How Weimar became a republic for our times

It was synonymous with ineffectual liberalism and fiscal chaos. Now, thanks to Warren Buffett, everyone's talking about it

If you have an eccentric uncle in the family who was collecting obscure books about politics 35 years ago, have a look through his bookshelves and see if you can find a copy of
When Money Dies, by Adam Fergusson. Because if you do, you have a valuable property. Yesterday there were three copies of this old hardback on sale in the USA, via Amazon, for prices ranging from £525 to £890. The Abebooks site showed two on sale in the UK, one for £575 and the other going at a bargain price of £395.

The book was scarily topical when it was first published in 1975, after the 1973 Arab-Israeli war, when the oil producing nations had got together as a cartel, quadrupled the price of oil and set off double figure inflation in Western economies.

Fergusson, an Old Etonian journalist and political activist, seized the moment to present a graphic description of what happened the last time a developed economy was hit by hyperinflation. His subject was Germany's Weimar Republic, that turbulent democratic interlude between the fall of the Kaiser and rise of Adolf Hitler – and particularly the early 1920s, when the German mark became worthless.

Fergusson went on to be a political adviser to Sir Geoffrey Howe, the Chancellor on whose watch, in the years 1979-83, inflation was beaten, though at great cost. After that, people stopped thinking about what it might be like to live in a society where money could not buy anything worth having – until the US confidence in its economic system was hit by the seismic shock of the banking crisis of 2008. Then old copies of When Money Dies came down from the shelves, the dust was blown off them and people pored over its descriptions of everyday life in Weimar Germany.

Warren Buffett, that great capitalist sage whose prowess as an investor has made him the world's second richest man, is said to have advised a Dutch financier to read the book as a cautionary tale about what could happen if governments run up such excessive debt. No one seems to know which Dutch financier was the recipient of this advice, or when, but the rumour helped push the potential sale price of secondhand copies of Fergusson above £1,000. This month, a small publisher rushed out a new paperback version.

Fergusson, who is now 78, gave an interview to the Daily Telegraph in which he came out firmly behind George Osborne's strategy of getting the government deficit down quickly. "Politically, now is the only time tightening can be done. In a year or so it won't be possible, politically, any more," he said. His views are not surprising, given that what Osborne is doing now is an updated version of what Howe did 30 years ago.

Weimar Germany is not a subject with which the average Briton can claim much familiarity. We all have ideas about the Great War and of the horrors of the Third Reich in 1933, but the only mental images some of us can muster of the 15 intermediate years derive from a visit that the writer Christopher Isherwood paid to Weimar Germany, which inspired his novel Goodbye to Berlin, which became a play, then a musical, then the 1972 film Cabaret. When we think "Weimar", we think Liza Minnelli in a black bowler and scanty skin-tight black outfit. It was a time when German culture flowered, throwing up names like Bertold Brecht, Kurt Weill, Thomas Mann, Hermann Hesse and many more. Those of us who were taught about the period in school also have mental pictures of people taking their wages home in suitcases or covering their walls with paper money because it was cheaper than wallpaper.

Inflation really was that far out of control. In 1913, the mark was worth one shilling. Had anyone wanted to exchange sterling for German currency in 1923, which no one did, they could have swapped a shilling for 1,000,000,000,000 marks. The wisest German politician of that era, the Foreign Minister Walter Rathenau, called it "the delirium of billions".

"A billion comes easily and trippingly to the tongue, but no one can imagine a billion," he said. "Does a wood contain a billion leaves? Are there a billion blades of grass in a meadow?"

Mercifully, the German hyperinflation had particular causes which are not likely to be repeated. During the war, the Kaiser had suspended the normal rules restricting bank loans and allowed the banks to lend money they did not have, which they generated by printing more banknotes. After the war, German industry was left severely damaged and the country was ordered to pay huge sums in reparations to the victors. Prices went up, and state and local authorities were given permission to print more and more money. To save paper, money of ever higher denomination was printed. The first 500 million mark notes went into circulation on 1 September 1923.

There was money, money everywhere, but it bought nothing. People rushed to spend their wages as soon as they had them in their hands, knowing that their value was depreciating by the hour. It was said that if you paid 5,000 marks for a cup of coffee, it would cost 8,000 marks by the time it was drunk. There were stories of thieves stealing suitcases full of money, dumping the money and keeping the cases. Unable to spend money, people resorted to barter, swapping paraffin for clothes, or clothes for food, or paying for a cinema ticket with a lump of coal.

Educated Germans did not accept that the flood of paper money was a cause rather than a result of inflation, which they blamed on foreign exchange rates. Others blamed profiteers, particularly the small number of rich Jews like the talented Walter Rathenau, who was killed by a right- wing assassin in 1922. In Bavaria, where Hitler was wandering around with a head full of unpleasant fantasies, the state government made gluttony a criminal offence. Anyone seen eating in a manner likely to cause the hungry to riot could be fined 100,000 marks.

The Weimar Republic has not had a good press, and too many of the people who lived through it were glad to see it replaced by the rule of a messianic strongman who promised to restore Germany's standing in the world. This is a shame, because had the economy been stable, this could have been a model democracy. The German Social Democratic Party was in power several years ahead of the British Labour Party. The Weimar Constitution, formally proclaimed on 11 August 1919, protected freedom of speech and of the press, declared that men and women were equal under the law, recognised the bargaining rights of trade unions, and granted free voting rights to all Germans over the age of 21. The Reichstag was one of the first parliaments elected under proportional representation. The constitution could almost have been written by Nick Clegg.

But there was a nasty undercurrent of political violence already simmering in Germany in 1919, as its defeated army was demobilised and thousands of young men went from the trenches to the dole queues. Another historian of those years, Eric D. Weitz, remarked in his 2007 book, Weimar Germany – Promise and Tragedy, that "people desire security – protection of their lives and of their economic well-being. When a democratic system cannot provide those basic requirements, even the best democrats may edge away from it and look to more authoritarian solutions." That lesson from Weimar is as relevant to the modern world as the fiscal one that captivated Buffett.

Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015