The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class
it could issue while still maintaining the all-important appearance of a gold-backed currency.
    The problem was that, although the Reichsbank knew that 5 billion gold marks were in circulation at the outbreak of war, even by the end of 1914, after several months of an intensive propaganda campaign to persuade citizens to exchange gold for paper (‘gold for the Fatherland!’), it held only 2 billion of that total. Although all over the country patriots had obediently given up their gold and silver coins, many other Germans – especially in rural areas – proved immune to patriotic blandishments. They held on to the value they knew they could rely on, whatever the outcome of the developing European catastrophe. Somewhere, a lot of gold and silver was being hoarded.
     
    By 1915, the military conflict had settled into a bloody stalemate. German and Allied forces faced each other in the west across no-man’s-land, each huddled into networks of trenches running 700 kilometres from the Belgian coast to the Swiss border. Germany had not triumphed, as so many of her people had expected, but she remained well placed. She controlled all but a tiny strip of Belgian territory. The great cities of Brussels, Antwerp (the port captured in October after a costly siege lasting more than three months) and historic Bruges, and the country’s rich industrial and coal mining area including Charleroi, Namur and Liège, all lay in German hands. The same went for much of northern France, including the major textile-producing city of Lille with a pre-war population of half a million, which finally fell to the Germans in October after vicious to-and-fro fighting.
    Although Paris was saved by the ‘Miracle of the Marne’, by the end of 1914 ten of the French Republic’s eighty-seven départements lay entirely or partly under German occupation. The more than 14,000 square miles of territory that for almost four years would remain behind the German lines included more than half of French coal mines, two-thirds of her textile manufacturing and 55 per cent of metallurgical production; altogether 20 per cent of the country’s gross domestic product. 3 In short, France’s industrial heartland lay for most of the war in enemy hands. Although almost 2 million of the local population fled the German advance, that still left 2.25 million French citizens under an occupation that was to prove bleak, lonely and harsh – sometimes brutally so. 4
    On the Eastern Front, after a brief Russian thrust into East Prussia in August 1914 was repulsed at the Battle of Tannenberg, Germany stabilised the general situation, regrouped, and after the war’s first winter began a slow but inexorable advance into the Baltic countries and Russian Poland. Most of the latter, including Warsaw, its capital, was conquered in the course of 1915.
    While from a military point of view, at this stage of the war and for a long time to come, Germany still held many advantages, her financial outlook was not nearly so positive. So desperate did the government become to separate its citizens from their hoarded gold that schoolchildren were enlisted into the campaign to cajole adult family members, neighbours and acquaintances to the ‘gold exchange bureaux’, where helpful officials waited to relieve them of their all-too-solid wealth and swap it for paper. One propaganda pamphlet, ‘The Gold Seekers’, was aimed at children via their teachers. It told the fictional story of three teenage high-school ( Gymnasium ) students and their campaign to get a well-off local grain merchant, Herr Lehmann, to part with his gold hoard for the country’s good, so that paper money could be printed for the war effort on the back of the exchange. It went without saying that they would accuse him of being a ‘betrayer of the fatherland’ if he refused to do so.
    Initially, Herr Lehmann was shown as resisting their pressure, and expressing scepticism that the Reichsbank would adhere to its side of

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