Success Story; Review of David Marsh, The Most Powerful Bank: Inside Germany's Bundesbank

Marsh is a gifted journalist and his command of events is most impressive, but he does not have the same respect for ideas as he does for the nitty-gritty of reportage.

Issue: Spring 1994

Review of David Marsh, The Most Powerful Bank: Inside Germany's Bundesbank (New York: Random House, 1994), 400 pp., $25.00.

The Bundesbank is one of the wonders of the Wirtschaftswunder that was ushered in by Ludwig Erhard's great reforms of 1948. Before the establishment of the Bundesbank in 1957, the Bank Deutscher LŠnder, a creation of the allied military government, had emphasized the importance of monetary policy in ensuring price stability. Both banks owe their independence and prestige to two catastrophes. The first was the great hyperinflation of 1920-23. This expropriated the wealth of the German middle classes and paved the way for Hitler; the gutter became the government. The second catastrophe was the hyperinflation of 1945-47--a consequence of the massive deficit financing of World War II. The Reichsmark currency was completely destroyed and the currency reform of 1948 ushered in the deutschemark, the Grail of which the authorities of the Bundesbank are the guardians.

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