Read Online The Downfall of Money: Germanys Hyperinflation and the Destruction of the Middle Class by Frederick Taylor - Free Book Online
Authors: Frederick Taylor
Tags: History, Germany, Europe, Economics, Finance, Professional & Technical, Business & Money, Money & Monetary Policy, Inflation, Accounting & Finance
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gold marks on what was now, undeniably, a lost war. Of this, around 60 per cent (98 billion) had been financed by the sale of war bonds (usually bearing 5 per cent interest). These bonds, representing a huge loan by the nation to its own government, had been sold to the German public and business community in nine remarkably successful war bond drives, beginning in November 1914 and ending in October 1918, just weeks before the armistice. 29
Each war bond drive had been accompanied by massive patriotic campaigns, including early cinema advertising, and of course by government assurances that, not only would the money raised contribute to a German victory, but the bonds themselves would provide a decent investment income for their holders. The interest to the bond holders was supposedly still due, of course, win or lose. Not only that, but it was clear that the nation would also have to find the money to pay an as yet unspecified but predictably huge sum to the victors as reparations. The Reich’s financial situation, as the Kaiser fled and the democrats took over, was disastrous.
The fighting on the battlefield was over. However, the economic and financial struggle that had begun in August 1914 would carry through not just to the period of armistice, but to the peace treaty and far beyond.
In fact, there were those who saw everything that happened to the German economy and currency by government action over the next five years as simply the continuation of war by other means. And to some extent, there is reason to believe they might have been right.
Footnotes
* Fruit stones (especially cherry and plum) were collected in an organised way by schools as part of a government campaign. : e kernels were pressed for the nutritious oils they contained, to help make up for the shortage of imported oils.
4
‘I Hate the Social Revolution Like Sin’
On the morning of 9 November 1918, with a general strike called, Berlin full of excited crowds and rumours of an armistice coursing the streets, Prince Max of Baden, last hope of the old regime, decided to lay down the chancellorship he had accepted from the Kaiser barely a month earlier.
The Kaiser, of course, had departed Berlin some days earlier for Spa, whence his next stop would, it turned out, be refuge in neutral Holland. But what now? Prince Max had hoped to save the monarchy by skipping two unpopular royal generations and holding the crown in regency for the Kaiser’s infant grandson. Even though the Kaiser had not yet formally abdicated, Max had announced his dethronement two days earlier. In this he was supported by the leader of the party that for so many years had been excluded by the old Prussian-dominated hierarchy but since August 1914 had become part of the war establishment: the Social Democrats.
Since the new Chancellor had taken power, two top-ranking Social Democrats had even been awarded posts in the government. Not yet a minister, but of prime importance to Prince Max’s project, was the chairman of the Social Democratic Party, forty-seven-year-old Friedrich Ebert.
A stocky, not especially articulate party bureaucrat, the Heidelberg-born Ebert grew up in modest but reasonably secure circumstances as the seventh of nine children of a master tailor and his wife. He himself learned the trade of a saddler but spent little time plying it before devoting himself to politics. Sebastian Haffner, no enthusiast for a man he saw as one of the prime betrayers of the German revolution, painted an unflattering and somewhat patronising portrait of a bloodless political bureaucrat who presented ‘an unprepossessing figure’:
He was a small, fat man with short legs and a short neck, with a pear-shaped head on a pear-shaped body. He wasn’t a riveting speaker either. He spoke in a guttural voice, and he read his speeches from a prepared text. He was not an intellectual, or for that matter a real proletarian . . . Ebert was the type of the German master craftsman:
Each war bond drive had been accompanied by massive patriotic campaigns, including early cinema advertising, and of course by government assurances that, not only would the money raised contribute to a German victory, but the bonds themselves would provide a decent investment income for their holders. The interest to the bond holders was supposedly still due, of course, win or lose. Not only that, but it was clear that the nation would also have to find the money to pay an as yet unspecified but predictably huge sum to the victors as reparations. The Reich’s financial situation, as the Kaiser fled and the democrats took over, was disastrous.
The fighting on the battlefield was over. However, the economic and financial struggle that had begun in August 1914 would carry through not just to the period of armistice, but to the peace treaty and far beyond.
In fact, there were those who saw everything that happened to the German economy and currency by government action over the next five years as simply the continuation of war by other means. And to some extent, there is reason to believe they might have been right.
Footnotes
* Fruit stones (especially cherry and plum) were collected in an organised way by schools as part of a government campaign. : e kernels were pressed for the nutritious oils they contained, to help make up for the shortage of imported oils.
4
‘I Hate the Social Revolution Like Sin’
On the morning of 9 November 1918, with a general strike called, Berlin full of excited crowds and rumours of an armistice coursing the streets, Prince Max of Baden, last hope of the old regime, decided to lay down the chancellorship he had accepted from the Kaiser barely a month earlier.
The Kaiser, of course, had departed Berlin some days earlier for Spa, whence his next stop would, it turned out, be refuge in neutral Holland. But what now? Prince Max had hoped to save the monarchy by skipping two unpopular royal generations and holding the crown in regency for the Kaiser’s infant grandson. Even though the Kaiser had not yet formally abdicated, Max had announced his dethronement two days earlier. In this he was supported by the leader of the party that for so many years had been excluded by the old Prussian-dominated hierarchy but since August 1914 had become part of the war establishment: the Social Democrats.
Since the new Chancellor had taken power, two top-ranking Social Democrats had even been awarded posts in the government. Not yet a minister, but of prime importance to Prince Max’s project, was the chairman of the Social Democratic Party, forty-seven-year-old Friedrich Ebert.
A stocky, not especially articulate party bureaucrat, the Heidelberg-born Ebert grew up in modest but reasonably secure circumstances as the seventh of nine children of a master tailor and his wife. He himself learned the trade of a saddler but spent little time plying it before devoting himself to politics. Sebastian Haffner, no enthusiast for a man he saw as one of the prime betrayers of the German revolution, painted an unflattering and somewhat patronising portrait of a bloodless political bureaucrat who presented ‘an unprepossessing figure’:
He was a small, fat man with short legs and a short neck, with a pear-shaped head on a pear-shaped body. He wasn’t a riveting speaker either. He spoke in a guttural voice, and he read his speeches from a prepared text. He was not an intellectual, or for that matter a real proletarian . . . Ebert was the type of the German master craftsman:
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