The Dollar in Wonderland


NOTHING illustrates better the difference between the value of the American dollar and that of the inflated currency of the Central European countries, than the experience of a traveler in a second-class Vienna restaurant. This man consumed an almost luxurious dinner, and offered a twenty-dollar gold coin to the head waiter, called ‘Ober,’ when he timidly presented his bill for three hundred kronen. The waiter looked at the treasure with bewilderment, and did not seem to know how much he ought to give in change. He excused himself and went to the telephone to ask the proprietor. The waiter was heard to say, —

‘Here is a gentleman, sir, who wants to pay with a twenty-dollar gold piece. How much am I to give for it?’

Having received the landlord’s instructions, the Ober returned, and said seriously, —

‘I am to give you as much change, sir, as you desire.’

This is, perhaps, the nearest approach to the truth so far as foreign exchange, east of France and Switzerland, is concerned. Such a condition, in conjunction with the business depression which has produced it, leads, of course, to speculation. Business men, professional men, and even working men are valuta, that is exchange, mad, and gambling is their main occupation. The ambitious concentrate entirely upon foreign currencies and the American dollar is their goal. But the American dollar is beyond the reach of most of these speculators. In Vienna a one-dollar bill will buy to-day, December 10, 10,000 kronen, a sum that represented $2000 in 1914. In Russia, one of our dollars is worth 200,000 rubles. In Poland, a traveler was asked by a bank teller whether he had brought along a pushcart, when he presented $150 at the teller’s window for exchange. And the teller was quite serious about it, too. The traveler took mark notes, in denominations of 1000, for his money; and even so, his pockets were bulging out very suspiciously with the bulk of them.

Thousands of articles — economic essays, speeches, and serious papers — are being printed on the unprecedented and tragic financial chaos that has followed in the wake of the World War. Suggestions are put forward by the dozen every day, for the salvation of the bankrupt and semi-bankrupt nations. The greatest economists and financial geniuses have been pondering over remedial measures these three years; but yet conditions are getting steadily worse. A two days’ rally in the exchange market is followed by a three weeks’ continuous slump, and there is no way of stopping it; just as there does not seem to be a way of stopping the presses in the stricken countries from printing the almost valueless paper money. For the governments would find themselves unable to meet current expenses without that suicidal printing operation. It is a mad, irresistible rush toward bankruptcy.

To stabilize exchange, normal production or an international note-issuing bank would be necessary; both seem to be without the realm of possibility. With currencies inflated to such an extent, normal production is impossible, and, with production at a standstill, deflation is impossible. Raw materials cannot be purchased abroad on account of the fabulous depreciation of the currencies. The necessary adjustments of wages required by the fluctuations of the purchasing power of the money seem also to be impossible. A living wage has to be figured in millions in Russia, and in hundreds of thousands in Austria, Poland, Hungary, and other Central European countries. And the depreciation of the currencies always greatly exceeds the tardy adjustment of wages.

Of course, this brings about frequent labor troubles. Just now, for instance, the Polish mark has increased in value almost 500 per cent, and, as a consequence, there are widespread labor troubles. For the goods that are exported from Poland are paid for in foreign currency, and the amount of Polish marks that can be bought in exchange for the foreign currency has been greatly reduced. The employers are, in consequence, compelled to reduce wages, which, of course, means strikes and disorders.

Among the stricken countries there are some that actually lose money on the printing of their paper currency; the cost of printing a one-krone bill, for instance, considerably exceeds its purchasing value. The same may be said of the Russian ruble. For that reason, the Russian Government is now printing ruble notes in denominations of ten thousand rubles; and soon these notes will be the smallest denomination circulating, among the merchants at least.

However, even in the folds of tragedy there always lurks some relieving humor. And so it happens that there are many funny aspects, even of this sad aftermath of the greatest human catastrophe on record. Some people make it a hobby to collect such queer and puzzling stories, which circulate among the victims of, and the speculators in, exchange. These stories seem to upset all accepted laws of economics and of finance. Those that tell of erstwhile millionaires, princes, and magnates going begging, and formerly poor peasants weighing out bills by the pound, or using paper money to stuff their straw ticks with, are too common to relate. The peasant who is paid 100 kronen, Polish marks, or rubles for an apple, and has 200 healthy apple trees, and who is not willing, or, perhaps, not able, to count up to one hundred, will naturally resort to weighing, in order to balance accounts. The erstwhile millionaire, who finds that a suit of clothes costs him one tenth of his fortune, will certainly get into the poorhouse in a very short time if he indulges himself too frequently.

Such are the natural consequences of inflation, and of the turning topsyturvy of everything we understand by the word value. It is quite a common occurrence for owners of old issues of stock to find themselves multi-millionaires by the advance of stock values, following the depreciation of currency. Take, for instance, a share that was issued at a par of 100, seven years ago. The 100 of those times is worth, in Vienna for instance, 2000 times one hundred, that is, 200,000. Five shares, which cost the owner five hundred kronen a few years ago, make him a multi-millionaire to-day. But there are stocks issued by some great banks that have not advanced more than 400 per cent; and indeed, it may be said generally, that the cases are very rare where the stock quotations have kept pace with the money fluctuations in the opposite direction. Nowadays, a battered derby hat is worth as much as a share of the best bank. Stocks of financial institutions are not regarded as assets to be stored away as a source of income. Stocks to-day are, in fact, only media for gambling. In the years before the war the rentier. that is, the man who has retired from business and is living on the dividends of his shares, was a citizen of standing, par excellence. In France these people still retain their status, though to a lesser degree than before the war. In Central Europe the type has entirely disappeared.

Thousands of peasants, following a time-honored custom, buried their silver coins against a rainy day. These silver coins naturally retained their formal value. But the hoarding was done on such an extensive scale that, as early as 1918, all silver coins had disappeared from circulation in Germany, Austria-Hungary, Yugoslavia, Rumania, and Poland. To-day a peasant who buried one hundred five-kronen pieces is a millionaire; he can exchange the five hundred kronen in silver for one million kronen in paper money. In Austria-Hungary alone there had been in circulation something like 200,000,000 kronen worth of silver money before the war. It would take Austria the enormous sum of 200,000,000,000 kronen to buy up her half of this hoarded silver currency.

It is not an uncommon occurrence for a man who leaves London with five hundred pounds sterling, on a pleasuretrip to the Continent, and stops for several weeks in five different capitals, living in luxury and spending money lavishly, to return to London with more pounds sterling than he had when he started. A newspaper man has actually gone through this experience. He spent hundreds of thousands of kronen, marks, francs, and leis, and, mind you, did no business, did not speculate, and did no work; all he did was to change his money five or six times. The rest was done by the exchange fluctuations.

The fact of being a millionaire in those countries does not mean anything. Such a million is a million in figures, but not in value; and when such a million is converted into a sound currency, the shrinkage is fabulous. But the purchasing power of the depreciated currencies of Central Europe has not gone down quite in proportion with the decrease of their exchange value. One million Austrian kronen, which were worth before the war almost $200,000, are worth to-day not quite $120; but their purchasing value in Austria is considerably more than that. But, of course, to-day, when nobody knows what his kronen will be worth to-morrow, people are far less careful with their money than they used to be in times when their money had an unchanging cash value, and when it commanded the power of an established and firm standard. The only currency that commands respect is the ‘highexchange’ currency, such as the American, English, Swiss, and Scandinavian. Among these the dollar tops all the rest.

The dollar is supreme all over Europe, but most particularly in Central and Eastern Europe. It is strange to find that the larger the denomination of the dollar bill, the greater the value of each of its units. A hundred-dollar bill, for instance, is worth $110 worth of currency; that is, it is worth as much as 110 single one-dollar bills. It is impossible to fathom the mystery of this predilection for the one-hundred-dollar bill. It is most surprising to hear the question, in answer to an application for the exchange of $150: ‘What denominations of the dollar?’ When the questioner is asked what difference it makes, the answer is, that one-hundreddollar bills will fetch ten per cent more than the same amount in a small denomination. From that time on, the traveler who had this experience was always most obliging in changing twenty-, fifty-, and one-hundred-dollar bills to smaller denominations, when Americans made the request to that effect.

As said before, to be a millionaire means nothing in those countries. Somebody would mention, for instance, a friend of his, just casually calling attention to the glorious fact of his being a millionaire. The inevitable question would follow: ‘In dollars?’ To be a millionaire in ‘good currency’ is the only thing that commands respect.

There are two hundred million people in Central and Eastern Europe who talk, think, and dream of nothing else than ‘high-exchange’ currency. A dollar bill is a fortune. How are they to get dollar bills? Thousands of people have taken up a novel occupation. In Munich, Vienna, Warsaw, and Budapest the possession of a New York or a Chicago telephone directory constitutes a valuable business asset. There are so many thousands of addresses in it! All Americans, every one of them the owner of a certain number of dollar bills! Having nothing to offer in exchange for the dollar, the only expedient left is to beg for it. Thousands of men are offering American addresses, at five dollars in United States currency per thousand; also, texts of most ingenious begging letters. The begging letters usually pretend to come from a poor, sick woman, mother of five children, whose husband was killed in the war; or from a sixteen-year-old, beautiful girl (photo inclosed), who begs for just one dollar to save her aged mother and younger sisters from starvation; adding, with tearful entreaty, that, unless she gets the dollar, she will have no other choice than to sell her honor to the first-comer. Now, if this story does not touch you to the extent of a dollar, nothing will. The writer, however, is not a sixteen-year-old girl, but a fifty-year-old swindler, frequently of some prison experience, who in this way receives donations from abroad to the tune of fifty or a hundred dollars a month, and lives in great luxury. For such an amount is a princely income in that part of the world.

Others have other means of getting hold of dollars. Returning immigrants receive special attention from the dollar-hunters. But, in these cases, it is not begging, but an exchange manipulation, that is the means to the end. However, in order to protect their returning nationals, most of the governments have state officials meet every incoming steamer, and these take their countrymen under their wings, and get their dollars from them for the benefit of the government, which serene body is just as anxious to get hold of the American dollar as any of its greedy citizens. The governments need the foreign high exchange to keep their foreign representatives going. A committee that is to go abroad on some mission would have to carry bales of money to cover expenses, if there was no ‘ high exchange ’ available. Governments have a special money-press running to turn out the paper that will exchange the dollars of the returning immigrants; one or more millions for every thousand dollars. In some cases, 10,000 one-thousand-kronen bills for ten onehundred-dollar bills. Imagine the roll: ten thousand big bills, three times the size of a dollar bill! Ten pockets will not hold it!


A newspaper man, traveling from Switzerland to Austria, had a very amusing experience, furnishing an excellent illustration of topsy-turvydom in the foreign exchanges. Perhaps the story is best told in his own words.

‘I took the express to Vienna, in Zürich. It was lunch-time. I entered the dining-car, and had a table-d’hôte lunch on Swiss territory. In payment I tendered a ten-franc note of Swiss money. I received two francs in change, the dinner costing me eight francs. In the course of the afternoon, we crossed the Swiss frontier into Austrian territory. Dinner-time came. Again I went to the dining-car, and I had a tabled’hôte dinner, this time in Austria. It was substantially the same meal I had had at noon in Switzerland, and was served by the same caterer. The obliging waiter, the same who waited on me in Switzerland only six hours before, gave me his reckoning in Austrian currency, and accepting the two Swiss francs that I tendered in payment, gave me 1700 Austrian kronen in change. The dinner cost 500 kronen; the two Swiss francs were worth 2200 kronen that day. For the change that the waiter gave me from my two Swiss francs I hired a room in a good Vienna hotel at 700 kronen a day, and on the remaining thousand kronen I lived a whole day in good style.’

In short, in Switzerland they charge eight francs for a table-d’hôte dinner. These eight francs are worth about a dollar and a half in American currency. These eight francs are sufficient in Vienna to pay a traveler’s hotel bill and all his meals for four days,

A Hungarian gentleman had a very profitable experience with Swiss francs. He forgot to declare some cigars for duty. This happened in July, 1916, when a Swiss franc was worth one Hungarian crown. An argument arose between the homeward-bound Hungarian traveler and the Swiss customs officer. A blow followed, and the consequence was that the Swiss gendarme arrested the traveler. The judge ruled that the prisoner was to deposit one thousand francs with the court, and could then continue his trip. The fine was to be deducted from that sum, and the rest of the money was to reach him through the Swiss consulate in Budapest. It was four years before the Hungarian got his money. In 1916 the thousand francs were equal to a thousand Hungarian kronen. From these a fine of twenty-five francs was to be deducted. Had the Hungarian received his money in 1916, the amount would have been simply 975 Hungarian kronen. But in 1920, when the 975 francs finally reached him, he received 260,000 Hungarian kronen. The blow that he gave the Swiss customs officer netted him over a quarter of a million!

The constant depreciation of currency seems to have a deteriorating influence upon morality. Newspapers are full of political scandals, public corruption, and the misdoings of bank swindlers, defalcators, and petty thieves. The respect for property is diminishing in proportion to its higher money value; and the amounts in which dishonesty deals are counted in millions. It is not worth while to steal less. The former monetary unit has no value. The absolute worthlessness of it is clearly demonstrated by the Munich brewery which named its bottled beer ‘Kronen Bier,’ using a one-krone note as a label on its bottles; for it would cost more to have labels printed than to buy one-krone notes. It has been pointed out before, that the purchasing value of the Austrian krone is far below its cost of printing.

Everywhere is chaos, anarchy, and topsy-turvydom. Take the case of the three German brothers, of whom Hans Lichtig, a prominent manufacturer of copper utensils is the eldest, Jacob, a stock-exchange broker, the second, and Adolph the youngest. Adolph was the black sheep of the family — a waster, who never did a day’s work in his life. It happened in 1916 that the three brothers inherited from an uncle in Holland 100,000 Dutch guilders each. The two elder and respectable brothers decided that Adolph was not to be trusted with his 100,000 guilders, and they got a court order declaring him a minor, and restraining the executors from paying over his legacy to him. Adolph’s money was deposited in a Dutch bank at The Hague, until such time as his brothers should declare him able to manage his own affairs. Thus it happened that Adolph was living on a pittance doled out to him by his two elder brothers, who, being good patriots, invested their 100,000 guilders in war-loans. In 1920, they discovered that their war-bonds were worth next to nothing. The value of the copperutensil factory was also considerably reduced, on account of the labor troubles and the business depression. The second brother did not do any better. But Adolph still had his 100,000 guilders, now worth six million German marks, though originally they represented only about 200,000 marks. Adolph became the support and the idol of the family.

Money being worth next to nothing, the governments in Central Europe are devising other means of obtaining revenue. The first step in this direction was taken by the Hungarian Government, which takes land-taxes from landlords owning more than a thousand acres. These taxes are paid in kind, that is, a certain percentage of the land is expropriated by the Government and sold to the peasants. The maximum acreage that may be owned by one man is 1000 acres. The object of the confiscation is not only to provide revenue for the state, but also to reduce all holdings to that maximum. Nor does the confiscation extend to the whole acreage exceeding the maximum, at one time; rather, it is distributed over a number of years, until the holdings have been reduced to the allowable maximum.

The incomes of these big landlords are enormous; for the prices of agricultural products exceed all limits, thousands being paid for a bushel of grain. Taking the value of land at 40,000 kronen an acre, the taxes would amount to about a hundred acres a year in cases where estates larger than a thousand acres are involved. The big landowners, most of whom belong to the nobility and clergy, are vehemently opposed to this property tax; but the landless peasantry is only too eager to get a share of the soil that still remains, of ‘Crippled Hungary ’ as the Magyars are fond of calling their disintegrated country, which has been parceled up into four parts, leaving to the Hungarians only one third of their former country.

In Moscow, Berlin, Vienna, Budapest, and, in fact, in every large city in Central and Eastern Europe there are, besides the official stock exchange, money exchanges on almost every corner. Coffeehouses, saloons, or ordinary inns, where business men gather, are recognized miniature exchanges, which often dictate the quotations to the great national exchanges of the capitals. There are in a place of this kind two hundred to three hundred men. They are veritable curb markets, dealing in everything, but chiefly in foreign exchanges. An Austrian clerk, at the end of his tether, discovered by chance two hundred coupons of an English soap-manufacturer, advertising his products in the English language. The clerk took these coupons to one of these coffeehouse exchanges, and offered them to one of the brokers as Berengarian currency.

‘What are they quoted at?’ asked the broker.

‘Twenty kronen the lotu,' answered the clerk, giving to the imaginary Berengarian currency the fanciful name, lotu.

‘Done,’ said the broker, and paid the clerk 20 kronen for each coupon.

The next day the clerk’s conscience began to trouble him; so he returned to the coffeehouse and said to the broker: ‘Look here, sir, I am very sorry, but I can’t accept your money for those things I sold you yesterday. Here is your money back.’

‘No, no, my dear fellow; I sold them at twenty-eight, and now you could not buy them for less than 40 kronen a lotu. If you wait a day or two, they might drop back to 20 again.’

The shifting of values and the greatly unsettled conditions in trade and finance have, as may be seen, totally upset all moral laws. To cheat the state, to rob the treasury, has become a praiseworthy deed; to transact crooked business is not looked upon as unfair; nor is it at all unusual — in Central Europe, at least. Mail robberies, tampering with valuable packages, are matters of everyday occurrence, and, indeed, are part of the routine. A New York foreign-exchange banker, authorized by the Hungarian Government to exchange old Hungarian paper currency against the newly issued bills, states that every package of such newly issued bills that comes to him by mail, sealed, wrapped in several layers of linen, has been tampered with. Thus, from one package three million kronen of paper money was extracted en route; from another, only nine one-hundredkronen notes were missing, each worth about twelve cents. How they managed to open these packages is difficult to say.

‘It was quite a mystery,’ said the banker, ‘why this particular thief stole only nine bills out of that package containing fifteen million kronen. I presume, when he saw they were Hungarian notes, he did n’t think it worth while to take any more of them.’


The salaried classes and the wageearners of Central Europe are hardest hit by these conditions. No salary can really be high enough to afford them a bare living — indeed, not even mere semi-starvation. Every wage-earner or salaried worker has to speculate, barter, or steal in order to make both ends meet. The condition of judges, teachers, military officers, postal clerks, letter-carriers, and all other civil servants who receive salaries, is a desperate one, indeed. A college professor in the Central European states receives a salary that is barely equivalent to ten dollars a month, and in many cases to as little as three dollars a month. A postal clerk in Vienna, receiving a monthly salary of 5000 kronen, gets in fact an equivalent of only about 55 cents in United States currency. The letter-carriers are in the same plight, and they deserve great credit for not robbing all the American mail they deliver. It must, indeed, require a heroic effort not to succumb to the temptation of getting at the contents of American letters, most of which contain dollar bills.

But not only unimportant people have to put up with hardships. Great officeholders are hard put, also. The Hungarian Regent, with all his prerogatives of a king, receives only three million kronen a year, — equivalent to $3000, — on which he has to keep up a court not less pretentious than that of the former Emperor Charles. A cabinet minister earns something like $200 a year, and a prime minister has to live on but little more than that. The salary of a member of Parliament varies between ten and fifty dollars a year.

Judges of the High Court mend their own shoes and those of their children. Most of them eat a square meal only when they are invited to some rich man’s table. Their clothes are ragged, for their yearly salary would not buy them a suit of clothes. And these judges have to sit in litigations involving millions. Does it not seem likely that a starving and ragged judge like this could be tempted by money? Yet corruption of the courts does not exist in Germany, Austria, and Hungary; not a shadow of suspicion has been known to attach to them.

The conclusion from all these facts is plain. The Central European nations are near bankruptcy. Their industrial life, whatever there is of it, is unhealthy and insecure. Trading and manufacturing are impaired by the political and customs barriers of the newly formed small states. A decent living is out of the question for the masses. There is every inducement for graft, corruption, and other forms of dishonesty, to which many must turn their wits for a living which is, in fact, semi-starvation. Conditions get increasingly worse, and this winter will probably see them at their worst; and there seems to be no remedy for them. What will be the end?