Monday, May 07, 2012

Again on hyperinflation during the Weimar Republic and Hitler's rise to power

I posted back in January about Paul Krugman commenting on what has long been one of my pet peeves, the idea that the German hyperinflation of 1923 led directly to Hitler and his Nazi Party (NSDAP) taking power in 1933, nine years later.

M E Synon also posted on that same topic in February, Merkel forgets Germany's history: 'Austerity not inflation gave us Hitler' Daily Mail 02/07/2012:

... here are some lines from a letter to the editor in the Financial Times yesterday. It comes from Anthony Murray in Kingston-on-Thames.

Murray recommends that readers should study the record of Heinrich Bruning, a predecessor of Adolf Hitler as German chancellor. They could discover 'the real reason for Germany's descent into Nazism.'

'Monetarist fetishists have helped to circulate a pernicious falsehood that the Weimar uber-inflation caused the rise of Hitler.'

'The wild inflation storm occured in 1924. [sic; it was actually 1923 - Bruce] The Weimar economy recovered from it.'

'The Nazis came to power only in 1933, as an immediate consequence of the deflationary spiral that resulted from what Mr Wolf [commentator Martin Wolf, in an earlier article] refers to aptly as the "catastrophic austerity" introduced by Bruning.'
In my earlier post, I included this table from Peter Gay's The Dilemma of Democratic Socialism: Eduard Bernstein's Challenge to Marx (1952):

Repeating what I wrote in January:

The hyper-inflation incident was primarily a phenomenon of 1923. This is the period about which those stories are told about a loaf of bread costing a wheelbarrow full of money or whatever. A new currency was introduced late in 1923 and inflation stabilized.

This chart of election results shows the election results in millions of votes for the NSDAP (National Socialists, Nazi Party). In 1924, the year following the hyper-inflation, the NSDAP got 0.9 million votes. That fell to 0.8 million in 1928. Then in rose dramatically to 6.4 million in 1930 and 13.7 million in July of 1932. What else might have happened between 1924 and 1930? What could it have been?

Oh, yeah, that Great Depression thing. Economic crash, soaring unemployment. And Heinrich Brüning's Chancellorship of 1930-32.

None of this implies that the hyper-inflation of the early 1920s had no lasting effect. It's just that it's hard to match the notion that hyper-inflation brought the Nazis to power with the historical record as shown in election results.

While we're on the subject, it's worth noting that the NSDAP vote dropped significantly from the July 1932 election to November 1932. It's true that Hitler came to power mostly through electoral means. But Hitler's  feverish politicking that got him appointed Chancellor at the end of January 1933 was driven by his falling electoral support.
On the hyperinflation itself, see also Alexander Jung, Millions, Billions, Trillions: Germany in the Era of Hyperinflation Spiegel International 08/14/2009 14.08.2009

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