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lend. But the mainstay of borrowing in Germany, as here, despiteall the fancy tales told of new and ingenious fiscal inventions bySchacht, were the banks. There has been a good deal of admirationin this country among the devotees of public spending and debt ofthe so-called magical stratagems of Dr. Hjalmar Schacht. GenerallySchacht tried as far as possible to do two things: he tried to keepGermany's state bonds and treasury paper out of the banks, and hetried to compel private individuals to supply the funds for stateenterprises without involving the government in avoidable debt.For instance, the Treasury would borrow a large sum from thebanks. It would give the banks its short-term notes. The bankswould give it a deposit. This is an inflationary proceeding. The nextstep would be to get the whole transaction out of the banks. Schachtwould then go to the large steel or munitions or finance companiesand "request" them to buy the bonds from the banks out of theirprofits as a patriotic duty. Thus the bonds would be removed fromthe banking system and go into the hands of private investors.He also put into effect a regulation that in any given field ofindustry or finance—thesteel industry, the arms industry, the motorindustry, the insurance companies, etc.—when the surplus of cashfunds exceeded a certain amount these funds should be invested ingovernment securities. However, Schacht would then go to the industryand inform them that the government had ordered theconstruction of a large power plant or a great steel works or a hugeplane factory. The plant would be built by a private corporationformed at the order of the government or it would be built by anexisting private corporation. In this country this method has beenfollowed. But our government borrows the money and lends it tothe private corporation. Thus the government has a liability on itsbonds, takes the risks and borrows its funds at the bank, thus addingto inflation. In Germany, Schacht would go to these large privatesteel or finance or other corporations and "request" them to buy thebonds of the private corporation building the new industry. Thusthe government's credit was kept out of the transaction. Billions ofdollars have been utilized in this way. However, these devices do notsuffice for the immense sums required by the government for its vastenterprises in road and swimming-pool and school and playground135