nment rarely intervened in major firms, as happened when the German military took over the Daimler motor car works for padding costs on war-production contracts. Governments tended to favor large, centralized industries over smaller ones. The war was a stimulus towards grouping companies into larger firms. When resources became scarce, nonessential firms, which tended to be small, were simply closed down. Inflation was the greatest single economic factor as war budges rose to astronomical figures and massive demand forced shortages of many consumer goods. Virtually ever able-bodied person was employed to keep up with the demand. This combination of high demand, scarcity, and full employment sent prices soaring, even in the best managed countries. In Britain, a pound sterling brought in 1919 about one-third of what it had bought in 1914. French prices approximately doubled during the war and it only got worse during the 1920's. Inflation rates were even higher in other belligerents The German currency ceased to have value in 1923. All of this had been forseen by John M. Keynes asa result of the Versailles Treaty: The danger confonting us, therefore, is the rapid depression of the standard of life of the European populations to a point which will mean actual starvation for some (a point already reached in Russian and approximately reach in Austria). Inflation affected different people quite differently. Skilled workers in strategic industries found that their wages kept pace with prices or even rose a little faster. Unskilled workers and workers in less important industries fell behind. Clerks, lesser civil servants, teachers, clergymen, and small shopkeepers earned less than many skilled labors. Those who suffered the most were those dependent on fixed incoming. The incomes of old people on pensions or middle class living on small dividends remained about the same while prices double or tripled. T...
