Hjalmar Schacht

(6 of 9)

October 1, 1938: German troops begin the occupation of the Sudetenland.

From Schacht’s pre-trial interrogation:

Q: Now I am coming back to the march against Czechoslovakia, which resulted in the appeasement policy, Munich, and the cession of the Sudetenland to the Reich.

A: Yes.

Q: Did you, at that time, favor the policy of acquiring the Sudetenland?

A: No.

Q: Did you favor, at that time, the policy of threatening or menacing the Czechs by force of arms, so as to acquire the Sudetenland?

A: No, certainly not.

Q: Then I ask you, did it strike you at that time; did it come to your consciousness, that the means, which Hitler was using for threatening the Czechs, was the Wehrmacht and the armament industry?

A: He could not have done it without the Wehrmacht.

Q: Did you consider the manner in which he handled the Sudeten question wrong or reprehensible?

A: Yes.

Q: You did?

A: Yes, Sir.

Q: And did you have a feeling, at that time, looking back on the events that had proceeded, and in your own participation in them, that this army, which he was using as a threat against Czechoslovakia, was at least in part, an army of your own creation? Did that ever strike you?

A: I cannot deny that, Sir.

From Schacht’s IMT testimony: I said that the Allies, by their policy, gave the Sudetenland to Hitler, whereas I always had expected only that the Sudeten Germans would be given autonomy. I never knew that Hitler, beyond autonomy, demanded anything else. I certainly did not know that Hitler would use the army in order to threaten other nations . . . . He [Hitler] did not take [the Sudetenland] with violence at all. The Allies presented him with the country. The whole thing was settled peacefully.

From Schacht’s pre-trial interrogation:

Q: Now, after the Sudetenland was taken over by the Munich agreement, did you, as the President of the Reichsbank, do anything about the Sudeten territory?

A: I think we took over the affiliations of the Czech Bank of Issue.

Q: And you also arranged for the currency conversion, did you not?

A: Yes.

From Schacht’s IMT testimony: It is no "wrong and reprehensible" act "committed" by Hitler, but Hitler received the Sudeten German territory by way of treaty and, of course, the currency, and the institute [that] directed financing had to be amalgamated with this field in Germany. There can be no talk of injustice. I cannot believe that the Allies have put their signature to a piece of injustice.

November 9, 1938: The Night of Broken Glass (Kristallnacht), an anti-Jewish pogrom, takes place in Nazi Germany and Austria.

From Schacht’s IMT testimony: The Jewish question came up quite early when, in 1933, a New York banker, the late James Meier, announced his intention to visit me. I went to Hitler at that time, and told him, "Mr. James Meier, one of the most respected New York bankers and a great benefactor of his old home country, Germany, will come to visit me, and I intend to give a dinner in his honor. I assume that you have no objection." He immediately said, in a very definite and pronounced manner, "Herr Schacht, you can do everything." I assumed that he gave me absolute freedom to keep in contact with my Jewish friends, which I did. The dinner actually took place. I only mention this because it was the first time the Jewish question was brought up between us. At every occasion, I took a definite position on the Jewish question and, wherever possible, publicly. I have always looked for that opportunity.

I will give only two examples of that:

There was a branch of the Reichsbank in Arnswalde, in the Province of Brandenburg. The name of the manager of that branch office was one day posted up in one of the public Stuermer boxes in his town, and termed a traitor to the people, because his wife had bought 50 pfennigs worth of ribbon, or the like, in a Jewish store. I at once approached the competent official at Arnswalde, and demanded the immediate removal of the placard, and an immediate correction, to the effect that the man was no traitor to the people. That was refused; whereupon, without asking anyone, I closed the Reichsbank branch at Arnswalde. It took a number of weeks until, in the end, the Oberpraesident, who was of course also a Nazi boss, came to me, and asked me to reopen the branch office. I told him, "As soon as they repudiate that affair publicly, I shall reopen the branch office at Arnswalde." It took only a few days before the Oberpraesident and Gauleiter of Brandenburg, Grube, had the announcement made public in the Arnswalde newspaper, in large print, and so I reopened the branch office in Arnswalde. That is one example.

The second example has been mentioned briefly; I just want to sum it up once more, because its effect was penetrating. On the occasion of a Christmas celebration for the office messengers of the Reichsbank, I referred to the pogrom of 9 November 1938, and I told the boys, in the presence of many parents, Party leaders, and Party members, that I hoped they had nothing to do with these things, which should make every decent German blush with shame. But if they did, they should leave the Reichsbank at once, because in an institution such as the Reichsbank, which was built up on good faith, there was no place for people who did not respect the property and life of others.

November 1938: Erwin von Witzleben is posted as commander-in-chief of Army Group 2 to Frankfurt (Oder).

From the IMT testimony of Hans Bernd Gisevius: Schacht won Witzleben over. Oster visited Witzleben, and told him everything that had happened. Thereupon, Witzleben sent for me, and I told him that, in my opinion, the police situation was such that he, as commanding general of the Berlin Army Corps, could confidently risk a revolt. Witzleben asked me the question, which every general put to us at that time: whether a diplomatic incident in the East would really lead to war, or whether it was not true, as Hitler and Ribbentrop had repeatedly told the generals in confidence, [and] that there was a tacit agreement with the Western Powers, giving Germany a free hand in the East. Witzleben said that if such an agreement really existed, then, of course, he could not revolt. I told Witzleben that Schacht, with his excellent knowledge of the Anglo-Saxon mentality, could no doubt give him comprehensive information about that.

A meeting between Schacht and Witzleben was arranged. Witzleben brought with him his divisional general, von Brockdorff, who was to carry out the revolt in detail. Witzleben, Brockdorff, and I drove together to Schacht’s country house, for a conference that lasted for hours. The final result was that Witzleben was convinced by Schacht that the Western Powers would under no circumstances allow Germany to move into the Eastern territories, and that now Hitler’s policy of surprise had come to an end. Witzleben decided that he, on his part, and independently of Halder, would make all preparations that would be necessary if he should have to act.

He issued me false papers, and gave me a position at his district headquarters, so that there, under his personal protection, I could make all the necessary police and political preparations. He delegated General von Brockdorff, and he and I visited all the points in Berlin which Brockdorff was to occupy with his Potsdam Division. Frau Struenck was at the wheel and, traveling ostensibly as tourists, we settled exactly what had to be done. I believe I owe you a brief explanation as to why Witzleben’s co-operation was absolutely necessary. It was not so easy to find a general who had the actual authority to order his troops to march. For instance, there were some generals in the provinces who could not give their troops the order to march. Schacht was kept informed about all these matters. We met in the evening in the residence of Von Witzleben, and I showed everything that I had worked out in writing during the day. It was then discussed in full detail. We had to decide carefully what the German nation was to be told in such a case, from the point of view of internal politics, just as there were certain preparations [that] had to be made regarding the external ... foreign politics.

From Schacht’s IMT testimony: As early as 1937, I tried to determine which groups in Germany one might rely upon in an attempt to remove the Hitler regime. Unfortunately, in the years 1935, 1936, and 1937, I got to know that all those circles, in which I had placed my hope, were failing, namely the scientists, the educated middle class, and the leaders of economy.

I need only mention that the scientists permitted themselves to listen to the most nonsensical National Socialist lectures, without opposing them in the least. I call attention to the fact that, when the economic leaders saw that I was no longer a figure in economy, they disappeared from my anteroom, and thronged into that of Goering. In a word, one could not rely upon these circles. Consequently, one could depend only on the generals, on the military because, according to my conception at the time, one could certainly count on an armed resistance, even by the SS bodyguard.

Therefore, as has been stated here--and I do not want to pursue it further--I tried at first to contact such generals as Kluge, for instance, merely in order to ascertain whether, among the military, there were people with whom one could speak openly. And this first occasion led me to a great many generals whom I contacted in the course of time ... throughout the entire war I pleaded with every general whom I could contact. I used the same arguments [that] I have just mentioned in connection with the prospective interview with Brauchitsch; therefore, it was not merely theory, but I actually spoke to all these generals . . . .

In 1941 I tried not only to get in touch with General Hoeppner but, in a whole series of conversations, I attempted to make him take action. Hoeppner was perfectly willing and prepared, and later, he too, unfortunately, lost his life as a consequence of 20 July 1944.

In the year 1942--and this has not been mentioned here up to now, because Gisevius did not participate--I tried again to mobilize General von Witzleben to renewed activity. I went on a special journey to Frankfurt-on-the-Main, where he had his headquarters at that time, and von Witzleben proved, as ever, to be completely resolved to act, but he told me that, of course, he could only do so, if he again received a command at the front . . . .

May I perhaps say one more thing? I, of course, always participated in the conversations--mentioned by Gisevius here--with the other generals, that is the group of Beck, Fromm, Olbricht, et cetera. These things did not come about for some time, on account of the negotiations abroad, for which the generals were always waiting. I think that enough has been said here about this topic, and I need not make further report on it. I come then to one last point, which does not become apparent from Gisevius’ statement but, about which, an affidavit from Colonel Gronau will be submitted here. I can mention it quite briefly, in order to save time. Naturally, together with the group of Beck, Goerdeler, my friend Strunck, Gisevius, and others, I was completely informed of, and initiated into, the affair of 20 July. However, and I think it was mutual, we told each other, whenever possible, only those things which the other absolutely had to know, in order not to embarrass the other man, should he at any time be submitted to the tortures of the Gestapo. For that reason, apart from being in touch with Beck, Goerdeler, Gisevius, and Strunck, et cetera, I had another connection with the generals who were at the head of this revolt, and that was the General of Artillery Lindemann, one of the main participants in the coup, who unfortunately also lost his life later . . . .

It was not because of threatening danger to my life, that I could not resign earlier. For I was not afraid of endangering my life, because I was used to that ever since 1937, having constantly been exposed to the arbitrariness of the Party and its heads. Your question, as to whether I tried to turn a number of generals to high treason, I answer in the affirmative. In 1938, when I made my first attempt, I was not thinking as yet of an assassination of Hitler. However, I must admit that, later, I said if it could not be done any other way, we would have to kill the man, if possible. If I had had the opportunity, I would have killed him, I myself. I beg you therefore, not to summon me before a German court for attempted murder because, in that sense, I am, of course, guilty . . . .

I could not announce this matter in advance in the newspapers. They [the Gestapo] could have put me under arrest much earlier than that, [July 23, 1944] if they had been a little smarter; but that seems to be a strange attribute of any police force.

November 29, 1938: From a speech by Schacht, in Berlin:

If there is anything remarkable about the New Plan, it is again, only the fact that German organization under National Socialist leadership succeeded in conjuring up, in a very short time, the whole apparatus of supervision of imports, direction of exports, and promotion of exports. The success of the New Plan can be proved by means of a few figures. Calculated according to quantity, the import of finished products was cut down by 63 percent, between 1934 and 1937. On the other hand, the import of ores was increased by 132 percent, of petroleum by 116, of grain by 102, and of rubber by 71 percent . . . . It is possible that no bank of issue in peacetime carried on such a daring credit policy as the Reichsbank, since the seizure of power by National Socialism. With the aid of this credit policy, however, Germany created an armament second to none; and this armament in turn made possible the results of our policy . . . .

Instead of a weak and vacillating government, a single, purposeful, energetic personality is ruling today. That is the great miracle, which has happened in Germany, and which has had its effect in all fields of life, and not last in that of economy and finance. There is no German financial miracle. There is only the miracle of the reawakening of German national consciousness and German discipline, and we owe this miracle to our Fuehrer, Adolf Hitler.

From Schacht’s IMT testimony: Inasmuch as [the speech] was made before the German Academy ... it was entirely public, and if it passed the censorship, it certainly was also mentioned in the papers. It was public; anyone could hear it. That is absolutely correct [that armament made possible the results of our policy], and---would you please mind letting me talk in the future? That is correct, and I was very much surprised that it was necessary to do this, in order to create justice in the world. I have already told you that Germany did not "take over Czechoslovakia," but that it was indeed presented to Germany by the Allies on a silver platter ... [it was] a present. If someone gives me a present, such as this, I accept it gratefully.

From the IMT testimony of Hans Bernd Gisevius: Schacht always told me that he had financed the rearmament program for purposes of defense. Schacht was convinced, for many years, that such a large nation in the center of Europe should at least have means of defense. I may point out that, at that time, large groups of the German people were possessed of the idea that there was a possible danger of attack from the East. You must not forget the type of propaganda with which the German people were inundated at that time, and that the reasons given for this particular danger from the East were based upon Polish aspirations concerning East Prussia . . . .

Schacht was of the opinion that all means should be used to bring about discussions on rearmament again. He had an idea that very soon--I think he had held that opinion since 1935--the attention of opponent countries should be drawn to German rearmament; and then Hitler, because his rearmament was now known, would be forced to resume discussions at the disarmament conference. I remember this conversation very well, because I thought Hitler’s inclinations lay in other directions than in attending a disarmament conference. I thought Hitler to be of an entirely different mentality, and was somewhat surprised that Schacht considered it possible that Hitler might harbor such thoughts.

December 1938: Schacht meets with George Rublee, the representative of the Jewish American Joint Distribution Committee, in London. Schacht proposes, and Rublee tentatively agrees, that 150,000 Jewish men in the workforce should each be provided with an immigration loan of ten thousand marks raised by American and British Jews--a total of 1.5 billion marks. A considerable part of this loan would be spent in Germany, providing the Reich with needed foreign exchange. Germany would sequester the property of the departing Jews, and repay the loan over a period of 25 to 30 years from the proceeds. Note: Schacht will be out of power before the plan can be implemented. (Conot)

January 2, 1939: Schacht meets with Hitler at Berchtesgaden, on the Obersalzberg.

From Schacht’s IMT testimony: After the events of November 1938 I paid one more visit to London, in December, to attend a conference regarding the financing of the Jewish emigration from Germany in an orderly manner: a thing which I myself had suggested. On that occasion, I also talked with Prime Minister Chamberlain. On 2 January 1939 I arrived at the Berghof in Berchtesgaden to report to Hitler about these matters. On that occasion we, of course, also got to talk about the financial needs of the Reich. I still refused to give credit to the Reich, and pointed out the very difficult financial situation which called for, or should have called for, a reduction of State expenditure, and thus of armament expenditure.

In particular, I pointed out that, at the beginning of December, the first instalment of the so-called Jewish fine (which had been imposed on the Jews after the murder of Herr Vom Rath in Paris, and which had been collected to the extent of 250 million marks at the beginning of December), that this first instalment of 250 million marks had not been received entirely in the form of cash but, that the Reich Minister of Finance had had to agree to accept a considerable part of it "in kind," as the English say, because it was not possible to make liquid the cash necessary for this payment. Hitler replied: "But we can circulate notes on the basis of these goods. I have looked into the question of our future financial policy very carefully and, when I get back to Berlin in a few days, I shall discuss my plans with you and the Minister of Finance."

I saw at once that it was Hitler’s intention to resort to the printing of notes to meet this expenditure, with or without the necessary cover, but at any rate against certain securities. The danger of inflation was now definitely imminent. And since I realized at once that this was the point where I and the Reichsbank had to say "stop," I replied to him, "Very well, in that case I will get the Reichsbank to submit a memorandum to you, setting out the attitude of the Reichsbank to this problem, and which can be used at the joint meeting with the Finance Minister."

After that, I went back to Berlin, and informed my colleagues in the Reichsbank Directorate. We saw, to our personal satisfaction, that here was an opportunity for us to divorce ourselves definitely from that type of policy. The memorandum dated 7 January, which the Reichsbank Directorate then submitted to Hitler has, I think, also been submitted as evidence by the Prosecution . . . .

When I spoke here, I said that I had a long conversation on 2 January 1939 with Hitler at Berchtesgaden, on the Obersalzberg, and that after that conversation, in which the suggestion was put to me to create an inflation, I considered that the time had come to take that step, which the Reichsbank afterwards took, to dissociate itself from Hitler and his methods.

January 7, 1939: From a memorandum from the Reichsbank Directorate to Hitler, signed by Schacht and all the members of the Reichsbank Directorate:

From the beginning the Reichsbank has been aware of the fact that a successful foreign policy can be attained only by the reconstruction of the German Armed Forces. It--the Reichsbank--therefore assumed, to a very great extent, the responsibility of financing the rearmament in spite of the inherent dangers to the currency. The justification thereof was the necessity, which pushed all other considerations into the background, to carry through the armament at once, out of nothing and, furthermore, under camouflage, which made a respect-commanding foreign policy possible . . . .

We are, however, faced with the fact that approximately 3 billion Reichsmark of such drafts cannot now be paid, though they will be due in 1939 . . . . Exclusive of the Reichsbank, there are approximately 6 billion Reichsmark mefo drafts [that] can be discounted against cash payment at any time at the Reichsbank, which fact represents a continuous danger to the currency . . . .

We are convinced that the effects on the currency, caused by the policy of the last 10 months, can be mended, and that the danger of inflation again can be eliminated by strict maintenance of a balanced budget. The Fuehrer and Reich Chancellor, himself, has publicly [rejected an inflation], again and [again, 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 expenditures, or assume guaranties and obligations, [which] 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.

From Schacht’s IMT testimony: In order to explain the statements [that] the Reichsbank Directorate made to Hitler in this decisive moment regarding further State expenditure, and especially armament expenditure, I ask permission to read only two very brief sentences from this memorandum. It says, and I quote:

"Unrestrained public expenditure constitutes a definite threat to our currency. The unlimited growth of government expenditure defies any attempts to draw up a regulated budget.

It brings State finances to the verge of ruin, despite a tremendous increase in taxes, and it undermines the currency and the issuing bank."

Then there is another sentence, and I quote:

". . . if, during the two great foreign political actions in Austria and the Sudetenland, an increase in public expenditure was necessary, the fact that, after the termination of these two foreign political actions a reduction of expenditure is not noticeable, and that everything seems rather to indicate that a further increase of expenditure is planned, makes it now our absolute duty to point out what the consequences will be for our currency.

"The undersigned Directors of the Reichsbank are sufficiently conscious of the fact that, in their co-operation, they have gladly devoted all their energy to the great aims that have been set, but that a halt must now be called."

That entire letter was composed in such a way that there were only two possible answers to it; either an alteration of financial policy, and that meant a stop to rearmament, which would have amounted to a complete change of Hitler’s policy, or else, the dismissal of the Reichsbank President; and that happened. We expected it because, at that time, I no longer believed that Hitler would change his policy so completely.

Hitler certainly confirmed that himself and, in the letter of dismissal to me, said it expressly. We heard from the testimony of Herr Lammers in this Court that Hitler, with his own hand, wrote that addition into the letter: that my name would remain connected with the first stage of rearmament. The second stage of rearmament I rejected, and Hitler understood that very clearly because, when he received that letter from the Reichsbank, he said to those who were present: "This is mutiny."

From an affidavit of Emil Puhl, a director of the Reichsbank: When Schacht saw that the risky situation that he had sponsored was becoming insoluble, he was more and more eager 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.

From pre-trial interrogations of von Krosigk:

A: I asked Mr. Schacht to finance for the Reich for the ultimo of the month the sum of 100 or 200 millions. It was this quite customary procedure [that] 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 this was not the proper ground to discuss the whole question of financing, because the question of financing very small sums for a few days during ultimo 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 . . . .

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 program?

A: No, he never said it in this specific form, but in some conversations, he certainly spoke about it several times in his own way, when he had encounters with Goering ... therefore, I did not take these things very seriously.

Q: Well, let me put it this way, and please think carefully about this. Did Schacht ever say that he wanted to resign because he realized that the extent of the rearmament program was such, as to lead him to the conclusion that it was in preparation for war, rather than for defense?

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, were there still meetings between Schacht and yourself, 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 program of rearmament, or opposed to the budget of the Wehrmacht?

A: No, I do not think he ever did.

From a pre-trial interrogation of Goering:

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 program?

A: No, because of his utterly impossible attitude in this matter, regarding this advance, which had no connection with the rearmament program.

From Schacht’s pre-trial interrogation:

Q: Well, did you in the Reichsbank utilize funds which were available? Let me put it this way: As these mefo bills became due, what did you do about them?

A: I asked the Minister of Finance whether he could repay them because, after 5 years, he had to repay them, some in 1938 or 1939, I think. The first mefo bills would have become due for repayment, and of course he said, "I cannot." . . . .

Q: But I am asking you whether, during that period from 1 April 1938 to January 1939, you did not continue to finance armaments?

A: Sir, otherwise, these mefo bills had to be refunded by the Reich, which they could not be, because the Reich had no money to do it; and I could not procure any money for refunding, because that would have had to come from taxes or loans. So I had to continue to carry these mefo bills, and that, of course, I did.

From Schacht’s IMT testimony: Yes [that is what I said], that was quite in order--kindly let me speak, would you not--because the Finance Minister did not make his funds available for the repayment of the mefo bills, but instead gave them for armaments. If he had used these funds to pay the mefo bills, everything would have been all right. A large part of the mefo bills was already on the financial and capital market. Now, when the government too heavily burdened that market, then the people brought in the mefo bills to the Reichsbank, for the Reichsbank had promised to accept them. That, precisely, was the great obstruction to my policy. The Reich Finance Minister financed the armament, instead of honoring the mefo bills as he had promised.

From Wilhelm Vocke’s IMT testimony: 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 [below] 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 memorandum had to deal with the question of currency, but at the same time, we made quite clear what we wanted: 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 program, must be checked. Either 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 1,000 million. That had to be faced, and the Minister of Finance was on our side. If this 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. We wanted to stress that the entire Directorate unanimously approved this important document, which was to put an end to armaments . . . .

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, it is looked upon as mutiny. Hitler had the same ideas . . . .

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 at the beginning, where he spoke of Hitler’s successes, he also used those tactics. The result was that first Schacht was dismissed, then Kreide, and Huelse, then I, Erhard, and Lessing. The result, however, [was] that they knew abroad what things had come to in Germany. My colleague Huelse had made unequivocal statements in Basel, and said that, if we should be dismissed, then our friends would know to what pass things had come . . . .

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 things would lead to war, and we then saw that we had to force the decision.

However, one has to consider the following: As a bank, we could not bring up political or military arguments or demands [that] were not within our competence. The danger of inflation, which we had stressed in that memorandum, did not show until 1938, when the note circulation during the last ten months had increased enormously--more than throughout the five preceding years.

At any rate, in 1938, the feeling that this tremendous armaments program, which had no limits, would lead to war, became stronger and stronger, especially after the Munich Agreement. In the meantime, Schacht had realized, and I think the Fritsch affair had made it very clear to him, that Hitler was the enemy, and that there was only one thing to do; that was to fight against Hitler’s armament program and warmongering, by every possible means. These means, of course, were only financial, such as the sabotage, et cetera, as I have already described. The final resort was the memorandum, by which Schacht forced his resignation.

From Adolf Hitler by John Toland: Schacht knew that Hitler would be infuriated, because the declaration, in effect, called for the end of military adventures. He told Schwerin von Krosigk what he had done, adding that he expected to be fired. (He had already lost his post as Minister of Economics to Walter Funk, whose powers were promptly annexed by Goering, as chief of the Four-Year-Plan). The Finance Minister said that, if Schacht went, he would ask for his own dismissal, then composed a similar memorandum, and sent it to the Fuehrer.

Days passed, and nothing happened. Finally, at midnight of January 19, 1939, Schacht’s phone rang. He was ordered to report to the Fuehrer the following morning, at nine. It was an unusual hour for an interview, since Hitler rarely went to bed before three in the morning. According to Schacht, the Fuehrer said, without preamble, "I have called you in order to hand you your dismissal as president of the Reichsbank." Schacht took the piece of paper extended to him. "You don’t fit into the National Socialist picture," continued Hitler, then waited for some comment. Schacht remained silent, until Hitler reprimanded him for condemning Crystal Night, at a Christmas party of bank office boys. "If I had known that you approved of those happenings," Schacht finally said, "I might have kept silent."

This reply seemed to take Hitler’s breath away. "In any case, I am much too upset to talk to you any more now." Both men agreed that Schacht should take a long trip abroad, and he left for India soon thereafter. Hitler was relieved to be rid of him. "When it is a question of a bit of sharp practice," Hitler later told his inner circle, "Schacht is a pearl beyond all price." But whenever he was called upon to show strength of character, he always failed."

January 19, 1939: Hitler dismisses Schacht from the Presidency of the Reichsbank; Walter Funk again replaces Schacht.

From the IMT testimony of Hans Bernd Gisevius: Schacht told me at the time that, after all we had experienced, the generals could not be relied upon ever really to revolt. For that reason, as a politician, he considered it his duty to think of some possibility, other than a revolt, for bringing about a change in conditions in Germany. For that reason, he evolved a plan which he explained to me at the time. Schacht said to me, "I have got Hitler by the throat." He meant by that, as he explained to me in great detail, that now the day was approaching where the debts [that] had been incurred by the Reich Minister of Finance, and thus by the Reich Cabinet, would have to be repaid to the Reichsbank. Schacht doubted whether the Minister of Finance, Schwerin-Krosigk, would be prepared, without further ado, to carry out the moral and legal obligation of repaying the credits [that] had been extended.

Schacht thought that that was the moment, in which he should come out with his resignation, with a joint step by the Reichsbank Directorate; and he hoped that, given that situation, the other ministers of the Reich would join him, the majority of whom were still democratic at the time.

That is what he meant when he said to me, "I have still one more arrow I can shoot, and that is the moment when not even a Neurath, a Guertner, a Seldte can refuse to follow me."

I answered Schacht at that time, that I doubted whether there would ever be such a meeting of the Cabinet. In my opinion, the steps that would be taken to dispose of him would be much more brutal. Schacht did not believe me and, above all, he told me he would be certain of achieving one thing: these matters would have to be discussed in the Cabinet, and then he would cause a situation in Germany as alarming as the one which existed in February 1938, at the time of the Fritsch crisis. He therefore expected a radical reformation of the cabinet, which would provide the proper psychological atmosphere for the generals to intervene. Schacht replied, as he assured me directly after Halder’s visit, that he was prepared to do anything, if the generals were to decide to remove Hitler.

The following morning, Halder sent for Oster. He told him of this conversation, and he asked Oster whether police preparations had now been made for this revolt. Oster suggested that Halder should talk to me personally about these matters. I had a long talk in the darkness, with Halder, about this revolt. I believe that it is important for me to state here what Halder told me of his intentions at that time. First, Halder assured me that, in contrast to many other generals, he had no doubt that Hitler wanted war. Halder described Hitler to me as being bloodthirsty, and referred to the blood bath of 30 June. However, Halder told me that it was, unfortunately, terribly difficult to explain Hitler’s real intentions to the generals, particularly to the junior officers corps, because the saying [that] was influencing the officers corps was, ostensibly, that it was all just a colossal bluff, that the Army could be absolutely certain that Hitler did not want to start a war, but rather that he was merely preparing a diplomatic maneuver of blackmail, on a large scale.

For that reason, Halder believed that it was absolutely necessary to prove, even to the last captain, that Hitler was not bluffing at all, but had actually given the order for war. Halder therefore decided, at the time, that for the sake of informing the German nation and the officers, he would even risk the outbreak of war. But even then, Halder feared the Hitler myth; and he therefore suggested to me that, the day after the outbreak of war, Hitler should be killed by means of a bomb; and the German people should be made to believe, as far as possible, that Hitler had been killed by an enemy bombing attack on the Fuehrer’s train. I replied to Halder at the time that perhaps I was still too young, but I could not understand why he did not want to tell the German people, at least afterwards, what the generals had done.

Then, for a few weeks, there was no news from Halder. The press campaign against Czechoslovakia assumed an ever more threatening character, and we felt that now it would be only a few days, or perhaps weeks, before war would break out. At that very moment, Schacht decided to visit Halder again, and to remind him of his promise. I thought it best that a witness should be present during that conversation and, therefore, I accompanied Schacht. It did not appear to me that Halder was any too pleased at the presence of a witness. Halder once again declared his firm intention of effecting a revolt; but again, he wished to wait until the German nation had received proof of Hitler’s warlike intentions, by means of a definite order for war. Schacht pointed out to Halder the tremendous danger of such an experiment. He made it clear to Halder that a war could not be started simply to destroy the Hitler legend in the eyes of the German people.

In a detailed and very excited conversation, Halder then declared that he was prepared to start the revolt, not after the official outbreak of the war, but at the very moment that Hitler gave the army the final order to march.

We asked Halder whether he would then still be able to control the situation, or whether Hitler might not surprise him with some lightning stroke. Halder replied literally, "No, he cannot deceive me. I have designed my General Staff plans, in such a way that I am bound to know it 48 hours in advance." I think that is important because, during the subsequent course of events, the period of time between the order to march and the actual march itself was considerably shortened.

Halder assured us that, besides the preparations in Berlin, he had an armored division ready in Thuringia, under the command of General von Hoeppner, which might possibly have to halt the Leibstandarte, which was in Munich, on the march to Berlin.

Although Halder had told us all this, Schacht and I had a somewhat bitter aftertaste of that conference. Halder had told Schacht that he, Schacht, seemed to be urging him to effect this revolt prematurely; and Schacht and I were of the opinion that Halder might abandon us at the last moment. We informed Oster immediately of the bad impression we had had, and we told Oster that something absolutely must be done, to win over another general, in case Halder should not act at the last minute. Oster agreed, and these are the preliminary events which led to the late General Field Marshal Von Witzleben first coming into our circle of conspirators.

From Schacht’s IMT testimony: From the very moment when I recognized what a harmful individual Hitler was, what a threat to world peace, I broke with him, not only secretly, but publicly and personally. I know of no one in Germany who would have done more in that respect than I did. I warned against excessive armament. I impeded and, if you like, sabotaged effective armament, through my economic policy. I resigned from the Ministry of Economics, against the will of Hitler; I publicly protested to Hitler against all the abuses of the Party; I continuously warned people abroad, and gave them information; I attempted to influence the policy of other nations with respect to the colonial question, in order to achieve a more peaceful atmosphere. Credits for continued armaments.

January 19, 1939: Hitler writes to Schacht:

At the occasion 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 [that] 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.

From the IMT testimony of Hans Bernd Gisevius: [A political event on the horizon, which had a stimulating effect on our group of conspirators] was Schacht’s sudden dismissal from the Reichsbank Directorate. Schacht’s desire for a consultation of the Cabinet on this matter did not materialize, and our hopes of bringing about a cabinet crisis were vain. Thus, our opposition group had no connecting point, and we had to wait and see what would happen after the conquest of Prague.

I saw how the various letters and memoranda of the Reichsbank Directorate were drafted, and how they were progressively toned down, and how Schacht was then dismissed. A few minutes after the letter of dismissal arrived from Hitler, Schacht read it to me; and he was indignant at the contents. He repeated to me the passage in which Hitler praised him for his participation in the German rearmament program; and Schacht said, "And now he wants me to undertake to go on working with him openly, and uphold his war policy."

From Schacht’s IMT testimony: I refer to the testimony by the witness Gisevius, who has already said that, outwardly, Hitler would never indicate that there was dissension between himself and his collaborators, but that he always attempted to give a false impression to the world. After January 1939, Hitler never asked for my opinion or my cooperation . . . . Hitler did not, under any circumstances, want it to be known that a break, or even so much as a difference of opinion, had occurred between one of his assistants and himself. When he finally approved my release, he attached the condition that, nominally, I should remain Minister without Portfolio . . . .

There was a law in Germany that, if a person held two public offices, he could be paid only for one. Since I was, in addition, President of the Reichsbank, I continuously received my income from the Reichsbank: at first, my salary and later, my pension; therefore, as a minister, I drew no salary whatever . . . .

I have already emphasized again and again in this Court--and I can only repeat it again—that, after I left the Reichsbank, I had not a single official discussion; I did not take part in a single ministerial or official conference and that, unfortunately, it was not possible for me to bring up any subject for discussion; for I had no factual basis or pretext for such a possibility, for the very reason that I had no particular field to administer. I believe that I was the only Minister without Portfolio--there were also a few others--who was not active in any way at all. As far as I know, Seyss-Inquart was undoubtedly Minister without Portfolio; he had his administration in Holland. Frank was Minister without Portfolio, and had his administration in Poland. Schirach--I do not know whether he was Minister without Portfolio; I think it has been mentioned once, but I do not know if it is correct--he had his Austrian administration in Vienna. I had nothing further to do with the state administration or, in any other way, with the State or the Party . . . .

On the whole--and I think it is understandable after what I have stated here--I watched carefully for every possibility of intervening again, in some way; but I remember and state with absolute certainty that, during the entire time until the collapse, I received all in all three official memoranda. The numerous invitations to state funerals and similar social state functions really need not be mentioned here as official communications. I did not participate in these occasions either. However, these three instances are interesting. The first time it was a letter from Hitler--pardon, from Himmler--a circular, or request, or a bill proposed by Himmler, who intended to transfer court jurisdiction over the so-called asocial elements of the population to the police, or rather the Gestapo, that is to say [in contravention of] a basic principle of the administration of justice: to separate the functions of prosecution and judge.

I immediately assented, in the copy of a letter which Reich Minister Frank had sent me, in which he took a stand against this basic violation of legal principles, and the bill was not made law. It would indeed have been extremely regrettable, because I am firmly convinced that I myself was a definite antisocial element, in Himmler’s sense.

The second instance was a letter concerning some discussions about state property in Yugoslavia, after we had occupied Yugoslavia. I answered that, since I had not taken part in the preliminary discussions on the draft of the law, I should not be counted upon to assist in this matter.

Finally, the third incident--and this is the most important--occurred in November 1942. Apparently by mistake, there came into circulation the draft for a law of the Reich Minister for Air, which contained the suggestion of taking 15 and 16 year old students away from the high school, to enlist them for military service in the antiaircraft defense, the so-called Flakdienst. I answered this letter, because it was a welcome opportunity for me to state, for once, my opinion on the military situation, in a long detailed reply, which I sent to Goering. It is a letter of 30 November which, on the second of December, I believe, was given personally by my secretary to the adjutant of Goering in a closed envelope, with the request that he himself open it . . . .

March 15, 1939: In defiance of the Munich Pact, the Germans seize and occupy Bohemia and Moravia.

From the IMT testimony of Hans Bernd Gisevius: Since December, our group had definite proof that Hitler would attack Prague in March. This new action was cynically called the "March whirlwind." As it was quite openly discussed in Berlin circles, we hoped that news of this action would also reach the British and French Embassies. We were firmly convinced that, this time, results would not be achieved by surprise; but Halder had already adopted a different view. He thought that Hitler had been given free passage to Prague by the Western Powers. He refused to have preliminary conferences, and wanted to wait and see whether this Prague action could be achieved without a fight. And that is what happened.

March 1939: Schacht travels to Switzerland, and then, soon after, to India.

From the IMT testimony of Hans Bernd Gisevius: [Our group went to Switzerland] together with Schacht, but also with Goerdeler. We were of the opinion that Schacht in Germany--excuse me--that Prague would have incredible psychological effects in Germany. As far as foreign countries were concerned, Prague was the signal that no peace and no treaty could be kept with Hitler. Inside Germany, unfortunately, we were forced to see that the generals and the people were now convinced that this Hitler could do whatever he wished; nobody would stop him; he was protected by Providence. This alarmed us. On one side, we saw that the Western Powers would no longer put up with these things; and on the other side, we saw that, within Germany, the illusion was growing that the Western Powers would not go to war. We could see that a war could be prevented only if the Western Powers would tell, not only the Foreign Minister, not only Hitler, but by every means of propaganda, tell the German nation that any further step towards the East would mean war. It appeared to us that the only possibility was to warn the generals, and to get them to revolt, and that was the subject of the talks which Schacht, Goerdeler, and I conducted in Switzerland, immediately after Prague.

We met a man who had excellent connections with the British and French Governments. This man made very exact reports, at least to the French Government. I can testify to this because, later, after Paris was conquered, I was able to find a copy of his report among Daladier’s secret papers. We told this man very clearly that, in autumn at the latest, the fight for Danzig would start. We told him that, as good Germans, we were without doubt of the opinion that Danzig was a German city and that, some day, that point would have to be peacefully discussed; but we also warned him against having conferences now, regarding Danzig alone, because Hitler did not want only Danzig but the whole of Poland, not the whole of Poland but the Ukraine, and that that was the reason why the propaganda of foreign countries should make it abundantly clear to Germany that the limit had now been reached, and that the Western Powers would intervene. We said that, only then, would a revolt be possible for us ... I must say that, very soon, public statements on the part of the British, either on the radio or in the press or in the House of Commons, began to remove these doubts among the German generals and the German people. From that time on, everything which could be done was done by the British to alarm the German generals . . . .

We thought that the opportunity for Schacht to talk to a close friend of the British Prime Minister, Chamberlain, should not be allowed to pass; and Schacht had very detailed discussions with Montagu Norman, so as to describe to him the psychological atmosphere in Germany after Prague, and to persuade him that the British Government should now undertake the necessary clarifications. We wanted it made clear to the German people that the Western Powers were not against Germany, but only against this Nazi policy of surprise, and against the Nazi methods of terror, within the country as well as without. We saw that things in Germany were rapidly drifting toward the August crisis, and that the generals could not be dissuaded from the view that Hitler was only bluffing, and that there would be another Munich or another Prague. And now began all those desperate efforts [that] we made in order to influence the leading generals, and particularly Keitel, to prevent the decisive order being given to march against Poland.

From Schacht’s IMT testimony: After the dismissal in January 1939, I already mentioned that Hitler suggested to me that I should go on an extensive journey abroad and, at the time, I went to India by way of Switzerland, where I again saw my friends. In India, I merely traveled as a tourist. I was not politically active but, of course, I visited several governors, and I spent 3 days as the Viceroy’s guest, in his house in Simla. When I was in Burma, after leaving India, I received a visit in Rangoon from a Chinese friend who had visited me before in Berlin on occasion, and who had been commissioned by his government to talk to me about the situation of China. I will sum it up in one sentence. In a written memorandum, I advised Chiang Kai-Shek’s government to continue holding out against Japan, giving as reason that the economic resources of China would last longer than the economic resources of Japan; and I advised Chiang Kai-Shek to rely primarily on the United States of America in his foreign policy . . . .

Had it been only a question of my personal fate, nothing would have been simpler [than to emigrate], especially since, as we have heard before, I would have been offered that opportunity, and it would have been made easy for me. It was not merely a question of my own welfare; but as I had devoted myself to the public interest since 1923, it was the question of the existence of my people, of my country. I know of no instance in history where emigrants were of help to their own nation. Of course, I speak of those emigrants who leave of their own free will, not those that have been expelled. It was not the case in 1792, at the time of the French Revolution; it [was] not the case in 1917, during the Russian Revolution; and it was not the case at the time of the National Socialist revolution which we witnessed . . . .

If I had sacrificed myself, it would not have been of the slightest use because the circumstances of my sacrifice would never have become known. Either I would have disappeared in some prison, or I would have died there, and no one would have known whether I was alive or not; or I would have been the victim of a planned accident, and it would not have been possible to become a martyr. Martyrs can be effective, only if their martyrdom becomes known to the public.

May 23, 1939: Hitler addresses his Generals about his future plans. From a summary: (http://comicism.tripod.com/390523.html)

From Schacht’s IMT testimony: I knew nothing at all, and never heard anything about [Hitler’s plans against Memel]. As far as I know, I learned of the annexation of Memel by Germany, on my trip to India, which I had already started at that time. I had no knowledge about [the attack on Poland] and, therefore, I also knew nothing of the May meeting of 1939, which has been discussed several times. In the beginning of March, I left Berlin and then stayed for some time in Switzerland; at the end of March, I set out for India, via Genoa, and so I learned nothing at all about the Hacha affair, that is the establishment of the protectorate in Czechoslovakia, nor of Memel, nor of Poland, since I did not return from the trip to India until the beginning of August.

August 15, 1939: Schacht, having just returned from a tour of Burma and India, receives fellow ’Schwarze Kapelle’ conspirator Hassel, at his new bachelor quarters in Berlin. From Hassel’s diary: "Schacht’s view is that we can do nothing but keep our eyes open and wait, that things will follow their inevitable course." (Shirer)

From the IMT testimony of Hans Bernd Gisevius: He [Schacht] went to India, and hoped to stay there as long as possible, in order to go to China. But, on the way, Hitler’s order prohibiting him from setting foot on Chinese soil reached him, and he had to return. As far as I remember, he came back a few days before the outbreak of war. [Schacht] sympathized greatly with the Chinese Government, as did our entire circle. We all had quite a number of good and dear Chinese friends, with whom we attempted to keep in touch, in spite of the Japanese pact . . . .

[Schacht] took a great number of steps [to stop war from breaking out], but they cannot be described individually, as that would create the impression that Schacht alone was taking these steps. Actually, the situation was such, that a large group of people were now in the struggle, and each one took those steps which were most suited to him, and each one informed the group of what he had done, and what would be advisable for another to do. For that reason, I am afraid that it would present a completely erroneous picture, if I were to describe individually, and only with respect to Schacht, all those desperate efforts made from August 1939 until the attack on Holland and Belgium . . . .

I must state first, that Schacht knew of all these other matters, and was, in a certain sense, also an accomplice. Of Schacht himself, I can only say at this particular moment that he was co-author of the Thomas memorandum, addressed to General Keitel, or the two memoranda, in which Schacht, together with our group, pointed out the dangers of war to Keitel. Further, I can say that, through Thomas and Canaris, Schacht took steps to intervene with Brauchitsch and Halder. But I would like to emphasize expressly that all the steps taken by Beck and Goerdeler were taken with the full knowledge of Schacht, and also with his participation. This was a very important undertaking.

After General Thomas had failed with both his memoranda, and after he had failed to persuade Keitel to receive Goerdeler or Schacht, Schacht tried to approach Brauchitsch or Halder. For that purpose, Thomas paid frequent visits to General Halder, and it was typical that, during those critical days, he could not get past the anteroom of General Halder’s office, past General von Stuelpnagel. Halder was not "at home," and just said that he did not want to see Schacht. Thereupon, we took a further step on that dramatic 25 August, the day on which Hitler had already once given the order to march. As soon as the news reached us that Hitler had given Halder the order to march, Schacht and I first got into touch with Thomas; and then, together with Thomas, we went to Admiral Canaris, so that both Thomas and Canaris should accompany Schacht, when he went unannounced to the headquarters in Zossen, in order to confront Brauchitsch and Halder with his presence. Schacht intended to point out to Brauchitsch and Halder that, in accordance with the existing constitution, the Reich Cabinet must be consulted before waging war. Brauchitsch and Halder would be guilty of a breach of oath if, without the knowledge of the competent political authorities, they obeyed an order for war. That was roughly what Schacht intended to say, to explain his step. When Thomas and Schacht arrived at Bendlerstrasse, Thomas went to Canaris.

From Schacht’s IMT testimony: I saw him [Hitler] once more in January 1939, because I had to discuss my future activity, et cetera, with him. And on that occasion, he asked me--he knew that I had long wished to take an extensive journey--that I might avail myself of this opportunity to take this journey now, so there would not be so much talk about my leaving the Reichsbank. Then we agreed on the trip to India. On that occasion, I also saw Goering for the last time. And then--after my return in August--I did not see him again; then the war came, during the course of which I saw him twice.

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