introduction

When the National Socialist regime collapsed in May 1945, the war had left behind not only human suffering and destruction but also a massive financial burden. The indebtedness of the Reich alone has been estimated at more than 400 billion reichsmark, more than four times the prewar national income.

Although the greatly inflated money supply did not have a direct effect on demand (pentup inflation) on account of the price and wage freezes still in effect at the end of the war, it nonetheless hung like the sword of Damocles over Germany's economic and financial development. Moreover, despite officially controlled prices, the fall in the value of money was obvious - not least on the black market. Until a solution could be found to the financial consequences of the war, it would be impossible for Germany to return to normal economic (and political) conditions and thus come to terms with the other burdens left by the war. If no solution were forthcoming or if it were to be long delayed, creeping economic paralysis threatened to develop into a full-scale disaster. It is not surprising, then, that the “money question” had become prominent in both German1 and Allied minds even before the war ended. It soon became apparent, of course, that this was not a purely technical issue of finance: Important political decisions had to be made before the financial consequences of the war could be dealt with.