A history note by Maynard.

In the aftermath of World War I, the fiscal irresponsibility of the short-lived Weimar Republic plunged the German nation into the hyperinflation of the early 1920’s. The German Mark was devalued on an hourly basis, and yesterday’s fortune rapidly became today’s wastepaper. I mean that literally; pictured here are worthless bills in the street (see this page for more photos).

German hyperinflation was a much-remembered event as the 1960’s rolled along and American inflation heated up. But we pushed our own stagflation aside, at least for a while, and today this bit of history is largely forgotten. Hyperinflation happens in Zimbabwe, not rich places like Europe and America.

Let me pause here to mention that I (Maynard) mostly steer clear of books about current events, since these are written from a modern vantage and with a modern agenda. I’m more interested in the historical observations of people that are not struggling to make a point about today’s politicians. (Yes, I’m trying to make that point, but that can’t be helped.)

Anyway, I picked up Erich Maria Remarque’s The Black Obelisk, just because it looked like an interesting book. And I’m fascinated by it, not for political reasons but for human reasons (which is why I read novels). Remarque is a German author best known for All Quiet on the Western Front; this book; written in the late 1950’s, is set during the time of German hyperinflation. Here’s a bit of the description of the era, taken from the book. The narrator is a small businessman learning the nasty tricks needed to survive in the new, evil day.

The shipment of granite we want to extract from Riesenfeld [a profiteer who sells raw materials] is something we cannot, of course, pay for in advance. We never have that much money at one time and it would be madness to try to accumulate it in the bank — it would melt away like snow in June. Therefore we want to give Riesenfeld a promissory note payable in three months. That means we want to pay practically nothing.

Naturally, Riesenfeld must not lose on the transaction. That shark in the ocean of human tears needs to make a profit like every honest businessman. And so on the day he receives the note from us he must take it to his bank or ours and have it discounted. The bank ascertains that both Riesenfeld and we are good for its face value, deducts a few percent for discounting the note, and pays out the money. We pay back to Riesenfeld the amount of the bank’s commission. Thus, he receives full payment for the shipment just as though we had paid in advance. Nor does the bank lose. It immediately sends the note to the Reichsbank, which in turn pays just as the bank paid Riesenfeld. And there in the Reichsbank it remains until, on the expiration date, it is presented for payment. What it will be worth then is easy to imagine.

We have only known about all this since 1922. Before then we tried to transact business in the same way as Heinrich Kroll [i.e., with old-school straightforwardness] and almost went broke doing it. We had sold out almost our entire inventory and, to our amazement, had nothing to show for it except a worthless bank account and a few suitcases full of currency not even good enough to paper our walls with. We tried at first to sell and then buy again as quickly as possible — but the inflation easily overtook us. The lag before we got paid was too long; while we waited, the value of money fell so fast that even our most profitable sale turned into a loss. Only after we began to pay with promissory notes could we maintain our position. Even so, we are making no real profit now, but at least we can live. Since every enterprise in Germany is financed in this fashion, the Reichsbank naturally has to keep on printing unsecured currency and so the mark falls faster and faster. The government apparently doesn’t care; all it loses in this way is the national debt. Those who are ruined are the people who cannot pay with notes, the people who have property they are forced to sell, small shopkeepers, day laborers, people with small incomes who see their private savings and their banks accounts melting away, and government officials and employees who have to survive on salaries that no longer allow them to buy so much as a new pair of shoes. The ones who profit are the exchange kings, the profiteers, the foreigners who buy what they like with a few dollars, kronen, or zlotys, and the big entrepreneurs, the manufacturers, and the speculators on the exchange whose property and stocks increase without limit. For them practically everything is free. It is the great sellout of thrift, honest effort, and respectability. The vultures flock from all sides, and the only ones who come out on top are those who accumulate debts. The debts disappear of themselves.

That’s the end result — or perhaps I should say it’s the beginning of the end result — of fiscal madness. Governments start playing these monetary games as a means of transferring wealth from the naive thrifty to the calculating cronies. The process, once started, is very hard to stop. Fiscal corruption induces the citizens to likewise become corrupt, or they will not survive (and plenty of good people, having lost everything, see no pathway forward and simply commit suicide). The man in the street knows there’s a problem, but he doesn’t understand where it’s coming from. He thinks it’s a cancer, an act of God, not a matter of policy. And so he looks for a political solution. Later in the book we get a whiff of the true end result…

“Did you hear him?” Watzek asks.


“Man alive, him! The Führer! Adolf Hitler! He was on the radio. We heard him at the stockyard. He will change everything! Marvelous speech! That man knows what’s wrong. Everything must be changed.”

“That’s obvious,” I say. There, in one sentence, lies the whole stock in trade of the world’s demagogues. “Everything must be changed!”

If I were to put this in a book today, I would be accused of writing with an agenda. But this is a lament, from 50 years ago, about the genesis of the previous cataclysm. You’d think we’d know better by now.

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3 Comments | Leave a comment
  1. little firefly says:

    Okay, okay. I was already frightened. Has mankind ever learned from history? Now what, Maynard? Shall we leave now? Where do we go?

  2. Cernunnos81 says:

    Nah, we don’t leave… We kick the Socialist prangs in the Juevos and then yank their jerseys over their heads while we uppercut them repeatedly. We do this in the limelight, in front of every ‘politician’ out there and make it plain Why it is happening. Then we look at the new guys that we’ve put in place that have stated they will Not follow the redistribution and ‘bread and circus’ policy and we hold them to it. We continue to do this because the ‘Politicians’ won’t change anything, but we, as the people, Will and must. We vote in people that will defund programs that have 4 different lines of funding, we cut the strings of social welfare programs, force reforms that make them as short lived as possible. We follow the lead of the Scandahoovians and cut unemployment down to less than 3months without Proof of searching for a new job.* We do All of this and we do it fast and hard. Its the only way to take our country back.

    * The Scandanavians used to allow 5yrs on the dole, and people would stay on it until the last few weeks and suddenly find work, so they reformed it to 3yrs, and suddenly it took people 2yrs and 11months instead of 4yrs and 11months to find new jobs. Then they reduced it to a year and lo and behold, 11months and people suddenly found work… 100wks is what we currently do, that’s almost 2yrs, and the Dems want to Increase it.

  3. Slimfemme says:

    There’s even a better book that discusses the cultural milieu of Germany pre-Nazi and during the Nazi regime. It’s called The Ominous Parallels by Dr. Leonard Peikoff. It’s a philosophical analysis of the kinds of ideas that permeated German society that led to hyperinflation and to Nazism. In short, nothing happens in a vacuum. He also gives us a warning about our own society and the eerie similarities to Weimar Germany.

    I’m at a point where the Obama Administration means nothing to me. I’ll continue to live my life and achieve my goals. He’s a fraud and such a small man; he means nothing to me. Every time I see his face, I chuckle because he’s so absurd!!!

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