Chapter 219: Hitler's former Cabinet – A tale of Hjalmar Schacht
Chapter 219: Hitler's former Cabinet – A tale of Hjalmar Schacht
Hjalmar Horace Greeley Schacht (born 22 January 1877) was a German economist, banker, centre-right politician, and co-founder in 1918 of the German Democratic Party. He served as the Currency Commissioner and President of the Reichsbank under the Weimar Republic and was a fierce critic of his country's post-First Great War reparation obligations. He was never a member of the Nazi Party, but served in Adolf Hitler's government as President of the National Bank (Reichsbank) 1933 onward and became Minister of Economics (from August 1934 onward). While Schacht was for a time feted for his role in the German "economic miracle", he opposed Hitler's policy of German re-armament insofar as it violated the Treaty of Versailles and (in his view) disrupted the German economy. His views in this regard led Schacht to clash with Hitler and most notably with Hermann Göring.
Schacht was born in Tingleff, Schleswig-Holstein, Prussia, German Empire to William Leonhard Ludwig Maximillian Schacht and baroness Constanze Justine Sophie von Eggers, a native of Denmark. His parents, who had spent years in the United States, originally decided on the name Horace Greeley Schacht, in honor of the American journalist Horace Greeley. However, they yielded to the insistence of the Schacht family grandmother, who firmly believed the child's given name should be Danish. After completing his abitur at the Gelehrtenschule des Johanneums, Schacht studied medicine, philosophy and political science at the Universities of Munich, Leipzig, Berlin, Paris and Kiel before earning a doctorate at Kiel in 1899 – his thesis was on mercantilism.
He joined the Dresdner Bank in 1903. In 1905, while on a business trip to the United States with board members of the Dresdner Bank, Schacht met the famous American banker J. P. Morgan, as well as U.S. President Theodore Roosevelt. He became deputy director of the Dresdner Bank from 1908 to 1915. He was then a board member of the German National Bank for the next seven years, until 1922, and after its merger with the Darmstädter und Nationalbank (Danatbank), a board member of the Danatbank. Schacht was a freemason, having joined the lodge Urania zur Unsterblichkeit in 1908.
During the First Great War, Schacht was assigned to the staff of General Karl von Lumm (1864–1930), the Banking Commissioner for Occupied Belgium, to organize the financing of Germany's purchases in Belgium. He was summarily dismissed by General von Lumm when it was discovered that he had used his previous employer, the Dresdner Bank, to channel the note remittances for nearly 500 million francs of Belgian national bonds destined to pay for the requisitions. After Schacht's dismissal from public service, he had another brief stint at the Dresdner Bank, and then various positions at other banks. In 1923, Schacht applied and was rejected for the position of head of the Reichsbank, largely as a result of his dismissal from Lumm's service.
Despite the blemish on his record, in November 1923, Schacht became currency commissioner for the Weimar Republic and participated in the introduction of the Rentenmark, a new currency the value of which was based on a mortgage on all of the properties in Germany. Germany entered into a brief period where it had two separate currencies: the Reichsmark managed by Rudolf Havenstein, President of the Reichsbank, and the newly created Rentenmark managed by Schacht. After his economic policies helped battle German hyperinflation and stabilize the German mark (Helferich Plan), Schacht was appointed president of the Reichsbank at the requests of president Friedrich Ebert and Chancellor Gustav Stresemann.
In 1926, Schacht provided funds for the formation of IG Farben. He collaborated with other prominent economists to form the 1929 Young Plan to modify the way that war reparations were paid after Germany's economy was destabilizing under the Dawes Plan. In December 1929, he caused the fall of the Finance Minister Rudolf Hilferding by imposing upon the government his conditions for obtaining a loan. After modifications by Hermann Müller's government to the Young Plan during the Second Conference of The Hague (January 1930), he resigned as Reichsbank president on 7 March 1930. During 1930, Schacht campaigned against the war reparations requirement in the United States.
By 1926, Schacht had left the small German Democratic Party, which he had helped found, and began increasingly lending his support to the Nazi Party (NSDAP), to which he became closer between 1930 and 1932. Though never a member of the NSDAP, Schacht helped to raise funds for the party after meeting with Adolf Hitler. Close for a short time to Heinrich Brüning's government, Schacht shifted to the right by entering the Harzburger Front in October 1931.
Schacht's disillusionment with the existing Weimar government did not indicate a particular shift in his overall philosophy, but rather arose primarily out of two issues:
In August 1934 Hitler appointed Schacht as Germany's Minister of Economics. Schacht supported public-works programs, most notably the construction of autobahnen (highways) to attempt to alleviate unemployment – policies which had been instituted in Germany by von Schleicher's government in late 1932, and had in turn influenced Roosevelts's New Dea. He also introduced the "New Plan", Germany's attempt to achieve economic "autarky", in September 1934. Germany had accrued a massive foreign currency deficit during the Great Depression which continued into the early years of the Third Reich. Schacht negotiated several trade agreements with countries in South America and southeastern Europe, under which Germany would continue to receive raw materials, but would pay in Reichsmarks. This ensured that the deficit would not get any worse, while allowing the German government to deal with the gap which had already developed. Schacht also found an innovative solution to the problem of the government deficit by using mefo bills. He was appointed General Plenipotentiary for the War Economy in May 1934 and was awarded honorary membership in the NSDAP and the Golden Party Badge in January 1937. Schacht disagreed with what he called "unlawful activities" against Germany's Jewish minority and in August 1935 made a speech denouncing Julius Steicher and Streicher's writing in the Nazi newspaper Der Stürmer.
During the economic crisis of 1935–36, Schacht, together with the Price Commissioner Dr. Carl Friedrich Goerdeler, helped lead the "free-market" faction in the German government. They urged Hitler to reduce military spending, turn away from autarkic and protectionist policies, and reduce state control in the economy. Schacht and Goerdeler were opposed by a faction centering on Hermann Göring. Göring was appointed "Plenipotentiary for the Four Year Plan" in 1936, with broad powers that conflicted with Schacht's authority. Schacht objected to continued high military spending, which he believed would cause inflation, thus coming into conflict with Hitler and Göring.
In 1937 Schacht met with Chinese Finance Minister Dr. Hsian-hsi Kung. Schacht told him that "German-Chinese friendship stemmed in good part from the hard struggle of both for independence". Kung said, "China considers Germany its best friend... I hope and wish that Germany will participate in supporting the further development of China, the opening up of its sources of raw materials, the upbuilding of its industries and means of transportation." In November 1937 he resigned as Minister of Economics and General Plenipotentiary at both his and Göring's request. He had grown increasingly dissatisfied with Göring's near-total ignorance of economics, and was also concerned that Germany was coming close to bankruptcy. Hitler, however, knew that Schacht's departure would raise eyebrows outside Germany, and insisted that he remain in the cabinet as minister without portfolio. He remained President of the Reichsbank until the coup gainst Hitler when he returned to is old position as the Minister of Economics and General Plenipotentiary again.
Under the new imperial government of the returning Emperor Wilhelm II, Schacht helped the reintegration of Jews in the society and helped them to return with their money and property, or get back what they had lost under the Nazi's. He created a trust for this purpose and established relations with Montagu Norman, governor of the Bank of England, and Lord Bearstead, a prominent Jew, who both reacted favourably, but the spiritual leader of the London Jews, Chaim Weizmann, opposed the plan.
Because Schacht was said to be in contact with the German resistance as early as 1934, though at that time he still believed the Nazi regime would follow his policies, and because he opposed some Nazi's and their plans openly, he escaped a trial after the military coup against the Nazi government. With the beginning German victories, Schacht became Banking Commissar for he occupied Scandinavian regions and later western Europe until 1940. In 1941 this financial and military occupation and redirection of the European economies became more planned and centralized, focusing on Germany as the industrial and transportation core region of the Axis Central Powers. Later known as the Mitteleuropa Projekt (Middle Europe Alliance/ Project), Schacht became a leading member of the planning board. This lead to Schachts involvement of the EU (Economic Union) of the Axis Central Power member states and occupied regions in Europe. By far Schacht was one of the few members of Hitler's former Cabinet who did not lose, but even gained more immense power in the new German Empire and the Axis Central Power dominated Europe.
Hjalmar Horace Greeley Schacht (born 22 January 1877) was a German economist, banker, centre-right politician, and co-founder in 1918 of the German Democratic Party. He served as the Currency Commissioner and President of the Reichsbank under the Weimar Republic and was a fierce critic of his country's post-First Great War reparation obligations. He was never a member of the Nazi Party, but served in Adolf Hitler's government as President of the National Bank (Reichsbank) 1933 onward and became Minister of Economics (from August 1934 onward). While Schacht was for a time feted for his role in the German "economic miracle", he opposed Hitler's policy of German re-armament insofar as it violated the Treaty of Versailles and (in his view) disrupted the German economy. His views in this regard led Schacht to clash with Hitler and most notably with Hermann Göring.
Schacht was born in Tingleff, Schleswig-Holstein, Prussia, German Empire to William Leonhard Ludwig Maximillian Schacht and baroness Constanze Justine Sophie von Eggers, a native of Denmark. His parents, who had spent years in the United States, originally decided on the name Horace Greeley Schacht, in honor of the American journalist Horace Greeley. However, they yielded to the insistence of the Schacht family grandmother, who firmly believed the child's given name should be Danish. After completing his abitur at the Gelehrtenschule des Johanneums, Schacht studied medicine, philosophy and political science at the Universities of Munich, Leipzig, Berlin, Paris and Kiel before earning a doctorate at Kiel in 1899 – his thesis was on mercantilism.
He joined the Dresdner Bank in 1903. In 1905, while on a business trip to the United States with board members of the Dresdner Bank, Schacht met the famous American banker J. P. Morgan, as well as U.S. President Theodore Roosevelt. He became deputy director of the Dresdner Bank from 1908 to 1915. He was then a board member of the German National Bank for the next seven years, until 1922, and after its merger with the Darmstädter und Nationalbank (Danatbank), a board member of the Danatbank. Schacht was a freemason, having joined the lodge Urania zur Unsterblichkeit in 1908.
During the First Great War, Schacht was assigned to the staff of General Karl von Lumm (1864–1930), the Banking Commissioner for Occupied Belgium, to organize the financing of Germany's purchases in Belgium. He was summarily dismissed by General von Lumm when it was discovered that he had used his previous employer, the Dresdner Bank, to channel the note remittances for nearly 500 million francs of Belgian national bonds destined to pay for the requisitions. After Schacht's dismissal from public service, he had another brief stint at the Dresdner Bank, and then various positions at other banks. In 1923, Schacht applied and was rejected for the position of head of the Reichsbank, largely as a result of his dismissal from Lumm's service.
Despite the blemish on his record, in November 1923, Schacht became currency commissioner for the Weimar Republic and participated in the introduction of the Rentenmark, a new currency the value of which was based on a mortgage on all of the properties in Germany. Germany entered into a brief period where it had two separate currencies: the Reichsmark managed by Rudolf Havenstein, President of the Reichsbank, and the newly created Rentenmark managed by Schacht. After his economic policies helped battle German hyperinflation and stabilize the German mark (Helferich Plan), Schacht was appointed president of the Reichsbank at the requests of president Friedrich Ebert and Chancellor Gustav Stresemann.
In 1926, Schacht provided funds for the formation of IG Farben. He collaborated with other prominent economists to form the 1929 Young Plan to modify the way that war reparations were paid after Germany's economy was destabilizing under the Dawes Plan. In December 1929, he caused the fall of the Finance Minister Rudolf Hilferding by imposing upon the government his conditions for obtaining a loan. After modifications by Hermann Müller's government to the Young Plan during the Second Conference of The Hague (January 1930), he resigned as Reichsbank president on 7 March 1930. During 1930, Schacht campaigned against the war reparations requirement in the United States.
By 1926, Schacht had left the small German Democratic Party, which he had helped found, and began increasingly lending his support to the Nazi Party (NSDAP), to which he became closer between 1930 and 1932. Though never a member of the NSDAP, Schacht helped to raise funds for the party after meeting with Adolf Hitler. Close for a short time to Heinrich Brüning's government, Schacht shifted to the right by entering the Harzburger Front in October 1931.
Schacht's disillusionment with the existing Weimar government did not indicate a particular shift in his overall philosophy, but rather arose primarily out of two issues:
- his objection to the inclusion of Socialist Party elements in the government, and the effect of their various construction and job-creation projects on public expenditures and borrowings (and the consequent undermining of the government's anti-inflation efforts);
- his fundamentally unwavering desire to see Germany retake its place on the international stage, and his recognition that "as the powers became more involved in their own economic problems in 1931 and 1932 ... a strong government based on a broad national movement could use the existing conditions to regain Germany's sovereignty and equality as a world power."
In August 1934 Hitler appointed Schacht as Germany's Minister of Economics. Schacht supported public-works programs, most notably the construction of autobahnen (highways) to attempt to alleviate unemployment – policies which had been instituted in Germany by von Schleicher's government in late 1932, and had in turn influenced Roosevelts's New Dea. He also introduced the "New Plan", Germany's attempt to achieve economic "autarky", in September 1934. Germany had accrued a massive foreign currency deficit during the Great Depression which continued into the early years of the Third Reich. Schacht negotiated several trade agreements with countries in South America and southeastern Europe, under which Germany would continue to receive raw materials, but would pay in Reichsmarks. This ensured that the deficit would not get any worse, while allowing the German government to deal with the gap which had already developed. Schacht also found an innovative solution to the problem of the government deficit by using mefo bills. He was appointed General Plenipotentiary for the War Economy in May 1934 and was awarded honorary membership in the NSDAP and the Golden Party Badge in January 1937. Schacht disagreed with what he called "unlawful activities" against Germany's Jewish minority and in August 1935 made a speech denouncing Julius Steicher and Streicher's writing in the Nazi newspaper Der Stürmer.
During the economic crisis of 1935–36, Schacht, together with the Price Commissioner Dr. Carl Friedrich Goerdeler, helped lead the "free-market" faction in the German government. They urged Hitler to reduce military spending, turn away from autarkic and protectionist policies, and reduce state control in the economy. Schacht and Goerdeler were opposed by a faction centering on Hermann Göring. Göring was appointed "Plenipotentiary for the Four Year Plan" in 1936, with broad powers that conflicted with Schacht's authority. Schacht objected to continued high military spending, which he believed would cause inflation, thus coming into conflict with Hitler and Göring.
In 1937 Schacht met with Chinese Finance Minister Dr. Hsian-hsi Kung. Schacht told him that "German-Chinese friendship stemmed in good part from the hard struggle of both for independence". Kung said, "China considers Germany its best friend... I hope and wish that Germany will participate in supporting the further development of China, the opening up of its sources of raw materials, the upbuilding of its industries and means of transportation." In November 1937 he resigned as Minister of Economics and General Plenipotentiary at both his and Göring's request. He had grown increasingly dissatisfied with Göring's near-total ignorance of economics, and was also concerned that Germany was coming close to bankruptcy. Hitler, however, knew that Schacht's departure would raise eyebrows outside Germany, and insisted that he remain in the cabinet as minister without portfolio. He remained President of the Reichsbank until the coup gainst Hitler when he returned to is old position as the Minister of Economics and General Plenipotentiary again.
Under the new imperial government of the returning Emperor Wilhelm II, Schacht helped the reintegration of Jews in the society and helped them to return with their money and property, or get back what they had lost under the Nazi's. He created a trust for this purpose and established relations with Montagu Norman, governor of the Bank of England, and Lord Bearstead, a prominent Jew, who both reacted favourably, but the spiritual leader of the London Jews, Chaim Weizmann, opposed the plan.
Because Schacht was said to be in contact with the German resistance as early as 1934, though at that time he still believed the Nazi regime would follow his policies, and because he opposed some Nazi's and their plans openly, he escaped a trial after the military coup against the Nazi government. With the beginning German victories, Schacht became Banking Commissar for he occupied Scandinavian regions and later western Europe until 1940. In 1941 this financial and military occupation and redirection of the European economies became more planned and centralized, focusing on Germany as the industrial and transportation core region of the Axis Central Powers. Later known as the Mitteleuropa Projekt (Middle Europe Alliance/ Project), Schacht became a leading member of the planning board. This lead to Schachts involvement of the EU (Economic Union) of the Axis Central Power member states and occupied regions in Europe. By far Schacht was one of the few members of Hitler's former Cabinet who did not lose, but even gained more immense power in the new German Empire and the Axis Central Power dominated Europe.
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