Eugen Peter Schwiedland · Year unverified
Schwiedland’s English-language review of Julius Wolf’s 1920 study traces Germany’s currency crisis from its unequal social effects to its fiscal and political causes. Its central argument, attributed to Wolf, is that depreciation cannot be arrested while the government remains unable to bring expenditure into line with revenue. The review moves from prices and incomes through foreign trade and monetary expansion to the burdens of the peace settlement, ending with a pessimistic forecast for German exchange rates.
The opening contrasts the rise of domestic commodity prices to twelve or thirteen times their pre-war level with an even greater loss of currency value abroad. Schwiedland then distinguishes the experiences concealed within these aggregate movements: workers’ wages lag behind prices, clerks and officials fare worse, and many intellectual and artistic occupations receive still smaller increases. Holders of bonds and mortgages suffer especially because their nominal revenues remain unchanged. The distinction between money income and purchasing power also governs the account of industry:
The depreciation of the currency was accompanied by a quite illusory industrial prosperity, large nominal profits being realised at the expense of real wealth.
Apparent commercial success thus offers no reliable evidence of recovery. Exchange-rate fluctuations additionally disrupt trade, making depreciation a source of instability as well as redistribution.
Schwiedland reports Wolf’s three principal explanations: speculation, Germany’s urgent demand for imported food and raw materials after the blockade, and excessive bank-note issuance. Foreign loans might temporarily restore external balance, but continuing inflation would raise prices and obstruct exports. This diagnosis connects monetary instability to the budget: public expenditure in 1920 exceeded revenue by more than threefold, while taxes failed even to cover an adequate portion of the deficit, much less withdraw currency from circulation.
The review locates these expenditures in the aftermath of a war beyond Germany’s resources and in the financial obligations of peace. It particularly emphasizes compensation to former owners of confiscated overseas assets, alongside Rhineland occupation costs and reparations already discharged. Yet the decisive move is from the scale of these burdens to the state’s capacity to respond:
The greatest obstacle to economic recovery, however, is the weakness of the Government.
As Schwiedland presents Wolf’s reasoning, fear of rebellion and deference to the demands of the masses and officials prevent sufficient spending cuts. New bank notes consequently finance unavoidable payments, sustaining the depreciation they are meant to accommodate.
The author therefore comes to the conclusion that the price of German bills of exchange has not by any means as yet touched bottom.
The review’s significance lies in this linkage of unequal losses, illusory nominal prosperity, external imbalance, and political constraints on fiscal adjustment. Schwiedland offers little independent criticism; his concise exposition preserves Wolf’s argument that the exchange crisis ultimately rests on the government’s inability to stop financing its deficit through monetary expansion.
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