The Nizkor Project: Remembering the Holocaust (Shoah)

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Q. We will speak later about that. May I ask you first - the
Tribunal know about the method of financing this credit,
namely, by MEFO bills, so you need not say anything about
that. What I want to ask you is how, in your opinion, your
opinion as a lawyer, could the financing of armaments by
these MEFO bills be reconciled with banking law?

A. The MEFO bills and the construction of that company had,
of course, been legally examined beforehand and the point of
its legality had been raised with us, and the question as to
whether these bills could be brought under banking law had
been answered in the affirmative. The more serious question,
however, was whether these bills fulfilled the normal
requirements which an issuing bank should demand of its
reserves. To that question, of course, I must definitely
answer NO.

If one asks, why did not the bank buy good commercial bills
instead of MEFO bills, the answer is that at that time there
had been no good commercial bills on the market for years -
that is, since the collapse due to the economic crisis.
Already, under Bruning, schemes for assisting and restoring
economy and credit had been drawn up, all of which followed
similar lines; that is, they were sanctioned according to
their nature, normal credits along the lines of a semi-
public loan, for the Bank was faced with the alternative of
standing by helplessly and seeing what would happen to the
economy, or of helping the Government as best it could to
restore and support the economy. All issuing banks in other
countries were faced with the same alternative and reacted
in the same manner. Thus the armaments bills, which,
economically speaking, were nothing more than the former
unemployment bills, had to serve the same purpose. From the
point of view of currency policy the Reichsbank's reserves
of old bills, which had been frozen by the depression, were
again made good.

All the regulations under banking law, the traditional
regulations concerning banking and bills policy had only one
aim, namely, to avoid losses.

Q. I believe, Herr Vocke, it will be sufficient for the
Tribunal if you could confirm that in the end the legal
experts of the Reichsbank pronounced the MEFO bills to be
legal. The reasons for this, if your Lordship agrees, we can

                                                   [Page 86]

Now, we come to the memorandum which you have already
mentioned and which you want to describe to the Tribunal.
The reasons which caused the Reichsbank Directorate, with
Schacht at the head, to submit that memorandum to Hitler,
and what the tactical purposes were which the Directorate,
and therefore Schacht, hoped to achieve by that memorandum.

A. If we had been able to speak frankly, of course, we would
have said, you must stop armaments. But the Reichsbank
itself could not do this. Instead, we had to limit ourselves
to the question of our responsibility for the currency.
Therefore, the Reichsbank memorandum dealt with the question
of currency. It said: If the financing of armaments is
continued German currency will be ruined and there will be
inflation in Germany.

The memorandum also spoke of limitless credits, of
unrestrained expansion of credits, and unrestrained
expenditure. By expenditure we meant armaments. That was
quite clear.

THE PRESIDENT: We have all seen the memorandum, have we not?

DR. DIX: He is not speaking about the contents of the
memorandum, but of the reasons, the tactical reasons.


Q. You understand, Herr Vocke, the Tribunal knows the text
of the memorandum, so please confine yourself to what I have
asked you.

A. The memorandum was supposed to deal with the question of
currency, but at the same time, we made it quite clear that
we wanted a limitation of foreign policy. That shows clearly
what we wanted: limitation of expenditure, limitation of
foreign policy, of foreign policy aims. We pointed out that
expenditure had reached a point beyond which we could not
go, and that a stop must be put to it.

In other words, the expenditure policy, that is the
armaments programme, must be checked.

Q. Now tell us, did you anticipate the effect that that
memorandum would have on Hitler? What did you expect,

A. That the memorandum would result in a halt of this
intolerable expenditure which had brought us to ruin, for at
the end of 1938 there was no more money available, instead
there was a cash deficit of nearly one billion... That had
to be faced and the Finance Minister was on our side. If it
was not recognized, then the smash would come and we would
have to be released. There was no other alternative. We took
the unusual step of getting the whole Directorate to sign
this document.

Q. That, in my experience, is quite unusual, because
generally an official document of the Reichsbank is signed
by the President or his deputy, is it not?

A. That is true. We wanted to stress that the entire
directorate unanimously approved this important document,
which was to put an end to armaments.

Q. That, witness, is clear. Have you any reason for
believing that Hitler recognized that fact?

A. Yes, Hitler said something to the effect that that would
be "mutiny."

I think that is the word they use in the Army. I have never
been a soldier, but I think that when a complaint is signed
by several soldiers, that is looked upon as mutiny. Hitler
had the same ideas.

Q. Yes, something like that. . But you were not there. Who
told you about that expression "mutiny."

A. I can't remember that now. I believe it was Herr Berger,
of the Finance Ministry. But I can't say exactly.

Q. So, there was talk about it in ministerial circles, about
this expression.

A. Yes.

Q. Now, that memorandum also contained a compliment to
Hitler, a reference to his successes in foreign policy.

                                                   [Page 87]

A. Yes. Schacht had adopted the habit of using flattery in
his dealings with Hitler. The greater an opponent of the
Hitler regime Schacht became, the more he made use of this
flattery. Therefore, in that memorandum, at any rate, where
he spoke of Hitler's successes, he also used those tactics.

Q. And what was the consequence of that memorandum? Please
tell us briefly.

A. First Schacht was dismissed, then Kreide and Hulse, then
I. The result, however, was that they knew abroad what
things had come to in Germany. My colleague, Hulse, had made
unequivocal statements in Basle, and said that if we should
be dismissed, then our friends would know to what pass
things had come.

Q. Did Hulse tell you that?

A. Yes, Hulse told me that.

DR. DIX: Your Lordship, shall we make a short pause here? I
have not much more, but I still have the documentary

THE PRESIDENT: How much longer do you think you will take
before you finish?

DR. DIX: It is very short, and then the documentary evidence
which is also very short. Shall I continue?

THE PRESIDENT: The Tribunal will adjourn.


Q. Now, witness, you have described to the Tribunal how that
dismissal of Schacht and yourself came about. Why did
Schacht not resign before? Did he talk to you about it?

A. No. Throughout the years 1936 and 1937 we could not make
up our minds. At first there was still hope that Hitler
would steer a reasonable course as a statesman. Finally, in
1938, we reached a crisis, particularly in connection with
the Munich Agreement, and then after the Munich Agreement.
Then, indeed, there was real anxiety that it would come to
war, and we then saw that we had to force the issue.

However, one has to consider the following: As a bank we
could not use political or military arguments or demands,
which were not within our scope. The inflation, which we had
anticipated in that memorandum, did not materialise until
1938, when the note circulation during the last ten months
had increased enormously - more than throughout the five
preceding years.

Q. So that it was not until that year that, let us say, a
pretext, a means, was found to take that step?

A. Yes.

Q. Now I will end with a general question. The high
intelligence of Dr. Schacht is not disputed - that he was
disappointed in Hitler and deceived by him, he says himself.
You yourself, with your knowledge of Schacht's personality,
must probably have had your own ideas as to how this mistake
on the part of Schacht could be explained, how he could have
been so deceived. Therefore, if the Tribunal permits, I
should be grateful if you could give us your personal
impressions about it.

MR. JUSTICE JACKSON: Your Honour, may I make an objection? I
do not understand how the working of Dr. Schacht's mind can
be explained by someone else. I have had no objection to any
facts which this witness has known. We have even let him
detail here at great length private conversations. However,
speculation on Schacht's mental attitude, it seems to me, is
beyond the pale of probative evidence.

THE PRESIDENT: Dr. Dix, as I think I have said before, you
cannot give by one witness the thoughts of another man; you
can only give his acts and his statements.

                                                   [Page 88]

DR. DIX: Yes, your Lordship. When I put the question I said:
if the Tribunal permits." I too was aware of the question of

THE PRESIDENT: You have the answer now, the Tribunal does
not allow it.

DR. DIX: Then we will leave that question. May I ask your
Lordship this

Of course, I can still put questions about the treatment of
the Jews by Schacht. I personally think that this chapter
has been dealt with so exhaustively that it is not necessary
for this witness to give us more examples of the attitude of
Schacht. I would only ask to be permitted to put the same
question concerning the Freemasons, because nothing has been
stated about that.


Q. Do you know anything about the treatment of Freemasons or
the attitude of Schacht to Freemasons?

A. Yes. The Party demanded that the Freemasons should be
eliminated from the Civil Service. Schacht said: I refuse to
let anybody tell me what to do. Everybody knows that I
myself am a Freemason; how can I take action against
officials simply because they belong to the Order of
Freemasons? And as long as Schacht was in office he kept
Freemasons in office and promoted them.

Q. Now, one last question. Do you know whether Schacht ever
received any gifts or had any economic advantages during
Hitler's time beyond his regular income as an official?

A. No; that was quite out of the question for Schacht.
Besides, he was never offered gifts. In all his dealings, as
far as money was concerned, he was absolutely clean and
incorruptible. I can give examples. For instance, when he
left in 1930, he reduced his pension to less than half of
the pension of the vice-president or of another board
member. He said: These people have devoted their whole life
to the bank, whereas I have only given a few years' service.
I could give more examples of Schacht's absolute correctness
in that respect.

DR. DIX: I believe, if the Tribunal does not wish it, it
will not be necessary to give further examples. That brings
me to the end of my interrogation of this witness.

THE PRESIDENT: Does any member of defendants' counsel wish
to ask any questions?

BY DR. STEINBAUER (Counsel for the defendant, Seyss-Inquart)

Q. Witness, do you remember the financial-political measures
on the occasion of the annexation of Austria in March of
1938; that is to say, in general terms?

At that time two laws were issued, both of 17th March, 1938,
one concerning the conversion of schillings into marks, and
the other for the taking over of the Austrian National Bank
by the Reichsbank.

Dr. Schacht, as a witness, stated yesterday that on 11th
March, he was asked what exchange he would consider correct
in the event of an entry into Austria, and he answered that
question by saying that according to the latest market rate,
two schillings for one Reichsmark would be correct.

After the Anschluss, my client, Dr. Seyss-Inquart, objected
to the under-valuation of the schilling, and he succeeded in
getting the schilling converted at 1.50 to the Reichsmark.
Is that correct?

A. Before the entry into Austria, I had not heard of any
ratio being fixed by the Reichsbank Directorate. They were
entrusted with that question only after the entry into
Austria, and as experts and bankers they proposed a ratio
which was in accordance with the conditions, and only a
slight modification was made. It was for the Government to
make concessions, if it wanted to win over the Austrian
population or make it favourably inclined.

Q. The second law deals with the Austrian National Bank. The
witness, Dr. Schacht, has said today that the Austrian
National Bank was not liquidated,

                                                   [Page 89]

but - as he expressed himself - amalgamated. I have looked
up that law and it states expressly in Paragraph 2 that the
Austrian National Bank is to be liquidated. That is Document
2312-PS. Now, I ask you, witness, do you know anything about
it? Was the Austrian National Bank left to function as an
issuing bank, or was it liquidated?

A. The right to issue notes in Austria of course, went to
the Reichsbank which, as far as I know, took over the
Austrian National Bank in Vienna and carried it on. I do not
remember any details. My colleague, Kesnik, took care of

Q. But maybe you will remember if I quote from the official
reports of the Austrian National Bank that the gold reserve
of the Austrian National Bank in March, 1938, amounted to
243 million schillings, and the foreign currency reserve 174
million schillings, which means that roughly over 400
million schillings in gold was taken over by the Reichsbank
from the Austrian National Bank.

A. I do not recall these facts now, but if it was done, it
was done by law, by the Government.

Q. Yes. I have that law of the 17th of March. I just wanted
to correct it and to point out that Dr. Schacht must have
made a mistake unintentionally. The law he himself signed
says "shall be liquidated." I have no other questions.

BY DR. LATERNSER (Counsel for General Staff and OKW):

Q. Witness, you said earlier that the fundamental difference
between Dr. Schacht and the high military leaders was that
he remained a free man in his attitude to the regime. I want
to ask you now, since that statement seems to imply a
criticism of the high military leaders, which of the high
military leaders do you know personally?

A. Not a single one.

Q. Then would you maintain that judgement?

A. In our circles of the Reichsbank, General Keitel and
other gentlemen were considered too servile and too
acquiescent toward Hitler.

Q. But if, you had no personal acquaintance with these
people, do you not think that what you said earlier is a
rather serious criticism to make here?

A. Yes, I think it is.

DR. LATERNSER: I have no further questions.

THE PRESIDENT: Do any of the other Counsel wish to cross-



Q. Witness, when you met Dr. Schacht first, as I understood
it, it was on the occasion of an official visit which you
paid to von Lumm in Brussels?

A. Yes.

Q. During the first years of the first World War?

A. Yes.

Q. Schacht then held some position on von Lumm's staff?

A. Yes.

Q. What was his position, Schacht's?

A. I cannot say. He was just one of the staff. How I came to
meet him was that on one occasion when I was sent to
Brussels to discuss something with von Lumm, the latter took
the opportunity to introduce his colleagues and among them
was Schacht. We were merely introduced.

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