The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class (11 page)

The mixture of relief and apprehension that characterised the great majority of Germans’ attitudes during this interlude – the armistice followed the next day, on Monday, 11 November – seemed to bode well for change. But most Germans, including the leadership of the Social Democratic Party, typified by Friedrich Ebert, did not want too much of it.

The new governing elite wanted enough to give the country’s citizens some more freedom and equality, to brush aside the stuffy authoritarianism of the Empire, and, so far as the outside world was concerned, perhaps to induce a more merciful peace settlement along the lines of President Wilson’s Fourteen Points. And perhaps a little socialism, too. Even before 1914, German industry had already developed along lines that diverged consciously from the free-market, individualist ‘Manchesterism’ of Britain or the USA, and the passions and necessities of war had done much to move the Reich’s economy towards a kind of corporate socialism that was even more peculiarly German. But not so much socialism that ‘Russian conditions’ would be created, for both the prosperous classes and the majority of workers did not want Bolshevism.

The main thing was that the old system seemed both discredited and ruined. The Kaiser, after his apparently panic-stricken flight across the border into Holland, was held in widespread contempt. The generals and the officer class had brought their nation nothing but drawn-out suffering and defeat. Germans had stood together for four years with remarkable fortitude, it was true, but to what end? And what would happen now?

A few months later, Ebert would give a speech in which he spoke of his motives at the time of the November revolution:

We were in the real meaning of the word the insolvency administrators of the old regime: All the warehouses were empty, all stocks dwindling, all creditworthiness shattered, our morale sunk to the depths. We . . . exercised our best energies to overcome the dangers and the misery of the transitional period. We did not prejudge things that were the business of this National Assembly. But where time and necessity were of the essence, we made every effort to fulfil the most urgent demands of the workers. We did everything we could to restore economic life. If our degree of success did not accord with our wishes, then the circumstances that prevented us from doing so must be properly judged . . .
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This speech was many things but it was certainly not the speech of a revolutionary, of someone creating a new world from scratch, with confidence and passion and preparedness to risk all for the chance of a bright future. In fact, there was an air of mild apology about parts of the speech. The phrase ‘insolvency administrators’ said it all.

Behind Ebert’s assurances to the newly elected deputies of the Republic’s constituent assembly was an awareness that, for the new Germany to work, it had to offer its citizens a better life than the previous regime. The Social Democratic Party itself had spent the previous half-century promising that, when it won power, it would transform life for the mass of Germans, providing work, social welfare, equality and prosperity within a framework of ideal socialist democracy.

Excluded from power while the German Empire lasted, the Social Democratic Party and its members had come, over more than four decades, to form a parallel society within society. Inside this sheltered environment flourished paradisiacal, even fantastic imaginings of what life would be like when the day of proletarian power finally arrived. The party had never planned on carrying out the transition to this ideal state under the circumstances of a catastrophic lost war. Nor had it foreseen taking power in a nation exhausted by war, heavily loaded with debt, excluded from world markets and threatened with heavy reparations, and half-starved thanks to a ruthless blockade that continued even after the armistice. Worst of all, although the end of the monarchy had been welcome to many Germans at the time of the Kaiser’s abdication, the nation was already subject to bitter political and social divisions that promised only to get worse.

A late twentieth-century American political fixer would invent the slogan ‘It’s the economy, stupid’ to express the reality of how elections were decided. There were many other factors responsible for the wild and ultimately tragic ride that would follow the establishment of the First German Republic, but ultimately the economy would indeed dictate how those factors played out.

As for the value of the German currency, it was relatively well placed in the spring of 1918 at a little over five marks to the dollar. By the time Herr Ebert made his less than certain speech to the National Assembly at the beginning of 1919, it was running at 8.20, and the direction of movement was downwards.

6
Fourteen Points

Although the fighting on the Western Front ceased at 11 a.m. on 11 November 1918, the war did not actually end on that day. Technically, it merely paused. The armistice that had been signed early on the same morning, shortly after 5 a.m., was a time-limited agreement, valid for only thirty-six days from that date. The armistice could be – and was – extended by agreement several times until the last belligerent power ratified the peace treaty in January 1920, although the constant threat of resumption of hostilities remained until that final hour.

There was another respect in which the armistice was far from representing a return to ‘normality’. Among the Fourteen Points originally proposed by President Wilson as a basis for a fair and lasting peace had been ‘freedom of the seas in peace and in war’. During the increasingly ill-tempered exchange of notes preceding the armistice, it had nonetheless been made clear that freedom of the seas would not apply until the conclusion of a peace treaty. This meant that the blockade on all seaborne trade between Germany and the rest of the world, enforced by the British and French navies since 1915, would continue even after the guns fell silent. In other words, Germans would continue to go hungry for an indefinite period to come, and, furthermore, be barred from pursuing the foreign trade through which it could actually pay to feed itself.

Both the insult and the injury were increased by the fact that a sub-clause in the armistice agreement stipulated that ‘The Allies and the United States contemplate the provisioning of Germany during the armistice to the extent as shall be found necessary’.
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This left the question for the Entente and the Americans (and, indeed, everyone else) to ‘contemplate’. What would be considered ‘necessary’? The answer was, initially at least, just about nothing. Even though, after German protests, an agreement was reached that allowed food imports, in return for Allied control over 2.5 million tons of German cargo space,
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the months of nit-picking argument that followed further delayed any progress, stoking (and providing justification for) German resentments. The French in particular refused for the next several months to countenance the idea of the German government importing food for its needy population.
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So the end of the fighting would bring no relief. During the period of eight months or so during which the blockade continued after the armistice, Germany would protest repeatedly, and with justice, that the Allied stranglehold not only conflicted with the spirit of the armistice but continued to inflict unnecessary suffering on the country’s innocents, especially its poor and its children. It would be well into the new year before some controls were relaxed, and even then the concessions were motivated by anti-Bolshevik political calculation on the part of the victors, rather than pure humanitarianism. And what extra food could be imported by the German government, against payment in gold, turned out, in any case, to be too little, too late.

Of course, not everyone in Germany went hungry. By 1918, few German civilians’ lives were not to some extent touched by encounters with the black market. Farmers, manufacturers and retailers had all become adept at circumventing the myriad wartime regulations and restrictions. But those who bought on the black market had to be able to pay the prices that market demanded.

The question of whether Germany was ‘really’ starving played an important role in the debates on the Entente side about lifting the blockade, or at least supplying the defeated population with foodstuffs. Military missions started conducting visits of inspection, an important part of whose remit was to ascertain how bad (or otherwise) things were in Germany under the continued blockade.

One such military mission, a British one, visited Berlin in February 1919. The three officers involved set off from Cologne, now occupied by the British under the armistice agreement, at the beginning of the month and stayed for nine days at the luxurious Hotel Adlon on Unter den Linden. There they found ‘no sign of want of anything’. Dinner in the hotel restaurant consisted of mock turtle soup, boiled turbot and potatoes, followed by a large plate of veal and vegetables and salad, stewed apples and coffee. Price eighteen marks.
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The mission found likewise other parts of the city where – for a price – meat, fish and other palatable foods could be had. Other visits, however, to working-class areas and to orphanages and hospitals, did show serious shortages and resultant health problems. And, tellingly, given the currency’s escalating inflationary tendencies, even at the Adlon the staff were, according to the officers’ report, glad to be rewarded with leftover British military rations as gratuities. These were ‘evidently much more acceptable than money would have been’.
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Reporters from Allied countries also began to visit Germany again, for the first time since before August 1914, initially tending to stay in the Allied-occupied areas of western Germany, which were not entirely typical of the whole country. All the same, one of their chief tasks seemed to be to judge, on their readers’ behalf, the state of the German economy, of the food supply, and of the population’s general health.

The tone of their comments veered between the fairly sympathetic and the pitilessly hostile. In fact, even a liberal paper such as the British
Manchester Guardian
could print material that seemed inclined towards an extraordinary callousness in its attitude to the suffering of the defeated Germans.

In the second week of January 1919, one of the
Manchester Guardian
’s correspondents reported on the sorry state of British prisoners of war still in German hands, who, it was claimed, were ‘in so feeble and demoralised a condition when brought in that they were like dumb animals, hardly speaking and incapable even of showing joy at their rescue. It was not until they had a meal that a French officer turned on “God Save the King!” on a gramophone . . . it was a moving sight to watch their haggard faces brighten as they heard the familiar tune.’ The reporter went on to compare this with what he claimed to be the condition of the Germans. ‘Everywhere I have been during the journey of 250 miles on both banks of the Rhine I have seen no sign of food shortage.’ He continued:

At Mainz the cafés serve delicious creamy cakes in unlimited quantities. London had not seen such luxuries for a long while until the armistice was signed, and no one needs to remember that here the blockade is still maintained, and that the food one gets now is what the Germans have been having right through the war.

When they complain of shortage, most Germans mean shortage compared with the vast and superfluous quantities they used to eat in peace, and instead of affecting health unfavourably the restrictions, such as they were, that our blockade imposed have probably lengthened many a German life which dyspepsia or fatty degeneration of the heart would have brought to an untimely end.
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What the reporter ignored (or, viewed more charitably, perhaps did not know) was that the French authorities, hoping that the inhabitants of the occupied Rhineland could be seduced into a pro-French attitude, possibly even willingness to secede from Germany altogether, had abolished all trade restrictions for their zone. The Allied blockade did not, in fact, apply in the area concerned. As a British official recollected some years later, ‘We regarded the occupied territory at that time for trading purposes as if it were part of France or Belgium.’
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More balanced reports pointed to the supply problems which had further exacerbated the shortages since the end of the war, especially outside the occupied areas.

Throughout Germany . . . all large manufacturing centres and industrial concentrations of population are suffering for the simple reason that the hinterlands of supplies have been cut off. The general political upheaval in Germany and on her borders has thrown a network of barriers across the complicated transport systems which used to minister to the needs of these thickly populated areas, and the populations consequently find themselves shut up in narrow little compartments of territory, which cannot produce nearly enough to supply them, and where consequently they are in danger of starving . . .
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A correspondent who went under the soubriquet of ‘An Englishwoman in Germany’ reported from the spa and casino centre of Wiesbaden, a haunt of pre-war international high society. Although her article was headlined ‘Wiesbaden Still a Luxury Town’, there was a surprising degree of nuance in her observations, and a recognition of post-war economic realities.

The people do not look ill-fed; the children perhaps have a somewhat pinched appearance, but not more than might be the case in our own East End. Yet the prices tell a tale, and one wonders how the poor live at all, both as regards food and as regards clothes. Here are a few prices I noticed in a walk through the streets of Wiesbaden:-