nomics, later with the Reichskommissar for Water Traffic, will also be able to give information about these transactions which certainly took place against his will.

About transactions in France in the field of finance and industry the war administration chief (Kriegsverwaltungschef) with the military commander in France, Ministerialdirektor Dr. MICHEL will best be able to give information. MICHEL was at the same time representative of the Four Year Plan. The Bank der Luftfahrt (Aerobank) was especially active in France in the field of financing.

This bank and the Four Year Plan also played a leading role, in transactions in Norway. At first Generaldirektor KOPPENBERG from Junkers and then WESTRICK from the Vereinigte Aluminiumwerke worked there. The consultant for economic affairs of Reichskommissar OTTE (Former economic advisor in Hamburg-Gauwirtschaftsberater) should know about everything that went on in the industrial sector in Norway, also about the methods of financing. The director of the Reich Bank SATTLER should also be interrogated on this subject.

In Holland the financing of economy was handled by Dr. FISCHBOECK. The Luftwaffe was in charge at Philipps, the Ministry of Food and Agriculture at Unilever. The commissioner who was put there, State Secretary Dr. POSSE evidently exercised an administrative activity by preference. About what went on in the other big Dutch enterprises Dr. FISCHBOECK should know himself, since he handled these affairs himself together with Rost van TORMRUEGEN (?) and the Dutch Secretaries of State. Among the German enterprises which had interests in Dutch industry, especially the Ver. Stahlwerke and the Thyssenkonzern should be mentioned. The Kalisyndikat (Potassium syndicate) was supported in its foreign investments chiefly by the Continentale Bank (State Secretary NEUMANN was in the end director general of the Deutsche Kalisyndikat). In the field of banking the Deutsche Bank was especially interested in Holland (through de Bary), while in Belgium the Dresden Bank was especially active (Banque de Bruxelles?). About what happened in the industrial sector in Belgium and Luxemburg Kommerzienrat ROECHLING should be best informed.

The Four Year Plan determined who was to be the administrator of the large industrial enterprises in the occupied areas and into which German sphere of interest the individual works should fall. The former associate of Flick who incidentally lost out in these transactions, Captain STEINBRINCK (retired) of the Vereinigte Stahlwerke should be accurately informed about the events

in Belgium and Luxemburg (labor). To throw further light on the whole complex of German financing and participations abroad is only possible if the main participants whom I have enumerated above from memory are interrogated together about these affairs so that with the help of mutual questions the necessary information can be obtained. To such a circle of financial and industrial people the following persons should be added.

Four Year Plan: NEUMANN, KOERNER, GRAMTSCH, KADGIEN;

Ministry of Economics: KIRSCHFELD, SCHLOTTERER, v. JAGWITZ, BETHGE;

Reichsbank: PUHL, WILHELM, von WEDEL, REX, WOLF; Foreign Office: WIEHL, CLODIUS, SCHNURRE, RIPKEN; Ministry of Armaments: SAUER, HETTLAGE, SCHIEBER, KEHRL, MUM (Switzerland).

OKW: Lt. Gen. BECKER and the representatives for foreign countries of the three Waffenaemter (the latter seem especially important to me):

Reichskommissar for Water Traffic: Ministerialdirektor Dr. BERGMANN and Senatssyndikus Essen;

Banking: ABS (Deutsche Banken), GOETZ or RASCHE (Dresden Bank), RODENWALD (Reichskredit Gesellschaft) RADORF (Aerobank);

Foreign Trade: LINDEMANN (Bremen), Dr. v. POLL (General manager of the Reichsgruppe Handel-Reich Group for Trade).

Since the discussion of this complex of questions would also reveal information about present German accounts abroad and credit possibilities and therefore would allow important deductions to be made concerning internal financial questions. I suggest that to such a conference, or interrogation group besides myself also Graf SCHWERIN v. KROSIGK with Ministerialdirektor Dr. BERGER and Ministerialdirigent BAYRHOFFER be added, especially since the enumerated persons to a great extent are identical with those persons who will chiefly have to be called upon for the reconstruction of the German financial system and the financing of the public and private needs as well as for foreign currency and currency questions.

[signed] WALTER FUNK

SECRET

ANNEX ON THE ORGANIZATION OF INDUSTRIAL

ECONOMY

The Organization of Industrial Economy of which I was in

charge had as its uppermost principle that its responsible members should be practical businessmen.

The party fought this principle consistently since it was the party's aim of get party functionaries into the organization. The procedure followed often was to place a man, suitable to the party, into a key economic position by appointing him director, usually of a public institution, or by establishing bank credit.

The organization consisted of horizontal (regional) division, chambers of commerce and chambers of trade and a vertical (professional) division, Reichsgroups, individual groups, vocational groups (guilds for handicraft). The head organization, combining the two systems was the Reich Economic Chamber (Reichswirtschaftskammer).

The gau economic chambers combined industry, commerce and trade and also maintained subjective and objective connections with the vocational groups. The gau economic chambers were a concession to the party since gauleiters and gau economic advisors were given a certain amount of influence. The president of the chamber was appointed by me and the economic groups were assured of making their own decisions concerning professional problems.

This vocational organization functioned quite well ordinarily speaking, until a second, completely differently designed organization arose out of the Armament Ministry committees and rings equipped with the tremendous authority and powers of the Minister of Armament. This new organization undermined and excavated the old one. In other words production representatives of the Armament Ministry paralyzed the economic groups. The old economic organization no longer held the deciding powers. These were in the hands of the Ministry and the Landeswirtschaftsaemter (economic departments). The Speer organization held almost unlimited powers.

The task of my Landeswirtschaftsaemter, the guidance of production and the distribution of quotas to the economy, also went into the hands of the Armament Ministry so that the Landeswirtschaftsaemter received orders from two different places.

A third controlling board was added when fuel and tire production was transferred to the Transport Ministry. Finally the job left for the economic Ministry was the distribution of consumer goods to the population and the old economic organization could only concern itself with basic economical questions, fares, financial questions, etc. The Deutsche Arbeits Front considered questions concerning social topics, which are very important to the economy, its exclusive domain.

With reference to the meeting of our mutual special workers in the case, I would like to inform you of the following:

I

According to the Reich Defense Law of 4 September 1938, I have the direction for the economic preparations for the Reich Defense (except the armament industry). The Offices under my jurisdiction (Reich Ministry for Economic Affairs, Reich Ministry for Nutrition and Agriculture, Reich Labor Ministry, Reich Forest Master and Reich Commissioner for Price Control) are bound to follow my directives.

For the preparations concerning the utilization of labor during the war, the measures planned by you for the housing and the utilization of prisoners of war are of great importance. In the case of mobilization there would be an important deficit of laborers which might be catastrophic in some parts of the economy. I can refer to the statements of Col. General Keitel, Secretary of State Dr. Posse, and Secretary of State Dr. Syrup in the meeting of the sub-committee (R.V.) on 17 January 1939, concerning balance sheets for figures [Zahlenbilanz]. The deficit in labor has to be made up by the employment of eventual prisoners of war as far as possible and practical. The preparations, therefore, have to be made in close cooperation of OKW and GBW. The offices under my jurisdiction will be informed.

I therefore beg you to inform me of the preliminary studies prepared so far and to have negotiations of a principal nature in future with myself. I would be grateful for a copy of the drafts so far prepared.

1

II

In the drafting of the directives I want to emphasize the following principles:

1) Location of Camps:

For the choice of transit camps only military and technical transport exigencies will be prevailing.

As far as the permanent camps are concerned the exigencies of labor utilization will have to be taken into consideration. It will be expedient to locate them in districts which presumably will have the greatest and most urgent need for workers. The preliminary studies of the President of the Reich Institution for employment and unemployment insurance concerning employment during war in the agriculture could serve as a basis.

I therefore beg you before the final decision about the location of the six contemplated permanent camps to give me an opportunity to offer my advice. This could be done within a very short time.

2) Dimension of the Camps:

According to present directives, the permanent camps shall take in 10,000 men and the working commands should return daily to the camp even if longer distances are involved. This regulation renders more difficult a practical employment. Therefore, a more flexible arrangement of the camps should be sought, as far as military reasons do not interfere and self-contained working commands should be provided.

3) Execution of the Utilization of Labor:

a) The utilization of the prisoners of war will take place only in the permanent camps; in the transit camps a separation of working commands will not take place. If the High Command of the Armed Forces should think a different regulation necessary, then a participation of the district labor offices for the transit camps would have to be ordered, which, so far, is only contemplated for the permanent camps.

b) The utilization of the prisoners of war must be accomplished in close cooperation with the authorities for labor utilization, because only they have knowledge about the most urgent demands for labor. The Reich Labor Minister will declare competent one district labor office (respective labor office) for each permanent camp, which takes care of the practical utilization of the prisoners and which will advise the Commandant of the camp on all labor questions.

c) All requests for working commands will have to be directed to the District Labor Office. Insofar as the utilization of prison