Hjalmar Schacht was born on January 22nd 1877 in Tingleff, Schleswig (now Tinglev in Denmark). Schacht did not come from an economics background as would befit a man who was to be put in charge of the main bank of Nazi Germany. After high school in Berlin, Schacht studied medicine at Kiel, German philosophy at Berlin and political science at Munich. It was only after this that he studied for a doctorate in economics at Berlin. After his years of studying, Schacht started work for the Dresdner Bank in 1903 and became a deputy director in 1908.
During World War One, Schacht worked as part of the occupying German force in Belgium. Schacht worked under the command of General von Lumm and it was von Lumm who dismissed Schacht when he found out that Schacht was using the Dresdner Bank to channel national bonds worth 500 million Belgium francs that were used to pay for requisitions. Von Lumm believed that Schacht’s previous association with Dresdner Bank left him open to questions being asked about his professionalism. While this could have hindered any potential advance in the banking world, it turned out to be no more than a blemish.
In 1916, he was appointed director of the National Bank of Germany at the age of 39. Schacht did what he could to socially advance himself and while publicly professing that he was a monarchist, he helped to found the German Democratic Party.
As a senior German banker, Schacht had to deal with the hyperinflation of 1923 which wiped out the savings of very many people in Weimar Germany. He was officially the Currency Commissioner for Weimar Germany. It was Schacht who took the credit for the introduction of the ‘Retenmark’ that helped to stabilise Weimar’s currency. His secretary of the time later said that while he was trying to broker deals to drag the republic out of the financial mess it was in, he worked very long hours, barely ate and left his office just in time to catch the last tram home.
His reward came in December 1923 when Schacht was appointed President of the Reichsbank, Germany’s leading financial institution, by President Hindenburg and Chancellor Gustav Stresemann. Schacht had developed a reputation as a highly successful financial ‘Mr Fix-It’ and his reputation went before him. However, Schacht resigned in March 1930 because he did not agree with the terms of the Young Plan. While he had been in favour of the Young Plan in its original form, he objected to the final version that he believed was being imposed on Weimar by the Americans as opposed to being negotiated by both parties. Schacht was primarily concerned at the growing foreign debt that had been created by the Weimar government.
It was also at this time that Schacht came to the conclusion that Chancellor Brűning was allowing himself to be influenced too much by socialist economic principles. He feared that Weimar was heading towards another bout of chronic inflation and that everything he had tried to establish would be undermined.
Schacht claimed to have read ‘Mein Kampf’ in 1930. He believed that Germany needed a strong leader as he convinced himself that Hitler would create “a sound economy in a strong state” and that Germany deserved a “strong government based on a broad national movement”.
Schacht introduced Hitler to wealthy industrialists. A conservative, Schacht joined the ‘Harzburg Front’ in October 1931. This was an alliance of right wing nationalists who were opposed to the government of Heinrich Brűning. Many members were very wealthy industrialists or bankers and probably the most famous member was Alfred Hugenberg, a tycoon and leading German nationalist. Hitler was also present when they met at Bad Harzburg. Hugenberg warned that Germany faced being taken over by ‘Bolshevism’ under the government of Brűning and that Germany needed a strong government. Hitler addressed the meeting and repeated what Hugenberg said. However, the Harzburg Front failed to get what it wanted – the removal of Brűning and Hitler, while he grasped the opportunity of spreading his beliefs to highly wealthy individuals, had no desire to be linked up with Hugenberg as he believed, probably correctly, that Hugenberg wanted to use the Nazi’s popularity with the voting public for his own purposes. However, it brought Schacht into contact with the future Chancellor. Schacht said:
“I am no National Socialist, but the basic ideas of National Socialism contain a great deal of truth.”
As well as being appointed head of the Reichsbank, Hitler appointed Schacht Reich Minister of Economics – a post he held from August 1934 to November 1937. Despite the huge amounts of money being spent on rearmament, Schacht managed to keep inflation under control.
He supported the public works schemes introduced by the Nazis – especially the building of the motorways (autobahns) – and attempted to deal with Germany’s huge foreign currency deficit.
Publicly, Schacht gave his full support to Hitler. He was given an honorary membership to the Nazi Party (NSDAP) and awarded the Golden Swastika in January 1937.
However, various incidents in Nazi Germany made him question the direction Germany was taking. The Night of the Long Knives, the Blomberg-Fritsch crisis and the increasing persecution of the Jews all served to undermine Schacht’s support for the regime. He also advised Hitler to reduce his spending on rearmaments and to move away from protectionist policies – something opposed by Hermann Goering who had been appointed head of the Four Year Plan. It would always be the case that at this time in the history of Nazi Germany, Goering would have more of the ear of Hitler than Schacht could ever hope to do.
In November 1937 he resigned as Minister of Economics but Hitler retained him as Minister without Portfolio between 1937 and 1943. He was also renamed as President of the Reichsbank in 1938 but was dismissed from the position in 1939.
During World War Two, Schacht played a part in the resistance movement against Hitler but ceased his activities in 1941. The failure of the July Bomb Plot of 1944 put his life in danger. Schacht was arrested and sent to three concentration camps – Ravensbrűck, Flossenbűrg and Dachau. In April 1945, the SS moved him to Tyrol where they left him. Schacht was arrested by the Americans on May 5th 1945 and taken into custody.
Schacht was put on trial at Nuremberg – an act that infuriated him. He was charged with organising an economy for war – though the court recognised that rearmament was not in itself a criminal act. The court found him not guilty as it could not establish that he had been involved in a plot to engage in aggressive war and they accepted his argument that he had lost all important positions in 1937 and as a result simply could not have participated in any planning for war. Schacht was acquitted.
However, he was later re-arrested and charged under West Germany’s denazification laws. He was sentenced to eight years in prison as he was deemed to be a major offender. He appealed and on September 2nd 1948, Hjalmar Schacht was released from prison.
Schacht was charged on three other occasions but always cleared. In 1953, he founded a private banking house in Dusseldorf.
Hjalmar Schacht died in Munich on June 3rd 1970.