I could not put down Liaquat Ahamed’s riveting biographical account of ‘the bankers who broke the world’ – the central bankers, that is. (William Heinemann, 2009). Those that lorded it over the global economy during the Great Depression were Montagu Norman of the Bank of England (1920-1944); Benjamin Strong of the Federal Reserve (1914-1928), Horace Greely Hjalmar Schacht of the Central Bank of Germany (1933-39) and Aime Hilaire Emile Moreau of the Banque de France (1926-1930).
It is sobering to discover that Montagu Norman had the first of many nervous breakdowns in 1906. In 1913 he consulted Dr. Carl Jung in Zurich – who informed that he was suffering from “general paralysis of the insane” – a term then used to describe the onset of mental illness…..The diagnosis was flawed, as in fact Norman was probably a manic depressive. In 1931, at the height of the financial crisis he had another breakdown, and headed off to Canada on an ocean liner. His mental fragility did not however, prevent him from continually being re-appointed as governor – until 1944. Such are the filial bonds of the British establishment. They are no less strong than the establishments bonds that ensured Ben Bernanke’s recent re-appointment – despite his role in cheering on the vast credit bubble that fuelled the asset bubble that finally burst on the 9th August, 2007 – arguing all along that the boom “largely reflect(s) strong economic fundamentals.”
Hjalmar Schacht and Montagu Norman were on good terms during the 1930s when Schacht was financing the expansion and militarisation of Nazism – with a good deal of help from the western banking system. Such was the bond between them that as late as 1939 Norman visited Berlin to attend the christening of one of Schacht’s grandchildren.
This and many other powerful insights to be found in this book, which I strongly recommend.