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Last-Modified: 1999/09/25

                                                        [Page 190]


PROFESSOR HERBERT KRAUS (Counsel for defendant Schacht): We agree
that the question of the disagreement between the defendant's
Goering and Schacht need not be discussed further at this time.
But we shall come back to and deal in detail with the question how
far these disagreements had any bearing on the plan for an
aggressive war.

LIEUTENANT BRYSON: If the Tribunal Please, we have eliminated part
of our proof. I would simply like to put in a letter from Goering
and an interrogation of Schacht, which will finish up the question
of the disagreement.

Under date of 5th August, 1937, Schacht wrote a critical letter to
Goering, who replied with a twenty-four page letter on 22nd
August, 1937. Goering's letter reviews their many differences in
detail. I offer it as Document EC-493, Exhibit USA 642, and I wish
to read only one statement, found in the middle of Page 13:

   "In conclusion, I should like to refer to remarks which you
   made in a paragraph of your letter entitled 'The Four Year
   Plan' about your general attitude toward my work in regard to
   the economic policy. I know and I am pleased that at the
   beginning of the Four Year Plan you promised me your loyal
   support and co-operation, and that you repeatedly renewed this
   promise even after the first differences of opinion had
   occurred and had been removed in exhaustive discussions. I
   deplore all the more having recently formed the impression
   which is confirmed by your letter, that you are increasingly
   antagonistic toward my work in the Four Year Plan. This
   explains the fact that our collaboration has gradually become
   less close."

Schacht and Goering were reconciled by written agreement on 7th
July, 1937, but subsequently again fell into disagreement, and
Hitler finally accepted Schacht's resignation as Minister of
Economics on 26th November, 1937, simultaneously appointing him
Minister without Portfolio, and, later, Schacht's resignation was
extended to his position as Plenipotentiary for War Economy.
Without reading it, I offer in evidence Document EC-494, Exhibit
USA 643, as proof of this fact.

Now, finally, I wish to refer the Tribunal to the interrogation of
Schacht, under date of 16th October, 1945, Exhibit USA 636, and I
wish to read from Page 12 of the document near the bottom:

   "A. It may amuse you if I tell you that the last conversation"
   - this is Schacht speaking - "I had with Goering on these
   topics was in November, 1937, when Luther for two months had
   tried to unite Goering and me, and to induce me to co-operate
   again with Goering and maintain my position as Minister of
   Economics. Then I had a last talk with Goering, and at the end
   of this talk Goering said, 'But I must have the right to give
   orders to you.' Then I said, 'Not to me, but to my successor.'
   I never have taken orders from Goering, and I would never have
   done it, because he was a fool in economics and I knew
   something about it, at least.
   
   Q. Well, I gather that was a culminating, progressive personal
   business between you and Goering. That seems perfectly obvious.
   
   A. Certainly."

In all this abundant and consistent evidence there is not the
slightest suggestion that Schacht's withdrawal from these two
posts represented a break with Hitler in the field of contemplated
military aggression. Indeed, Hitler was gratified that Schacht
would still be active in the Government as President of the
Reichsbank and as Minister without Portfolio. I offer in evidence
Document L-104, Exhibit USA 644, consisting of a letter to the
United States Secretary of State from Ambassador Dodd, under date
of 29th November, 1937, enclosing a translation of Hitler's letter
of 26th November, 1937, to Schacht. I quote the last two sentences
of Hitler's letter, found on Page 2 of the document:

                                                        [Page 191]

   "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 Directorate,
   you will make available to the German people and me, for many
   years more, your outstanding knowledge and ability and your
   untiring energy. Delighted at the fact that in the future,
   also, you are willing to be my personal adviser, I appoint you
   as from to-day a Reich Minister."

Schacht did continue, obviously still in full agreement with
Hitler's aggressive purpose. He was still President of the
Reichsbank at the time of the taking of Austria in March, 1938. In
fact, the Reichsbank took over the Austrian National Bank. On this
point I refer the Tribunal to Reichsgesetzblatt 1938, Part 1, Page
254, and ask that judicial notice be taken thereof. Further,
Schacht even participated in the planning of the absorption of
Austria. In this connection I introduce into evidence Document EC-
421, Exhibit USA 645, consisting of excerpts from minutes of a
meeting of the staff of General Thomas on 11th March, 1938, at
15.00 hours. I quote therefrom as follows:

   "Lieutenant-Colonel Hunerm reads directive of the Fuehrer of
   11th March concerning the 'Action Otto' and informs us that
   'The Economy War Service Law' has been put in force. He then
   reads Directives 1 and 2, and gives special orders to troops
   for crossing the Austrian borders. According to that, at
   Schacht's suggestion, no requests should take place, but
   everything should be put in Reichsmark on an exchange basis of
   two Schillinge to one Reichsmark."

On the conversion of the Austrian Schilling the Tribunal is asked
also to take judicial notice of Reichsgesetzblatt, 1938, Part 1,
Page 405.

The Tribunal, of course, is already familiar with the public
approval by Schacht of the Anschluss, in his Vienna speech of 21st
March, 1938, and your Honours will also recall Schacht's pride in
Hitler's use of the rearmed Wehrmacht at Munich, as expressed in
his speech of 29th November, 1938. Both speeches were subsequent
to his resignation in November, 1937.

We come now to the removal of Schacht from the Presidency of the
Reichsbank in January, 1939. The reason for this development is
quite clear. Schacht lost confidence in the credit capacity of the
Reich and was paralysed with the fear of a financial collapse. He
felt that the maximum level of production had been reached, so
that an increase in banknote circulation would only cheapen money
and bring on inflation. In this attitude he ceased to be useful to
Hitler, who was about to strike, and wished to tap every ounce of
available Government credit for military purposes.

I refer the Tribunal to Document EC-369, which I have previously
submitted in evidence as Exhibit USA 631. This document is a
memorandum from the Reichsbank Directorate to Hitler, under date
of 7th January, 1939, in which Schacht reviews in detail his fears
of inflation. The seriousness of the situation may be seen
generally from the entire text. I wish to quote several of the
more crucial statements - one from the last paragraph on Page 3,
the second sentence:

   "We are, however, faced with the fact that approximately three
   billion Reichsmark of such drafts cannot now be paid, though
   they will be due in 1939."

I quote from the upper half of Page 4:

   "Exclusive of the Reichsbank there are approximately six
   billion Reichsmark 'Mefo' drafts which can be discounted
   against cash payment at any time at the Reichsbank, which fact
   represents a continuous danger to the currency."

And I quote finally from the concluding paragraph of the
memorandum:

   "We are convinced that the effects on the currency caused by
   the policy of the last ten months can be mended, and that the
   danger of inflation again can be eliminated by strict
   maintenance of a balanced budget.
   
                                                        [Page 192]
   
   The Fuehrer and Reich Chancellor himself has, again and again,
   publicly rejected an inflation, as foolish and fruitless.
   
   We therefore ask for the following measures:
   
   (1) The Reich as well as all the other public offices must not
   incur expenditure or assume guarantees and obligations that
   cannot be covered by taxes, or by those funds which can be
   raised through loans without disturbing the long-term
   investment market.
   
   (2) In order to carry out these measures effectively, full
   financial control over all public expenditures must be restored
   to the Reich Minister of Finance.
   
   (3) The price and wage control must be rendered effective. The
   existing mismanagement must be eliminated.
   
   (4) The use of the money and investment market must be at the
   sole discretion of the Reichsbank."

It is clear that Schacht's fear was genuine and is a complete
explanation of his departure from the scene. He had good reason to
be afraid. In fact, the Finance Minister had already recognised
the situation in September, 1938. I refer the Tribunal to Document
EC-419, Exhibit USA 621, which I have already submitted in
evidence, and which consists of a letter under date of 1st
September, 1938, from Krosigk to Hitler, in which Krosigk gives a
warning of an impending financial crisis. I quote from the bottom
of Page 2:

THE PRESIDENT: Is that not really cumulative of what you have
already read?

LIEUTENANT BRYSON: We will be glad to omit it, Sir; it is
cumulative.

Schacht was not only afraid of a financial crisis, but he was
afraid that he personally would be held responsible for it. I
offer in evidence an affidavit of Emil Puhl, a director of the
Reichsbank and co-worker of Schacht, dated 8th November, 1945,
designated as Document EC-438, Exhibit USA 646, and I read
therefrom, beginning at the bottom of the second page:

   "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 'Leitmotiv' of Schacht's conversation with the
   Directors of the bank."

In the end, Schacht escaped by deliberately stimulating his
dismissal from the Presidency of the Reichsbank. I offer in
evidence Exhibit USA 647, consisting of excerpts from an
interrogation of von Krosigk under date of 24th September, 1945,
and I wish to read several statements, beginning at the very
bottom of the second page:

   "I asked. Schacht to finance for the Reich before the last day
   of the month the sum of one hundred or two hundred millions. It
   was this quite usual procedure which we had used for 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, as he said, that, it should be made
   clear to Hitler that the Reich was bankrupt. I tried to explain
   that these were not the proper grounds for discussing the whole
   question of finance, because the question of financing very
   small sums for a few days beyond the last days of the month
   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 do not know what they said,
   but the result certainly was the dismissal of Schacht."

THE PRESIDENT, Just give me again the reference to that document
that you were reading from.

LIEUTENANT BRYSON: This is the interrogation of von Krosigk under
date of 24th September, 1945. I wish to read further, continuing
on Page 3:

                                                        [Page 193]

   "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 programme?
   
   A. No, he never said it in this specific form, but in some
   conversations he certainly said it several times, in his own
   way, that he had conflicts with Goering so that, in answer to
   that, I did not take these things very seriously.
   
   Q. Well, let me put it in this way, and please think carefully
   about this. Did Schacht ever say that he wanted to resign
   because he realised that the extent of the rearmament programme
   was such as to lead him to the conclusion that it was in
   preparation for war rather than for defence?
   
   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 you
   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
   programme of rearmament, or to the budget of the Wehrmacht?
   
   A. No, I do not think he ever did."

The defendant Goering has also confirmed this testimony. I refer
the Tribunal to the interrogation of Goering under date of 17th
October, 1945, this being Exhibit USA 648. I read from this
interrogation on 17th October, 1945, from the lower half of the
third page:

   "Q. I want to ask you this specifically. Was Schacht dismissed
   from the Reichsbank by Hitler for refusing to participate any
   further in the rearmament programme?
   
   A. No, it was because of his utterly impossible attitude in
   this matter regarding this advance, which had no connection
   with the rearmament programme."

Hitler dismissed Schacht from the Reichsbank on 20th January,
1939. Without reading, I offer in evidence Document EC-398,
Exhibit USA 649, consisting merely of a brief note from Hitler to
Schacht announcing his dismissal.

From all of the foregoing it is clear that Schacht's dismissal in
no sense reflected a parting of the ways with Hitler on account of
proposed aggression. This fact may also be seen from Document EC-
397, Exhibit USA 650, consisting of Hitler's letter to Schacht
under date of 19th January, 1939, the text of which I wish to
read:

   "On these occasions of your recall from office as President of
   the Reichsbank Directorate, I take the opportunity of
   expressing to you my most sincere and warmest gratitude for the
   services which you have 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."

In fact, Schacht continued as Minister without Portfolio until
January, 1943.

I wish to conclude by saying that the evidence shows: first, that
Schacht's work was indispensable to Hitler's rise to power and to
the rearmament of Germany; second, that Schacht personally was
favourably disposed towards Aggression and knew Hitler intended to
and would break the peace; and, third,

                                                        [Page 194]

that Schacht retired from the scene for reasons wholly unrelated
to the imminence of illegal aggression.

As long as he remained in power, Schacht was working as eagerly
for the preparation of aggressive war as any of his colleagues. He
was beyond any doubt most effective and valuable in this
connection. His assistance in the earlier phase of the conspiracy
made their later crimes possible. His withdrawal from the scene
reflected no moral feeling against the use of aggressive warfare
as an instrument of national policy. He personally struggled to
retain his position. By the time he lost it he had already
completed his task in the conspiracy, namely, to provide Hitler
and his colleagues with the physical means and economic planning
necessary to launch and maintain the aggression. We do not
consider that, having prepared the Wehrmacht for assault upon the
world, he should now be permitted to find refuge in his loss of
power before the blow was struck.

This concludes our case against the defendant Schacht, and Lt.
Meltzer follows me with the presentation of the American case
against the defendant Funk.

LIEUTENANT BERNARD D. MELTZER: May it please the Tribunal, the
documents bearing upon defendant Funk's responsibility have been
assembled in a document book marked "HH," which has been filed
with the Tribunal and has also been made available to defence
counsel. The same is true of the brief. The documents have been
arranged in the book in the order of their presentation. Moreover,
to facilitate reference, the pages of the document book have been
numbered consecutively in red. I wish to acknowledge the
invaluable collaboration of Mr. Sidney Jacoby, who sits to my
right, in the selection and analysis of these documents.

We propose to submit evidence concerning five phases of defendant
Funk's participation in the conspiracy:

   First, his contribution to the Nazi seizure of power;
   
   Second, his role in the Propaganda Ministry and in the related
   agencies, and his responsibility for the activities of that
   Ministry;
   
   Third, his responsibility for the unrelenting elimination of
   Jews, first from the so-called cultural professions and then
   from the entire German economy;
   
   Fourth, his collaboration in the paramount Nazi task to which
   all other tasks were subordinated preparation for aggressive
   war;
   
   And finally, we propose to mention briefly the evidence
   concerning his active participation in the waging of aggressive
   war.

We turn now to the evidence showing that defendant Funk actively
promoted the conspirators' accession to power and their
consolidation of control over Germany. Soon after he joined the
Nazi Party in 1931 defendant Funk began to hold important
positions, first within the Party itself and then within the Nazi
Government. Funk's positions have, in the main, been listed in
Document 3533-PS, which is a statement signed by both defendant
Funk and his counsel. This document has been made available in the
four working languages of these proceedings, and a copy in the
appropriate language should be available in each of your Honours'
document books. It is accordingly requested that this document,
which is Exhibit USA 651, be received into evidence without the
necessity of its being read in its entirety.


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