Great find!
How 'bout this quote from that source:
"Schacht was a bright fellow, and he wanted this point to be understood. He waited until he wrote The Magic of Money in 1967. His earlier book, The Stabilization of the Mark (1927), discussed inflation profiteering, but did not clearly identify the private Reichsbank itself as financing such speculation; making it so convenient to go short of the mark.
Thus we now realize that it was a privately owned and privately controlled central bank, which made loans to private speculators, to enable them to put up the necessary margin to speculate against the nation's currency. Such speculation helped create a one-way street, down, for the German mark. Soon a continuous panic set in, and not just speculators, but everyone else had to do what they could to get out of their marks, further fueling the disaster.
This factor has been largely unknown, and "the government" typically gets the blame for this mother of all inflations, in economic propagandizing.
Why did Schacht give these details after 44 years, when he could have easily "forgotten" about them? Probably because his sense of justice was deeply offended over the destruction of the mark by Germany's plutocracy - especially her bankers.
. . .
Later in 1924 there was a Dawes Plan loan to the Reichsbank, after which foreign credits began to pour in. Foreign bankers had confidence in Schacht. He was against the loans, and insisted that any foreign borrowings only be to finance production, not luxury, or consumption. This policy, from 1924 to 1929, resulted in Germany establishing Europe's most modern factory system of the period.
. . .
Feder's captivating ideas were about money. At the base of his monetary views was the idea that the state should create and control its money supply through a nationalized central bank rather than have it created by privately owned banks, to whom interest would have to be paid. From this view was derived the conclusion that finance had enslaved the population, by usurping the nation's control of money.
Feder's monetary theories could easily have originated from the work of German monetary theorists such as George Knapp, whose book The State Theory of Money (1905) is still one of the classics in the monetary area. Right on page one, Knapp nails it:
Money is a creature of the law. A theory of money must therefore deal with legal history.
Knapp describes the invention of fiat money in these terms: "the most important achievement of economic civilization." For Knapp, the determination of whether something was money or not was: "our test, that the money is accepted in payments made to the state [i.e., government] offices."24
Near the end of that book, Knapp casually mentions how German monetary theorists of his day, and earlier, would study and discuss American monetary theories. Thus the ultimate source of Feder's viewpoint was probably the American Populist movement of the 1870s and the ideas that movement promoted to establish a permanent greenback system."
It's striking that Schacht wound up issuing a "fiat" currency while publicly stating:
"Nationalization of banks, abolition of bondage to interest payments and introduction of state Giro 'Feder' money, those were the high-sounding phrases of a pressure group which aimed at the overthrow of our money and banking system. To keep this nonsense in check, [I] called a bankers' council, which made suggestions for tighter supervision and control over the banks. These suggestions were codified in the law of 1934... In the course of several discussions, I succeeded in dissuading Hitler from putting into practice the most foolish and dangerous of the ideas on banking and currency harbored by his party colleagues."
This article was written by Stephen Zarlenga, researcher in monetary history and theory, and author of "The Lost Science of Money." |
