In the biography of Hjalmar Schacht – Hitler’s Banker, by John Weitz, Little Brown and Company, NY, 1997, there are many interesting stories in the book. In the 1920’s there are famous pictures of Germans taking wheelbarrows of money to pay for everyday consumer items. Shortly after this period, Mr. Schacht became the head of the German Federal Reserve. In a couple of years through austerity measures the value of the German mark rebounded and Mr. Schacht was a hero both domestically and abroad. When things are going well, a new management style was needed and Mr. Schacht was replaced but he retained good press as he lectured around the world. A few years later, the economy was not working and Mr. Schacht received his old job back. Along comes Adolph Hitler who through the split vote system in the German parliament receives enough votes to become Chancellor. Similar to every federal civil servant, you serve at the request of the leader but neither agree or disagree with the leader’s policies 100% of the time. It was the same with Mr. Schacht, they both wanted a strong Germany – one through high trade surpluses, one through the use of war and other tactics.
Linking to dividend paying stocks, often companies making profits have a love hate relationship with the government. As long as the company is able to make healthy profits the government who supplies that ability is the one the company supports. All democracies are funded by citizens or companies who after a certain size of a cheque expect something back from the government. The company will look at the personnel of both the government and the top people in the civil service to see if the cheques should keep coming. People such as a Mr. Schacht help legitimized the government and extended the goodwill. Eventually, even though Mr. Schacht and Mr. Hitler were for the same end, how Germany achieved its place was the difference. Process or the how always matters whether in a dividend paying company or growth stock.
There are more questions than answers, till the next time – to asking questions
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