Horace Greeley Hjalmar Schacht (; 22 January 1877 – 3 June 1970) was a German economist, banker, politician, and co-founder of the German Democratic Party. He served as the Currency Commissioner and President of the Reichsbank during the Weimar Republic. He was a fierce critic of his country's post-World War I reparations obligations. He was also central in helping create the group of German industrialists and landowners that pushed Hindenburg to appoint the first Nazi-led government.
Schacht served in Adolf Hitler's government as President of the Central Bank (Reichsbank) 1933–1939 and as Minister of Economics (August 1934 – November 1937).
While Schacht was for a time feted for his role in the German "economic miracle", he opposed elements of 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 Hermann Göring. He resigned as President of the Reichsbank in January 1939. He remained as a minister without portfolio and received the same salary until he left the government in January 1943.Richard J. Evans, The Third Reich in Power 1933–1939. Penguin Books. . p. 153, states that he had no role in government during World War II .
In 1944, Schacht was arrested by the Gestapo following the assassination attempt on Hitler on 20 July 1944 because he allegedly had contact with the assassins. Subsequently, he was interned in the Ravensbrück, Flossenbürg, and Dachau concentration camps. In the final days of the war, he was one of the 139 special and clan prisoners who were transported by the SS from Dachau to South Tyrol. This location is within the area named by Himmler the "Alpine Fortress", and it is speculated that the purpose of the prisoner transport was the intent of holding hostages. They were freed in Niederdorf, South Tyrol on 30 April 1945.Peter Koblank: Die Befreiung der Sonder- und Sippenhäftlinge in Südtirol. Online-Edition Mythos Elser 2006.
Schacht was tried at Nuremberg, but was acquitted despite Soviet objections. Later, a German denazification tribunal sentenced him to eight years of hard labour, which was also overturned on appeal.
Early life and career Schacht was born in Tingleff, Schleswig-Holstein (now in Denmark) to William Leonhard Ludwig Maximillian Schacht and Baroness Constanze Justine Sophie von Eggers, a native of Denmark and a granddaughter of the Danish-Holsteinian civil servant . 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, philology, political science, and finance at the Ludwig-Maximilians-Universität München, Leipzig University, the Friedrich Wilhelm University of Berlin, the University of Paris and Kiel University before earning a doctorate at Kiel in 1899 – his thesis was on mercantilism.Hjalmar SCHACHT, biography by Frédéric Clavert, author of a thesis on Schacht, Hjalmar Schacht, financier et diplomate 1930–1950, University of Strasbourg, France, 2006 "Schacht, Hjalmar" in Munzinger Online/Personen – Internationales Biographisches Archiv, URL: http://www.munzinger.de/document/00000000515 (retrieved 6 March 2016)
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 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.Hjalmar Schacht, Confessions of the "Old Wizard", (Boston: Houghton Mifflin, 1956), 105.
During World War I, Schacht was assigned to the staff of General Karl von Lumm (1864–1930), the Banking Commissioner for German-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.Peterson, Edward Norman. Hjalmar Schacht: For and Against Hitler. Christopher Publishing House (Boston: 1954) pp. 24–31
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.
During the German Revolution of 1918–1919, Schacht became a Vernunftrepublikaner (a supporter of the Republic by reason rather than conviction) who had reservations over the parliamentary democratic system of the new Weimar Republic but supported it anyway for pragmatic reasons. He helped found the left-liberal German Democratic Party (DDP), which took a leading role in the governing Weimar Coalition. However, Schacht later became an ally of Gustav Stresemann, the leader of the center-right German People's Party (DVP).
Rise to President of the Reichsbank Despite the blemish on his record from his service with von Lumm, on 12 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.Peterson, Edward Norman. Hjalmar Schacht: For and Against Hitler. Christopher Publishing House (Boston: 1954) pp. 49–62 Germany entered into a brief period where it had two separate currencies: the Papiermark managed by Rudolf Havenstein, President of the Reichsbank, and the newly created Rentenmark managed by Schacht. Havenstein died on 20 November 1923.
On 22 December 1923, after Schacht's economic policies had helped battle German hyperinflation and stabilize the German Papiermark (Helfferich Plan), he was appointed President of the Reichsbank at the requests of president Friedrich Ebert and Chancellor Gustav Stresemann. Schacht's office during this time was a former charwoman's cupboard. When his secretary, Fräulein Steffeck, was later asked about his work there, she described it as follows:
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 incurred large foreign debts 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.
Schacht became a friend of the Governor of the Bank of England, Montagu Norman, both men belonging to the Anglo-German Fellowship and the Bank for International Settlements. Norman was so close to the Schacht family that he was godfather to one of Schacht's grandchildren.Neil Forbes, Doing Business with the Nazis (2013), p. 117
Involvement with the NSDAP (Nazi Party) and government
By 1926, Schacht had left the shrinking DDP and began increasingly lending his support to the Nazi Party (NSDAP). He became disillusioned with Stresemann's policies upon believing that closer relations with the United States were failing to provide economic benefits, and after his efforts to negotiate a rapprochement with the United Kingdom by pegging the Reichsmark to the pound sterling failed. Beginning in 1929, he increasingly criticized German foreign and financial policy since 1924, and demanded the restoration of Germany's former eastern territories and overseas colonies. Schacht became closer to the Nazis 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 Harzburg 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 Social Democratic 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);Simpson, Amos E. Hjalmar Schacht in Perspective. Mouton Group (Paris: 1969) pp. 30–32 his 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."Simpson, Amos E. Hjalmar Schacht in Perspective. Mouton Group (Paris: 1969) p. 179
Schacht believed that if the German government was ever to commence a wholesale reindustrialization and rearmament despite the restrictions imposed by Germany's treaty obligations, it would have to be during a period lacking clear international consensus among the Great Powers.
After the November 1932 elections, in which the NSDAP saw its vote share fall by four percentage points, Schacht and Wilhelm Keppler organized a petition of industrial and financial leaders, the Industrielleneingabe (Industrial petition), requesting president Paul von Hindenburg to appoint Adolf Hitler as Chancellor. After Hitler took power in January 1933, Schacht won re-appointment as Reichsbank president on 17 March.
On 2 August 1934, when Reich and Prussian Minister of Economics Kurt Schmitt went on an extended medical leave of absence, Hitler provisionally appointed Schacht to take over the running of the ministries. The appointment was made permanent on 31 January 1935, after Schmitt formally resigned.Protokolle des preußischen Staatsministeriums (Acta Borussica) Band 12/II (1925–1938) p. 757 (PDF; 2,14 MB) 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 Kurt von Schleicher's government in late 1932, and had in turn influenced Franklin D. Roosevelt's New Deal in the United States. But years later, Roosevelt seemed to "enjoy" recalling how Dr. Schacht was "weeping on his [FDR's] desk about his poor country." 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 Nazi rule. 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 that had already developed. Schacht also found an innovative solution to the problem of the government deficit by using Mefo bills.