Hjalmar Horace Greeley Schacht first attracted the attention of the world when he was given credit for ending the German hyperinflation of 1923, after which the economy of the Weimar Republic performed remarkably well until the 1929 recession which eventually developed into the Great Depression plaguing the advanced capitalist system in the 1930s.When the World War I reparations payments were subject to a general moratorium in 1931, Schacht played a major role in the creation of the Bank for International Settlements that was responsible for the servicing of the loans made under the Dawes and Young Plans.to Germany. These loans were finally paid off by the Federal Republic od Germany in 1980.. Schacht had certain fundamental beliefs: he opposed the paying of reparations required by the terms of the Versailles Treaty in 1919; he had the typical banker's fear of inflation and the role of governmental expenditures in the creation of rising prices; he advocated the rearmament of Germany and sincerely believed that this would contribute to world peace. By 1936, he had begun to oppose Hitler's 4-Year Plan which, under the leadership of Goering, called for a drive towards autarky and additional military spending in an economy that was already back to full employment as a result of deficit spending..
Schacht was opposed to devaluating the mark, which was increasingly seen as a solution based on Britain's devaluation of the pound in 1931 and their comparatively successful subsequent coping with the Great Depression in Great Britain. Instead, Schacht and his cohorts came up with .the Mefo bonds which were used to deficit finance the construction of the famous Autobahns. Schacht went along with the 4-Year plan only after being assured that the Mefo bonds, which he regarded as a stop-gap measure, would be paid off or retired in 1938. Presumably the inflationary impact of rising military expenditures would be offset by the deflationary retirement of the bonds.
The increasing reluctance of Schacht to go along with the Military Keynesianism of his successor, Walther Funk, who, like Schacht , was an economic journalist, showed up in Schacht's increasing criticism of Hitler and personally in his souring relationship with his first wife, Luise, who was a convinced Nazi. By the time of the serious attempt to assassinate Hitler in July 1944, Schacht was a candidate for involvement in this conspiracy and was subsequently imprisoned.by the Nazis.
Thus, it becomes more understandable why Funk received a long sentence while Schacht was acquitted following the Nuremberg Trials. Schacht's opposition to the autarky and additional military spending to support Hitler's aggressive plans saved his neck , although he was harrassed by the West German courts long after his Nuremberg acquittal.
Schacht never joined the Nazi Party and was clearly used by Hitler since his intellectual talents were too great to ignore. After the war his services were in high demand
in the Third World, particularly in Indonesia, India, Egypt, and Iran. He organized his own export company and regained some of his earlier wealth before dying in his nineties..
Professor Emeritus of Economics.