Ludwig von Mises on Money and Inflation.pdf - The Ludwig von ...

started it when it began to increase the quantity of money by printing it.
To give an example of how inflation destroys savings, there was in a
European country a poor boy educated in an asylum for orphans, very
well educated because when he had finished school and his life in the orphanage
he emigrated to the United States. In the course of a long life
he accumulated a considerable fortune by producing and selling something
which was very successful. When he died, after living 45 years in
the United States, he left a considerable fortune of $2,000,000. Not everybody
leaves such a fortune; this was certainly exceptional. is man made
a will according to which this $2,000,000 was to be sent back to Europe to
establish another orphan asylum such as that in which this man had been
educated. is was just before World War I. e money was sent back to
Europe. According to the usual procedure it had to be invested in government
bonds of this country, interest to be paid every year to keep up the
asylum. But the war came, and the inflation. And the inflation reduced
to zero this fortune of $2,000,000 invested in European Marks—simply
to zero.
To give another example, a German who in 1914 owned a fortune
which was the equivalent of US$100,000 had left from that fortune nine
years later one-half cent perhaps, something like that, or five cents—it
doesn’t make any difference; he had lost everything.
And there were similar experiences in the European universities. For
instance, lots of foundations were set up in the course of centuries by people
who wanted to make it possible for poor boys to study at the university
and to achieve what they had achieved from the good education they had
gotten at these universities. And what happened In all these countries,
in Germany, France, Austria and Italy, there came great inflations. And
these inflations again destroyed these investments. For whose benefit For
the benefit, of course, of the government. And what did the government
do with the money It spent it; it threw it away.
People still believe, however, that destroying the value of the monetary
unit is something that does not hurt the masses. But it does hurt the
masses. And it hurts them first. ere is no better way to bring about a
tremendous revolution than to destroy the savings of the masses which are
invested in savings deposits, insurance policies, and so on. An example of
what I mean was furnished by the president of a bank in Vienna. He told
me that as a young man in his twenties he had taken out a life insurance
policy much too large for his economic condition at the time. He expected
that when it was paid out it would make him a well-to-do burgher.
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