L. Albert Hahn, [Aussprache zu Kredit und Konjunktur]

L. Albert Hahn’s contribution to the scientific conference discussion on credit and the business cycle, originally published in 1929, is a brief intervention defending monetary business-cycle theory while clarifying what its acceptance entails. The supplied text is a republication whose date is undocumented. Speaking as a Frankfurt bank director, Hahn addresses disagreements within the preceding discussion rather than developing a systematic theory. His argument moves from the relation between banking practice and monetary explanation, through the distinction between explaining and endorsing credit expansion, to the methodological question of which economic fluctuations a theory of the cycle should explain.

Hahn begins by declining to elaborate on banks’ capacity for creative credit extension. Among those sympathetic to this approach, he considers the parallel movement of expanding credit and economic upswing substantially accepted. Questions of priority and further details would exceed his allotted time; opponents, meanwhile, are unlikely to change their position after another short presentation. His references to Schumpeter and Hawtrey locate the argument within an established intellectual tradition. The opening is therefore both economical and polemical: Hahn treats the monetary approach as a body of reasoning already available for examination, not as a novelty requiring invention before the audience.

His first substantive correction concerns the relation between theory and practice:

Die monetäre Konjunkturtheorie ist nicht, wie es vielleicht den Anschein haben könnte, eine Erfindung der Theoretiker.

English translation: Monetary business-cycle theory is not, as might perhaps appear to be the case, an invention of the theorists.

Hahn invokes the London banking world, where he says this explanation is so familiar that questioning it attracts attention. He cautiously leaves its historical origins unresolved: John Law suggests a possible practical ancestry, but Hahn explicitly disclaims sufficient expertise in the history of doctrine to establish that genealogy. His narrower claim is that practitioners have supported monetary explanations and that theorists have adopted them gradually under the pressure of practical events. Against this background, the opposition voiced by Dr. Röhr and Dernburg appears striking. Hahn suggests that contemporary practitioners’ greater caution about credit expansion may help explain their resistance.

That suggestion leads to the intervention’s clearest conceptual distinction. A judgment about the desirability of a credit-driven boom must not substitute for an explanation of an actual boom. Hahn imagines a resolution declaring that an expansion resting on credit should not occur:

Diese Resolution würde meinen vollen Beifall finden.

English translation: This resolution would have my full approval.

His agreement with such a resolution makes the distinction pointed. Supporting monetary business-cycle theory does not oblige him to advocate expansionary banking policy. The relevant scientific question is whether a boom that nevertheless occurs rests on credit expansion—or, in his deliberately more cautious formulation, runs parallel with it. This qualification matters: Hahn defends the explanatory relevance of monetary movements without claiming here to settle causal priority. He also implies that opposition might diminish once the practical condemnation of credit expansion is separated from the analysis of its effects.

The second part turns from policy commitments to the construction of the object under discussion. Hahn recalls children hiding objects, finding what they themselves had hidden, and celebrating their discovery. The audience’s recorded laughter gives this methodological criticism the form of a conversational analogy:

Wir gehen in unseren Betrachtungen von einem gewissen Tatbestandskomplex aus, machen über diesen Tatbestandskomplex Aussagen und freuen uns nachher, daß sie stimmen.

English translation: In our reflections we start from a certain complex of facts, make statements about this complex of facts, and afterwards rejoice that they are correct.

The target is an explanation whose apparent success is already secured by the selection of phenomena. If “business cycles” includes every fluctuation arising from accidental events, commodity-market movements, or war, then almost anything can emerge as a cause. Hahn connects this result with the position criticized by Dr. Loewe. The disagreement cannot be resolved simply by collecting more possible causes; it requires specifying which recurring configuration of events the theory is supposed to explain.

Hahn proposes restricting the discussion to the characteristic prewar cyclical phenomena accompanied by rising prices. This narrower object supplies his concluding defense of the monetary approach:

Tut man das, dann, glaube ich, kann man zum mindesten die prinzipielle Richtigkeit der monetären Konjunkturtheorie nicht leugnen; denn daß allgemeine Preissteigerungen nicht ohne Veränderungen auf der Geldseite einhergehen können, ist doch wohl klar.

English translation: If one does that, then, I believe, one cannot deny at least the correctness in principle of monetary business-cycle theory; for it is surely clear that general price increases cannot occur without changes on the monetary side.

The claim establishes a minimum rather than a complete causal account: generalized price increases require monetary changes, but the speech does not demonstrate a detailed mechanism linking credit creation, production, and prices. Its force depends on distinguishing the specific cycle from economic fluctuation in general. Hahn’s closing satisfaction at monetary theory’s growing recognition in Germany completes this defense of its scientific standing. The contribution’s lasting interest lies in its linked distinctions between explanation and prescription, observed parallelism and causal priority, and a defined cyclical pattern and an unrestricted catalogue of disturbances.