the purpose of aggression. I do not want to interfere with the defendant giving any facts that bear on his aggressive intentions, but the details of negotiations of European politics and charges and counter-charges between governments, it seems to me, lies beyond any inquiry that we could possibly make, and the details of this matter seem to me not helpful to the solution of the issues here, and I think was ruled out by the Tribunal in the case of Goering, if I am not mistaken. THE PRESIDENT: Well, Dr. Dix, it all seems to be a matter of argument, and argument is not really the subject of evidence. DR. DIX: I do not believe so, your Lordship. What Mr. Justice Jackson said is quite correct. 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 he 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, in this connection, to one of the motives for Dr. Schacht's assistance in rearmament. It was his hope to renew the debate on disarmament. May I draw your attention to Exhibit 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- establishment of the disturbed equilibrium and the only means of inducing the other European powers to participate in a limitation of armaments which, in opposition to the Versailles Treaty, they had sought to avoid." That is a statement of Scherpenberg regarding conversations which Schacht had had at that time. It is, therefore, not an ex-post opinion, it is the report [Page 415] of a conversation which he, Scherpenberg, had with his father-in-law Schacht at that time. That is just an additional remark I wanted to make. BY DR. DIX: Q. You have spoken about the rearmament on the part of the other States, particularly Czechoslovakia and Poland, but can you tell us whether, at the time, you knew of or heard any exact details regarding the state of armament of those two States? A. I only know that it was known that Russia in 1935 announced that its peacetime army should be increased to 960,000 men. Then I knew that in Czechoslovakia, for instance, the installation of aerodromes was one of the leading tasks of rearmament. We knew that Great Britain's navy was to be stepped up. Q. Did you later on completely abandon your idea of general disarmament? A. On the contrary, I used every opportunity, in particular during conversations with men from abroad, to say that the aim should always be disarmament. That, of course, rearmament would always mean an economic burden for us, which we considered a most unpleasant state of affairs. I remember a conversation which I had with the American Ambassador Davies. His report of this conversation is incorporated in an exhibit that has been submitted to the Tribunal. It is an entry in a diary which is repeated in his book, "Mission to Moscow," and it is dated as early as 20 June, 1937, Berlin. He is writing about the fact that amongst other things he and I had talked about disarmament problems, and I need only quote one sentence. I have not the number of the document, your Lordship, but it has been submitted to the Tribunal. Q. It is Schacht Exhibit 18, German text, Page 43, English, Page 49. A. Since I have only the English text, I shall read from it. Davies writes:- "When I outlined the President's (Roosevelt) suggestion of limitation of armament to defensive weapons only, such as a man could carry on his shoulder, he (Schacht) almost jumped out of his seat with enthusiasm." End of quotation. It becomes clear, therefore, from Ambassador Davies' remark, that I was most enthusiastic about this renewed attempt and the possibility of an imminent step towards disarmament as proposed by President Roosevelt. In this same book Davies reports a few days later, on 26 June, 1937, about the conversation he had with me, in a letter addressed to the President of the United States. I quote only one very brief paragraph - in English again:- "I then stated to him (i.e., Schacht) that the President in conversation with me had analysed 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 merely defensive military basis, and this through the elimination of aircraft, tanks, and heavy equipment, and the limitation of armaments to such weapons only as a man could carry on his back, with an agreement among the nations for adequate policing of the plan by a neutral State. Schacht literally jumped at the idea. He said: 'That's 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 every single one of our neighbour States. Q. And did Hitler talk to you of far-reaching intentions, or did you hear of any? A. At no time did he inform me of them, nor did I hear from anyone else whether he had made remarks about further intentions. [Page 416] 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 this financing or were you prepared to advance any amount of money? A. I was certainly by no means ready to advance any unlimited amount of money, particularly as these were not contributions; they were credits which had to be repaid. The limits for these credits were two-fold: One was that the Reichsbank was independent of the Reich finance administration, and the supreme authority of the State as far as the granting of the credits was concerned. The board of directors 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 it right. As I was perfectly certain of the policy of the board of directors of the Reichsbank - all of these men agreed with me completely on financial and banking policy - therein lay the first possibility of applying a brake, if I considered it necessary. The second safeguard, the limit, was contained in the agreement which the Minister of Finance, the Government, and so of course Hitler, had made - the Mefo bills, of which these credits subsisted, which were to be paid back when they expired. They were repayable after five years, and I have already said that if the repayments had been made, funds for rearmament would naturally have had to decrease. Therein lay the second possibility of limiting the rearmament. Q. Will you now please give the Tribunal the figures which you were dealing with at the time? A. We went up to ... MR. JUSTICE JACKSON: We have no desire to enter into controversy about the figures of financing rearmament. It seems that the detail of dollars and cents - or Reichsmarks - is unimportant to this, and terribly involved. We are not trying whether it cost too much or too little; the purpose of this rearmament is the only question we have in mind. I do not see that the statistics of cost have anything to do with it. THE PRESIDENT: Dr. Dix, we would like to know what figures the accused and you are talking about. DR. DIX: The sums that Schacht as President of the Reichsbank was ready to grant for the rearmament programme; that, no doubt, is relevant, because if those sums remained within such limits as might possibly be considered adequate for defensive rearmaments in case of emergency, then, of course, the extent of that financial assistance is an important piece of evidence regarding the intentions which Schacht was pursuing at the time. That is the very thing that in the case of Schacht, Mr. Justice Jackson considers relevant, namely, whether he helped prepare for an aggressive war. If he was only considering the possibility of a defensive war in his financing, and only placed sums at the disposal of the rearmament programme which would never have allowed an aggressive war, then that would refute the accusation raised by the prosecution against the accused, and I think that the relevance of that question cannot be doubted. THE PRESIDENT: Are you saying that if the defendant Schacht 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 be not 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 and unwillingly 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 size of the amount. THE PRESIDENT: Well, that can be stated very briefly, but as for details of finance [Page 417] DR. DIX: I am of the opinion also that we have talked about it too long. I was only going to ask, "What sum did you give"? and then the objection was raised, and thus the discussion was drawn out. May I put the question? THE PRESIDENT: Yes. Q. Well, then, what sum did you intend to grant? A. Naturally as little as possible. However, what I contributed is what is important. I 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. I have discussed that with one of the interrogators of the English prosecution, who asked me about the subject, and I replied that that was about one third of the amount which was spent on rearmament. After that, without the Reichsbank, beginning with 1 April, 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 your departure, was it not? A. That was after I had stopped credits. For record purposes I should like to say that I think I made a mistake before, I said milliards instead of millions, but I think it is obvious what I meant. I only wanted to correct it. 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. A. Here, again, the prosecutor did not see things in the proper light. 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 can hardly be held responsible for the things done by the Secretary of State in Washington, for instance. Q. You have also been accused that the debt of the Reich increased three times during the time while you were president of the Reichsbank. A. I might just as well be accused of being responsible for the fact that the birth rate in Germany rose sharply during the time I was President of the Reichsbank. I want to emphasise the fact that I had nothing to do with either. Q. You were not responsible for the same reason. A. No, of course I am not responsible for that. Q. And presumably the same applies to the point made by the prosecution that you allegedly drafted a new finance programme in 1938? A. On the contrary, I refused to do anything else for the financing of rearmament; the finance programme was drafted by a State Secretary in the Reich Finance Ministry, and, it looked like it. Q. One of your economic policies, during the time you were Minister of Economy, and which you have been accused of as being a preparation for war, was the so-called "New Plan" (Neue Plan). What was that? A. May I first of all say that the "New Plan" had nothing at all to do with rearmament. Germany, after the Treaty of Versailles, had fallen into a state of distress, economically speaking and especially export ... DR. DIX: May I interrupt you. Your Lordship, if the Tribunal is of the opinion that the "New Plan" has nothing to do with the rearmament and preparation for war - I think the prosecution is of the opposite opinion - then, of course, the question is irrelevant, and I will drop it. I am only putting it because the "New Plan" has been used in the arguments of the prosecution. THE PRESIDENT: If you say, and the defendant has just said, that the "New Plan" had nothing to do with rearmament, I think you might leave it for cross-examination and you can raise it again in re-examination if it is necessary. Q. In that case I shall not ask you about the barter agreements, either. I shall leave it to the prosecution to bring it out during the cross-examination. I cannot see what it has to do with the preparation for war. [Page 418] Now, defendant, you have already stated that you strove to remove the Versailles Treaty by means of peaceful negotiations, or at least, to modify it. In your opinion, did any such means for a peaceful modification of the Versailles Treaty still exist? A. In my opinion, there were no means other than peaceful ones. The desire to modify the Versailles Treaty by means of a war was a crime. Q. Right. But now you are being accused that the alleged preparations for war, which really were a counter measure to the general rearmament, but, although not a preparation for an aggressive war, were nevertheless a rearmament, as such were an infringement of the Treaty of Versailles. I assume that you at the time decided to help finance that rearmament only after giving the problem due legal and moral considerations. What, exactly, were these considerations? A. I think I have already answered that question in detail. I need add nothing else.
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