The Hugenberg Memorandum

The infamous ‘Hugenberg Memorandum’, presented by nationalist politician Alfred Hugenberg at the 1933 World Economic Conference, London

The untitled document below, commonly known as the ‘Hugenberg Memorandum’, was first disseminated by German-National politician Alfred Hugenberg on 16 June, 1933, at the World Economic Conference in London. Hugenberg, with his solidly middle-class Prussian background, his massive media empire, and his web of financial ties to German heavy industry, might seem an unlikely candidate for inclusion on this blog. As an old Pan-German and a leading figure within the bourgeois-nationalist German National People’s Party (DNVP), Hugenberg was typically viewed by communists, socialists, and national-revolutionaries alike as an ossified, backwards-looking reactionary. Yet despite his stolid conservatism, Hugenberg in many respects still represented a particularly radical tendency in German economic thought. Like many Pan-Germans, Hugenberg was an advocate of autarchy as a solution to Germany’s economic woes, promoting vigorous protectionism for German produce, a strict quota system on agricultural imports, wide-ranging debt relief for farmers, and a gigantic expansion of domestic markets by retaking Germany’s African colonies and by ‘clearing’ Slavic land to the east for ‘settlement’. Through Franz von Papen’s influence, Hugenberg in 1933 had been awarded multiple influential positions within the new Hitler Government, finally affording him the opportunity to fulfill his dream as Germany’s “savior from economic misery.” It was for this reason that he insisted on presenting the below memorandum on his personal economic vision to the Economic Conference, despite horrified protestations from other members of the German delegation. The result was disastrous. The Hitler Government at the time was still only months old, and was desperately trying to present a picture of moderation and conciliation to other nations, who viewed the still poorly-armed ‘New Germany’ with deep suspicion. Hugenberg’s memorandum criticizing foreign investment and claiming that the world’s recovery from the Great Depression could only come about through Germany being granted colonial territories in Africa and a free hand to seize land to the east was deeply embarrassing to the government, who were forced to declare that Hugenberg’s statements did not represent official policy. Hugenberg, alienated among his colleagues and with his political reputation in tatters, was left with little choice but to resign from the Hitler cabinet, and by the end of the month the DNVP too ended up being pressured to dissolve itself and to merge into the NSDAP. The text of Hugenberg’s memorandum is reproduced in full below, in part because it represents an excellent example of the radical economic worldview embodied in Pan-German ideology, and in part because of its historical value: histories of the Third Reich and the DNVP commonly reference the document, but very rarely provide substantial quotes from it to inform their readers, much less reproduce it in full. 

The ‘Hugenberg Memorandum’
Alfred Hugenberg,
Reichsminister for Economics, Reichsminister for Food and Agriculture

LONDON, June 14, 1933

In my homeland the Westphalians and the Frisians are considered to be among the tribes which are least diplomatic and most rustic, blunt, and stubborn. I am a cross between these two tribes. You must therefore have the great kindness to overlook it as a hereditary fault of mind if you do not like everything I say.

Given the situation in which my country finds itself it is impossible for me to try to skip lightly over the gulf of deep problems which are agitating not only us Germans but to an increasing extent the entire Western world, including America. The philosopher1 who entitled a well-known book Decline of the West thereby pointed prophetically to a danger which appears as a dark storm cloud on the horizon of the world. The government of the country in which this book was written many years ago is today, under the leadership of Reichschancellor Adolf Hitler, fighting the battle against this decline of the West. The esteemed President of this Conference, Mr. MacDonald,2 has described this danger in other words but with all desirable clarity as follows: “The world is drifting toward a state in which life revolts against hardship and the gains of the past are swept away by forces of despair.”3 In the sense of this struggle there is a family of nations. Those that belong to it are basically permeated with this feeling: We do not want to lose the courage and the spirit of our forefathers; nor do we want to let ourselves be exterminated by the subhumanity [Untermenschentum] growing up in our own nations. 

In the hour when the nations of the world are meeting in the hospitable capital of the British Empire there is a serious thought which Germans cannot refrain from expressing: prices, goods, credits, economy, etc. – these are all subordinate concepts in comparison with the concept of the freely creating man, which the Western nations have received from their forefathers. In Germany – you must realize – we are fighting for this concept. We have been doing so for years in the face of death but with an irrepressible will to live. If we should succumb, the other Western nations would succumb with us or after us. If, on the other hand, the world is to be restored to health, it must first permit us to become well again. We are now experts on the illness which this meeting aims to cure. We have passed through and suffered everything connected with this illness. We are fully aware of the possibility of recovery and carry the prescriptions for it within ourselves. Only a couple of simple, great decisions are needed. In reality they are no sacrifice for those of whom they seemingly demand sacrifice. For it is really no sacrifice to give up a poison by which one would oneself be destroyed in the end.

It must be made quite clear here that:

World economy is the coexistence of independent national economies. World economy is the varying exchange of goods between the individual, constant national economies. The world economy can therefore be repaired only if each individual national economy first puts its own house in order. Anyone who believes that the cure for the individual economies can come only from the world economy is putting the cart before the horse. He remains in the same error that first brought the world economy into the condition in which it finds itself today.

What for years was believed to bring well-being, namely the interlocking of international debts, is precisely what brought the individual national economies, one after the other, into disorder. The intertwining of international debts is the main cause of the derangement of all markets and the destruction of the purchasing power of the nations. It had been deliberately forgotten that importation of capital means importation of goods, that the importation of goods means importation of foreign labor, and that interest and amortization payments on imposed and contracted debts are likewise possible only by way of importation of goods and labor. If credits in the form of goods are poured into a non-colonial country, its economy is disorganized. In trying to pay its interest and amortization installments in the form of goods at any price the debtor country avenges itself, so to speak, on its money and lender and on those to whom it owes tribute. The disorganization of the world economy through this development is also the real cause of all the protectionism of the postwar period. This is also the real cause of the currency fluctuations on the international market.

It is therefore natural, and a thoroughly wholesome development, that in all states the tendency is first of all, by satisfying and developing the domestic markets, to free one’s own economy as far as possible from the ruinous consequences of international interlocking of debts. I should like to point out that the last of all countries to take this road was Germany and that she consciously joined the world economic development described above only under the present government.

It is obvious that the above-mentioned trend of development must continue and deepen as long as the sum of the international interest and capital claims exceeds what the debtor countries can pay in deliveries of goods and what the creditor countries can accept in such payments without destroying their own economies.

From this, two things follow:

  1. Only through the recovery of the individual national economies can the world economy become healthy again. Only through restoration of domestic markets will it be possible again to increase the capacity of countries to absorb foreign goods and thereby increase world trade.
  2. That requires a proper settlement of the international debts. There is no way to get around this truth. The settlement of international debts is the first step in saving all the nations concerned.

The following consideration leads us to the same results.

The entire economy is based on one economic principle. That principle is: free exchange of services [Leitungsaustausch]. Free exchange of services means that for every service there must be a corresponding service in return. If that economic principle is violated in any field, the economy finally collapses. If in a national economy any economic sector is forced to produce without an equivalent return, as for example, agriculture in Germany during the last decade, not only that economic sector but the whole national economy suffers. The agricultural crisis and the resulting purchasing-power crisis of the domestic market lead inevitably to an industrial crisis.

The economic service principle is the immutable basic law of economics which no one in the world, no economic or political power, can abrogate without being ruined. The penalty for its permanent violation is national death.

This basic law of economics also applies to the world economy. If one member of the world economy is forced for long to produce without any compensation, not only it, but the world economy, collapses. Neither between independent nations nor internally in a national economy is prosperity in reality based on what one takes away from another by all sorts of expenditures of energy and time, or on what one prevents another from earning, but on the development of all existing forces. One of the most disastrous of errors, which from time to time has dominated the nations, is that a nation can become richer by the impoverishment of another nation.

I fully agree with the statement of Mr. MacDonald:

“No nation can permanently enrich itself at the expense of others. Mutual enrichment is the condition of individual enrichment.”4

The history of the last 20 years is based on the fiction of the opposite. I shall not cite any examples because I might thereby easily create the impression that I am speaking only as a German and not as a member of this Conference. If it is desired to get out of the world economic depression, then the free exchange of services must be restored in the world economy. That does not mean free trade between the independent nations; in the situation described above that can not be achieved by dropping the international customs barriers or by similar means dealing only with trade policy. It can be achieved only by eliminating the basic causes that obstruct and destroy free exchange of services. This again means, however, that the solution of the world economic exchange problem is absolutely dependent on a correct debt settlement. Not only the debtors but also the creditors have a vital interest in this. The restoration of free exchange of services in the world economy is therefore in reality not mainly a problem of trade policy but a financial problem of debts. If the World Economic Conference is to lead to a beneficent outcome, it can do so only by first creating, on the basis of this understanding, the indispensable conditions for healthy trade conditions.

We Germans are now poor devils and have nothing more to give or to lose. But, in spite of all assertions to the contrary, we attach importance to our good name and have at our disposition the experience gained from misfortune. We can only state here what we have learned and act accordingly ourselves. If this knowledge should not as yet be general, we must wait until it is or, in other words, until the nations on whom the matter depends have reached such a state of distress that the same knowledge becomes for them, too, a spur to action. We shall always be mindful of contributing our small share so that action will not come too late.

In order to make the crux of the matter quite clear, I wish to add the following points. The receiving and granting of political credits from nation to nation is an offense against the economy of nations. It would be in the common interest of the world if a sensible agreement were concluded sufficiently early between the creditor countries and the debtor countries making it possible for the creditor countries gradually to obtain their capital and for the debtor countries to pay their debts on tolerable terms.  In the future there should be creditor and debtor countries only on the old, solid basis of capital grants for large works of peace. For profitable works of peace a colonial country can have large foreign debts that can gradually be paid off with goods. A country with a developed industry should be granted credit by another country only with extreme caution, unless the credit is regarded only as a way, so to speak, of burning unmarketable commodities, like wheat, for example, in order to relieve the domestic market (which could be done more cheaply and more advantageously for both countries at the place of production). If such mistaken credits are granted, however, and if they are to be repaid, the repayment is essentially the same mistake from the point of view of “world economy” as the grant. It is possible only in the form of goods, on account of which the receiving country must then restrict the employment of its own workers. One of the most elementary social demands from the point of view of any country is that its development and the employment of its workers should not suffer through the exported capital of other countries, that is, through the importation of foreign goods. But there are other periods – so-called boom periods – in which a country’s own workers are fully employed. Those are the periods in which a debtor country with less employment can repay debts to the creditor country in the form of goods. 

From Germany’s point of view it would be possible with wise and peaceable cooperation between creditor and debtor countries to take two impartial steps by which Germany could again be made internationally solvent. One of these steps would be to give Germany a colonial empire again in Africa, out from which she would build all over this new continent large works and installations that would otherwise not be constructed. The second step would be to open up to the “nation without space” [“Volk ohne Raum”] areas in which it could provide space for the settlement of its vigorous race and construct great works of peace.

For it is a mistaken viewpoint if one says that the world suffers from overproduction – just as it is a wrong view if one says that the cause of the present distress is to be found in the spread of mechanized operations. In reality we do not suffer from overproduction but from forced underconsumption. The real cause of the present conditions is to be found in the loss of purchasing power, and thereby power of consumption. War, revolution, and internal decay made a beginning in Russia and large parts of the east. This development, instead of being met with healing counteraction, has gradually been intensified to an extreme point by artificial impoverishment of the civilized countries of the world having the greatest power of consumption. This destructive process is in the meantime still going on. It is necessary that it be stopped.DNVP_symbolARPLAN Notes

1. A reference to Oswald Spengler.

2. Ramsay MacDonald, Prime Minister of Great Britain (1929-1935) and a member of the UK Labour Party.

3. Hugenberg here is referencing a speech made by Prime Minister MacDonald on June 12, 1933, at the World Economic Conference’s opening session, although it is not an exact word-for-word quotation.

4. Hugenberg again is quoting from MacDonald’s June 12, 1933 speech.

Article transcribed from the US Department of State’s Documents on German Foreign Policy 1918-1945, Series D (1937-1945), Vol. XIII (1954), Government Printing Office: Washington.

One thought on “The Hugenberg Memorandum

  1. Bogumil,

    Before I begin, how are things going with you? I am doing well and making sure to avoid getting infected by Coronavirus.

    Either way, I am impressed and humbled that you decided to post an International Economics-related topic on the ARPLAN Blog which touches on the same issues that we are living under in 2020 during this Coronavirus Pandemic.

    While Liberal Capitalists would tell us that it was the Coronavirus itself (or the “China Virus” as Trump calls it) which caused the planetary-wide economic difficulties, reading Hugenberg’s speech at the 1933 World Economic Conference offers a different explanation that was as applicable to the Great Depression just as it is also applicable to this current moment in 2020.

    Today, the closest equivalent to the World Economic Conference is the “World Economic Forum” in Davos, Switzerland. If Hugenberg or anyone else delivered that speech, there are no doubts that they will literally be booed and hissed by the audience before being herded away from the podium. I would not be surprised if such a thing has happened or could happen so long as Liberal Capitalism’s “Washington Consensus” on the world stage continues unabated.

    Truly, “World Economy” is not a single entity but an amalgamation of independent economies controlled by 194 nation-states on Earth. The need to ensure the Free Exchange of Goods and Services without resorting to “Free Trade Agreements” is a necessity that can and should be considered without entertaining notions of Debt until a bilateral or multilateral Trade Agreement becomes an abusive zero-sum game where one or more parties gains something at the expense of the other parties involves. Failure to realize this is how nation-states foolishly start “Trade Wars,” “Customs Wars,” “Currency Wars,” and even actual wars.

    But there is also a post-1945 angle which bears mention here in relation to Hugenberg’s argument. Despite the Bretton Woods System being dissolved in 1973, the IMF and the World Bank are still active and plunging “developing countries” outside the West into Sovereign Debt while subverting their “Financial Regimes.” We also have to live with the fact that the US Dollar is still the “World’s Reserve Currency,” forcing many countries to rely on the US Dollar in international transactions for Commodities like Crude Oil, Petroleum, Gold and Silver, and so forth.

    Speaking of which, the US Dollar has been depreciating in value over the past few months and I have yet to discern if the Inflation Rate in the US Dollar has planetary-wide ramifications. The possibility that I am positing over is whether we will also witness a similar event comparable to various countries like Germany and Japan abandoning the Gold Standard back in the 1930s. Today’s equivalent is the “Washington Consensus,” which is the formal name for the disproportionate US control of the World Economy. It would entail nation-states refusing to rely on the US Dollar because it is no longer worth anything to them.

    I know such an abandonment of the US Dollar has yet to appear, but seeing how so many parallels are being made by all sorts of news outlets globally about this Pandemic being akin to the “Spanish Flu” Pandemic, it’s still a possibility worth considering as a very real possibility.


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