60 THE BiG DROP
plained, the exchange rate between the German paper currency,
the reichsmark, and the dollar went from 208 to 1 in early 1921
to 4.2 trillion to 1 in late 1923. At that point, the reichsmark
became worthless and was swept down sewers as litter.
Yet Stinnes was not wiped out during this hyperinflation.
Why was that?
Stinnes was born in 1870 into a prosperous German family
that had interests in coal mining. He worked in mines to ob-
tain a practical working knowledge of the industry and took
courses in Berlin at the Academy of Mining. Later, he inherited
his family’s business and expanded it by buying his own mines.
Then he diversified into shipping, buying cargo lines. His
own vessels were used to transport his coal within Germany
along the Rhine River and from his mines abroad. His vessels
also carried lumber and grains. His diversification included
ownership of a leading newspaper, which he used to exert
political influence. Prior to the Weimar hyperinflation, Stinnes
borrowed vast sums of money in reichsmarks.
When the hyperinflation hit, Stinnes was perfectly posi-
tioned. The coal, steel and shipping retained their value. It
didn’t matter what happened to the German currency, a hard
asset is still a hard asset and does not go away even if the
currency goes to zero.
Stinnes’ international holdings also served him well be-
cause they produced profits in hard currencies, not worthless
reichsmarks. Some of these profits were kept offshore in the
form of gold held in Swiss vaults. That way he could escape
both hyperinflation and German taxation. Finally, he repaid
his debts in worthless reichsmarks, making them disappear.
Not only was Stinnes not harmed by the Weimar hyperin-
flation, but his empire prospered and he made more money
than ever. He expanded his holdings and bought out bankrupt
competitors. Stinnes made so much money during the Weimar
hyperinflation that his German nickname was Inflationskönig,