The Downfall of Money: Germanys Hyperinflation and the Destruction of the Middle Class Read Online Free PDF Page A
Author: Frederick Taylor
9
True, Germany managed to raise £147 million through sales of foreign securities. All the same, the vast majority of any money required to cover the immense cost of waging war on such a scale, and for the kind of duration now expected, would have to be raised from among Germany’s own citizens by various means, including the sales of long-term interest-bearing war bonds, as well as increases in existing taxes and the levying of new ones. This created a burden of debt that would haunt the country for many years to come. There was also, as we shall see, the hidden time bomb of the vast loans taken out by Germany’s municipalities to cover their wartime expenses, which, since German law devolved such responsibilities, included vastly increased welfare expenditure for victims of the fighting, their families and dependants.
It was a daunting prospect. But Germany’s rulers – and most of the country’s citizens – expected that such outlay, however burdensome, would be merely temporary. When the Reich finally won the war, so the nation assumed, these expenses would be recouped from the losers – Britain, France, Russia and their allies. On 20 August 1915, the conservative-nationalist Secretary of State for the Treasury, former chair of the board of the Deutsche Bank and later Reich Vice-Chancellor, Dr Karl Helfferich, openly declared as much to an enthusiastic Reichstag:
Gentlemen, as things stand, our only way through remains to postpone the final regulation of war costs through the means of credit, to a future time when peace is concluded, until we are at peace. And on this subject I should today like once more to emphasise this: If God grants us victory and thus the possibility of shaping the peace according to our needs and the necessities of our national life, we intend and are entitled, along with everything else, not to forget the question of costs.
[Lively agreement]
We owe this to the future of our people.
[Calls of ‘very true!’]
The entire future maintenance of our life as a nation must, insofar as is at all possible, remain free of, and be relieved of, the enormous burden that the war has caused to accumulate.
[Further calls of ‘very true!’]
It is the instigators of this war who deserve to bear this lead weight of billions.
[Calls of ‘quite right!’]
Let them drag it through the decades to come, not us.
[Calls of ‘very good!’] 10
Of course, Germany’s enemies believed exactly the same. In the case of France and Belgium, they also fully intended to seek compensation for physical damage inflicted on their territory as a result of fighting, and the activities of German occupation forces.
This last imposition, should Germany in fact lose the war, was going to be extremely onerous. Except for a brief though violent Russian incursion into the easternmost part of Germany in the first weeks of the war, and some fighting in the border fringes of Alsace and Lorraine, the Reich’s territory remained untouched by war to the end.
In France, by contrast, as a result of the fighting and the occupation, more than half a million private dwellings and 17,600 public buildings were reckoned completely or largely destroyed; 860,400 acres of farmland were laid waste or rendered unsuitable for cultivation; and 20,000 factories and workshops were destroyed or seriously damaged. Some factories, especially those containing modern machinery, were dismantled and shipped to Germany. At least a million head of cattle were also transferred east of the Rhine.
Most appallingly, when the Germans ‘rationalised’ their front and fell back to the supposedly impregnable ‘Hindenburg Line’ early in 1917, at some points retreating up to fifty kilometres, they carried out a ruthless, systematic policy of destruction. Demolition teams obliterated all industrial plant, farms and infrastructure before abandoning the territory the Imperial Army had occupied for just over two and a half years. Coal pits were
True, Germany managed to raise £147 million through sales of foreign securities. All the same, the vast majority of any money required to cover the immense cost of waging war on such a scale, and for the kind of duration now expected, would have to be raised from among Germany’s own citizens by various means, including the sales of long-term interest-bearing war bonds, as well as increases in existing taxes and the levying of new ones. This created a burden of debt that would haunt the country for many years to come. There was also, as we shall see, the hidden time bomb of the vast loans taken out by Germany’s municipalities to cover their wartime expenses, which, since German law devolved such responsibilities, included vastly increased welfare expenditure for victims of the fighting, their families and dependants.
It was a daunting prospect. But Germany’s rulers – and most of the country’s citizens – expected that such outlay, however burdensome, would be merely temporary. When the Reich finally won the war, so the nation assumed, these expenses would be recouped from the losers – Britain, France, Russia and their allies. On 20 August 1915, the conservative-nationalist Secretary of State for the Treasury, former chair of the board of the Deutsche Bank and later Reich Vice-Chancellor, Dr Karl Helfferich, openly declared as much to an enthusiastic Reichstag:
Gentlemen, as things stand, our only way through remains to postpone the final regulation of war costs through the means of credit, to a future time when peace is concluded, until we are at peace. And on this subject I should today like once more to emphasise this: If God grants us victory and thus the possibility of shaping the peace according to our needs and the necessities of our national life, we intend and are entitled, along with everything else, not to forget the question of costs.
[Lively agreement]
We owe this to the future of our people.
[Calls of ‘very true!’]
The entire future maintenance of our life as a nation must, insofar as is at all possible, remain free of, and be relieved of, the enormous burden that the war has caused to accumulate.
[Further calls of ‘very true!’]
It is the instigators of this war who deserve to bear this lead weight of billions.
[Calls of ‘quite right!’]
Let them drag it through the decades to come, not us.
[Calls of ‘very good!’] 10
Of course, Germany’s enemies believed exactly the same. In the case of France and Belgium, they also fully intended to seek compensation for physical damage inflicted on their territory as a result of fighting, and the activities of German occupation forces.
This last imposition, should Germany in fact lose the war, was going to be extremely onerous. Except for a brief though violent Russian incursion into the easternmost part of Germany in the first weeks of the war, and some fighting in the border fringes of Alsace and Lorraine, the Reich’s territory remained untouched by war to the end.
In France, by contrast, as a result of the fighting and the occupation, more than half a million private dwellings and 17,600 public buildings were reckoned completely or largely destroyed; 860,400 acres of farmland were laid waste or rendered unsuitable for cultivation; and 20,000 factories and workshops were destroyed or seriously damaged. Some factories, especially those containing modern machinery, were dismantled and shipped to Germany. At least a million head of cattle were also transferred east of the Rhine.
Most appallingly, when the Germans ‘rationalised’ their front and fell back to the supposedly impregnable ‘Hindenburg Line’ early in 1917, at some points retreating up to fifty kilometres, they carried out a ruthless, systematic policy of destruction. Demolition teams obliterated all industrial plant, farms and infrastructure before abandoning the territory the Imperial Army had occupied for just over two and a half years. Coal pits were
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