Akademik

(1879-1962)

   Chancellor and Reichsbank President; was Finance Minister during the months of 1923-1924 when a currency reform ended Germany's hyperinflation. Born to a Berlin* businessman, he studied law and took his doctorate in 1904. After working in the magistrate's office in Char-lottenburg, he joined Magdeburg's city council in 1907. His municipal achieve-ments, largely social, included a tenfold increase in Magdeburg's garden allotments and a successful legal case brought against the potash industry for contaminating the drinking water. He functioned as executive secretary of the Prussian Stadtetag (city assembly) between 1913 and 1918. In July 1918 he became Oberburgermeister of Essen, an office he held until Wilhelm Cuno* asked him to become Agriculture Minister in 1922. During the November Rev-olution* he persuaded Essen's Workers' and Soldiers' Council* to recognize his authority. In 1920 he joined Germany's provisional Economic Council.

   Luther's shift to national office ended a brilliant municipal career. A member of no party, but closest to the DVP (he joined in 1927), he had ties with heavy industry. After rejecting the Economic and Interior portfolios, he assumed the Agriculture Ministry when Karl Müller was forced to resign. Retaining office in Gustav Stresemann's* first cabinet, he focused on feeding those hardest hit by the inflation.* On 6 October 1923 he succeeded Rudolf Hilferding* as Fi-nance Minister, an office he retained through Wilhelm Marx's* first two cabinets (30 November 1923 to 15 January 1925). Implementing harsh reforms to halt the inflation, he drafted a currency act that fused the monetary theories of former State Secretary Karl Helfferich* with Hilferding's implementation plan. In league with Currency Commissioner Hjalmar Schacht,* he took advantage of the December 1923 Enabling Act* to enact emergency taxes needed to balance Germany's budget.

   Since the Reichstag* elections of December 1924 left Marx's cabinet unable to maintain itself, Marx resigned in January 1925, and Luther, still without a party, formed a new government. His cabinet combined professional bureaucrats with members of the Center,* the DDP, the DVP, the BVP, and the DNVP. But the union was soon threatened by the February death of President Ebert*; while the DVP and DNVP chose to support the candidacy of Hindenburg,* the Center joined the SPD and DDP in support of Marx. With patience and diplomacy, Luther survived the crisis. He applied the same attributes to international trade practices. A protective policy for industry and agriculture was created by the tariff law of 12 August 1925. Thereafter his government negotiated trade treaties with France, Britain, the Soviet Union,* Spain, and Italy. But his cabinet's paramount achievement was the 1925 Locarno Treaties*—accords that presaged German entry into the League of Nations in September 1926. Although Locarno led the DNVP to leave his cabinet on 26 October 1925, Luther managed, after a lengthy delay, to form a new government in January 1926. Soon after he negotiated the April 1926 treaty of friendship with the Soviet Union, his second cabinet collapsed when he naively signed President Hindenburg's flag decree. The ensuing flag controversy* outraged republicans and forced his resignation on 12 May.

   Luther was elected to the council of the national railway company (Reichs-bahngesellschaft) in 1926. During 1928-1929 he founded and presided over the League for the Regeneration of the Reich (Bund zur Erneuerung des Reiches), an alliance aimed at reorganizing Germany's federal structure; the endeavor foundered on opposition from Prussia* and Bavaria.* In March 1930 he suc-ceeded Schacht as Reichsbank President; as such, he joined the governing board of the Bank for International Settlements.* A supporter of the deflationary course set by Heinrich Brüning,* he found his own rigid financial policies attacked by Schacht. In the banking crisis of 1931 he went to the legal limits of the Reichs-bank's assets to assist banks forced to repay short-term, high-interest foreign loans.

   On 16 March 1933, at Hitler's* request, Luther submitted his resignation. Although he never joined the NSDAP, his aversion to parliamentary democracy allowed him to serve during 1933-1937 as Nazi Germany's well-regarded Am-bassador to Washington. After World War II he was a trustee for a private Munich bank and from 1952 served as an honorary professor at Munich's Hochschule fur politische Wissenschaften.

   REFERENCES:Benz and Graml, Biographisches Lexikon; Feldman, Great Disorder; James, Reichsbank; Larry Jones, German Liberalism; NDB, vol. 15.