Felix Somary’s address, delivered in 1924, first published in 1925, and republished here in 2022, examines German inflation and the conditions for lasting monetary stabilization. It connects monetary theory with investment, reparations, and state capacity, while insisting on economists’ public responsibility to oppose destructive policy.
The opening presents the discussion as a belated intervention:
Unsere heutige Debatte wird manchem von Ihnen als sehr verspätet erscheinen, und wohl mit Recht: vor zwei Jahren, vielleicht auch noch vor einem Jahr war hierzu Zeit.
English translation: Our debate today will seem to many of you very belated, and probably with right: two years ago, perhaps even a year ago, there was time for it.
Somary recalls urging the association to oppose inflation around the Genoa Conference. Its preference for preparatory research produced studies that arrived late or remained incomplete. Scholarly caution was not the only obstacle: official restrictions prevented researchers from consulting necessary budgetary evidence. His account exposes a tension between comprehensive investigation and timely public judgment.
The urgency of intervention follows from inflation’s broad constituency:
Alle organisierten Schichten der Wirtschaft unterstützen die Inflation: Banken, Unternehmer, Landwirte, Arbeiter.
English translation: All organised strata of the economy support the inflation: banks, entrepreneurs, farmers, workers.
Somary treats inflation as a collective failure, not merely a technical monetary error. Organized interests perceived immediate advantages while contributing to currency destruction. His warning distinguishes apparent enrichment from the erosion of real wealth:
Jeder glaubt sich zu bereichern, und wird doch letzten Endes durch die Währungszerrüttung stärker verarmen als durch den Krieg.
English translation: Everyone believes himself to be growing rich, and yet in the end he will be impoverished more severely by the disruption of the currency than by the war.
The theoretical discussion argues that the catastrophe confirmed established monetary principles rather than invalidating them. Against Knapp’s state theory of money, Somary emphasizes monetary value: depreciation undermines wealth preservation and the denomination of deferred payments before threatening immediate exchange. The abandonment of state money in 1923 reveals limits to sovereign monetary authority. He also defends the explanatory core of the quantity theory against refinements that obscure its practical significance.
Somary’s production argument turns from visible industrial expansion to investment that inflation prevented. Exceptionally low German production costs should, under stable monetary conditions, have attracted foreign capital. Yet unreliable long-term calculation obstructed projects with extended construction periods. Firms’ accumulation of materials could protect against depreciation without demonstrating adequate investment across the economy. He offers this account as a hypothesis for comparative inquiry, not a completed statistical demonstration.
Monetary unity also sustains national economic cohesion. Somary argues that a separate Rhineland currency might have encouraged territorial-economic separation; stabilization therefore preserved more than purchasing power. His treatment of inflation as an economic pathology extends to its effects on collective mentality and supports his demand for explicit scholarly evaluation. His strongest indictment concerns economists’ silence:
Sicherlich ist der Währungsverfall keine Ruhmesepisode in der deutschen Wirtschaftsgeschichte, aber das Verstummen der Vertreter der Wissenschaft in so kritischer Zeit wird lange unvergessen bleiben.
English translation: Certainly the collapse of the currency is no episode of glory in German economic history, but the falling silent of the representatives of science at so critical a time will long remain unforgotten.
The policy discussion identifies renewed inflation under reparations pressure, rather than imminent deflation, as Germany’s central danger. Measures intended to prevent reparations transfers from destabilizing currency markets might redirect receipts into domestic credit or commodity purchases, counteracting the Reichsbank’s restrictive policy. Coordination between transfer authorities and the central bank is therefore essential.
High German interest rates cannot guarantee continuing American investment. Somary doubts that low American rates will persist and makes sustained capital attraction depend on competitive entrepreneurial returns. Labor-intensive industries may retain advantages, whereas capital-intensive industries require substantial cost reductions. This reasoning supports industrial mergers and opposition to additional state control over monopoly formation: a fiscally weakened state should avoid responsibilities beyond its capacity.
The closing agenda connects stable prices and domestic capital formation with further research, especially into Germany’s balance of payments and emigration. Somary favors a smaller, adequately paid civil service over expanded secure public employment and treats productive work abroad as a possible contribution to national reconstruction. The address thus joins monetary credibility to a restrictive conception of state capacity. Its governing tension remains the need for empirical investigation alongside the obligation to act before investigation is complete.
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