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Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

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Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#21

Post by hutzlibu »

atq2119 wrote: post #6
hutzlibu wrote: post #4

Schacht might have been a brilliant state accountant, but what he and Nazi germany mostly did was taking a massive but hidden debt ... where the idea was to repay it with war treasure - which failed.

I'm not so sure about the "hidden debt" story. I have a feeling that that's a story popularized by people who want to believe that everything done under the Nazi regime was bad. The truth is that the rise of authoritarian extremism tends to be facilitated by economic uncertainty (yes, racism and xenophobia tends to play a big role as well, but immigration is always easier to stomach when jobs are plenty etc.). Stavin…

"If that means learning from a Nazi supporter (who wasn't a Nazi himself), then so be it."

I certainly do not have a problem with learning from Nazis when they did things right. I just mostly learn from them how not to do it. Regarding this example see the other reply. They invested mainly in military - which only can pay off with a succesful war.

Another important example of "how not to do it, I took from "Mein Kampf" where Hitler states how he became Antisemitic. Basically he says his instinct and feelings were allways disgusted with antisemitism, but his rational thinking convinced him more and more to the point where he made the conscious decision of being a mortal enemy to the jews. (and after that he said his intuition which he could rely on usually ... went away for a few years)

So my takeaway is, to trust more my instincts and feelings which I take for deeper thinking, and not the simple, rational thinking which is too shallow for complex things.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#22

Post by subjectHarold »

Svip wrote: post #2

The first figure is a bit obfuscating. It says 1922-1939, but only shows 1926 through 1939. Which is probably a good thing, because then it doesn't include the hyperinflation of the early 1920s, which might undermine the point of 'Nazis stabilising the economy'. By 1933, most Western economies were moving out of the Great Depression, even if the Netherlands - only economy compared here (wouldn't the UK or France be m…

The economic effect of the Autobahn is massively overstated (I would actually look to Wages of Destruction by Tooze here). Public works were important but it is as important to look at how this was all facilitated.

The reason it only shows 26-39 is that Nazis came to power in 1932. The worst year in the GD was 1931-32, other countries were not moving out by 1933, most didn't move out decisively until WW2. The UK isn't a good comparison (the UK was still way ahead of most other nations at this point, Germany wasn't particularly similar).

It is definitely possible that without Schacht, the boom wouldn't have occurred. The constraints on resources were massive and required the invention of a range of complex economic devices to manage. Even at the time, there was the same backwards thinking about this: Germany must have managed to do this because they had the resources. No, they had no resources. What they did was very unusual. The only comparison that occurs is the international monetary co-operation in the 1960s to maintain the $ peg to gold...and even then, the level of sophistication required was nowhere near and the results achieved far less significant.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#23

Post by subjectHarold »

realusername wrote: post #11
Svip wrote: post #2

The first figure is a bit obfuscating. It says 1922-1939, but only shows 1926 through 1939. Which is probably a good thing, because then it doesn't include the hyperinflation of the early 1920s, which might undermine the point of 'Nazis stabilising the economy'. By 1933, most Western economies were moving out of the Great Depression, even if the Netherlands - only economy compared here (wouldn't the UK or France be m…

> (wouldn't the UK or France be more interesting comparisons?) France wasn't affected much by the Great Depression because it had an economy centralised around the colonies, it affected a lot Germany but in France not that much.

No, the reason why was France pegging to gold at a very favourable rate in the 1920s. The UK, obviously, was not short of colonies but got absolutely rolled in this period because they pegged to gold at their old rate instead of devaluing. This led to huge unemployment issues (even before the GD). Germany suffered because they were heavily reliant on flows of US capital causing bank failures (there was a tremendous boom between 25-29).

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#24

Post by danmaz74 »

atq2119 wrote: post #16
danmaz74 wrote: post #10

Earlier quoted context omitted.

If you use a lot of borrowed money, you need that money to be invested in a way that will generate wealth that you can use to pay interests on the debt you created. The nazis used most of that money to build their army. If they hadn't used that army, it would have been wasted money, which in no way could have repaid the debt. Democratic governments can - and should - borrow to invest if they see an opportunity for fu…

What you're saying applies to private households and companies. It doesn't necessarily apply to a government that issues its own currency. Just look at the debt ratio of Japan. For that matter, look at the modern day US which also uses a lot of debt to build up its army. The point is, blanket statements such as yours have been shown again and again to be false, at least in that generality. I can only reiterate that y…

As it happens, I read quite a bit about Schacht and Nazi Germany. They spent around 15% of GDP in the army in the years before the war. And they created an enormous external debt for that, because they needed lots of raw materials they didn't have internally (oil, rubber and many others).

In the USA, military spending is just a little above 3%.

Japan's economy stopped growing years ago. Their debt is mostly internal. They pay for what they import.

If you need resources from foreign countries and can't pay for them, printing your own currency can only help for some time.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#25

Post by lkrubner »

roenxi wrote: post #5

Such articles are fascinating in the way they expose how primitive our conception of the economy is. > "This is an incredible story from an economic point-of-view. After Hitler’s election in 1933 the Nazis were able to sustain between about 8-10% GDP for five years running with an inflation rate that would be the envy of the Bank of England and other inflation-targeters today." It is so hard to know what to ask for t…

"a country that has recently been through hyperinflation"

I think you mean deflation. The hyperinflation was in 1923, but the period of 1929 to 1933 was one of shocking deflation, one without precedent in an industrialized country. Germany was left with 60% unemployment, which in a sense made a remarkable bounce back easier -- all of the factories were still there, and all of the workers still existed, they simply needed some money to be pumped through the system so the workers could go back to work at the factories.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#26

Post by mariuolo »

_19qg wrote: post #8

The view of Schacht and his relationship to the Nazi movement is way to favorable. That he wasn't a member of the NSDAP was something he claimed, but which wasn't true. Given his prominent role in the early days of the Nazi government, he was quite a strong supporter of the regime. He may have helped some Jews, but he supported the Rassegesetze, and even made personal profit from the fate of the German jews, etc. Fas…

He was fired from his ministerial job in 1937 and later sent to a concentration camp.

By that metrics, most German citizens of that generation are guilty.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#27

Post by atq2119 »

matt4077 wrote: post #18
atq2119 wrote: post #7

Earlier quoted context omitted.

Just one point to keep in mind is that Germany hadn't been through hyperinflation recently . The hyperinflation was in 1923, so it had ended almost 10 years before the Nazis came to power. That should be plenty of time to get the economy back on track. The first years of the Nazi boom can of course be explained as recovery from the recent depression, but it seems that the boom went beyond that. And it's important to…

The causality between any one adminstration/regime and economic development is far weaker than than your comment implies, at least in the short and middle term (say, a decade). Specifically, all industrialised countries saw very similar developments, even though their politics differed vastly: https://en.wikipedia.org/wiki/Great_Depression#/media/File:G... The US and United Kingdom happen to be rather close analogs t…

I'd argue that the graph you linked to actually shows significant differences between countries.

Yes, they all experienced the depression around the same time, and if you just look at the signs of the slopes there's a lot of similarity.

However, the US was barely back to its pre-depression peak by 1940, while Germany was way higher. The only country in that graph that is somewhat comparable to Germany is the UK.

Re: Schacht, Mefo Bills and the Restoration of the German Economy 1933-39 (2013)

#28

Post by _19qg »

mariuolo wrote: post #26
_19qg wrote: post #8

The view of Schacht and his relationship to the Nazi movement is way to favorable. That he wasn't a member of the NSDAP was something he claimed, but which wasn't true. Given his prominent role in the early days of the Nazi government, he was quite a strong supporter of the regime. He may have helped some Jews, but he supported the Rassegesetze, and even made personal profit from the fate of the German jews, etc. Fas…

He was fired from his ministerial job in 1937 and later sent to a concentration camp. By that metrics, most German citizens of that generation are guilty.

Lots of Nazis were killed or fell out of favor. From Röhm to Heß.

Schacht wasn't fired in 1937. He quit the job himself - minister for economics. He was removed from the job as central banker in 1939 and remained in a position as a minister until 1943.

> By that metrics, most German citizens of that generation are guilty.

Most Germans weren't Reichswirtschaftsminister (1934-1937) AND Reichsbankpräsident (1933-1939). Schacht was one of the most prominent members of the Nazi regime at that time and he was instrumental in directing the financing of the build-up for the war machine. Schacht was a core member of the Nazi regime from 1931 on.

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