Germany's 1923 Hyperinflation: A "Private" Affair

Germany's 1923 Hyperinflation: A "Private" Affair

Article from The Barnes Review, July-Aug. 1999, pp. 61-67.
The Barnes Review, 645 Pennsylvania Ave SE, Suite 100, Washington D.C. 20003, USA.
By Stephen Zarlenga, researcher in monetary history and theory;
published here with kind permission from TBR.
This digitalized version © 2003 by The Scriptorium.
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Hjalmar Schacht (second from left), president of the Reichsbank, at a 1928 banquet. Schacht resigned his post following the unveiling of the 1929 Young Plan, named for American banker and railroad president Owen D. Young. It set Germany's annual payments almost 20 percent lower than those of the Dawes Plan, but it stipulated that they should last for 59 years - until 1988. This would have the effect of pledging Germany's entire wealth as reparations security.

Discussions of the dangers of inflation inevitably end up at the worst-ever case known - the German hyperinflation of 1923. Accompanied by economists' moralizing warnings of the dire results of governments' printing paper money, the German hyperinflation is used as a horror story by those who advocate a plutocratic control over money. However (as in other cases), when the monetary facts are actually examined, the argument falls apart as it becomes clear that the bankers themselves and speculators were the primary cause of the German hyperinflation, which was not stopped until the government took decisive action against them. [more]