Reichsbank

“ DR. SAUTER: You always refer to the Gold Discount Bank. The Tribunal would be interested to know whether the Gold Discount Bank is identical with the Reichsbank, whether it was also under the jurisdiction of the Defendant Funk and your own, and what was its position?
PUHL: The Gold Discount Bank was an institute subsidiary to the Reichsbank; it was founded in the twenties for various purposes, not only for the promotion of exports, but also for the increase of production. The capital structure... ”

“ Of all German financial institutions the most influential and prosperous is the Deutsche Bank. It has been aptly termed an empire within the empire. Its capital, 250 million francs, exceeds that of the Reichsbank by thirty millions. ”

“ The Reichsbank, by far the most powerful banking institution in Germany, is managed by the bank directory appointed by the chancellor of the empire. The shareholders join in the management through a committee, of which each member must be qualified by holding not less than three shares. The government exercises complete powers of control through the chancellor of the empire. ”

“ A. Principally with the Dresdner Bank, because they get interest upon it.
Q. Do they pay interest on deposits?
A. They pay an average of 4 per cent., which may be considered as an almost permanent rate. The money they get is in most cases money for a long period. They have to compete with the savings banks.
Q. Are the small societies at all in competition with the Reichsbank, where they have a branch?
A. No. There is no competition. They do a business which the Reichsbank would not do. They give credit to people who would not suit the Reichsbank, because they could not give the guarantee. ”

“ In Germany, business is largely done upon credit, and especially so by small concerns and individuals, who possess no extended bank credit nor available collateral, and hence are not in position to make use of the Reichsbank or other commercial banks, or the Darlehnskassen. ”

“ By the end of the year the whole of the loan was paid up and the debt to the Reichsbank discharged. This first loan was subscribed for to the extent of about 40 millions sterling by persons who obtained loans through the war banks, and 40 millions by depositors in savings banks, leaving about 143 millions to be subscribed by Joint Stock Banks and other people. Thus they saw people pledging their securities and properties and with the proceeds taking up the loan. ”

“ FUNK: Yes, that is what I just mentioned; that Herr Puhl told me one day, I believe in 1939 or 1940, that some gentlemen from the economic section of the SS had spoken to him regarding a credit, which until that time had been granted by the Dresdner Bank and which they would now like to have from the Reichsbank. I asked Herr Puhl, “Will we get interest; is the credit secure?” ”

“ He is acknowledged to be one of the foremost American economists and the views here expressed are based on wide information.
In a great financial emergency conditions are immediately registered in the monetary and credit mechanism. Although the German Government and the Reichsbank had obviously been preparing for war long before, as soon as mobilization was ordered there was a currency panic. The private banks stopped payment in gold. Crowds then besieged the Reichsbank in order to get its notes converted into gold. ”

“ Some 2 billion can be consolidated annually by long term loans, 8 to 9 billion cannot be asked for; the possibility of making available depends on the development of the money market. Full concentration of the money market through the Reichsbank is necessary. ”

“ Publications of the National Monetary Commission, Senate Document No. 508, 61st Congress, 2nd Session, pp. 117-271.
[185] In order to facilitate its giro business and reduce the friction to a minimum, the Reichsbank has special printed forms prepared for the various kinds of transactions, the use of which is made compulsory on the public. For a simple transfer of money from one customer to another, whether they be in the same town or in different places, the "red check" is employed, which is filled out by the party making the transfer and handed in to the bank. ”

“ The object of the arrangement made between the Reichsbank and the treasury of the empire of Germany is a different one—to provide the banking accommodation required and to prevent panic, hence a rate of only 5% has been generally charged, though in 1899 the rate was 7% for a short time. As is often the case in business, a moderate rate has been accompanied by higher profit. The duty on the extra issue between 1881, when the circulation of the Bank of Germany first exceeded the authorized limit, and the close of the year 1906 amounted to £839,052. ”

“ 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. ”

“ I rejected the Leadership Principle for the Reichsbank. The Reichsbank was governed by a group of men all of whom had an equal power to vote and if there was a “tie,” the vote of the chairman was the decisive vote, and beyond that the chairman had no rights in this board.
DR. DIX: You are familiar with the affidavit of the former Reichsbank Director Puhl. Did—I put the question taking into consideration the contents of this affidavit with which the Tribunal is acquainted—Puhl also participate in giving financial help from the Reichsbank for rearmament? ”

“ He has not contended that this speech did not represent his state of mind at the time. After the occupation of the Sudetenland, he arranged for currency conversion and for the incorporation into the Reichsbank of local Czech banks of issue. ”

“ 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. ”

“ There is of course a great difference. I personally assumed that it concerned a gold deposit, that this gold consisted of gold coins or other foreign currency or small bars of gold or something similar, which had been brought in from the inmates of the concentration camps—everybody in Germany had to hand these things over—and that it was being handed to the Reichsbank, which would use it. ”

“ I remember that, urged by him, I spoke to the Reichsführer about whether the Reichsbank could utilize these items. The Reichsführer said, “Yes.” But at no time did I speak to the Reichsführer about jewelry and precious stones and watches and such things. I spoke only of gold.
Concerning what Puhl states about a financing scheme—I believe that goes back a number of years—I know Herr Puhl came to me one day and said that he was asked to give a credit for certain factories of the SS and somebody was negotiating with him about the matter. I asked him, “Is this credit secure? Do we get interest?” ”

“ The income is then no longer striking in any way. In regard to my property, the list shows that over a period of 10 years it has hardly changed, and I want to emphasize here particularly that in the last 20 years my property remained approximately the same and did not increase.
DR. DIX: If I remember rightly you reduced your own salary as President of the Reichsbank at a certain time on your own initiative?
SCHACHT: When, on Hitler’s suggestion, President Hindenburg in March of 1933 appointed me again to the position of President of the Reichsbank, Hitler left it to me to fix my own income. ”

“ Our Fleet has defended us from invasion with complete success, and the damage done by marine and aerial raiders to our property on shore is negligible. Our free gold market is said to have broken down. The proof of the pudding is in the eating. Germany, when the war began, immediately relieved the Reichsbank from any obligation of meeting its notes in gold, and frankly went on to a paper basis. ”

“ So this concerns, to a large extent, normal deposits by customers who had placed their valuables, their property, in these safe deposits which could not be got at by the Reichsbank. Consequently I cannot tell from this film which of these items were deliveries by the SS and which were genuine deposits. The Prosecutor certainly is correct when he says that no one would deposit gold teeth in a bank. It is, however, quite possible that certain functionaries of concentration camps made genuine deposits in the Reichsbank which contained such articles, to safeguard them for future use. ”

“ Now, from the testimony of Field Marshal Keitel, we have heard here that armament expenditure during these years when the Reichsbank was still co-operating, 1934-35, 1935-36, 1936-37 and so on, amounted respectively to 5,000 million Reichsmark, 7,000 million Reichsmark and 9,000 million Reichsmark; that is the estimate of experts. The production of the entire German economy during these years could be estimated approximately at 50-60,000 million Reichsmark. ”

“ Your Federal reserve banks which are intended to be the equivalent of the Central banks of other countries, such as the Bank of England, Bank of France, and the Reichsbank, should be prepared to rediscount approved bills at all times and to any extent.
The advantages to you of such a market would be the same [Pg 710] advantages that we possess, namely, liquid employment for short money; power to meet demands for money without disorganizing stock exchange prices; power to check overtrading at home, and finally, power to check a foreign drain of gold. ”

“ Currency inflation continued, and during 1921 the note circulation of the Reichsbank was nearly trebled, bringing it up to nearly six times what it had been two years earlier. Imports steadily exceeded exports in value. Some foreign investors in marks began to take fright and, so far from increasing their holdings, sought to diminish them. And now at last the German Government was called on to make important cash payments on Reparation account. Sales of marks from Germany, instead of being absorbed by foreign investors, had now to be made in competition with sales from these same investors. ”

“ Even the children know that coin has not left them richer: many, very many Germans know the Kultur War to be ruinous: but Berlin must play the Game still, and assume that the tricks and aims cannot be understood! It is lack of regard for other nations carried into German Finance; and all because the bureaucratic military heart is a stone. The piling up of State paper goes on, but not merrily, as Michael goes from Darlehnkasse to Reichsbank, one, two, three (and is about to go the fourth time!) ”

“ The private banks were at the same time obliged to erect branch offices in Berlin or Frankfort-on-Main for the payment of their notes. In consequence of this regulation numerous banks resigned the privilege of issuing notes, and at present there are in Germany but the following private note banks, issuing private notes, viz. the Bavarian, the Saxon, the Württemberg, the Baden and the Brunswick, in addition to the Imperial Bank. The Imperial Bank (Reichsbank) ranks far above the others in importance. ”

“ For instance, last September, when the Berlin exchange was at the point at which, if theory ruled in these matters, Berlin ought to have been thinking of packing up some gold to send to London, Berlin was buying gold in London and shipping it to the Fatherland, because there is always great pressure for currency in Germany at the end of September when the interest on mortgages falls due and has to be paid in cash, with the result that the Reichsbank's note circulation expands very rapidly and the backing of gold behind it has to be increased. ”

“ The French Country Bankers' Association holds its meetings in Paris, where matters of interest to bankers are discussed. (See Bankers' Magazine, July 1898.)
Germany.—Besides the Imperial Bank of Germany, the "Reichsbank," there are about 140 banks doing business in the states which form the German empire. These credit and industrial banks with their large resources have had an immense influence in bringing about the astonishing industrial development of their country. Five banks possess the right of uncovered note-issue ”

“ The Reichsbank has invested most of the German mark sums, available to its administration and belonging to foreigners, in armament bills of exchange. Thus our armament was partly financed with the property of our political opponents. Also used for the financing of the armament program were the 500 millions RM, which came together through the Reich loan placed at the savings banks in Jan 1935. In the regular budget the following amounts were provided for the armed forces: fiscal year 1933/34 RM 750 millions, fiscal year 1934/35 RM 1100 millions, fiscal year 1935/36 RM 2500 millions. ”

“ By means of this Machiavellian cycle, France was despoiled of real wealth and forced deeper into currency inflation.
In conquered territories, soldiers' banks were established (Soldatenbanken) . They were provided with special army promissory notes called Reichskredit Kassenscheme or Reich Credit Office Notes, printed without any backing. They were valid only in the country of issue. Reichskredit notes issued for Belgium had no value in France or even in Germany. The German authorities fixed an arbitrary rate of exchange between these occupation marks and the currency of the occupied country. ”