The difficulty was that this money was directed only at federal expenditures, and it covered only about two-thirds of these; the interest on the bonds themselves represented another, accumulating, expense, which claimed further resources. The German government planned to present the defeated enemy with the entire bill at the conclusion of the war; until then, though, it discovered no alternative to funding its mounting deficits by manufacturing its own money. The process required only that the Reichsbank, the German national bank, discount short-term Treasury bills with bank notes to the government’s credit. While this practice addressed the immediate requirements of the federal government for credit, the national bank refused to accord the same service to state and local governments, whose need for credit to meet their own current expenses also burgeoned. With this problem in mind, the Federal Council passed a law in the first days of the war that established a network of loan bureaus (Darlehenskassen) in localities throughout the land. These institutions were empowered to lend money to states and local government agencies, as well as to private borrowers, on more liberal terms – with less collateral but higher rates of interest – than the national bank provided. To this end, the loan bureaus were allowed to issue their own notes. These had the same legal status as the notes of the national bank and hence circulated in increasing numbers as paper money, once gold coins had been called in (to provide coverage for national bank notes) and silver coins disappeared to hoarding (see Figure 3).
Figure 3 Banknotes in circulation Source: Ruth Andexel, Imperialismus, Staatsfinanzen, Rüstung, Krieg: Probleme der Rüstungsfinanzierung des deutschen Imperialismus (Berlin, 1968), 50–1.
These policies conjured paper money out of nowhere. It became common practice to use war bonds at the loan bureaus as collateral for loans whose sole purpose was the purchase of additional war bonds. The national bank in turn used notes of the loan bureaus to cover additional issues of its own notes. These rituals provided thin cover for the government’s resort to the printing presses to fund the war. The consequences were direct and obvious. The growth of the money supply meant that more money pursued fewer goods. Hence the government’s monetary policies fueled strong pressures already being exerted by shortages of basic goods, such as food. Prices rose (see Figure 4).
Figure 4 The rise of prices and the cost of living Source: Jürgen Kocka, Klassengesellschaft im Krieg: Deutsche Sozialgeschichte 1914–1918 (Göttingen, 1973), 17.
Inflation became an unremitting, omnipresent fact of life on the German home front.34 Despite administrative attempts to soften its impact with price ceilings, it affected everyone. It also delivered the bill for the war to the German people, for it confiscated their wealth as surely as taxation did. It did so more deceptively, however, and without the benefits of taxation, which in theory reduced the money supply and so discouraged inflationary monetary pressures. Every German whose wages, salary, rents, or investment earnings fell behind the rate of inflation (and they represented the vast majority of the population) paid the price for the war in the form of reduced real income and capital wealth. In this light, the sale of war bonds was especially pernicious, for it encouraged far more sacrifice than patriotic subscribers suspected. A war bond with a face value of 1,000 marks when purchased in the summer of 1914 still carried a face value of 1,000 marks in the summer of 1918, when its value, adjusted to current prices, stood at about 300 marks. Five years later its value was nothing. The writer Thomas Mann sold his country house in 1917 and invested the proceeds in war bonds; he soon learned that he would have done better to give the money away.35
As it eroded wealth and jeopardized standards of living, inflation bred a pervasive sense of social anxiety on the German home front. Its impact was socially divisive as well. Its root causes were remote and difficult to understand, so inflation invited suspicions towards more tangible objects of frustration, such as the farmers and merchants who charged the ever higher prices.36 Finally, inflation also became a motor of social change, for some groups of Germans were more vulnerable to its effects than others.
War and social class
The war affected every German who endured it, but its impact was by no means uniform. The experience of war varied among the basic groups of which German society was composed. These groups displayed various characteristics in common, which bred shared experiences, a sense of shared identity, and common understandings of the war’s meaning. The most basic of these groups were social classes, which were founded on the common circumstances in which people labored in order to support themselves and their families. Class relations rested on material differences of income, property, and other wealth, as well as on the status and the access to education, privilege, and power that material advantages conferred. Along this axis of social relations, the war occasioned fundamental shifts as it distributed its hardships.37
The war mobilized vast resources for purposes of destruction. It commanded, in other words, the destruction of vast amounts of wealth. Four years of this enterprise resulted in general social immiseration. The overwhelming majority of Germans had significantly less real wealth at the end of the war than they had at the beginning. A rise in the cost of living index of 200 percent between 1914 and 1918 meant that anyone whose income failed to keep pace suffered a net material loss during the war. Nearly everyone did. The costs were not equally shared, however. Some groups lost much more than others, and social relationships became unsettled.
The war generated a massive shift of material resources towards the sectors of the economy that produced the tools of destruction. The war’s social “winners” were to be found here. The war provided good business for the firms that were directly engaged in producing arms and munitions, the great industrial plants that dominated the war corporations and fed on the generous terms of war contracts (and on the indifferent efforts of the government to regulate the attendant profits). By 1917 the net profits of the Krupp steel works had increased two and a half times over the prewar average. Profits were up a comparable amount in the Cologne Gunpowder Factory and ten times over prewar levels in the mammoth Rhine Metal Works in Düsseldorf.38 Adjusting for inflation, dividends were up an average of 175 percent among companies that processed iron on a large scale and almost 200 percent in the chemical industry.39 These figures documented an obvious social truth: certain branches of German industry did very well during the war, as did their owners, stockholders, managers, and other leading employees. Germans who were in the economic orbit of the large companies that dominated mining and metal processing, chemicals, and electrical equipment were thus in the best position to withstand the social ravages of the war.
The further an enterprise was removed from this orbit, the more perilous became the condition of those who were associated with it. While the war encouraged the concentration of industrial power in huge concerns that were directly involved in the production of weapons and munitions, firms that were devoted to less essential manufactures tended to be smaller. These firms faced myriad problems. While the value of their capital plants provided some protection against inflation, a distorted market made survival difficult amid rationed supplies and controlled prices, reduced sales and profits, and the departure of workers and managers to the army or other, more essential and better-paying industries. The plight of these firms registered in the fluctuation of their workforce. While the number of workers rose 44 percent in war industries between 1913 and 1918, it fell 21 percent over the same period in “intermediate” firms, which produced for both civilian and military purposes; and it declined 40 percent in firms that produced only for civilian purposes.40 In Barmen, the number of workers in the textile plants declined 60 percent during the war, while it rose over 50 percent in the metalworking factories.41 These figures reflected the collapse of countless small businesses, whose owners or workers were drafted into the army or whose supplies of coal and other essential materials dwindled. Particularly after the Hindenburg Program intensified the purge of non-military production, closure was a
common fate among small firms (and many larger ones) that had produced or processed food, textiles, reading materials, and buildings. In Wesel, a fortress town of about 20,000, some 300 artisans and other small businessmen were inducted; and by the winter of 1916–17 about a half of them had been compelled to shut down their operations.42 At the same time, however, many small businesses did persevere as contractors or subcontractors in the many niches of the war economy. Saddlers, locksmiths, watchmakers, box-makers, and other craftsmen learned that the price of survival was the quick adjustment of their shops and output to the tastes of the military procurement offices.
Proximity to war production not only governed the material fortunes of owners, managers, and stockholders of industrial firms; it affected workers as well. Here the statistics told an unambiguous story (see Table 3). Although their wages failed to keep pace with the rise in the cost of living, male workers who were employed in war production fared significantly better than others, particularly when their labor was skilled, as it was in many phases of metal processing and electrical work. Because their labor was essential to the war effort, most of the workers employed in these critical plants escaped military service and were otherwise well treated by employers and government officials. These workers were encouraged to organize, and, in part because of the protection that unionization brought them, they were relatively well paid – often in food and other material provisions, as well as wages. The median wages for skilled metalworkers in Düsseldorf nearly trebled during the war. The higher wages reflected as well the long hours that prevailed in the armament factories, however, such as the Düsseldorf Pipes and Iron Rolling Works, where twelve-hour shifts were not unusual.43
Table 3 Industrial wage indices (male workers), 1914–18
* * *
Wage index, 1914Wage index, 1918Cost of living index, 1918
War industries: metals, machinery, chemicals, electrical 100 252 313
Intermediate industries: stone, wood, leather, paper 100 209 313
Civilian industries: food, textiles, clothing, printing 100 181 313
* * *
Source: Kocka, Klassengesellschaft im Krieg, 14.
Workers who were employed in firms less immediately involved in war production faced greater jeopardy from the erosion of their livelihoods. The most vulnerable category of employee comprised so-called white-collar or clerical workers, who typically worked for salaries or commissions in non-manual occupations. Quite apart from the fact that many of them were in the army, their vulnerability was due to central characteristics of their social existence in war: they tended to lack capital assets and the protection of collective bargaining. Some statistics suggest the dimensions of the problem (see Table 4). All categories of these white-collar employees lost real wealth to inflation – even those who were employed by Siemens, the giant electrical firm that played host to innumerable military contracts. Moreover, excepting only the lower-level public officials, all clerical and public employees found their incomes more severely eroded in the rising cost of living than did industrial workers as a group.
Table 4 White-collar wage indices, 1914–18
* * *
Pay index, 1914Pay index, 1918Cost of living index, 1918
Shop clerks 100 118* 285*
High-level public officials 100 147 313
Mid-level public officials 100 172 313
Low-level public officials 100 218 313
* * *
* 1917.
Source: Kocka, Klassengesellschaft im Krieg, 72–4.
The war brought material hardship to nearly everyone. Even workers in the war industries had to contend with increasing shortages of the most basic commodities; and no one’s wages kept pace with inflation on the black market. Other kinds of social problems, which were psychological as well as material, were more subtle and durable. These had to do with collective identities or self-perceptions among social groups. The war drew attention to the broad gulf that separated the rich from the poor – the Germans with wealth and property from those without. In 1916 this second group received official bureaucratic designation as Minderbemittelt – people of “lesser means,” who earned less than a subsistence income and were accordingly entitled to public subsidies. This group, which comprised a significant majority of the men, women, and children in virtually every German city, endured the worst failures and humiliations of the rations system, for they lacked the resources to circumvent it. As the war continued, these experiences nourished resentment among this official lower class against the privileges of wealth, which were emphasized daily by the absence of the rich – those Germans for whom “price plays no role” – among the people who queued up for rations.
A second critical focus of tension lay along the divide that marked off Germans “of lesser means.” The war threatened to close the social fissure that had separated salaried from non-salaried employees, white-collar from blue-collar workers – or, in the terms in which these distinctions were conventionally defined, the lower tiers of the middle class from the industrial working class. The claims of salaried employees to higher social status had traditionally rested on the purported respectability and independence of their work and lifestyle. White-collar workers did not work with their hands, nor for hourly wages. They did not bargain collectively in unions; before the war they had generally earned more than manual workers, and some at least had modest savings. The war eroded the material foundations of these self-perceptions and status claims. Many white-collar workers fell during the war into the category “of lesser means.” Inflation hit them as a group harder than it did industrial workers. Major sectors of the proletariat emerged from the war earning more money than salaried employees, who not only tended to disdain unionization but had also invested their savings in war bonds.
Among these salaried public employees, the higher officials – from judges to university professors – represented a special case. Their claims to social distinction were based on their academic credentials: the fact that they had studied at a university. They faced the greatest relative erosion of their material circumstances, however; not only did their salaries stagnate and their savings dwindle, but they also could not qualify for the public subsidies that helped support their lower-ranking colleagues. They shared this fate with many highly educated professionals, such as lawyers and journalists. The consequence was to breed special insecurity among this articulate group, which comprised much of the country’s cultural and political leadership. Although it did not reach catastrophic proportions until the hyperinflation of the postwar era wrought the financial ruin of much of Germany’s middle class, the seeds of social crisis were planted during the war. One clear sign of trouble was the growing frequency with which public officials and other groups of salaried employees began to organize – and even to strike – towards the end of the war, for this step represented a fundamental departure from the behavior prescribed in the social image of these people.
The war thus promoted important shifts of social power in Germany even as it emphasized class divides. In the reorganization of the economy, social survival seemed to require strategic location, size, and organization. The benefits of this principle accrued to selected sectors of the industrial bourgeoisie and the blue-collar workforce, which could exploit their central positions in the war economy at least to temper their immiseration. Large segments of the German lower middle class, both small businesspeople and salaried employees, were not so fortunate. Not only did they bear the brunt of the inflation, but the war also challenged their sense of respectability and social distinction. Images of smallness, duress, and helplessness – of a petite bourgeoisie squeezed between big capital and big labor – circulated now with special power in these sectors of society. Images such as these provided at least a sense of bearing for the vulnerable, as the war assaulted long-standing relationships among social groups that had been defined by differences of material circumstance. But class represented only one category of relations that the war challenged.
Gender
Like class, gender was a basic condition of social experience during the war. It was geared to a different, physiological order of circumstances. The relationship between class and gender was nonetheless a cultural phenomenon, and it was inextricably reciprocal. Patterns of gender relations were governing characteristics of class, just as social factors conditioned the experience – and even the definition – of gender. The classic instance of this truth was the doctrine of “separate spheres.” In segregating the private from the public realm, and in defining “proper” women as inhabitants of the home, this doctrine sanctioned gender roles that were more prevalent – and possible – among middle-class families in Germany (and elsewhere) than among working-class households, which depended to greater degrees on the gainful employment of women.
Imperial Germany and the Great War, 1914–1918 Page 18
