After reading my post about the “Depression Pocketbook,” my husband asked if I actually had any verifiable proof that anyone in Germany (or anywhere else) bought bread (or anything else) with a wheelbarrow full of money. It’s something we’ve both heard people say, but I must admit, I couldn’t quote a source.
Is it an urban legend? Is it something historians have invented because it sounds good? God knows when I was in school, I was told medieval people believed the world was flat. Not only was that never true (and there’s evidence from their maps and writings to prove it), but the idea can actually be traced back to a writer (I believe it was Nathaniel Hawthorne) who first used it in his popular biography of Christopher Columbus. It was taken for truth and repeated until it became reality and the truth became lost.
Is that what happened with the wheelbarrow-full-of-money story?
True Tales from Weimar
The story of hyperinflation in Germany during the Weimar Republic is easily verifiable. A bad economy coupled with an incompetent government was one of the reasons that Hitler was able to take over. (His first attempted takeover, the Beer Hall Putsch, was in 1923. But even though it failed, the National Socialists won a number of seats in the next election and even more in the following one. When he had enough people in power, he was able to take over rather easily.)
Paper Money by “Adam Smith” (George J.W. Goodman) has a few tales of people who lived through the Weimar hyperinflationary period:
“My father was a lawyer,” says Walter Levy, an internationally known German-born oil consultant in New York, “and he had taken out an insurance policy in 1903, and every month he had made the payments faithfully. It was a 20-year policy, and when it came due, he cashed it in and bought a single loaf of bread.”
The Berlin publisher Leopold Ullstein wrote that an American visitor tipped their cook one dollar. The family convened, and it was decided that a trust fund should be set up in a Berlin bank with the cook as beneficiary, the bank to administer and invest the dollar. [By 1923, one dollar was worth one trillion marks.]
Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. “If you want to save money,” he was told, “and you want two cups of coffee, you should order them both at the same time.”
A factory worker described payday, which was every day at 11:00 a.m.: “At 11:00 in the morning a siren sounded, and everybody gathered in the factory forecourt, where a five-ton lorry was drawn up loaded brimful with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you had caught one you made a dash for the nearest shop and bought just anything that was going.”
Another quote about the situation, this time provided by Robert Blueman:
Melchior Palyi, a college instructor who saw his pay go from 10,000 marks per month to 10 million marks paid twice per day in less than two years’ time tells the story of how another professor asked him on the way out of their offices, “‘Are you taking the streetcar?’ he asked. ‘Yes,’ I said. ‘Let’s hurry. The fare will be raised by 6 pm. We may not be able to pay it.'”
So, while there was definitely a point where you would need a wheelbarrow full of money to buy a loaf of bread, did anyone actually do that?
Bartering and Denominations
Before I go any farther into my investigation, let me stop for a moment to note a couple of important things. One, physical goods were the only thing that had any real value. When people were paid, they made a run to stores not just to buy staples, like food, but to buy anything they could get. I came across one story of a woman buying all the bedpans in one store, because that was all that was left. She didn’t need a bunch of beadpans, but somewhere, someone surely needed them. Having bought them, it would then be her task to hock the bedpans to her neighbors, at a hospital, or just to strangers on the street. People who needed them would trade food or clothing or anything else that was needed.
It was a good thing most women didn’t work, because converting a brick of money into something that was actually useful could be its own full-time job.
The other thing I wanted to point out is that the German government was constantly making new denominations of money. If it cost 14,000 marks to buy two cups of coffee, and all you have are 1 mark notes, you really would need to push around a wheelbarrow full of money for every. single. purchase. So, to combat that, the government started issuing new denominations. So yesterday you might have had to carry around 14,000 one-mark notes to pay for your coffee break, but today the government has issued 10,000-mark notes, so it only takes two notes to pay for your coffee.
Of course, when inflation rises again, and your two cups of coffee costs 140,000 marks, you’re right back in the same boat: you would need 140 10,000-mark notes to pay for coffee. So the government issues 100,000-mark notes. And so on.
Meanwhile, a single-mark note no longer has any real value because it would take a lot more than wheelbarrow to cart around 140,000 one-mark notes. That’s when you start to see people doing some pretty strange things with their money.
101 Uses for Useless Money
Another commonly-stated “use” for the money, was as wallpaper. I found a couple of different pictures that seem to support that as well.
But what about those elusive wheelbarrows?
When Times Get Tough, Break Out the Satire
I got a bit of a break in this cold (hard cash) case . The history department at the University of California, Santa Barbara, said, “Cartoons of the time depicted people with wheelbarrows full of money who could not buy a loaf of bread.”
Another website said, “There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic, thieves would take the wheelbarrow and they would leave the money behind.”
So, whether or not people were actually using wheelbarrows to transport money, it seems that the origin of the idea is at least contemporary.
Baskets and Bags of Cash
We’re getting closer!
Inflation and the Death of a Currency
You may be wondering how we got to this point in the first place. Why would it conceivably take a wheelbarrow of money to buy a loaf of bread? And why did it keep getting worse?
When you get right down to it, what value does a small rectangle of fabric with some ink on it really have? Unlike gold or silver, it can’t be changed into jewelry or something useful, like silverware. Unlike food, it can’t be eaten. Unlike gasoline, it can’t fuel a car or heavy equipment. Unlike a computer or bicycle, it’s not useful. And given its small size, and relative to the price of a bolt of cotton/linen blend fabric, it wouldn’t even make good clothing.
When paper money (I use the term “paper” loosely; dollar bills are
actually made from a cotton/linen blend) is not fully backed by something real (like gold or silver), it functions as a trade item only because people believe in it. My boss can pay me for my labor in dollar bills because I have every confidence that I can take those same dollar bills to the grocery story and get a pizza, a Redbox movie, and an unintentionally-hilarious Nora Robert novel. But if I was afraid that by the time I got to the grocery store, my paycheck wouldn’t even rent me a movie, I’d insist she either give me a lot more dollars, or pay me in something useful, like food and gasoline and clothing.
What causes the system to break? Why do people lose confidence in their currency? Old Picture of the Day actually explains how inflation (using Weimar as an example) works:
Germany has a bushel of wheat. If it used the bushel of wheat to pay a creditor nation [Germany owed millions of dollars in war reparations post-WWI], it would have no food to feed its people. If it used it to feed its people, it would default on its national debt. So, it decided to print 10 marks. Five of the marks were sent help pay the national debt (monetization of debt), and five was injected into the economy to try and spur economic activity (stimulus, or quantitative easing).
Also, remember, that somewhere out in Germany was a person with 5 marks that could have used it to buy the bushel of wheat to begin with. Now, this is what happens. That country that received the 5 marks wants something tangible for the 5 marks, so it tries to buy the bushel of wheat from Germany. The person that got the 5 marks through the stimulus program wants to buy the bushel of wheat, and the original person who had 5 marks to begin with wants to buy the bushel of wheat. Notice that even though there is now 15 marks, there is still only ONE bushel of wheat. The person who originally had 5 marks, the saver, finds that he is facing stiff competition for the purchase of the wheat. He finds that his 5 marks will no longer buy the wheat [because the farmer sells to the highest bidder, and someone else may offer 10 marks for it]. The creditor nation that was paid 5 marks finds it was not a very good deal, because it is not enough to buy the bushel of wheat. The person who received the 5 marks through the stimulus program also finds that it will not buy the bushel of wheat. So, in the end, pretty much everyone loses.
So, to continue this example, let’s say the farmer decides to charge 10 marks for his wheat and a miller buys it. The miller then grinds it up and charges twice as much for the bag of flour as he did before because the price of wheat has doubled and he needs to be sure that, at the end of the day, he has enough profit leftover to go back to the farmer and buy some more wheat.
Then along comes a baker, who buys the flour and has to turn around and charge double for a loaf of bread. Now the worker who is on his way to work can’t buy a loaf for lunch, so he demands his employer pay him more. And the farmer who got double the usual price for wheat finds that everything else has doubled as well, so he’s not really any richer than he was yesterday.
Then the government prints out additional money, there’s a bidding-war for commodities, which pushes up the price, and things start all over again.
Which brings us back, once again, to the wheelbarrow.
Wheelbarrows of Cash
I did find two pictures of wheelbarrows full of money that are supposedly from the Weimar Republic.
This image is from The Washington Post (where they also write that Germans were shopping with wheelbarrows full of cash). But one website with a copy of the image says that it’s a banker wheeling money out to his tellers before the start of business, so it doesn’t quite fulfill our hunt for the elusive wheelbarrow-full-of-money-for-shopping.
This tiny picture of an elderly couple in front of a bank with a wheelbarrow is all over the internet as being from the Weimar Republic, too. It’s not shopping, but obviously they were having to cart large sums of money around town–at least to the bank.
I should point out, though, that hyperinflation didn’t only occur in Germany; there have been many outbreaks, even here in America (albeit back in the 18th century).
The most recent case–and one you might have seen on television–is Zimbabwe. Like Germany, new denominations of notes kept getting printed until they literally ran out of space to put zeros. Entirely new notes were issued, but the government didn’t stop printing too much and the people never gained confidence in it, so the new notes ran up just like the old ones.
The fourth incarnation of the Zimbabwean one dollar bill was worth 10 trillion trillion original Zimbabwean dollars.
So, my answer to the question, “Did people actually shop with wheelbarrows full of cash in Germany?” is: maybe.
The inflation rate became so horrible in Germany between 1919 and 1923 that yes, it would have required a wheelbarrow (and later an entire truckload) of small-denomination bills to buy a loaf of bread. (One woman commented on a blog that her mother had lived through the Weimar Republic period, and she had said that wives would go to their husband’s job with wheelbarrows, pick up their daily pay, then hurry into town to buy whatever they could.) Yes, people burned their small denominations, papered their walls with it, and let their kids play with it.
But, as for actually paying someone with a wheelbarrow full of money in Germany, I couldn’t find any pictorial evidence.
What was probably most common is that when denominations became too small to be useful, people took their wheelbarrows full of money to the the bank, cashed them in on larger notes, then took those larger notes shopping. But one website said that many banks closed up around 11:00 AM and some employees went on strike because of the huge lines of people, so in some cases, it may not have been possible for people to cash in their small bills for larger ones. And that’s when you end up going to the store with so much cash, they have to weigh it rather than count it.
As for wheelbarrows of cash in Zimbabwe, I think I’m going to have to say that yes, that definitely happened there. Those wheelbarrows piled high with cash in the public thoroughfare aren’t there for decoration, and money is really not your first opti0n for seat cushioning.
So what happened to the German currency? It took a while, but eventually the government realized that hey,
this inflation thing isn’t good (duh!), and they ended up issuing an entirely new note (the Rentenmark) with a face value of 1 and they said one Rentenmark is equal to one billion old marks. The government did its part by not printing too many, and the people did their part by
believing in it.
“I remember,” said one Frau Barten of East Prussia, “the feeling of having just one Rentenmark to spend. I bought a small tin bread bin. Just to buy something that had a price tag for one Mark was so exciting.”
All money is a matter of belief. Credit derives from Latin, credere, “to believe.” Belief was there, the factories functioned, the farmers delivered their produce. The Central Bank kept the belief alive when it would not let even the government borrow further. (from Paper Money by “Adam Smith,” (George J.W. Goodman))
In a way, it was like the country went bankrupt. The government wiped out the old money and started from scratch, just like debtors wipe out their old debts in bankruptcy and start with a clean slate. Unfortunately, it was like every single person in the country also went through bankruptcy. All savings and investments were in the old currency, so they just vanished. Debts, too, vanished,
and while that may sound like a good thing for the person who is in debt, it’s a bad thing for the people who lent money and expected it to come back (it was an investment for the lender).
With the currency went many of the lifetime plans of average citizens. It was the custom for the bride to bring some money to a marriage; many marriages were called off. Widows dependent on insurance found themselves destitute. People who had worked a lifetime found that their pensions would not buy one cup of coffee.
[A]lthough the country functioned again, the savings were never restored, nor were the values of hard work and decency that had accompanied the savings. There was a different temper in the country, a temper that Hitler would later exploit with diabolical talent. Thomas Mann wrote: “The market woman who without batting an eyelash demanded 100 million for an egg lost the capacity for surprise. And nothing that has happened since has been insane or cruel enough to surprise her.” (from Paper Money by “Adam Smith,” (George J.W. Goodman))
Germans lost confidence in their government thanks to the hyperinflation debacle and eventually turned to Nazism as the answer to their problems.
Just six years after their currency finally stabilized, the stock market crashed and America was plunged into the Great Depression. When Herbert Hoover was not seen to be doing enough to ease the hardship on Americans, he was replaced by FDR, who promised social reforms. Blending socialist ideas (like minimum wage, unemployment pay, and social security) with the capitalistic democracy that already existed appeased the people and possibly saved us from a revolution or fascist takeover, as happened in Russia, Germany, and Italy.
Instead, the American people retained their confidence in the government, and when the government called on them to fight a war in Europe and stop driving their cars and stop taking trips and use ration coupons and grow victory gardens and go without pantyhose and rubber tires and a myriad of other things, they did so, and thus earned the nickname, “The Greatest Generation.”
As for Zimbabwe, in 2012 the people ended up giving up on their currency all together and the government quit printing it. As of today (6/1/13), there is still no national currency in Zimbabwe; people either barter or use foreign money (like U.S. dollars). (From Wikipedia)
Just to add insult to injury, a cholera epidemic struck Zimbabwe and many wheelbarrows were put into use transporting the sick.