THE DEATH OF MONEY: Konrad Heiden on The Debilitating Effects of Runaway Inflation, including the Rise of Hitler, the Road to WW2, and The Holocaust

"In the Summer of 1923, Hitler told a story in a large meeting: 

'We have just had a big gymnastic festival in Munich. Three hundred thousand athletes from all over the country assembled here. That must have brought our city lots of business, you think. Now listen to this: There was an old woman who sold picture postcards. She was glad because the festival would bring her plenty of customers. She was beside herself with joy when sales far exceeded her expectations. Business had really been good — or so she thought. 

But now the old woman is sitting in front of an empty shop, crying her eyes out. For with the miserable paper money she took in for her cards, she can't buy a hundredth of her old stock. Her business is ruined, her livelihood absolutely destroyed. She can go begging. And the same despair is seizing the whole people. We are facing a revolution. . . .' 

This was the story of the end of the world — seemingly the story of an old woman, but really, in seven or eight phrases, the story of the destruction of German, indeed of European, self-reliance and dignity. The truths which had seemed most certain, the multiplication table and the difference between good and evil, vanished before the eyes of the uncomprehending individual. 

First it was the story of the German inflation, which reduced the supposedly eternal value of the German mark from $0.24 to $.000,000,000,024; or, in other words: an object which had previously been worth twenty-four cents, now cost a sum which would formerly have equaled three times the national wealth. 

To a lesser degree, it was also the story of the blowing away of money in other countries, Austria, Poland, Hungary, France, Italy, Spain; and later, there were beginnings of the process in England, and even the United States. This was the twilight of the age of progress: the death of money. 

On Friday afternoons in 1923, long lines of manual and whitecollar workers waited outside the pay-windows of the big German factories, department stores, banks, offices: dead-tired workingmen in grimy shirts open at the neck; gentlemen in shiny blue suits, saved from before the war, in mended white collars, too big for their shrunken necks; young girls, some of them with the new bobbed heads; young men in puttees and gray jackets, from which the tailor had removed the red seams and regimentals, embittered against the girls who had taken their jobs. 

They all stood in lines outside the pay-windows, staring impatiently at the electric wall clock, slowly advancing until at last they reached the window and received a bag full of paper notes. According to the figures inscribed on them, the paper notes amounted to seven hundred thousand or five hundred million, or three hundred and eighty billion, or eighteen trillion marks — the figures rose from month to month, then from week to week, finally from day to day. With their bags the people moved quickly to the doors, all in haste, the younger ones running. They dashed to the nearest food store, where a line had already formed. 

Again they moved slowly, oh, how slowly, forward. When you reached the store, a pound of sugar might have been obtainable for two millions; but, by the time you came to the counter, all you could get for two millions was half a pound, and the saleswoman said the dollar had just gone up again. 

With the millions or billions you bought sardines, sausages, sugar, perhaps even a little butter, but as a rule the cheaper margarine — always things that would keep for a week, until next pay-day, until the next stage in the fall of the mark. For money could not keep, the most secure of all values had become the most insecure. The mark wasn't just low, it was slipping steadily downward. 

Goods were still available, but there was no money; there was still labor and consumption, but no economy; you could provide for the moment, but you couldn't plan for the future. It was the end of money. It was the end of the old shining hope that everyone would be rich. The secular religion of the nineteenth century was crumbling amid the profanation of holy property. 

Germany had financed her war by means of loans. The state had borrowed from its citizens approximately eighty billion marks, about a third of the so-called national wealth, and shot them into the air — without result, for the war had been lost. Every citizen had been forced to lend, even the propertyless out of their meager wages. 

Great fortunes and petty savings had been thrown down the gullet of war. And then, suddenly, the mark lost its value. The war loan was worth nothing. Savings of a lifetime were worth nothing. 

The great radical cure, ruthless equalization, was going into effect. It was a process which would affect the distant future, but most men failed even to suspect its full significance, for they saw only the beginnings, the first symptoms. The great prophecies of the nineteenth century were beginning to be fulfilled. A man who thought he had a small fortune in the bank might receive a politely couched letter from the directors: 

'The bank deeply regrets that it can no longer administer your deposit of sixty-eight thousand marks, since the costs are out of all proportion to the capital. We are therefore taking the liberty of returning your capital. Since we have no bank-notes in small enough denominations at our disposal, we have rounded out the sum to one million marks. Enclosure: one 1,000,000-mark bill.' 

A canceled stamp for five million marks adorned the envelope. The state wiped out property, livelihood, personality, squeezed and pared down the individual, destroyed his faith in himself by destroying his property — or worse: his faith and hope in property. Minds were ripe for the great destruction. 

The state broke the economic man, beginning with the weakest. From Russia, the explosion of 1917 had resounded throughout the world. Over one seventh of the earth's surface it had made private property questionable, and ultimately, after years of struggle and experiment, destroyed it. Like a sea, receding for a moment, then wildly surging through all dikes, a counter-movement, inspired by fear, had swept across the world. 

Anti-Bolshevik propaganda bureaus, clubs, newspapers were launched. Perhaps the strangest monster nurtured by this movement was The Protocols of the Wise Men of Zion. Nowhere, with the exception of Russia, did the state destroy property as radically as in Germany. 

And it was not the workers who did it. Not the Social Democrats, who in 1918 had proclaimed the republic; or the Communists, who reviled the Social Democrats as 'traitors to the working class,' and for years kept disturbing the peace with vain, hopeless attempts at revolt. The workers had no intention at all of destroying property. Plans to this effect stood in the party programs, but nowhere else. For the proletarian is a component of the capitalist economy, and what he wishes is not to abolish exploiting capitalism, but to exploit it himself. 

On November 9, 1918, Philipp Scheidemann, the Social Democratic leader, proclaimed the republic in Berlin, saying, 'The German people has been victorious all along the line'; but a week later, the leaders of the German working-class, who had been victorious all along the line, concluded a pact with the leaders of the German employers 'for the maintenance of our economic life.' 

And both sides solemnly declared 'that the reconstruction of our national economy requires the pooling of all economic and intellectual forces and the harmonious collaboration of all.' 

It could not have been said more clearly: to save capitalism from the crushing vise of war socialism was the aim of the workers as well as the capitalists. At this time Socialist demonstrations were swarming through the capital; as the masses passed through the Tiergarten, the great park in the middle of Berlin, a voice is said to have cried out: 'Comrades, preserve revolutionary discipline! Don't walk on the grass!' A legend, perhaps. But how apt! 

Actually the leader of German capitalism after the war, Hugo Stinnes, destroyed far more private property than all the German Socialists. Mammoth industrialist with super-capitalist dreams of domination, he unconsciously sought after super-capitalist forms. Such was the magnitude of the property he amassed, and such the methods by which he amassed it, that the very concept of property burst asunder. 

Between 1920 and 1923, Stinnes was the most powerful man in Germany — in so far as we may speak of power in those dissolved, anarchic times. By bold combination of widely ramified interests (mines, electricity, navigation, hotels, newspapers, book publishing) he exerted an influence on the whole country, financed parties and politicians, and in all his activities was guided by the feeling that Fate had called him to rebuild Germany. The first step in this reconstruction was a process of destruction. 

At the outset the masses misinterpreted it as nothing more than a scandalous rise in prices; only later, under the name of inflation, the process was correctly comprehended as the downfall of money. While Walter Rathenau was still foreign minister, a group of American bankers visited Germany to study the causes of the German inflation. 

In some quarters it had been maintained that Germany hoped the devaluation of her currency would cause her political debts to evaporate. It is doubtful whether anyone ever cherished so naive a hope, and surely it was never realized. 

In reality the inflation was largely caused by the efforts of German industry to regain its position in the world market. Rathenau and Stinnes sat down with the Americans, and Stinnes, according to his own report, gave them the following harsh explanation for the German inflation: 

'I informed the gentlemen that after the lost war Germany had been obliged to develop regular working habits in the four million men who, in the army, had lost the habit of regular work; for this, I told them, raw materials and employment were necessary. 

In order to obtain raw materials and a market for our products, in order to preserve the life of the nation, we had been obliged to sacrifice parts of our capital; there was no other way. For if the masses had remained without employment, Bolshevism would assuredly have seized Germany. ... 

I further informed the gentlemen that the weapon of inflation would have to be used further, without regard to the resultant extraordinary losses of capital, because this was the only possibility of providing the population with the ordered regular activity which was necessary to secure the life of the nation.' 

The specter of Bolshevism overpowered the holiness of property. That money was obsolete could be no more dismally proved than by this suicide for fear of death. As a defense against Bolshevism, the destroyer of private wealth, private wealth was destroyed. Germany, like all countries, had been bled white by the war, and this real decline in wealth was inevitably followed by a decline in nominal titles to wealth, in the form of currency. Germany's money had been turned to cannon and hand-grenades. 

The grenades produced corpses, the cannon fell into the hands of the enemy, the national wealth was turned to dust. Germany had scarcely anything left. But after the war, even the little that remained was flung away, to preserve at least political peace in the land. 

While Stinnes, on his royal-industrial throne at Miihlheim on the Ruhr, calmly took it upon himself to destroy private property in Germany, Hitler stamped furiously back and forth on his platform in the ill-lit beer hall and shouted: 'You had no right to make the whole economy, state as well as private enterprises, unprofitable, by overfilling them with workers at a time when the market was stagnant and there was a shortage of raw materials!' 

He spoke like a learned doctor of economics, and just this sounded quite incredible in his mouth; but then the beer-hall orator expressed an idea, far surpassing Stinnes in polidcal wisdom: the chaos should have been exploited for a transformation of the German economy. 

He censured the government, because, 'when the soldiers streamed back from the front, it did not distribute them among much-needed projects [public works and housing], but sent them back to the places from which they had been called to the colors.' He understood that the old laissez-faire economy could not be restored. He understood that the old liberal Germany could not be rebuilt. 

He early realized what his friend Rudolf Hess wrote, many years later: 'For Adolf Hitler the revolt of 1918 was a necessity of Fate, for, despite its criminal leadership, it swept away many survivals of a time that was outlived, survivals that would have created obstacles to the National Socialist revolution.' 

He knew how much he owed to the chaos. At the height of the year 1923 it was the chaos which literally fed him and his followers; for the decay of the mark blew small financial contributions, made in substantial foreign currency by friends in Czechoslovakia, Switzerland, the United States, up to gigantic sums in marks; a person could live comfortably for a week on a dollar at that time, and for a hundred dollars one could buy a minor revolution. 

It was a decisive turn in Hitler's career when his friend and admirer, Ernst Hanfstaengl, scion of an old-established, wealthy printer's family, himself halfAmerican by descent, borrowed for him the fabulous sum of one thousand dollars. This money enabled Hitler to set up, in February, 1923, the Volkischer Beobachter as a daily paper. 

He said: 'The government calmly goes on printing these scraps, because, if it stopped, that would mean the end of the government. Because once the printing presses stopped — and that is the prerequisite for the stabilization of the mark — the swindle would at once be brought to light. For then the worker would realize that he is only making a third of what he made in peacetime, because two thirds of his labor go for tribute to the enemy.' 

And just that made inflation a 'necessity of Fate.' It shattered public faith in property, and nothing was more necessary for Hitler than the shattering of this faith. And so he prophesied and described the destruction which was to pave his road to power: 'Believe me, our misery will increase. The scoundrel will get by. 

But the decent, solid businessman who doesn't speculate will be utterly crushed; first the little fellow on the bottom, but in the end the big fellow on top too. But the scoundrel and the swindler will remain, top and bottom. The reason: because the state itself has become the biggest swindler and crook. A robbers' state . . .' 

The whole demagogical debate was actually a fight between two thieves over the corpse of the national economy. Stinnes flung away the national wealth to banish poverty and with it Bolshevism; but Hitler screamed: 

'And what if even greater misery descended on us I Let us have misery! . . . The greatest misfortune would be so-called prosperity. We would forget all our disgrace. If we were getting along, we would stop hating France!' 

He meant it; for he went on to explain: 'In present-day Germany, sad to say, people do not lament over the loss of our world position and world respect, not over the loss of Alsace-Lorraine and Upper Silesia, SchleswigHolstein and the other ravished territories — all they complain about is the exorbitant prices. 

If today there were a French dictator in Berlin and the physical needs of the German people were secured by him and his officials, we may be convinced that a majority of our fellow countrymen would resign themselves to their fate. This sheds full light on the demoralization into which we have fallen, and concerning which, sad to relate, no one wastes any tears.' 

Therefore, let us have misery. Therefore, chaos was a necessity of Fate; therefore, prosperity would have been a misfortune. This was the destructive, and at the same time creative, idea of a brilliant have-not, a good-for-nothing, with nothing to lose. Let us have misery! The economy is dying. Let it die, and no tears shed, for it has only plunged us into misfortune: 

'The pure scientists are misled. An economy exists only because a strong national people creates it. An economy without political power is a temptation for foreign conquerors. Hence today we have a slave-economy.' The old bourgeois parties 'are to blame, for they have trained us to be merely an economic people. If economic development had gone on like that, we would have developed an innumerable mass of factory workers, crippled in body and mind' 

Richard Wagner in his time had accused Germany's ruling class of letting the German worker degenerate in hunger, vice, and crime. For Hitler, Germany was stifling in the morass of peace: 'Nobody wants to die for business deals. But a man dies gladly for a political ideal!' 

This lost world war did Germany some good by casting it into an abyss, from which, in Hitler's opinion, it could not save itself by mere economic means: 'To liberation belongs more than economic policy; more than sweat. To make us free, we need pride, will, defiance, hate, hate, and again hatel' 

And so, let us have misery! Let the people despair of the economy. Let them cease to believe in their own labor. There stood these men, pressed tightly between the tables of an overfilled beer hall. Their cheeks were sunken, their gray suits — remade uniforms — were shabby and threadbare; under their arms some held a bundle of food, arduously and illicitly acquired. 

The speaker fixed his eyes on one of these poverty-stricken figures and said: soon you will starve completely unless you blindly follow me, wherever I lead you. Citizens reckoning in billions, said Hitler, will die of hunger, because the farmer will stop selling his grain or butter for the worthless billions, 'with which he can paper his outhouse on the manure heap. And don't go complaining: how mean of the farmer! Will one of you step forward and say he is willing to give away his work of many months for nothing?' The money you offer the farmer 'is no longer a note on work done, it is a note on a swindling regime. And that means hunger!' 

On this Hitler set his great hope, on the 'revolt of starving billionaires.' The revolt against the parliamentary regime in Germany was inevitable, and hunger would bend the masses under dictatorship: 

'If the horrified people notice that they can starve on billions, they must arrive at this conclusion: we will no longer submit to a state which is built on the swindling idea of the majority, we want dictatorship!' 

To repeat the same in the words of the Wise Men of Zion: 'By envy and hatred, by struggle and warfare, even by spreading hunger, destitution, and plagues, we shall bring the people to such a pass that their only escape will lie in total submission to our domination.' 

Adolf Hitler is a true child of the old German self-contempt. At all events, the German people was one of the first to witness the decay of those material values which a whole century had taken as the highest of all values. The German nation was one of the first to experience the death of the unlimited free property which had lent such a royal pride to modern humanity. Money had lost its value — what, then, could have any value? 

From 'Der Führer – Hitler's Rise to Power", by Konrad Heiden: