DR. DIX: If you as President of the Reichsbank turned down those credits, then it seems there was nothing for it but to print more notes. Did Hitler or anyone else suggest to you that the note printing presses should be set in motion?
SCHACHT: After the events of November 1938 I paid one more visit to London, in December, to attend a conference regarding the financing of the Jewish emigration from Germany in an orderly manner—a thing which I myself had suggested. On that occasion I also talked with Prime Minister Chamberlain. On 2 January 1939 I arrived at the Berghof in Berchtesgaden to report to Hitler about these matters. On that occasion we, of course, also got to talk about the financial needs of the Reich. I still refused to give credit to the Reich, and pointed out the very difficult financial situation which called for, or should have called for, a reduction of State expenditure and thus of armament expenditure.
In particular, I pointed out that at the beginning of December the first instalment of the so-called Jewish fine—which had been imposed on the Jews after the murder of Herr Vorn Rath in Paris and which had been collected to the extent of 250 million marks at the beginning of December—that this first instalment of 250 million marks had not been received entirely in the form of cash, but that the Reich Minister of Finance had had to agree to accept a considerable part of it “in kind,” as the English say, because it was not possible to make liquid the cash necessary for this payment. Hitler replied: “But we can circulate notes on the basis of these goods. I have looked into the question of our future financial policy very carefully and when I get back to Berlin in a few days I shall discuss my plans with you and the Minister of Finance.”
I saw at once that it was Hitler’s intention to resort to the printing of notes to meet this expenditure with or without the necessary cover, but at any rate against certain securities. The danger of inflation was now definitely imminent. And since I realized at once that this was the point where I and the Reichsbank had to say “stop,” I replied to him, “Very well, in that case I will get the Reichsbank to submit a memorandum to you, setting out the attitude of the Reichsbank to this problem and which can be used at the joint meeting with the Finance Minister.”
After that I went back to Berlin and informed my colleagues in the Reichsbank Directorate. We saw, to our personal satisfaction, that here was an opportunity for us to divorce ourselves definitely from that type of policy.
The memorandum dated 7 January which the Reichsbank Directorate then submitted to Hitler has, I think, also been submitted as evidence by the Prosecution.
In order to explain the statements which the Reichsbank Directorate made to Hitler in this decisive moment regarding further State expenditure and especially armament expenditure, I ask permission to read only two very brief sentences from this memorandum. It says, and I quote:
“Unrestrained public expenditure constitutes a definite threat to our currency. The unlimited growth of government expenditure defies any attempts to draw up a regulated budget. It brings State finances to the verge of ruin despite a tremendous increase in taxes, and it undermines the currency and the issuing bank.”
Then there is another sentence, and I quote:
“...if during the two great foreign political actions in Austria and the Sudetenland an increase in public expenditure was necessary, the fact that after the termination of these two foreign political actions a reduction of expenditure is not noticeable and that everything seems rather to indicate that a further increase of expenditure is planned, makes it now our absolute duty to point out what the consequences will be for our currency.