The Review Of When Money Dies

It says something about present anxieties that a 35-year-old account of Weimar hyperinflation has come into vogue. In early 2010, Adam Fergusson's long-out-of-print volume was trading online for four-figure sums. There were (false) reports of kind words about it from Warren Buffett. Now back in print, this once obscure book from 1975 has been selling briskly. Just another manifestation of the financial millenarianism now sweeping the land? Perhaps, but "When Money Dies" remains a fascinating and disturbing book.

The death of the German mark (it took 20 of them to buy a British pound in 1914 but 310 billion in late 1923) plays a key part in the dark iconography of the 20th century: Images of kindling currency and economic chaos are an essential element in our understanding of the rise of Hitler. Mr. Fergusson adds valuable nuance to a familiar story. His tale begins not, as would be popularly assumed, in the aftermath of Germany's political and military collapse in 1918 (by which point the mark had halved against the pound) but in the original decision to fund the war effort largely through debt—a decision with uncomfortable contemporary parallels (one of many in this book) tailor-made for today's end-timers.
Yet the parallels go only so far. The almost inevitably inflationary consequences of paying for a world war on credit were exacerbated by: Germany's relatively shallow capital markets, the creation of "loan banks" funded solely by a printing press that was also at the disposal of the central bank; and the muffling of warning signals in a way unimaginable in our information age. The rise in prices was obvious to all. That it was due to more than wartime shortages was not. The country's stock markets were closed for the duration of the fighting. Foreign- exchange rates were not published.
"When Money Dies" was written in the early 1970s for a British audience. Inflation was accelerating fast, and London's political class was at a loss about what to do. Mr. Fergusson's book (which began as a series of newspaper articles) reflected the growing national alarm over inflation and hinted that price stability would not be won back without more focus on the quantity of money in circulation. With monetarist ideas just beginning to enter mainstream British political discourse, the Havenstein of "When Money Dies"—a printing-press banker supposedly unaware of the connection between soaring inflation and roaring money supply—made a useful villain.