A series of political crises beginning with the murder of Foreign Minister Walther Rathenau on June 24, 1922, helped propel the inflation into overdrive. Ra-thenau was killed by right-wing assassins as he drove to work along Berlin’s Konigstrasse (the death spot is now marked with a plaque, one of many such memorials in the haunted city). To accomplish their mission, the killers pulled up alongside the minister’s open car and sprayed him with automatic pistol fire, then tossed in a grenade for good measure. This was Rathenau’s reward for being a Jew who had tried to help his nation cope with the demands of the Versailles Treaty and the evils of inflation. Berliners turned out in their thousands to view his body as it lay in state in the Reichstag (a building he had hated), but they should also have mourned the mark. On the eve of the assassination the German currency had stood at 331 to the dollar; by the end of July 1922 it had dropped to 670. In December 1922, following rumors that the French planned to occupy the Ruhr Valley to punish Germany for defaulting on reparations payments, the mark ballooned to 7368.
Walther Rathenau in 1921, a year before his assassination
The rumors about the French turned out to be true. On January 11, 1923, French and Belgian troops marched into the Ruhr in order to force the Germans to make coal deliveries stipulated in the reparations agreement. This action ignited a storm of patriotic protest across Germany. Berlin was engulfed in anti-French demonstrations; Pariser Platz had to be closed off to prevent attacks on the French embassy.
The German government responded by instituting “passive resistance,” encouraging coal companies and railways to shut down and then compensating owners and striking workers with money from the national treasury. Now the mark went into free fall. In early February it hit 42,000 to the dollar, in July 160,000, in August 3,000,000. To meet the demand for paper currency more than 2,000 presses worked around the clock churning out bills in ever higher denominations. In September 1923 the Reichsbank issued a 50 million mark note; in October it came out with 1, 5, and 10 billion mark bills; on November 2 a 100 trillion note. The Berlin newspaper publisher Hermann Ullstein, whose presses were requisitioned for the printing, hired elderly women to put newly printed billion-mark bills in neat packages for vigilant Reichsbank officials. “They had to keep an eye on every single billion,” he noted. “Officials are so funny sometimes.” But why in fact worry about the odd billion when, in late November 1923, one American dollar was worth a mind-boggling 4,210,500,000,000 German marks?
Money being transported to a Berlin bank during the Great Inflation, 1923
As the mark sprouted zeros, so did the prices for basic necessities. In Berlin a streetcar ride cost 3,000 marks on July 16, 1923; 6,000 marks on July 30; 10,000 on August 6; 50,000 on August 14; and 100,000 on August 20. The price for natural gas shot up from 1,200 marks a cubic meter on July 1, 1923, to 250,000 marks on August 30. In late November, at the height of the Great Disorder, a glass of beer fetched 150 billion marks, a loaf of bread 80 billion, and a pickle 4 billion. Prostitutes were demanding 6 billion marks and a cigarette for the “mistress-slave perversion.” At these prices, it made sense to use lower-denomination bills for functions other than trade. Berliners lit their cigars with thousand-mark bills and wiped their bottoms with millions—“filthy lucre” indeed. The dadaists Kurt Schwitters and Lÿszló Mo-holy-Nagy used billion-mark notes to make collages of the national symbol, the eagle, which they turned into a vulture.
With the collapse of the mark, many business people insisted upon being paid in goods or services rather than currency. The “most modern city in Europe” was reverting to history’s oldest system of trade—barter. Of course, since many daily transactions still had to be conducted in cash, people tried to get rid of their currency as quickly as possible, before it lost further value. They rushed from pay counter to store or bar, often transporting their load of bills in backpacks or even wheelbarrows. By contrast, when it came to settling obligations like taxes, mortgages, and rents, which did not keep pace with inflation, they tried to delay paying for as long as possible. The result was that, for the first time, housing in Berlin became relatively cheap. That was the good news. The bad news was that housing was also more shabby and in shorter supply than ever because builders and landlords had no incentive to put up new structures or to repair the old ones.
As in the First World War, natural products were supplanted by ersatz concoctions. Visiting Berlin in 1920, the Russian writer Ilya Ehrenburg noted: “In the café Josty where I sometimes went, the wishy-washy so-called ‘Mocha’ was served in metal coffeepots with a little glove on the handle to prevent the customer from burning his fingers. Sweet cakes were made of frostbitten potatoes. As before, the Berliners still smoked cigars labeled Cuban or Brazilian though in fact they were made of cabbage leaves steeped in nicotine.”
Germans did not fare equally under the pressures of inflation. Those with plenty of goods to trade, or, better yet, with access to foreign currency, could do quite well for themselves. The sociologist Leo Lowenthal had enough foreign funds to spend the last days of the hyperinflation in the splendor of the spa at Baden-Baden. Felix Gilbert, having gone off to university in Heidelberg with fifty dollars from his uncle, used the money to buy pots of jam that he sold from time to time when he needed cash. The Berlin director Berthold Viertel was able to buy his own theater with the help of a currency-trader patron. Workers whose unions were able to bargain for steady wage increases got along much better than unorganized civil servants, teachers, doctors, and artists, whose incomes lagged far behind the price curve. Worst off were retired people on fixed incomes and citizens who had conscientiously put their savings in government bonds during the war. Such people, generally middle class, suffered the dual horror of seeing their own living standards plummet while their social inferiors held their own.
Not surprisingly, those who fared the best were those who took ruthless advantage of other people’s vulnerability. Berlin had always had its share of economic predators, but in the inflation era the city became a paradise for profiteers, or Raffkes, in popular parlance. With small amounts of foreign currency or stock they bought up the furniture and family heirlooms of desperate widows. They purchased companies for $500 and met their payrolls with worthless marks. The most enterprising Raffke of all was Hugo Stinnes, a self-made magnate whom Harry Kessler described as “a cross between a patrician, a commercial traveler, and the Flying Dutchman.” Having built up a coal-mining empire with dubious credit, Stinnes turned his coal into foreign currency during the inflation and used that to build one of the largest economic empires the world has ever seen. This complicated operation, however, could be kept going only by the fast footwork of its founder, and when Stinnes died in 1924 his empire collapsed.
German children demonstrating that it takes 100,000 marks to buy one U.S. dollar in early 1923. By the fall of that year the dollar was worth 4.2 trillion marks
Because foreign currency, especially the dollar, was the key to the good life in inflation-ridden Germany, foreigners could live very high off the hog. Ernest Hemingway and his wife Hadley crossed into Germany from France in September 1922 to inspect the scene. For ten francs they received 670 marks, or about ninety cents in Canadian money (Hemingway was then reporting for the Toronto Daily Star). “That ninety cents lasted Mrs. Hemingway and me for a day of heavy spending and at the end of the day we had one hundred and twenty marks left!” he reported to the paper. Berlin in particular was overrun with Ausländer who went there to enjoy an extravagance that they could never have managed at home. The American writer Djuna Barnes, who spent the summer of 1921 in the Spree city, found “things so cheap for us that you felt almost ashamed to be there. Full of buggers from America who bought boys cheap.” In fact, most foreigners felt little shame about their wealth. Flaunting their dollars, pounds, and francs, tourists and expatriates bought up whatever they wanted, from boys to buildings. For one hundred dollars, a classical music fan from Texas rented the entire Berlin Philharmonic for an evening’s entertainment. Typical of the new breed of expatriates was the American editor Matthew Josephson, who moved his magazine Broom to Berlin because it was cheaper to publish there. According to his friend Malcolm Cowley, who visited him in Berlin in 1923, Josephson was not living the usual life of a little-magazine editor. On his salary of one hundred dollars a month he “lived in a duplex apartment with two maids, riding lessons for his wife, dinners only in the most expensive restaurants, tips to the orchestra, pictures collected, charities to struggling German writers.”