From Funk's IMT testimony: I wanted to clarify the position, but later it was not clarified in that sense but in the sense that I was dependent upon the directives of the Reich Marshal. I wrote this letter in order to try to obtain a clarification, but I do not remember this letter in detail ... I was never successful . . . . I tried at that time to achieve that post, but in fact I never succeeded because the Reich Marshal himself stated later that he would never turn over the war economy to me. The formal authority of the Plenipotentiary for Economy was turned over to the Four-Year Plan by a decree of the Führer of December 1939.April 27, 1938: From a letter from the OKW concerning its interpretation that the decree of the Fuehrer of 4 February 1938 does not correspond to the necessities of total warfare:
From Funk's IMT testimony: I do not know this letter either. I do not know the attitude of the OKW but I do know this: The OKW, especially the Codefendant Field Marshal Keitel, was of the opinion at that time that I, as Plenipotentiary General for War Economy, should assume the authority and competence of Schacht; but there was a conversation between the Reich Marshal and Field Marshal Keitel—Keitel confirmed this to me—in which the Reich Marshal clearly declared; "The war economy will not be turned over to Funk." I can honestly and sincerely say that I did not have the slightest idea of all these things. I did not know what kind of position the OKW intended me to have. I never had that function because the administration for the armaments industry was never included in the Ministry of Economics. I do not remember the matter.May 28, 1938: Hitler calls a conference of his principal military and political advisers in the winter garden of the Reichs Chancellery in Berlin.
From Funk's IMT testimony: I was never called into political and military discussions, and I did not participate in any of these discussions which were mentioned here in connection with the charge of planning an aggressive war, so far as discussions with the Führer are concerned. I was also not informed about the contents of these discussions. And as far as I can remember, I was hardly ever present at the discussions with the Reich Marshal, when they dealt with this topic.
I have been confronted here with a meeting which took place in October of 1938 ... that was the meeting in which, according to the indictment against me, Göring pointed out that he had been instructed by the Führer to increase armament to an abnormal extent. The Luftwaffe was to be increased fivefold, as speedily as possible.
The Prosecutor, according to the official record (volume V, Pages 163, 164), asserts that, in this discussion, Göring addressed me in the words of a man who was already at war. I was not even in Germany those days but in Bulgaria, and consequently I could not participate in this meeting. I have the document here. If this record had been submitted to me I would have affixed my initials "W. F." to it. Besides, this document deals with the continuous discussions, which I have already mentioned, about the financing of the war, and the measures to be taken in the field of civilian economy in case of a war. The Reich Minister of Finance naturally prepared the decisive measures for the financing, and these measures were discussed at length in this conference at which the question of meeting the expenses through taxes was one of the chief topics. In any event, a variety of such discussions was carried on continuously at that time among the representatives of the various departments, and they took place in the office of the leading staff of the Plenipotentiary for Economy. By chance I have now found this name which earlier I could not remember: this was the institution—the committee—which was founded in the days of Schacht and was later continued.
From Funk's IMT testimony: On the morning of 9 November, on my way from my home to the Ministry, I saw for the first time what had taken place during the night. Before that I had not had the slightest hint that such excesses and terror measures had been planned. I only found out about that later ... I believe very much later. Later on there was much discussion about this matter and it was never clear just who had been the instigator of these measures of terror and violence and where the order had originated. We knew that it had come from Munich. We had learned that in the meantime on 9 November; but, whether it was Goebbels or Himmler, and to what extent the Führer himself participated in this measure, I was never able to find out clearly. From my telephone conversation with Goebbels, which I mentioned today, one thing was clear: The Führer must have known about this matter, for he told me that the Führer had decreed, and Göring also said this, that the Jews were completely to be eliminated from economic life. From this I had to conclude that the Führer himself knew about this matter.
I did not know that [Kristallnacht was not a spontaneous uprising] at the time. At that time I still believed that it was really something favored by large elements of the population. Very much later I found out that routine machinery had been put in motion. At that time I did not know who had started this regime of terror and how it had been carried through; that was entirely new to me.
From Funk's IMT testimony: May I ask the Tribunal to give me time for a rather detailed account on this topic. Then the points that we will treat later can be dealt with much more briefly. This is the charge of the Prosecution that really affects me most gravely.
When I took over the Ministry of Economics in February 1938, I very soon received demands from the Party, and especially from Goebbels and Ley, to eliminate the Jews from economic life, since they could not be tolerated. I was told that people were still buying in Jewish stores, and that the Party could not permit its members to buy in such stores; the Party also took offense at the fact that some high state officials, and in particular their wives, were still shopping in such stores. The sectional chairmen of the Labor Front refused to work with Jewish managers. There were constant clashes, I was told, and there would be no peace if the measures that had already been introduced here and there were not extended gradually to eliminate the Jews completely from economic life.
The Law for the Organization of National Labor, which was decreed under my predecessors and which was also carried through by them in agreement with the German Labor Front, had assigned political and Party functions also to domestic economy. The plant manager was also responsible to the Party and above all to the State.
Some Jewish managers readily succumbed to the pressure and sold their businesses and enterprises to people and at prices of which we did not approve at all. I had made private agreements with individual Jewish leading men in banking, heavy industry and the big stores, and had thus brought about their withdrawal from positions in economic life. There was no peace, and we had to try within a certain time and in line with certain legal decrees to force back and gradually eliminate Jewish influence from economic life. In this connection, I personally always represented the view that, first of all, the process should be carried out slowly, with intervals of time; secondly, that the Jews should be given adequate compensation, and thirdly, that one might leave certain economic interests in their hands, especially their security holdings; and I particularly emphasized this in the meeting with Goering which has been mentioned here so frequently.
Now while these developments were taking shape, the terrible happenings of the night of 9-10 November 1938, originating in Munich, burst upon us and affected me personally very deeply. When I drove to my ministry on the morning of 10 November, I saw on the streets and in the windows of the stores the devastation that had taken place and I heard further details from my officials in the Ministry. I tried to reach Göring, Goebbels, and I think Himmler, but all were still traveling from Munich. Finally I succeeded in reaching Goebbels. I told him that this terror was an affront against me personally, that through it valuable goods which could not be replaced had been destroyed, and that our relations with foreign countries, upon which we were particularly dependent at this time, would now be disturbed noticeably.
Goebbels told me that I personally was responsible for this state of affairs, that I should have eliminated the Jews from economic life long ago, and that the Führer would issue an order to Reich Marshal Göring according to which the Jews would have to be completely eliminated from economic life; I would receive further details from the Reich Marshal. This telephone conversation with Goebbels was confirmed by him later, and witnesses will verify this.
The next day, 11 November, I was informed that there was to be a meeting on the 12th with Goering in his capacity as Delegate for the Four-Year Plan, for the purpose of settling the Jewish problem. The Delegate for the Four-Year Plan had given instructions to the Ministry to prepare a draft for a decree which was to be the basis of laws for the elimination of the Jews from economic life.
On the 12th this meeting, which has been discussed here frequently, took place. There was a discussion with the Reich Marshal in the morning at which the Gauleiter were present. The Reich Marshal was highly excited; he said that he would not tolerate this terror and that he would hold the various Gauleiter responsible for what had happened in their Gau.
After this meeting I was therefore comparatively relieved, but at the meeting, of which the record has been read here several times, Goebbels very soon produced his very radical demands and thereby dominated the whole of the proceedings.
The Reich Marshal became increasingly angry and in this mood he gave way to the expressions noted in the record. Incidentally, the record is full of gaps and very incomplete. After this meeting it was clear to me that now indeed the Jews would have to be eliminated from economic life, and that in order to protect the Jews from complete loss of their rights, from further terror, attacks, and exploitation, legal measures would have to be decreed. I made provisions, and so did the Minister of Finance, the Minister of the Interior, the Minister of Justice, and so on, for the execution of the original decree of the Delegate for the Four-Year Plan in which the transfer of Jewish businesses and Jewish shares to trustees was stipulated.
The Jews were compensated by 3 percent bonds, and I always saw to it that, as far as the Ministry of Economics was involved in this, this decision was carried out faithfully and according to the law and that the Jews did not suffer further injustice. There was at that time certainly no talk of an extermination of the Jews. However, a plan for the organized emigration of the Jews was briefly discussed at that meeting. I personally did not participate in any way in the terrorist, violent measures against Jews. I regretted them profoundly and sharply condemned them. But I had to authorize the measures for the execution of those laws in order to protect the Jews against a complete loss of rights, and to carry through in an orderly manner the legal stipulations which were made at that time . . . .
I had thought, up to the time of that conference, that the Jews could keep their securities; and in the course of the conference I said that it was quite new to me that the Jews should also surrender the securities they possessed. Ultimately they got 3 percent government bonds in settlement, but they had to hand over all their shares and other interests. I was also against a ruling of that kind because the Government would then take over a huge number of securities and the conversion of such securities was of course difficult.
I was against ghettos for the simple reason that I considered a ghetto a terrible thing. I did not know any ghettos, but I said that 3 million Jews can surely live among 70 million Germans without ghettos. Of course, I said that the Jews would have to move together more closely, and one would have to assist the other, for it was clear to me, and I also said so during the conference, that the individual Jew could not exist under the conditions which were now being created for him. I merely attempted to have certain things put through in order to save something for the Jews, for example, their securities and stocks. Then I managed to have the stores reopened, so that things would move less rapidly, and I did more, too.
From Funk's IMT testimony: Never in all my life, orally or in writing, have I demanded an extermination or annihilation of the Jews or made any statement to that effect. Apparently this is an utterance of the Prosecutor, which, in my opinion, is based only on imagination or the state of mind in which he has viewed the things from the beginning. I myself have never advocated the extermination of the Jews and I did not know anything of the terrible happenings that have been described here. I did not know anything. I had nothing to do with them; and afterwards, as far as I recall, I never took part in any measures against the Jews, since these matters were no longer dealt with in my departments. With the exception of these legal measures, these executive orders, I do not believe that within my departments I ever again authorized anything further connected with Jewish affairs . . . .
I saw to it that these directives were followed in a fair way and according to the laws. However, the carrying out of these decrees was the responsibility not of the Ministry but of the district president and of the offices dependent on the Gauleiter in the Reich. Many complaints reached me about the manner in which Aryanization was carried out, and my officials will confirm that I intervened in every case when I was informed of such abuses. I even dismissed an official of that department when I heard of incorrect behavior; later I also parted with the department head ... because these abuses had occurred. Just as previously I had done everything in my power to aid the Jews to emigrate by making foreign currency available to them, so now, in carrying out these directives, I did everything in my power within the scope of possibility to make things bearable for the Jews . . . .
I based [my statement that Kristallnacht was a spontaneous uprising] on the attempted assassination of—I do not know who he was, some attaché in Paris—and actually the attempt caused much agitation. There is no doubt of it. But I did not know that that is what took place. I admit that I knew that an impulse had come from some office or other.
From Funk's IMT testimony: But the decrees had to be issued. I have already emphasized that several times here. I had no pangs of conscience because the decrees were issued. I had pangs of conscience because of the reasons for them.December 3, 1938: Funk again advances the policy of economic extermination by signing a decree which carries out the promise of the more severe anti-Jewish policy implied in his November 17, 1938 speech [http://avalon.law.yale.edu/imt/1409-ps.asp]. This decree imposes additional and drastic economic disabilities upon Jews and subjects their property to confiscation and forced liquidation. It provides that: owners of Jewish enterprises could be ordered to sell or liquidate their enterprises (Section 1); trustees could be appointed for such enterprises, with the expenses of trusteeship borne by the owner of the enterprise (Section 2); Jews could be ordered to sell their property (real estate, etc.) (Section 6); Jews are prohibited from acquiring any real estate (Section 7); governmental consent is required for any disposition of real estate (Section 8); Jews are forced to deposit all stocks, mining shares, bonds, and other securities with specially designated banks, and accounts have to be marked "Jewish" (Section 11); Jews are forbidden to acquire, to give as security, or to sell objects made of gold, platinum, or silver, precious stones, or pearls, etc. (Section 14); and Jews could be required to make certain payments to the Reich before receiving the consent necessary for the transfer of their property (Section 15).
From Funk's IMT testimony: I have never seen that letter, and never signed it. But that letter belongs to the matters about which I spoke this morning. The office of the Plenipotentiary for Economy--moreover, I see "Plenipotentiary for War Economy" is scratched out--was continuously occupied with these things. I personally had nothing to do with it ... it is signed "By Order: Sarnow." He [Sarnow] only worked in the office of the Plenipotentiary General. My main deputy, who was in charge of those things, was Dr. Posse. As I have said before, I personally had nothing to do with these things whatsoever . . . .
The reason [that the title of my office—that is, Plenipotentiary for War Economy—was changed] was that according to the old Reich Defense Law, Schacht had been appointed Plenipotentiary for War Economy, and on the basis of this second Reich Defense Law, which appointed me, I was appointed Plenipotentiary for Economy, because at that time it was quite clear that the special tasks concerning war economy—that is to say, armament industry, war economy proper—could no longer remain with the Plenipotentiary for Economy, but that he had essentially to co-ordinate the civilian economic departments.
From the post-war interrogation of Hans Posse, formerly State Secretary in the Ministry of Economics and Deputy Plenipotentiary for Economy:
Q: Dr. Posse, is it correct that the office of Plenipotentiary for Economy was established to the final end of uniting all economic functions with a view to the preparation for war?"
A: The purpose was what I have just said-to co-ordinate the various conflicting economic interests. But there was no talk about the preparation for war . . . . It is correct that the aim, was to co-ordinate all economic questions, but the purpose was not to prepare for war. Of course, if war preparation should become necessary, it was the task of the Plenipotentiary for Economy to concern himself with these questions and to act as a coordinator . . . . We never knew anything about the international situation and we never heard anything about it, and if the international situation was mentioned in our discussions we could always voice merely our personal opinions . . . . We always hoped that there would be no war.
From Funk's IMT testimony: Herr Posse was an old, sick man, whom I had put in this post. He was formerly State Secretary under Schacht, and when I took over the ministry, I received a new State Secretary through Goering who, unfortunately, later became insane. And then State Secretary Dr. Landfried came to me, and Posse, who formally was still in the Ministry of Economics as State Secretary, was without a job. Therefore I made him an executive officer attached to the Plenipotentiary for Economy.
Here, of course, he had constant difficulties from the very beginning. The High Command of the Armed Forces or the War Economy Staff wanted to reduce the authority of the Plenipotentiary, as can be seen from the letter which was presented yesterday. And the civilian economy department did not want to follow his directives because they already had been subordinated to and had to follow the directives of the Delegate for the Four-Year Plan. Therefore, as a matter of fact, that unhappy Plenipotentiary for Economy held a post which to all intents and purposes existed only on paper . . . . I have said repeatedly that until the end I did not believe that there would be a war, and the same is true of my colleagues, and everyone who spoke to me at that time will corroborate this. Herr Posse was, of course, still less informed about political and military events than I was. Consequently, that also applies to him.
From Hans Heinrich Lammers' IMT testimony: That decision [to appoint Funk President of the Reichsbank] was the Führer's. The way it happened in practice was that the Minister of Finance submitted the application for a credit. That was done in duplicate. One letter with the appropriate order was directed to the Reich Minister of Finance, and the second letter with such an order was addressed to the President of the Reichsbank. All I received were those two documents from the Finance Minister. It was entirely a matter of having them signed. They were signed in one second by the Fuehrer and then they were sent back. I never had an order to negotiate with Herr Funk or with Herr Schacht or with the Minister of Finance. It was entirely a matter of having them signed, nothing else. The instructions were signed by the Führer.
From Funk's IMT testimony: I had just returned from a journey about the middle of January 1939. I was called to the Fuehrer and found him in a state of great agitation. He told me that the Reich Minister of Finance had informed him that Schacht had refused the necessary financial credits and that consequently the Reich was in financial straits. The Führer told me, in great excitement, that Schacht was sabotaging his policies, that he would not tolerate the Reichsbank’s interference with his policies any longer and the gentlemen in the Reichsbank Directorate were utter fools if they believed that he would tolerate it. No government and no chief of state in the world could possibly make policy dependent on co-operation or non-co-operation of the issuing bank.
The Führer further declared that from now on he himself, on the suggestions and demands of the Reich Minister of Finance, would fix all credits to be given by the Reichsbank to the Reich. He had given Lammers instructions to formulate a decree, together with the Reich Minister of Finance, by which the status of the Reichsbank, as established by the provisions of the Treaty of Versailles, would be changed, and whereby the terms for the granting of credits to the Reich would be determined by himself alone in the future.
The Führer further said that he was asking me to take over the direction of the Reichsbank, whereupon I replied that I would be glad to comply with his wish, but that first of all I had to have confirmation from him that the conditions for stabilization of currency would be maintained.
The opinion, which was voiced here by a witness, that inflation would be brought about through a further grant of credits at that time is wrong and totally untenable. Although 12,000 millions of credit can have an inflationary effect, 20,000 millions of credit will not necessarily tend toward inflation if the state has the necessary authority to stabilize prices and wages and to carry out the regulation and administration of prices, and if the people maintain the proper discipline in this respect, and if, finally, the money which as a result of increased credits represents excess purchasing power is diverted through taxes or taken up through loans; then, as far as the currency is concerned, there is absolutely no danger.
It is a fact that the Reichsmark, up to the final collapse, was kept on a stable basis. As far as the essentials of life are concerned, the purchasing power of money in Germany was secure. Of course, its value was limited insofar as consumers' goods were produced only on a very limited scale, for almost all production was turned over to armaments.
In other countries as well, large credits were issued during the war which did not in any way cause an inflation. The national debt in the United States as well as in England was relatively, and in part even absolutely, higher than that in Germany. And in these countries, too, a correct financial policy overthrew the old thesis that a war would, of necessity, bring about the destruction of the monetary value.
The German people, up to the very end, until the terrible collapse, maintained admirable discipline. Money as a function of the state will have its value and currency will function so long as the state has authority to maintain it on a stable basis, to keep the economy under control, and as long as the people themselves maintain the necessary discipline.
Thus I took over this office not with the knowledge that Germany was now entering an inflation period but, on the contrary, I knew well that through maintenance of a suitable governmental policy the currency could be protected, and it was protected. However, the basic difference between Schacht's position and my position lay in the fact that during Schacht's time the Reichsbank could determine the granting of credits to the Reich, whereas this authority was taken from me, and the responsibility for domestic finances, therefore, was turned over to the Minster of Finance or of course to the Führer himself . . . .
The gold reserve which I took over amounted to about 500 million Reichsmark when I received the post of Schacht. It was increased in any substantial manner only by the Belgian gold, as far as I know. Only by changing foreign currency into gold, and then, after I took over the post, we got in addition the gold reserve of the Czech National Bank. But we mainly increased our reserve through the Belgian gold. It was very difficult to pay in gold. Because the countries with which we still had business relations introduced gold embargoes. Sweden refused to accept gold at all. Only in Switzerland could we still do business through changing gold into foreign currency.
From Inside the Third Reich by Albert Speer: Walter Funk, who was both Minister of Economics and president of the Reichsbank, told stories about the outlandish pranks that his vice president, Brinkmann, had gone on performing for months, until it was finally realized that he was mentally ill. In telling such stories Funk not only wanted to amuse Hitler but to inform him in this casual way of events which would sooner or later reach his ears. Brinkmann, it seemed, had invited the cleaning women and the messenger boys of the Reichsbank to a grand dinner in the ballroom of the Hotel Bristol, one of the best hotels in Berlin, where he played the violin for them. This sort of thing rather fitted in with the regimes propaganda of all Germans forming one "folk community." But as everyone at the table laughed, Funk continued: "Recently he stood in front of the Ministry of Economics on Unter den Linden, took a large package of newly-printed banknotes from his briefcase—as you know, the notes bear my signature—and gave them out to passers-by, saying: "Who wants some of the new Funks?"' [Note: There is a pun (Funken = sparks?) somewhere in Funks hilarious-to-a-German punch-line, but the pun just doesn't seem to translate into American English.]
Shortly afterwards, Funk continued, the poor man's insanity had become plain for all to see. He called together all the members of the Reichsbank. "Everyone older than fifty to the left side, the younger employees to the right." Then, to one man on the right side: "How old are you?"—"Forty-nine, sir."—"You go to the left too. Well now, all on the left side are dismissed at once, and what is more with a double pension." Hitler's eyes filled with tears of laughter. When he had recovered, he launched into a monologue on how hard it is sometimes to recognize a madman.
From Funk's pre-trial interrogation:
Q: All the decrees excluding the Jews from industry were yours, were they not?
A: So far as my participation in this Jewish affair is concerned, that was my responsibility and I have regretted it later on that I ever did participate. The Party had always brought pressure to bear on me previously to make me agree to the confiscation of Jewish property, and I had refused repeatedly. But later on, when the anti-Jewish measures and the force used against the Jews came into force, something legal had to be done to prevent the looting and confiscation of all Jewish property.
Q: You know that the looting and all that was done at the instigation of the Party, don't you?
A: [Weeping] Yes, most certainly. That is when I should have left in 1938, of that I am guilty, I am guilty. I admit that I am a guilty party here.
From Funk's IMT testimony: I had at that time [the time of the interrogation] just been brought from hospital into prison. I did not know before that I had been accused of being a murderer and a thief and I do not know what else. I was sick for 9 or 10 weeks, and from the hospital bed I was brought here during the night. During those days my interrogations here started immediately. I must admit that the American officer who interrogated me, Colonel Murrey Gurfein, conducted the interrogation with extreme consideration and forbearance and again and again called a halt when I was unable to go on. And when I was reproached with these measures of terror and violence against the Jews I suffered a spiritual breakdown, because at that moment it came to my' mind with all clearness that the catastrophe took its course from here on down to the horrible and dreadful things of which we have heard here and of which I knew, in part at least, from the time of my captivity.
I felt a deep sense of shame and of personal guilt at that moment, and I feel it also today. But that I issued directives for the execution of the basic orders and laws which were made, that is no crime against humanity. In this matter I placed the will of the State before my conscience and my inner sense of duty because, after all, I was the servant of the State. I also considered myself obliged to act according to the will of the Führer, the supreme Head of the State, especially since these measures were necessary for the protection of the Jews, in order to save them from absolute lack of legal protection, from further arbitrary acts and violence. Besides, they were compensated and, as can be seen from the circular letter which you have just quoted, I gave strict instructions to my officials to carry out these legal directives in a correct and just way.
It is terribly tragic indeed that I in particular am charged with these things. I have said already that I took no part in these excesses against the Jews. From the first moment I disapproved of them and condemned them very strongly, and they affected me personally very profoundly. I did everything, as much as was within my power, to continue helping the Jews. I never thought of an extermination of the Jews, and I did not participate in these things in any way.
From Funk's IMT testimony: I said this morning that I had a deep sense of guilt and a deep sense of shame about the things which were done to the Jews in Germany, and that at the time when the terror and violence began I was involved in a strong conflict with my conscience. I felt, I could almost say, that a great injustice was being done. However, I did not feel guilty in respect to the Indictment against me here, that is, that according to the Indictment I was guilty of Crimes against Humanity because I signed the directives for carrying out laws which had been issued by superior offices—laws that had to be made so that the Jews would not be entirely deprived of their rights, and so that they would be given some legal protection at least in regard to compensation and settlement. I am admitting a guilt against myself, a moral guilt, but not a guilt because I signed the directives for carrying out the laws; in any event not a guilt against humanity.June 1, 1939: From a letter from the Chief Plenipotentiary for Economics Funk, signed on his behalf by Dr. Posse, containing the minutes of a meeting concerning the financing of the war. This meeting had been held under the chairmanship of Dr. Landfried, Funk's Undersecretary in the Reich Ministry of Economics. The document bears a marginal note in the bottom left hand corner, dated 5 June, stating that the document was "to be shown to the Minister" [i.e., Funk]. Only eight copies were made of the Minutes, which were marked "Top Secret". Four of these copies were sent to officials directly subordinate to Funk (two in the Reich Ministry of Economics, one in the Reichsbank and one in the Office of the Chief Plenipotentiary for Economics). During the course of the meeting, which was attended by twelve officials, five of whom were directly responsible to Funk in his various capacities, the conferees discussed a memorandum regarding war finance that had been prepared by the Chief Plenipotentiary for Economics on 9 May 1939. The minutes of this meeting state:
From Funk's pre-trial interrogation:
A. First, that I wasn't in Berlin at all during July. In July I was undergoing treatment because of my diabetes in Kissingen. And as far as I remember I came back from there at the beginning of August, so that all these discussions could only have taken place as late as August. Further, I remember the following: some time about the middle of August I lunched with the Führer, together with al lot of other people. During the lunch, the tension with Poland was discussed. After the lunch the Führer told me that he had put proposals to Poland regarding Danzig and the Corridor, and that he was under the impression that the Poles would accept these proposals. But that it was also possible that the Poles, under the protection of the British guarantee, would become more hostile towards us.
And during that discussion I briefly explained to the Führer that in the event of such a war it would be important that prices and wages and finances were controlled in such a manner that the banks of issue would exert their influence by means of war taxes and that it now became clear to me what the passage in this letter refers to, namely, that I had already talked with the Führer about that matter. And that must have been before my birthday, that is to say the 15th or 16th of August, since he did not set forth congratulations to my birthday in that letter. My birthday is on the 18th of August. Therefore I can imagine that I may have told the Führer—although I cannot remember exactly that I proposed to talk to Göring about these matters, since he was responsible in that respect.
Since furthermore Göring informed me or had me informed that he discussed these matters with the Führer, probably via Neumann, and that the Führer was in agreement with my plans. It is probable, therefore, that the Führer has discussed, probably in the presence of Neumann, these civil economic questions and particularly the points referring to prices, wages, etc. And furthermore, Göring would have reported to the Führer on the subject and would have had me informed probably through Neumann that I should occupy myself with these questions. Any nomination for the plenipotentiary of economy did not take place before the 28th of August, something which I gathered from the indictment. Subsequently it is probable, and I seem to remember that I have had conversations with Goering on the subjects, and I remember one conversation during which Neumann was also present. And on that occasion Goering gave me the task to negotiate with my ministerial colleagues in accordance with my own proposals.
Q. So that just to clarify it, when you say Hitler, as you say, in the middle of August, Hitler told you if he could not succeed by negotiation with the Poles in effect that he would have to attack them; is that correct?
A. I wouldn't put it precisely like that, but in any case he must have expected the possibility of a war.
Q. And that is what he told you in effect, that you were to take part in the preparation of this war?
A. No, but that the proposals that I had mentioned to him referring to prices, wages, etc., should be discussed between Göring and myself.
Q. But when the Führer told you that war was likely to come you volunteered the suggestion that you ought to get up a plan for the control off wages and prices; is that that right?
A. That is correct, yes, and that is the explanation for the wording of the letter referring to my proposals. That refers to the conversation with the Führer. That has now come back to me. That was about the middle of August, which was the last time I saw him before the actual outbreak of the war.
Q. So that you were a man who always felt that you could not successfully prosecute a war without internal control of the economy by way of price and wage regulations?
A. Yes, certainly. If a war was to break out, price and wage control were necessary, and these things would have to be fixed to prevent the Reichsbank form having to meet considerable expenditure right away. The Minister of Finance had prepared these war measures separately from me already. He was proposing a simply colossal taxation for that event, which appeared quite unnecessary to me, and I said if he introduced it everybody would go bankrupt.
Q. How long before that were these tax plans made before the contingencies of war?
A. That was all around about the same time.
Q. And that was part of the program that you were coordinating for Hitler?
A. Yes, that was part of it; that was included in the points. And subsequently from that the Minister of Finance had mad similar preparation, which in my opinion went much too far.
Q. So that in effect you were urging upon the Führer a total preparation for war, and you were in effect preparing for the war itself, within your own sphere?
A. Well, I don't know about total war; we are only concerned here with the war against Poland.
Q. You don't understand me. When I say total war I mean the total regimentation of the economy for war.
A. Yes; and the fact that I was against such far-reaching measure as proposed by the Minister of Finance can be explained from my conviction that I did not think that there would be a war, but that I was thinking simply of a war against Poland, because if one was of the opinion that a world war was about to break out the preparation would have been quite different.
Q. Yes, but that means that you thought that you could have a war against Poland without the other powers interfering; is that right?
A. Yes, certainly. And that was my personal conviction and everyone else's that England would not start a war for the sake of Danzig.
Q. And also you did not consider it to be excluded that the Poles would resist any diplomatic attempt to get Danzig, and that it might be necessary to attack them?
A. Yes, but the Führer said during that lunch that he thought that the Poles would accept those proposals regarding Danzig, which in fact were eventually made to the Poles.
Q. Yes, but also said that I the event he could not succeed diplomatically he would have to go into a war?
A. Well, he himself didn't say that, but it was my own personal opinion that in the event of failure of political efforts of war against Poland being inevitable; he himself never said that.
Q. Why did you think that?
A. Because the situation in Poland deteriorated from day to day, which was later on confirmed by people coming back from Poland. I myself had relations there, and the conduct of the Poles was unforgivable.
Q. So that you felt you would have to, if they did not agree peaceable, to force them by arms to get rid of this situation?
A. Yes, because the Poles carried things so far that we in Germany no longer had any other possible way. And after all, Germany at that time was already a very powerful country. You can't take just everything from the Poles.
Q. You mean you could not take insult form the Poles?
A. After all, Germany could only condone this sort of thing up to a point, and there were incidents at the frontier when Germans were massacred; they had their noses and ears cut off.
Q. You knew at that time that German propaganda said for a long time that it had been going on all summer?
A. Yes, but it was far later on confirmed by Germans, in fact by my own relatives who were living in Conetz in Poland, just how the Poles treated the Germans there and what dreadful things they committed against them.
Q. So you agree with Hitler that the only think to do was liquidate the Polish problem, and if it could not be done by diplomacy it should be done by force of arms; is that right?
A. Yes, but I didn't actually make the statement on the subject because I didn't have the authority to discuss that sort of thing with the Führer. But it was my own conviction that that was the action which events would have to take.
Q. But the effect of the conversation that you yourself related with the Führer, as you say, in the middle of August 1939 was to cause you immediately to tell the Führer what economic preparations should be made for war?
A. Yes, because that was my duty. If war was about to break out then one had to make the necessary preparations.
Q. Yes, but you wouldn't have been afraid to tell the Führer any such thing if the Führer told you that he was going to get a peaceful settlement? How could you suddenly tell him you were going to prepare for war?
A. No, because one also had to tell him that certain preparations had to be made in the event of a war.
Q. But you just told us you couldn't speak about such matters with the Führer.
A. No, but one had to tell the Führer that in the event of an outbreak of war that these, that, and those measures had to be taken for such an emergency.
Q. But that means you felt that you were the one that decided that war was likely to come, and that Hitler gave you no such intimation. How could that be?
A. Well, no, I personally, and everybody else I knew, was convinced that the solution to the problem could be found in the diplomatic field, but if this should fail it was our duty and my personal duty to see to this, that should war break out that necessary economic preparations were made.
Q. But it wasn't for you to suggest to the Führer, was it?
A. Well, no. If one discusses that sort of thing with the Führer, and he suggests that the diplomatic effort would succeed whilst on the other hand the possibility of a conflagration cannot altogether be excluded, then it was the duty of the Minister of Economy to put before the Führer such economic measures as I considered necessary.
Q. Only because you thought that war was imminent?
A. Not because I thought so, but because I visualized that possibility.
Q. And the possibility, as you said, was because the British might intervene?
A. No; because the Poles, under protection of British guarantee, refused to be reasonable and forced us into war.
Q. Now, in connection with the events I asked you about in 1941, put your mind back on that for a moment, will you. Do you remember you said that you knew about the likelihood of an attack upon Russia in June or July of 1941?
A. Well, the fact that there was a threat of war against Russia was known to me in May and June 1941?
From Göring's IMT testimony: Just as military mobilization, or rather mobilization preparations have to be kept up to date and have to keep pace with the political situation—whether it be tense or relaxed, or when it changes—economic matters also, as I mentioned in my concluding remarks yesterday, have to keep pace in the same way. Thus, I ordered thorough preparations for mobilization in this field also. In the matters of foreign exchange and finance it was the duty of the president of the Reich Bank, as of the Reich Economics Ministry, in economic matters to make all preparations which would put me in the position, in the event of war, of having the utmost security for the German people in the economic field as well. At what time exactly I ordered this I cannot tell you, for it was a general basic directive which was always in effect. I can no longer remember in detail now [what powers Funk had in the issuing of regulations]. The general directive he received from me. How far and to whom he, proceeding from this directive, issued departmental instructions in his special field in the occupied territory, I cannot say in detail; but they always resulted from my personal responsibility.
From Funk's IMT testimony: In Schacht's time there existed an office for the Plenipotentiary General for Economy, and a working committee was set up which consisted of the representatives of the various economic departments, as well as of the Ministry of the Interior, the Plenipotentiary for Administration, the OKW, and above all, of the Four-Year Plan.
When Schacht resigned, the direction of this committee and of the office of the Plenipotentiary for Economy was transferred to Dr. Posse, his former State Secretary, whereas under Schacht State Counselor Wohlthat had headed the office and the committee. These people, of course, had constant consultations, in which they discussed measures necessary in the economic sphere for waging war. And this was the organization of the Plenipotentiary for Economy that I dealt with in my speech in Vienna which had been mentioned here. It existed alongside the Four-Year Plan, and in the main was charged with a smooth conversion of the civilian economy into a war economy in the case of war, and with the preparation of a war economy administration.
When, in August of 1939, there was a threat of war with Poland, I called together the chiefs of the civil economic departments, as well as the representatives of the Four-Year Plan, and, in joint consultation, we worked out measures necessary for converting the civilian economy into a war economy in the case of a war with as little disturbance as possible.
These were the proposals which I mentioned in my letter to the Führer dated 25 August 1939, at a time when the German and Polish Armies already faced each other in a state of complete mobilization.
It was, of course, my duty to do everything to prevent dislocations of the civilian economy in the case of a war, and it was my duty as President of the Reichsbank to augment gold and foreign exchange assets of the Reichsbank as much as possible.
This was necessary first of all because of the general political tension that existed at the time. It would also have been necessary if war had not broken out at all, but even if only economic sanctions had been imposed, as was to be expected from the general foreign political tension which existed at the time. And it was equally my duty, as Minister of Economics, to do everything to increase production.
But I did not concern myself with the financial demands of the Wehrmacht, and I had nothing to do with armament problems, since, as I have already said, the direction of peacetime as well as war economy had been turned over to the Delegate for the Four-Year Plan.
The explanation for the fact that at that time I kept aloof from the work of that committee is the following:
I personally did not believe that there would be war, and everyone who discussed this subject with me at that time will confirm this. In the months before the beginning of the war I concentrated my entire activity on international negotiations for bringing about a better international economic order, and for improving commercial relations between Germany and her foreign partners.
At that time it was arranged that the British Ministers Hudson and Stanley were to visit me in Berlin. I myself was to go for negotiations to Paris where, in the year 1937, I had come to know some members of the Cabinet when I organized a great German cultural fete there.
The subject of short-term foreign debts had again to be discussed and settled-the so-called moratorium. I had worked put new proposals for this, which were hailed with enthusiasm, especially in England. In June of 1939, an international financial discussion took place in my offices in Berlin, and leading representatives of the banking world from the United States, from England, from Holland, France, Belgium, Switzerland, and Sweden, took part in it.
These discussions led to results that satisfied all parties. At the same time I carried out the exchange or transfer of Reichsbank assets in foreign countries. This exchange of gold shares also was considered very fair and satisfactory in foreign banking circles and the foreign press.
In June of that year I went to Holland to negotiate trade agreements. I also participated in the customary monthly discussions of the International Clearing Bank at Easel as late as the beginning of July 1939, and despite the strong political tension which existed at the time I was convinced that a war would be avoided and I voiced this conviction in all my discussions, at home and abroad. And this is why during those months I was barely interested in the discussions and consultations on the financing of the war and the shape of war economy.
I had, of course, given instructions to the Reichsbank to use its available economic assets abroad as far as possible to obtain gold and generally to increase our foreign assets. But in the few months of my activity in this sphere before the war, the success of this endeavor of mine was slight. Our gold assets and foreign assets, as Schacht turned them over to me, remained on the whole unchanged until the war.
The tone and contents of this letter can be explained from the general mood that existed everywhere in Germany at that time. Beyond that it is a purely personal letter to the Fuehrer: In it I thanked him for his congratulations on my birthday. For this reason the letter is a little emphatic in its style. When I spoke of "my proposals," this may be traced back to the fact that I had personally some time before explained to the Fuehrer what measures would be necessary if a war broke out. And in the main, those were the measures that were adopted later as a result of conferences with the other economic offices, and to which I referred in this letter. Thus it was not quite correct for me to say "my proposals." I should really have said, "The proposals worked out together with the other economic offices."
I would like to explain this whole letter with just a few words, since it is apparently one of the pillars of the Prosecution's case against me.
As I have said, it was the time when the two mobilized armies faced each other. It was the time when the entire German people were in a state of great excitement because of the constant provocations and the ill treatment of the German population in Poland. I personally did not believe that we would actually have war, for I was of the opinion that diplomatic negotiations could again be successful in preventing the threat of war and indeed in avoiding war itself. After the Führer's almost miraculous successes in foreign policy, the heart of every true German had to beat faster in the expectation that in the East also Germany's wishes would be fulfilled; that is, that my separated home province of East Prussia would be reunited with the Reich, that the old German city of Danzig would again belong to the Reich, and that the problem of the Corridor would be solved.
The overwhelming majority of the German people, including myself, did not believe that this question would end in war. We were rather convinced that England would be successful in exerting pressure on Poland. so that Poland would acquiesce in the German demands on Danzig and the Corridor and would not bring on a war. The testimony of the witness Gisevius must have made clear to everyone in the world that England did nothing at that time to exert a soothing and conciliatory influence on Poland. For if the British Government knew that a conspiracy existed in Germany in which the Chief of the General Staff, the Chief of the OKW, the Chief of German Armament and other leading military personalities and generals were involved, and that an overthrow had been prepared for the event of war, then the British Government would have been foolish indeed if they had done anything to assuage and conciliate Poland. The British Government must have been convinced that if Hitler should go to war, a coup d'etat, a revolution, an overthrow would take place, and that, in the first place, there would be no war and, secondly, that the hateful Hitler regime would be removed. Nobody could hope for more . . . .
I feel I must state that I on my part did everything to ensure that in the event of war peace-time economy would without disturbance be converted into a war economy. But this was the only time at which, as Plenipotentiary for Economy, I was active at all with regard to the other economic departments and the fact that I referred to my position in this letter may be explained quite naturally, because I was proud that I had for once done something in this official position—for every man likes to be successful.
[Next: Part Three, Click Here.]
[Part Five, 6/7/1945-5/31/1960.] [Part Four, 9/8/1942-5/1945.] [Part Three, 8/27/1939-8/20/1942.] [Part Two, 3/12/1938-8/25/1939.] [Part One, 8/18/1890-2/1938.] Twitter: @3rdReichStudies E-MAIL
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