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               at OBERURSEL, 24 SEPTEMBER 1945
       Interrogated by Lt. Col. M. I. GURFEIN, Office
        of US Chief of Counsel, Report by Miss Evelyn
             Low, Office of US Chief of Counsel.
[Pages 2-6]

Q. Well, we will leave that for the moment. In any event, you began to
have meetings with Blomberg and Schacht concerning the financing of the
armaments program, beginning, I believe, you said, in 1935?

A. Yes.

Q. Now, please tell us the discussions that took place the first time
that you had this meeting.

A. These discussions during the years always took place in about the
same way. The Field Marshal von Blomberg and later on the Field Marshal
Keitel, told us the sums which for the following budget year the
Minister of War thought to be necessary and then we discussed how these
sums eventually could be financed. I made a statement on the probable
inco ' me of taxes, Schacht said that he thought that probably we would
be able to get a certain sum of treasury bills taken by the banks and
that he could be able to finance a certain sum with the aid of the
Reichsbank and if these two sums, the one sum which the Army wanted to
have and the sums which we thought we could get, didn't suit, then, of
course, there was a long discussion with the aim to come together and
the result was in most cases that the Minister of War said "Well, I put
down the amount I wanted to have and I will try to get through with the
lower amount" and we said "Well, we will try to finance this sum, if it
should prove not to be possible during the year, then we will meet again
during the year and discuss what is going to happen." I think it was in
1936 that according to Motion made by Mr. Schacht we found the way of
the Mefo bills and also according to Motion of Mr. Schacht we thought
that we could go to the amount of 12 billion Mefo bills.

Q. Now, that sum of 12 billion marks of Mefo bills, how was that limit
fixed? Was it based on the technical estimate of the capacity of the
Reichsbank to finance or was it based on some other ground?

A. No, it was merely based on the technical capacity of the Reichsbank
and Schacht said that he merely could estimate or could feel the
possible height of this figure.

                                                              [Page 536]

Q. Was there any discussion as to what alternative methods of financing
should be employed when the ceiling of 12 billion marks through Mefo
bill financing had been reached?

A. Not in the beginning because we then didn't know how long this amount
of 12 billions would reach. In the moment as we saw that it would come
to an end in a certain time we discussed the new methods of financing
and we came to the result that in the first place we would have to
increase the revenue of taxes and so Nve came to a resolution of
increasing the corporation taxes.

Q. Was Dr. Schacht a party to this discussion about increasing the
corporation taxes as a means, of financing re-armament?

A. Yes.

Q. Would you say that a time came when it was clear that you were going
to reach shortly the 12 billion figure? Can you recall how much had
already been financed through Mefo bills at that point?

A. As far as I remember, it was at the time when the expenditures had
reached the sum of 9 billions.

Q. Now, that coincided with the ending of the 4 year term of Dr. Schacht
as President of the Reichsbank-he was appointed in 1933 for 4 years,
ending ill 1937. Now, did Schacht discuss with you at that time whether
or not he should assume again the presidency of the Reiehsbank?

A. I don't think that he discussed it with me but as far as I remember I
have heard from Dr. Berger who always was on good terms with Dr. Schacht
and with the other gentlemen of the Reichsbank that he was doubtful
whether he should again take the duty for four years or whether he
should take it only for one year to see what would happen in this year.

Q. What reasons were given to you by Dr. Berger and others as to why
Schacht said that he was debating whether or not to take a 4 year term
or a one year term as President of the Reichsbank?

A. As far as I remember the reason was the conflicts which had arisen
between Schacht and Goering and between Schacht and Daipre. This
conflict was due to various technical differences. But these differences
led also to a personal difference, especially between Schacht and

Q. And I believe you told me that there was resentment on the part of
Schacht over the economic powers that Goering had been given by Hitler?

                                                              [Page 537]

A. By Hitler because Schacht thought that these powers of Goering led to
conflicts with powers as Minister of Economy or as President of the

Q. In your discussions with Berger, was anything said about Schacht's
attempt to regain the power over the Economy that he had lost to

A. I am not quite sure whether it was in conversations with Dr. Berger
but I remember that in conversations with him or with other persons this
reason then was discussed.

Q. Let me ask you, did you ever discuss it with Keppler?

A. I don't think I did. It's possible but I don't think I did.

Q. Who were these other persons, as you can remember?

A. Well, it is possible that I spoke about it with other Ministers, with
Neurath, or Seldte, or Gertner, but I don't know

Q. Well, in any event, is it clear that prior to the time when the last
three billion financing by the Reichsbank of the Mefo bills were
started, that everybody concerned knew that this was to be the last
financing of Mefo bills. Did you understand that?

A. Yes. Well, I will put it in that way. I think that certainly Mr.
Schacht said that it was his intention not to go beyond the sum of 12
billion Mefo bills.

Q. What I mean is, there ,s,as no new crisis so fat. as you recall in
the 1937/1938 period because as you explained it, it was already
understood before that, that the sum of 12 billion would be the limit?

A. Yes.

Q. Now, do you know anything of the circumstances under which Schacht
finally resigned or was put out as President of the Reichsbank in
January 1939?

A. Yes. Of course I am not quite sure whether the incident which I am
going to tell was the real reason that Schacht resigned, but it
certainly was a ground that gave the start. I asked Mr. Schacht to
finance for the Reich for the ultimo of the month the sum of 100 or 200
millions. It was this quite usual procedure which we had used for years
and years and we used to give back this money after a couple of days.
Schacht this time refused and said that he was not willing to finance a
penny because he wanted that, as he said, it should be made clear to
Hitler that the Reich was bankrupt. I tried to explain that this was not
the proper ground to discuss the whole question. of financing because
the question of financing very small sums for a few days during ultimo
never would bring Hitler to the conviction that the whole financing was
impossible. As far as I remember now it was Funk


who told Hitler something about this conversation, then Hitler asked
Schacht to call upon him. I don't know what they said but the result
certainly was the dismissal of Schacht.

Q. Now, did Schacht ever say anything to you to the effect that he
wanted to resign because he was in opposition to the continuance of the
rearmament program?

A. No, he never said it in this specific form but in some conversations
he certainly said several times in his own way when he had conflict with
Goering and anger with Darre, so that I didn't take these things very

Q. Well, let me put it this way and please think carefully about this.
Did Schacht ever say that he wanted to resign because he realized that
the extent of the rearmament program was such as to lead him to the
conclusion that it was in preparation for war rather than for defense?

A. No, he never did.

Q. Was Schacht ever quoted to you to this effect by any of your
colleagues or by anybody else?

A. No.

Q. Now after Keitel took over the position of Chief of the Wehrmacht,
there were still meetings between Schacht and yourself, with Keitel in
place of Blomberg?

A. Yes.

Q. Did Schacht ever say anything at these meetings to indicate that
except for the technical question of the financing through the
Reichsbank directly he was opposed to a further program of rearmament or
opposed to the budget of the Wehrmacht?

A. No, I don't think he ever did.

Q. Is that your best recollection?

A. It may have been that he explained to Keitel that in his opinion the
amount of rearmament could lead to economic difficulties especially as
regards the level of prices.

Q. You mean that the pressure of armaments purchasing and the shortage
of goods created thereby might cause a rise in prices?

A. Yes but I only stress this, that all the reasons I heard from Schacht
as regards rearmament always were technical or economic reasons.

Q. Let me ask you one other thing. At the first meetings in 1935 between
Blomberg, Schacht and yourself, Schacht has stated that at those
meetings no fixed amounts were discussed in any form and that he was
asked whether the Reichsbank would participate in the financing of
rearmaments without discussion as to the amount involved. Is that also
your recollection?

                                                              [Page 539]

A. Yes, because that leads to the certain differences of opinion I had
in the beginning.

Q. Please explain that.

A. I had the opinion that we should try to come to fix a certain sum for
rearmament, if possible for some years. Schacht as well as Blomberg had
the opinion that that was not possible and Schacht always thought that
the natural limit for rearmarnent was the capacity of labor and the
capacity of industry to produce. I always thought that the limit by
fixing a certain sum would be more effective as it would lead the
Minister of War to more careful thrift. So we then came to the
arrangement to fix a sum not for several years but always for one year.
Now, I am not quite sure for which year we fixed the sum in this way.

Q. The net result of that was, however, that it enabled you to make
larger expenditures in the event that the capacity of industry and labor
and resources increased. In other words, that you did not have a
definite limit set in advance from the financing point of view, which
would have restricted the possibilities.

A. Well, for one year, yes.

                                             s/Graf Schwerin von Krosigk
Sworn to me before this twenty-ninth day of September, 1945.
Murray I. Gurfein, Lt. Col. AUS.

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