The greatest central banker of the 20th century?

Dr Hjalmar Schacht (1877-1970) was one of the most outstanding central bankers of the 20th century. He was President of the Reichsbank under the Weimar Republic ( ) and under Hitler (1933-39). He was also Feral Minster for Economic from 1934-37) and the main architect of the spectacular revival of Germany during these years. He was fiercely opposed to the increasing military adventures of the Third Reich and was dismissed in 1939. Subsequently involved in a number of anti-Nazi plots, Schacht was arrested in 1944 by the Nazis, accused of taking part in the 20rth July plot and narrowly escaped with his life, spending the rest of the war in a concentration camp. In 1953 he founded his own bank which he led for ten years and was a much valued adviser on the economic development to many 3rd world countries. His early career was spent with the Dresdner Bank. In 1923 he was became currency commissioner for the Weimar Republic. His brilliant policies reduced German inflation and he was appointed president of the Reichsbank. He stepped down in 1930 to campaign in the USA against the continuing war reparations which was undermining all efforts to improve the economic situation in Germany. He became disillusioned with the Weimar government whose socialist expenditures and borrowing were wrecking his anti-inflationary polities. His main aim was to see Germany retake its place on the international stage and he recognized that Depression would allow a strong government to regain Germany’s sovereignty and equality as a world power. After the 1932 elections when the NSDAP obtained more than a third of the seats, he organized industrial leaders to request that President Hindenburg appoint Adolf Hitler as Chancellor of Germany. Hitler subsequently appointed him Reichsbank Chairmen when he came to power and Minister of Economics a year later. In the first practical example of Keynesian economics, Schacht implemented a host of public work programs such as the autobahns and solved Germany’s chronic unemployment problem virtually overnight. Roosevelt’s policies known as the New Deal were greatly influenced by the success in Germany. However, Schacht was appalled by what he called the “unlawful activities” against Germany’s Jewish minority and in August 1935 made a speech denouncing Julius Streicher and the anti-semitism of Der Sturmer. It was the beginning of the rift between the central banker and Hitler because Schacht was essentially a free-marketer and in particular he urged the Führer to reduce military spending. He was opposed by Hermann Göring whose Four Year Plan was accepted in 1936 and thereafter Schacht was increasingly at odds with Hitler until he was finally sacked as President of the Reichsbank in 1939. To greater and lesser degrees, Schacht was then involved in numerous attempted coups in the years between his dismissal from the Reichsbank and his imprisonment in 1944. After the July 23 plot he was arrested and sent to Ravensbrück concentration camp and then to Dachau. In late April 1945 he was transferred to the Tyrol where he was initially liberated and then arrested by the Americans. His appearance at the Nuremberg Trial was the most farcical moment in the proceedings of that dismal kangaroo court. His council rightly argued that he was just a patriot, who was trying to make the German economy great. Furthermore, it was pointed out that Schacht, a liberal, was not a member of the NAZI and shared very little of their ideology. The British judges favored acquittal, while the Soviet judges opposed it but eventually common sense prevailed.

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