The Volokh Conspiracy

Mostly law professors | Sometimes contrarian | Often libertarian | Always independent

From My Commonplace Book, No. 6

Stefan Zweig on inflation in Central Europe in the 1920s


[Earlier posts in this series: Introduction/#2/#3/#4/#5]

The following is an excerpt from Stefan Zweig's "The World Of Yesterday," his magnificent tribute to life in the Austro-Hungarian empire in the first several decades of the 20th Century (and the utter destruction of that world in the aftermath of World War I), describing the hyper-inflation of the 1920s in Austria and Germany:

An economist who knew how to describe graphically all the phases of the inflation which spread from Austria to Germany, would find it unsurpassed material for an exciting novel, for the chaos took on ever more fantastic forms. Soon nobody knew what any article was worth. Prices shot up at random: a box of matches could cost twenty times more in a shop that had raised the price early than in another, where a shopkeeper was still selling his wares at yesterday's prices.… Standards and values disappeared during this melting and evaporation of money. There was but one merit: to be clever, shrewd, unscrupulous, and to mount the racing horse instead of be trampled by it…. The most grotesque discrepancy developed with respect to rents, the government having forbidden any rise; thus tenants, the great majority, were protected but property owners were the losers. Before long, a medium-size apartment in Austria cost its tenant less for the whole year than a single dinner….

The strangest thing is that I cannot recall, however I may try, how we kept house during that era, or in what manner the Austrians kept on raising the thousands and tens of thousands—and the Germans, in their turn, the millions—of kronen which were dally needed to keep body and soul together. Mysteriously enough, they did raise them. Habits are acquired and the chaos became normal to life. It stands to reason that one who was not a witness would imagine that, at a time when an egg cost what a fine motor-car used to cost (in Germany eggs went up to four billion marks, the approximate past value of all of the real estate in Greater Berlin), women must have been running wildly through the streets with tousled hair, that shops were deserted for lack of purchasing power and that theatres and amusement places were surely empty.

Astonishingly enough, just the opposite was the case. The will to pursue life was great enough to overcome the instability of the currency. Financial chaos prevailed, yet the daily round seemed little affected. There were widespread individual changes, such as those who had wealth in the form of cash in bank or government bonds becoming impoverished, speculators becoming rich. But the balance-wheel maintained its rhythm unconcerned with single fates, there was no standstill; bakers baked bread, cobblers made boots, authors wrote books, peasants sowed and reaped, trains ran on time, the morning newspaper never failed, and the places of entertainment, bars, and theatres were filled to capacity. The very fact that what once represented the greatest stability —money— was dwindling in value daily caused people to assess the true values of life-work, love, friendships, art, and Nature the more highly, and the whole nation lived more intensively and more buoyantly than ever despite the catastrophe; young people went on mountain tramps and returned healthily tanned, dance halls kept going until late at night, new factories and business enterprises sprang up. I don't think that I ever lived and worked with greater zest than in those years. Whatever had meant much to us in days gone by meant even more now; at no time had we ever been so devoted to art in Austria as in those years of chaos, because the collapse of money made us feel that nothing was enduring except the eternal within ourselves.