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Economists at War

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Economists at War 2

Most economists go through their lives wondering if any of their work has had an effect on the world beyond academe. The seven economists that Alan Bollard writes about in Economists at War probably never had to wonder. Bollard, an economics professor at Victoria University in Wellington, New Zealand, traces the effects seven economists had on their governments’ policies before, during, and after wartime. He starts with the oldest economist, Takahashi Korekiyo, born in Edo (now Tokyo) in 1854, and ends with the second youngest, John von Neumann, born in Budapest in 1903.

The book’s weakness is that Bollard doesn’t always give enough background for a non-economist to understand the issues fully. Its strength is in its fascinating stories about the seven men’s lives, the various challenges they faced, and their views of the world. Especially interesting are their views of Communism, which three of the economists—Leonid Kantorovich, Wassily Leontief, and John von Neumann—lived under for all or part of their lives. Fortunately, this strength outweighs the weakness in Bollard’s discussion of economic issues.

These are the opening 2 paragraphs of David R. Henderson, “Economists Waging War,” my recent review of Economists at War: How a Handful of Economists Helped Win and Lose World Wars, by Alan Bollard.

Bollard’s treatment of Hjalmar Schacht, Hitler’s finance minister, changed my view of Schacht. What I knew about him, I knew from a short section of Milton Friedman’s book Dollars and Deficits. It turns out that he had a few virtues. I write:

One of the more interesting characters in the book is Hjalmar Schacht, Hitler’s finance minister from 1934 to 1937. Schacht, who is most famous among economists for implementing currency exchange controls in the 1930s, was more free-market oriented than I had thought. In 1914, he was appointed Administrator of the Dresdner Bank in Occupied Belgium, where he clashed with the German military. They simply took whatever supplies they wanted, while Schacht, sympathetic to the occupied Belgians, wanted to maintain a market-based economy. Schacht was involved in the currency reform that ended German hyperinflation, which lasted from 1921 to 1923. Schacht was not a Nazi but made peace with the Nazis. He often conflicted with Hermann Goering about how to run the German economy and, unfortunately, Schacht often prevailed. I say “unfortunately” because if Goering had prevailed, Germany’s wartime economy would have been less efficient. To his credit, Schacht often talked back to Hitler. Indeed, in 1939, he wrote a memo to Hitler condemning his treatment of the church and of the Jews. As president of Germany’s central bank, the Reichsbank, he even used Reichsbank resources to print and distribute 10,000 copies of a speech he had given in which he condemned Nazi policy. Because of his alleged association with some of the Germans who tried to kill Hitler in July 1944, he was imprisoned. Later, he was tried at Nuremberg. Although the U.S. prosecutor wanted him found guilty and the Soviet judges agreed, the British judges disagreed and he was freed. Schacht later went into development economics and died in 1970 at age 93.

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