27 Nov. 45

program is emphasized by the disguised financing, both before and after the announcement of conscription and the rebuilding of the Army, 16 March 1935.

I have, if the Court please, an unsigned memorandum by the Defendant Schacht dated 3 May 1935 entitled "The Financing of the Armament Program" (Finanzierung der Rüstung). As I say, it is not signed by the Defendant Schacht, but he identified it as being his memorandum in an interrogation on the 16th of October 1945. I would assume that he would still admit that it is his memorandum. That memorandum has been referred to but I believe not introduced or accepted in evidence. I identify it by our Number 1168-PS, and I offer it in evidence as Exhibit USA-37.

I think it is quite significant, and with the permission of the Court I shall read the entire memorandum, reminding you that the German interpreter has the original German before him to read into the transcript. "Memorandum from Schacht to Hitler" identified by Schacht as Exhibit A, interrogation 16 October 1945, Page 40 May 3, 1935 is the date of the memorandum.

"Financing of Armament. The following explanations are based upon the thought that the accomplishment of the armament program with speed and in quantity is the problem of German politics; that everything else therefore should be subordinated to this purpose as long as the main purpose is not imperiled by neglecting all other questions. Even after March 16, 1935 the difficulty remains that one cannot undertake the open propagandistic treatment of the German people for support of armament without endangering our position internationally (without loss to our foreign trade). The already nearly impossible financing of the armament program is rendered hereby exceptionally difficult.

"Another supposition must also be emphasized. The printing press can be used only for the financing of armament to such a degree as permitted by maintaining of the money value. Every inflation increases the prices of foreign raw materials and increases the domestic prices and is therefore like a snake biting its own tail. The circumstance that our armament had to be camouflaged completely till 16 March 1935, and since this date the camouflage had to be continued to an even larger extent, made it necessary to use the printing press (bank note press) already at the beginning of the whole armament program, while it would have been natural to start it (i. e., the printing press) at the final point of finance. In the portfolio of the Reichsbank are segregated bills of exchange for this purpose (that is, armament) of 3,775 mil-