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                                                        [Page 180]
THIRTY-SECOND DAY

FRIDAY, 11TH JANUARY, 1946

LIEUTENANT BRYSON: If the Tribunal, please, before picking up our
line of proof against the defendant Schacht, I would like to
supply a point of information.

Yesterday the President of the Tribunal inquired with respect to
Document EC-457, Exhibit USA 619. The question raised by the
Tribunal was with respect to the words "in retirement" in the
letter-head used by Schacht in writing to Hitler in 1932. This is
the letter in which Schacht expressed his belief in the truth of
the Nazi movement and in which he said that Hitler could always
count upon him as a reliable assistant.

The letter-head has printed upon it "The President of the
Reichsbank," and after that phrase there is typed the letters
"A.D." and I understand that those letters are an abbreviation for
a German phrase meaning " in retirement," and that it is
customary, or it was customary, in Germany, for retired officials
to continue to use their titles with the letters "A.D."

THE PRESIDENT: I see.

LIEUTENANT BRYSON: Yesterday we had just about completed our proof
with respect to the contribution of the defendant Schacht to the
preparation for war, and I wish to submit one more document on
this point. This is Document EC-451, Exhibit USA 626. It consists
of a statement by George S. Messersmith, United States Consul-
General in Berlin, 1930 to 1934. I will quote therefrom, beginning
with the second sentence of the fourth paragraph:

   "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 programme 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 an opinion
   which 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 Schacht, by his
   resourcefulness, his complete financial ruthlessness and his
   absolute cynicism 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."

We turn now -

THE PRESIDENT: Well, Lieutenant Bryson, I am not sure that that
gives a full or quite fair recapitulation of the document. Do you
not think perhaps you ought to read the paragraph before?

                                                        [Page 181]

LIEUTENANT BRYSON:

   "Dr. Schacht always attempted to play on both sides of the
   fence. He told me, and I know he told both other American
   representatives in Berlin and various British representatives,
   that he disapproved of practically everything the Nazis were
   doing. I recall on several occasions his saying, after the Nazi
   Party came into power, that, if the Nazis were not stopped,
   they were going to ruin Germany and the rest of the world with
   it. I recall distinctly that he emphasised to me that the,
   Nazis were inevitably going to plunge Europe into war."

If the Court please, I would like to read also from the last
paragraph:

   "In my opinion Schacht was in no sense a captive of the Nazis.
   He was not compelled to devote his time and his capacities to
   their interest. His situation was such that he would most
   likely have been able either to work on a much less restrained
   scale or to abstain from activity entirely. He continued to
   lend his services to the Nazi Government at every opportunity."

We turn now to the third part of our case against Schacht. The
evidence is clear that he willingly contributed his efforts to the
Nazi conspiracy, knowing full well its aggressive designs. The
Tribunal will recall our proof that Schacht was converted to the
Nazi philosophy in 1931 and helped Hitler come to power in 1933.
We will now prove, first, that Schacht personally favoured
aggression and, second, that in any event he knew Hitler's
aggressive intentions.

There is ample evidence to justify the conclusion that Schacht
rearmed Germany in order to see fulfilled his strong belief in
aggressive expansion as an instrument of German national policy.
Schacht had long been a German nationalist and expansionist. He
spoke against the Treaty of Versailles at Stuttgart as early as
1927. I offer in evidence Document EC-415, Exhibit USA 627,
consisting of a collection of excerpts from speeches by Schacht.

I quote from the top of Page 2:

   "The Versailles Dictate cannot be an eternal document, because
   not only its economic but also its spiritual and moral premises
   are wrong."

It is common knowledge that he strongly favoured acquisition of
colonial territory by Germany. However, he also favoured
acquisition of contiguous territory in Europe.

THE PRESIDENT: Are you going to read the passage that follows that
at a later stage ?

LIEUTENANT BRYSON: At a later stage, if you please, Sir, in
connection with another point.

THE PRESIDENT: Very well; go on.

LIEUTENANT BRYSON: On 16th April, 1929, at the Paris Conference in
connection with reparations, he said:

   "Germany can, in general, pay only if the Corridor and Upper
   Silesia is handed back to her from Polish possession and if,
   besides, somewhere on earth colonial territory is made
   available to her."

THE TRIBUNAL (Mr. Biddle): What are you quoting from?

LIEUTENANT BRYSON: I offer in evidence Exhibit USA 628, consisting
of excerpts from a pre-trial interrogation of Schacht on 24th
August, 1945.

You will find it in the document book at the back, labelled
"Interrogation of 24th August." It is at the top of the first page
of the interrogation. This statement was quoted as Schacht's and
his reply contains an admission of having made the statement. In
his reply he said:

"That Germany could not pay, at the time after I made the
statement, has been proved, and that Germany will not be able to
pay after this war will be proved in the future."

                                                        [Page 182]

I wish to point out that this is the very territory which was the
subject of armed aggression in September, 1939.

In 1935 Schacht stated flatly that Germany would, if necessary,
acquire colonies by force. I offer in evidence Document EC450,
designated as Exhibit USA 629. This document consists of an
affidavit of S. R. Fuller, Jr., together with a transcript of his
conversation with Schacht at the American Embassy in Berlin on
23rd September, 1935. I wish to read from Page 6 of the document
where there appears a statement by Schacht in the lower half of
the page.

THE PRESIDENT: What is the date of the conversation?

LIEUTENANT BRYSON: The conversation occurred on 23rd September,
1935. The page number of this document is at the bottom, and I
quote from Page 6:

   "Schacht: Colonies are necessary to Germany. We shall get them
   through negotiation, if possible, but if not, we shall take
   them."

In July, 1936, when the rearmament programme was well under way,
Schacht again publicly spoke of the Versailles Treaty. This time
his language contained an explicit threat of war. I refer the
Tribunal again to Document EC-415, which I have previously
introduced in evidence as Exhibit USA 627, consisting of a
collection of speeches by Schacht. I wish to read from the
paragraph beginning in the middle of the first page:

   "But the memory of war weighs undiminished upon the
   disposition of the peoples. 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 labour, but the moral wrong which has been inflicted
   upon the conquered peoples, in the peace dictates, leaves a
   burning scar on their conscience. The spirit of 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 publicly advocated the doctrine of
"Lebensraum" for the German people. I quote again from Document EC-
415, Exhibit USA 627, being an excerpt from Schacht's speech at
Frankfurt on 9th December, 1936, on the second page, the last
paragraph:

   "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."

In January, 1937, Schacht, in a conversation with Ambassador
Davies, at least by inference threatened a breach of the peace in
demanding a colonial cession. I offer in evidence Document L-111,
being Exhibit USA 630, consisting of excerpts from a report under
date of 20th January, 1937, by Ambassador Davies to the Secretary
of State. I wish to read therefrom, beginning with the second
sentence of the second paragraph:

   "He" - meaning Schacht - "stated the following: that the
   present condition of the German people was intolerable,
   desperate and unendurable; that be had been authorised 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 this based upon a colonial cession that
   would provide for Germany an outlet for population, a source
   for foodstuffs, fats and raw materials."

                                                        [Page 183]

In December, 1937, Ambassador Dodd noted in his diary that Schacht
would be willing to risk war for the sake of new territory in
Europe. I refer the Tribunal to Document EC-461, consisting of
excerpts from Ambassador Dodd's diary.

THE PRESIDENT: The proposal contained in Document 111 was for
cession of colonies, was it not?

LIEUTENANT BRYSON: It was, Sir.

I turn now to Document EC-461, consisting of excerpts from
Ambassador Dodd's diary. The entire diary has previously been
received in evidence as Exhibit USA 58.

I quote some notes on a conversation with Schacht on 21st
December, 1937, beginning near the bottom of the second page of EC-
461, at the last paragraph:

   "Schacht meant what the army chiefs of 1914 meant when they
   invaded Belgium, expecting to conquer France in six weeks; that
   is, domination and annexation of neighbouring small 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."

THE PRESIDENT: There is another passage in that book, that diary.
I do not know if it is the same date. I am not sure; it probably
is not the same date, but it is on the first page of the exhibit,
I think, the third paragraph. Is it at a different time?

LIEUTENANT BRYSON: It is a different time, Sir.

THE PRESIDENT: September the 19th of what year?

LIEUTENANT BRYSON: We will check that in the complete volume here,
and I think in a minute I will be able to supply the date. In the
meantime, would you like me to read, Sir?

THE PRESIDENT: Yes, I think you had better read this.

LIEUTENANT BRYSON:

   "He then acknowledged that the Hitler Party is absolutely
   committed to war and the people, too, are ready and willing.
   Only a few Government officials are aware of the dangers and
   are opposed. He concluded: 'But we shall postpone it ten years.
   Then it may be we can avoid war.'"

THE PRESIDENT: Well, I think you should read the next paragraph,
too.

LIEUTENANT BRYSON:

   "I remind him of his Bad Eilsen speech some weeks ago and said:
   'I agree with you about commercial and financial matters in the
   main. But why do you not, when you speak before the public,
   tell the German people they must abandon a war attitude?' He
   replied: 'I dare not say that. I can only speak on my special
   subject.'"

THE PRESIDENT: And the next one.

LIEUTENANT BRYSON:

   "How then can German people ever learn the real dangers of war,
   if nobody ever presents that side of the question? He once more
   emphasised his opposition to war and added that he had used his
   influence with Hitler - 'a very great man,' he interjected - to
   prevent war.
   
   The German papers printed what I said at Bremen about
   commercial relations between our countries, but not a word
   about the terrible effects and barbarism of war. He
   acknowledged that and talked very disapprovingly of the
   Propaganda Ministry which suppresses everything it dislikes. He
   added, as I was leaving: 'You know a Party comes into office by
   propaganda and then cannot disavow it or stop it.'"

The date of this conversation was in September, 1934.

THE PRESIDENT: 1934?

                                                        [Page 184]

LIEUTENANT BRYSON: 1934.

THE PRESIDENT: It is a pity that those years are not stated in the
document. It is rather misleading as it is.

LIEUTENANT BRYSON: If the Court please, the exhibit which is in
evidence will show the dates.

THE PRESIDENT: Yes, I am not blaming you, but it is misleading,
because it looks like September the 19th and December the 21st,
and there were three years' interval between. It makes a
difference. That is right, is it not?

LIEUTENANT BRYSON: Yes, that is right. I am sorry the excerpt
simply shows the page numbers from the exhibit, and not the dates.

Schacht admittedly strained all the resources of Germany to build
up a Wehrmacht which would provide Hitler with an instrument for
realisation of his desire for Lebensraum. In this connection I
offer in evidence Document EC-369, Exhibit USA 631, consisting of
a memorandum from the Reichsbank Directorate, signed by Schacht,
to Hitler, dated 7th January, 1939. I wish to read the last
paragraph of the first page:

   "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
   of financing the rearmament in spite of the inherent dangers to
   the currency. The justification thereof was the necessity,
   which pushed all other considerations into the background, of
   preparing immediately an armament, out of nothing and
   furthermore under camouflage, which would make possible a
   foreign policy which would command respect."

It is clear that the "successful foreign policy" which Schacht
thus attributed to rearmament included the Austrian and
Czechoslovakian acquisitions. I offer in evidence Document EC-
297A, Exhibit USA 632, being a speech of Schacht's in Vienna after
the Anschluss in March, 1938. I quote from the third page and the
second full paragraph:

   "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 internal union between Germany and
   Austria."

With respect to the Sudetenland I refer the Tribunal to Document
EC-611, already in evidence as. Exhibit USA 622, being a speech by
Schacht on 29th November, 1938, shortly after the Munich
settlement. I have earlier read the pertinent remark attributing
Hitler's success at that conference to the rearmament made
possible by Schacht's financial and economic measures.

This line of proof shows that Schacht entertained an aggressive
philosophy with respect to territorial expansion, and justifies
the conclusion that he allied himself with Hitler because of their
common viewpoint.

We now turn to prove that, whether or not Schacht wanted war, he
at least knew Hitler planned military aggression, for which he was
creating the means. He had numerous discussions with Hitler from
1933 to 1937. He knew that Hitler was intent upon expansion to the
East, which would mean war, and that Hitler felt he must present
the German people with a military victory. I offer in evidence
Exhibit USA 633, consisting of an excerpt from a pre-trial
interrogation of Schacht on 13th October, 1934, and I read from
the second page at the end of the second question:

   "Q. What was there in what he" - meaning Hitler - "said that
   led you to believe he was intending to move towards the East?
   
   A. That is in 'Mein Kampf.' He never spoke to me about that,
   but it was in 'Mein Kampf.'
   
                                                        [Page 185]
   
   Q. In other words, as a man who read it, you understood that
   Hitler's expansion policy was directed to the East?
   
   A. To the East.
   
   Q. And you thought that it would be better to try to divert
   Hitler from any such intention and to urge upon him a colonial
   policy instead?
   
   A. Quite. "

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