MOur series on the German hyperinflation of 1923, which is based on contemporary articles from the old “Frankfurter Zeitung” (1856 to 1943), ended with the article “Volksgemeinschaft oder Innerdeutscher Finalkampf” from January 30th. It has met with lively interest from readers. It was not uncommon for similarities between 100 years ago and the present to be pointed out. With regard to the development of prices, there is no comparison, since the inflation rate in the current cycle peaked at around 10 percent and then fell quickly again, while the inflation rate reached astronomical heights in 1923 and resulted in the complete destruction of the mark .
Instead, readers referred to similarities in the political process – doubts about governments formed from centrist parties, a growing interest among voters in fringe parties, and a disinhibition and brutalization in their interactions with one another. Then as now, inflation was not the sole source of disaster. Other influences came into play, but the corrosive role of currency devaluation should not be underestimated.
Our series began with articles from the fall of 1922, a time in which the initially rather sluggish devaluation of the mark accelerated significantly. At that time the inflation rate was already around 1000 percent. The causes of the adventurous currency devaluation went back to the financing of the First World War (1914 to 1918) through a move away from the gold backing of the currency and an expansionary financial policy in the Empire. In the first period after the Treaty of Versailles of 1919, which was also sharply criticized by the “Frankfurter Zeitung”, the economy in the young Weimar Republic was characterized by a pseudo-bloom favored by the weak currency.
Don't place the responsibility solely on foreign countries
The devaluation of the mark made exports easier and the low interest rates enabled a credit boom, which resourceful entrepreneurs like Hugo Stinnes used to build nested business conglomerates. The economic policy message of the “Frankfurter Zeitung” remained unmistakable even in this first phase of inflation: it did not deny the burden of the reparations burden from the Treaty of Versailles, which it advocated for its reorganization, which was, in its view, far too high.
But at the same time it was not prepared to release the Reich government and the Reichsbank from their responsibility: “Such a reorganization from outside would not release us from the obligation to make our own highest efforts; On the contrary, Spartan work and life would be our responsibility even then and even then, in order to increase our production, increase our exports, and organize our internal state finances through tax payments,” it said in an article from October 10, 1922. Haste did it Emergency: “We must act, act immediately, even by desperate means if there are any.”
At the time, it was not a self-evident position to place responsibility for the situation in Germany solely on other countries. Many experts were of the opinion that the currency devaluation within Germany was the result of a devaluation of the mark on the foreign exchange market caused by the reparations, which had an effect on the domestic price level by making imports more expensive.
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