Monday, October 15, 2012

Heinrich Brüning and Angie-nomics 1930-32

I'm trying to learn more about how the Great Depression played out, especially in Europe. I recently read a biography of the Angela Merkel of 1930-32, German Chancellor Heinrich Brüning(1885-1970), who rigidly enforced austerity at the early part of the Great Depression in Germany, a counter-cyclical policy that had famously unhappy results.

The biography is by Gottfried Reinhold Treviranus (1891-1971), Das Ende von Weimar: Heinrich Brüning (1968). He was a close political associate of Brüning's and a minister in his cabinet. (There was also a famous biologist named Gottfried Reinhold Treviranus in the early eighteenth century.)

Heinrich Brüning (1885-1970)
Treviranus, a friend and close collaborator of Brüning's, wrote a sympathetic biography, at times obviously defensive over some of the more dubious aspects of Brüning's career. Treviranus is especially sensitive to charges that Brüning's government, which held power under Presidential decree from March 30, 1930 to May 30, 1932, damaged the Weimar democracy and paved the way for Hitler and the NSDAP (Nazi Party) to come to power. His argument is not convincing. In fact, President Hindenburg's extensive interference with parliamentary processes that made Weimar into a semi-democracy even before Hitler became Chancellor in January 1933 actually began with the appointment of Brüning as Chancellor. Treviranus even relates Brüning's hopes as Chancellor to bring back the Kaiser and re-establish monarchical government.

Weimar Germany was a democracy with a serious shortage of democrats among the political, business, military and governmental elites.

Treviranus, even writing the biography in the mid-1960s, was an unrepentant defender of austerity economics during a depression. He spends a chapter polemicizing against Keynesian economics. He refers to it as the "Keynes psychosis" at one point. Although to read Treviranus, Keynes economics pretty much came down to promoting inflation.

Then he follows it up with a chapter defending all the things Brüning's government did to promote public works, which of course Keynes would have approved as far as it went. But the overall effect of Brüning's enthusiastic budget-cutting was a pro-cyclical economic policy that made the depression worse. Treviranus defends Brüning's focus on balancing the budget in that critical period at the start of the Great Depression as having been an essential and totally justifiable policy. If he learned anything about the downside of austerity economics in a depression, it's not readily evident in this biography.

Trevinarus even writes, which no hint of reflection on what it means for the policy he's defending, that German unemployment "first went down under Hitler with the beginning of the armaments program." ("unter Hitler erst mit dem Anlaufen der Aufrüstung abgesunken.") Duh! If Brüning's government had provided an aggressive program to combat unemployment in the 2+ years it was in office, maybe Hitler wouldn't have had the chance to solve the problem his way, with a rearmament drive and displacement of Jews from many jobs and confiscation of the property of Jewish emigrants, that lead to a military catastrophe for Germany.

The result of rising unemployment and social distress was a big boost to the NSDAP, which reached it's height of electoral success in July 1932. (There was an election in March 1933 after the Reichstag Fire, but it could hardly be called a fair democratic election. Though it's notable that the NSDAP was unable to win a majority even under repression conditions controlled by them.)

Treviranus also makes a more plausible case that Allied reparations policy was forcing them to maintain a balanced budget. So was the gold standard, though he doesn't seem to recognize that the gold standard, which had proved a source of stability in ending the hyperinflation of 1923-4, had become a destructive factor by 1930 in depression conditions.

Speaking of hyperinflation, Treviranus claims that the German public generally was focused on that period as especially disruptive. I suspect that was especially true for the German economic elite and their allies. By 1930, unemployment and depression/deflation was clearly much more of a problem. German hyperinflation has become a favorite bogeyman for advocates of austerity economics. I'm particularly skeptical of claims that hyperinflation was a direct cause of the NSDAP gaining power; the argument just doesn't hold up to scrutiny. (See my posts, Krugman on European austerity and that German hyper-inflation thing 01/29/2012 and Again on hyperinflation during the Weimar Republic and Hitler's rise to power 05/07/2012.)

Brüning was from the Catholic Center Party, which along with the Social Democrats (SPD) and the small German Democratic Party (DDP) were the parties that had been genuinely committed to the Weimar Constitution. Brüning's government was a big turn away from normal democratic procedures and toward and more dictatorial kind of rule.

Brüning himself was an opponent of the Nazis and of bringing Hitler into the government. He wound up fleeing Germany in 1934, first to the Netherlands and then to the US, where he became a professor of political science at Harvard. Treviranus narrowly escaped being arrested during the infamous Night of the Long Knives purge, aka, the Röhm-Putsch, in 1934, when Hitler decided to eliminate a number of his internal enemies. Teviranus himself had never been associated with Ernst Röhm's SA, but Brüning's government had had some dealings with Gregor Strasser, who left the NSDAP and who Hitler considered a deadly enemy. Treviranus was able to escape Germany in 1934 and eventually wound up in the US, as well.

Gottfried Trevinarus (1891-1971)
Trevinarus identifies himself as having been the speaker in the Reichstag for the Stahlheim, the League of Front Soldiers (BdF) from 1924-29. (pp. 193-4) He sat in the Reichstag as a member of the Deutschnationalen Volkspartei (DNVP) headed by published Alfred Hugenburg. Treviranus broke with the DNVP in January 1930 and founded the Volkskonservativen Vereinigung (People's Conservative Union), and later that year it merged with another breakoff faction of the DNVP to become the Konservativen Volkspartei (KVP) (Conservative People's Party) heavily backed by German industry.(See Heinrich August Winkler, Der lange Weg nach Westen, Bd. 1; 2000) So he was no longer part of the DNVP when Hugenburg formed the Harzburg Front, an anti-Weimar-democracy alliance that included included the Alldeutschen Verband, the DNVP, Hitler's NSDAP and the Stahlhelm group. The inclusion of the Nazis in that alliance was a big boost in Hitler's rise to power.

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