June 16, 2012
A stamp collection in Berlin’s German Historical Museum sums up what, to many Germans, is the price of economic recklessness. A Weimar-era postage stamp worth five pfennigs in 1920 doubled in price the following year, then jumped to ten marks in 1922. It cost 30 marks in January 1923, 1,000 marks in May and 800,000 marks in October. By the end of 1923, sending a letter took ten billion marks. Next to this “document of an insane era”, the museum shows how worthless banknotes were defaced by Nazis with caricatures of Jewish speculators. It was at the height of hyperinflation, explains the display, that Hitler staged his failed Munich beer-hall putsch.
The moral is clear: profligacy leads to economic chaos, political extremism and ultimately to catastrophe for all of Europe. For today’s Germans, prosperity and democratic order must be based on sound money. The German chancellor, Angela Merkel, is in tune with this domestic mood when she insists that the euro zone must embrace a culture of financial stability if it is to overcome its debt crisis.
But is she drawing the wrong lessons from history? It was not hyperinflation in the 1920s but depression and mass unemployment in the 1930s that propelled Hitler to power. Like the hapless Weimar chancellor, Heinrich Brüning, Mrs Merkel is accused by critics of hastening disaster by pushing austerity during a deep recession. But whereas the 1930s is seared in American memory, it is less clearly remembered in Germany. The reason, says Professor Carl-Ludwig Holtfrerich of the Free University of Berlin, is that Germany returned to full employment more quickly, thanks partly to Hitler’s own form of Keynesian stimulus: notably autobahn-building and rearmament.
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