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tioned letter, “that you have made so little use of my offer” (EC497). Instead, Goering began to encroach upon powers which had been delegated to Schacht, and they became embroiled in a bitter jurisdictional conflict. On 26 November 1936, Goering issued a directive regarding raw and synthetic material production, whereby he undertook to assume control over large economic areas previously within Schacht's province (EC-243).
Schacht did not supinely accept Goering's intrusions upon his powers. Goering's directive was countered by an abrupt order from Schacht to all supervisory offices to accept orders from him alone (EC-376).
The conflict reached such dimensions that it threatened to retard the pace of the conspirators' armament program. The military sided with Schacht, who had provided the means for their rapid rearmament. They submitted proposals which would have assured to Schacht as Plenipotentiary General for the War Economy the responsibility for "unified preparation of the war economy as heretofore” (EC-408; EC-420).
In January 1937, the German Military Weekly Gazette published an article warmly praising Schacht's achievements in rearmament. The timing of the article indicates that it was a further attempt by the military to tip the scales in Schacht's favor. The article stated :
"The German Defense Force commemorates Dr. Schacht today as one of the men who have done imperishable things for it and its development in accordance with directions from the Fuehrer and Reich Chancellor. The Defense Force owes it to Schacht's skill and great ability that, in defiance of all currency difficulties, it, according to plan, has been able to grow up to its present strength from, an army of 100,000
men.” (EC-383) Shortly thereafter, Schacht attempted to force a showdown with Goering by temporarily refusing to act in his capacity as Plenipotentiary. Schacht plainly was using his prime importance in the conspirators' program of economic planning and preparation for war as a lever. In a letter to Hitler dated 22 February 1937, General von Blomberg, the Minister of War, suggested a settlement of the jurisdictional fight under which Schacht would fully retain his powers as General Plenipotentiary of War Economy, and concluded by stating:
"If you, my Fuehrer, agree with my view regarding these jurisdictional questions, it may be possible to induce Reichsbank President Dr. Schacht, whose cooperation as Plenipotentiary for preparation of war is of great significance,
to resume his former activity." (EC-244) As a further demonstration of the community of interest between Schacht and the top German military authorities, Schacht attended the secret "War Economy" games at Godesberg in the latter part of May 1937. The purpose of the games was to demonstrate "how the action of the soldiers in total war is influenced by economy and how on the other hand, economy is completely dependent on military operations". Schacht's attendance was acclaimed at the games as
"renewed proof that you are willing to facilitate for us soldiers the difficult war-economic
war-economic preparations and to strengthen the harmonious cooperation with your offices."
(EC-174). In June 1937, Keitel implored Hitler to accelerate a final agreement between Schacht and Goering. Speaking of arrangements concerning cooperation of these two key figures, Keitel said:
"I know that a necessary practical basis for it (the arrangement for cooperation between Schacht and Goering) has already been found, and only a formal agreement is needed in order to carry on the common work.”
to waste time in our situation would be the greatest reproach that history could make upon us. “May I beg, therefore, once more that the arrangement mentioned be expedited, and that I be notified accordingly."
(EC-248) Finally, on 7 July 1937, Schacht and Goering signed an agreement of reconciliation in Berlin, wherein it was said that the tasks of Goering and Schacht "are being solved in closest mutual cooperation,” and that “no doubt exists about the fact that the Commissioner General for War Economy has the position of a supreme authority of the Reich" (EC-384).
Schacht resumed his duties as General Plenipotentiary with renewed vigor. On the day following his formal agreement with Goering, he wrote to General von Blomberg on "Measures for the preparation of the conduct of war,” pledging continued cooperation in their mutual endeavors:
* by the direction of the supreme authority for the conduct of war, the coordination of the conduct of war will be assured in its execution through mutual agreement between you and me, which I look upon as a matter of course in the Central Authority and without which I cannot envisage any conduct of war. The direction of the economy by the plenipotentiary would in that event never 'take place entirely independent from the rest of the war mechanism' but would be aimed at the accomplishment of the political war purpose with the mustering of all economic forces. I am entirely willing, therefore, to participate in this way in the preparation of the forthcoming order giving effect to the
Reich Defense Act (Reichsverteidigungsgesetz].” (EC-252) However, Schacht and Goering were soon again in disagreement. After a sharp exchange of letters in which each sought to justify his particular economic program as the best means of making possible the attainment of Hitler's objectives (EC-497; EC-493), Schacht suggested to Goering in a curt letter dated 26 August 1937, that he (Goering) assume sole charge of economic policies. In this letter, Schacht rationalized his precipitate action as follows:
"To me it does not seem to be of decisive importance to raise questions of competence and initiative, but it is of decisive importance that the Fuehrer's economic policy should be carried out in a coherent manner, and with the least amount
of friction." (EC-283) Despite the uncompromising tenor of the latter communication, Schacht was still amenable to an arrangement with Goering which would have permitted him a measure of autonomy in economic planning and preparation for war. On 1 November 1937, he attended a conference with Goering
* which led in an entirely friendly manner to the working out of a series of proposals, which *
* Goering promised to have presented to me (Schacht] in writing on the following day * so that, after having reached an agreement we could present a mutually approved text to you,
my Fuehrer.” (EC-495) But the written agreement was not forthcoming as Goering had promised, and Schacht repeated his request to be relieved from the Ministry of Economics, “in the interest of a uniform government management" (EC-495). Hitler finally accepted Schacht's resignation as Minister of Economics on 26 November 1937, simultaneously appointing him Minister Without Portfolio. Schacht's resignation was also extended to his position as Plenipotentiary for War Economy (EC-494).
In subsequent interrogations, both Schacht and Goering have confirmed the fact that Schacht's withdrawal was simply the re
sult of a losing struggle with Goering to retain personal power (3730-PS; 3728-PS).
There is nothing to indicate that Schacht's withdrawal from the Ministry of Economics and the Office of Plenipotentiary for War Economy in any sense represented a break with Hitler on the ground of contemplated military aggression. He consented to retain his position as President of the Reichsbank, where he remained undisputed master, and accepted the post of Minister of Portfolio, in order to be Hitler's "personal adviser." In the letter accepting Schacht's resignation as Minister of Economics, Hitler said:
“If I accede to your wish it is with the expression of deepest gratitude for your so excellent achievements and in the happy consciousness that, as President of the Reichsbank Directorium, you will make available for the German people and me for many years more your outstanding knowledge and ability and your untiring working strength. Delighted at the fact that in the future, also, you are willing to be my personal
adviser, I appoint you as of today a Reich Minister.” (L-104). As President of the Reichsbank, Schacht continued to carry out Hitler's policies. As previously shown, he participated in the planning of the invasion of Austria by fixing the conversion rate of the Austrian Schilling in advance of the invasion; and under his direction, the Austrian National Bank was merged into the Reichsbank. He publicly approved the absorption of Austria and the acquisition of the Sudetenland. He continued to finance armaments by “mefo” bill credits until April 1938, and thereafter, until his resignation in January 1939, authorized an increase of approximately 2.6 billion Reichsmarks in bank notes in order to discount commercial paper which was used in connection with the armament program. (EC-438)
(2) Schacht's dismissal from the Presidency of the Reichsbank. Schacht was dismissed from the Presidency of the Reichsbank in January 1939. The evidence indicates that Schacht engineered his dismissal in order to escape personal responsibility for what he believed to be an impending financial crisis; he was not dismissed because of disagreement with the ultimate objectives of the conspiracy or common plan.
Schacht had always feared an inflation in Germany. As early as May 1936, he emphatically stated that he would "never be party to an inflation" (1301-PS). In January 1939, Schacht was convinced that ruinous inflation was, in fact, immiment (EC-369). There was, it appears, ample basis for his fear. The Finance
Minister, von Krosigk, had already recognized the situation in September 1938, and had written to Hitler warning that
we are steering towards a serious financial crisis, the forebodings of which have led already abroad to detailed discussions of this weak side in our economic preparations and to an apprehensive loss of confidence domestically.”
(EC-419) Schacht was not only afraid of a financial crisis; he was even more fearful that he personally would be held responsible for it and his prestige would suffer a crushing blow. One of his associates at the Reichsbank has stated :
"When Schacht saw that the risky situation which he had sponsored was becoming insoluble, he was more and more anxious to get out. This desire to get out of a bad situation was for a long time the ‘leitmotif' of Schacht's conversations
with the directors of the bank.” (EC-438) In the end, Schacht deliberately stimulated his dismissal from the Presidency of the Reichsbank by arbitarily refusing an endof-the-month loan in a relatively small amount to the Reich, contrary to well established practice (3730-PS; 3731-PS).
Despite differences of opinion concerning the limits to which the German economy might be pushed without plunging the country into inflation, Schacht continued to enjoy Hitler's confidence. In his letter to Schacht dated 19 January 1939, Hitler stated :
“On the occasion of your recall from Office as President of the Reichsbank Directory, I take the opportunity to express to you my most sincere and warmest gratitude for the services which you 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.” (EC-397). On his side, Schacht evidenced his abiding faith in Hitler and his continued agreement with his aggressive policies, by remaining as Minister without Portfolio until January 1943. As such he received a large salary from the Nazi Government and enjoyed the emoluments of public office (3724-PS).
(3) Conclusion. Schacht's assistance in the earlier phase of the conspiracy was an important factor in enabling the conspirators to seize the German state and thus pave the way for their later crimes. His work was indispensable to the rearma