History Teaches, But Will We Learn?

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The Boston Globe

History Teaches, But Will We Learn?

SOMETIMES A CIGAR is only a cigar, so Freud said, but there was a time when a cigarette was anything but. Nothing embodied the chaos of Europe's destroyed economy after World War II more dramatically than the fact that for a period of time, the American cigarette was widely accepted in the heart of Europe as the only reliable form of currency.

Indeed, the first phase of Germany's recovery was based on what became known as the ''cigarette economy.'' American soldiers could buy a carton of cigarettes at the PX for a dollar.

That same carton, sold on the black market, would bring the GI as much as 1,000 reichsmarks at a time when a German's wage for a week's work was about 80 reichsmarks. With cigarettes worth so much more than reichmarks, it was not long before the value of everything was measured in smokes. Ironically, once the cigarette became currency, it seemed foolish to light up. A cigarette was anything but a cigarette.

The process of postwar European recovery that began with the cigarette economy has come to completion with the European Union's adoption of the euro as its universal currency. Last week the new coins and bills were introduced by the European Central Bank in advance of the day next January when the euro will replace the individual currencies of a dozen nations. This event has far more significance than a casual observer in today's world can really appreciate, since the savagery of Europe's 20th century was rooted in fears tied, above all, to unstable currencies.

The collapse of the Weimar economy, when it took a wheelbarrel full of bills to buy a loaf of bread, was the precondition of the rise of Adolf Hitler. And it is instructive to recall that the dispute that precipitated the Cold War antagonism between Moscow and the West was a dispute, exactly, over currency.

Toward the end of World War II, the Allies agreed that once they occupied Germany, they would issue a common occupation currency tied in value to the reichsmark and required for all economic transactions by civilians and occupiers alike. The problem came when 3 million American GIs were paid in the occupation reichsmarks, able to redeem them for dollars, while the millions of Russian soldiers, paid in the same currency, were not able to redeem them for rubles, making the reichsmarks relatively valueless for Russians except for their ability to exchange with GIs.

This disparity soon led to a dangerously destablilizing black market, and it also meant that America, converting Russian-issued reichsmarks into dollars, was paying costs of the occupation that properly belonged to Moscow.

To stop that, the American government simply decreed that it would no longer redeem Russian-issued reichsmarks for dollars. As I learned from the journalist Edwin Hartrich, this meant an immediate impoverishing of the Soviet millions, and it was the first real breach in the alliance that had defeated Hitler.

Soon enough, the impossibly compromised reichsmark was replaced by the cigarette as a reliable symbol of value, but like the dollar, the cigarette was made in the USA, guaranteeing American dominance. Disputes over the currencies in the two zones of Germany would lead directly to the Berlin airlift in 1948 and indirectly to the construction of the Berlin Wall in 1961.

Thus, perhaps even more than in the great ideological differences between East and West, the conflict that terrified the rest of the century had its source in unforeseen - and perhaps preventable - inequities in financial exchange and value. The tragedy, of course, is that the largest difference between Russia and America in 1945 was that the former's economy had been destroyed by the war against Hitler while the latter's had been rescued by it.

This is the history that lends such significance to the arrival of the euro. That once bloodied Europe has solidified its character as a democratic economic union in which differences weigh less than commonalties is surely one of the greatest triumphs of our lifetimes - properly a source of pride to Americans, who enabled it.

But there is a warning in this story, too - a hint of history repeating itself. Just as World War II ended with Moscow impoverished and Washington enriched, the consequent Cold War ended with the Soviet Union's economy gutted and with the American economy poised for the greatest boom ever. If we think we can just declare our independence from Russia's problem, as we did in the currency dispute of 1945, and not face terrible consequences ourselves, we will have learned nothing.

The lesson, of course, involves the impoverished world, not only Russia. The harshest truth of history fairly screams at us. To paraphrase a biblical question, if our neighbors ask for bread, will we again give them cigarettes? Especially now, when we know a cigarette for what it is - the coin of death.

James Carroll

James Carroll

James Carroll is a Boston Globe columnist and Distinguished Scholar-in-Residence at Suffolk University. He is the author, among other works, of House of War: The Pentagon and the Disastrous Rise of American Power and, most recently, Christ Actually: The Son of God for the Secular Age.

 

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