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.
During the First World War, Schacht was tasked to serve on the staff of General von Lumm, the Banking Commissioner for Occupied Belgium. 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 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. 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 7 March 1930. During 1930, Schacht campaigned against the war reparations requirement in the United States .
By 1926, Schacht had left the small German Democratic Party, which he had helped found, and was increasingly lending his support to the NSDAP, to which he became closer between 1930 and 1932 (although he never officially became a member of the party). Close for a short time to Heinrich Brüning's government, Schacht shifted to the right by entering the Harzburg Front in October 1931 .
Schacht's disillusionment with the existing Weimar government did not indicate a particular shift in his overall philosophy, but rather arose primarily out two issues: first, out of his objection to the inclusion of Socialist Party elements in the government, and the effect of their various construction and make-work projects on public expenditures and borrowings (and the consequent undermining of the government's anti-inflation efforts); second, on his fundamentally unwavering desire to see Germany retake its place on the international stage, and his recognition that "as the powers became more involved in their own economic problems in 1931 and 1932 . . . a strong government based on a broad national movement could use the existing conditions to regain Germany's sovereignty and equality as a world power." Schacht was convinced that if the German government were ever to commence a wholesale reindustrialization and rearmament in spite the restrictions imposed by Germany's treaty obligations, it would have to be during a period lacking clear international consensus among the Great Powers
After the July 1932 elections, which saw the NSDAP obtain more than a third of the seats, he helped Wilhelm Kepler to organize a petition of industrial leaders requesting that President Hindenburg nominate Adolf Hitler as Chancellor of Germany. He returned as Reichsbanck Chairman on 17 March 1933 after Hitler's rise to power.
Though never a member of the NSDAP, Schacht helped to raise funds for the party after meeting with Adolf Hitler; he was also a main figure in the formation of IG Farben through the funds provided in part by him. In August 1934 Hitler appointed Schacht as his Minister of Economics. Schacht supported public works programs, most notably the construction of autobahns (highways) to attempt to alleviate unemployment - policies which had been instituted in Germany under legislation drawn up by Kurt von Schleicher's government in late 1932, and had in turn influenced Roosevelt's policies. He also introduced the 'New Plan', Germany's autarchic attempt to distance itself from foreign entanglements in its economy, in September 1934. Germany had accrued a massive foreign currency deficit during the Great Depression, and it continued into the early years of the Third Reich. Schacht negotiated several trade agreements with countries in South America, and South-East Europe, ensuring that Germany would continue to receive raw materials from those countries, but that they would be paid in Reichsmarks; thus ensuring that the deficit would not get any worse; whilst allowing the German government to deal with the gap which had already developed. Schacht also found an innovative solution to the problem of the government deficit by using mefo bills. He was appointed General Plenipotentiary for the War Economy in May 1934 and was awarded honorary membership of the NSDAP and the Golden Swastika in January 1937.
Schacht disagreed with what he called "unlawful activities" against Germany's Jewish minority and in August 1935 made a speech denouncing Julius Streicher and the articles he had been writing in Der Stürmer.
During the economic crisis of 1935-36, Schacht, together with the Price Commissioner Dr. Carl Friedrich Goerdeler, helped lead the "free-market" faction in the German government who urged Hitler to reduce military spending, turn away from autarkic and protectionist policies, and reduce etatism in the economy. Schacht and Goerdeler were opposed by another fraction centering around Hermann Göring calling for the opposite policies. Schacht began to lose power after the implementation of the Four Year Plan in 1936 by Hermann Göring. He resigned as Minister of Economics and General Plenipotentiary in November 1937 at the request of the Minister of Economics, Göring, due to disagreements with Hitler and Göring over military spending, which he believed would cause inflation. He was re-appointed President of the Reichsbank until Hitler dismissed him from his position in January 1939. After this Schacht held the title of Minister without Portfolio, mainly an honorific title, and received the same salary that he did as President of the Reichsbank until he was fully dismissed in January 1943.
As a result of the various putsch attempts between 1938 and 1941, Schacht was arrested on 23 July 1944, accused of having participated in the July 20 Plot to assassinate Hitler . He was sent to Ravensbrück and Flossenburg and finally to Dachau, where he remained until his liberation and subsequent re-imprisonment by Allied army in April 1945. He was arrested by the Allies and accused of war crimes at the Nuremberg Trials, but was acquitted and released in 1946. He was again arrested by Germans, tried in a denazification court and sentenced to eight years in a work camp, but was released early in September 1948. He formed the Düsseldorfer Außenhandelsbank Schacht & Co. after his release and became an economic and financial advisor for developing countries, in particular Non-Aligned heads of state. Schacht died in Munich, Germany on 3 June 1970.
Schacht was tried for crimes against peace in Nuremberg in 1946. His defense was that he was only a banker and economist. Schacht was one of the first at Nuremberg to offer to turn state’s evidence against his co-defendants, using letters to approach one of the Generals overseeing the trial with the offer of cooperation. Schacht’s move towards a plea bargain, although eventually quashed by Justice Jackson, led Goring to make a similar overture towards the prosecutors.
The judges were split on his case due to a lack of evidence against Schacht during the war years, with the British judges favoring acquittal and the Russian judges particularly opposed..
Robert Jackson, a member of the prosecution team and an Associate Justice of the United States, was so outraged at the trial result that he lashed out at Schacht as "the most dangerous and reprehensible type of all opportunists, someone who would use a Hitler for his own ends, and then claim, after Hitler was defeated, to have been against him all the time. He was part of a movement that he knew was wrong, but was in it just because he saw it was winning."
However, in its final decision vindicating Schacht, the tribunal declared that “rearmament of itself is not criminal under the Charter . . . To be a crime against Peace under Article 6 of the Charter it must be shown that Schacht carried out his rearmament as part of the Nazi plans to wage aggressive wars”. The judges went on to note that as a result of Schacht’s dismissal from the presidency of the Reichsbank in 1939, the case hung on entirely on whether Schacht had been cognizant of the plans of the government prior to his dismissal from the presidency of the Reichsbank. The trial judges asserted that insufficient evidence has been presented to justify such a conclusion, and Schacht was acquitted – one of only three defendants at Nuremberg to be so released. Significant factors in establishing Schacht's innocence included the fact that he had lost all of his important posts before the war, had kept in close contact with dissidents such as Hans Bernd Gisevius throughout the war, and had spent most of the last year of the war as a concentration camp prisoner himself. His defenders argued that he was just a patriot, who was trying to make the German economy great. Furthermore, it was argued that when he saw what atrocities Hitler was committing the evidence suggests he did not approve, and that fundamentally he was not a member of the NSDAP and shared very little of their ideology.
Schacht, Hjalmar: Hjalmar Schacht. Aufstieg und Fall von Hitlers machtigstem Bankier.(Brief article)(Book review)
Jan 01, 2009; Schacht, Hjalmar Hjalmar Schacht. Aufstieg und Fall von Hitlers machtigstem Bankier. Christopher Kopper. Munich, Vienna: Hanser,...