Page 4 - GC-Sept-Oct-23

1923 Germany’s

Klosettpapier economy

by Daniel Schwarz
f you are wondering what Klos-
ettpapier or sometimes just
Icalled Klopapier means, its Ger-
man for toilet paper! That is what
most German citizens thought of the
paper currencies as the economic
inflation turned to hyperinflation,
and ravished Germany in the early
1920s. Eventually to keep produc-
ing the flurry of needed ever higher
inflation denomination paper cur-
rencies, the government printing
presses started printing them on one
side only to save on ink and time.
Out of frustration some people
even started to call them Schmier-
zettel, meaning smear tickets or pa-
per, which was slang for the other
word! Anger, frustration, uncertain-
ty, desperation, was the norm as
people’s wealth disappeared and
people’s wages and pensions could
not keep up with the spiraling out of
control inflation.
This year 2023 marks the cen-
tennial of this most turbulent eco-
nomic hyperinflation that peaked
during the end of 1923 in the Ger-
man Weimar Republic. Economic
disaster had hit Germany! By No-
vember 1923 the Papiermark that
had replaced the Goldmark or Re-
ichmark in 1914 when Germany Some people even joked that they were now millionaires
went off the gold standard, was so but couldn’t even afford to buy a cup of coffee.
drastically devalued against other
world currencies that the conversion
to the U.S. dollar was In any event, the inflation story system initiated in November 1923
4,210,500,000,000 Papiermarken to began at the start of WWI, but not with a new currency called Renten-
one U.S. dollar! That’s over 4.2 tril- until about 1922 did it escalate fast- mark, economic stability returned to
lion to one USD. Besides financial er and spiral out of control to its the German economy, and prices of
ruin of its citizens, worthless pen- peak in November / December goods and services allowed interna-
sions, savings, investments, world 1923. Finally with a new banking tional business to resume.
trade for German businesses had
come to a halt. Something had to be
done, and immediately.
If I tell you some of the main
reasons for this inflation, its escala-
tion to hyperinflation, and how it
was finally resolved, I would need
to include subjects such as: Germa-
ny losing WWI (1914-1919); going
off the gold standard that had kept
the German Reich prosperous; issu-
ing unsecured Papiermark curren-
cies to finance the war; foreign
occupation of the German Ruhr ar-
ea; WWI Treaty of Versailles with
extremely high reparations payment
obligations of Germany in gold se-
curities; losing German territories;
politics; and how financial stability
was finally restored with U.S. sup-
port, but the details of these topics
are beyond the scope of this article.