In the Spring of 1921, the following conversation might have been overheard between an American and a German.
A.: You see the consequences of the war are worse for the victor than for the vanquished.
G.: Only apparently, and for the moment. The future, I fear, will teach us something different.
A.: Nobody can look into the future. At the present minute, we witness the biggest economic collapse that the world has ever seen, all countries suffer from it, except Germany. All states had made preparations for peace, now the stored up goods are lying there and nobody wants them, not even Germany. We thought, that Germany, bare of everything, would swallow anything.
G.: The reason is, that Germany cannot pay. Her gold and tangible gold values have been taken from her. Why do not the other countries buy? Their peace production has been lying idle for years, consequently, the shelves must be fairly empty.
A.: Quite right, but prices have risen to an unreasonable height. During the war, a most wasteful regime prevailed; everybody made big profits or received huge wages, and accustomed himself to a most sumptuous life. Now, vengeance is upon them, for nature does not allow herself to be ravished, nor does she present gifts for extravagant living.
G.: If prices have been driven to an unreasonable level by wasteful workings, then, a big decline in prices is the only remedy.
A.: We are in the midst of a phenomenal collapse of prices. Cotton is a barometer for all other goods. The price in America is, to-day, 11 cents, a short while ago, it was 40 cents.
A.: The cost of production is for him this season about 25-30 cents per pound. He has worked for nothing, and besides, loses a good deal of money, as his means are small, he will be heavily in debt.
A.: The planter is absolutely unable to produce a similar crop. It is the old story, when prices are too low the crop will be curtailed.
G.: We have always experienced that low prices are followed by high ones. What other consequences is this collapse in prices likely to have?
A.: All cotton goods fall in the same proportion as the raw material, this means a bad crisis for commerce and industry, and an unprecedented amount of unemployment. Besides, this collossal drop in prices has caused other very peculiar situations.