Continuing with the Rise and Fall of The 3rd Reich

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The strangulation of Germany’s economy hastened the final plunge of the mark. On the occupation of the Ruhr in January 1923, it fell to 18,000 to the dollar; by July 1 it had dropped to 160,000; by August 1 to a million. By November, when Hitler thought his hour had struck, it took four billion marks to buy a dollar, and thereafter the figures became trillions. German currency had become utterly worthless. Purchasing power of salaries and wages was reduced to zero. The life savings of the middle classes and the working classes were wiped out. But something even more important was destroyed: the faith of the people in the economic structure of German society. What good were the standards and practices of such a society, which encouraged savings and investment and solemnly promised a safe return from them and then defaulted? Was this not a fraud upon the people?

And was not the democratic Republic, which had surrendered to the enemy and accepted the burden of reparations, to blame for the disaster? Unfortunately for its survival, the Republic did bear a responsibility. The inflation could have been halted by merely balancing the budget – a difficult but not impossible feat. Adequate taxation might have achieved this, but the new government did not dare to tax adequately. After all, the cost of the war – 164 billion marks – had been met not even in part by direct taxation but 93 billions of it by war loans, 29 billions out of Treasury bills and the rest by increasing the issue of paper money. Instead of drastically raising taxes on those who could pay, the republican government actually reduced them in 1921.

From then on, goaded by the big industrialists and landlords, who stood to gain though the masses of the people were financially ruined, the government deliberately let the mark tumble in order to free the State of its public debts, to escape from paying reparations and to sabotage the French in the Ruhr. Moreover, the destruction of the currency enabled German heavy industry to wipe out its indebtedness by refunding its obligations in worthless marks. The General Staff, disguised as the ”Truppenamt” (Office of Troops) to evade the peace treaty which supposedly had outlawed it, took notice that the fall of the mark wiped out the war debts and thus left Germany financially unencumbered for a new war.

The masses of the people, however, did not realize how much the industrial tycoons, the Army and the State were benefiting from the ruin of the currency. All they knew was that a large bank account could not buy a straggly bunch of carrots, a half peck of potatoes, a few ounces of sugar, a pound of flour. They knew that as individuals they were bankrupt.
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