The Holocaust Historiography Project

Copy of document 3726-PS

     DR. HJALMAR SCHACHT on 24 August 1945 at 10:45 a.m.
          at “Dustbin". Interrogator: C.J. Hynning

[Pages 83 and 84]

Q. This was at the Paris Conference, 16 April 1929 — you
are quoted as having made this statement: (Read from page 3,
in German.)

A. It may be that I have made such a statement.

                                                  [Page 466]

Q. It reads: “Germany can generally only pay if the Corridor
and Upper Silesia will be handed back to Germany from Polish
possession and if besides somewhere on the earth colonial
territory will be made available to Germany". As I remember
our last interrogation, those sentiments are still yours.

A. I think the sentiment has been made useless by the
following events. That Germany could not pay at the time
after I made the statement has been proved, and that Germany
will not be able to pay after this war will be proved in the

[Pages 89 to 103]

Q. How, under this law, was foreign exchange allocated?

A. All of this is in the law, and I don’t know why you ask
me. We can talk for years, and I cannot tell any details of
these things. The provisions of the laws are there, and they
had to be executed, and they were executed orderly and
correctly by everybody who had to work under the law.

Q. You were in complete sympathy with the law?

A. Whether I was in sympathy or not did not matter at all. I
had to carry out the laws.

Q. Did you ever take any measures to change the law or to
recommend any change in the law which would be taken as
evidence of your not being in sympathy with it.

A. As long as I was in the Ministry of Economics, I had no
vote in the Government at all, and did not interfere with

Q. You may have had no vote, but you had a voice.

A. When I saw that things were intended which I did not
like, I must have raised my voice, and certainly did it.

Q. Did you raise your voice against this particular law at
any time?

A. I don’t remember.

Q. I take it that if you had raised your voice against a law
of this importance, you would remember.

A. Maybe.

Q. Did you have any previous knowledge of this statute?

A. Not the least. I don’t remember the details of this

Q., You were not consulted in any way prior to its

A. Certainly not.

Q. Since for some time you had to administer the
Reichsbank’s responsibilities under this law, did your
experience result in your

                                                  [Page 467]

concluding that it had any defects and, if so, what were the
nature of these defects?

A. It had certainly no defects big enough to alter.

                    (Recessed for lunch)

Q. I am going to ask you this afternoon regarding some
statutes and regulations, and my primary interest in them is
economic rather than raising the technical points of law.
You were head of the Reichsbank on June 9, 1933?

A. Yes, sir.

Q. At that time the Reich Government decreed a law entitled
"Law Governing Obligations to Pay Foreign Creditors".

A. Yes.

Q. That was a law in whose formulation you had participated?

A. Yes.

Q. Briefly, what circumstances resulted in the proposal and
adoption of this statute?

A. The lack of foreign exchange. We had no foreign means to

Q. A quick reading of the statute would indicate that the
statute was drawn in such a way as to give you, as head of
the Reichsbank, very complete, almost dictatorial powers in
the situation.

A. Only as far as the execution of the law was concerned.

Q. In respect to the execution of the law, it gave you very
sweeping power.

A. I don’t think it is sweeping power. What do you mean,

A. I will read several phrases to illustrate: “Rates of
exchange fixed by the Reichsbank shall be deemed rates
computed as defined under this law. — The Conversion Bank -
- is under the supervision of the Reich Directorate. — The
Reichsbank Directorate appoints the responsible officials. -
- The time for payments of such credits shall be determined
by the Reichsbank. — The Reich Minister of Economic Affairs
may with the approval of the Reich Directorate permit
exceptions to this law". In other words, that power was
vested in you?

A. Yes.

Q. The bank which was created ---

A. It was not a bank. It was simply bookkeeping and cash

Q. It was a corporation?

A. It was an institution of the Government.

                                                  [Page 468]

Q. It was placed under the supervision of the Reichsbank?

A. I don’t remember. I think it was a Government office, but
I don’t remember.

Q. And the Reichsbank Directorate appointed the responsible

A. Yes.

Q. As head of the Reichsbank, you would have exercised that
appointing power?

A. Certainly, if it says in the law.

Q. It also was in your power to determine when the claim of
the creditors should be paid?

A. What does it say in the law?

Q. “The time for payments of such credits shall be
determined by the Reichsbank.”

A. Maybe, yes.

Q. The Reich Minister of Economic Affairs, together with the
Reichsbank Directorate, could grant exceptions to the law?

A. Yes.

Q. In view of that language, you would agree that you had
very full powers under that law in respect to the foreign

A. Yes.

Q. Do you recall whether you signed that statute?

A. I don’t think so. It was a law, wasn’t it?

Q. Yes.

A. Then it must have been signed by the Chancellor and the
Minister of Economics. Whether I signed it or not, I agreed
with it.

Q. Under this law, exceptions were granted?

A. I do not think any exceptions have been made. I think
that was just a facility which was in the statute in case
events required such exception.

Q. There is a phrase here which I will ask you about. “The
remaining legal affairs of the Conversion Bank are regulated
by the by-laws issued by the Reich Minister of Economic
Affairs with the approval of the Reichsbank Directorate".
What remaining affairs of the Conversion Bank would there be
that this covers?

A. I don’t know, sir, I don’t remember. Maybe the pensions
of the officials, and gratuities — the payment of the
officials or something. I don’t know what it is. Certainly
minor affairs.

Q. In connection with this legislation, by-laws were adopted
which raised some question in my mind which I would like you
to answer. I would like to have your answers provide a brief

                                                  [Page 469]

explanation of the operation of the institution. The by-laws
provided for: “The Bank may issue notes (`Schuldscheine')
for deposited sums, payable in Reichsmarks and not bearing
interest. Provision for the redemption of these notes shall
be laid down by the Reichsbank Directorate.”

A. That term does not mean notes. It means bonds.

Q. Then this further provides: “the Conversion Bank may
issue interest-bearing scrap in the nominal amount of the
obligation or its equivalent --.”

A. It is all provided. How far it was executed, I don’t

Q. I will ask you for a brief description of the operations
of this bank.

A. We could not pay any more the foreign creditors, but we
did not want the German debtor to become released of his
debt because it was only the problem of transfer involved,
so the debtor had to pay to the conversion office and
thereby was released of his debt, but the conversion office
held that money on account of the creditor, and the
intention was to pay the creditor as far and as soon as
transfer could be made possible.

Q. It provides here: “It can accept payments from foreigners
which emanate from blocked or registered accounts, and
credit them to account.” Can you explain that operation?
This conversion bank served at times to transfer funds from
Reichsmarks accounts of the foreigner to the foreigner in
his own currency?

A. Yes. You see it provides for all possibilities. If you
make a statute, you have to include everything.

Q. This statute appears to put the foreign creditor
completely at the mercy of the Reichsbank.

A. Entirely. (,Pause) Entirely, as far as transfer was
concerned. With their money inside Germany they could do
what they liked. As to their German money there were several
possibilities opened up to them to place that money.

Q. Do you wish to expand on that?

A. I think that is sufficient. Everybody will understand.

Q. How long did this conversion bank function?

A. Up to now.

Q. “Starting with July 1, 1934, the Conversion Bank offered
to the foreign creditors for the amount of investment
proceeds paid into the accounts in the Conversion Bank long-
term interest-bearing bonds, payable in Reichsmarks which
were guaranteed by the German Reich is [sic]  a series of
laws. These bonds could be exchanged at a very substantial
discount from the par value

                                                  [Page 470]

of the bonds". Wasn’t the effect of that a substantial
reduction in the payment of principal and interest to the
foreign creditors?

A. I think so.

Q. You stated a little earlier in connection with this
legislation that its sole purpose was to provide more
foreign exchange.

A. That was not the purpose — to provide foreign exchange -
- but to state that we had no foreign exchange. How can I
get foreign exchange by not paying? If I don’t pay I can’t
get foreign exchange.

Q. The purpose of this legislation was to make available for
other purposes such foreign exchange as was in the control
of the Reich?

A. Yes.

Q. Would you care to elaborate on the other purposes?

A. Yes, it would be interesting. The other purposes were to
get foreign exchange for the import of foodstuffs and raw
materials in order to carry on German economic life and to
feed the population.

Q. At this time, the Nazi Regime having been in power for
some months, foreign exchange was needed in connection with
their requirements for the beginning of the rearmament

A. The rearmament was started a good time later only.

Q. Measuring time in days?

A. In months.

Q. Possibly the final production, but the initial stages?

A. I don’t think so.

Q. This legislation provided a basis for conserving foreign
exchange for a number of purposes which included such
requirements for rearmament as there might be?

A. I don’t know whether that was the intention.

Q. As I recall, you have already stated in earlier testimony
that the rearmament program of the Nazis started in 1933?

A. I cannot give the exact date.

Q. It clearly was the purpose of this legislation together
with the purposes which you have already stated, to free
foreign exchange for the economic and political purposes of
the Nazi regime.

A. I did not say for political purposes.

Q. I am not quoting you. I am stating that it was for that

A. For an economic life, industrial life, and for feeding
the people.

                                                  [Page 471]

Q. And for political purposes of the Regime?

A. I don’t know. And I certainly don’t know how many foreign
exchanges were needed or wanted for political purposes
unknown to me.

Q. You wouldn’t say that you were entirely ignorant of the
political purposes of the Nazi Regime from the time they
came to power until you left office? That would be an
astounding statement.

A. Yes. I want to make the astounding statement that Hitler
hid his political intentions from his collaborators,
including the Ministers and other high officials.

Q. You designate yourself as a collaborationist?

A. Certainly. I was in office under his regime.

Q. You are acquainted with the decree of September 4, 1934,
entitled “Commodity Exchange Decree"?

A. Yes. That is the first of these laws here, or decrees. I
initialed it.

Q. And I believe you signed it?

A. Certainly.

Q. Would you tell us the reason for its initiation?

A. Yes. We had not sufficient foreign exchange to let
everybody buy in foreign countries what he liked, because
the little foreign exchange which we earned had to be used
for those things which were most necessary for the economic
life of Germany, so we had to take control of these
purchases. We could not any more allow people to buy what
they wanted and use the foreign exchange therefore, but we
had to buy in countries where at the same time in exchange
we could sell our products in order to be able to pay for
the goods we bought.

Q. This constituted a very broad extension of your powers?

A. Yes. This is what they have always called the barter
agreements with foreign countries.

Q. In effect, in respect to most commodities, it made you a
virtual czar.

A. Not quite, sir. The industries were organized in self-
governing bodies which were called Ueberwachungsstellen, and
the czarism was used only in close cooperation with the self-
governing bodies.

Q. To use a hypothetical example — to explain in part the
mechanism and to have you interpret the statement which you
just made, if for rearmament or other purposes the steel
industry in Germany needed more raw material, they would
state that need to you and you would, on the basis of your
discretion, approve their requirements or tell them what
they could have?

                                                  [Page 472]

A. I cannot say here without having been in touch with my
assistant officials in what way the decree functioned in any
special case.

Q. And the officials you would want to consult were, by

A. I have already stated in my written statement that I do
not remember who they were, but you can easily find out by
asking in the Economic Ministry in Berlin.

Q. The men that you had to consult on these major problems
you do not recall?

A. The man at the head of the total organization of
Ueberwachungsstellen was Mr. Brinkmann.

Q. He could answer a question of the character I just asked

A. Entirely.

Q. I will read you the first section of this decree:
"Section 1. Authorization. The Reich Minister of Economic
Affairs is authorized to supervise and regulate transactions
in commodities, particularly to determine and adopt measures
with respect to their content, distribution, storage, sale,
use, and process". That language is very broad. It would
appear to have given you power to channelize all raw
materials and semi-finished goods so that the course of
German economy was in your control under this statute. Do
you agree?

A. Yes.

Q. How broadly was this term “storage” interpreted in the
operations under this statute?  In other words, under the
terms of this statute, if you were to stockpile certain
strategic commodities, this authorized that type of

A. Certainly.

Q. And I take it that under this authorization you were
responsible for the stockpiling of the strategic

A. In what way responsible? What do you mean by that?

Q. I mean by that that the statute authorized that type of

A. Yes.

Q. And that in carrying out your responsibilities, for which
you had wide discretionary powers under this statute, these
strategic commodities were in a number of instances
stockpiled in substantial amounts?

A. I don’t know whether they have been, but the possibility
was given in the law.

Q. It wouldn’t surprise you if proof were offered that it
had been done?

                                                  [Page 473]

A. I wouldn’t care. Things I don’t know, don’t interest me.
Couldn’t we perhaps shorten the whole interrogation by
asking me really what you want to know? You mean that I was
responsible for the armament and so on? What is it you would
like me to tell you?

Q. It may be by asking you specific questions --

A. Will you allow me to make a statement on armament?

Q. Go ahead.

A. It seems to me that the answers and statements which I
have given at former interrogations do not circulate among
the various interrogators. It would help greatly if this
could be done, because there are so many interrogators, and
always new and changing, that it takes very much time to
answer always the same questions. I have in former
statements very frankly admitted that I was entirely in
favor of rearmament. I have given the reason for my opinion
and I have stated how far with these rearmaments I wanted to
go. I have stated further that when rearmaments exceeded the
amount which I had intended and when I felt that this
rearmament might lead to war, I have refused all further
cooperation. I have even endeavored very hard to stop
further armaments, because I was decidedly against war. And
when I felt that Hitler wanted to go to war or might aim at
war I turned 100 percent against him. Already in 1938 I
participated in the first attempt to do way with Hitler. I
take the full responsibility for my cooperation in the
rearmament up to 1938, but not the least for the following

Q. The Munich incident was in September 1938, at which time,
if historians are to be believed, on the basis of Germany's
rearmament up to that time Adolf Hitler threatened the
western powers with war. You did not resign prior or
immediately after Munich — you continued in the Hitler

A. An official under the Hitler Regime could not resign
without his approval. I had to manage it so as to be
released by him, which I did and succeeded in my dismissal
21 January 1939.

Q. Let us continue. Prior to your self-serving statement in
respect to rearmament, you indicated that you did not know,
and inferred that you did not have the means of knowing,
anything about any stockpiling of strategic materials under
the provisions of the commodity exchange decree of September
1934.  That decree gave you explicit power to get
practically any information that you might want from anybody
and everybody operating in the economy of the Reich, so that
you had the basis for complete information about the most
trivial transactions as well as those

                                                  [Page 474]

of a major character, which are the kind that you are being
asked about. In drawing this statute you gave yourself such
wide powers, such comprehensive powers that I think we can
agree that with those powers you must accept responsibility
for everything that was done under the terms of that

A. Certainly not. It gave me the power, for instance, to
look after commodities stored secretly by industrialists in
order to make profits out of it. If it gave me the power to
control that, I do not want to be made responsible if I had
not discovered such stored commodities.

Q. To indicate this far-reaching power that you provided for
yourself in this statute, I will read just a few portions of
it: “The Reich Minister of Economic Affairs — may make
determinations and adopt measures for the recording of
business transactions, particularly accounting procedures.
The Reich Minister of Economic Affairs shall appoint a Reich
Commissioner for the Reich Control Office and may designate
one or more deputies for the Reich Commissioner. The Reich
Commissioner shall direct the Reich Control Office, subject
to instructions by the Reich Minister of Economic Affairs.
The Reich Commissioner shall issue the rules of procedure
for the Reich Control Office — the rules of procedure
require approval of the Reich Minister of Economic Affairs.
The members of the Advisory Board shall be appointed by the
Reich Minister of Economic Affairs. The Reich Minister of
Economic Affairs shall determine the manner of collection
(of funds) and the group of persons and enterprises required
to make contributions. Imprisonment and fines to an
unlimited amount may be imposed". Are you in agreement that
those are very broad powers?

A. Yes, sir.

Q. To revert a moment to our brief mention of Munich, and
your situation with respect to Munich, you testified at
another time that you accepted full responsibility for all
of your acts, and that your decisions were your own and that
you were not bound by others.

A. Except by Hitler where the general political situation of
the Reich was concerned.

Q. So that your failure to leave your post prior to Munich,
at which time Hitler threatened war on the basis of the
armaments he then had available, your failure to do that was
something for which you accept full responsibility?

A. It was not a failure. I could only not do it immediately
without great personal risk, and I told you that I had to

                                                  [Page 475]

it so as to induce Hitler to dismiss me, in which I
succeeded between Munich and the following 21st of January.

Q. In connection with the creation of the Devisenstellen, a
high official of the Reichsbank has testified that by
creating the Devisenstellen a development was started which
became “more and more an instrument of economic policy and
became later on a means of controlling the whole economic
life and activity of Germany". He further testified that
from the time of the “New Plan” of which you were the author
"the devisen control system became more and more an
instrument of economic politics".

A. I fully agree with those two statements.

Q. I take it that you would also agree with this statement
which came from another source: That the purpose of this has
been described as “to regulate demand and consumption and
steer the scanty supply of raw materials into fields and in
directions where it could do the most good, both from the
political as well as the economic point of view".

A. I do not agree with the word “political". I don’t know
what that source includes.

Q. I think that might be paraphrased “would do the most good
both from the standpoint of the political objectives of the
Hitler Regime and its economic point of view".

A. From that statement I take it that the economic point of
view and intentions of Hitler Regime coincide, wherewith I

Q. Still another source, after a thorough-going study of the
"New Plan” characterized the primary objective of it to be
"devoting a maximum proportion of Germany’s productive
resources to rearmament and preparation for war.”

A. I disagree entirely with that statement as far as war is
included. It has certainly helped rearmament.

Q. You must agree that rearmament is preparation for war.

A. I disagree entirely with that statement. It means defense
in case of attack.

Q. You would agree with the statement then if it were
changed to read: “Devoting a maximum proportion of Germany's
resources to rearmament and preparation for a defensive

A. That might go.

Q. In connection with this “New Plan” of which you were the
author, in addition to the law controlling commodities which
we discussed briefly, another important part of the “New

                                                  [Page 476]

as it was enacted into legislation would be this law
establishing this German clearing bank. Is that correct?

A. Yes.

Q. This again is legislation which you initialed?

A. Entirely. Because it was the necessary consequence of the
decree of the 4th of September, because we had to establish
an international banking account where the balances, because
cash payment would not take place, had to be debited and

Q. The question that I am about to ask you may require a
technical answer. The type of transaction in which this bank
subsequently engaged had been carried on briefly to some
extent by the Reichsbank, had it not?

A. That sort of business did not exist before that decree
came out.

Q. My question arises from this section, which I will read
to you: “Any rights belonging to the Reichsbank and
obligations devolving upon it under clearing agreements
which have been contracted by the German Government with
foreign governments or by the Reichsbank with foreign
central banks of issue, revert to the clearing bank.  The
clearing bank shall take over the management of accounts
which is incumbent upon the Reichsbank".

A. It may be that some transactions have been made before, I
don’t know. The difference of time between the two decrees
is only five weeks.

Q. Like the commodity control statute, this statute gave you
as Reich Minister of Economic Affairs, complete control over
the operations under the statute?

A. It was a bookkeeping and accounting office, nothing else.
I don’t know what power would be connected therewith.

Q. The powers, of course, are set forth in the statute which
was given you by the interrogator at the previous session,
and under the terms of that statute a board of directors was
provided to control it, and you in turn as Reich Minister of
Economic Affairs appointed that board of directors.

A. Yes. Which means that I appointed the accountants.

Q. There was no staff? There were only the directors?

A. I assume that they had a staff.

Q. The statute provides that the Reich Minister of Economic
Affairs can allow exceptions. Were there any instances where
these exceptions are allowed?

A. I do not remember any one, and I do not think that there
were any.

                                                  [Page 477]

Q. Perhaps you could tell us the extent to which you
participated in the formulation of the clearing agreements
which were subsequently administered under this statute?

A. The Minister of Economics took part in all the clearing
agreements as long as I was in power. After that time, I do
not know.

Q. Who were the others who generally participated during the
time you were in power?

A. My assistant officials. You want names?

Q. No, not at this time. Were you and your assistant
officials the only ones participating?

A. Oh, no. The foreign office also participated. And
sometimes the Minister of Agriculture.

Q. Would it be correct to state that there were no clearing
agreements effected during the time that you were in power
which did not have your approval?

A. That is correct.

Q. In the self-serving statement which you made this
afternoon, and in earlier statements, in respect to
rearmament, you were careful to make the point that at a
given time in the long process of rearmament you shifted
your position and ceased to support further rearmament, and
in January 1939 ceased to hold any official Government
position except that of Minister without portfolio. The
legislation which we have been discussing which provided the
legal foundation for the “New Plan” provided a sufficiently
well-rounded and comprehensive basis of control of the
economic life of Germany for political purposes so that in
carrying rearmament forward after you left the Government it
was not necessary to make any radical changes for some time.
Is that true?

A. I would first like to reject the word “careful statement”
which you used. I make true statements, and I am not aiming
to be more careful than is necessary. As to your question, I
think that every institution which exists in the world, and
so every law, is open to abuse.

Q. If there is any difference between the operation of these
laws during your period of office, and that of your
successor, it would appear from the record to have been a
difference of degree rather than kind.

A. I do not know what my successor has done, and whether he
abused the law or not, and whether he abused it in degree or
in kind.

                                                  [Page 478]

Q. You are familiar, are you not, with the general trend of
economic legislation subsequent to your departure from
public office?

A. Not more than an ordinary newspaper reader.

Q. It has been testified that even as late as the period
during which you were in custody of the Reich you requested
economic information from the Reichsbank or its directors,
and that an effort was made to send you such information. If
this is true it would indicate a continuing interest far
beyond that which one might infer from your last statement.

A. The statement is correct, but incomplete. I have asked
once with the permission of my custodian to send the printed
annual Reichsbank, because I filled my time in the prison
with studies about the time of my former activity. The
annual reports have reached me.

A. You raise, in your testimony, the question as to how far
advanced German rearmament was at the time you left the
Reichsbank in the latter part of January 1939.  Rearmament
is a relatively slow process because of the time required to
assemble raw material and to transform it into the complex
modern instruments of warfare, and yet it was only a few
months after you ceased official participation in the
rearmament program that the Reich felt itself sufficiently
prepared to engage in the second World War. What comment do
you wish to make in respect to that relationship?

Q. Here is a misunderstanding as to the dates. All payments
from the Reichsbank ceased in March 1938, a thing which I
have stated in former interrogations several times already.
As to the length of time for manufacturing war goods, I have
no technical knowledge whatever.