The crisis lasted for three days. The government fell on the evening of 3 October, when the Social Democrats refused to support the extension of emergency powers to the economy, which would have allowed the government to make changes to working conditions without consulting the Reichstag. Then, on 6 October, it rose again. In the interim, with President Ebert refusing to replace Stresemann as Chancellor, and no other possible political constellation in sight, someone found a form of words – involving ‘fundamental recognition of the eight-hour day . . . but also the possibility of a contractually agreed exceeding of the current working time’ that enabled the Social Democrats to vote for reform of the eight-hour day after all.1
The major personnel change in the new cabinet, however, was that the keen (but in many ways conventionally minded) socialist Hilferding was replaced as Finance Minister by a supposedly non-party figure. In fact, the new man, Hans Luther, was a moderate conservative expert who had already served as Food and Agriculture Minister and, as a former mayor of Essen, the home of Krupp, also stood close to the industrial interest. At the very least, he represented a more reassuring, or at least less controversial, figure than Hilferding. The socialist representation in the cabinet was reduced from four to three, and, with a man of Luther’s background at Finance, the balance had tipped decisively towards the kind of base for the urgent currency reorganisation - drawing on national reserves of agricultural and industrial wealth - that had been put forward by the nationalist Helfferich earlier in the summer.
The way lay open for what would be known as the Rentenbank (literally ‘annuity bank’) and for a new system of money for Germany. This was, essentially, the idea that Helfferich had first put forward under the title of ‘Rye Bank’. It came not a moment too soon.
In July 1923, unemployment among the unionised workforce had stood at 3.5 per cent. By October it was heading quickly for the next month’s total of a terrifying 23.4 per cent. The situation was disastrous, and it seemed out of control.
‘There have been bread riots and plundering with collisions with the police all through the week,’ wrote the London Sunday Times’s correspondent in Berlin in October 1923. He continued:
The whole trouble in Berlin was one of prices. The advocates of inflation at home should come to Berlin and see what happens when the debt falls due. There had been ominous clamourings for a fortnight past against the rising prices. It took a whole series of riots and an ultimatum of the trade unions leaders that if there was not an issue of new money in three days there would be a general strike to wake up the Government to a sense of the seriousness of the situation. Academic discussion had to be abandoned and somebody had to get busy.2
In an unnamed provincial town, another journalist, writing for the London Observer, described skilled men, ‘aristocrats of labour’, earning the equivalent, in British currency, of ‘three-halfpence’ an hour, making a shilling a day. ‘But after all,’ the man told the reporter, ‘we have work, and ours is still an eight-hour day.’ His brother, an unskilled labourer, married with three children, earned, so it was said, the price of three loaves of bread in a week. The sympathetic correspondent did some calculations for the paper’s British readers, and worked out that the ‘stupendous figure in marks’ that it would cost to supply a thousand men, women and children with a nourishing meal in fact amounted to one guinea, or one farthing per head:
It is the lack of complaint that becomes so significant, in a way so depressing. Beggars are few and the most of these are blind or maimed; children, dogs and horses appear to be kindly treated; the queues that wait for bread or potatoes are patient almost to the point of apathy. In the grocer shops people come in, ask prices and go out again; shopkeepers, warned by telephone every hour of the latest movement in the valuta market, anxious to sell and yet afraid to part with their stock, are civil, even sympathetic. An old man had come in to ask the price of some tinned soup, and gone out again. ‘He was among my best customers before the war,’ said the grocer. ‘Now he lives in one room with his wife, who is older than he is, and very ill. One of his friends told me to let him have a little parcel of grocery every month. He sent it back. He says that neither he nor his wife can accept charity, but I doubt if they get one meal a day.’ I said nothing, for the professor seemed to typify the German spirit in adversity, and I remember the equally thin and threadbare scholar of another town who said that what he missed most was neither food nor sound footwear, but books.3
Of course, there were the usual crass contrasts, even as the crisis reached its grim apogee:
The winter season, such as it is, has begun. It has opened with the closing of one of the smartest restaurants for dinner in Unter den Linden, and another has shut a large part of its accommodation, because there are not enough dinner customers. Lunch has become the great meal.
At the same time there is a revival of dinner dancing. M. Marek Weber has moved with his band from the Hotel Esplanade to the Hotel Adlon, and on certain days a week when the Berliner is allowed by his paternal government to dance, things are quite gay again.
There were, of course, far too many people in Berlin and the rest of Germany for whom any meal at all would have been a great meal. Somewhere, however, there were those who could afford £8. 2s. 6d. to fly from London to Berlin. The service had been running since the beginning of the year, landing and taking off from the airfield attached to the former Zeppelin airship works at Berlin-Staaken. It was now, at the beginning of November, due for expansion.
The new route will connect London, Rotterdam, Hanover, and Berlin, Berlin being brought within eight hours of London. Napier D.H. 34 air limousines are to be used on the service, every comfort having been installed for passengers during the long journey. Air cushions are provided in the armchair seats, silk curtains are hung at the windows, and the cabin is heated by a circulation of warm air.
Leaving London at 8 a.m. the limousines will descend at Hanover at 2 p.m. and at Berlin at 3.50 p.m., while on the return journey, starting at 8 a.m. from Berlin and 10 a.m. from Hanover, London is reached at 2.30 p.m. . . .
Each passenger will be provided with a free luncheon basket, containing, in addition to food for the journey, a bottle of wine for the women passengers and a small bottle of whisky for the men.4
The London-Berlin flights would soon transfer to Tempelhof, the former parade ground of the Kaiser’s army to the south of the city centre, where work had been under way for some months on constructing an airfield even at the height of the inflation. After being delayed by a combination of capital shortages (due to the economic situation) and bureaucratic obstruction (the original plan of the Berlin city fathers had been to construct an exhibition space for trade fairs), Tempelhof had been granted official airport status in October 1923. The Junkers Aircraft Company and Aero-Lloyd had already built wooden hangars-cum-terminals on the site.
Weimar Germany, for all her problems and struggles, despite her poisonous political divisions, the horrors and absurdities of the hyperinflation, and the continuing, near-medieval suffering of wide swathes of her population, was ripe for the modernist revolution that was under way all over the developed world, especially in the real winner of the First World War, America.
That same hyperinflationary autumn also witnessed the first public radio broadcasts in Germany. At 8 p.m. on 29 October 1923, with a dollar worth 65 billion marks, at the Vox-Haus in the Potsdamer Strasse, seat of the eponymous record company, the slightly crackly tones of Germany’s first radio presenter travelled over the air waves: ‘Attention! Here is the Vox-Haus broadcasting station, on the 400 m frequency. We make the brief announcement that the Vox-Haus broadcasting station is commencing entertainment radio.’
The first music to be played – live - on German radio was a piece for solo cello and piano accompaniment, ‘Andantino’ by Kreisler. Eleven other pieces followed over the course of the next hour, the last of them a recorded version of the national anthem, played by a military band. Then the announcer’s voice return
ed to urge the listeners: ‘We wish you a good night. Please do not forget to earth your antennae!’5 Two months later, the total number of officially licensed listeners (who paid a steep annual fee of sixty gold marks or 780 billion paper marks to the German post office6) had reached around 1,000. By the middle of the next year, 1924, the licence fee would have been reduced to a third of its initial level, there would be 100,000 legitimate listeners (illegal listening remained widespread), and by December more than half a million, clearly undeterred by the fact that this early public radio required the use of earphones.7
Beneath the chaotic surface, Germany was changing, waiting to fulfil her post-war promise. Inflation might have helped soften many of the blows inflicted by defeat in war, but now it was holding the country back. The question was whether during the past five years Germany had slipped too far away from a viable model of capitalism to be able to recover. On the far left, the Communists, and on the far right, the paramilitary nationalist groups for which Hitler was becoming a unifying figure, both sensed their moment.
Towards the end of October 1923, it seemed, to the extremists and the disillusioned, possible that violent change could be brought about. The ‘Grand Coalition’, despite its lofty name, appeared too riven to summon the forceful and potentially unpopular response needed finally to push post-war German society through the door into modernism, welfare and democracy that had stood open ever since 9 November 1918. If Stresemann and his ministers did not do this, there were plenty of Germans prepared to push the country through another door entirely.
The enabling law requested by the Stresemann cabinet finally received President Ebert’s signature on Saturday, 13 October 1923. It put the government in a position of temporary and carefully delineated dictatorship, whose powers were valid only so long as the current coalition remained in government, and even then would expire on 31 March 1924. The government was from this day empowered to take an extremely wide range of decisions that would usually require the Reichstag’s approval.
Stresemann’s ministry immediately used the opportunity to order reforms to unemployment benefit, to give the state a new and decisive role in the management of labour disputes and to dismiss large numbers (up to 25 per cent) of the Reich’s civil servants. As agreed with the Social Democrats, the eight-hour day remained standard, but could be extended now to ten if a case could be made by the employer. The liberal Vossische Zeitung in its report of the vote called this a ‘Restoration of Productivity’.8 A cabinet discussion on the currency question was, the paper further informed its readers, set for the following Monday, 15 October. Things were starting to move.
Meanwhile, the stubborn attachment of Germany’s industrial workers to their eight-hour day was a source of great resentment among the other classes. In all the great German cities, especially Berlin, what leisure the people had – and since the eight-hour day it was more than before – they devoted to loading themselves up with sacks and bags and embarking on trips into the countryside to hunt for food. The London Observer wrote:
But the only part of the weary journey worth recording is the tramp, from one farm to another along the Spree, the Havel, even the Elbe, on its long way through the flat fields to Hamburg. Most of the country dwellers are willing to part with their potatoes early in the morning at yesterday’s prices; towards mid-day they are restive. ‘The night watchman hasn’t been round yet,’ is the cryptic reply. It appears on inquiry that the night watchman’s new function is to report the state of the dollar exchange on the Berlin Bourse from house to house and farm to farm, and that the hundredweight of the morning may cost another milliard [modern billion] in the afternoon. This is of interest to all and sundry, but the moot point comes when the man is a Berlin working-man, who complains not only of the price, but of the plenty which he sees around him. ‘Work ten hours and more a day, the same as we do,’ is the answer.9
In Saxony, with the Communists joining the Social Democrats in power, the situation was different. A journalist reported from Dresden:
There is a kind of rough-and-ready ‘people’s justice’. It is sometimes very rough. It is not only Communists who break into the market halls and compel the stall keepers to sell at prices the working-folk can pay, prices that often mean a heavy loss. The movement is a general mass movement, and Socialists, as well as Communists, sit on the ‘control committees’ that settle disputes between buyers and sellers, usually in a rather summary fashion.
There have been times when no fruit and vegetables or dairy produce have arrived from the country districts because the farmers have been loth to sell against depreciating paper marks. The urban masses have organised raids, have dug up the potatoes themselves, have cut down corn with shears (causing great waste and damage), or have forced the farmers to sell cheaply.10
Unemployment in Saxony was also rising fast, as elsewhere in Germany, more than quadrupling from 25,000 in August to a little over 112,000 at the beginning of October 1923. No fewer than 350,000 were on short-time, up from 41,000. Hundreds of factories were being closed down. The difference between this part of Germany and the others was that the leftist government in Saxony ‘solved’ the problem by simply making factory closures illegal.
Things could indeed get ‘rough and ready’ in beautiful Dresden, the ‘Florence of the Elbe’. In the spring of 1919, a few months after the revolution, the then Saxon Minister of War, Gustav Neuring (a Social Democrat), had refused to personally receive a deputation of disabled war veterans. As a consequence, his ministry was invaded, he was seized and thrown into the River Elbe. Moreover, when the minister tried to swim back to shore, he came under fire from armed demonstrators lining the riverbank, and was killed.11 Four years later, with inflation raging, 60 per cent unemployment in Dresden,12 and the so-called ‘proletarian hundreds’ flexing their muscles, largely under Communist command, it looked as if the stage was set for more violence against the status quo.
The tens of thousands of uniformed members of the ‘proletarian hundreds’ in Saxony, who existed, technically, in order to support the forces of law and order, pointed to the threat of anti-republican forces in Bavaria as a justification for their military preparations.
Clandestinely supported by elements of the Reichswehr, armed units of the nationalist right, including the successors of the Erhardt Brigade and also Hitler’s storm troopers, had begun massing on the northern border of Bavaria. The nationalist forces stood especially thick on the ground around the border city of Coburg, where 11,000 paramilitaries were commanded by none other than the founder of Organisation Consul, Naval Captain Erhardt. They seem to have been supplied with weapons mainly from the stores of the Bavarian police.13 Here they faced into the state of Thuringia, which by the second half of October 1923 was likewise run by a socialist-Communist coalition. Further to the east, a short stretch of border also led from Bavaria into Saxony. The implications were all too clear.
The trouble was that the existence of the ‘proletarian hundreds’ undoubtedly raised the threat of a Communist coup in Saxony and Thuringia, which might then lead on to a Communist takeover in Berlin and other major cities, and eventually even to a Soviet Germany. This was precisely the justification that the far right in Bavaria needed in order to arm its own supporters to the teeth, and to threaten a ‘march on Berlin’ via Saxony and Thuringia. In other words, the far left and far right fed off each other’s activities. Each group blamed its worryingly eager preparations for civil war on the other side.
Meanwhile, the government in Berlin, for a while, seemed helpless to intervene in either of these places. But if the Berlin government did finally summon the will to intervene in these parts of Germany where its writ had become all but ineffectual, where and how would this happen?
The situation in central Germany was coming to a head, in its different way, but absolutely of a pace with that in Bavaria. On 10 October, the Communists, who had hitherto merely provided parliamentary support for the Social Democratic Premier in Saxony, joined his governm
ent, as instructed by Moscow.14 The Communists took over the finance and economy ministries in Dresden, and the party’s leader became head of the cabinet office. A few days later, the Thuringian Communists were also given government posts, in the economy and justice ministries.
In fact, when steps were taken by the Berlin government, they were directed only at Saxony and its junior partner in leftism, Thuringia. On 15 October, the day the cabinet was due to make a final decision on the setting up of a new currency bank that would end the inflation, the commander of the Reichswehr’s troops in Saxony, General Müller, issued a reprimand to the new socialist-Communist government. Its officials had put up posters explaining its programme in public places without the General’s permission, which was required under the recent emergency laws. Socialists all over Germany protested at this, including the Social Democrat cabinet ministers in Berlin. Stresemann pointed out to his colleagues that this action had been agreed with President Ebert and that furthermore, as the cabinet record had it, ‘if the government took no action in Saxony, the danger existed that those circles in Saxony who were threatened [i.e. business and farming interests] would turn to Bavaria for help. He did not need to go into details about how this would mean civil war and the disintegration of the Reich.’15
Not the best of days to decree the creation of the new currency bank, but then the government had no choice but to press on.
Everyone wanted a dictatorship. The Communists wanted one, of the proletarian kind. The conservative nationalists wanted one that bore some resemblance to the old monarchy. Hitler’s Nazis thought of nothing else, and their obvious model was Mussolini, who had seized power in Italy in October 1922. Even the democratic ‘Weimar’ parties had decided, rather gloomily, that the country needed a strong hand, albeit on a temporary basis. Lastly, the man so many in Germany considered the country’s secret ruler had also made a decision along these lines. Hugo Stinnes wanted a dictatorship, too.
The Downfall of Money: Germanys Hyperinflation and the Destruction of the Middle Class Page 33