Hjalmar Schacht

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Revision as of 23:57, 7 August 2008

Doctor Hjalmar Horace Greeley Schacht (born on January, 22 1877 at Tingleff, Germany)is a German economist. Widely known for his tenure as President of the Reichsbank during the Tirpitz Chancellorship and the success of its investments in Central Europe, he is the current German State Secretary for Finance since 1933.

Education and rise to President of the Reichsbank

Schacht was born in Tingleff, Schleswig-Holstein, Prussia, German Empire to William Leonhard Ludwig Maximillian Schacht and Danish baroness Constanze Justine Sophie von Eggers. 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. Schacht studied medicine, philology and political science before earning a doctorate in economics in 1899 — his thesis was on mercantilism.

He joined the Dresdner Bank in 1903, where he became deputy director from 1908 to 1915. He was then a member of the committee of direction of the German National Bank for the next seven years, until 1922, and after its merger with the Darmstädter und Nationalbank, a member of the Danatbank's committee of direction. 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.

During the Weltkrieg, Schacht was tasked to serve on the staff of General von Lumm, the Banking Commissioner for Occupied Belgium (Now Flandern-Wallonia). Schacht was responsible for organizing the financing of Germany's purchasing policy within the country, and 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.

Subsequent to Schacht's dismissal from the public service, he resumed a brief stint at the Dresdner Bank, before moving on to various positions within rival establishments. In 1923, Schacht applied and was rejected for the position of head of the Reichsbank, largely as a result of his dismissal from von Lumm's service.

Despite the small blemish on his record, in November 1923, Schacht became currency commissioner for the German Empire 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. After his economic policies helped reduce German inflation and stabilize the German mark (Helferich Plan), Schacht was appointed president of the Reichsbank at the requests of Kaiser Wilhelm II and Chancellor Gustav Stresemann. He collaborated with other prominent economists to form the 1929 Young Plan to modify the way that war reparations were paid after Germany's economy was destabilizing 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 the obtention of a loan. After modifications by Hermann Müller's government to the Young Plan during the Second Conference of The Hague (January 1930), he stepped down from the position of Reichsbank Chairman on March 7, 1930.