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Arnold Brecht on Heinrich Brüning's Policy of Deflation (Retrospective Account, 1967)

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I saw two possibilities, as mentioned before. One was stretching the available work by radically shortening the work hours. The other was making jobs available on a grand scale by organizing public works to be financed by those billions of marks that would be saved in unemployment compensation by spreading available jobs among more workers, and by loans, if necessary compulsory loans. My comparative research on public expenditures in the main countries had convinced me that Germany in consequence of her annulment of interior war debts had unjustifiably low domestic debts. No political or economic objections could be justly raised if these domestic debts were increased by billions of marks for the purpose of giving jobs to unemployed workers.

Prussian Minister-President Braun sent a letter to this effect to Chancellor Brüning in April, 1932. I had drafted it together with State Secretary Hans Staudinger (Prussian Ministry of Commerce) and Ministerial Director v. Leyden, expert for communal affairs in the Prussian Ministry of the Interior.

Mastering the situation was by no means simple. Although it is widely recognized today that in order to create jobs for unemployed workers a country’s government, as practiced for instance under Franklin D. Roosevelt in the New Deal, can finance public works by loans without thereby starting an inflationary process (Keynes), there did not yet exist any scientifically grounded theory of this type in 1930. It was, rather, generally believed that every spending of public money for production of a non-self-liquidating character would lead to inflation. And the fear of inflation was overwhelming in Germany, with the memory of the unlimited inflation of 1920–1924 still vividly alive. Nor was the floating of long-term loans in Germany as easy as it was in the United States. Even borrowing small amounts for undisputed projects frequently proved impossible. To provide billions of Reichsmarks for unprofitable projects would have required additional printing of paper money or financial methods yet untried.

Source of English translation: Arnold Brecht, The Political Education of Arnold Brecht, An Autobiography 1884-1970. Princeton, New Jersey: Princeton University Press, 1970, pp. 321-23.

Source of original German text: Arnold Brecht, Mit der Kraft des Geistes: Lebenserinnerungen 1927-1967. Stuttgart: Deutsche Verlags-Anstalt, 1967, pp. 134-36.

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