ABSTRACT
The years from 1919 to 1923 form naturally a distinct period in which all financial relations—and, indeed, economic relations generally—were dominated by inflation and its effects. This chapter provides the increase in the note circulation of the Reichsbank, and also the depreciation of the mark as measured by the dollar exchange. Allowance being made for current depreciation of the mark, successive discount rates of the Reichsbank were not really high, often indeed represented a negative rate of real interest. The influence of inflation upon bank deposits—including current account balances—was very striking, although the true nature of this influence was not at first apparent. There was a marked revival of stock exchange activity in the later years of War. Partly as a result of the resumption of foreign trade, and partly because, despite all governmental prohibitions, foreign bills and foreign notes were the object of a great deal of speculation, there was also a great increase in dealings in foreign exchange.
