~ Jens Parsson. [edits/comments ~R]
The Weimar Republic’s constitution was a masterpiece of democratic theory – and in the best democratic tradition the government was hopelessly responsive to its sources of support. A government so plainly a weathervane to the prevailing winds was ill suited to override the shortsighted self-interest of its power groups and deal sternly with hard realities. So, nothing has changed there then…
When the government tried to evolve adequate tax plans, labor blocked income or consumption taxes which would weigh upon workers, and business and property blocked taxes which would weigh upon capital. So, very simply, no one paid. Ditto
Magnates like Hugo Stinnes and Fritz Thyssen and the entire voice of big business obstructed every effective effort to put a stop to the inflation, because very simply the inflation was good business for them. Ditto
When Germany at last turned to the prominent industrialist Wilhelm Cuno in the hope of finding succor in a government of businesslike soundness, [John Key?] his impotent administration from then presided inertly over the worst months of the inflation.
Even in November of 1923, political paralysis was so pervasive that chancellor Stresemann’s only way to shortcut the interminable parliamentary deliberation (and institute the miraculous Rentenmark) was to assume dictatorial power to rule by decree under the emergency provisions of the Weimar constitution. (These same extraordinary powers were later accused of facilitating Hitler’s usurpation of absolute power) [Apply enough heat: and it becomes a choice of the frying pan, or the fire – Great… ]
Throughout the inflation, the characteristic of the Reichsmark which was most vitally important, and at the same time most securely hidden, was the depreciation in its value as diminishing shares of the more or less constant total value of Germany. But it was difficult to detect and practically impossible to measure. [particularly if you choose to not even try]
Unrealized and unsuspected depreciation also accounted for the remarkable complacency of Germans, who were prone to think they were always more or less square with their past fiscal sins. They were understandably bewildered when the inflation then burst over their heads in an unforeseen enormity and for no apparent reason. [particularly if you choose not to look or see]
It was always possible that if the growth in the real value of Germany had ever been allowed to make good the spurious value of the mark, some degree of unrealized depreciation could have been carried by the Mark indefinitely. [kick the can]
The exact degree is so uncertain that, as Dr. Schacht said, a government finance minister must feel the danger line with his fingertips. Its flash point was risky at best, especially when government ministers were totally unaware that anything like Schacht’s fingertip sensitivity was needed. [yeah …what could possibly go wrong?]
The government’s practical ability to make good on the Mark, as distinct from its theoretical ability, was undoubtedly limited. [but lets use the numbers that look the best]
Once begun, the inflation required ever more inflationary expansion just to support the old debts. Germany had to run faster and faster to stay ahead of the engulfing wave, until it simply could not run any faster. Stopping the inflation would have killed the boom, and that seemed excessively unpleasant. [yeah …what could possibly go wrong?]
Hugo Stinnes in a much-noted speech declared that it was madness to think that a defeated Germany with all its huge burdens could spend more, have more, work less, carry an ascending prosperity, and do it all with mirrors. But Germany seemed quite willing to try. [well, you gotta try don’t you …what could possibly go wrong?]
It was theoretically possible for Germany to extricate itself at virtually any time it chose. Lord Keynes and Dr. Schacht, two wizards of the black art of economics, both happened to agree that the way to do it was with capital taxes designed to soak up some of the excess supplies of money. Capital taxes made sense because the brimming coffers of capital were where the profits of the inflation gravitated; wage and salary earners were already laboring heavily under the inflation and had no more capacity to pay taxes. An impartial tax on all capital would clearly have been less destructive than the totally confiscatory tax which eventually fell on one part of capital — the savers and lenders.
In any case, neither this nor any other means of dismounting from the inflationary wave was ever resolutely tried. Though it was always possible to dismount, it was never possible to dismount painlessly. [money for nothin’ and your Chicks for free…]
Every day that passed, appeasing the inflationary dragon with more inflation, increased the assured severity of the inevitable medicine. [how much severity do you imagine we here and now have saved up?]
So long as the Siren-like lure of the easy wealth continued, it was impossible to persuade enough of the nation that titanic measures of austerity and self-denial were necessary. [hmmm… titanic…. so, you could either choose titanic, or have titanic thrust upon you…]
When the Siren’s song stopped the crash had already begun and it was too late.
In final analysis, there is more difference of expert opinion than one might expect about whether the inflation was good or bad. Its horrors, while it lasted and the permanent harm to millions of individuals which it left in its wake, might appear to speak for themselves. [it might appear that way, yes… depends who’s doing the measuring I guess]
From a transoceanic distance, detached economists like Professor Frank Graham were able to weigh up the pluses, minuses and the cold-blooded conclusion that the inflation may actually have been a good thing for Germany as a whole. Germany as a whole suffered no net loss in the inflation.
The great middle class and all the savers and lenders who lost all their wealth merely saw it transferred to debtors and to the government. [oh, well that’s alright then]
Production increased, employment increased. Conceivably the inflation may have helped Germany recover from the war and come out from under its load of liabilities. It may even have been a net gain to wipe out all the pensioners and herd them back into the labor force.
If so, the Germans who lost might be excused for finding no comfort in knowing all of this.
In the end, Germany perhaps did not get off altogether so lightly from the inflation.
The later agony of Germany, and the world, personified in Hitler, was deeply rooted in the inflationary crash. It was no mere coincidence that Hitler’s first Putsch occurred in the last and worst month of the inflation, and that he was in total eclipse later when economic conditions in Germany improved.
When still another economic crash struck Germany in the 1930’s, Hitler rode into power not by coup, but by election.
His most solid supports at that later date were an implacable middle class, the same who had paid the piper for all of Germany in 1923 – and who suffered grievously again when the 1930’s Depression came.
Barely two years before the onset of the Hitler nightmare, Professor Graham was able to make this marvel of miscalculation of the psychological scars of the inflation: “With all these reservations taken into account however, the adverse effects on the national psychology were no doubt of import, but they cannot be measured, and these effects will perhaps more quickly disappear than is ordinarily supposed.”
Misgoverning the country perpetually at the expense of its quietest and steadiest class cannot be disregarded as possibly the best explanation why the plurality of Germans at last turned to Hitler.
The wages of economic charlatanry proved to be rather high – and not merely economic. [but that’s ok – just so long as it can’t be measured – somebody else’s problem]
Do you imagine that cocking it all up (again – globally) could conceivably lead to another World War?