The Coming of the Third Reich (21 page)

There can be little doubt that, even in the Republican bastion of Prussia, the vast majority of civil servants had little genuine loyalty to the constitution to which they had sworn their allegiance. Should the Republic be threatened with destruction, very few of them indeed would even think of coming to its aid. Devotion to duty kept them working when the state was challenged, as in the Kapp putsch of 1920, but it would also keep them working when the state was overthrown. Here was another central institution whose loyalty was to an abstract concept of the Reich rather than to the concrete principles of democracy. In this as in other respects, Weimar was weak in political legitimacy from the start.
⁵⁸
It was beset by insurmountable problems of political violence, assassination and irreconcilable conflicts about its right to exist. It was unloved and undefended by its servants in the army and bureaucracy. It was blamed by many for the national humiliation of the Treaty of Versailles. And it also had to face enormous economic problems, beginning with the massive monetary inflation that made life so difficult for so many in the years when it was trying to establish itself.

THE GREAT INFLATION

I

Even the most diehard reactionary might eventually have learned to tolerate the Republic if it had provided a reasonable level of economic stability and a decent, solid income for its citizens. But from the start it was beset by economic failures of a dimension unprecedented in German history. As soon as the First World War had begun, the Reich government had started to borrow money to pay for it. From 1916 onwards, expenditure had far exceeded the revenue that the government had been able to raise from loans or indeed from any other source. Naturally enough, it had expected to recoup its losses by annexing rich industrial areas to the west and east, by forcing the defeated nations to pay large financial reparations, and by imposing a new German-dominated economic order on a conquered Europe.
⁵⁹
But these expectations were dashed. In the event, it was Germany that was the defeated nation and Germany that had to foot the bill. This made things far worse than before. The government had been printing money without the economic resources to back it. Before the war, the dollar had been worth just over 4 paper marks on the exchange in Berlin. By December 1918 it took nearly twice as many marks to buy a US dollar. The rate continued to decline to just over 12 marks to the dollar in April 1919 and 47 by the end of the year.
⁶⁰

Successive governments of the Weimar Republic were caught in a political trap that was at least partly of their own making. The need to export government revenue to other countries in the form of reparations payments meant an additional drain on resources at a time when wartime debts still had to be paid and Germany’s economic resources and domestic market had shrunk. Heavily populated industrial areas in Lorraine and Silesia had been removed under the terms of the Treaty. Industrial production was only 42 per cent in 1919 of what it had been in 1913, and the country was producing less than half the grain it had produced before the war. Massive expenditure was required to fund the adjustment to a peacetime economy, and to provide welfare measures for ex-soldiers seeking jobs, or unable to find them because of war disability. Yet if any government sought to bridge the gap by raising taxes by any more than a small amount, it would immediately be accused by its enemies on the nationalist right of imposing taxes in order to meet Allied reparations bills. It seemed politically more astute to most governments to tell foreign powers instead that Germany’s currency problems would only be solved by the abolition of reparations, or at least by rescheduling them to what would be a more acceptable level. The energy and aggressiveness with which various German governments pursued this dangerous policy varied, and during 1920 and 1921 the slide of the mark against the dollar was arrested more than once. Still, by November 1921 Germans who wanted to buy a US dollar had to pay 263 marks for it, and by July 1922 the cost had almost doubled again, to 493 marks.
⁶¹

Inflation on this scale had different effects on different players in the economic game. The ability to borrow money to purchase goods, equipment, industrial plant and the like, and pay it back when it was worth a fraction of its original value, helped stimulate industrial recovery after the war. In the period up to the middle of 1922, economic growth rates in Germany were high, and unemployment low. Without this background of virtually full employment, a general strike, such as the one which frustrated the Kapp putsch in March 1920, would have been far more difficult to mount. Real taxation rates were also low enough to stimulate demand. The German economy managed the transition to a peacetime basis more effectively than some European economies where inflation was less marked.
⁶²

But the recovery was built on sand. For, despite a few temporary respites in the process, the inflation proved to be unstoppable. It took over 1,000 marks to buy a US dollar in August 1922, 3,000 in October, and 7,000 in December. The process of monetary depreciation was taking on a life of its own. The political consequences were catastrophic. The German government could not make the required reparations payments any longer, since they had to be tendered in gold, whose price on the international market it could no longer afford to meet. Moreover, by the end of 1922 it had fallen seriously behind in its deliveries of coal to the French, another part of the reparations programme. So French and Belgian troops occupied Germany’s leading industrial district, the Ruhr, in January 1923 in order to seize the missing coal and force the Germans to fulfil their obligations under the Treaty. The government in Berlin almost immediately proclaimed a policy of passive resistance and non-cooperation with the French in order to deny the occupiers facilities to garner the fruits of Ruhr industrial production for themselves. The struggle was only called off towards the end of September. Passive resistance made the economic situation worse. Anyone who wanted to buy a dollar in January 1923 had to pay over 17,000 marks for it; in April 24,000; in July 353,000. This was hyperinflation on a truly staggering scale, and the dollar rate in marks for the rest of the year is best expressed in numbers that soon became longer than anything found even in a telephone directory: 4,621,000 in August; 98,860,000 in September; 25,260,000,000 in October; 2,193,600,000,000 in November ; 4,200,000,000,000 in December.
⁶³
Newspapers soon began informing their readers about the nomenclature of big numbers, which varied confusingly from one country to another. The French, one columnist noted, called a million million a trillion, while ‘for us on the other hand, a trillion is equal to a million billion (1,000,000,000,000,000,000), and we must only hope to God that we don’t get into these or even higher numerical values with our everyday currency, merely because of the overcrowding of the lunatic asylums that it would cause.’
⁶⁴

At its height, the hyperinflation seemed terrifying. Money lost its meaning almost completely. Printing presses were unable to keep up with the need to produce banknotes of ever more astronomical denominations, and municipalities began to print their own emergency money, using one side of the paper only. Employees collected their wages in shopping baskets or wheelbarrows, so numerous were the banknotes needed to make up their pay packets; and immediately rushed to the shops to buy supplies before the continuing plunge in the value of money put them out of reach. The school student Raimund Pretzel later remembered how at the end of every month his father, a senior civil servant, would collect his salary, rush off to buy a season ticket for the railway so that he could get to work for the next month, send off cheques for regular outgoings, take the entire family for a haircut, then hand over what was left to his wife, who would go with the children to the local wholesale market and buy heaps of non-perishable foodstuffs off which they had to live until the next pay-packet came in. For the rest of the month the family had no money at all. Letters had to be mailed with the latest denomination banknotes stapled to the envelope, since postage stamps of the right value could not be printed fast enough to keep pace with the price rise. The German correspondent of the British
Daily Mail
reported on 29 July 1923: ‘In the shops the prices are typewritten and posted hourly. For instance, a gramophone at 10 a.m. was 5,000,000 marks but at 3 p.m. it was 12,000,000 marks. A copy of the
Daily Mail
purchased on the street yesterday cost 35,000 marks but today it cost 60,000 marks.’
⁶⁵

The most dramatic and serious effects were on the price of food. A woman sitting down in a café might order a cup of coffee for 5,000 marks and be asked to give the waiter 8,000 for it when she got up to pay an hour later. A kilo of rye bread, that staple of the German daily diet, cost 163 marks on 3 January 1923, more than ten times that amount in July, 9 million marks on I October, 78 billion marks on 5 November and 233 billion marks a fortnight later, on 19 November.
⁶⁶
At the height of the hyperinflation, over 90 per cent of the expenditure of an average family went on food.
⁶⁷
Families on fixed incomes started selling their possessions so that they could have something to eat. Shops began hoarding food in anticipation of immediate price rises.
⁶⁸
Unable to afford the most basic necessities, crowds began to riot and to loot food shops. Gunfights broke out between gangs of miners, who sallied forth into the countryside to strip the fields bare, and the farmers who were trying to protect their crops and were at the same time unwilling to sell them for worthless banknotes. The collapse of the mark made it difficult if not impossible to import supplies from abroad. The threat of starvation, particularly in the area occupied by the French, where passive resistance was crippling the transport networks, was very real.
⁶⁹
Malnutrition caused an immediate rise in deaths from tuberculosis.
⁷⁰

Not untypical was the experience of the academic Victor Klemperer, whose diaries offer a personal insight into the larger sweep of German history in this period. Living very much from hand to mouth on temporary teaching contracts, Klemperer, a war veteran, was pleased to receive a small additional war gratuity in February 1920, but, as he complained, ‘what was earlier a small income is now just a tip’.
⁷¹
Over the following months, Klemperer’s diary was increasingly filled with financial calculations as inflation gathered pace. Already in March 1920 he was encountering ‘foragers, little people with rucksacks’ on the train outside Munich.
⁷²
As time went on, Klemperer paid increasingly fantastic bills ’with a kind of dull fatalism‘.
⁷³
In 1920 he at last gained a permanent appointment at Dresden Technical University. But it did not bring financial security. Each month he received an increasingly astronomical salary with back payments to make up for inflation since the last payment. Despite receiving nearly a million marks’ salary at the end of May 1923, he was still unable to pay his gas and tax bills. Everyone he knew was working out how to make money speculating on the Stock Exchange. Even Klemperer had a try, but his first gain, 230,000 marks, paled into insignificance in comparison with that of his colleague Professor Förster, ‘one of the worst antisemites, Teutonic agitators and patriots in the university’, who was said to be making half a million marks a day playing the markets.
⁷⁴

An habitué of cafés, Klemperer paid 12,000 marks for a coffee and cake on 24 July; on 3 August he noted that a coffee and three cakes cost him 104,000 marks.
⁷⁵
On Monday, 28 August Klemperer reported that a few weeks previously he had obtained ten tickets for the cinema, one of his main pleasures in life, for 100,000 marks. ‘Immediately after that, the price increased immeasurably, and most recently our 10,000-mark seat has already cost 200,000. Yesterday afternoon,’ he went on, ‘I wanted to buy a new stock. The middle rows of the stalls already cost 300,000 marks’, and these were the second cheapest seats in the house; a further price increase had already been announced for the following Thursday, three days later.
⁷⁶
By 9 October he was reporting: ‘Our visit to the cinema yesterday cost 104 million, including the money for the fare.’
⁷⁷
The situation brought him, like many others, to the brink of despair:

Germany is collapsing in an eerie, step-by-step manner ... The dollar stands at over 800 million, it stands every day at 300 million more than the previous day. All that’s not just what you read in the paper, but has an immediate impact on one’s own life. How long will we still have something to eat? Where will we next have to tighten our belts?
⁷⁸