Berlin

Even as they threw money into new investment schemes, many Germans were plagued by a sense of unease and guilt. For the Junkers in particular, stock-market speculation clashed sharply with ancient prejudices against commercial capitalism and paper profiteering. Such activities might be acceptable for bourgeois tradesmen and Jews, but these practices had been traditionally off-limits to the titled defenders of Prussian and Christian morality. Yet the aristocrats were as susceptible to greed as anyone, and the increasingly high cost of living was making the old morality seem an unaffordable luxury. As a beleaguered noble protests in Friedrich Spiel-hagen’s novel Sturmflut: “A multitude of means which the bourgeois class uses with the most incredible success is denied us because of noblesse oblige. . . . We are supposed to defend our position in state and society and still preserve our moral qualities. This is all too often a difficult thing and sometimes it is impossible: it is nothing but the squaring of the circle.” Convinced that changed circumstances were forcing them to join the bourgeoisie at the Temple of Temptation, Berlin’s upper classes were on the lookout for scapegoats if anything went wrong.

And something did go wrong. On February 7, 1873, a National Liberal Reichstag deputy named Edward Lasker delivered a three-hour speech in parliament in which he exposed a “Strousberg system of corruption” at the heart of imperial Germany’s economic boom. Investors, he said, were living in a giant house of cards erected by shady speculators protected by venal officials. As if Lasker were telling people something they had long suspected, his revelations ignited a wave of selling on the stock market. News that the Vienna market, in which many Berliners had also invested, was on equally shaky ground, compounded the panic. The coup de grace came with the failure of a major American investment house and the sudden closing of the New York Stock Exchange.

With the collapse of the Berlin Börse, sources of investment capital dried up and inadequately secured companies began declaring bankruptcy. In early 1874, 61 banks, 116 industrial enterprises, and 4 railway companies (including Strousberg’s) went under. Many of the Berlin building societies also proved vulnerable. The glittering Kaiser-Gallerie on Unter den Linden found itself unable to rent out retail space. Because the investment spree fueling the boom had been so “democratic,” the bust was equally inclusive. “The word crash,” recalled a Berlin writer, “rang through the palaces of the dukes, the corridors of parliament, the halls of the stock market, the villas of the new rich, and the modest quarters of the fruit and milk vendors.”

While the crash exposed the reckless greed of ordinary investors along with the fraudulence of stock-jobbers and their protectors, it did not promote much serious soul-searching; rather, it generated a frenzy of finger-pointing. The outpouring of mutual recrimination engendered by the slump revealed deep fissures in German society, which had been papered over by the euphoria attending national unification. Anxious to clear themselves of any wrongdoing, Berlin’s conservatives pointed their fingers at the liberals, whose laissez-faire doctrines, they claimed, had invited corruption. Noting that some of the leading liberals and bankers were Jews, indignant rightists spoke of an international Jewish conspiracy behind the liberal policies. A popular tract entitled The Stock Exchange and the Founding Swindle in Berlin argued that the Jews were attempting to strengthen their own financial empire by destroying the native German middle class. In a series of articles in the middle-brow family magazine Gartenlaube, a Berlin journalist named Otto Glagau urged his fellow Christians to take action against Jewish domination of German life, especially in the capital:

No longer should false tolerance and sentimentality, cursed weakness and fear, prevent us Christians from moving against the excesses, excrescences, and presumption of Jewry. No longer can we suffer to see the Jews push themselves everywhere to the front and to the top, to see them everywhere seize leadership and dominate public opinion. They are always pushing us Christians aside, they put us up against the wall, they take our air and our breath away. . . . The richest people in Berlin are Jews, and Jews cultivate the greatest pretense and the greatest luxury, far greater than the aristocracy and the court. It is Jews who in the main fill our theaters, concerts, opera halls, lectures, etc. . . . It is Jews who primarily engineer the elections to the Diet and the Reichstag. . . . God be merciful to us poor Christians.