lp4guld

dislocated all the machinery of production and distribution, it hadfreed the nation from internal debt. 8"With the collapse Germany went into a profound crisis—unemployment,paralysis of industry, bankruptcy, bewilderment. GustavStresemann became Premier. Hjalmar Schacht, president of theReichsbank, stopped the printing presses, invented a new currencyunit—the Rentenmark (equal to a trillion inflation marks)—theDawes Plan was adopted, and in October 1924 a foreign loan of800,000,000 gold marks was made to the Reich. Thereupon thecountry, thus crushed by defeat and inflation, proceeded to stageone of the most spectacular recoveries in the history of business.At the end of the last war America suffered her own moderatesizeddepression from 1920 to 1923. At that point we began thatamazing upward flight known as the Coolidge Boom or the NewEra. Oddly the vanquished Germany, starting almost from scratchjust a year later, put on a recovery in many respects even moreremarkable than ours, and one which lasted almost the same lengthof time—until 1929—and ended, as ours did, in a disastrous economiccrash.Germany had lost by the war and the treaty 13 per cent of herterritories, 14 per cent of her arable land, 74 per cent of her ironore, 68 per cent of her zinc ore, 26 per cent of her coal production.She had lost the railways, potash mines, and textile industries ofAlsace-Lorraine. She had been compelled to deliver to her enemiesall her merchant ships over 1,600 tons and much of the rest, aquarter of her fishing fleet, 5,000 locomotives, 150,000 railway cars,5,000 motor trucks. She had seen her foreign investments confiscatedand had been subjected to a huge reparations bill in moneyand kind. 9 Yet in the five years from 1924 to 1929 she had builtup her industrial production to a point greater than in 1913. In 19278 It is well to recall that this inflation was produced not by "printing" government currencybut by printing government bonds. Germany borrowed this grotesque inflation moneyon treasury notes and bills from the Reichsbank, accepting Reichsbank notes in paymentwhich the government proceeded to spend, just as if the United States were to borrowmoney on bonds from the Federal Reserve Bank accepting Reserve currency for its bonds.The whole inflation was accomplished by an ever-widening and extending use of the policyof borrowing from the banks. The printing consisted in the government printing bonds ornotes and the Reichsbank printing currency.*German Economy, by Gustav Stolper, Reynal & Hitchcock, New York, 1940.9*