Hjalmar Schacht - Involvement With The Third Reich Government

Involvement With The Third Reich Government

By 1926, Schacht had left the small German Democratic Party, which he had helped found, and was 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 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: first, his objection to the inclusion of Socialist Party elements in the government, and the effect of their various construction and make-work projects on public expenditures and borrowings (and the consequent undermining of the government's anti-inflation efforts); second, on 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." Schacht was convinced that if the German government were ever to commence a wholesale reindustrialization and rearmament in spite of 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 July 1932 elections, in which the NSDAP got more than a third of the seats, Schacht and Wilhelm Kepler organized a petition of industrial leaders requesting that President Hindenburg appoint Hitler as Chancellor. After Hitler took power in January 1933, Schacht was re-appointed Reichsbank President on 17 March.

In August 1934 Hitler appointed Schacht as his 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 Roosevelt's policies. 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 Swastika 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 Streicher 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 around 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. H. H. 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 Göring's request. He remained President of the Reichsbank until Hitler dismissed him in January 1939. After this Schacht held the empty title of Minister without Portfolio, and received the same salary, until he was fully dismissed in January 1943.

Following the Kristallnacht of November 1938, Schacht publicly declared his repugnance at the events, and suggested to Hitler that he should use other means if he wanted to be rid of the Jews. He put forward a plan in which Jewish property in Germany would be held in trust, and used as security for loans raised abroad, which would also be guaranteed by the German government. Funds would be made available for emigrating Jews, in order to overcome the objections of countries that were hesitant to accept penniless Jews. Hitler accepted the suggestion, and authorised him to negotiate with his London contacts. However although Montagu Norman, governor of the Bank of England, and Lord Bearstead, a prominent Jew, were in favour, it was rejected by the spiritual leader of the London Jews, Chaim Weizmann.