22 February 2012

Weimar Wednesday: No. 7

I am translating Hans Ostwald's Sittengeschichte der Inflation (Berlin: Neufeld & Henius, 1931). The book is frequently cited in works dealing with the Weimar hyperinflation (where it is usually referred to as A Moral History of the Inflation, or Tales of the Inflation), but up until now it has not been published in English. In these times of quantitative ease, I thought it might be amusing to post something from it each week.

The subject of this installment is Max Klante, who ran a Ponzi scheme offering 600% returns and conveniently accepted after-hours deposits at the cafés he owned:
Yes, he knew how to bind his followers to him, holding assemblies in the Circus Busch where they crowned him with laurels and hoisted him on their shoulders. He raised their hopes with new ideas and plans, and they remained faithful to him -- he wanted to take over a major liquor company and start a whole line of cocktail bars. Cocktail and juice bars were all the rage back then, and they were like gold mines. And so the Klante system hit paydirt ... 
But after a few weeks it became obvious that this seam of ore was really fool's gold. Klante could no longer meet the demands of his creditors and fled to a sanatorium, pleading chronic illness. But this could not protect him from the investigation launched by the public prosecutor. 
His overly credulous creditors filed 90 million marks' worth of claims. His racehorses, his mansion, and his cars covered only a tiny fraction of that sum. The money had been offered up by people who had once considered him a saviour, and now they wanted to crucify him.
According to the Wikipedia article on Klante (only available in German), his scheme was so popular that there were branches in most major cities.