Another way in which he tried to sabotage armaments was when the industries which applied for loans to expand their factories were prohibited from doing so by Schacht, and thus were prevented from expanding. The termination of the Reichsbank credit did not only mean that the Reichsbank could no longer finance armaments, but it dealt a serious blow to armament itself. This was shown in 1938, when financing became extremely difficult in all fields and, upon Schacht’s resignation, immediately reverted to the direct credits of the issuing bank, which was the only means of maintaining elastic credit, perpetual credit, so to speak, which Hitler needed and could never have received from Schacht.
I know that from my personal recollection, because I protested against that law which was put to me and which Hitler issued after Schacht’s dismissal. I said to the Vice President: I am not going to have anything to do with it.
Thereupon, I was immediately dismissed ten days after the dismissal of Schacht.
DR. DIX: Well, Herr Vocke, for an outsider the motive for stopping the financing of armaments might have been purely economic. Have you any grounds, have you any experience which shows that Schacht was now also afraid of war, and wanted to prevent a war by this stoppage of credit?
VOCKE: Yes. At any rate, in 1938 the feeling that this tremendous armaments program which had no limits would lead to war became stronger and stronger, especially after the Munich Agreement. In the meantime Schacht had realized, and I think the Fritsch affair had made it very clear to him, that Hitler was the enemy, and that there was only one thing to do; that was to fight against Hitler’s armament program and warmongering by every possible means. These means, of course, were only financial, such as the sabotage, et cetera, as I have already described. The final resort was the memorandum by which Schacht forced his resignation.
DR. DIX: We will speak later about that. May I ask you another question? The Tribunal knows about the method of financing this credit, namely, by mefo bills, so you need not say anything about that. What I want to ask you is now, in your opinion as a lawyer, could the financing of armaments by these mefo bills be reconciled with banking law?
VOCKE: The mefo bills and the construction of that transaction had, of course, been legally examined beforehand; and the point of their legality had been raised with us, and the question as to whether these bills could be brought under banking law had been answered in the affirmative. The more serious question, however, was whether these bills fulfilled the normal requirements which an issuing bank should demand of its reserves. To that question, of course, the answer is definitely “no.”
If one asks, why did not the bank buy good commercial bills instead of mefo bills, the answer is that at that time there had been no good commercial bills on the market for years—that is, since the collapse due to the economic crisis. Already under Brüning schemes for assisting and restoring economy and credit had been drawn up, all of which followed similar lines, that is, they were sanctioned according to their nature as normal credits along the lines of a semipublic loan; for the Bank was faced with the alternative of standing by helplessly and seeing what would happen to the economy or of helping the Government as best it could to restore and support the economy. All issuing banks in other countries were faced with the same alternative and reacted in the same manner. Thus the armaments bills, which, economically speaking, were nothing more than the former unemployment bills, had to serve the same purpose. From the point of view of currency policy the Reichsbank’s reserves of old bills, which had been frozen by the depression, were again made good.
All the regulations under banking law, the traditional regulations concerning banking and bills policy, had only one aim, namely, to avoid losses.
DR. DIX: I believe, Herr Vocke, it will be sufficient for the Tribunal if you could confirm that in the end the legal experts of the Reichsbank pronounced the mefo bills to be legal. The reasons for this, if Your Lordship agrees, we can omit.