Dr. Hjalmar Horace Greeley Schacht

Hjalmar Schacht Minister of Economics

Dr. Hjalmar Horace Greeley Schacht (22 January 1877 - 3 June 1970) was a German financial expert and Minister of Economics from 1935 until 1937.

Education and rise to President of the Reichsbank

Schacht was born in Tingleff, Imperial Germany (now in Denmark) to William Leonhard Ludwig Maximillian Schacht and Danish baroness Constanze Justine Sophie von Eggers. 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. Schacht studied medicine, philology and political science before earning a doctorate in economics in 1899 - his thesis was on mercantilism . 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 joined the Dresdner Bank in 1903, where he became deputy director from 1908 to 1915. He was then a member of the committee of direction of the German National Bank for the next seven years, until 1922, and after its merger with the Darmstädter und Nationalbank (Danatbank), a member of the Danatbank's committee of direction.

In November 1923, he became currency commissioner for the Weimar Republic and participated in the introduction of the Rentenmark. After his economic policies helped reduce German inflation 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. 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 the obtention of a loan . After modifications by Hermann Müller's government to the Young Plan during the Second Conference of The Hague (January 1930), he stepped down from the position of Reichsbank Chairman on March 7, 1930. During 1930, Schacht campaigned against the war reparations requirement in the United States .

Schacht had left the small German Democratic Party, which he had helped found, in 1926 and later came to lend his support to (but did not join) the Nazi Party, to which he became closer between 1930 and 1932. Close for a short time to Heinrich Brüning's government, he shifted to the right by entering the Harzburg Front in October 1931 .

After the July 1932 elections, which saw the Nazis obtain more than a third of the seats, he helped the Nazi Wilhelm Kepler to organize a petition of industrial leaders requesting that President Hindenburg nominate Adolf Hitler as Chancellor of Germany. He returned as Reichsbanck Chairman on March 17, 1933 after Hitler's rise to power.

Involvement in the Nazi Party

Though never a member of the Nazi Party, Schacht helped to raise funds for the party after meeting with Adolf Hitler. In August 1934 Hitler appointed Schacht as his Minister of Economics. Schacht supported public works programs, most notably the construction of autobahns (highways) to attempt to alleviate unemployment - policies which had been instituted in Germany under legislation drawn up by Kurt von Schleicher's government in late 1932, and had in turn influenced Roosevelt's policies. He also introduced the 'New Plan', Germany's autarchic attempt to distance itself from foreign entanglements in its economy, in September 1934. Germany had accrued a massive foreign currency deficit during the Great Depression, and it continued into the early years of the Nazis' reign. Schacht negotiated several trade agreements with countries in South America, and South-East Europe, ensuring that Germany would continue to receive raw materials from those countries, but that they would be paid in Reichsmarks; thus ensuring that the deficit would not get any worse; whilst allowing the Nazis 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 1935 and was awarded honorary membership of the Nazi Party and the Golden Swastika in January 1937.

Although somewhat hostile to Jews, Schacht disagreed with what he called "unlawful activities" against them and in August 1935 made a speech denouncing Julius Streicher and the articles he had been writing in Der Stürmer.

Schacht began to lose power after the implementation of the Four Year Plan in 1936 by Hermann Göring. He resigned as Minister of Economics and General Plenipotentiary in November 1937 at the request of the Minister of Economics, Göring, due to disagreements with Hitler and Göring over military spending, which he believed would cause inflation. He was re-appointed President of the Reichsbank until Hitler dismissed him from his position in January 1939. After this Schacht held the title of Minister without Portfolio, mainly an honorific title, and received the same salary that he did as President of the Reichsbank until he was fully dismissed in January 1943.

Imprisonment and subsequent life

Involved in various putsch attempts between 1939 and 1941, he was arrested on 23 July 1944, accused of having participated in the July 20 Plot to assassinate Hitler . He was sent to Ravensbrück and Flossenburg until he was liberated in April 1945. He was arrested by the Allies and accused of war crimes at the Nuremberg Trials, but was acquitted and released in 1946. He was again arrested by Germans, tried in a denazification court and sentenced to eight years in a work camp, but was released early in September 1948. He formed the Düsseldorfer Aussenhandelsbank Schacht & Co. after his release and became an economic and financial advisor for developing countries, in particular Non-Aligned head of states, often also anti-Zionists . Schacht died in Munich, Germany on 3 June 1970.

Schacht at the Nuremberg trials

Schacht in 1946, during the Nuremberg trials.

Schacht was tried for crimes against peace in Nuremberg in 1946. His defence was that he was only a banker and economist, even though evidence showed that he participated in meetings that directly helped bring the Nazis to power, and that he admitted to breaking the Treaty of Versailles. He had created schemes to regiment the German workforce and gut the union movement, even before the election of Hitler.

The judges were split on his case due to a lack of evidence against Schacht during the war years.

Robert Jackson, a member of the prosecution team and an Associate Justice of the United States, was so outraged at the trial result that he lashed out at Schacht as "the most dangerous and reprehensible type of all opportunists, someone who would use a Hitler for his own ends, and then claim, after Hitler was defeated, to have been against him all the time. He was part of a movement that he knew was wrong, but was in it just because he saw it was winning." However, since Schacht had lost his important posts before the war, kept in close contact with dissidents such as Hans Bernd Gisevius throughout the war, and spent most of the last year of the war as a concentration camp prisoner himself, building a successful case against him would prove difficult. His defenders argued that he was just a patriot, who was trying to make the German economy great. Furthermore, it was argued that when he saw what atrocities Hitler was committing the evidence suggests he did not approve, and that fundamentally he was not a Nazi party member and shared very little of their ideology.