Copy of document 3727-PS

          EXCERPTS from testimony of HALMAR SCHACHT
     taken at Nurnberg, Germany, 13 October 1945, 1530-
       1630, by Lt. Colonel M.I. Gurfein, OUSCC. Also
             Present: Miss Evelyn Low, Reporter

[Pages 1 to 3]

Q. I was looking over one of the statements that you made to
Major Tilly and there was a sentence there that I wondered
if you could explain. I copied it down, as follows: “In
order to divert Hitler’s attention from German expansion in
the East which
could not have been achieved without war, I started very
early to win Hitler to a colonial policy.”  Do you remember
saying that?

A. Yes.

Q. Now I want to ask you first how early was that when you
say “very early"?

A. I think in 1932 already. It has always been on my mind.

Q. And you had discussions as early as 1932 about it with
Hitler?

A. Oh certainly, from 1931. About everything — many
questions.

Q.  Such as what?

A. Economic and political and whatever it was — social,
unemployment.

Q. But this particular point of foreign policy, you were the
proponent, as you explained it, of the view that Germany,
should get colonies rather than that there should be
expansion in the east?

A. I don’t know what it means — “proponent.” The question
of colonies has always been discussed by me since 1920. Even
before that.

Q. And you wrote an article, as a matter of fact, on foreign
affairs particularly?

A. Yes.

Q. In which you urged that Germany should obtain colonies?

A. Yes.

Q. In these early discussions that you had with Hitler
concerning the desirability of trying to get colonies for
the Reich, what position did Hitler take with respect to
that?

A. He was not so much interested in colonial matters and did
not lay much stress upon the colonial question at that time
-- only later.

Q. In other words, at the time of your talks with Hitler in
1931 and 1932 concerning colonial policy, you did not find
him, shall we say, enthusiastic about the possibility?

A. Not enthusiastic and not very much interested.

Q.  But he expressed to you what his views were
alternatively to the possibility of obtaining colonies?

A. No. We didn’t go to other alternatives.

Q. You told Mayor Tilly — that is why I read this, because
I would like to get the details of it a little more clearly
from an historical point of view — you told Major Tilly in
substance that you started very early to talk him into a
colonial policy in order to

                                                  [Page 480]

divert his attention from the east. What was there in what
he said that led you to believe that he was intending to
move towards the east.

A. That is in Mein Kampf. He never spoke to me about that
but it was in Mein Kampf.

Q. In other words, as a man who had read it, you understood
that Hitler’s expansion policy was directed to the east?

A. To the east.

Q. And you thought that it would be better to try to divert
Hitler from any such intention and to urge upon him a
colonial policy instead?

A. Quite.

[Pages 7 and 8]

Q. Do you remember being interrogated by Major Ziegler. Do
you recall having stated that the amounts expended for the
rebuilding of the German Army and for armaments from the
period 1934 to 1938 were substantial — about 45 billions of
Reichsmarks?

A. Dr. Ziegler from his side gave some figures of taxes and
loans and so on and we came to the conclusion that they
might have reached that sum. I did not do it by my own
knowledge but when he read his figures before me I have said
"Well, that may be.”

Q. To go back — that figure of 45 billions was also broken
down as I recall it. I don’t have it right before me but you
had about 15 billions raised through taxes through the Reich
budget during that period for rearmament. You had about 12
billion mefo bills — that is 27 billion. You had 8 million
from loans — that is 35?

A. That comes to 35 billions.

Q. If all of the 8 billions has been spent on armaments,
then this must be right. You would not say that figure of 35
billions was fantastic like the figure of 90 billions that
Hitler said?

A.  No, it would certainly not be so fantastic. I don’t know
whether those 15 billions have been spent on armaments and
whether all the 8 billions loans went into armament. That I
cannot control. The 12 billions mefo bills were exhaustively
appropriated for armament so I knew that money was not spent
for dinners and suppers.

Q. Let us go back for a minute and reconstruct the position.
You had these conversations with General von Blomberg and
Count von Krosigk each year with respect to the total
requirements of the Armed Forces, is that agreed?

A. No. Only from 1936 on. I should say middle of `36.

                                                  [Page 481]

Q. From `36 on. And those were the total budget figures
which included, as everybody had testified, not only the
operating expenses of the existing Armed Forces, but also
the accretions including the rearmament program itself.

A. It must have been.

Q. So that at that time, as President of the Reichsbank
being called upon to supply funds you undoubtedly considered
what proportion of the total that was being asked for by the
Wehrmacht you personally as President of the Reichsbank were
being asked to furnish, that is only natural?

A. It is quite natural.

Q. These figures that we have quoted of approximately 35
billion Reichsmarks for the period, as against 12 billion
from mefo bills, would represent approximately one-third of
the total amount expended for armaments?

A. Yes, maybe.

[Pages 16 to 19]

Q. Did you feel, Dr. Schacht, at the time you went to Vienna
to make the speech within the week after the Anschluss that
by your financing the rearmament you had enabled Hitler to
use the Wehrmacht to accomplish his purpose by these methods
that you did not favour?

A. In fact the Anschluss was made by the propaganda which
Hitler did in Austria and by political pressure which he
brought upon Schuschnigg and others — I don’t know who were
the leading men at the time. He did not use the military
force in order to shoot or to make war, it was just the
pressure that was behind it.

Q. Did the Wehrmacht or the fact that there was a Wehrmacht
have anything to do with the result in your opinion?

A. I don’t know how far the propaganda and the pressure
which came from the Austrian Nazis would have succeeded if
there had been no Wehrmacht.

Q. What I mean is did you at that time credit the Wehrmacht
as an instrument for the achievement of Hitler’s march into
Austria?

A. I have never thought of that.

Q. I want you to think about that now. Logically, of course,
anybody would have thought of it as the whole world did at
the time?

A. Yes but I have never thought that it was primarily the
Wehrmacht which forced the Anschluss so that for the
Austrians there was the alternative. I think, whether to
make the Anschluss or we will be at war with Germany.

                                                  [Page 482]

Q. Did not Schuschnigg call for a plebiscite which he had to
call off by a show of arms by Hitler?

A. I don’t know what the arrangements between Schuschnigg
and Hitler have been at that time.

Q. But that was a matter of common knowledge — in the press
of the world at the time?  You remember the ultimatum of
Hitler — the ultimatum to Schuschnigg?

A. I know that.

Q. Which was based on the fact that Hitler was prepared to
march?

A. That I didn’t know.

Q. What they stated.

A. I believe so. I just don’t remember. But you say it is
public knowledge — I would like to see that.

Q. That the Wehrmacht was strong enough at that time and in
a position to impose Hitler’s will on Austria in the event
that Schuschnigg did not comply with the ultimatum?

A. There can be no doubt because there is the people of 60
million on one side and on the other side a people of 6
million but I do not remember that such a menace was ever
made.

Q. Let me see if I can refresh your recollection about your
views on the 21st March 1938?

A. 21 March 1938.

Q. At the time at which you made a speech before the
employees of the former Austrian National bank?

A. Yes.

Q. The Anschluss, you remember, was on the 13 March 1938 and
this is eight days later. I will read it to you in German
first and then we can translate it for the record and I want
to see if you remember first making this statement in the
speech. Do you remember saying it?

A. Certainly.

    (The English translation was then given, as follows):

"Thank God these things have finally come to pass that they
could not further hinder the great German people, for Adolf
Hitler created a society of German will and thought. He
supported it through a newly strengthened Wehrmacht and
through them he finally brought the inner union between
Austria and Germany also into this outward form.”

A. Quite, you are correct, yes.

Q. I ask you whether that passage in the speech refreshes
your recollection as to the thoughts that you had as you
stood there before the employees of the Austrian National
Bank in

                                                  [Page 483]

Vienna on the 21st March 1938 with respect to the role that
the Wehrmacht had played in Hitler’s achievement.

A. Yes, you remember that in 1932 I think it was, the
Austrians and the German Government agreed about customs
union. That customs union was prevented by the Allied Powers
and not only Anschluss, which was not in question at that
time, but even a mere customs union was not allowed to be
contracted or closed. The fact that Hitler had put Germany
on an equal international foot again with the neighboring
powers made the Anschluss possible and so one of the aims
which I had always had in mind, by force of rearmament was
achieved because at that moment the Foreign Powers did not
any more hinder the Anschluss.

Q. You characterized in last week’s interrogation, Dr.
Schacht, the method used by Hitler as “Reckless.” What did
you mean by that?

A. I meant that if Hitler forced these things upon the
Austrians it was not good. He should have allowed the
plebiscite. The fact that he hindered the plebiscite was
certainly not favored by me.

Q. You still say you did not favor the methods that Hitler
used?

A. Yes. I only favored the fact that the Foreign Powers did
not any more hinder the coming together of Austria and
Germany and that was due to the rearmament.

Q. In other words, the Army stood there let us say as a
weapon in the hands of the politics of Hitler, vis-a-vis the
Austrians.

A. Not vis-a-vis the Austrians but vis-a-vis the Allies --
that is important.

Q. In other words you felt that the Wehrmacht had up till
March 1938 been so strengthened that it was a sufficient
threat to prevent the Allies from doing anything
preventative in respect to Austria?

A. I don’t know I am sure. To go to war at that time we
would have been beaten the same way as we have been beaten
now, but the fact that we had rearmed had the real effect
that they didn’t interfere.

Q. I am a bit naive about these things I must say. You say
that the main use of the Wehrmacht in 1938 as an instrument
for Hitler was not vis-a-vis Austria but against the Powers?

A. No [sic] against the Powers but vis-a-vis the Powers.

                                                  [Page 484]

Q. That means that the Wehrmacht must have been strong
enough to have an effect on any potential conflict. In other
words no longer a negligible force?

A. I don’t say that — even in 1934 the Allies respected the
rearming of Germany already so it was not comparison of
force which I had in mind but simply the fact that we had
armed or we were arming. We had armed.

Q. But basically you consider, as I understand it, that by
1938 Germany had resumed what you consider its rightful
position as one of the armed Powers of Europe.

A. I was sure of that.

[Page 22]

Q. You may remember that I asked you last time, in the
interrogation of 26 September 1945,

     “Q. Did you ever state to them that only those who had
     loyalty to Hitler could remain?
     A. I never did. My speech which I made to the employees
     must certainly be in the files of the bank.
     Q. And the speech that you made represented your views
     at that time naturally?
     A. Certainly. I never said anything which I didn’t
     mean.”

Q. Do you recall making those answers? Would you like to
withdraw that — I just want to know where you stand?

A. No. I would like to make it clear that I have praised
Hitler and appreciated what he had done in bringing Austria
into the Reich, in re-establishing the international
position of the Reich. I have not been in concurrence with
his moral principles. And I don’t think from this speech you
can take it that I approved his moral principles.

Q. That is your explanation?

A. Yes.

[Pages 28 and 29]

Q. In connection with that position, was it your duty to be
prepared in the event of war for the control of the German
economy?

A. I think that is true — that is correct.

Q. And is it correct to say that you then occupied a
position of equal rank with the Chief of the General Staff
of the Wehrmacht?

A. Not of the General Staff, I think the War Ministry.

Q. In other words you agree with Marshal Blomberg when he
says that in your capacity as Plenipotentiary for the War
Economy you were not under him but you were on a comparable
footing with him?

A. Quite.

                                                  [Page 485]

Q. So that the people who were charged with the
responsibility in the event of war — No. 1. Minister of War
and the Chief of the General Staff of the Wehrmacht and No.
2. on a similar footing, Dr. Schacht as Plenipotentiary for
the Economics.

A. Yes.