When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany
Adam Fergusson
Language: English
Pages: 288
ISBN: 1586489941
Format: PDF / Kindle (mobi) / ePub
When Money Dies is the classic history of what happens when a nation’s currency depreciates beyond recovery. In 1923, with its currency effectively worthless (the exchange rate in December of that year was one dollar to 4,200,000,000,000 marks), the German republic was all but reduced to a barter economy. Expensive cigars, artworks, and jewels were routinely exchanged for staples such as bread; a cinema ticket could be bought for a lump of coal; and a bottle of paraffin for a silk shirt. People watched helplessly as their life savings disappeared and their loved ones starved. Germany’s finances descended into chaos, with severe social unrest in its wake.
Money may no longer be physically printed and distributed in the voluminous quantities of 1923. However, “quantitative easing,” that modern euphemism for surreptitious deficit financing in an electronic era, can no less become an assault on monetary discipline. Whatever the reason for a country’s deficit—necessity or profligacy, unwillingness to tax or blindness to expenditure—it is beguiling to suppose that if the day of reckoning is postponed economic recovery will come in time to prevent higher unemployment or deeper recession. What if it does not? Germany in 1923 provides a vivid, compelling, sobering moral tale.
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Squander. In the middle of May 1922 Dr Schober’s gallant, almost single-handed efforts as Chancellor to bring order to Austria’s economy and moderation and common-sense to her politics came to an end. His administration was defeated in parliament a bare four weeks after he had persuaded the Allies at Genoa to relinquish their prior mortgage rights on all Austrian State property held to meet occupation and reparation costs - an agreement which cleared the way for raising an Austrian loan. The.
Diplomatic prelude to his moving appeal made to the League of Nations in Geneva in early September. To this body he demonstrated conclusively that without financial help the Austria established by the Treaty of St Germain would fall to bits; and he announced that Vienna was prepared to accept whatever degree of discipline the League might require in putting her house in order. The pistol at the League’s head was less the horror of Austrian disintegration than the threat of an Austrian customs.
Greatly reduced inland purchasing power, and in addition gratify the Germans’ need and urge to get rid of all their paper money. The average citizen these days preferred buying three pairs of indifferent leather boots to buying one good pair. At the fair he was being offered mouth organs at the equivalent of 17s a dozen, or concertinas at half a guinea each. His was becoming in many respects a cheapjack country. It could only be a matter of time before the Bank’s capacity to support the currency.
Berlin government faced five immediate crises: Bavaria, Saxony, the Rhineland, the question of resumption of work in the Ruhr, and the financial chaos.38 On a successful outcome to the Ruhr negotiations depended further negotiations with New York for the supply of sufficient credits to buy essential imports of food and fuel. If the loan were large enough, it might be possible, in conjunction with Germany’s remaining reserves, to start a new currency. Otherwise the government had nowhere to look.
Dogs:47 after stabilisation, the consumption of every article of daily need - beer, pork, coffee, sugar, tobacco - increased regularly, except dogmeat. On Christmas Day 1923, Lord D’Abernon wrote of the ‘magical wand of Currency Stability’:Not even the most fanatical advocate of stabilisation - and this title I yield to no one - could have anticipated more remarkable results from its attainment than those which are now manifest. Food has become abundant in the great towns; potatoes and cereals.