The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class (48 page)

With Communism suddenly no longer an immediate threat, the right-wing paramilitaries were robbed of their main rationale. Kahr and Lossow, and even Erhardt, spread along the northern border of Bavaria with his mix of old Freikorps hands and nationalist volunteers, now seemed to hesitate. The anti-Berlin rhetoric did not change, but the ‘march on Berlin’ no longer seemed an urgent prospect, especially as General Seeckt had finally made it clear that he would not support the planned imposition by force of an extra-parliamentary dictatorship.
10

For Kahr and Lossow and the rest of the right-wing clique in charge in Munich, a violent strike against the Republic, while still desirable, was not, for the moment, an urgent political priority. It was time to rethink and regroup. Hitler, on the other hand, had spent the past four years building an attack animal of a political movement, specifically designed for the violent seizure of power. Quite rightly, from his point of view, he understood that without action, his political base, and with it his extremely promising career, would collapse.

On Thursday, 8 November 1923, Hitler made his move. Kahr was due to address his supporters that evening at the vast
Bürgerbräukeller
beer hall on the Rosenheimer Strasse, in the centre of Munich. Alongside him on the platform would be Lossow, the Reichswehr commander, and the third member of the triumvirate that ruled Bavaria, the state police chief, Colonel Hans von Seisser. The next day
would
bring the fifth anniversary of the declaration of the hated Republic – perfect timing for the ‘march on Berlin’ that would, so the nationalists hoped, destroy it.

So it was that, at around 8:30 p.m., Hitler stomped into the
Bürgerbräukeller
at the head of a group of armed followers. Kahr, flanked by Lossow and Seisser, was in
t
he
midst of delivering a blistering attack on the central government to a packed crowd of
some
3,000 nationalists. He stopped in mid-flow, forced to watch as steel-helmeted Hitler supporters dragged a machine gun into position at the back of the hall. Pushing on into the cavernous, smoke-filled room, waving a Browning pistol and followed by his SA chief, Hermann Goering, and a gang of storm troopers, Hitler stood on a chair to address the crowd. Unable to make himself heard, he fired his pistol
a
t
the ceiling and, when the noise level dropped, explained that the building was surrounded by armed men. He then declared that the Bavarian government was deposed. The ‘national revolution’ had begun.
11

Leaving Goering and the storm troopers to manage the crowd (‘You’ve got your beer!’ the future Reich Marshal assured them), Hitler and his acolytes herded Kahr and the other two at pistol point into a back room. There they were joined by General Ludendorff, who had arrived in full Imperial Army uniform. Once they had set up a new regime in Berlin, Hitler assured his captives, Ludendorff would be the new Commander-in-Chief with dictatorial powers, while Lossow was promised the post of Reichswehr Minister and Seisser Police Minister. Kahr would be appointed
Landesverweser
(Regent) of Bavaria. All they had to do was to promise their support for the ‘national revolution’. After some further discussion, they agreed. Then, at Ludendorff’s insistence, after giving more or less convincing speeches in Hitler’s favour, Kahr and co. were released, on their word of honour that they would do nothing to oppose the Nazi
t
akeover. Th
ese officials were, after all, ‘honourable’ men, were they not? Hitler then addressed the crowd himself and was received rapturously by the same huge audience that had applauded Kahr just a few hours earlier. The putsch seemed to have got off to a fine start. Hitler had found his hour.

Setting Kahr, Lossow and Seisser free proved, in fact, the conspirators’ greatest mistake. The triumvirate promptly welshed on their promise – which had, after all, been extracted under duress – and spent the
nigh
t
hours energetically organising resistance to Hitler and Ludendorff. By the time dawn broke on 9 November, it was clear that, outside the
Bürgerbräukeller
, things had started to go wrong.

Hitler declared his determination to carry on to the death – never a good sign, as the future would prove – and urged his storm troopers likewise, although he apparently also sent a party out to seize bundles of 50-billion mark notes straight off the presses of the Bavarian State Printers, just to make sure they all had something to show for their trouble.
12
The Führer’s paramilitaries also carried out some arrests of political opponents, including Social Democratic city councillors.
13

The crunch came when, late the next morning, the Nazis’ now somewhat shaky putsch plan moved on to what they had hastily agreed would be stage two –
a
march on the Bavarian Defence Ministry. There the rebels found themselves opposed by troops and
police.

Although Hitler’s supporters and allies totalled around 2,000, the less numerous opposing
forces
held firm. When some hotheads on the Nazi side started shooting, a short but sharp
gun ba
tt
le
followed. Within about half a minute, dead and wounded Hitlerites littered the street.
General
Ludendorff, however, unflinchingly continued to advance through the police ranks and into
t
he
ministry square. By then, most of his co-rebels, including Hitler, had already fled. The old soldier calmly
gave
himself up.

Other Nazis were arrested at the scene, though many fled over the border into Austria, including future leaders of the Third Reich such as Rudolf Hess and Hermann Goering. Hitler himself was taken into custody at the country house of a sympathiser outside Munich two days
la
t
er.

Sixteen Nazi ‘martyrs’ had lost their lives, including Max von Scheubner-Richter, another nationalist writer who had joined forces with the Führer. He had been standing next to Hitler, arm in arm, when the shooting started. As the historian Ian Kershaw has averred, had the bullet been directed a foot to the right, the world’s history might have taken a different course.

So, shortly after noon on 9 November 1923, the last great political threat to the young German democracy was dealt with – at least for now. Six days later, it was the turn of the economic enemy.

The irony was that, although Gustav Stresemann still occupied the Chancellor’s residence, Germany did indeed have a dictator by the end of the night of 8/9 November 1923. After attending an emergency meeting of the cabinet late on the evening of 8 November, President Ebert delegated absolute command of the German armed forces, and also executive power in the Reich, to General Seeckt. It was a bold, or perhaps desperate move, for Seeckt was no friend of democracy and, as we now know, had indeed indulged in discussions with its enemies about establishing a dictatorial regime.
14
Fortunately, the same fastidious legalism that had, in the end, kept Seeckt from joining up with Kahr and friends guided him during the period to come. The Republic survived the time of Seeckt’s supremacy, which would last into the new year.

On 11 November, Dr Schacht accepted the post of Currency Commissioner. Production of the new Rentenmark had already begun. Germans would once more have to deal with small-denomination coins as well as paper money. There were one- and two-pfennig coins minted of copper with a small amount of tin, and five-, ten- and fifty-pfennig pieces out of bronzed aluminium. These were to be produced at the Prussian mint. The notes, to be produced at the Reich Printing House and a selection of other trusted printing works, would run in eight denominations, from one to a thousand Rentenmarks. They would be printed on both sides (at the height of the hyperinflation, they had often, for ease and cheapness, been printed on just one), on high-quality paper, with designs redolent of virtuous agricultural productivity, appropriate to the currency’s backing. Everything was calculated to inspire confidence.

By 10 November, only a little over 78,000,000 gold marks’ worth of the new currency had been produced. This was slow going. The Rentenmark was supposed to be in restricted supply, but not this restricted. And then, not for the first time, the workers at the Reich Printing House went on strike.

According to Finance Minister Luther, the stoppage was motivated by a new fear for German printers – the fear that, because less money would now be produced and therefore many presses closed down, they would lose their jobs. The next day, Seeckt, entering into the spirit of his new responsibilities, issued an order banning all strikes in plants producing banknotes, and also took the precaution of having the strike leaders taken into protective custody. This, combined with the preparedness of white-collar and other workers at the printing offices to take on tasks usually done by the strikers, and the drafting in of volunteers from the
Technische Nothilfe
(Technical Emergency Aid),
*
meant that the hiccup in production was not too severe.

By 15 November, some 200 million gold marks’ worth were ready for distribution. It was still not really enough – one important factor seems to have been a shortage of the high-grade paper that the notes were printed on
15
– and there had been a brief hesitation before the decision was made to go ahead. The benefits to morale of having the new currency in circulation, even if in inadequate quantities, were thought so important (and a postponement correspondingly disastrous), that a delay was felt to be impossible. In any case, instructions had already been issued for 30 per cent of the next month’s salary for government officials to be paid in Rentenmarks, and the order could not be rescinded.
16

The issue of Rentenmarks went ahead, the printing of Rentenmarks continued, while at the same time the printing presses for the inflationary paper marks were stopped. It was the moment, or, rather the day, of truth for Germany.

The first Rentenmarks went out in the form of credits to banks and companies in agreed quantities. On 17 November, the
Vossische Zeitung
told its readers that, given the shortage of notes, it would be a few days before Rentenmarks were available over bank counters as cash:

First we should keep in mind that we have deceived ourselves, because of the illusion of huge numbers, about the amount of work that has to be accomplished if the task is to produce, for example, a hundred million Rentenmarks in one mark notes. That corresponds to a sum of a hundred quintillion paper marks, i.e. a great part of our entire circulation, represented in trillion notes.
17

Getting the German public, after years of big numbers, to think small, was obviously going to be one of the chief problems. Another problem was that for some days after the new currency was launched on 15 November, it was still not clear exactly what its exchange rate against the dollar would be, and therefore exactly its relationship to the old pre-war gold mark. On the actual date of the launch, the official rate of the paper mark was doubled to 2.2520 trillion to the dollar, or 600 billion to the gold mark. The rate remained unchanged for five days. There followed a behind-the-scenes struggle between conservative gentlemen of the Rentenbank (who were allowed to, and were keen to, make a profit) and the Reich and the Reichsbank. The Reich, which was allotted 300 million Rentenmarks as an interest-free loan from the Rentenbank, with another 900 million to be made available on a discretionary basis on the Rentenbank’s part, was supposed to use this money to buy up the Reich Treasury notes in circulation (valued in inflationary paper marks), thus eliminating that debt. The more the paper mark depreciated, the cheaper the Reich could buy up the debt. It worked the other way round for the Rentenbank, which wanted to sell Rentenmarks for as many paper marks as possible, and for those paper marks to keep as much value as possible.

Not until 20 November 1923 was a fixed exchange rate announced, and this was conditioned largely by arithmetical convenience. Since the pre-war gold mark had for a long time bought
10/42 of a dollar, it was finally agreed that the exchange rate for paper marks would be set at 4.2 trillion to the dollar. The same applied to other foreign currencies, such as the pound, where the rate was fixed at 18 trillion paper marks, or 18 marks in the new currency. It followed that, since the value of the Rentenmark was fixed at one per 1 trillion paper marks, by lopping off twelve zeros this would automatically restore the old pre-war exchange rate.

And one more thing. With the establishment of a 1-trillion paper mark to one Rentenmark value, Germany’s post-war domestic debt – founded overwhelmingly on all those virtuous citizens who had bought war bonds in the hope of a small regular reward for their patriotism – was reduced from 154 billion marks in November 1918 to exactly 15.4 pfennigs in November 1923.

Whatever its continuing wrangles over reparations, the government stood in the unique position internationally of owing virtually nothing internally. Correspondingly, of course, millions of Germans had seen government-fostered inflation finally and definitively rob them of their apparently blue-chip, government-backed investments.