The Great Disorder: Politics, Economics, and Society in the German Inflation, 1914-1924
The scholarly standard; corrects Fergusson on who gained and who lost.
Summary
Gerald Feldman wrote the most comprehensive history of the German inflation, running to well over eight hundred pages and covering the political, social and economic dimensions together across the decade from 1914.
His method is archival and exhaustive. He works through the records of government ministries, industrial associations, trade unions, banks and municipal authorities to reconstruct how decisions were made and how different groups experienced and responded to the inflation. His central argument is that the inflation was the product of an unresolved distributional conflict: German society could not agree who would bear the costs of the war and of reconstruction, and inflation was the mechanism by which the question was deferred and then answered arbitrarily.
The book documents which groups gained and lost. Industrialists who borrowed to acquire real assets gained, most conspicuously Hugo Stinnes, whose empire Feldman treats in detail. Workers' real wages fell but employment was maintained, and unions preferred inflation to unemployment for much of the period. Holders of fixed claims, including bondholders, pensioners and the professional middle class, were destroyed. Feldman also covers the revaluation dispute after stabilisation, in which the courts and the legislature partially restored the real value of some debts, which reopened the distributional conflict. The book is long and demanding and is the reference work on the subject. Readers wanting a narrative should go to Frederick Taylor; those wanting the economics to Holtfrerich or Webb.
Key takeaways 7
- The German inflation was the mechanism through which an unresolved conflict over who would bear the war's costs was deferred and then settled arbitrarily.
- Industrialists who borrowed to acquire real assets gained enormously, and Feldman documents Hugo Stinnes's empire as the extreme case.
- Trade unions accepted inflation for much of the period because it maintained employment, and preferred it to the alternative.
- Holders of fixed claims including bondholders, pensioners and professionals were destroyed as a class.
- The revaluation disputes after stabilisation reopened the distributional conflict rather than settling it.
- Government decisions during the inflation were made by coalitions unable to agree on taxation, not by officials pursuing inflation deliberately.
- Feldman's archival reconstruction of how each interest group behaved is the book's principal contribution.
Who should read it
Historians and serious readers of inflation who want the complete political and social record of the most-studied currency destruction.
Where it sits in the reference 2
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