Out Or In?

The increasingly strange case of Reichsbank President & Economics Minister Dr. Horace Greeley Hjalmar Schacht, who recently laid his resignation before Adolf Hitler (TIME, Sept. 27), significantly pointed up last week the curious fashion in which Nazidom is ruled. Unlike Mussolini, who is a Dictator in the classic sense, the Fuehrer does not so much dictate as preside over a cluster of semiautonomous, mutually-jealous State and Party cliques, intervening chiefly when their affairs have reached a crisis. In his alternately moody or excited fashion Hitler talks with fewer leading men in a week than Mussolini calls in and actively bosses in a day. By last week German industrialists, whose every major move is controlled by either the Economics Ministry or the Reichsbank or both, were nearly frantic as they tried to find out what was actually going to be the future policy of these two vital Government departments.

The Economics Ministry was still physically occupied by Nazi adherents of Prussian Premier Hermann Wilhelm Goring who simply moved in fortnight ago, brusquely announcing: "Any further Government role by Dr. Schacht--even as Acting Minister of Economics--is out of the question!" Last week at the Ministry for Propaganda and National Enlightenment, headed by Dr. Paul Joseph Goebbels, a bitter rival of General Goring, word was put about that "Hitler has turned down the draft text of a 'hold for release' press announcement of Dr. Schacht's resignation on the ground that nothing has been decided."

With the respective cliques of General Goring, Propagandist Goebbels and Labor Front Leader Dr. Robert Ley all struggling for mastery of German economic and financial policy last week, Dr. Schacht himself went off to Essen and in this Krupp stronghold addressed a meeting of 400 directors of German savings banks. Some of them came out convinced they had heard the brusque, autocratic Reichsbanker squawk a guttural swan song. Others thought Dr. Schacht had delivered publicly just such an accounting of his stewardship as he might have made in private to convince the Fuehrer that German economy must continue under Horace Greeley Hjalmar Schacht if the Fatherland is to avoid perilous overspending for rearmament, catastrophic inflation.

Before the 400 savings bankers Dr. Schacht warmly refuted charges heard in radical* Nazi circles that the German mark is already an inflated currency. Since 1929, declared the Reichsbanker, the volume of money circulating in Germany has increased only 10%, whereas in Britain and France the increase averages 33% and such "inflation" in the U. S. has reached 42%. Scarcely any two economists agree on exactly what constitutes "inflation," as Dr. Schacht well knows, but to most Germans it means another such crazy, uncontrolled increase in the number of paper marks circulating as occurred after the War. Today there is a potent Nazi clique which wants to finance rearmament by "controlled inflation," and to this scheme Dr. Schacht replied last week that drastic economies, the raising of loans and taxation are instead the necessary methods.

"There is another recipe," the Reichsbanker told the savings bankers with scorn in his tone. "It is to print bank notes, as many as are needed. Swift price increases would be the result, with wage rises lagging behind. Such 'compulsory saving' we have had before and called it inflation.

"There are actually people in Germany who believe the bank note press has lost its terror because, thanks to foreign exchange control, its consequences cannot be read in the daily dollar quotation. It is difficult to discuss such naivete.

"This much is true: If somebody abstains from building a house, he can use the steel thus saved for casting cannon. But it is impossible to produce one single cannon from bank notes, for bank notes are paper and a cannon consists of steel.

"Warnings to economize," concluded Dr. Schacht, "are never popular. To spend is pleasanter than to save, and the places to spend money always are more numerous than those which have to provide the money."

*The 5,000,000 Germans who voted Communist and the 7,000,000 who voted Socialist four short years ago are very much alive today and most of them have merged with the radicals of the Nazi Party who have always had such slogans as ''Labor Creates Capital." German wits long ago compared radical Nazis to beefsteak: "brown outside, red inside." In the hierarchy of the State one of the most potent radical Nazi leaders is Dr. Ley who keeps on repeating his famed postulate of 1933:

"He who organizes the profit mentality must go; he is a mortal enemy of the nation!"

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