ment financing by organic and planned reduction of other expenditures not only from the point of receipt, but also from the point of expenditure, that is, by saving.

"How urgent this question is, can be deduced from the following, that a large amount of task has been started by the state and party and which is now in process, all of which are not covered by the budget, but from contributions and credits, which have to be raised by industry in addition to the regular taxes.

"The existing of various budgets side by side, which serve more or less public tasks, is the greatest impediment for gaining a clear view over the possibilities of financing the armaments. A whole number of ministries and various branches of the party have their own budgets, and for this reason have possibilities of incomes and expenses, though based on the sovereignty of finance of the state, but not subject to the control of the Minister of Finance and therefore also not subject to the control of the cabinet. Just as in the sphere of politics the much too far-reaching delegation of legislative powers to individuals brought about various states within the states, exactly in the same way the condition of various branches of state and party, working side by side and against each other, has a devastating effect on the possibility of financing. If on this territory concentration and unified control is not introduced very soon, the solution of the already impossible task of armament financing is endangered.

"We have the following tasks:

"(1) A deputy is entrusted with finding all sources and revenues, which have its origin in contributions to the federal government, to the state and party and in profits of public and party enterprises.

"(2) Furthermore experts, entrusted by the Fuehrer, have to examine how these amounts were used and which of these amounts can in the future be withdrawn from their previous purpose.

"(3) The same experts have to examine the investments of all public and party organizations, to which extent this property can be used for the purpose of armament financing. "(4) The federal Ministry of Finance is to be entrusted to examine the possibilities of increased revenues by way of new taxes or increasing of existing taxes.

"The up-to-date financing of armaments by the Reichsbank

under existing political conditions was a necessity and the political success proved the correctness of this action. The other possibilities of armament financing have to be started now under any circumstances. For this purpose all absolutely non-essential expenditures for other purposes must not take place and the total financial strength of Germany, limited as it is, has to be concentrated for the one purpose of armament financing. Whether the problem of financing, as outlined in this program, succeeds, remains to be seen, but without such concentration, it will fail with absolute certainty." (1168-PS)

C. Renunciation of Armament Provisions of Versailles Treaty. 21 May 1935 was a very important date in the Nazi calendar. It was on that date that the Nazis passed the secret Reich Defense Law (2261-PS). The secrecy of their armament operations had already reached the point beyond which they could no longer maintain successful camouflage. Since their program called for still further expansion, they unilaterally renounced the armament provisions of the Versailles Treaty on the same date, 21 May 1935. Hitler's speech to the Reichstag on that day (2288-PS) was published in "Voelkischer Beobachter" under the heading "The Fuehrer Notifies the World of the Way to Real Peace." Hitler declared:

"1. The German Reich Government refuses to adhere to the Geneva Resolution of 17 May.

"The Treaty of Versailles was not broken by Germany unilaterally, but the well-known paragraphs of the dictate of Versailles were violated, and consequently invalidated, by those powers who could not make up their minds to follow the disarmament requested of Germany with their own disarmament as agreed upon by Treaty.

"2. Because the other powers did not live up to their obligations under the disarmament program, the Government of the German Reich no longer considers itself bound to those articles, which are nothing but a discrimination against the German nation for an unlimited period of time, since, through them, Germany is being nailed down in a unilateral manner contrary to the spirit of the agreement." (2288-PS)

In conjunction with other phases of planning and preparation for aggressive war, there were various programs for direct and indirect training of a military nature. They included not only

the training of military personnel, but also the establishment and training of other military organizations, such as the Police Force, which could be and were absorbed by the Army. The extent of this program for military training is indicated by Hitler's boast of the expenditure of ninety billion Reichsmarks during the period 1933 to 1939, in the building up of the armed forces.

In a speech by Adolf Hitler delivered on 1 September, 1939, (2322-PS), which was published in the "Voelkischer Beobachter" under the heading "The Fuehrer announces the Battle for the Justice and Security of the Reich", the following passage occurred:

"For more than six years now, I have been engaged in building up the German Armed Forces. During this period more than ninety billion Reichsmarks were spent building up the Wehrmacht. Today, ours are the best-equipped armed forces in the world, and they are superior to those of 1914. My confidence in them can never be shaken." (2322-PS)

The secret nature of this training program and the fact of its early development is illustrated by a report to Hess, in 1932, concerning the secret training of flying personnel, as well as the early plans to build a military air force (1143-PS). This report was sent in a letter from Schickedantz to Rosenberg, for delivery to Hess. Apparently Schickedantz was very anxious that no one but Hess should get this letter, and therefore sent it to Rosenberg for personal delivery to Hess. The letter points out that the civilian pilots should be so organized as to enable their transfer into the military air force organization. The letter dated 20 October 1932, reads:

"Dear Alfred [Rosenberg]: I am sending you enclosed a communication from the RWM forwarded to me by our confidential man (Vertrauensmann) which indeed is very interesting. I believe we will have to take some steps so that the matter will not be procured secretly for the Stahlhelm. This report is not known to anybody else. I intentionally did not inform even our tall friend." [Rosenberg, in an interrogation on 5 October 1945, identified this "tall friend" as being Von Albensleben.] "I am enclosing an additional copy for Hess, and ask you to transmit the letter to Hess by messenger, as I do not want to write a letter to Hess for fear that it might be read somewhere. Mit bestem Gruss, Yours Amo." (1143-PS)

Enclosed in the report is:

"Air Force Organization"

"Purpose: Preparation of material and training of personnel

to provide for the case of the armament of the air force.
"Entire management as a civilian organization will be trans-
ferred to Col. Von Willberg, at present commander of Bres-
lau, who, retaining his position in the Reichwehr, is going
on leave of absence.

"(a) Organizing the pilots of civilian air lines in such a way
as to enable their transfer to the air force organization.
"(b) Prospects to train crews for military flying. Training
to be done within the organization for military flying of the
Stahlhelm [steel helmet] which is being turned over to Col.
Hanel, retired.

"All existing organizations for sport flying are to be used
for military flying. Directions on kinds and tasks of military
flying will be issued by this Stahlhelm directorate. The
Stahlhelm organization will pay the military pilots 50 marks
per hour flight. These are due to the owner of the plane in
case he himself carries out the flight. They are to be divided
in case of non-owners of the plane, between flight organiza-
tion, proprietor and crew in the proportion of 10:20:20.
Military flying is now paid better than flying for advertise-
ment (40). We therefore have to expect that most pro-
prietors of planes or flying associations will go over to the
Stahlhelm organization. It must be achieved that equal con-
ditions will be granted by the RWM, also the NSDAP or-
ganization." (1143-PS)

D. Secret Rearmament

The program of rearmament and the objectives of circumventing and breaching the Versailles Treaty are forcefully shown by a number of Navy documents, showing the participation and cooperation of the German navy in this rearmament program which was secret at first. When it was deemed safe to say so, the Navy openly acknowledged that it had always been its objective to break the Versailles Treaty.

In 1937 the Navy High Command (OKM) published a secret book entitled, "The Fight of the Navy Against Versailles, 1919 to 1935", written by Sea Captain Schussler (C-156). The preface refers to the fight of the navy against the unbearable regulations of the peace treaty of Versailles. The table of contents includes a variety of navy activities, such as saving of coastal guns from destruction as required by Versailles; independent armament measures behind the back of the government and behind the back of the legislative bodies; resurrection of the U-boat arm; economic rearmament; and camouflaged rearmament from 1933 to the freedom from the restrictions in 1935. (C-156)

This book points out the significant effect of seizure of power by the Nazis in 1933 on increasing the size and determining the nature of the rearmament program. It also refers to the farreaching independence in the building and development of the navy, which was only hampered insofar as concealment of rearmament had to considered in compliance with the Versailles Treaty (C-156). With the restoration of what was called the military sovereignty of the Reich in 1935-the reoccupation of the demilitarized zone of the Rhineland-the external camouflage of rearmament was eliminated.

This book of the German navy bears the symbol of the Nazi Party, the Swastika, in the spread eagle on the cover sheet, and it is headed "secret", underscored (C-156). Raeder has identified this book in an interrogation and explained that the Navy tried to fulfill the letter of the Versailles Treaty and at the same time to make progress in naval development. The following are pertinent extracts from the book:

"The object and aim of this memorandum under the heading
'Preface', is to draw a technically reliable picture based on
documentary records and the evidence of those who took part
in the fight of the Navy against the unbearable regulations
of the peace treaty of Versailles. It shows that the Reich
navy after the liberating activities of the Free Corps and of
Scapa Flow did not rest, but found ways and means to lay
with unquenchable enthusiasm, in addition to the building
up of the 15,000-man navy, the basis for a greater develop-
ment in the future, and so create by work of soldiers and
technicians the primary condition for a later rearmament.
It must also distinguish more clearly the services of these
men, who, without being known in wide circles, applied
themselves with extraordinary zeal in responsibility in the
service of the fight against the peace treaty; thereby stimu-
lated by the highest feeling of duty, they risked, particularly
in the early days of their fight, themselves and their position
unrestrainedly in the partially self-ordained task. This com-
pilation makes it clearer, however, that even such ideal and
ambitious plans can be realized only to a small degree if
the concentrated and united strength of the whole people is
not behind the courageous activity of the soldier. Only when
the Fuehrer had created the second and even more important
condition for an effective rearmament in the coordination
of the whole nation and in the fusion of the political, finan-
cial and spiritual power, could the work of the soldier find
its fulfillment. The framework of this peace treaty, the