Fergusson Adam Dugdale - When Money Dies


Author : Fergusson Adam Dugdale
Title : When Money Dies : The Nightmare of the Weimar Collapse
Year : 1975

Link download : Fergusson_Adam_Dugdale_-_When_Money_Dies.zip

WHEN a nation's money is no longer a source of security, and when inflation has become the concern of an entire people, it is natural to turn for information and guidance to the history of other societies who have already undergone this most tragic and upsetting of human experiences. Yet to survey the great array of literature of all kinds — economic, military, social, historic, political, and biographical — which deals with the fortunes of the defeated Central Powers after the First World War is to discover one particular shortage. Either the economic analyses of the times (for reasons best known to economists who sometimes tend to think that inflations are deliberate acts of fiscal policy) have ignored the human element, to say nothing in the case of the Weimar Republic and of post-revolutionary Austria of the military and political elements; or the historical accounts, though of impressive erudition and insight, have overlooked — or at least much underestimated — inflation as one of the most powerful engines of the upheavals which they narrate. The first-hand accounts and diaries, on the other hand, although of incalculable value in assessing inflation from the human aspect, have tended even in anthological form either to have had too narrow a field of vision — the battle seen from one shell-hole may look very different when seen from another — or to recall the financial extravaganza of 1923 in such a general way as to underplay the many years of misfortune of which it was both the climax and the herald. The agony of inflation, however prolonged, is perhaps somewhat similar to acute pain — totally absorbing, demanding complete attention while it lasts; forgotten or ignorable when it has gone, whatever mental or physical scars it may leave behind. Some such explanation may apply to the strange way in which the remarkable episode of the Weimar inflation has been divorced — and vice versa — from so much contemporary incident. And yet, one would have thought, considering how persistent, extended and terrible that inflation was, and how baleful its consequences, no study of the period could be complete without continual reference to the one obsessive circumstance of the time. The converse is also true: except at the narrowest level of economic treatise or personal reminiscence, how can a fair account of the German inflation be given outside the context of political subversion by Nationalists and by Communists, or the turmoil in the Army, or the quarrel with France, or the problem of war reparations, or the parallel hyperinflations in Austria and Hungary? How can one gauge the political significance of inflation, or judge the circumstances in which inflation in an industrialised democracy takes root and becomes uncontrollable, unless its course is charted side by side with the political events of the moment? The Germany of 1923 was the Germany of Ludendorff as well as of Stinnes, of Havenstein as well as of Hitler. For all their different worlds, of the Army, of industry, of finance and of politics, these four grotesque figures stalking the German stage may equally be represented as the villains of the play: Ludendorff, the soulless, humourless, ex-Quartermaster-General, worshipper of Thor and Odin, rallying point and dupe of the forces of reaction; Stinnes, the plutocratic profiteer who owed allegiance only to Mammon; Havenstein, the mad banker whose one object was to swamp the country with banknotes; Hitler, the power-hungry demagogue whose every speech and action even then called forth all that was evil in human nature. In respect of Havenstein alone the description is of course unjust; but the fact that this highly-respected financial authority was sound in mind made no difference to the wreckage he wrought. Or one may say that there were no real human villains; that given the economic and political cues, actors would have been in the wings to come on and play the parts which circumstances dictated. Certainly there were many others as reprehensible and irresponsible as those who played the leading roles. The German people were the victims. The battle, as one who survived it explained, left them dazed and inflation-shocked. They did not understand how it had happened to them, and who the foe was who had defeated them. This book presents a few new facts, but many forgotten facts and many hitherto unpublished opinions — most usefully of those who could observe events objectively because their purses, health and security were unaffected by what they were witnessing. The most bountiful store of such material are the records of the British Foreign Office, supplied originally by the embassy in Berlin where Lord D'Abernon prosecuted in those years one of the most successful ambassadorships of the age. His information was amply augmented by the consular service in every important city in Germany, as by reports from individual members of the Allied commissions concerned with reparations or disarmament. The documents in the Public Record Office, apart from being among the more accessible, are also probably the most important source available, not only because the British Embassy through D'Abernon was in exceptionally close touch at all times with Germany's senior politicians, but because the withdrawal of the United States presence at the start of 1933, and the almost complete interruption of any communication between Berlin and Paris earlier still, rendered sporadic or superficial what might have been information of comparable value. Supplemented by contemporary German material, I have not hesitated to draw as fully as seemed justified on those papers. I have tried as far as possible to keep these actions, reactions and interactions in their proper historical sequence in the hope that this perhaps obvious order is in this case both a new and enlightening one, and the better to expose a number of important but little-noticed relationships. In relating the story, I have followed, and at times had to hang on grimly to a special thread which wound through Austria, Hungary, Russia, Poland and France, too. It is one which the great authorities have sometimes seemed to lose touch with: the effect of inflation on people as individuals and as nations, and how they responded to it. I have not, however, dared to draw hard and fast conclusions about humanity and inflation on the basis of what I have written here: the facts speak very well for themselves. Still less have I expounded any economic lessons or indulged in theoretical explanations of economic phenomena. This is emphatically not an economic study. Yet inflation is about money as well as people, and it would be impossible to tell the tale without introducing figures, sometimes vast figures, again and again. Vast figures were what the people of central Europe were assailed by and bludgeoned with for years on end until they could bear no more. The value of the mark in 1922 and 1923 was in everyone's mind; but who could comprehend a figure followed by a dozen ciphers? In October 1923 it was noted in the British Embassy in Berlin that the number of marks to the pound equalled the number of yards to the sun. Dr Schacht, Germany's National Currency Commissioner, explained that at the end of the Great War one could in theory have bought 500,000,000,000 eggs for the same price as that for which, five years later, only a single egg was procurable. When stability returned, the sum of paper marks needed to buy a gold mark was precisely equal to the quantity of square millimetres in a square kilometre. It is far from certain that such calculations helped anyone to understand what was going on; so let the un-mathematical reader take heart. Because of the varying ways in which nations express large amounts, I have tried to avoid notations such as billions and trillions upon which custom is confusingly divided. When I have departed from this practice, due indication has been given. It has been harder in the writing to find enough simple epithets to describe without repetition the continuous, worsening succession of misfortunes that struck the German people at this time. It was a difficulty noticed and noted by Mr Lloyd George writing in 1932, who said that words such as 'disaster', 'ruin', and 'catastrophe' had ceased to rouse any sense of genuine apprehension any more, into such common usage had they fallen. Disaster itself was devalued: in contemporary documents the word was used year after year to describe situations incalculably more serious than the time before. When the mark finally dropped out of sight and ruin was all around, there were still Germans to be heard predicting Katastrophe for the future. I have tried, therefore, to limit the number of disasters, crashes, cataclysms, collapses and catastrophes in the text, as well as the degree of crisis and chaos, to a digestible amount, to which the reader may mentally add as much more as his power of sympathy dictates. In one other matter the reader must act independently. It has been necessary frequently to give the 1920s' sterling or dollar equivalents of the mark sums involved, in order to show the degree of the mark's depreciation. The continuing process of inflation of all western countries makes conversion to present-day value an unrewarding occupation. For the lowest range of conversions have kept to the £sd system of 12 pence to the shilling am shillings to the pound. At this distance, cost of living comparisons are fairly futile; yet it may be useful to reckon that in the middle of 1975 it was necessary to multiply every 1920 sterling figure by almost 15 times to find an equivalent. Thus a wage of £200 in 1919 may be worth £3,000 today; a sum of ten shillings worth seven or eight pounds. For dollars, a multiplicator of six or eight could be enough. If a mark in 1913 would buy almost a pound's worth of goods services in 1975 (some items, clearly, were much more expensive than others such as labour much cheaper in real terms than now) No simple but rough conversion is available for sterling readers whom it amuses or vexes to imagine paying £148,000,000 for a postage stamp: for marks they should read pounds. There is no constant rule of thumb for coping accurately witt later stages of the inflation. Until autumn 1921 the internal depreciation of the mark sometimes lagged far behind its fall abroad; making Germany such a haven for tourists. Later on (from beginning of 1922), as public confidence in the mark dissolved, domestic prices adjusted themselves rapidly upwards in tune to the dollar rate, and at the end were even heftily anticipating mark's fall. This was one more of the phenomena of the times which fatally confused the issue then and which exercised the interest of economists for many years afterwards. ...

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