Third Annual Symposium on Pop Culture and International Law: Game of Thrones and Hjalmar Schacht

[Dan Breen is Professor of the Practice in the Legal Studies program at Brandeis University.  He is currently working on a book on the public monuments of Boston.]

We are now approaching the 80^th anniversary of the trials of leading Nazis by the International Military Tribunal at Nuremberg.  The trials were seen at the time as a major landmark in international law; they were, after all, the first instance in which an international court subjected individuals to serious punishments for acts that they had committed at the behest of a national government, and under color of national laws. Twelve of the original defendants were in fact sentenced to death, and by the time the IMT had concluded its business, 24 Nazis had received the ultimate punishment.  And while no one would say that the trials achieved the fondest hopes of their supporters, they did create a vital precedent, one that led, eventually, to the creation of the International Criminal Court in The Hague.

Among the defendants at Nuremberg in 1945 was the banker Hjalmar Schacht.  As the currency commissioner for the Weimar Republic he had rescued the economy from its bout with runaway inflation by introducing an entirely new Mark as legal tender; and he had followed up that feat by negotiating a new approach to post-World War One reparations that had helped trigger years of economic growth after 1925.

Schacht’s reputation, however, was tarnished by his decision to support Hitler’s rise to power in the economic crisis of 1931-1933, and by his decision to join Hitler’s government as Minister of Economics.  And while he genuinely loathed Goering and his 4-Year Plans, there is no doubt that Schacht had helped to give Hitler the financial tools he needed to build up the Wehrmacht to the point where it was ready to embark upon war in 1939.  For example, it was Schacht who pioneered the infamous MEFO, a company whose sole purpose was to issue bills of exchange that could be converted into Reichsmarks.  It was this mechanism that allowed Germany to purchase war-related raw materials from South Africa and the nations of South America, at a time when the government was running a dangerous deficit.  All in all, it is hard to see how Germany could have rearmed as fast as it did without the financial acumen of Hjalmar Schacht.

For these reasons, Schacht was imprisoned in 1945 by the allies (much to Schacht’s intense dismay, as he had already spent nearly a year at Ravensbruck and Dachau for his alleged role in the plot to assassinate Hitler).  Following his arrest, he was charged at Nuremberg with having committed Crimes Against Peace, and also Conspiracy to commit the same.  A Crime of Peace was, and still is, defined as an act related to the planning, initiation or preparation of a war of aggression. However surprised Schacht might have been by the indictment, it was consistent with lead prosecutor Robert Jackson’s assumption that the Nazi state was really one big conspiracy to wage war—a conspiracy that Schacht’s creative financing certainly furthered.  

For our purposes, the important thing was what the IMT ultimately concluded about Schacht.  While holding that all the evidence suggested that Schacht had been “active in organizing the German economy for war,” the facts also suggested that by 1939, Schacht had changed his tune.  Concerned about runaway government spending, he had urged Hitler to cut back on military expenditures—a request that surely came too late, but was enough to cast doubt on the indictment.  Ultimately, the tribunal found that it could not convict Schacht purely on the basis of his contributions to German rearmament—something which he had encouraged both as head of the Reichsbank and as Economic minister, but which might as easily be ascribed to Schacht’s wish that Germany regain the political influence it had lost in 1918, rather than a wish that Germany make war.  To put it another way, the IMT refused to hold him responsible for decisions taken by others, especially Hitler and Goering, at a time when Schacht was losing much of his influence.

Schacht’s acquittal raises an interesting question: when should a banker be found guilty of Crimes Against Peace?  The question has taken on some contemporary relevance. Oleg Ustenko, economic advisor to President Zelensky of Ukraine, has called for leading American bankers, especially JP Morgan-Chase and Citibank, to be indicted by the ICC for their actions in financing oil companies in their continued purchases of Russian oil.  The Ukrainian Ministry of Justice is actively collecting information about that financing with a view towards furnishing it to ICC Prosecutor Karim Ahmad Khan, in the hope that his office will investigate further and perhaps file an indictment under the Rome Statute (perhaps an uphill battle, since “Crimes against Peace” is not presently covered under the jurisdiction of the ICC).  There IS some precedent for charging banks with responsibility for Crimes against Peace, at least financially.  In the 1990s, groups of holocaust survivors filed class action lawsuits against Credit Suisse and other Swiss Banks for their roles in facilitating German legal transactions during the war—lawsuits that specifically accused the banks of Crimes Against Peace.  The lawsuits were settled, without a final ruling, when the banks agreed to put together a survivors restitution fund, leaving up in the air the question first raised at Nuremberg: when, if ever, should financial measures taken by bankers be deemed a Crime Against Peace?  

What makes the question difficult, of course, is this: bankers lend money, and that money can be used for bad things; but it is always easy for bankers to say that the actual decisions of what to do with the money are not theirs.  Schacht could argue that it was never his role to decide what to do with the war machine he helped fund; and Citibank could make a similar argument about the credits it furnished to Russian oil purchasers.  While it knows where the money is going, it has no control over what the money is used for.

Game of Thrones, however, provides us with what seems to me to be a clear example of when a financial institution can be prosecuted for Crimes against Peace, at least by states, if not by the ICC.  I am referring, of course, to the Iron Bank of Braavos.  The Iron Bank is not a Central Bank, exactly—there is no indication that its decisions are subject to any sort of political mandate to maintain a stable currency, increase employment, or enforce reserve cash requirements on other banks.  Rather, it functions as a private bank that provides credit to, among other entities, nearby city-states and kingdoms, much along the lines of the Medici Bank of the 15^th century and the Fuggers of the 16^th.  By any standards, its lending is reckless.  The profligate spending that all but emptied the treasury under King Robert Baratheon would have been impossible without a dependable stream of Iron Bank loans, none of which seem to have had the strings attached that we associate with the IMF—strings that however burdensome they may be to developing economies, might have produced needed habits of fiscal sanity in Westeros (of course, Master of Coin Petyr Baelish’s series of currency devaluations shares a considerable amount of the blame for ruining not just the crown’s but also the kingdom’s finances).  For years the Iron Bank forbore serious collection efforts, since the Master of Coin was faithfully making interest payments, mostly in Lannister gold, but a reckoning could not be put off forever.  Meanwhile, as the Westerosi civil wars continued, the Iron Bank extended credit first to Stannis Baratheon to fund his doomed rebellion, and then to John Snow and the Night Watch, to see his forces through a time of severe want.  The first loan went bad with Stannis’s death; the latter, if it paid back at all, won’t be paid anytime soon.  So ill-thought are the Iron Bank’s lending practices that Zachary Feinstein has worried that their fabled vaults might have less reserves than one might think—raising the potential of a liquidity crisis should too many depositors lose confidence in the bank’s leadership.

Perhaps it was worries like that that finally sent the Iron Bank’s Tycho Nestoris to King’s Landing to lay down the law to Queen Cersei.   Pursuant to its motto “the Iron Bank Always gets its Due,” Tycho, near the beginning of Season Seven, was in effect calling in the Bank’s loans and insisting on a sizable repayment, knowing full well that the Lannisters have no means to do that; Tycho assures Cersei that he knows that her coffers are empty, and in the series at least, it turns out that the famous goldmines of Casterly Rock have become depleted.  If she does not pay the Bank some significant amount, there will be no more money to fund her war to the death against Daenerys and her allies.  

The important thing to grasp is that the Iron Bank does not want to do anything that would force a hopelessly broke Cersei to sue for peace and make a deal with the alliance that opposes her.  The bank has lost money on its slave-based investments as a result of Daenerys’s emancipation policies; the last thing it wants is for Cersei to make peace with the “breaker of chains.”

Cersei senses this—she knows that the bank wants to bet on her, but that her husband’s reckless fiscal policy has made it difficult for the bank to do anything but demand payment.  How is Cersei to raise the money?  Quite intentionally, in my opinion, Tycho has left Cersei no alternative.  To raise the money she has to wage war and steal it—which means, of course, attacking and seizing Highgarden, the only significant source of money within Cersei’s reach in Westeros, as Tycho and the Iron Bank well know.

What the Iron Bank was doing here was knowingly placing Cersei where the only choice she had was to extend the war.  As a result, to me, this kind of action qualifies as the “initiation” of an act of war on the part of the Iron Bank; and if this is true, it qualifies, based on the definition quoted above, as a Crime Against Peace.

Contrast Tycho Nestoris’s actions with those of Hjalmar Schacht.  Nothing Schacht did as the head of the Reichsbank ever left Hitler with no choice but to wage war.  His policies helped build up the Wehrmacht, but they did not paint Hitler into any kind of corner where the only possible way out was to invade Poland and France.  Tycho, on the other hand, did put Cersei in just this position.  It was the Iron Bank’s intervention that led Cersei to undertake the war against the Tyrells—something she would not have done, at least not at that time, had the Bank been content to adopt a wait and see policy towards both the kingdom’s colossal debt and the war itself.  Burned by the bad bet on Stannis—although Tycho claims that his employer “does not make bets”—Tycho and the Bank laid down the financial law to Cersei; and in the process, initiates a wider war that serves no one’s interests better than the Bank’s.

In considering these facts, we can now postulate the following rule, which I call the Tycho Rule: a financial institution is guilty of “crimes against peace” when it uses its financial power knowingly to place a state in a position where waging war presents itself, to the state, as a viable option.  This is by no means a broad definition, of course, but I think it captures the real difficulties presented by the fungibility of money, and it respects the need to reserve indictments under the Nuremberg principles to cases where the institutional and individual responsibilities for waging war are clear and direct.