One Summer: America, 1927

earlier.
    In the last week of November 1923, Germany replaced the valueless reichsmark with a new currency, the rentenmark. Miraculously, the move had the desired effect and inflation sankback to more manageable, less hysterical levels. By a rather extraordinary coincidence, on the very day that the change was effected, Rudolf Havenstein, head of the Reichsbank, collapsed and died. His successor was Hjalmar Schacht. Because Schacht’s arrival was so exquisitely timely, he received all the credit for restoring stability to the German economy, and was hailed for evermore as a financial genius.
    A second, later consequence of the French seizure of the Ruhr and all the disruption and bitterness that followed was the rise to power of Adolf Hitler. Some historians have maintained that the Nazis could not have risen as they did without the legitimacy Schacht conferred upon them and the financial mastery he brought with him. After the Second World War, Schacht was tried at Nuremberg. In his defence, Schacht claimed that he had been against the persecution of Jews and had never joined the Nazi Party. He believed in stripping Jews of their rights, but not in killing them, which by the standards of the day made him almost an enlightened figure in Germany. He was acquitted and lived on until 1970. He and Norman also got along well. For the meeting on Long Island, they sailed to America together, under assumed names, aboard the Mauretania .
    The fourth member of the gathering was Charles Rist, a Swiss-born economist and former professor of law at the Sorbonne who was deputy governor of the Banque de France. The governor, Émile Moreau, spoke no English, so sent Rist in his place. Bald and grave, Rist was eminently respectable, but very much the outsider at the meeting. He had joined the Banque de France only the previous year, so was not well known to the other three.
    Each man naturally brought to the gathering a measure of national mood, self-interest and prejudice. France was having a terrible year. Its citizens were feeling poor and hard done by; the disappearance of Nungesser and Coli had been a bitter psychological blow. On an official level, the Banque de France was suspicious of Norman, believing that he would sell out the rest ofEurope in an instant if it meant preserving London’s status as a global financial centre. Britain, for its part, had just emerged from a costly general strike, and was pained and bewildered by its inability to regain its former supremacy in the world. Norman was personally furious with the French for engineering a quiet but insistent run on British gold reserves, and to show his displeasure was for the time being refusing to address any Frenchman in French. Germany was simply exhausted. Not only had it been landed with crippling reparation payments, but it had also been deprived of much of its capacity to earn foreign exchange. The allied powers had seized a good deal of its shipping, for instance. A fact largely forgotten now is that many of the great ocean liners of the 1920s were actually German ships under new names. Cunard’s Berengaria , a vessel so splendid that Cunard made it its flagship, had originally been the German Imperator . The White Star Line’s Majestic had been the Bismarck . The American Leviathan , on which Commander Byrd and his team were about to sail home, had earlier sailed proudly as the Vaterland .
     
    America, in stark contrast to its European cousins, found itself in the unusual position of doing, if anything, too well. Its economy seemed unstoppable. Inflation was zero and had been for four years. Economic growth was averaging 3.3 per cent a year. The latest figures from the Treasury Department, released the day before the bankers assembled on Long Island, showed that for the fiscal year just completed the United States had enjoyed a record budget surplus of $630 million and had trimmed $1 billion off the national debt. It simply wasn’t possible for an economy to do better.
    In the stock market, people were making fortunes with no apparent effort at all. F. Scott Fitzgerald in My Lost City noted in amazement that his barber had retired after making $500,000 – nearly 400 times the average annual wage – on a single timely investment. For many, playing the market became almost an addiction. Warren Harding did so while president. (He wasn’tsupposed to.) When he died, he was $180,000 in debt to his broker. For many like Harding, the great attraction was that