Book Review

Book Review: When Money Dies By Adam Fergusson

With this book, we are in what Gerry calls, “Solid Emily Boring Book Territory”. The subject matter is a study of the inflationary period during the Weimar Republic (Germany after WWI). This book was out of print for a long while, a sole copy heading up to 4 figures on amazon.com, until it was released last year. It was originally published in 1975.

There was no more “civilized’ place on earth than western Europe at the turn of the 20^th century – something that did not inoculate their population from a whole host of horrors. This book however only deals with one – the hyperinflation from 1919 to the end of the 20’s. As scary as a picture the book paints the parallels to the U.S. situation in 2012 are hard to ignore. There is a reason the book is back in print.

The book alternates between an accounting of the levels of inflation (the currency to buy one egg at the beginning is worth 500 billion at the end), a liturgy of the colorless politicians trying to head off the effects of inflation while keeping the printing presses going (the weakest section of the book) and the accounts of the German lay-people and what they see in their lives (the most compelling).

Inflation starts before the German soldiers are home from the trenches. The printing presses are ranked up in attempt to pay German war debts and restart the economy. Printing money is the only available option to the politicians in place. The government is too weak to impose any other measure without jeopardizing its own existence (sound familiar?). However, printing money is a tax on the middle class, plain and simple, whether in 1920, in 1975 and in 2012. Unlike Britain at the end of WWI, which could tax the corporate entities that profited from the war, Germany had no politically viable option other than to print money.

Print they did – and commodity prices rose as a result – till food was ¾ of a family’s budget. Milk rose 40 times. Put in today’s perspective, a gallon of milk at $4.39 would be $176. They printed it until people hoarded goods, because why sell something if the money you get for it is worthless hours later? They printed and people lined up the streets to spend it. Shop keepers eventually closed up shop and hoarded the goods themselves – and the people went hungry.

Women and children are always the ones to suffer the most. Children were, on average, two years behind on weight and heights percentiles because of malnutrition. Tuberculosis in children rose. In one grandmother’s memoir she notes her grandson, whom she was supporting on her pension, developed scurvy. Women went dumpster diving in the more affluent neighborhoods searching for crumbs.

Some of the observations on the perspective of the German-on-the-street struck me as awfully familiar. One was the perspective, not that their own currency was getting weaker but that other’s was “rising”. “How did the Euro get to be so strong,” we asked – when really it was the dollar that was falling. The other is that Germany became a “cheapjack” country. As people sought to spend money, the quality of goods fell. Why make one pair of good boots when I can sell three pairs of cheap boots just as easily? Anyone who has recently bought a refrigerator knows they don’t make ‘em like they used to. An increase in cheaply manufactured products is the natural byproduct of inflation.

One of the most illustrative examples in the book is Hemingway visiting Germany during this period. He is able to effectively live like a king for 90 cents Canadian. He buys an apple for equivalent of 2 cents. He meets an elderly German pensioner who tells him he can’t afford the apples on his pensions. Things are dire for the German population. Our grandmother tells us at the end of the period her whole husband’s pension doesn’t buy her a cup of coffee. Mr. Fergusson doesn’t tell us what happened to the grandson. It’s hard to imagine a positive outcome for this family. Mobs steal the brass plates outside the British Embassy. Today’s corollary is that when Ger and I put out copper pipes from our basement, garbage pickers claimed them within a few hours.

Where the similarity ends, at least right now, is with the mobs. While our population is disillusioned enough to camp in public squares and form tea parties, the Germans, Austrians and Hungarians in the 1920s are a lot more desperate and hungry. As Mr. Fergusson puts it, when the deliveries of food stop coming from the countryside, the mobs goes and fetches the food. The descriptions of mobs marauding the countryside, stealing livestock out of hunger and destroying barns out of anger, are downright scary – especially when you are reading the book with an eye to what could happen here on U.S. soil.

The thing is, I think if thing got to that point herein the U.S. we would fare worse. While the German in the 1920s was one or two people removed from their food, I don’t know any farmers to cajole to spare me a sack of potatoes. Despite living next to the supermarket, I have no idea who the manager is or where they live. I don’t know any of the people who stock the shelves by name, no personal history to call upon to get them to give me the first run on bread or beans, like our grandmother in the book can. Not that it matters, the inventory in most supermarkets and big box stores is managed in terms of hours, not days. The shop keepers in the 1920s had more inventory on hand at any given time, since they don’t have massive I.T. investments keeping their inventory down to the lowest possible point (to make the balance sheet look better). If the shipments stopped coming, how long would the stores last? Walmart measures inventory in 15 minute increments.

All in all, “When Money Dies” is a sobering cautionary tale that makes me think I should have taken the “The Dirty Life” a bit more seriously.