I also ask that judicial notice be taken of its contents and want to read only one sentence on the last page. I quote: "The last heard from Schacht was indirect. In 1939 before the outbreak of the War, Lord Norman (then Mr. Montague Norman, Governor of the Bank of England), told me confidentially that he had just come back from Baslo where he had met Schacht who sent me his greetings. Lord Norman told me than that Schacht (who had returned from Baslo to German) was in great personal danger as he was very much in disgrace with the Nazis." That concludes volume one of my document book and I pass on to volume two which begins with the affidavit. I have to go through the individual affidavits but I shall not read any.
The first Exhibit is No. 34, which has frequently been quoted, the affidavit, and sworn testimony of the Banker and Swedish Consul General Schniewind at "Munich at the time. It is a very instructive and very exhaustive affidavit and in order to save time, there are eight passages which, would take up much time and I will only consider what I have read already from this affidavit and for the rest, I ask the Tribunal to take judicial notice. It has already been submitted, but I still have to submit Exhibit 35. I beg your pardon, but that has been submitted before. That is the affidavit of Dr. Franz Reuter. I submitted it before when I read the passage about the tendency, about the biography. Of the rest, I ask you to take judicial notice, the rest of this affidavit. Dr. von Scherpenberg, formerly legation counsellor at the legation in Germany, and the German office, and now at the Ministry of Justice at Munich, the son-in-law of Dr. Schacht. I read a passage and of the remainder, I ask you to take judicial notice.
The next one Exhibit 37-A. It has been submitted. There, also, is a passage, 154 of the German text, about the warning signal of the fact of the resignation of Schacht as Reichsbank president and of the balance, I ask you to take judicial notice. of Dr. Schacht in the Reichsbank Directorate at the same date as the witness we have just heard, Vocke.
I don't have to read anything. I just ask you to take judicial notice of its contents. submitted. I ask you to take judicial notice of its contents. I do not have to read anything.
The next is Exhibit 38, an affidavit of General Thomas. That has not been submitted yet and I submit it hereiwt h and ask to be permitted to read one passage, beginning on the first page. That is the English page 172 and 164 of the German text.
"Question: Schacht claims to have influenced Blomberg to retard rearmament. Can you give information on this matter? When was it?
"Answer: I was chief of the Army Economic Staff or of the Army Economic and Armament Office of the Supreme Command of the Wehrmacht (OKW) from 1934 to the time of my dismissal on January 1943 In this capacity I had connections with the Reich Minister for Economics and Reich Bank President Hjalmar Schacht. Undoubtedly until 1936 Schacht promoted rearmament by making available the necessary means. From 1936 on he used every opportunity to influence Blomberg to reduce the tempo and extent of the armament. His reasons were as follows:
"1. Risk to the currency.
"2. Insufficient production of consumer goods.
"3. The danger to foreign policy which Schacht saw in excessive armament for Germany. The last point frequently caused him to indicate repeatedly to Blomberg and me that by no means must the armament lead to a new war. There were also the reasons which led him to threaten Blomberg with resignation in 1936 and again in 1937. Both times I was delegated by Blomberg to influence Schacht not to carry out his threat of resignation. I was present during the conference between Blomberg and Schacht in 1937." Of the remainder of that affidavit by General Thomas, I ask you to take judicial notice.
The next Exhibit 39 has also been read in parts; that is to say, the part Schacht played in the incident of the 20th of July in connection with General Lindemann--an affidavit by Colonel Hans Gronau, and of the remainder, I ask the Tribunal to take judicial notice.
The same applies to the next Exhibit 40. That is a sworn statement, also by an assistant and collaborator of Schacht in the Finance Ministry, Dr. Asmis, concerning the happenings at the occasion of the dismissal of the Minister of Economics; a part of the remainder has been read, and I ask you to take judicial notice. retirement, Christian Schmidt. I have not read anyting and I ask to be permitted to read two passages.
The first one is on the German text page 182; 190 of the English text:
"When the Bruenig Cabinet, which had been arranged by General von Schleicher" -- That is not correct. I think that should be different, but that isn't essential. --"When that was torpedoed be Schleicher himself, Schacht considered the early appointment of Hitler as head of the Government to be unavoidable. He pointed out that the great mess of the German people said yes to National Socialism, and that the left as well as the center had come to a state of complete passive resignation. The short life of transition cabinets of Papen and Schleicher was clear to him from the very beginning.
"Schacht decisively advocated cooperation of men of experience in their fields with National Socialism without accepting its program as a whole, which he always referred to ironically, and later frequently called it a really bestial ideology, when talking to me; But he held that the influencing of developments from important inner-power or positions was an absolute patriotic duty, and he strongly condemned emigrations and the flight to sulking corners." text, two very short passages:
I recall numerous talks with Dr. Schacht in which he stated that the war was an economic impossibility, and simply crazy. Thus, for instance, in the house of Dr. Fritz Tiesen in Muehlheim, who closely associated with Goering and Hitler before 1933, was in strong opposition since 1934, and who also fought against every thought of war as madness."
And, then, further down on the same page, only one sentence:
"The Himmler-Rosenberg Lebensraum plans against Russia were quoted by Schacht to be as an example, and ironically referred to as an example of the thoughts of Party ideas." His hobby horse was an understanding with England," and so on; and I ask you to take judicial notice of the remainder of the document.
subsequent director of the Upper Silesian Coke Works.
Now I come to Exhibit 43. That has already been submitted and read in part. It is the correspondence between the publisher of Ambassador Dodd's diary and Sir Neville Henderson. I ask you to take jucicial notice of the part not yet read, and whatever comes after Exhibit 43 has been submitted. I ask you to take judicial notice of its contents, and I forego the reading of it. Schacht.
THE PRESIDENT: Now the Tribunal will continue the case against the defendant Funk;
DR. SAUTER (Counsel for Funk) Mr. President, with your permission, I call first the defendant Dr. Funk himself into the witness box. as follows:
BY THE PRESIDENT:
Q Will you state your full name, please?
Q Will you repeat this oath after me: the pure truth and will withhold and add nothing, (The witness repeated the oath.)
THE PRESIDENT: You may sit down.
DR. SAUTER: Mr. President, may I begin with one sentence: The defendant Funk has been a sick man for many years now, and before he came into the prison he had been in the hospital for some time. He was supposed to undergo an operation, which, however, due to conditions at the time, could not be carried out. He still is under medical supervision, medical treatment at this time.
under all circumstances wants to make his own defense as short as possible, I shall put only those questions to the defendant which are absolutely necessary so as to give you a clear picture about his person and his activities. BY DR. SAUTER:
Q Witness, when were you born? your life, and to simplify matters you can only answer with yes or no.
You are 56 years old. You were born in East Prussia.
Q You come from a merchant's family in Koenigsberg. political science, literature and music. You also came from a family which has produced a number of artists. and in the year 1910, on account of a bladder ailment, you became an editor with largo newspapers, and you told me that for a long time you couldn't make up your mind as to whether you should become a musician or a journalist. Then you decided for the latter, and in 1922, I believe, you became editor-in-chief of the "Berliner Boersenzeitung." Is that all correct? tendencies of that paper for which you worked for about ten years as editor-in-chief.
A The tendency of the paper was Prussia National. The newspaper was not tied up with any party. It was owned by an old publisher's family at Berlin. into the editor's office, to the Jewish question?
AAbsolutely neutral. They didn't even deal with the Jewish question,
Q From an affidavit by Dr. Schacht, I have seen that at that time--that is to say, during the '20's--you moved in circles where there were also Jews, and whore frequent discussions were held about questions of economic matters, such as gold currency, and so forth. Is that correct?
A I don't know anything about that circle.
Q Dr. Schacht has asserted that in an affidavit of the 7th of July 1945, PS-3936.
A I had much to do with Jews. That was in the nature of my profession. Every day at the stock exchange I was together with 4,000 Jews. chief?
Q What were the reasons for that? come to power in the Government, and I felt that it was up to me to express my own political and economic opinions within the Party. kind of opinions you had, Dr. Funk, especially concerning the questions of clashes between parties, between classes, and so one spiritually as well as materially. The people by the struggle of parties and classes was torn apart. The Government, or rather the Governments, had no authority. The parliamentary system was out, and I myself, 10 or 12 years before that, had protested and fought publicly against the burdens of tribute of Versailles, because I was of the conviction that those tributes were the primary cause for the economic bankruptcy of Germany.
23-1 private economy, because I was convinced that the idea of private enterprise is connected with the idea of the difference of capacities and capabilities of individual human beings. I have fought for the right of free enterprise, free initiative, for a free competition, and, at that time in particular, for the removal of that wild struggle of classes, and for the reestablishment of a social national community on the basis of the industrial community. conversations, particularly, with Gregor Strasser. briefly? party organization of the National Socialist Party and was generally considered to be the second man of Adolf Hitler.
THE PRESIDENT: This is the time to break off.
(The Tribunal adjourned until 4 May 1946, at 1000 hours.)
DR. SAUTER: Mr. President, may I continue with my testimony and examination of the witness Funk BY DR. SAUTER:
Q Dr. Funk, yesterday you gave us a rather brief account of your life, told us that you are 56 years of age, that you have been married for 25 years, that you were Editor in Chief of the Berliner Boersenzeitung, and in conclusion you told us yesterday what your convictions were regarding the development of Germany for the future. Perhaps you can reiterate on some of these points where you were interrupted through the recess yesterday, and since your health was in such a poor state yesterday that at the close of the day you could scarcely remember what you had told the court during the day. What conviction did you have about the economic and political prospects for Germany in the future at the time when you entered the party? Perhaps you can just briefly sketch what you said yesterday. This crisis was caused chiefly through reparations and the way in which these reparations had to be met, and also through the inability of the regime at that time to master the economic problems which were plaguing the country at the time. The most disastrous problem in the matter of paying tribute was that German marks in immense volumes were being transferred abroad to foreign countries without receiving anything in return. As a result of that, in foreign countries there was an over-balance of Reichsmarks. As aresult there was an inflation in Germany. People who had German currency bought Germany out. Therefore, there was a large indebtedness on the part of German industry, and it was an almost unbearable debt to foreign countries. It was all a short time debt. There was financial estrangement in industry.
There was much more debt than we could handle, in every country. There was a complete impoverishment of citizens and of the middle class stratum of society which was the chief bearer of German culture. Each third German family was unemployed, and the Government itself had neither the power nor the courage to master these economic problems. alone; it was necessary that first of all there should be a government with full authority and responsibility, and that a unified political will should be founded among the people. The National Socialists at that time captured 40 per cent of the Reichstag mandates; the people streamed to this party in millions and millions, especially youth which was fired by the ideology and the personality of the Fuehrer which acted like a tremendous and huge magnet. The economic program of the Party was unclear and in my opinion was essentially based on propaganda to serve their purpose; and even in Party circles with which I came into contact in the year 1931, this Party program was discussed and argued very vehemently. in Chief of a largo middle class paper to make myself independent by founding an economical political press information service which was transmitted to the various branches of the economy, also to the leading party circles, and also to circles which belonged to the German National Party and other parties.
Q Dr. Funk, just a little while ago you said approximately that according to your then current opinion of perhaps the year 1931 that only a government with full authority and full responsibility, that is, only a strong state and one with a unified political will could save Germany from the crisis which Germany was going through then; this crisis which was a result of the first World War. At that time did you perhaps have a thought whether the leadership principle, the Fuehrer prinzip which developed increasingly with time, whether this leadership principle could coincide with your ownreconomic ideas? Or let us put it negatively; at that time could you foresee betterments resulting from this leadership principle?
Will you clarify your position on that point?
it is good or bad. It depends on the given circumstances, and, above all, on those people who are doing the ruling. Germany had no parliamentary or democratic traditions, such as may be found in other countries. few voices of the economic party actually did the deciding, and these voices were, in the main, bought. Therefore, another principle had to come to the fore; and in a totalitarian government, if those who carry the authority and responsibility are good, then the Government in turn is good. rule, and so in such a way the authority would be from above to below and the responsibility would be from below to above. personalities of the Party, and, as I said, from the confidence and the enthusiasm which the German people brought to this political movement, I formed the opinion that this Party would have to come into the government, and that through this Party alone salvation could come, I personally wanted to put through my own economic ideas in this Party.
Q Dr. Funk, you just mentioned the personality of Hitler. Through whom did you meet Hitler? Who were the first personalities among Party circles through whom you were won over to the Party?
A In the main, Gregor Strasser. As I mentioned yesterday, be brought about my first meeting with Hitler. Then much later, in Berlin, I met Hermann Goering. In the main, I had very few acquaintances in the Party at that time and played no role in the Party. you at that time? I would like to make this introductory remark. I believe it was the year 1931. You were at that time a mature man yourself. You were more than 40 years old, and, as such, what was your impression of the personality and objectives, and so forth, of Hitler? small wonder since I came from a world which was entirely strange to him. I immediately received the impression of an extraordinary personality.
With lightning speed he comprehended all problems and knew very well how, with expressive gestures and grear oratory, to present these problems. He had the habit to take these problems and to contemplate these problems, and he seemed to discuss the problems with himself, and in that way lifted these problems to a more rarefied sphere. especially that I based my economic theories on private property, which was the fundamental tenet of my economic theories, and which was intimately connected with human activity. his idea in economics was also based on selectivity, that is, what a person could produce and personal capacity; and he was very glad indeed that I wanted to act along those lines in the Party; that I would work with him and support him in the economic line, all of which things I actually did. he told me that "This moment I cannot tie myself down in an economic, political way, and the things that are said by my theorists, such as Feder, I am not in complete accord with." by a Dr. Wagner.
A That was led by Dr. Wagner. I was not consulted on political matters. Closer connections to the Fuehrer I really had only in the year 1933 and the first half of 1934, at a time when, as press chief of the Reich Government, I contacted him regularly. At that time it happened on occasion that he would interrupt me suddenly, that we would go into the music room and he would have me play the piano for him.
Then the relationship became a little more reserved again. When I became Minister of Economics the Fuehrer kept his distance from no more and more, out whether he had special reasons, as Lammers testified here, I really don't know.
discussion and consultation perhaps four or five times, but he really did not need me, because his economic and political directives were given to the Reichsmarshal, as he was the responsible head of economics. Later, beginning with the year 1942, he gave these directives to Speer, since at that time armament dominated the entire economy. half of 1934 until the death of the Reich President von Hindenburg.
Q Dr. Funk, you have come along quite a bit in your discussion. We would like to return now to the year when you entered the Party. When was that
Q The summer of 34. You have already told the Court that for the reasons given by you you did not object to the leadership principles. necessary for the period of emergency that obtained. in the Party program, points of view which later on worked out unfavorably, and which in the course of this proceeding have been used against the defendants in the dock here-just to use one example, Lebensraum. During these proceedings you have heard this word again and again. Dr. Schacht dealt with this problem also. Perhaps in all brevity, you cam give us your own attitude to this problem and this question.
A Lebensproblem, the problem of life, is no cue word. It was really the problem of life of the German people at that time. Under the Lebensproblem.
Q You mean Lebensraum? at all, and the thought of war at that time, as to most other Germans, was entirely strange to me. German interests of life. By that I mean a participation of the German people for the using of goods of the world, which were present in abundance.
through agreements of trade, that I did not actually bother myself with at that time in detail. How things worked out for Germany in the world economy, for Germany before the First World War, was decisive for me in my becoming an economic journalist. The participation of Germany in the Rumanian petroleum industry, the concession of the Bagdad Railway, the growing German influence in South America and China and Greater Asia -- all of these things made me very enthusiastic. And even at that time I met men like Otto Guther, Karl Helferich, Withoeften, with an overseas merchant, Hamburg, and many other German economic pioneers, and with all the enthusiasm of a young journalist, I was wedded to my calling. and political demands and of the economic participation in Germany, a share in the goods of the world, an eradication of the barriers which we met with on all sides. To me it was absolute nonsense that Germany on one side should pay tribute and pay debts while on the other hand the creditor nations refused to have these debts met in the only possible form, that is, in the form of goods and services.
At that time a great discriminating wave started. I would like to point to the Ottawa agreement and to the policy followed in America, a policy which resulted in 1929 and 1930 in a world economic crisis which hit Germany very, very hard also.
Q Dr. Funk, have you completed? Then I would like to ask you another question: The Prosecution in their trial brief contend thatyou participated in the formation of the Nazi program. What can you tell us about that?
A That is completely impossible. The Party program, as far as I know, was established in the year 1921 and at that time I didn't even know about National Socialism or about Adolf Hitler. that the economic development program in the year 1932 was established by you. By that they mean a program for the recovery of German economic life. Is it correct that you established this economic program?
an economic program which he, Strasser himself, made known as a program of mine and gave this material to the various Party officers as material for speeches. This economic recovery program, which according to the words of the Prosecution was supposed to become the economic bible for the Party and its organizers is, I believe, not revolutionary in any way and could not draw any attention to it. democratic government. I believe it is set down in a book -- in the book from which the Prosecution took certain extracts.
Q Yes, it is presented, in the book by Dr. Paul Oestreich, a book from which we have had many quotations. This book contains your biography under the title, "Walter Funk, A Life for Economy," and has been used by the Prosecution under Exhibit 3505-PS, U. S, Exhibit 653. Dr. Funk, I have this program before me -
Q It deals with/only half a page and in the main sets forth really nothing which might be characterized as National Socialist treads of thought. event only a very young member. one's self how little of actually characteristic National Socialist demands are contained therein. This is a program of which the Defendant Funk says that almost any liberal, or domocratic or other beurgeois party could accept. The program mentions the bringing about of work through private andState investment, and new investments. That is point one, The providing of credit to the Reichsbank but to prevent inflation and to bring about a healthy currency, money and credit system. The general lowering of interest rates, considering the special interests as they applied, the bringing about of a central place for foreign currency and foreign trade, and the regulation of relations with foreign count tries, to the end that the domestic market be considered and with special attention to the export trade which is absolutely necessary to German life, Regulation of German finance and insurance, the displacement of methods of balancing and property along the lines of productivity, expansion of German raw materials, the production of new national industries, technical changes -- that is all contained in this so-called economic recovery program.
tion of the Party for economic matters. It was my hope that the Party Would acknowledge these principles. In later years I had great difficulty with the various Party branches because of my economic principles, and I was considered in Party circles a liberal and an outsider because of those economic beliefs. I combatted the tendency and on the strength of it was in constant conflict with the labor front, but I was supported especially in some of my economic views by Reichsmarschall Goering and at my suggestion, even during the war, parts of the Hermann Goering Works were, once more put back on a private basis. only average production. Staatswirtschaft (State Economy) means a sterile economy and economy which does not foster the utmost competition or individual effort, and any economy which lacks these elements of competition and initiative will remain sterile and will be at best mediocre in its results. and it was a great disappointment to me when finally in the last years the Fuehrrer very vehemently turned toward the middle-class and bourgeois world, making a fiasco of my entire life's work.
THE PRESIDENT: Dr. Sauter, it seems he might get on to something more import ant than this, his views as between state economy and private enterprise.
DR. SAUTER: Yes, Mr. President. BY DR. SAUTER:
Q Dr. Funk, you know the tremendous problem of unemployment at that time made it possible for Hitler to get to power. What views: did you have for the elimination of unemployment, especially since you knew that problem?
THE PRESIDENT: Dr. Sauter, we have heard nearly all the defendants on the conditions which obtained in Germany at that time, and there is no charge against these defendants for trying to re-establish German economy between the years 1933 and 1939.
DR. SAUTER: Yes, of course, Mr. President. I wanted to put a question to the defendant, Dr. Funk, just how he envisioned the elimination of unemployment; for from the testimony of other defendants, I gathered that he had a. different way of doing away with unemployment, such as through, re -armament, perhaps. But in this case, as far as I know, this does not apply, and I believe when we come to judge the defendant Funk, this problem is of significance to him, the matter of how he viewed the elimination of unemployment, whether through re-armament or through another way.
I believe it will not take very much time, Mr. President. The defendant Funk, I am sure, will be very brief -- perhaps just a sentence or two.
THE PRESIDENT: He can answer that in a sentence, I should think. BY DR. SAUTER: time I viewed the elimination of unemployment according to a very solid, plan, but without armament, but things which I would have to explain. But in any event, at that time, re-armament was not even discussed.
Q But can you just tell us in a few words?
A First of all, work was on the streets, so to speak. It was absolutely necessary to build streets and highways, it was necessary to bring about a revitalizing of the automotive industry, an industry which, of course, had to be protected. There was a building and housing program. Hundreds of thousands of houses were lacking and were needed.
the proper light on the subject. Up until the war, of the entire productivity of Germany, two-thirds went to private consumption, only one-third for State needs. Up until that point, the armament industry did not play a decisive role.
Q Dr. Funk, now we will turn to another problem. You will remember that the Prosecution contended in their trial brief that the accusation against you was largely a diverted one. I assume, therefore, an argument which is less concerned with your actions, but rather is based on your offices. Therefore, I am interested. Which party offices did you have?
Q (Interposing) These are party offices, not State offices.
A I understand. In the year 1932, and for only a few months, I received party directives and missions. At that time, Gregor Strasser wanted to give me an office for privatwirtschaft--private economy. This office, however, was dissolved a few months later when he himself left the party and its offices. economy.
Q That is in December of 1932? office, also. Both instructions, or offices, were insignificant, and therefore never accomplished anything in the short time of their duration. All the se I gentlemen can confirm me on this, all the defendants who had leading positions in the party at that time.
But beyond that, I never had a party office; that is, after 1933, I did I not have any instructions from the party, and no party office. Economy, if I understood you correctly, existed for just a few months in the year 1932, but did not actually function. And of the other, this Commission for Economic Policy, you were made the head in December of 1932. Then a month later, in February of 1933, just shortly after taking over power, this socalled office was given up by you; is that correct?
member of any organization of the party - of the SA, of the SS, or any other organization, branch, or affiliation of the party? SA nor to the SS, or any other organization, and, as I have already said, did not belong to the Corps of Political Leaders.
Q You did not belong to the Corps of Political Leaders?
Q You know, Dr. Funk, that the party functionaries, that is the Old Guard, and so forth, annually, in November, met in Munich; and we saw a film showing some of these functions.
ber? Were you ever invited?
A. Whether I was invited I do not know. That may be. But I was never present at a gathering of this kind, for these were gatherings which were for the old party members, and of the Old Guard. They were in commemoration of the March on the Feldherhalle; and, as I say, I never participated in these gatherings, as I rarely attended larger gatherings. I never liked to attend. I only attended a party rally once. Mass gatherings always brought physical pain to me.
Q. Mr. Witness, after you had become a minister, did you receive the golden party emblem?
A. No; I received that when I was press chief of the Reich government
Q. You did not get it as minister?
A. No.
Q. How long had you been a National Socialist member of the Reichstag?
A. For just a few months.
Q. From when to when?
A. From July of 1932 until February of 1933. Then I was not reelected, for the Chairman of the Reichstag Organization, Dr. Frick, said that according to a directive of the Fuehrer, only the old party members would be called in. But I had a State position.
Q. Then with these laws, these laws which are especially important to this proceeding, such as the Ermaechtigungsgesetz, the Enabling Act, which for all practical purposes eliminated the Reichstag, or the law for the prohibiting of political parties, or the law dealing with the unity of party and State -- as far as all these laws are concerned, which were in preparation for later development, were you still a member of the Reichstag at that time, or had you been eliminated already?
A. I was not in the Reichstag any longer. But even so, I considered these laws necessary.