27 Nov. 45

lions and 866 millions, altogether 4,641 millions, out of which bills of exchange for armament amount to 2,374 million Reichsmark, that is of April 30, 1935. The Reichsbank has invested the amount of marks under its jurisdiction, but belonging to foreigners, in bank notes of armament.

"Our armaments are also financed partly with the credits of our political opponents. Furthermore, 500 million Reichsmark were used for financing of armaments which originated out of the federal loans which were invested in the saving banks in the year 1935. In the regular budget the following amounts were provided for the Armed Forces:

"For the budget period 1933 to 1934--750 million Reichsmark; for the budget period 1934 to 1935--1,100 million Reichsmark; and for the budget period 1935 to 1936--2,500 million Reichsmark.

"The amount of deficits of the budget since 1928 increases after the budget 1935 to 1936 to 5 to 6 billion Reichsmark. This total deficit is already financed at the present time by short-term credits of the money market. It therefore reduces in advance the possibilities of utilization of the public market for the armament. The Reichsfinanzminister"--Minister of Finance--"correctly points out at the defense of the budget:

" 'As a permanent yearly deficit is an impossibility, as we cannot figure with security increased tax revenues in an amount balancing the deficit and any other previous debits, as on the other hand a balanced budget is the only secure basis for the impending great task of military policy,'"--I interpolate that evidently the Defendant Schacht knew about the impending great military task to be faced by Germany.--

" 'for all these reasons we have to put in motion a fundamental and conscious budget policy, which solves the problem of armament financing by organic and planned reduction of other expenditures, not only from the point of receipt, but also from the point of expenditure, that is, by saving.'

"How urgent this question is, can be deduced from the following, that very many tasks have been undertaken by the State and Party"--it isn't ever just the State; it is the State and the Party-"and are now in process, all of which are not covered by the budget, but from contributions and credits, which have to be raised by industry in addition to the regular taxes. The existence of various budgets side by side, which serve more or less public tasks, is the greatest impediment for gaining a clear view of the possibilities of financing the armaments. A large number of ministries and