The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class (7 page)

Again, the one thing that could be seen by such victims of the war economy as providing possible recompense for their suffering – and even enabling restoration of their previous way of life – was the promise of victory. For the first half of 1918, with Russia knocked out of the war and the army advancing in France, this seemed to many Germans to have become inevitable. Annexations or no annexations, with France and Britain defeated, Germany would perforce dominate Europe economically and politically as well as militarily. She would be even more prosperous than before. There would be enough to eat, and the necessities of life would be once more plentiful and affordable. Normal economic conditions would return, bringing with them a strong German mark based once more on the gold standard. Stable prices would nurture the rebirth of a stable society.

Nurtured by endless, triumphant daily press reports, these happy hopes lasted, for most ordinary Germans, until July 1918, when reality bit with a vengeance. In August, another report from a military commandant admitted the negative effect the renewed German reverses were having on morale at home:

The joyous – partially exaggerated – hopes which were attached to the renewal of our offensive . . . have been strongly shaken by the enemy counterattack and the withdrawal on our front. While the great mass of the people, because of the successes during the spring, have become accustomed to counting on the ending of the war this year, the prospect of another war winter has created a certain dullness and indifference in many people, and the economic cares and privations have come to the forefront again more than before.
23

Following the British counter-attack near Amiens on 8 August, spearheaded by tanks, 70 per cent of German losses were in the form of men taken prisoner, rather than wounded or killed, a sure sign that morale among the front-line soldiers was starting to collapse.
24
By late October, the German front line had been pushed back more than fifty miles. A liberating British Army had been welcomed by delirious crowds in Lille on 28 October, and many other major towns were also taken back into French control.

The military fate of Germany was all but decided. Though her armies had still not been put to flight, a sense of hopelessness was spreading both at the front and at home. Clearly, there would be no more advances, and certainly no victory of the all-conquering kind so many had imagined just a month or two previously.

In the final weeks of the war, the prospect of defeat also drastically changed the shape of Germany’s political life. Attempts by the Reich’s elite, above all the High Command, to stem the swelling tide of discontent led to a drastic change of policy. On his generals’ advice, the Kaiser reluctantly assented to a brief, quasi-democratic interlude. A new cabinet was formed under the relatively liberal Prince Max of Baden, and at the end of October the right to name a chancellor was transferred from the monarch to the Reichstag. No one seemed to grasp the irony of offering the German people democracy under yet another prince. It couldn’t last. The angry masses began to take to the streets and demand far more radical changes than the Berlin establishment could, or wanted to, concede. Sporadic rioting and fighting began.

Bizarrely, the life of the city, and that of its elite, went on. On 8 November 1918, there was a press reception in Berlin for the director Ernst Lubitsch’s new film
Carmen
, featuring the twenty-one-year-old Polish actress Pola Negri, who would later become a huge Hollywood star of the silent era. Everyone was dressed up. There was champagne. An orchestra played selections from Bizet’s famous opera. The producers began to show the film, but, as it ran, Negri heard the sound of what, after a while, she recognised as gunfire. It grew louder as the performance went on. Finally, she turned to Lubitsch and quietly asked if he could hear it, too. Yes, he said, then shushed her. ‘There’s nothing anybody can do. Watch the picture.’ Afterwards, Miss Negri scuttled through empty streets to the nearest underground railway station in fear of her life.
25

Sebastian Haffner remembered those final wartime days in the capital, and also their sudden end:

On November 9 and 10, there were still Army Reports in the old style: ‘Enemy breakthrough attempts repulsed’, ‘. . . after a brave defensive battle, our troops fell back to prepared positions . . .’ On November 11, when I arrived at the usual time, there was no Army Report fixed to the blackboard outside our local police station.
26

It was, in fact, the day of the armistice on the Western Front. By the time the guns fell silent, at eleven on the morning of Monday, 11 November 1918, a revolution had taken place. The elegant expanse of Unter den Linden was thronged, not with the well-dressed ladies and gentlemen of 1910, but with noisy, excited crowds – among them workers and also soldiers of the German army, many wearing red revolutionary armbands and paying no heed to their officers.

Germany was now a republic. Her kings and princes and dukes were no more. Monarchs whose dynasties, in some cases, had lasted a thousand glittering years, disappeared from the scene with astonishingly little fuss. The previous Saturday, the Kaiser had found himself standing on a railway platform at his Grand Headquarters at Spa in Belgium, waiting with a handful of loyal officers for the imperial train to shunt its way to him. Once his transport was ready, he scuttled over the border into neutral Holland, seeking the protection of the Dutch government. It was said that his final comment, before beginning his journey into exile, had been: ‘Yes, who would have thought it would come to this. The German people are a swinish bunch [
eine Schweinebande
].’
27

Contrary to the pronouncements of the politicians in Berlin, the Kaiser had not, at this time, formally abdicated in favour of a regency – he would wait for three weeks in his Dutch hideaway before reluctantly giving up his dual crowns as King of Prussia and Emperor of Germany.
28
All the same, one thing was certain: whatever his technical status, after 9 November 1918 Wilhelm of Hohenzollern was no longer a proud monarch but a refugee from revolution – and from the victors’ vengeance.

Now was the time for thinking about what all this horror had cost – not just in lives, but in marks and pfennigs for Germany, and pounds, francs and dollars for the Allies.

Since August 1914, Germany had spent something like 160 billion gold marks on what was now, undeniably, a lost war. Of this, around 60 per cent (98 billion) had been financed by the sale of war bonds (usually bearing 5 per cent interest). These bonds, representing a huge loan by the nation to its own government, had been sold to the German public and business community in nine remarkably successful war bond drives, beginning in November 1914 and ending in October 1918, just weeks before the armistice.
29

Each war bond drive had been accompanied by massive patriotic campaigns, including early cinema advertising, and of course by government assurances that, not only would the money raised contribute to a German victory, but the bonds themselves would provide a decent investment income for their holders. The interest to the bond holders was supposedly still due, of course, win or lose. Not only that, but it was clear that the nation would also have to find the money to pay an as yet unspecified but predictably huge sum to the victors as reparations. The Reich’s financial situation, as the Kaiser fled and the democrats took over, was disastrous.

The fighting on the battlefield was over. However, the economic and financial struggle that had begun in August 1914 would carry through not just to the period of armistice, but to the peace treaty and far beyond.

In fact, there were those who saw everything that happened to the German economy and currency by government action over the next five years as simply the continuation of war by other means. And to some extent, there is reason to believe they might have been right.

Footnotes

*
Fruit stones (especially cherry and plum) were collected in an organised way by schools as part of a government campaign. : e kernels were pressed for the nutritious oils they contained, to help make up for the shortage of imported oils.

4
‘I Hate the Social Revolution Like Sin’

On the morning of 9 November 1918, with a general strike called, Berlin full of excited crowds and rumours of an armistice coursing the streets, Prince Max of Baden, last hope of the old regime, decided to lay down the chancellorship he had accepted from the Kaiser barely a month earlier.

The Kaiser, of course, had departed Berlin some days earlier for Spa, whence his next stop would, it turned out, be refuge in neutral Holland. But what now? Prince Max had hoped to save the monarchy by skipping two unpopular royal generations and holding the crown in regency for the Kaiser’s infant grandson. Even though the Kaiser had not yet formally abdicated, Max had announced his dethronement two days earlier. In this he was supported by the leader of the party that for so many years had been excluded by the old Prussian-dominated hierarchy but since August 1914 had become part of the war establishment: the Social Democrats.

Since the new Chancellor had taken power, two top-ranking Social Democrats had even been awarded posts in the government. Not yet a minister, but of prime importance to Prince Max’s project, was the chairman of the Social Democratic Party, forty-seven-year-old Friedrich Ebert.

A stocky, not especially articulate party bureaucrat, the Heidelberg-born Ebert grew up in modest but reasonably secure circumstances as the seventh of nine children of a master tailor and his wife. He himself learned the trade of a saddler but spent little time plying it before devoting himself to politics. Sebastian Haffner, no enthusiast for a man he saw as one of the prime betrayers of the German revolution, painted an unflattering and somewhat patronising portrait of a bloodless political bureaucrat who presented ‘an unprepossessing figure’:

He was a small, fat man with short legs and a short neck, with a pear-shaped head on a pear-shaped body. He wasn’t a riveting speaker either. He spoke in a guttural voice, and he read his speeches from a prepared text. He was not an intellectual, or for that matter a real proletarian . . . Ebert was the type of the German master craftsman: solid, conscientious, limited in his horizons but a master precisely within those limitations; modest and respectful in his dealings with genteel clients, taciturn and commanding in his own workshop. Social Democratic officials were a bit afraid of him, in the way that journeymen and apprentices are afraid of a strict master . . .
1

Becoming a convinced socialist and trade unionist, Ebert first worked as manager of a tavern in the northern port of Bremen (one that functioned as a social centre for political leftists), all the while working his way up the Social Democratic Party apparatus. He showed a strong talent for organisation, a taste for hard work and a firm attachment to the political centre. By the time he was in his thirties, ‘Fritz’ Ebert was a nationally known figure on the moderate German left, and at the age of thirty-four he became its national organising secretary and a member of the party’s central committee.

It was telling that Ebert put a stamp on his new position at party headquarters not by making great speeches or coming up with new political ideas – these were always tasks he tended to leave to others – but by ensuring that telephones and typewriters were installed in the offices, and a proper membership filing system instituted.
2
He was not elected to the Reichstag until the age of forty-one, in the socialists’ great victory of 1912, when the SPD became the largest party in the parliament. All the same, clearly the party wanted an organisation man at the top. When the veteran leader August Bebel died the following year, Ebert was elected to take his place as the party’s co-chairman.

Between 1878 and 1890 the German Social Democratic Party had been illegal. Bismarck’s attempt to crush the socialist left in his new Reich was, however, only very partially successful. Despite some of them being sentenced to terms of imprisonment, the party’s leadership and basic apparatus had remained intact. Social Democrat candidates continued to be elected to the Reichstag as supposedly ‘non-party’ individuals. In the January 1890 elections their vote reached almost 20 per cent, making this (officially non-existent) party the largest in terms of share of the popular vote, although because of the unfair way the seats were distributed it got a mere 35 seats out of 397.

The formal ban was lifted later in 1890, but for almost a quarter of a century thereafter the SPD was still considered ‘beyond the pale’ by the monarchist German establishment. In August 1914, so concerned were Germany’s socialists that war would bring a new political crackdown on their party that Ebert and a fellow committee member were delegated to head for Switzerland – along with a strongbox containing the party’s funds – and to wait out the immediate emergency.

In fact, Ebert, having got the party treasury to safety, returned to Berlin on 5 August. He found the Reich at war, and the vast majority of his party’s hitherto overwhelmingly internationalist and pacifist parliamentary representatives committed to supporting Germany’s cause. Ebert never voted for that near-unanimous acceptance by the Reichstag of the war credits (which turned out to be a virtual blank cheque for the German government), but he lost no time in leading his party in enthusiastic support for the
Burgfrieden
and for the war.