Hjalmar Schacht - Education and Rise To President of The Reichsbank

Education and Rise To President of The Reichsbank

Schacht was born in Tingleff, Schleswig-Holstein, Prussia, German Empire (now in Denmark) to William Leonhard Ludwig Maximillian Schacht and baroness Constanze Justine Sophie von Eggers, a native of Denmark. 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 (Danatbank), 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.

Schacht was a freemason, having joined the lodge Urania zur Unsterblichkeit in 1908.

During World War I, Schacht was assigned to the staff of General von Lumm, the Banking Commissioner for Occupied Belgium, to organize the financing of Germany's purchases in Belgium. He 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.

After Schacht's dismissal from the public service, he had a brief stint at the Dresdner Bank, and then various positions at other banks. 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 blemish on his record, in November 1923, Schacht became currency commissioner for the Weimar Republic 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 President Friedrich Ebert and Chancellor Gustav Stresemann.

In 1926, Schacht provided funds for the formation of IG Farben. 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 obtaining a loan. After modifications by Hermann Müller's government to the Young Plan during the Second Conference of The Hague (January 1930), he resigned as Reichsbank President on 7 March 1930. During 1930, Schacht campaigned against the war reparations requirement in the United States.