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In the course of these preparations for war, a clash of wills ensued between Goering and Schacht, as a result of which Schacht resigned his position as head of the Ministry of Economics and Plenipotentiary for the War Economy in November 1937. He was removed from the presidency of the Reichsbank in January 1939. Regardless of the details of this controversy, Schacht's departure in no way implied any disagreement with the major war aims of the Nazis. Schacht took particular pride in his vast attainments in the financial and economic fields in aid of the Nazi war machine. In a letter to General Thomas Schacht wrote:

"I think back with much satisfaction to the work in the Ministry of Economics which afforded me the opportunity to assist in the rearmament of the German people in the most critical period, not only in the financial but also in the economic sphere. I have always considered a rearmament of the German people as condition sine qua non of the establish

ment of a new German nation." (EC-257) In a letter written to General Von Blomberg, on 8 July 1937, Schacht wrote:

"The direction of the war 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 accomplishment of the political war purpose with the assistance 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 Defense Act.” (EC

252) In the spring of 1937, Schacht participated with representatives of the three branches of the armed forces in "war games in war economy" at Godesberg. A report of these exercises, entitled “War economy tasks in Godesberg undertaken by General Staff between the 25th of May and the 2nd of June,” records the speech welcoming Dr. Schacht:

“Before I start with the discussion of the war game in war economy, I have to express how grateful we all are that you, President Dr. Schacht, have gone to the trouble personally to participate in our final discussion today despite all your other activities. This proves to us your deep interest in war economy tasks shown at all times and your presence is renewed proof that you are willing to facilitate for us soldiers the difficult war-economic preparations and to strengthen the harmonious cooperation with your offices.”

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"I want to point out, however, that all matters and all

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information received has to be kept in strictest secrecy

*.(EC-174) The annexation of Austria was apparently a goal which Schacht had long sought, for in a speech to the employees of the former Austrian National Bank he declared:

Austria has certainly a great mission, namely, to be the bearer of German culture, to insure respect and regard for the German name, especially in the direction of the southeast. Such a mission can only be performed within the Great German Reich and based on the power of a nation of 75 millions, which, regardless of the wish of the opponents, forms the heart and the soul of Europe."

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"We have read a lot in the foreign press during the last few
days that this aim, the union of both countries, is to a certain
degree justified, but that the methods of effecting this union
was terrible. This method which certainly did not suit one
or the other power was nothing but the consequence of count-
less perfidies and brutal acts and violence which foreign
countries have practiced against us

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I am known for sometimes expressing thoughts which give offense and there I would not like to depart from this consideration. I know that there are even in this country a few people—I believe they are not too numerous—who find fault with the events of the last few days, but nobody, I believe, doubts the goal, and it should be said to all grumblers that you can't satisfy everybody. One person says he would have done it maybe one way, but the remarkable thing is that they did not do it, and that it was only done by our Adolf Hitler; and if there is still something left to be improved, then those grumblers should try to bring about these improvements from the German Reich, and within the German community, but not to disturb us from without.” (EC

297-A) A memorandum of 7 January 1939, written by Schacht and other directors of the Reichsbank to Hitler, urged a balancing of the budget in view of the threatening danger of inflation. The memorandum continued:

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 rreat extent the responsibility to finance the rearmament

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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." (EC-369) The Reichsbank directors, as experts on money, believed that a point had been reached where greater production of armaments was no longer possible. That was merely a judgment on the situation and not a moral stand, for there was no opposition to Hitler's policy of aggression. Doubts were merely entertained as to whether that policy could be financed. Hitler's letter to Schacht on the occasion of Schacht's departure from the Reichsbank paid high tribute to Schacht's great efforts in furthering the program of the Nazi conspirators. The armed forces by now had enabled Hitler to take Austria and the Sudetenland. Hitler, in his letter to Schacht declared:

"Your name, above all, will always be connected with the first

epoch of national rearmament.” (EC-397) Even though dismissed from the presidency of the Reichsbank, Schacht was retained as a minister without portfolio and special confidential adviser to Hitler. Funk stepped into Schacht's position as president of the Reichsbank (Voelkisher Beobachter of 21 January 1939). Funk was uninhibited by fears of inflation, and like Goering, under whom he had served in the Four Year Plan, he recognized no obstacles to the plan to attack Poland. In a letter written on 25 August 1939, only a few days before the attack on Poland, Funk reported to Hitler that the Reichsbank was prepared to withstand any disturbances of the international currency and credit system occasioned by a large-scale war. He said that he had secretly transferred all available funds of the Reichsbank abroad into gold, and that Germany stood ready to meet the financial and economic tasks which lay ahead. (699– PS)

It seems clear that the Nazi conspirators directed the whole of the German economy toward preparation for aggressive war. To paraphrase the words of Goering, the conspirators gave the German people "guns instead of butter.” They also gave history its most striking example of a nation gearing itself in time of peace to the single purpose of aggressive war. Their economic preparations, formulated and applied with the energy of Goering, the financial wizardry of Schacht, and the willing complicity of Funk, among others, were the indispensable prerequisites for their subsequent campaign of aggression.

LEGAL REFERENCES AND LIST OF DOCUMENTS RELAT

ING TO ECONOMIC ASPECTS OF THE CONSPIRACY

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ment. (USA 123)...

III
Directive from Blomberg to Su-
preme Commanders of Army,
Navy and Air Forces, 24 June
1935; accompanied by copy of
Reich Defense Law of 21 May
1935 and copy of Decision of
Reich Cabinet of 12 May 1935 on
the Council for defense of the
Reich. (USA 24).....

IV
Extracts from General Thomas'
Basic Facts for History of German
War and Armanent Economy.
(USA 35).......

IV
Report of the Second Meeting of
the Reich Defense Council, 25 June
1939. (USA 782).....

VI
Letter written November 1932 by
Schacht, Krupp and others to the
Reich President. (USA 851)..... VI
Letter from Krupp to Hitler, 25
April 1933, with enclosure. (USA
765).

VI
Memoranda by Sonnenberg and
Dr. Conn concerning exchange of
intelligence involving Krupp
works. (USA 766)...

VI
Speech of Hitler to leading mem-
bers of industry before the election
of March 1933. (USA 767).... VI
Statement of Krupp concerning
political organization of state and
economy, 22 February 1933
(USA 768)...

VI
Memorandum, 12 October 1939,
on distribution of propaganda
abroad through foreign connec-
tions of Krupp firm. (USA 769)... VI

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