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the danger which menaced us both from Poland and from the Western powers.

Our further incursions into Scandinavia, in the direction of the Mediterranean, and in that of Russia—these also aroused no doubts concerning the general conduct of the war so long as we were successful. It was not until more serious set-backs were encountered and our general situation began to become increasingly acute, that the German people began to ask itself whether perhaps we had not undertaken more than we could do and set our aims too high. To provide an answer to this questioning and to furnish you with certain points of view for use in your own explanatory activities is one of the main points of my present lecture. I shall divide it into three parts:

"I. A review of the most important development up to the present. "II. Consideration of the present situation. "III. The foundation of our morale and our confidence in

victory. "In view of my position as military advisor to the Fuehrer, I shall confine myself in my remarks to the problems of my own personal sphere of action, fully appreciating at the same time that in view of the protean nature of this war, I shall in this way be giving expression only to one side of events.

"1. Review "1. The fact that the National Socialist movement and its struggle for internal power were the preparatory stage of the outer liberation from the bonds of the Dictate of Versailles is not one on which I need enlarge in this circle. I should like however to mention at this point how clearly all thoughtful regular soldiers realize what an important part has been played by the National Socialist movement in reawakening the will to fight [Wehrwillen] in nurturing fighting strength (Wehrkraft) and in rearming the German people. In spite of all the virtue inherent in it, the numerically small Reichswehr would never have been able to cope with this task, if only because of its own restricted radius of action. Indeed, what the Fuehrer aimed at-and has so happily been successful in bringing about—was the fusion of these two forces. “2. The seizure of power in its turn has meant in the first place restoration of fighting sovereignty [Wehrhoheit-conscription, occupation of the Rhineland] and rearmament

with special emphasis being laid on the creation of a modern
armoured and air arm.
“3. The Austrian ‘Anschluss' in its turn, brought with it not
only the fulfillment of an old national aim but also had the
effect both of reinforcing our fighting strength and of ma-
terially improving our strategic position. Whereas up till
then the territory of Czechoslovakia had projected in a most
menacing way right into Germany (a wasp waist in the direc-
tion of France and an air base for the Allies, in particular
Russia), Czechoslovakia herself was now enclosed by pin-

cers.

"Its own strategic position had now become so unfavorable
that she was bound to fall a victim to any attack pressed
home with rigour before effective aid from the West could
be expected to arrive.
“This possibility of aid was furthermore made more difficult
by the construction of the West Wall, which, in contra-dis-
tinction to the Maginot Line, was not a measure based on
debility and resignation but one intended to afford rear cover
for an active policy in the East.
4. The bloodless solution of the Czech conflict in the autumn
of 1938 and spring of 1939 and the annexation of Slovakia
rounded off the territory of Greater Germany in such a way
that it now became possible to consider the Polish problem
on the basis of more or less favourable strategic premises.
“This brings me to the actual outbreak of the present war,
and the question which next arises is whether the moment
for the struggle with Poland-in itself unavoidable—was
favorably selected or not. The answer to this question is all
the less in doubt since the opponent-after all, not incon-
siderable in himself-collapsed unexpectedly quickly, and the
Western Powers who were his friends, while they did de-
clare war on us and form a second front, yet for the rest
made no use of the possibilities open to them of snatching
the initiative from our hands. Concerning the course of the
Polish campaign, nothing further need be said beyond that
it proved in a measure which made the whole world sit up
and take notice a point which up till then had not been cer-
tain by any means; that is, the high state of efficiency of the

young Armed Forces of Great Germany.” (L-172) In this speech General Jodl identifies himself fully with the Nazi movement. His own words show that he was not a mere soldier. Insofar as he is concerned, his speech identifies the military with the political, it also shows the deliberation with which

the Treaty of Versailles was abrogated by Germany and the demilitarized zone of the Rhineland was militarized and fortified.

In one of Adolf Hitler's reviews of the six-year period between his ascendancy to power and the outbreak of hostilities, he not only admitted but boasted about the orderly and coordinated longrange planning. The minutes of conference of the Fuehrer kept by Schmundt, his adjutant, contain the following passage:

"In the period 1933-1939 progress was made in all fields. Our military system improved enormously.”

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"The period which lies behind us has, indeed, been put to good use. All measures have been taken in the correct sequence and in harmony with our aims.(L-79)

B. Economic and Financial Preparations for Aggressive War.

One of the most significant preparations for aggressive war is found in the Secret Reich Defense Law of 21 May 1935 (2261-PS). The law went into effect upon its passage. It stated at its outset that it was to be made public instanter, but at the end of it Adolf Hitler signed the decree ordering that it be kept secret. General Thomas, who was in charge of War Armament Economy and for some time a high ranking member of the German High Command, refers to this law as the cornerstone of war preparations. He points out that, although the law was not made public until the outbreak of war, it was put into immediate execucution as a program for preparations. These statements are made at page 25 of General Thomas' work, "A History of the German War and Armament Economy, 1923-1944.(2353-PS)

This secret law remained in effect until 4 September 1939, at which time it was replaced by another secret defense law (2194-PS) revising the system of defense organization and directing more detailed preparations for the approaching status of "mobilization," which was clearly an euphemism for war.

The covering letter, under which this second Reich Defense Law, was sent to the Ministry for Economy and Labor for Saxony in Dresden, on 6 December 1939, was classified Top Secret and read as follows:

"Transportation Section, attention of Construction Chief
Counsellor Hirches, or representative in the office of the
Reich Protector in Bohemia and Moravia, received Prague,
5 September 1939, No. 274.
“Inclosed please find a copy of the Reich Defense Law of 4
September 1938 and a copy each of the decrees of the Reich
Minister of Transportation, dated 7 October 1938, RL

685964-46-28

10.2212/38, top secret, and of 17 July 1939, RL / LV 1.2173/39, top secret. For your information and observance, by order, signed Kretzchmar. 3 inclosures completed to Dresden, 4 September 1939, signed Schneider 3 inclosures. Receipt for the letter of 4 September 1939, with 3 inclosures, signed 5 September, 1939, and returned to construction

Counsellor Kretzchmar." (2194-PS) Thus the second secret Reich Defense Law was transmitted under top secret cover.

The general plan for the breach of the Treaty of Versailles and for the ensuing aggressions was carried out in four ways: (1) secret rearmament from 1933 to March 1935; (2) the training of military personnel (that includes secret or camouflage training); (3) production of munitions of war; (4) the building of an air force.

The facts of rearmament and of secrecy are self-evident from the events that followed. The significant phase of this activity lies in the fact that it was necessary in order to break the barriers of the Treaty of Versailles and of the Locarno Pact, and to make ready for aggressive wars which were to follow.

Those activities by their nature and extent, could only have been for aggressive purposes. The highest importance which the German government attached to the secrecy of the program is emphasized by the disguised methods of financing utilized both before and after the announcement of conscription, and the rebuilding of the army, on 16 March 1935.

The point is illustrated by an unsigned memorandum by Schacht dated 3 May 1935, entitled, "The Financing of the Armament program, “Finanzierung der Ruestung." (1168-PS) It is not signed by Schacht, but in an interrogation on 16 October 1945, he identified it as being his memorandum. The memorandum reads as follows:

“Memorandum from Schacht to Hitler [identified by Schacht
as Exhibit A, interrogation 16 October 1945, page 40) May
3, 1935.
"Financing of Armament. The following explanations are
based upon the thought, that the accomplishment of the
armament program with speed and in quantity is the prob-
lem of German politics, that everything else therefore should
be subordinated to this purpose as long as the main purpose
is not imperiled by neglecting all other questions. Even after
March 16, 1935, the difficulty remains that one cannot un.
dertake the open propagandistic treatment of the German
people for support of armament without endangering our po-

sition internationally (without loss to our foreign trade). The already nearly impossible financing of the armament program is rendered hereby exceptionally difficult. "Another supposition must be also emphasized. The printing press can be used only for the financing of armament to such a degree, as permitted by maintaining of the money value. Every inflation increases the prices of foreign raw materials and increases the domestic prices, is therefore like a snail biting its own tail. The circumstance that our armament had to be camouflaged completely till March 16, 1935, and even since this date the camouflage had to be continued to a larger extent, making it necessary to use the printing press (bank note press) already at the beginning of the whole armament program, while it would have been natural, to start it (the printing press) at the final point of financing. In the portefeuille of the Reichsbank are segregated notes for this purpose, that is, armament, of 3,775 millions and 866 millions, altogether 4,641 millions, out of which the armament notes amount to Reichsmarks 2,374 millions, that is, of April 30, 1935. The Reichsbank has invested the amount of marks under its jurisdiction, but belonging to foreigners in blank notes of armament. Our armaments are also financed partly with the credits of our political opponents. Furthermore, 500 million Reichsmarks were used for financing of armament, which originated out of [Reichsanleihe], the federal loans, placed with savings banks. In the regular budget, the following amounts were provided. For the budget period 1933-34, Reichsmarks 750 millions; for the budget period 1934-35, Reichsmarks 1,100 millions; and for the budget period 1935-36, Reichsmarks 2,500 millions. “The amount of deficits of the budget since 1928 increases after the budget 1935-36 to 5 to 6 millions Reichsmarks. This total deficit is already financed at the present time by short term credits of the money market. It therefore reduces in advance the possibilities of utilization of the public market for the armament. The Minister of Finance [Reichsfinanzminister), correctly points out at the defense of the budget: As a permanent yearly deficit is an impossibility, as we cannot figure with security with increased tax revenues in amount balancing the deficit and any other previous debits, as on the other hand a balanced budget is the only secure ba. sis for the impending great task of military policy. For all these reasons we have to put in motion a fundamental and conscious budget policy which solves the problem of arma

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