Helmut Schmidt Prize Lecture 2015: Austerity - Views of Chancellor Brüning's and President Hoover's Fiscal Policies from across the Atlantic, 1930-32

On December 10, 2015, the GHI, in cooperation with the ZEIT-Stiftung Ebelin-und-Gerd-Bucerius, awarded the biennial Helmut Schmidt Prize for German-American Economic History to Carl-Ludwig Holtfrerich, Professor Emeritus at the John F. Kennedy Institute of the Freie Universität Berlin. Holtfrerich was honored for his groundbreaking research in the field of transatlantic economic history, in particular for his historiographical interventions on the topics of hyperinflation in post-World-War-I Germany and the history of public debt. His long list of publications include a history of inflation in Germany during the Weimar period (1980), a history of the German Mark (2001, with Harold James and Manfred Pohl), and a contribution to the debate on reforming the German labor market (2007). In 1995, his book The Deutsche Bank 1870-1995, which he co-authored with Hans Büschgen, Gerald D. Feldman, Lothar Gall, and Harold James, garnered the Financial Times/Booz-Allen & Hamilton Global Business Book Award.

After a brief introduction by GHI Director Simone Lässig and welcome remarks by Nina Smidt, the President of the American Friends of Bucerius, Volker Berghahn, representing the Schmidt Prize Selection Committee, delivered the laudation. Berghahn praised Holtfrerich's contributions as an eminent, internationally known economic historian, especially as an outstanding expert on monetary policy and banking developments after the First World War. Accepting the prize, Holtfrerich then proceeded with the main event - a comparison of the economic emergency measures of President Herbert Hoover and Chancellor Heinrich Brüning. Holfrerich began his lecture by stressing the different conditions under which Hoover's and Brüning's governments confronted the Great Depression. While Brüning focused on budget cuts and Hoover increased government expenditures throughout most of his presidency, both leaders witnessed a massive rise in unemployment, which turned the men into objects of public ridicule ("Hungerkanzler" vs. "Hoovervilles"). At the same time, Germany's economy slid into a recession much earlier than the United States and remained the world's largest debtor, whereas the United States had emerged as its largest creditor. Moreover, Holtfrerich described the United States as a stable democracy, which he contrasted with the unstable political conditions in Weimar Germany.

The image of inept leadership and lacking democratic principles in Germany, Holtfrerich argued in the second part of his lecture, took hold of American public opinion. American newspapers were largely critical of Brüning's emergency decrees, calling the one of July of 1930 "the climax to more than three months of fruitless effort" to satisfy the demands of the Reichstag. Many American journalists saw Germany on the path to a "semi-dictatorship." Holtfrerich was most impressed by the fact that these papers contained no criticism of Brüning's economic policies in general but rather fanned the fear that Germany might slide into fascism. This was especially true of the Wall Street Journal, which seemed more concerned with the future of democracy in Germany than with the economic consequences of austerity. However, the New York Times' reporting was an exception to this trend. The paper even went so far as to express understanding for Brüning and Hindeburg's authoritarian approach, comparing it to Hoover's presentation of faits accomplies to Congress for later approval. What was lost in the debate, according to the prizewinner, was that the economic downturn of the late 1920s and early 1930s was not primarily a result of failed fiscal policies or ideological differences. Rather, earlier and tougher banking regulations by the U.S. government as in the Glass-Steagall of 1933 might have lessened the impact of the Great Depression.

The lecture was followed by a spirited question and answer session. A reception in honor of the prizewinner concluded the event.