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I also offer in evidence Document EC-458, Exhibit USA 634,
consisting of an affidavit of Major Edmund Tilley under date of
21st November, 1945, with respect to an interview with Schacht on
9th July, 1945. I read the second paragraph:

   "During the course of the discussion Schacht stated to me that
   he had had numerous talks with Hitler from 1933 to 1937.
   Schacht stated that from these talks he had formed the
   impression that, in order to make his hold on the Government
   secure, the Fuehrer felt that he must present the German people
   with a military victory."

As early as 1934, Schacht stated his belief that the Nazis would
bring war to Europe. I refer the Tribunal to Document EC-451,
which I have already submitted in evidence as Exhibit USA 626,
consisting of an affidavit under date of 15th November, 1945, by
Messersmith, American Consul-General in Berlin, 1930 to 1934. I
wish to read from the first page, third paragraph, last sentence.

THE PRESIDENT: You have read it already.

LIEUTENANT BRYSON: If the Court please, there is a little more
there which we have not read, which I should like to read.

THE PRESIDENT: You read the whole paragraph. At our invitation you
read from the third paragraph down to the bottom of the page.

LIEUTENANT BRYSON: I should like to read the first sentence of the
fourth paragraph on Page 1.

THE PRESIDENT: All right.

LIEUTENANT BRYSON:

   "While making these protestations he nevertheless showed by his
   acts that he was thoroughly an instrument of the whole Nazi
   programme and ambitions and that he was lending all his
   extraordinary knowledge and resourcefulness to the
   accomplishment of that programme."

THE PRESIDENT: Lieutenant Bryson, speaking for myself and for some
other members of the Tribunal, we think it is a far better way to
deal with a document to deal with it, if possible, once and for
all, and not to be coming back to it. It not only wastes time by
the fact that the Tribunal have to turn backwards and forwards,
backwards and forwards, to the document, but you get a much fairer
idea of it if it is dealt with once and for all, although it may
cover more, than one subject. I say this, although it may be
impossible for you to do it now because of the preparations that
you have made. Those who follow you, however, may be able to alter
their course. If it is possible, when you get a document with a
variety or a number of paragraphs in it which you want to quote,
you should quote them all at the same time. Do you follow what I
mean?

LIEUTENANT BRYSON: I follow you, your Honour. We have so organised
our materials that we have directed our evidence to specific
points, and, since the points are separated, we have to separate
our quotations.

THE PRESIDENT: I realise that it may be difficult for you.

LIEUTENANT BRYSON: In September of 1934 Ambassador Dodd made a
record in his diary of a conversation with Sir Eric Phipps at the
British Embassy in Berlin. If the Court please, I will pass over
this document, because in response to a question from the
Tribunal, I read an excerpt from the document that covers the same
point to which I was about to direct myself.

                                                        [Page 186]

I had just pointed out that Schacht has acknowledged to Ambassador
Dodd in September, 1934, his knowledge of the war purposes of the
Nazi Party, and we had already shown that in 1935 Schacht had
stated that Germany would, if necessary, acquire colonies by
force. He must then have known to what length Hitler was prepared
to go.

After attending a meeting of the Reich Ministers on 27th May,
1936, in Berlin, Schacht must have known that Hitler was
contemplating war. Your Honours may recall, as has been earlier
shown, that at this meeting the defendant Goering, who was very
close to Hitler, stated that all measures are to be considered
from the standpoint of an assured waging of war and that waiting
for new methods is no longer appropriate. I refer the Tribunal to
Document 1301-FS, from which I will not read, as the quotation is
already in evidence as Exhibit USA 123.

On 31st August, 1936, the War Minister, von Blomberg, sent to
Schacht a copy of von Blomberg's letter to the defendant Goering.
I refer the Tribunal again to Document 1301-PS, previously
submitted in evidence as Exhibit USA 123, and read from the middle
of Page 19 of the document. The page numbers, if the Court please,
on this document, are found in the upper left-hand corner.

   "According to an order of the Fuehrer the setting up of all Air
   Force units is to be completed by 1st April, 1937. Therefore
   considerable expenditures have to be made in 1936, which, at
   the time when the budget for 1936 was made, were planned for
   later years only."

This intensification of the Air Force programme certainly revealed
to Schacht the closeness to war which Hitler must have felt.

I also offer in evidence Document EC-416, Exhibit USA 635,
consisting of minutes of the Cabinet meeting of 4th September,
1936, which Schacht attended. I read the statement by Goering
found at the top of Page 2 of this document:

   "The Fuehrer and Reich Chancellor has given a memorandum to the
   General and the Reich War Minister which represents a general
   instruction. It starts from the basic thought that the showdown
   with Russia is inevitable."

Schacht thus knew that Hitler expected war with Russia. He also
knew of Hitler's ambition towards the East. It must have been
plain to him, therefore, that such a war would result from Russian
opposition to German military expansion in that direction; that
is, Schacht must have known that it would be a war of German
aggression.

In January, 1937, the Tribunal will recall, Schacht stated to
Ambassador Davies in Berlin that he had "been authorised by his
Government" to submit certain proposals to France and England
which, in fact, amounted to a bid for colonies under threat of
war. If Schacht was acting under instructions from Hitler, he was
necessarily familiar with Hitler's aggressive intentions at that
time.

In November of 1937 Schacht knew Hitler was determined to acquire
Austria, and, at least, autonomy for the Germans of Bohemia, and
that Hitler also had designs on the Polish Corridor. I refer the
Tribunal to Document L-151, already in evidence as Exhibit USA 70,
this being a letter containing a memorandum of a conversation
between Schacht and Ambassador Bullitt, dated 23rd November, 1937.
I quote the last paragraph on Page 2:

   "Hitler was determined to have Austria eventually attached to
   Germany and to obtain, at least, autonomy for the Germans of
   Bohemia. At the present moment he was not vitally concerned
   about the Polish Corridor, and in his" - Schacht's - "opinion
   it might be possible to maintain the Corridor, provided Danzig
   were permitted to join East Prussia, and provided some sort of
   bridge could be built across the Corridor, uniting Danzig and
   East Prussia with Germany."

                                                        [Page 187]

To digress for just a moment, Schacht here was really speaking for
himself as well as for Hitler. We have seen from his speech of
29th March, 1938, in Vienna, his enthusiasm for the Anschluss
after the event. He was even then working hard for its
achievement. In this connection I refer the Tribunal to the
transcript (Page 228, Part 1) for evidence of Schacht's having
subsidised the Nazis' preliminary agitation in Austria.

In addition to the foregoing direct evidence, the Tribunal is
asked to take into consideration the fact that to such a man as
Schacht the events of the period certainly bespoke Hitler's
intention. Schacht was a close collaborator of Hitler and a member
of the Cabinet during the period of the Nazi agitation in Austria,
the introduction of conscription, the march into the Rhineland,
the overthrow of the Republican Government in Spain, the ultimate
conquest of Austria, and the acquisition of the Sudetenland by a
show of force. During this period the Reich's debt tripled under
the stress of mounting armament. The expenditure rose from three-
quarters of a billion Reichsmark in 1932 to eleven billion
Reichsmark in 1937, and fourteen billion Reichsmark in 1938.
During the entire period 35 billion Reichsmark were spent on
armaments. It was a period in which the burning European foreign
policy issue was the satisfaction of Germany's repeated demands
for additional territory. Hitler, committed to a policy of
expansion, was taking great risks in foreign policy and laying the
greatest stress upon utmost speed in preparation for war.

Certainly, in this setting, Schacht did not proceed in ignorance
of the fact that he was assisting Hitler and Germany along the
road toward armed aggression.

We turn now to our last line of proof with respect to Schacht's
loss of power in the Hitler regime. In November, 1937, Schacht
resigned his offices as Minister of Economics and General
Plenipotentiary for the War Economy. At that time he accepted the
appointment as Minister without Portfolio and he also continued as
President of the Reichsbank.

Our evidence will show that: (a) this change in position was no
more than a clash between two power-seeking personalities, Goering
and Schacht, which Goering, being closer to Hitler, won, (b) their
policy differences were concerned only with the method of
rearming, and (c) Schacht's loss of power in no sense implies an
unwillingness to assist armed aggression.

There was an issue of policy between Goering and Schacht, but it
was concerned only with the method, and not the desirability of
war preparations. Schacht emphasised foreign trade as a necessary
source of rearmament material during the transitory period until
Germany should be ready to strike. Goering was a protagonist of
complete self-sufficiency. Hitler supported Goering, and Schacht,
his pride wounded and bitterly resenting Goering's intrusion in
the economic field, finally stepped out.

I refer the Tribunal to Document 1301-PS, previously submitted in
evidence as Exhibit USA 123, containing notes of a conversation
between Schacht and Thomas on 2nd September, 1936. These are found
on Page 21 of the document, from which I quote:

   "President Schacht summoned me to-day at 13.00 hours and
   requested me to forward the following to the Minister of War:
   That he, Schacht, had returned from the Fuehrer with the
   greatest anxiety, since he could not agree to the economic
   programme planned by the Fuehrer.
   
   The Fuehrer wants to speak at the Party Convention about
   economic policy and wants to emphasise there that we now want
   to get free with all our energy from foreign countries, by
   production in Germany.
   
   Schacht requests urgently that the Reichsminister of War warn
   the Fuehrer of this step."

                                                        [Page 188]

And three paragraphs further down:

   "If we now shout out abroad our decision to make ourselves
   economically independent, then we cut our own throats, because
   we can no longer survive the necessary transitory period."

Nevertheless, Hitler announced the Four Year Plan of self-
sufficiency a few days later in Nuremberg, and, against Schacht's
wishes, Goering was named Plenipotentiary of the Four Year Plan.

At this point I refer the Tribunal to the interrogation of Schacht
on 16th October, 1945, being Exhibit USA 636. I wish to read,
beginning near the bottom of Page 9 of the document:

   "Q. And the Four Year Plan came in when?
   
   A. It was announced in September, 1936, on the Party Day.
   
   Q. Do you say that from the time that the Four Year Plan came
   in in September, 1936, you were ready to rid yourself of your
   economic duty?
   
   A. No. At that time I thought that I might maintain my position
   even against Goering.
   
   Q. Yes. In what sense?
   
   A. That he would not interfere with affairs which I had to
   manage in my ministry.
   
   Q. As a matter of fact, his appointment was not met with favour
   by you?
   
   A. I would not have appointed a man like Goering who did not
   understand a bit about all these things."

Schacht and Goering immediately became embroiled in a conflict of
jurisdiction. On 26th November, 1936, Goering issued a directive
regarding raw and synthetic material production. I offer in
evidence Document EC-243, Exhibit USA 637, consisting of a copy of
this directive. It shows that Goering's Office for Raw and
Synthetic Materials pre-empted control over large economic areas
previously in the hands of Schacht. As an example, I shall quote
from paragraph 5 of the directive on Page 4 of the document:

   "The planning and determination of objectives, as well as the
   control over the execution of the tasks which must be
   accomplished within the framework of the Four Year Plan, are
   the responsibility of the Office for German Raw and Synthetic
   Materials, which supersedes the authorities Which have
   heretofore been in charge of these tasks."

On 11th December, 1936, Schacht found it necessary to order all
supervisory offices in the Ministry of Economics to accept
instructions from him alone. I offer in evidence Document EC-376,
Exhibit USA 638, consisting of a circular letter from Schacht to
all supervisory offices under date of 11th December, 1936, and I
quote from the second paragraph:

   "The supervisory offices are obliged to accept instructions
   from me alone. They must answer all official inquiries of the
   Office for German Raw Materials in order to give any
   information at any time to the fullest extent."

And a little further down:

   " ... I herewith authorise the supervisory offices to take the
   necessary measures for themselves. In case doubts should arise
   concerning the requests of the above offices, and these doubts
   cannot be removed by oral negotiations with the specialised
   workers of these offices, I should be informed immediately. I
   will then order in each case the necessary steps to be taken."

The military sided with Schacht, who had rearmed them so well. I
offer in evidence Document EC-420, Exhibit USA 639, consisting of
a draft of a memorandum by the Military Economic Staff, dated 19th
December, 1936. I wish to read from paragraph number 1:

                                                        [Page 189]
                                                                  
   "(1) The control of war economy in the civilian sector in case
   of war is possible only for that person who in peace-time has
   made preparations for war at his own responsibility.
   
   Upon recognition of this fact, Reichsbank President Dr. Schacht
   was appointed Plenipotentiary General for War Economy a year
   and a half ago, and an Operations Staff was attached to his
   office."

And then paragraph number 2:

   "(2) The Military Economy Staff does not deem it compatible
   with the principle laid down in number 1, paragraph 1, if the
   Plenipotentiary General for War Economy is now placed under the
   Minister President General Goering's command."

In January, 1937, the Military Weekly Gazette published an article
warmly praising Schacht's achievements in rearmament. Without
reading it, I offer in evidence Document EC-383, Exhibit USA 640,
containing this article, a pertinent quotation from which already
appears in the transcript for 23rd November (Page 137, Part 1).

Shortly thereafter Schacht attempted to force a showdown with
Goering by temporarily refusing to act in his capacity as
Plenipotentiary. I offer in evidence Document EC-244, Exhibit USA
641, consisting of a letter from von Blomberg, the Minister of
War, to Hitler under date of 23rd February, 1937. I read the
second paragraph of this letter as follows:

   "The President, Dr. Schacht, has notified me that he is not
   acting in his capacity as Plenipotentiary for the time being,
   since in his opinion there exists a conflict between the powers
   conferred upon him and those of General Goering. Because of
   this the preparatory mobilisation steps in the economic field
   are delayed."

Schacht obviously was using his importance to the war preparations
as a lever.

THE PRESIDENT: Lieutenant Bryson, does the defendant Schacht admit
in his interrogation that the reason for his giving up his office
was the difference of opinion between him and the defendant
Goering?

LIEUTENANT BRYSON: He does, Sir, and the defendant Goering states
so in his interrogation.

THE PRESIDENT: Is it necessary to go into the details of their
quarrel?

LIEUTENANT BRYSON: If the Court will be satisfied that this was
the cause of Schacht's resignation -

THE PRESIDENT: If they both say so -

LIEUTENANT BRYSON: And that the cause was not his unwillingness to
join in with the aggressive intentions of the Nazis at that time,
I shall be perfectly satisfied to confine our evidence to the
interrogations of Schacht and Goering.

THE PRESIDENT: Does he suggest that in his interrogation - that
that might have been the reason?

LIEUTENANT BRYSON: I will find out, Sir, but our case against
Schacht is premised upon conspiracy.

THE PRESIDENT: If the defendant Schacht wants to set up such a
case as that, you could apply to be heard in rebuttal.

LIEUTENANT BRYSON: Well, we shall be satisfied then to eliminate a
number of our items of evidence, including the controversy between
Goering and Schacht, and content ourselves with the
interrogations.

THE PRESIDENT: Yes.

LIEUTENANT BRYSON: If the Court please, we are almost at the time
of the break. Perhaps during the break we can arrange our
evidence.

THE PRESIDENT: Yes, we will adjourn now for ten minutes.

(A recess was taken.)


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