THE GREAT INFLATION: Germany 1919-1923

The bewildering, unprecedented events which took place in Germany in 1923 brought the word ""inflation"" into everyday speech--along with ersatz--which acquired its current meaning of shoddy or phoney substitutes for scarce goods. Millions and billions and trillions of marks were spewed forth from the printing presses in higher and higher denominations which, nevertheless, were insufficient to buy a pair of shoes or a loaf of bread. Guttman and Meehan, who collaborated on the BBC documentary The Year Money Went Mad, deal with the German inflation primarily as social history, relying on the accounts of students, workers, housewives and professionals who lived through the ""dance of the millions."" But in charting the deteriorating foreign exchange rate of the mark--8.57 marks to the dollar in January, 1919; 70 marks in June, 1921; 270 in November, 1921; 18,000 to the dollar in January, 1923; 100 million in September, 1923--the authors effectively detonate some of the persistent myths which accompanied the ever-accelerating plunge into financial chaos and social hysteria. The root cause of the inflation lay in the huge loans floated to finance Germany's war effort; though the Germans wailed that reparations were rendering the country prostrate, the actual payments to the Allies began well after the inflationary spiral had been set into motion. Indeed the authors make a surprising discovery: the assassination of Walter Rathenau was the key psychological moment at which the course of the financial holocaust became irreversible. While pensioners, rentiers and others on fixed incomes starved or sold family heirlooms on the street, Guttman and Meehan identify the ""winners"" as well as the ""losers""--the speculators who hoarded foreign currencies, those who lived on credit, the farmers who simply held on to their foodstuffs, all those who were successful in the ""flight into Sachwerte."" Social dislocation, the de facto expropriation of the middle class, Berlin afflicted by ""a sort of collective insanity"" which paved the way for Hitler--all this and coffee at 5000 marks a cup. With excellent photographs, Guttman and Meehan recreate the despair and the madness of money run amok. They don't go out of their way to present it as a cautionary tale. They don't need to.