Albert Hahn, Deflationsdruck und Transfer (1929)

Albert Hahn’s conference discussion contribution examines whether Germany’s reparations payments can be converted into an international transfer of goods without intolerable domestic deflation. Addressing a debate between economic theorists and practitioners, he shifts attention from competing theoretical principles to the magnitude of practical obstacles. His central distinction separates the losses caused by raising reparations domestically from the additional difficulties of transferring their equivalent abroad. The contribution proceeds from a diagnosis of the disagreement through this conceptual clarification to cautiously optimistic evidence about the adaptability of foreign trade.

Hahn opens by resisting the widening antagonism between theory and practice. Although he considers some practical objections theoretically unsound, he maintains that the participants broadly share a conceptual foundation:

Es ist von Bedeutung, sich darüber klar zu sein, daß in allerletzter Linie der Streit hier nicht um Theorien geht, sondern um Nuancen, um Akzentuierungen, um das Sehen gewisser Dinge, die der eine als groß und wichtig, der andere als nicht groß und nicht wichtig ansieht.

English translation: It is important to recognize that, ultimately, the dispute here is not about theories but about nuances, emphases, and the perception of certain things that one person regards as substantial and important and another as neither substantial nor important.

This reframing makes the scale of adjustment decisive. Hahn distinguishes the view that shifting purchasing power itself produces a corresponding movement of goods from the opposite claim that it is wholly insufficient. Between them lies the position that purchasing-power redistribution works insofar as it generates deflationary pressure. The question is therefore how much pressure effective transfer requires. A quarter or half percent might be readily manageable; ten percent would present insuperable difficulties. These figures illustrate the stakes rather than supply an estimate.

Hahn interprets the necessary deflationary pressure through the expenses, costs, and price reductions borne domestically to secure foreign purchases. Theorists and practitioners differ over how substantial these burdens are. Recalling Luther’s intervention, he acknowledges symmetrical professional biases: theoretical reasoning can obscure practical obstacles, while daily engagement with obstacles can exaggerate their importance. Hahn then adds a sharper criticism of the practical case against transfer: it often confuses transfer losses with the prior burden of raising the payment.

Ich habe das Gefühl, als ob sehr viele der Schäden, die heute im Zusammenhang mit dem Transfer erwähnt worden sind, in Wirklichkeit nichts mit dem Transfer, sondern mit der Aufbringung als solcher zu tun haben.

English translation: I have the impression that very many of the losses mentioned today in connection with transfer actually have nothing to do with transfer, but with raising the funds as such.

A reduction in German living standards cannot, by itself, establish a distinct transfer difficulty. It may instead reflect the withdrawal of resources required to meet reparations in the first place. Hahn’s distinction prevents the entire economic burden of reparations from being treated as evidence against the feasibility of their international settlement.

Yet conceptual precision does not yield a determinate forecast. Foreign resistance to German goods illustrates what theory alone cannot quantify: compensating for such resistance might require either a small or a substantial price reduction. The relevant practical magnitudes remain uncertain.

Ich glaube, daß man bei dieser Frage mit theoretischen Überlegungen nicht über eine gewisse Grenze hinauskommen kann.

English translation: I believe that, on this question, theoretical considerations cannot take us beyond a certain limit.

Hahn closes with observations that incline him toward confidence without removing that uncertainty. He cites the roughly one-billion improvement in the trade balance within weeks during the spring 1926 crisis, explicitly acknowledging the abnormal circumstances. He also treats foreign borrowing since autumn 1926 as a reverse transfer: Germany receives imported goods corresponding to foreign loans, apparently without comparable foreign anxiety about delivering their equivalent in commodities. Neither example proves that outward reparations transfer will be painless. Together, however, they challenge assumptions of rigid trade adjustment. The contribution’s significance lies in separating the underlying resource sacrifice from transfer-specific friction, while insisting that the latter must be assessed through practical magnitudes rather than theoretical assertion alone.