The Nizkor Project: Remembering the Holocaust (Shoah)

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                                                  [Page 114]

                   MONDAY, 6th MAY, 1946

DR. SAUTER: Mr. President, I will continue my questioning of
the defendant Dr. Funk. On Saturday we were discussing the
appointment of Dr. Funk as Reich Minister of Economics and
now I turn to his appointment as President of the

WALTER FUNK - Resumed.



Q. Witness, I believe it was in January, 1939, when you also
became President of the Reichsbank as successor to Dr.
Schacht. How did that appointment come about?

A. I had just returned from a journey about the middle of
January, 1939. I was called to the Fuehrer and found him in
a state of great agitation. He told me that the Reich
Minister of Finance had informed him that Schacht had
refused the necessary financial credits and that
consequently the Reich was in financial straits. The Fuehrer
told me, in great excitement, that Schacht was sabotaging
his policies, that he would not tolerate the Reichsbank's
interference with his policies any longer - and the
gentlemen in the Reichsbank Directorate were utter fools if
they believed that he would tolerate it. No Government and
no Chief of State in the world could possibly make policy
dependent on co-operation or non-co-operation of the bank.

The Fuehrer further declared that from now on he, himself,
on the suggestions and demands of the Reich Minister of
Finance, would fix all credits to be given by the Reichsbank
to the Reich. He had given Lammers instructions to formulate
a decree, together with the Reich Minister of Finance, by
which the status of the Reichsbank, as established by the
provisions of the Treaty of Versailles, would be changed,
and whereby the terms for the granting of credits to the
Reich would be determined by himself alone in the future.

The Fuehrer further said that he was asking me to take over
the direction of the Reichsbank, whereupon I replied that I
would be glad to comply with his wish, but that first of all
I had to have confirmation from him that the conditions for
stabilisation of currency would be maintained.

The opinion, which was voiced here by a witness, that
inflation would be brought about through a further grant of
credits at that time is wrong and totally untenable. Twelve
billion of credit cannot have an inflationary effect, while
twenty billion of credit will not necessarily tend toward
inflation if the State has the necessary authority to
stabilise prices and wages and to carry out the regulation
and administration of prices, and if the people maintain the
proper discipline in this respect, and if, finally, the
money which as a result of increased credits represents
excess purchasing power is diverted through taxes or taken
up through loans; then, as far as the currency is concerned,
there is absolutely no danger.

It is a fact that the German Reichsmark, up to the final
collapse, was kept on a stable basis. As far as the
essentials of life are concerned, the purchasing power

                                                  [Page 115]

of money in Germany was secure. Of course, its value was
limited in so far as consumer goods were produced only on a
very limited scale, for almost all production was turned
over to armaments.

Q. Dr. Funk, have you concluded?

A. just one moment, please. I believe this is a very
important question.

In other countries as well large credits were issued during
the war which did not in any way cause an inflation. The
national debt in the United States as well as in England,
was relatively, and in part even absolutely, higher than
that in Germany. And in these countries, too, a correct
financial policy overthrew the old thesis that a war would,
of necessity, bring about the destruction of the monetary

The German people, up to the very end, until the terrible
collapse, maintained admirable discipline. Money can serve
as a function of the State, and currency will function, as
the State has the authority to maintain it on a stable
basis, to keep the economy under control, and as long as the
people themselves maintain the necessary discipline.

Thus I took over this office not with the knowledge that
Germany was now entering into an inflation, but on the
contrary, I knew well that through maintenance of a suitable
governmental policy, the currency could be protected, and it
was protected. However, the basic difference between
Schacht's position and my position lay in the fact that
during Schacht's time the Reichsbank could determine the
granting of credits to the Reich, whereas this authority was
taken from me and the responsibility for domestic finances,
therefore, was turned over to the Finance Minister, or, of
course, to the Fuehrer himself.

Q. Dr. Funk, I have another question. Perhaps, despite your
poor state of health today, you might be able to speak a
little more loudly so that the Tribunal reporters might
understand you more easily. Please try, and we will make
this as brief as possible.

Witness, then in addition to these offices of yours which we
have discussed up to now, you finally had a further office
as successor to Dr. Schacht, namely, that of General
Plenipotentiary for Economy. Can you give us some details of
your views in this connection in order to clarify your
situation, your activity, and your achievements?

A. This of all the positions I had was the least formidable.
As the Reichsmarshal correctly stated, and as Dr. Lammers
confirmed, it existed merely on paper. That, too, was an
essential difference between the position which Schacht had
and the one which I had.

Schacht had been appointed General Plenipotentiary for War
Economy. I, on the other hand, was the Plenipotentiary for
Economy. According to the Reich Defence Law of 1938, the
General Plenipotentiary for Economy was to co-ordinate the
civil economic departments in preparing for a war. But, in
the meantime, these economic departments had been
subordinated to the Plenipotentiary for the Four-Year Plan,
and I, as General Plenipotentiary for Economy, was also
subordinate to the Plenipotentiary for the Four-Year Plan.

Consequently, there was confusion and overlapping in matters
of competence and authority as they had been laid down
formally. The result was a directive of the Fuehrer, just a
few months after the beginning of the war, which de jure,
formally transferred the authority of the General
Plenipotentiary for Economy, as far as the civil economic
departments were concerned, to the Plenipotentiary for the
Four-Year Plan.

Q. When was that?

A. That was in December of 1939. There remained only a
formal authority to issue directives, that is, I could sign
directives on behalf of the five civil economic departments,
which according to the Reich Defence Law, were subordinate
to the Plenipotentiary. I retained authority over the
Ministry of Economics and the Reichsbank, which I had in any

                                                  [Page 116]

Q. But you were subordinate even in these functions to the
Plenipotentiary for the Four-Year Plan; is that correct?

A. Yes, like all civil economic departments. Only with the
Ministry of Economics itself did I have a closer connection.

Q. Witness, in August of 1939, that is, immediately before
the beginning of the Polish campaign, you in your capacity
as General Plenipotentiary for Economy, summoned the civil
economic offices to a meeting, for discussions and Document
3324-PS refers to this meeting. It seems to me important
that you define your attitude on this point also, and
especially with reference to the fact that apparently your
letter to Hitler, dated 25th August, was a result of this
meeting. This matter is mentioned in your trial brief on
Page 24. Will you comment on it?

A. In Schacht's time there existed an office for the General
Plenipotentiary for Economy, and a working committee was set
up which consisted of the representatives of the various
economic departments, as well as of the Ministry of the
Interior, the Plenipotentiary for Administration, the OKW,
and above all, of the Four-Year Plan.

When Schacht resigned, the direction of this committee and
of the office of the Plenipotentiary for Economy was
transferred to Dr. Vosse, his former State Secretary,
whereas under Schacht, State Counsellor Wehlfahrt had headed
the office and the committee. These people, of course, had
constant consultations, in which they discussed measures
necessary for waging war in the economic sphere. And this
was the organization of the Plenipotentiary for Economy
which I dealt with in my speech in Vienna which has been
mentioned here. It existed together with the Four-Year Plan,
and in the main was charged with a smooth conversion of the
civilian economy into a war economy in the case of war, and
with the preparation of a war economy administration.

When, in August of 1939, there was a threat of war with
Poland, I called together the chiefs of the civil economic
departments, as well as the representatives of the Four-Year
Plan, and, in joint consultation, we worked out measures
necessary for converting the civilian economy into a war
economy in the case of a war with as little disturbance as

These were the proposals which I mentioned in my letter to
the Fuehrer, dated 25th August, 1939, at a time when the
German and the Polish Armies already faced each other in a
state of complete mobilization.

It was, of course, my duty to do everything to prevent
dislocations of the civilian economy in the case of a war,
and it was my duty as President of the Reichsbank, to
augment gold and foreign exchange assets of the Reichsbank
as much as possible.

This was necessary, first of all, because of the general
political tension which existed at the time. It would also
have been necessary if war had not broken out at all, but
even if only economic sanctions had been imposed as was to
be expected from the general foreign political tension which
existed at the time. And it was equally my duty, as Minister
of Economics, to do everything to increase production.

But I did not concern myself with the financial demands of
the Wehrmacht, and I had nothing to do with armament
problems, since, as I have already said the direction of
peace-time as well as war economy had been turned over to
the Plenipotentiary for the Four-Year Plan.

The explanation of the fact that at that time I kept aloof
from the work of that committee is the following:

I personally did not believe that there would be war, and
everyone who discussed this subject with me at that time
will confirm this. In the months before the beginning of the
war, I concentrated my entire activity on international
negotiations for bringing about a better international
economic order, and for improving commercial relations
between Germany and her foreign partners.

At that time it was arranged that the British Ministers
Hudson and Stanley were to visit me in Berlin. I, myself,
was to go for negotiations to Paris where, in the

                                                  [Page 117]

year 1937, I had come to know some members of the Cabinet
when I organized a great German cultural fete there.

The subject of short-term foreign debts had again to be
discussed and settled - the so-called moratorium. I had
worked out new proposals for this, which were hailed with
enthusiasm, especially in England. In June of 1939, an
international financial discussion took place in my offices
in Berlin, and leading representatives of the banking world,
from the United States, from England, from Holland, France,
Belgium, Switzerland, and Sweden, took part in it.

These discussions led to results which satisfied all
parties. At the same time I carried out the exchange or
transfer of Reichsbank assets in foreign countries. This
exchange of gold shares also was considered very fair and
satisfactory in foreign banking circles and the foreign

In June of that year I went to Holland to negotiate trade
agreements. I also participated in the customary monthly
discussions of the International Clearing House at Basle,
even at the beginning of July 1939, and despite the strong
political tension which existed at the time, I was convinced
that a war would be avoided and I voiced this conviction in
all of my discussions, at home and abroad. And this is why
during those months I was barely interested in the
discussions and consultations on the financing of the war
and the shape of war economy.

I had, of course, given instructions to the Reichsbank, to
use its available economic assets abroad, as far as
possible, to obtain gold and generally to increase our
foreign assets. But in the few months of my activity in this
sphere before the war, the success of this endeavour of mine
was slight. Our gold assets and foreign assets, as they were
turned over to me by Schacht, remained on the whole
unchanged until the war.

In my questionnaire to the Reichsbank Vice President, Puhl,
I requested clarification on these transactions, since the
directorate of the Reichsbank and its managing director who,
at that time, was Puhl, were bound to have information on
this matter. The answer to this questionnaire, I am sorry to
say, has not as yet arrived.

Q. Witness, you gave these details obviously to show that
despite the political tension at the time you did not even
think seriously of war.

A. Not until August 1939.

Q. Now, in the course of these proceedings, we have heard
about a series of discussions which Hitler had with generals
and other personalities, and which concerned military and
political matters. All these were discussions of which, we
must say today, stood in closest connection with
preparations for war.

At which of these discussions were you present, and what did
you gather from them?

A. I was never called in to political and military
discussions, and I did not participate in any of these
discussions which were mentioned here in connection with the
charge of planning an aggressive war, so far as discussions
with the Fuehrer were concerned. I was also not informed
about the nature of these discussions. And as far as I can
remember, I was hardly ever present at the discussions with
the Reichsmarshal, when they dealt with this topic.

I have been confronted here with a meeting which took place
in October of 1938.

Q. 14th October, 1938? I can tell you the document number.
It is Document 1301-PS. That was 14th October, 1938,
Document 1301-PS.

A. Yes.

Q. That was the meeting...?

A. Yes, that was the meeting in which, according to the
accusation against me, Goering pointed out that he had been
instructed by the Fuehrer to increase armament to an
abnormal extent. The Luftwaffe was to be increased five-
fold, as speedily as possible.

The Prosecutor, according to the official record, asserts
that, in this discussion, Goering addressed me in the words
of a man who was already at war. I was

                                                  [Page 118]

not even in Germany in these days but in Bulgaria and,
consequently, I could not participate in this meeting.

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