The prosecution concedes,
at the outset, that although Schacht believed that the Jews of Germany should be
stripped of their rights as citizens, he was
not in complete sympathy with that aspect
of the Nazi Party's program which involved
the wholesale extermination of the Jews, and
that he was, for that reason, attacked from
time to time by the more extreme elements
of the Nazi Party. It further concedes that
Schacht, on occasion, gave aid and comfort
to individual Jews who sought to escape the
indignities generally inflicted upon Jews
in Nazi Germany Schacht's attitude towards
the Jews is exemplified by his speech at the
German Eastern Fair, Koenigsberg, on 18 August
1935, wherein he said:
The foregoing concessions should render it unnecessary for Schacht
to produce evidence upon these matters.
The prosecution's case against Schacht is that he planned and prepared
for wars of aggression and wars in violation of international treaties,
agreements and assurances, and that he knowingly and willfully participated
in the Nazi common plan or conspiracy to plan, prepare, initiate, and
wage such wars. The evidence establishes that Schacht actively supported
Hitler's accession to power; that he was the chief architect of the
financial plans and devices which made possible the huge program of
rearmament in Germany; that he played a dominant role in the economic
planning of, and preparation for, wars of aggression; and that he contributed
his efforts willingly and with full knowledge of the fact that the leader
of the conspiracy, Adolf Hitler, was determined upon attaining his objectives
by launching aggressive wars.
Germany was virtually prostrate in the early part of 1933; she was
faced with dwindling revenues from taxation and seemingly unable to
raise money either through external or internal loans. Hitler entrusted
to Schacht the task of wringing from the depressed German economy the
tremendous material requirements of armed aggression, and endowed him
with vast powers over every sector of German industry, commerce, and
finance to carry out that task. Some of the devices which Schacht employed
to fulfill his mission will now be examined.
Schacht's program, as hereinafter outlined, was, by his own admissions,
dedicated to the accomplishment of Hitler's armament program. In a memorandum
to Hitler dated 3 May 1935 concerning the financing of armament, Schacht
"The following comments are based on the assumption that the
accomplishment of the armament program in regard to speed and extent,
is the task of German policy, and that therefore everything else must
be subordinated to this aim, although the reaching of this main goal
must not be imperiled by neglecting other questions. *** ''
"*** all expenditures which are not urgently needed in other
matters, must stop and the entire, in itself small, financial power
of Germany must be concentrated toward the one goal: to arm."
In a letter to General Thomas dated 29 December 1937, Schacht stated:
"I have always considered a rearmament of the German people
as conditio sine qua non of the establishment of a new German nation."
Schacht's vast achievements in furtherance of the conspirators' program
may conveniently be considered under four headings: (a) armament financing;
(b) the "New Plan"; (c) control of production; and (d) plans
and preparations for economic controls during war.
(1) Armament Financing.
(a) Mefo bills. The financing of the conspirators' huge rearmament
program presented a twofold problem to Schacht First, was the need of
obtaining funds over and above the amount which could be obtained through
taxation and public loans. Second, was the conspirators' desire, in
the early stages of rearmament, to conceal the extent of their feverish
armament activities. Schacht's answer to the problem was the "mefo"
bills, a scheme which he devised for the exclusive use of armament financing
Transactions in "mefo" bills worked as follows: "mefo"
bills were drawn by armament contractors and accepted by a limited liability
company called the Metallurgische Forschungsgesellschaft, m.b.H. (MEFO).
This company was merely a dummy organization; it had a nominal capital
of only one million Reichsmarks. "Mefo" bills ran for six
months, but provision was made for extensions running consecutively
for three months each. The drawer could present his "mefo"
bills to any German bank for discount at any time, and these banks,
in turn, could rediscount the bills at the Reichsbank at any time within
the last three months of their earliest maturity. The amount of "mefo"
bills outstanding was a guarded state secret (EC-436). The "mefo"
bill system continued to be used until 1 April 1938, when 12 billion
Reichsmarks of "mefo" bills were outstanding (EC-436). This
method of financing enabled the Reich to obtain credit from the Reichsbank
which, under existing statutes, it could not directly have obtained.
Direct lending to the Government by the Reichsbank had been limited
by statute to 100 million Reichsmarks (Reichsgesetzblatt, 1924, II,
p. 241). Schacht has conceded that his "mefo" bill device
"enabled the Reichsbank to lend by a subterfuge to the Government
what it normally or legally could not do" (3728-PS).
In a speech delivered on 29 November 1938, Schacht glowingly described
the credit policy of the Reichsbank of which he was the author as
"It is possible that no bank of issue in peacetime carried on
such a daring credit policy at the Reichsbank since the seizure of
power by National Socialism. With the aid of this credit policy, however,
Germany created an armament second to none, and this armament in turn
made possible the results of our policy." (EC-611).
The "daring credit policy," which made possible the creation
of "an armament second to none," obviously embraced the "mefo"
bill financing which he had contrived.
(b) Use of funds of opponents of Nazi regime. In his efforts
to draw upon every possible source of funds for the conspirators' rearmament
program, Schacht even used the blocked funds of foreigners deposits
in the Reichsbank. In his memorandum to Hitler of 3 May 1935, Schacht
"The Reichsbank invested the major part of Reichsbank accounts
owned by foreigners, and which were accessible to the Reichsbank,
in armament drafts. Our armaments are, therefore, being financed partially
with the assets of our political opponents." (1168-PS) .
(c) Taxation and long term indebtedness. "Mefo" bills
and the funds of political opponents of the conspirators were, of course,
not the only sources from which Schacht drew to finance the armament
program. Funds for rearmament were likewise derived from taxation and
an increase in public debt -- channels through which part of national
income is ordinarily diverted to public authorities. But what distinguished
the conspirators' program of public indebtedness was the fact that the
German capital market was completely harnessed to the expanding needs
of the Nazi war machine. By a series of controls, they reduced to the
minimum consistent with their rearmament program, all private issues
which might have competed with Government issues for the limited funds
in the capital market. Thus, the capital market was, in effect, pre-empted
for Government issues (EC-497; EC-611) .
During the period from 31 December /1932 to 30 June 1938, the funded
debt of the Reich rose from 10.4 billion Marks to 19 billion Marks (EC-419).
This large increase in funded debt was dedicated "as far as possible"
to "the financing of armament and the Four-Year Plan" (EC-611
(2) The New Plan. The conspirators' grandiose armament plans
obviously required huge quantities of raw materials. Schacht was a proponent
of the view that as much of the requisite raw materials as possible
should be produced within Germany. At the same time, however, he recognized
that large imports of raw materials were indispensable to the success
of the conspirators' gigantic armament program. To that end, he fashioned
an intricate system of controls and devices which he called the "New
Plan" (Reichsgesetzblatt, 1934, I, pp. 816, 829, 864; Reichsgesetzblatt,
1935, I, p. 10).
There were three main features of the "New Plan" as devised
by Schacht: (1) restriction of the demand for such foreign exchange
as would be used for purposes unrelated to the conspirators' rearmament
program; (2) increase of the supply of foreign exchange, as a means
of paying for essential imports which could not otherwise be acquired;
and (3) clearing agreements and other devices obviating the need for
foreign exchange. Under the "New Plan", economic transactions
between Germany and the outside world were no longer governed by the
autonomous price mechanism; they were determined by a number of Government
agencies whose primary aim was to satisfy the needs of the conspirators'
military economy (EC-437).
Schacht accomplished the negative task of restricting the demand for
"by various measures suspending the service on Germanys foreign
indebtedness, by freezing other claims of foreigners on Germany, by
a stringent system of export controls and by eliminating foreign travel
and other unessential foreign expenditures." (EC-437).
In order to increase the available supply of foreign exchange
"Schacht repeatedly requisitioned all existing foreign ex. change
reserves of German residents, required all foreign exchange arising
out of current exports and other transactions to be sold to the Reichsbank,
and by developing new export markets. Exports were encouraged by direct
subsidies and by accepting partial payment in German foreign bonds
or in restricted Marks which could be acquired by foreign importers
at a substantial discount." (EC-437).
A vast network of organizations was erected to effectuate these various
measures. Suffice it for the present purposes to mention merely one
of these organizations: the supervisory agencies (Ueberwachungsstellen).
These agencies, which were under Schacht's control as Minister of Economics,
decided whether given imports and exports were desirable; whether the
quantities, prices, credit terms, and countries involved were satisfactory;
and in short, whether any particular transaction advanced the conspirators'
armament program. The overriding military purpose of the series of controls
instituted under the "New Plan" is plainly shown in Schacht's
letter of 5 August 1937 to Goering, wherein he said:
"*** The very necessity of bringing our armament up to a certain
level as rapidly as possible must place in the foreground the idea
of as large returns as possible in foreign exchange and therewith
the greatest possible assurance of raw material supplies, through
There remains for consideration that aspect of the "New Plan"
which involved extensive use of clearing agreements and other arrangements
made by Schacht to obtain materials from abroad through the expenditure
of foreign exchange. The principle of the clearing system is as follows:
The importer makes a deposit of the purchase price in his own currency
at the national clearing agency of his country, which places the same
amount to the credit of the clearing agency of the exporting country.
The latter institution then pays the exporter in his own currency. Thus,
if trade between two countries is unequal, the clearing agency of one
acquires a claim against the agency of the other. That claim, however,
is satisfied only when a shift in the balance of trade gives rise to
an offsetting claim.
This device was used by Schacht as a means of exploiting Germany's
position as Europe's largest consumer in order to acquire essential
raw materials from countries which, because of the world wide economic
depression, were dependent upon the German market as an outlet for their
surplus products. Speaking of his system of obtaining materials abroad
without the use of foreign exchange, Schacht has stated:
"It has been shown that, in contrast to everything which classical
national economy has hitherto taught, not the producer but the consumer
is the ruling factor in economic life. And this thesis is somewhat
connected with general social and political observations, because
it establishes the fact that the number of consumers is considerably
larger than the number of producers, a fact which exercises a not
inconsiderable social and political pressure." (EC-611)
Schacht's clearing agreements were particularly effective in Southeastern
Europe, where agricultural exports had been considerably curtailed by
competition from the more extensive and efficient overseas agriculture.
The success of Schacht's ruthless use of Germany's bargaining position
is indicated by the fact that by August 1937, there had been imported
into Germany approximately one half billion Reichsmarks of goods in
excess of the amount delivered under the clearing arrangements. In his
letter to Goering dated 5 August 1937, Schacht stated:
"*** in clearing transactions with countries furnishing raw
materials and food products we have bought in excess of the goods
we were able to deliver to these countries (namely, Southeastern Europe
and Turkey) roughly one half billion RM ***." (EC-497)
Thus, through this device, Schacht was able to extract huge loans from
foreign countries which Germany could not have obtained through ordinary
channels. The device as developed by Schacht was subsequently used during
the war as a means of systematically exploiting the occupied countries
of Western Europe.
In addition to the clearing agreements, Schacht devised the system
which came to be known as the "aski" accounts. This scheme
likewise obviated the need for free currency (i.e. Reichsmarks freely
convertible into foreign currency at the official rate-U. S. dollars,
pounds sterling, etc). The system worked as follows: The German foreign
exchange control administration would authorize imports of goods in
specified quantities and categories on the condition that the foreign
sellers agreed to accept -payment in the form of Mark credits to accounts
of a special type held in German banks. These accounts were called "aski",
an abbreviation of Auslander Sonderkonten fuer Inlandszahlungen (foreigners'
special accounts for inland payments). The so-called "aski"
Marks in such an account could be used to purchase German goods only
for export to the country of the holder of the account; they could not
be converted into foreign currency at the official rates of exchange.
Each group of "aski" accounts formed a separate "island
of exchange" in which the German authorities, under Schacht's leadership,
could apply their control as the country's bargaining position in each
case seemed to warrant.
Schacht's ingenious devices were eminently successful. They admirably
served the conspirators' need of obtaining materials which were necessary
to create and maintain their war machine. On this point, Schacht has
"The success of the New Plan can be proved by means of a few
figures. Calculated according to quantity, the import of finished
products was throttled by 63 percent between 1934 and 1937. On the
other hand, the import of ores was increased by 132 percent, of petroleum
by 116, of grain by 12 and of rubber by 71 percent."
"These figures show how much the New Plan contributed to the
execution of the armament program as well as to the securing of our
food." (EC-611 )
(3) Production Control. As an additional means of assuring that
the conspirators' military needs would be met, Schacht adopted a host
of controls over the productive mechanism of Germany, extending, inter
alia, to the allocation of raw materials, regulation of productive capacity,
use of abundant or synthetic substitutes in place of declining stocks
of urgently needed materials, and the erection of new capacity for the
production of essential commodities. The structure of regulation was
built up out of thousands of decrees in which governmental agencies
under Schacht's control issued permits, prohibitions, and instructions
These decrees were the outgrowth of carefully laid plans of the Ministry
of Economics, of which Schacht was the head, concerning "economic
preparation for the conduct of war", and in accordance with its
view that "genuine positive economic mobilization" demanded
that "exact instructions for every individual commercial undertaking
are laid down by a central authority' (EC-128)
The plan to allocate raw materials was carried out through myriad "orders
to produce" specifying that certain commodities must or must not
be produced; "orders to process or use" prescribing the type
and quantity of raw material which could or could not be used in the
production of a given commodity; orders specifying that scarce raw materials
could be used only as admixtures with more plentiful but inferior products;
and other like measures. The precise details of these orders are unimportant
for present purposes. Their significance lies in the fact that they
were governed by a central purpose: preparation for war. In the above
mentioned secret report issued in September 1934 by the Ministry of
Economics it was said:
"Rules are to be initiated for the allotment of scarce raw materials
etc; and their use and processing for other than war, or otherwise
absolutely vital, goods is prohibited." (EC-128)
The military aspects of Schacht's plans to increase the production
of scarce raw materials within Germany, and thereby reduce Germany's
dependence upon foreign countries for materials needed in the rearmament
program, are likewise revealed in the aforementioned report of the Ministry
of Economics of September 1934:
"The investigations initiated by the Raw Materials Commission
and the measures introduced for enlarging our raw materials basis
through home production as well as for furthering the production of
substitute materials will directly benefit war economy preparations."
(4) Plans and Preparations for Economic Controls During War. Pursuant to the unpublished Reich Defense Law secretly enacted on 21
May 1935, Schacht was appointed General Plenipotentiary for War Economy
by Hitler. Under this law, Schacht was placed in complete charge of
economic planning and preparation for war in peacetime, except for the
direct production of armaments which was entrusted to the Ministry of
War; and upon the outbreak of war, Schacht was to be the virtual economic
dictator of Germany. His task was "to put all economic forces in
the service of carrying on the war and to secure the life of the German
people economically". In order to facilitate his task, the Ministers
of Economy, Food and Agriculture, Labor, and Forestry were subordinated
to him, and he was authorized "within realm of responsibility,
to issue legal regulations which may deviate from existing regulations".
The necessity for absolute secrecy was stressed (2261-PS).
Schacht appointed Wohlthat as his deputy General Plenipotentiary for
War Economy and organized a staff to carry out his directives. Schacht
has admitted that he must accept full responsibility for the actions
of these subordinates (3729-PS).
Before his resignation in late 1937, Schacht had worked out in amazing
detail his plans and preparations for the German economy in the forthcoming
war. Recognizing that wartime controls, to be effective, must be based
on adequate information, Schacht had directed the completion of comprehensive
surveys of 180,000 industrial plants in Germany and had compiled statistics
"*** the composition of the labor force as to sex, age, and
training, the consumption of raw and auxiliary material, fuels, power,
the productive capacity, the domestic and foreign trade as well as
the supply of material and products in the beginning and at the end
of the year." (EC-258)
On the basis of the statistical data thus collected, plans had been
formulated by the end of 1937 wherein
"*** the needs of the Armed Forces and the civilian minimum
needs in wartime are compared with the covering thereof by supplies
and production." (EC-258)
The supervisory boards, which were briefly described above in connection
with the import and export controls, were charged with "preparing
their orders for the regulation of war contracts and fees", and
were instructed to coordinate with various Reich manpower authorities
to secure "their indispensable personnel" (EC-258).
Special measures were taken under Schacht's direction, to maintain
"mobilization stocks" of coal and to assure their distribution
in accordance with the wartime needs of armament factories and large
consumers. Large "gasoline storage places" were constructed
for use of the Wehrmacht and "gasoline stations and gasoline stores"
were designated "for the first equipment of the troops in case
of mobilization". Careful plans were also made for the allocation
of power during war, and practice maneuvers were held in order to determine
"what measures have to be taken in case places of power generation
should be eliminated" (EC- 258).
Evacuation plans for the removal of war materials, agricultural products,
skilled workers, and animals from military zones were worked out by
the Office of the Plenipotentiary for War Economy with characteristic
thoroughness. Thus, "the supplies and skilled workers in the evacuation
zones" were "registered, earmarked for transportation into
certain salvage areas and registered with the Wehrkreiskommandos by
the field offices of evacuation and salvaging plans" (EC-25) .
Detailed plans for a system of rationing to become effective immediately
upon mobilization had already been made by the end of 1937:
"The 80 million ration cards necessary for this purpose have
already been printed and deposited with the Landrats, Chief Mayors,
and corresponding authorities. The further distribution of the ration
cards to the individual households is prepared by these authorities
to take place within 24 hours after mobilization has been ordered."
Trusted persons whose reliability had been attested to by the Secret
State Police were installed in important enterprises and charged with
the execution of "measures which guarantee the maintenance of production
of their enterprises in the event of mobilization". Their functions
likewise extended, among other matters, to applying "for exemptions
from military service" of "employees who are indispensable
to their enterprise", and seeking immunity from requisition by
the Wehrmacht- of all motor trucks which were needed in the enterprises
to which they were assigned (EC-258).
Pursuant to directives issued by Schacht as Plenipotentiary, labor
authorities of the Government ascertained "the available amount
of manpower, the wartime requirements of manpower and measures for the
covering of the wartime needs". The wartime needs were to be met
in part "by using reserve manpower (manpower theretofore used in
non-essential enterprises, women, etc.)", and by making "every
change of working place and every hiring of workers dependent upon the
consent of the Labor Office" (EC-258).,
The foregoing measures, it should be noted, are merely representative;
they are not exhaustive. But enough appears to make it abundantly clear
that Schacht's contribution, by any standard was an extraordinarily
important one. Enough appears, moreover, to give particular emphasis
to the following observations of the Honorable George S. Messersmith,
United States Consul General in Berlin from 1930 to 1934:
"It was his [Schacht's] financial ability that enabled the Nazi
regime in the early days to find the financial basis for the tremendous
armament program and which made it possible to carry it through. If
it had not been for his efforts, and this is not a personal observation
of mine only but I believe was shared and is shared by every observer
at the time, the Nazi regime would have been unable to maintain itself
in power and to establish its control over Germany, much less to create
the enormous war machine which was necessary for its objectives in
Europe and later throughout the world.
"The increased industrial activity in Germany incident to rearmament
made great imports of raw materials necessary while at the same time
exports were decreasing. Yet by Schacht's resourcefulness, his complete
financial ruthlessness, and his absolute cynicism, Schacht was able
to maintain and to establish the situation for the Nazis. Unquestionably
without this complete lending of his capacities to the Nazi Government
and all of its ambitions, it would have been impossible for Hitler
and the Nazis to develop an Armed Force sufficient to permit Germany
to launch an aggressive war." (EC-451).
2) Schacht favored the acquisition of additional territory for Germany-peacefully
if possible, but by aggressive war, if necessary. Schacht had long
been a German nationalist and expansionist. As early as 1927, he spoke
against the Versailles Treaty:
"The Versailles Dictate cannot be an eternal document, because
not only its economic, but also its spiritual and moral premises are
He strongly favored the acquisition by Germany of both colonial territory
and contiguous territory in Europe. At the Paris conference on 16 April
1929, he said:
"Germany can generally only pay if the Corridor and Upper Silesia
will be handed back to Germany from Polish possession, and if besides
somewhere on the earth colonial territory will be made available to
In a speech in Danzig in June 1935, Schacht ascribed the economic difficulties
which confronted Danzig to "historical errors of the greatest extent
which were beyond the control of the German people". He sought
to comfort his listeners with the assurance that
"We Germans in the Reich today are looking with fullest confidence
upon our comrades in the Danzig Free State, and maintain our people's
fellowship with the interests, wishes and hopes of this territory
which has unfortunately been separated from us." (EC-498)
In January 1936, Schacht again publicly spoke against the Versailles
Treaty, and impliedly threatened war unless its terms were revised in
Germany's favor. At that time, he stated:
"But the memory of war weighs undiminished upon the people's
minds. That is because deeper than material wounds, moral wounds are
smarting, inflicted by the so- called peace treaties. Material loss
can be made up through renewed labor, but the moral wrong which has
been inflicted upon the conquered peoples, in the peace dictates,
leaves a burning scar on the people's conscience. The spirit of the
Versailles has perpetuated the fury of war, and there will not be
a true peace, progress or reconstruction until the world desists from
this spirit. The German people will not tire of pronouncing this warning."
Later in the same year, Schacht again publicly advocated "Lebensraum"
for the German people in terms not unlike those employed by Hitler.
In his speech at Frankfurt on 9 December 1936, Schacht said:
"Germany has too little living space for her population. She
has made every effort, and certainly greater efforts than any other
nation, to extract from her own existing small space, whatever is
necessary for the securing of her livelihood. However, in spite of
all these efforts the space does not suffice." (EC-415)
Schacht had hoped, it is believed, that his desire for additional space
for Germany would be realized without resort to war. In Austria, for
example, he had authorized 200,000 Marks a month to be set aside for
the National Socialists in Austria, hoping thereby to facilitate the
absorption of Austria into Germany without war. But if Germany's neighbors
would not accede to the conspirators' demands for additional space,
Schacht was willing to go to war to fulfill those demands.
Thus, on 23 September 1935, Schacht told S. R. Fuller, Jr. at the American
Embassy in Berlin:
"Colonies are necessary to Germany. We shall get them through
negotiation if possible; but if not, we shall take them."
In January 1937, Schacht, in a conversation with Ambassador Davies,
impliedly threatened a breach of the peace unless Germany's demands
for colonies were met. The conversation is related as follows in a report
under date of 20 January 1937, by Ambassador Davies to the Secretary
"He [Schacht] stated the following: that the present condition
of the Germany people was intolerable, desperate and unendurable;
that he had been authorized by his Government to submit proposals
to France and England which would (1) guarantee European peace; (2)
secure present European international boundaries; (3) reduce armaments;
(4) establish a new form of a workable League of Nations; (5) abolish
sanctions with new machinery for joint administration; all based upon
a colonial cession that would provide for Germany an outlet for population,
source for food stuffs, fats and raw material. ***" (L-111)
The inference was clear: without a colonial cession, peace could not
be guaranteed. Equally clear was the inference that it would be Germany
in its search for "Lebensraum" that would disturb the peace.
On 21 December 1937, Schacht indicated to Ambassador Dodd that he desired
the annexation of neighboring countries, without war if possible, but
with war, if necessary. The pertinent portion of Ambassador Dodd's notes
on this conversation are as follows:
"Schacht meant what the Army chiefs of 1914 meant when they
invaded Belgium, expecting to conquer France in six weeks; i.e., domination
and annexation of neighboring little countries, especially north and
east. Much as he dislikes Hitler's dictatorship, he, as most other
eminent Germans, wishes annexation -- without war if possible, with
war, if the United States will keep hands off." (EC-461)
(3) Schacht knew of Hitler's plans to wage aggressive war and willfully
provided the means whereby such a war might successfully be waged. Whether or not Schacht personally favored war it is clear that he at
least knew that Hitler planned military aggression and that he was providing
Hitler with the instrument by which those plans could be executed. Even
before Hitler's accession to power, Schacht knew from a reading of Mein
Kampf that Hitler was bent upon expansion to the East by force of arms
In the course of his frequent contacts with Mr. Messersmith, United
States Consul General in Berlin from 1930 to 1934, Schacht emphasized
that the "Nazis were inevitably going to plunge Europe into war'
In September of 1934, Ambassador Dodd recorded in his diary a conversation
with Sir Eric Phipps at the British Embassy in Berlin, wherein he stated
that "Schacht had acknowledged to me the war purposes of the Nazi
Schacht has admitted that in the course of his numerous talk with Hitler
from 1933 to 1937, he formed the impression that "in order to make
his hold on the Government secure, the Fuehrer felt that he must present
the German people with a military victory" (EC-458).
These admissions by Schacht are fortified by other evidence which shows
that Schacht knew that Hitler planned military aggression. After his
appointment as Minister of Economics, Schacht became a permanent member
of the secret Reich Defense Council. The function of that Council, as
shown in other connections, was secretly to mobilize all of the human
and material resources of Germany for war (EC-177).
Shortly after his appointment as the Plenipotentiary General for the
War Economy in May 193, Schacht was entrusted by the Reich Defense Council
with the "preparation of economic mobilization" in connection
with the proposed re-occupation of the Rhineland. Schacht and those
officials who were charged with the purely military aspects of the re-
occupation were enjoined to proceed with the utmost secrecy because
of assurances given by Hitler to the French that no military action
was contemplated in the de-militarized zone of the Rhineland
At the 11th meeting of the Reich Defense Council, on 6 December 1935,
which was attended by a number of representatives from Schacht's office
of Plenipotentiary of the War Economy, Keitel pointed out that
"According to the will of the Fuehrer, the economic leadership
puts the increase of our armed might knowingly ahead of other requirements
of the state. It is the task of all members of the Reich Defense Council
to utilize the national property, made available, primarily for this
purpose and economically in the framework of the entire situation,
and request only such funds and raw materials which serve absolutely
and exclusively the Reich Defense. ***" (EC-406)
The singleness of purpose with which Schacht and the other conspirators
were gearing the German economy for war is strikingly shown by the Top
Secret minutes of the meeting of ministers dated 30 May 1936. This,
it will be recalled, was little more than 10 weeks after German troops
had occupied the Rhineland. At this meeting, Schacht pointed out that
"it must be attempted to produce those raw materials within Germany
which are economically favorable; for other raw materials ready reserves
for the case of mobilization"; and also that "certain raw
materials for war must be stocked." Continuing the discussion,
Goering emphasized that "all measures are to be considered from
the standpoint of an assured waging of war." Thereafter, Schacht
advocated the introduction of price supervision and agreed that first
priority should be given to the "specially urgent petroleum question"
By Top Secret letter dated 31 August 1936, Schacht was advised by General
von Blomberg that Hitler had ordered that "the setting up of all
air force units has to be completed on 1 April 1937". This accelerated
program entailed the expenditure of large additional funds which Schacht
and the Minister of Finance were called upon to supply. The sense of
urgency with which Hitler pressed the completion of the German air force
patently signified that the waging of war was a certainty (1301-PS).
Shortly after the receipt of this letter, and on 4 September 1936,
Schacht attended a secret cabinet meeting where Goering stated:
"The Fuehrer and Reichskanzler has given a memorandum to the
Col. General and the Reich War Minister which represents a general
instruction for the execution thereof.
"It starts from the basic thought that the showdown with Russia
"The Colonel General reads the memorandum of the Fuehrer."
"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."
"All measures have to be taken just as if we were actually in
the stage of imminent danger of war." (EC- 416).
There was no room for surmise in these utterances; Hitler was definitely
and irrevocably committed to waging aggressive war If Schacht ever had
any doubts concerning Hitler's firm resolve to carry out the program
of-aggressive war outlined in Mein Kampf; if, contrary to his statements
to Mr. Messersmith and Ambassador Dodd, Schacht actually doubted in
1934 that the Nazis, whom he was faithfully serving, would inevitably
plunge Europe into war; and if, despite the pressing sense of immediacy
that had pervaded the Nazi war economy from the very outset, he had
entertained lingering doubts concerning Hitler's plans for armed aggression,
all such doubts must have been removed by the clear and unequivocal
pronouncements in the above- mentioned eventful meetings of 1936 in
which he participated.
Yet, despite his knowledge of Hitler's plans to wage aggressive war,
despite the fact that he had grave technical doubts about the ability
of the Reichsbank to finance further armaments through additional short
term credits, and despite the fact that some directors of the Reichsbank
had opposed further "mefo" financing, Schacht pledged another
3 billion Reichsmarks by the "mefo" bill method for further
financing of armaments in March 1937 (EC-438).
The Hossbach notes, dated 10 November 1937, on the important conference
of 5 November 1937 in the Reichskanzlei, reveal a further crystallization
of Hitler's program of absorption and conquest in Europe (86-PS). Definite
plans were laid for the early acquisition of Austria and Czechoslovakia,
and for their exploitation in preparation for further military operations.
So far as appears, Schacht was not present at this particular meeting.
But his awareness of what occurred at the meeting is shown by the fact
that he told Ambassador Bullitt on 23 November 1937,
"Hitler was determined to have Austria eventually attached to
Germany and to obtain at least autonomy for the Germans of Bohemia.
At the Present moment he was not vitally concerned about the Polish
Corridor, and in his [Schacht's] opinion it might be possible to maintain
the Corridor provided Danzig were permitted to join East Prussia,
and provided some sort of a bridge could be built across the Corridor
uniting Danzig and East Prussia with Germany." (L-151) .
Although Schacht apparently sought to convey the impression to Ambassador
Bullitt that he desired to stay Hitler's hand but was powerless to do
so, it is clear that he was actually in complete sympathy with Hitler's
objectives. Despite the mounting tension which followed his conversation
with Ambassador Bullitt, Schacht remained as President of the Reichsbank,
and in that capacity established, in advance of the invasion of Austria,
the rate of exchange between Marks and Austrian Schillings which was
to prevail after the absorption of Austria (EC-421).
Moreover, under his direction, the Austrian National Bank was merged
into the Reichsbank (Reichsgesetzblatt, 1938, I, 254). His speech of
21 March 1938, to the employees of the former Austrian National Bank
on the occasion of its obliteration as an independent institution, betrayed
his true feelings. After inveighing against "the dictates of Versailles
and St. Germain", -Schacht stated:
"Thank God, these things could after all not hinder the great
German people on their way, for Adolf Hitler has created a communion
of German will and German thought, he bolstered it up with the newly
strengthened Wehrmacht and he then finally gave the external form
to the inner union between Germany and Austria."
"One person says he would have done it maybe in one way, but
the remarkable thing is that they did not do it (hilarity), that IT
WAS ONLY DONE BY OUR ADOLF HITLER (Long continued applause) and if
there is still something left to be improved, then those grumblers
should try to bring about those improvements from the German Reich
and within the German community, but not to disturb it from without.
(Lively agreement) ".
"I ask you to raise your hands and to repeat after me:
I swear that: I will be faithful, and obedient to the Fuehrer of
the German Reich and the German people, Adolf Hitler, and will perform
my duties conscientiously and selflessly. (The audience takes the
pledge with uplifted hands).
You have taken this pledge. A scoundrel he who breaks it. To our
Fuehrer a triple 'Sieg heil'." (EC-297-A)
Schacht was likewise enthusiastic about the acquisition of the Sudetenland,
and filled with pride over the contribution his credit policy as head
of the Reichsbank had made thereto (EC-611).
In January 1939, when Hitler was ruthlessly exploiting his successes
in Austria and the Sudetenland in preparation for his next aggressive
move, Schacht again referred, with pride, to the fact that the Wehrmacht
which he had helped create by his ingenious and risky methods had made
possible Hitler's successes. Thus, he said:
"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
thereof was the necessity - - which pushed all other considerations
in the background -- to carry through the armament at once, out of
nothing and furthermore under camouflage, which made a respect-commanding
foreign policy possible." (EC- 369)
The foregoing proof establishes, it seems clear, that Schacht knew
of Hitler's plans for aggressive war, and willfully created the means
whereby those plans could be executed. But apart from this direct proof,
it is submitted hat to a man in Schacht's position, the events of the
period clearly bespoke Hitler's intentions. Schacht was a key figure
in the Nazi Government during the period of the Nazi agitation in Austria,
the introduction of conscription, the march into the Rhineland, the
conquest of Austria, and the acquisition of the Sudetenland by a show
During this period, the Reich debt trebled under the stress of mounting
armaments (EC-419), and all the resources of Germany were being strained
to the very limit for armament. It was a period in which the burning
European foreign policy issue was the satisfaction of Germany's repeated
demands for additional territory. Hitler, committed to a policy of expansion,
was laying the greatest stress upon utmost speed in preparation for
Certainly in this setting, Schacht did not proceed in ignorance of
the fact that he was assisting Hitler and Nazi Germany along the road
towards armed aggression.
(1) His resignation as Minister of Economics and General Plenipotentiary
for War Economy. In November 1937, Schacht resigned his offices
as Minister of Economics and General Plenipotentiary for War Economy.
At the same time, he accepted appointment as Minister without Portfolio,
and continued as President of the Reichsbank. It is submitted that the
evidence shows at Schacht's resignations were merely the outgrowth of
a clash between two power-seeking individuals, Goering and Schacht,
over methods of creating a war economy. and over who should have final
authority to direct the completion of the task. So far as appears, Schacht
was in full accord with the other conspirators upon the desirability
of providing Hitler with the means by which he eventually could carry
out his planned aggressions.
The basic differences between Schacht and Goering date from a period
shortly after Goering became head of the Four-Year Plan Office. The
latter office was created by Hitler in September 1936, and in connection
therewith, Goering was "given far reaching powers to issue directives
to all the highest offices of the State Party". Goering conceived
of his function as head of the Four-Year Plan Office "within four
years to put the entire economy in a state of readiness for war"
Schacht was in agreement with the "aim and idea" of the Four
Year Plan. He promised Goering his complete support and cooperation,
and urged that Goering draw upon Schacht's long experience in economic
affairs. Thus, in Schacht's letter of 5 August 1937, to Goering, he
"The aim and the idea of the Four Year Plan were and remain
entirely correct and necessary! It stands, essentially, for the application
of increased energy to the efforts already undertaken by my ministry
since 1934 with the results shown in the above statistics. As you
will remember, I welcomed it when your energy, my dear Prime Minister,
was recruited by the Fuehrer for these tasks, and from the very beginning
I gave you my most loyal support and cooperation, with the particular
plea that I be given a hearing from time to time, since I believed
that my more than thirty years of experience in economic life, half
of them in public service, could be of value to you." (EC-497)
Goering, however, failed to avail himself of Schacht's offer of services.
"I can only regret," said Schacht in the aforementioned letter,
"that you have made so little use of my offer" (EC-497). Instead,
Goering began to encroach upon powers which had been delegated to Schacht,
and they became embroiled in a bitter jurisdictional conflict. On 26
November 1936, Goering issued a directive regarding raw and synthetic
material production, where by he undertook to assume control over large
economic areas previously within Schacht's province
Schacht did not supinely accept Goering's intrusions upon his powers.
Goering's directive was countered by an abrupt order from Schacht to
all supervisory offices to accept orders from him alone.
The conflict reached such dimensions that it threatened to retard the
pace of the conspirators' armament program. The military sided with
Schacht, who had provided the means for their rapid rearmament. They
submitted proposals which would have assured to Schacht as Plenipotentiary
General for the War Economy the responsibility for "unified preparation
of the war economy as heretofore" (EC-408;
In January 1937, the German Military Weekly Gazette published an article
warmly praising Schacht's achievements in rearmament. The timing of
the article indicates that it was a further attempt by the military
to tip the scales in Schacht's favor. The article
"The German Defense Force commemorates D. Schacht today as one
of the men who have done imperishable things for it and its development
in accordance with directions from the Fuehrer and Reich Chancellor.
The Defense Force owes it to Schacht's skill and great ability that,
in defiance of all currency difficulties, it, according to plan, has
been able to grow up to its present strength from an army of 100,000
Shortly thereafter, Schacht attempted to force a showdown with Goering
by temporarily refusing to act in his capacity as Plenipotentiary. Schacht
plainly was using his prime importance in the conspirators' program
of economic planning and preparation for war as a lever. In a letter
to Hitler dated 22 February 1937, General von Blomberg, the Minister
of War, suggested a settlement of the jurisdictional fight under which
Schacht would fully retain his powers as General Plenipotentiary of
War Economy, and concluded by stating:
"If you, my Fuehrer, agree with my view regarding these jurisdictional
questions, it may be possible to induce Reichsbank President Dr. Schacht,
whose cooperation as Plenipotentiary for preparation of war is of
great significance, to resume his former activity." (EC-244)
As a further demonstration of the community of interest between Schacht
and the top German military authorities, Schacht attended the secret
"War Economy" games at Godesberg in the latter part of May
1937. The purpose of the games was to demonstrate "how the action
of the soldiers in total war is influenced by economy and how on the
other hand, economy is completely dependent on military operations".
Schacht's attendance was acclaimed at the games as
"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." (EC-174) .
In June 1937, Keitel implored Hitler to accelerate a final agreement
between Schacht and Goering. Speaking of arrangements concerning cooperation
of these two key figures, Keitel said:
"I know that a necessary practical basis for it [the arrangement
for cooperation between Schacht and Goering] has already been found,
and only a formal agreement is needed in order to carry on the common
"*** to waste time in our situation would be the greatest reproach
that history could make upon us.
"May I beg, therefore, once more that the arrangement mentioned
be expedited, and that I be notified accordingly." (EC-248)
Finally, on 7 July 1937, Schacht and Goering signed an agreement of
reconciliation in Berlin, wherein it was said that the tasks of Goering
and Schacht "are being solved in closest mutual cooperation,"
and that "no doubt exists about the fact that the Commissioner
General for War Economy has the position of a supreme authority of the
Schacht resumed his duties as General Plenipotentiary with renewed
vigor. On the day following his formal agreement with Goering, he wrote
to General von Blomberg on "Measures for the preparation of the
conduct of war," pledging continued cooperation in their mutual
"*** by the direction of the supreme authority for the conduct
of war, the coordination of the conduct of war will be assured in
its execution through mutual agreement between you and me, which I
look upon as a matter of course in the Central Authority and without
which I cannot envisage any conduct of war. The direction of the economy
by the plenipotentiary would in that event never take place entirely
independent from the rest of the war mechanism but would be aimed
at the accomplishment of the political war purpose with the mustering
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 Reich Defense Act [Reichsverteidgungsgesetz]." (EC- 252)
However, Schacht and Goering were soon again in disagreement. After
a sharp exchange of letters in which each sought to justify his particular
economic program as the best means of making possible the attainment
of Hitler's objectives (EC-497; EC-493) Schacht suggested to Goering
in a curt letter dated 26 August 1937, that he (Goering) assume sole
charge of economic policies. In this letter, Schacht rationalized his
precipitate action as follows:
"To me it does not seem to be of decisive importance to raise
questions of competence and initiative, but it is of decisive importance
that the Fuehrer's economic policy should be carried out in a coherent
manner, and with the least amount of friction." (EC-283)
Despite the uncompromising tenor of the latter communication, Schacht
was still amenable to an arrangement with Goering which would have permitted
him a measure of autonomy in economic planning and preparation for war.
On 1 November 1937, he attended a conference with
"*** which led in an entirely friendly manner to the working
out of a series of proposals, which *** Goering promised to have presented
to me [Schacht] in writing on the following day *** so that, after
having reached an agreement we could present a mutually approved text
to you, my Fuehrer." (EC-495)
But the written agreement was not forthcoming as Goering had promised,
and Schacht repeated his request to be relieved from the Ministry of
Economics, "in the interest of a uniform government management"
(EC-495). Hitler finally accepted Schacht's resignation as Minister
of Economics on 26 November 1937, simultaneously appointing him Minister
Without Portfolio. Schacht's resignation was also extended to his position
as Plenipotentiary for War Economy (EC-494).
In subsequent interrogations, both Schacht and Goering have confirmed
the fact that Schacht's withdrawal was simply the result of a losing
struggle with Goering to retain personal power (3730-PS)
There is nothing to indicate that Schacht's withdrawal from the Ministry
of Economics and the Office of Plenipotentiary for War Economy in any
sense represented a break with Hitler on the ground of contemplated
military aggression. He consented to retain his position as President
of the Reichsbank, where he remained undisputed master, and accepted
the post of Minister of Portfolio, in order to be Hitler's "personal
adviser." In the letter accepting Schacht's resignation as Minister
of Economics, Hitler said:
"If I accede to your wish it is with the expression of deepest
gratitude for your so excellent achievements and in the happy consciousness
that, as President of the Reichsbank Directorium, you will make available
for the German people and me for many years more your outstanding
knowledge and ability and your untiring working strength. Delighted
at the fact that in the future, also, you are willing to be my personal
adviser, I appoint you as of today a Reich Minister." (L-104).
As President of the Reichsbank, Schacht continued to carry out Hitler's
policies. As previously shown, he participated in the planning of the
invasion of Austria by fixing the conversion rate the Austrian Schilling
in advance of the invasion; and under direction, the Austrian National
Bank was merged into the Reichsbank. He publicly approved the absorption
of Austria and acquisition of the Sudetenland. He continued to finance
armaments by "mefo" bill credits until April 1938, and thereafter,
until his resignation in January 1939, authorized an increase of approximately
2.6 billion Reichsmarks in bank notes in order to discount commercial
paper which was used in connection with the armament program. (EC-438)
(2) Schacht's dismissal from, the Presidency of the Reichsbank. Schacht was dismissed from the Presidency of the Reichsbank in January
1939. The evidence indicates that Schacht engineered his dismissal in
order to escape personal responsibility for what he believed to be an
impending financial crisis; he was not dismissed because of disagreement
with the ultimate objectives of the conspiracy or common plan.
Schacht had always feared an inflation in Germany. As early as 8 May
1936, he emphatically stated that he would "never be party to an
inflation" (1301-PS). In January 1939, Schacht was convinced that
ruinous inflation was, in fact, imminent (EC-369). There was, it appears,
ample basis for his fear. The Finance Minister, von Krosigk, had already
recognized the situation in September 1938, and had written to Hitler
warning that we are steering towards a serious financial crisis, the
forebodings of which have led already abroad to detailed discussions
of this weak side in our economic preparations and to an apprehensive
loss of confidence domestically. (EC- 419)
Schacht was not only afraid of a financial crisis; he was even more
fearful that he personally would be held responsible for it and his
prestige would suffer a crushing blow. One of his associates at the
Reichsbank has stated:
"When Schacht saw that the risky situation which he had sponsored
was becoming insoluble, he was more and more anxious to get out. This
desire to get out of a bad situation was for a long time the 'leitmotif'
of Schacht's conversations with the directors of the bank." (EC-348)
In the end, Schacht deliberately stimulated his dismissal from the
Presidency of the Reichsbank by arbitrarily refusing an end-of-the-month
loan in a relatively small amount to the Reich, contrary to well established
practice (3730-PS; 3731-PS).
Despite differences of opinion concerning the limits to which the German
economy might be pushed without plunging the country into inflation,
Schacht continued to enjoy Hitler's confidence. In his letter to Schacht
dated 19 January 1939, Hitler stated:
"On the occasion of your recall from Office as President of
the Reichsbank Directory, I take the opportunity to express to you
my most sincere and warmest gratitude for the services which you rendered
repeatedly to Germany and to me personally in this capacity during
long and difficult years. Your name, above all, will always be connected
with the first epoch of the national rearmament. I am happy to be
able to avail myself of your services for the solution of new tasks
in your position as Reich Minister." (EC- 397).
On his side, Schacht evidenced his abiding faith in Hitler and his
continued agreement with his aggressive policies, by remaining as Minister
without Portfolio until January 1943. As such he received a large salary
from the Nazi Government and enjoyed the emoluments of public office
(3) Conclusion. Schacht's assistance in the earlier phase of
the conspiracy was an important factor in enabling the conspirators
to seize the German state and thus pave the way for their later crimes.
His 'work was indispensable to the rearmament of Germany and to the
economic planning and preparation required to launch the German wars
of aggression. As long as he remained in power, he worked as eagerly
for the preparation of aggressive war as any of his co-conspirators.
He personally was favorably disposed towards aggression, if "Lebensraum"
for Germany could not otherwise be attained. He knew that Hitler intended
to and would break the peace, and with this knowledge, he willingly
and purposely contributed his efforts. His withdrawal from three of
his four posts reflected no moral feeling against the use of aggressive
warfare as an instrument of national policy; he withdrew for reasons
wholly unrelated to Hitler's program of illegal aggression. By the time
of his withdrawal from these three positions, he had already provided
his co-conspirators with the physical means and economic planning necessary
to launch and maintain their wars of aggression; and he continued in
his lucrative fourth position (Minister without Portfolio) until January
1943-until, in short, it became doubtful ether the conspirators could
maintain the successes which they had gained in the wars they had illegally
launched and were waging.