Dhe unprecedented events in the foreign exchange market are gradually affecting the economy, production and trade. The foreign currencies are still about three times as high as at the end of December: this new collapse of our currency is the fruit of the Franco-Belgian Ruhr action. But in the meantime the foreign currencies had already stood at two and a half times their current level. And this fantastic curve from 7,000 to 50,000 to 20,000 marks for the dollar in a period of not much more than four weeks distinguishes this development from all previous ones. It is, it must be said, a serious charge against the management of the Reichsbank, which in fact and by law is primarily responsible for looking after the currency.
Again and again in the past few years and now again, the Reichsbank has been called upon by a wide variety of admonishers to adopt an active policy against the collapse of the currency – again and again it has let things go with half or complete inactivity, citing the fact that it is opposed to the elementary violence of the the factors that determine currency development are powerless against the burden of reparations, financial misery and the unfavorable balance of trade. However, developments over the past fortnight have shown that an active monetary policy actually has considerably more influence than even those who, like us, had called for such an active policy from the outset had assumed.
Up to now the Reichsbank has not had to use its gold holdings at all to support the currency. And at the same time it turned out that in addition to the direct intervention activity by providing foreign exchange for urgent needs, another measure gained great importance, which actually only meant the disclosure of a previously tolerated abuse.
The Reichsbank has now made it necessary for numerous speculative buyers of foreign currency to surrender the foreign currency by preventing foreign currency lending and by scrutinizing the bills of exchange submitted to it for discount, which is primarily intended to eliminate purely financial bills of exchange. It has thus proved that it could and should have taken action against currency speculation much earlier with the same means and with the same success. Now she has let the mark fall into the abyss until she – or someone else! – came to realize that this could lead to fatality. The economy, however, which above all must wish for the smoothest possible development, even in the face of currency collapse, has been exposed to fluctuations of an unprecedented magnitude within a few weeks. This causes severe shocks for them.
The stock exchange has taken part in the fluctuations in exchange rates to a great extent in the valuation of the shares. A gigantic numerical rate increase with rising exchange rates is followed by a deep fall in exchange rates when the exchange rates fall. For the productive economy, the development of share prices over the last few weeks is primarily due to the fact that the purchasing power that flowed from speculative gains and the resulting demand for goods will no longer be available for the foreseeable future. Much more important for them, however, is the price development on the commodity markets. Here the actual design is by no means uniform. But a line of development that is dangerous in the long run can already be seen.