Life in Germany 1923

Basic necessities were now priced in the billions-a kilo of butter cost 250 billion; a kilo of bacon 180 billion; a simple ride on a Berlin street car, which had cost 1 mark before the war, was now set at 15 billion. Even though currency notes were available in denominations of up to 100 billion marks, it took whole sheaves to pay for anything. The country was awash with currency notes, carried around in bags, in wheelbarrows, in laundry baskets and hampers, even in baby carriages.

It was not simply the extraordinary numbers involved; it was the dizzying speed at which prices were now soaring. In the last three weeks of October, they rose ten thousandfold, doubling every couple of days. In the time that it took to drink a cup of coffee in one of Berlin’s many cafés the price might have doubled. Money received at the beginning of the week lost nine-tenths of its buying power by the end of the week.

It became meaningless to talk about the price of anything, because the numbers changed so fast. Economic existence became a race. Workers, once paid weekly, were now paid daily with large stacks of notes. Every morning big trucks loaded with laundry baskets full of notes rolled out of the Reichsbank printing offices and drove from factory to factory, where someone would clamber aboard to pitch great bundles to the sullen crowds of workers, who would then be given half an hour off to rush out and buy something before the money became worthless. They grabbed almost anything in the shop to barter later on for necessities in the flea markets, which had sprung up around the city.

Having to calculate and recalculate prices in the billions and trillions made any sort of reasonable commercial calculations almost impossible. German physicians even diagnosed a strange malady that swept the country, which they named “cipher stroke.” Those afflicted were apparently normal in every respect except, according to the New York Times, “for a desire to write endless rows of ciphers and engage in computations more involved than the most difficult problems in logarithms.” Perfectly sensible people would say they were ten billion years old or had forty trillion children. Apparently cashiers, bookkeepers, and bankers were particularly prone to this bizarre disease. Most people simply turned to barter or to using foreign currency. Every middle-class housewife knew up to the latest hour the exchange rate for the mark against the dollar. At every street corner, in shops and tobacconists’, even in apartment blocks, minute bureaux de change sprang up, with blackboards outside, advertising the latest exchange rates.

With the mark falling faster than domestic prices were rising, foreigners were able to live grotesquely well. Berlin apartments worth $10,000 before the war could be bought for as little as $500. Malcolm Cowley, an American literary critic then living in Paris, in Berlin to visit his friend the journalist Matthew Josephson, wrote, “For a salary of a hundred dollars a month, Josephson lived in a duplex apartment with two maids, riding lessons for his wife, dinners only in the most expensive restaurants, tips to the orchestra, pictures collected, charities to struggling German writers-it was an insane life for foreigners in Berlin and nobody could be happy there.” For one hundred dollars, a Texan hired the full Berlin Philharmonic for an evening. The contrast between the extravagance of foreigners, many of them French or British, but also Poles, Czechs, and Swiss, and the daily struggles of the average German to make a living only fed the resentment against the Versailles settlement further.

Inflation transformed the class structure of Germany far more than any revolution might have done. The rich industrialists did well. Their large holdings of real assets-factories, land, stocks of goods-soared in value while inflation wiped away their debts. Workers, particularly the unionized, also did surprisingly well. Until 1922, their wages kept up with inflation and jobs were plentiful. It was only in the last stages, from the end of 1922 into 1923, when the implosion of confidence caused the monetary system to seize up and the economy reverted to barter, that men were thrown out of work.

Those who made up the backbone of Germany-the civil servants, doctors, teachers, and professors-were hit the worst. Their investments in government bonds and bank deposits, carefully accumulated after a lifetime of prudence and discipline, were suddenly worthless. Forced to scrape by on meager pensions and salaries, which were decimated by inflation, they had to abandon their last vestiges of dignity. Imperial officers took jobs as bank clerks, middle-class families took in lodgers, professors begged on the streets, and young ladies from respectable families became prostitutes.

Source: Lords of Finance. The Bankers Who Broke The World (2009) by Liaquat Ahamed.

And then Hitler came in power.