Copy of document 3730-PS

                          EXCERPTS

Testimony of Hermann Goering, taken at Nurnberg, Germany, 17 October
1945, 1030-1215, by Lt. Col. M. I. Gurfein, OUSCC. Also present: Captain
Frank, Interpreter and Miss Evelyn Low, Reporter

[Page 1]

Q. I wanted to ask you to-day about some of the economic history of the
period. When was the armament program first discussed, that is, the
rearmament program-what year?

A. Immediately in 1933.

Q. In other words, Schacht had assumed the obligation at that time
already to raise funds for the rearmament program?

A. Yes, but of course in co-operation with the Minister of Finance.

Q. During the years 1933 to 1935, before general conscription came in
naturally, the rearmament was a secret rearmament was it not?

A. Yes.

Q. So that any monies that were used outside of the budget would have to
be raised by some secret means, not to be known to foreign nations?

A. Yes, unless they could be raised from normal army funds.

Q. That is to say, you had a small budget for the standing 100,000 man
Army which was open and the rest of the rearmament had to be from secret
sources?

A. Yes.

                                                              [Page 531]

[Pages 9-13]

Q. You had some jurisdictional differences with him in connection with
that position I believe and I want to show you an agreement of the 7th
July 1937 and ask you first to read it. Do you recognize that copy?

A. I can give you exact explanations. It was naturally my opinion that
the Plenipotentiary for War Economy would be abolished through the
nomination of myself for the Four Year Plan. Schacht opposed this
conception very forcibly. It was his argument that I, as Supreme
Commander of the Air Force, would be tied down for military reasons to
much too large a degree in the case of war. This conception I logically
had to agree to. And subsequently this contract was made. But I want to
draw your attention to one thing — the last sentence. Apart from this,
the fact that the Plenipotentiary for War Economy has a position of
supreme Reichs authority can in no way be doubted. This sentence was
inserted on my request. This means that I could give him instructions at
all times since the authority of the Plenipotentiary for the Four Year
Plan stated that I could give orders at any time.

Q. But it also was a face-saving device?

A. It gave me a possibility to give orders to the Plenipotentiary in
spite of this agreement. Schacht, however, in the event of war desired
to cancel the Four Year Plan by means of this agreement so as to take
the situation in hand himself. Thus this safety sentence, this last
sentence, was added.

Q. But on the face of it it looks as if it established a high position
for Dr. Schacht and certainly prevented the abolition of his office.

A. No. The position of Plenipotentiary for War Economy meant an
improvement of his position as Reichs Minister of Economy.

Q. So that it is clear, is it not, that as late as 7 July 1937 against
your attempt to abolish Schacht’s position as Plenipotentiary for the
War Economy he was opposing any such step and in fact was urging that he
be given broader powers in the event of war ?

A. Yes, that is correct. I wanted this position abolished — in the
event of war and yet he succeeded in retaining his position.

Q. Shortly after-

A. This I must underline. Schacht always tried to slide out and up and
achieve yet a new position whilst all other Ministers co-operated
absolutely.

                                                              [Page 532]

Q. Shortly after this, before we leave ttils agreement. which you have
just identified, Mister Goering, I wanted to ask you, there is a
reference in it I believe to a position of Hitler, with respect to this
jurisdictional controversy?

A. The Fuehrer sent for us both and explained how he visualized this
matter should be handled. He then put a proposal to us  — Schacht was
anxious to take something back in writing — regarding how such an
agreement should be drafted.

Q. In this conversation that you had together with Dr. Schacht in the
presence of Hitler, did Dr. Schacht make the proposal that he was
anxious to continue his powers as economic dictator in the event of war?

A. Yes, he even suggested that he should carry out his activities
independently from me. he gave as reasons that he could not otherwise
carry out his task and said that in the event of war I would obviously
be continuously absent, i.e. at my headquarters in the field, etc.
Practically speaking, to say it in one sentence, I should like to say
that what Schacht wanted was that in the event of war the Four Year Plan
should be abolished.

Q. Shortly after this agreement that was decided upon by Hitler with
respect to your jurisdiction in case of war, you began to have further
disputes with Dr. Schacht concerning economic matters, did you not?

A. Yes.

Q. Let me show you a copy in English ?

A. Just a moment — the Fuebrer did not lay down details in this
connection. This agreement is on extremely vague lines.

Q. Coming to this period shortly thereafter when you say you had
difficulties with Schacht, I should like to show you an English copy of
a letter dated 26 August 1937 by Schacht to you and will ask the captain
to be good enough to translate it into German — perhaps you uin read it
in English?

A. Yes.

Q. Can you understand this?

A. Yes.

Q. This is dated about a month later — roughly seven weeks.

What was the background for this letter of Dr. Schacht's?

A. Some row between the departments.

Q. And you had apparently written a letter previously to Schacht, to
which he took exception, is that correct?

A. Yes, certainly, either myself or my immediate subordinate  — I have
avoided whenever possible to write myself — but it is quite possible
that I myself wrote in this case.

                                                              [Page 533]

Q. Do you know what was meant by, the phrase -"fundamental differences
exist in our economic policies"?

A. He was absolutely — how shall I say it — the basic principle was
that I was interfering too authoritatively with economic matters and I
had frequent conferences with the leaders of the econornic system which
were against the feelings of Schacht’s personality. Furthermore, Schacht
sent me situation reports in such cases which were not strictly in
keeping with the facts. For instance, I received situation reports
according to which no further import possibilities would exist after,
say, six weeks or two months, and I must say some such nonsense. He
would paint the situation in such extreme and black colors so as to
scare me off personally.

Q. Did you feel there was always an implication that if Schacht were
permitted to do it himself that he felt he could do it better ?

A. Yes, that he has always told me, though indirectly.

Q. You recall that Schacht left the Reichsbank in January 1939. Do you
remember the circumstances of that?

A. Yes. The circumstances in this connection were, I must say,
ridiculous. The Minister of Finance, as it is often the case, demanded
an advance at the end of the month ats had been the case, and quite
suddenly and without notice this advance was refused. He told the
Minister of Finance to declare the Reich bankrupt. The Minister of
Finance put the matter right on his own negotiation but thus proved to
the Fuehrer that Schacht was being obstructive.

Q. But the discussions about Reichsbank financing with respect to the
question of inflation, (to you know anything about those?

A. Yes, the question of inflation arose during all conferences, and
suggestions were always made regarding measures to prevent the actual
arrival of an inflation. Opinions differed on these occasions. Someone,
I cannot remember who it was, would say that we were practically, in the
middle of an inflation now and someone else would say that this was not
so and could be avoided.

Q. I meant 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.

                                                              [Page 534]

Q. Keppler says that as early as 1936 You were trying to get rid of
Schacht by talking to the Fuehrer about him, is that correct ?

A. No, it was much later.

Q. And when it was later, it was about these personality difficulties
that You have discussed here this morning?

A. Yes. I always saw that he made considerable difficulties for my staff
when they were working on economic subjects outside. I don’t recall.

Q. I want to ask you whether this statement is true. Schacht in effect
has said that he resigned as Minister of Economies because he could not
agree with Goering or Goering’s war policy and that he wanted to prevent
the over-loading of industry for the preparation for war?

A. Oh! But that is absolute nonsense-he would never have said it then.
If he had said this as a reason for his renunciation he would not have
remained a member of the Reichs Cabinet nor the Chief of the Reichsbank.

Q. I don’t say that he said it at the time, I said that he says it now.
Is it true?

A. Of course what he says now, that I don’t know. But I do not want to
deny in this connection that I myself have pursued a very strong
economic policy for the purpose of rearmament. That is the actual reason
for the Four Year Plan. But if he does say this now he has certainly
hidden it very successfully then.

Q. In general terms, Schacht was never opposed, as far as you were
concerned, with the rearmament program or the extent of it?

A. No, he certainly did not oppose it generally but he had different
opinions regarding the methods to be ernffloyed. Obviously it would have
been quite out of the question that Hitler advanced and honoured Schacht
the way he did — making him Minister of Economies and President of the
Reichsbank, etc — if Schacht had been opposed to the rearmament
program. But he was of the opinion --as I said before — that sums such
as the Fuehrer visualized were impossible. That is correct.