Archive/File: imt/tgmwc/tgmwc-13/tgmwc-13-122.01 Last-Modified: 2000/02/23 [Page 114] HUNDRED AND TWENTY-SECOND DAY 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 Reichsbank. WALTER FUNK - Resumed. DIRECT EXAMINATION - Continued. BY DR. SAUTER: 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 value. 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 case. [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 possible. 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 Press. 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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