Summarizing his past activity, Schacht wrote in January 1937: "I worked out the preparation for war in accordance with the principle that the plan of our war economy must be built in peace time in such a way that there will be no necessity for any reorganization in case of war". Schacht confirmed his statement in court (Transcript, Afternoon Session, 2 May 1946).

Schacht consciously and deliberately prepared Germany for war.

d) The former Minister of War Von Blomberg testified that: "Schacht was fully cognizant of the plans for development and increase of the German Armed Forces, since he was constantly informed . . . . of all the financing necessary for the development of the German armed forces" (USA-838).

On 31 August 1936, Von Blomberg informed Schacht that: "The establishment of all the Air Force units must be completed by 1 April 1937, and therefore large expenditures must be entailed in 1936 . . . " (PS-1301, USA-123).

In the spring of 1937, Schacht participated in the military exercises in Godesberg (EC-174).

e) In his memorandum to Hitler on 3 May 1935, entitled the "Financing of Rearmament", Schacht wrote: "A speedy fulfillment of the program for rearmament on a mass scale is the basis of German policy, and, therefore, everything else must be subordinate to this task; the completion of this task, the achievement of this purpose must meet no obstacles . . . " (PS-1168, USA-37).

In his speech on 29 November 1938, Schacht announced that Reichsbank's credit policy made it possible for Germany to create an "unsurpassed machine, and, in turn, this war machine made possible the realization of the aims of our policy" (EC-611, USA-622).

One must exclude the supposition that Schacht was not informed as to what purposes these weapons were to serve since he could not but take into consideration their unprecedented scale and an obvious preference for offensive types of weapons (heavy tanks. bombers, and so on). Besides, Schacht knew perfectly well that not a single country intended to wage war on Germany nor had it any reasons to do so.

a) Schacht utilized the military might growing under his direction to back Germany's territorial demands which grew in proportion to the increase in armaments.

Schacht testified in Court that "at first he confined himself (in his demands) to the colonies which had once belonged to Germany" (Transcript, Morning Session, 3 May 1946).

In September 1934, during his talk with the American Ambassador Dodd, Schacht pointed out that he desired annexation if pos-