The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class
circles to this day – but, rather, to show that all the countries involved in the war knew that they couldn’t afford to pay for their folly. The losers would have to do that.
    On the German side, the chief way of ensuring that the country recovered quickly after the hoped-for victory was to put the Reich in a situation of such crushing superiority that it could do, and take, what it wanted. And then came the question of compensation. As Helfferich had put it in his famous speech on the 1915 budget, it was ‘the instigators of this war who would have to bear this lead weight of billions’. And he had been right. It just depended who, when the savage music of mass slaughter stopped, was going to be found sitting in the chair marked ‘instigator’.
    A reparations bill of 5 million gold francs – amounting at the time to 25 per cent of the defeated country’s annual gross domestic product – had been imposed by Bismarck on the French in 1871. This huge windfall to the Reich’s economy was said to have helped fuel the near-disastrous boom that followed German unification. The 1871 imposition was not to make restitution for damage to Germany. No fighting had taken place on German soil. Again, in the First World War, any reparations demanded by Germany would not have been for devastation of the Reich’s territory, resources or infrastructure, for (apart from a few early and fairly ineffectual aerial bombing raids and some fighting in German Alsace-Lorraine) there had been none. So what would Germany have demanded? Enough to compensate her for the quite enormous cost of the war?
    Some indication of how a victorious Germany might have treated the Entente in the war’s aftermath came with the Treaty of Brest-Litovsk, signed early in 1918.
    Imperial Russia’s huge but mediocre and often poorly led army had been slowly pushed back out of Poland and most of the Baltic lands and into what is now Ukraine and Belarus. There had been some temporary Russian successes. The so-called Brusilov Offensive in the summer of 1916, named after the general who planned and launched it, had at great cost forced the Austro-Hungarian forces to abandon their early gains. Nevertheless, the story of Russia’s participation in the war became one of ineffectuality at the front and increasing political and social chaos at home.
    By February 1917, the British Military Attaché to the Russian army, Colonel Knox, sent his superiors in London a message on the situation there that augured disaster. More than a million Russian soldiers had been counted killed, and a further 2 million missing or taken prisoner. Another million had deserted. ‘These men,’ Knox wrote, ‘were living quietly in their villages, unmolested by the authorities, their presence concealed by the village communes, who profited by their labour.’ 15
    In the course of February and March, sections of the Tsar’s army began to disobey orders and in Russia’s cities there were huge demonstrations against the war and the regime, followed by strikes in key industries. On 12 March, the soldiers of the 17,000-strong garrison in the capital, Petrograd, * joined the demonstrators and the old regime’s days were numbered.
    The overthrow of the Tsar led to the establishment of a weak provisional government dominated by the moderate left. Committed to a democratic system, it nevertheless did little to change the situation at home or at the front, except perhaps for the worse. The radical ‘street’ and the newly established soldiers’ committees wielded just as much power as the bureaucracy and its new reformist masters. Both the new republican government and the military command were forced to share power with unofficial, hastily elected ‘Soviets’ and their appointed commissars. The death penalty for offences against military discipline was abolished.
    In July 1917, an attempted assault by this hastily democratised Russian army on the German/Austro-Hungarian defences (named the

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