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As it was, defeat gutted the German economy. Colonies, working capital, merchant marine, chattels and domestic animals were taken by the Allies. Lorraine's minette iron ore, historic complement to Ruhr coking coal, reverted to France. Some of the gold had gone for raw materials, shipped in via Holland and Scandinavia, and the rest went after the War in the year in which Germany could get no credit. A strained industrial machine deteriorated still further during the chaotic years of sporadic revolution and French occupation of the Ruhr, and when the inflation came there were no marginal producers to be jogged into action by the rise in prices. So the rise in prices failed to stimulate increased production of real wealth. It worked only to impoverish the nation by making its money valueless.
Dawes to Hitler. Practically no one profited from the inflation except industrialists of the temper of greedy, gross Hugo Stinnes, who was able to expand his holdings and write off his fixed charges in worthless marks again and again. Stinnes practically owned the German economy when the mark was finally brought under control in November 1923, by the trick of backing a new currency with a first mortgage on German land and industry. Labor managed to stagger through the inflation, for the unions were powerful enough to compel continuing though laggard adjustments of wages to skyrocketing prices. The abrupt melting of savings accounts and insurance policies, however, humbled many in Germany's proud lower middle class, and if the western nations had not stepped in with the Dawes Plan and helpful loans the chaos of inflation might have terminated at once in a dictatorship.
In 1933 the sinister fruits of 1923 were finally plucked by Hitler, who spent the stabilization year of 1924 in jail working on Mem Kampf. The appeal of the dynamic jailbird, however, fell flat throughout the late '20s, for a still democratic Germany was able to buy herself five years of Indian summer prosperity with the aid of $1.377,000,000 borrowed from the U. S. and $2,373.000.000 from the rest of the world, chiefly Great Britain. The equivalent of two-thirds of the borrowed funds went out again as reparations payments, but the rest was spent to finance a local boom. Those were the fat years in which Germany revamped her industrial machine, built 1.432,843 (1926-30) houses, and dotted her cities with parks, athletic stadia, modernistic churches, skyscrapers, new city halls and post offices and monuments.
The depression called a halt to all that. And with other nations holding up their internal price levels by prohibitive tariffs, import quotas and preference systems, the German exporter began to lose hope that he would ever recover. Currency devaluation in England, Japan and the U.S. compounded the difficulties, for changed relations in the value of money left the German price level too high to appeal to the foreign buyer. And the Germans themselves did not dare tinker with the mark t0 meet the competition in depreciation. Memories of the 1923 inflation were too strong.