Will you be a Tom Lamont or a Hjalmar Schacht?

In what ways is creativity limited in positions of power?
When and how do we enforce ethical boundaries?
Source: Wikimedia Commons

Tom Lamont was one of the most important financiers of the 20th century. As one of the top partners at J. P. Morgan & Co., he managed the bond issues for Japan and Italy in the 1920s and ’30s. You’ll note that these are the runners up in the Axis Powers in the lead up to WWII.

He pioneered a form of a “positive press” (propaganda) where he would arrange for Japan and Italy to pay US newspapers to publish complimentary material preceding the J. P. Morgan’s floatation of their government bonds in international (especially American and British) markets.

The role of finance, in particular, the unwillingness of especially US financial institutions to consider the possibility of debt forgiveness (even though default was imminent), was probably the single largest factor contributing to the necessity of World War II. But such topics are beyond the scope of this piece.

Japan and Italy were engaged in questionable practices during this period. In 1931, Japan invaded China (Manchuria). In 1934, Italy invaded Africa (Ethiopia). Lamont drew the comparison to Westward Expansion in the United States; the “barbarians of Africa” were like the “savage Native Americans,” and their conquest served the myth of progress. Regardless of the moral standing of such a claim, his comparison is still accurate.

Lamont continued his relationship with Mussolini’s fascist Italy right up to Germany’s invasion of Poland in 1939, when Mussolini’s alliance with the US became politically untenable.

In summary, Lamont was the gatekeeper to the international financial markets for Japan and Italy. If someone had the ability to draw an ethical line in the trajectory of these countries during this period, it would have been Lamont, as he essentially held the drawstrings to the purse that enabled Japan and Italy’s expansion during this period. And yet he instead prioritized the respect and praise of high-powered individuals in these governments. He was unwilling to sacrifice his standing with the likes of Mussolini in service of some set of values. During this age of “relationship banking,” Lamont did his best to perform his duties to his clients, and failed to take responsibility for the political dimensions of his post.


Source: Wikimedia Commons

Hjalmar Schacht came to power in the world of German finance when he helped bring an end to the German hyperinflation in 1924. In the ’30s, he was Hitler’s top financial adviser, running Nazi Germany’s Ministry of Economics.

He was one of Hitler’s few advisors that would get in yelling arguments with the Führer, and was not afraid to stand up to power, which eventually resulted in his dismissal in early ‘39.

For a time Schacht could get behind Hitler’s nationalism, but the myth fell apart for Schacht during Kristallnacht in late ’38, the Nazi looting of Jewish-owned businesses. Having flirted with the German resistance since ’34, from that point forward, Schacht committed to bringing down the Nazi regime from the inside. This endeavor was met with limited success. Schacht ended up imprisoned in a concentration camp for a year at the end of the war.

Schacht was one of the few German officials to be acquitted during the Nuremberg trials.


I have a friend who was offered the job of CEO of one of the world’s most powerful food companies. His mission centered around sustainability (the company’s did not). He understood the limited influence of such a position. Massive enterprises have a huge amount of momentum and ingrained culture, and their stewardship more often entails restraint than creativity. We often perceive leaders of these enterprises to be in positions of extreme power, and this view is accurate, yet that doesn’t mean they have an extensive palette of potientialies to draw upon. Ultimately, he turned down the position because he wanted to use creativity rather than restraint, and such activities are more suited to small rather than large ventures.

Lamont set out to be a cultured aristocrat furthering good through sweeping acts of creation via alliances with grand yet ethically-compromised regimes—and failed. Schacht aspired to be a disciplined steward of power, and understood the limits of such a post.

If you get the possibility to place a landslide in front of such a freight train, will you do it? In working with large systems, when presented with the opportunity, it is our job to discern when enough is enough and say no.

It’s hard to tell how history might have taken a different turn. Is the reality more complex than the above story relating Lamont’s cooperation and Schacht’s resistance to unjust regimes? Absolutely. But there are still relevant lessons for our time in the resolve, or lack thereof, of such individuals.

This article was inspired by Ron Chernow’s financial history, “The House of Morgan,” and researched with the assistance of Wikipedia.