Berlin

In the period between 1919 and 1923 the German mark lost virtually all its value, first gradually, then with dizzying speed. With the collapse of the mark a whole way of life disintegrated; old virtues like thrift and saving became suicidal, and wild spending became a national obsession. As the Deutsche Allgemeine Zeitung put it in July 1923: “People throw themselves on the stores, buy what is there to buy. They hoard necessary and superfluous things. . . . Illogic, blind emotion, and panic rule the hour.” When the insanity had finally run its course in late 1923, millions of people were left destitute. For many Germans, the Great Inflation proved to be a catastrophe they could never overcome or forget. Like the internecine political wars of the immediate postwar era, the experience saddled the young republic and its beleaguered capital with a lasting trauma.

As if in anticipation of the mark’s dramatic inflation, Berlin itself inflated at the beginning of the Weimar period. On October 1, 1920, a law combining Old Berlin with its principal suburbs greatly expanded the city’s population and area. With the incorporation of eight formerly independent towns—Charlottenburg, Köpenick, Lichtenberg, Neukolln, Pankow, Schöneberg, Spandau, and Wilmersdorf—along with fifty-nine rural communities and twenty-seven estates, Berlin jumped in population to 3,858,000, thereby becoming the third largest city in Europe. In area it increased thirteenfold. Its 878 square kilometers, which embraced lakes and forests in addition to built-up sections, made it the roomiest European city. The municipal officials who engineered this expansion, which had become possible only because of the defeat of the imperial order, were proud of “Greater Berlin’s” new status, but many residents of the wealthier boroughs were not at all pleased to be thrown in the same pot with the worker- and immigrant-dominated districts of Old Berlin.

Berlin had always been a difficult city to govern and it became even more so with the expansion, since the various boroughs had considerable autonomy and the city parliament was too fragmented to function effectively. The SPD and USPD controlled the largest number of seats in the city parliament but had to form coalitions with the moderate middle-class parties to achieve governing majorities, which produced endless wrangling. From 1921 to 1930 the lord mayor was Gustav Böss of the Democratic Party. He was a competent administrator and a generous patron of the arts, but the powers of his office were too limited to allow him to exercise much control over the contending factions.

Gustav Böss, governing mayor of Berlin, 1921–1930

By the time Böss was sworn in as mayor, Berlin was already in economic trouble. Municipal budgets were under increasing strain because local officials had repeatedly given wage hikes to city employees even though tax revenues were down. Another source of financial hemorrhage was unemployment relief, which escalated as thousands of outsiders streamed into the city looking for work. Finding itself strapped for cash, Berlin took out short-term loans with foreign banks payable in foreign currency. Just to service these loans the city had to secure new loans at increasingly unfavorable rates.

In February 1920 the mark stood at 99.11 to the dollar; in November 1921 it stood at 262.96. The Allies accused the German government of willfully pushing the mark down in order to gain concessions in reparations payments, a charge the Germans vehemently denied. The government’s deficit spending, mirroring Berlin’s on a grander scale, undoubtedly contributed to the inflationary spiral, but the heart of the problem was that the German people increasingly took flight from their own currency either by selling marks abroad or by buying up material goods in anticipation of further depreciation, which of course made such depreciation inevitable.

The mark’s uneven slide in the first three years after the war was certainly unsettling, but things got much worse between mid-1922 and November 1923 during the so-called hyperinflation, a currency crash the likes of which the modern world had never seen. At this point Germany’s inflation escaped all rhyme or reason, growing like some rampant cancer or jungle-fungus, consuming the body politic.