Robert Benchley: How To Understand International Finance

[ I am surprised I haven’t posted this before. In this essay from 1922’s Love Conquers All, Robert Benchley explains modern finance, using the example of the German war debt to make it all surprisingly clear. As with all great humor, it’s pretty true. ]

It is high time that someone came out with a clear statement of the international financial situation. For weeks and weeks officials have been rushing about holding conferences and councils and having their pictures taken going up and down the steps of buildings. Then, after each conference, the newspapers have printed a lot of figures showing the latest returns on how much Germany owes the bank. And none of it means anything.

Now there is a certain principle which has to be followed in all financial discussions involving sums over one hundred dollars. There is probably not more than one hundred dollars in actual cash in circulation today. That is, if you were to call in all the bills and silver and gold in the country at noon tomorrow and pile them up on the table, you would find that you had just about one hundred dollars, with perhaps several Canadian pennies and a few peppermint life-savers. All the rest of the money you hear about doesn’t exist. It is conversation-money. When you hear of a transaction involving $50,000,000 it means that one firm wrote “50,000,000” on a piece of paper and gave it to another firm, and the other firm took it home and said “Look, Momma, I got $50,000,000!” But when Momma asked for a dollar and a quarter out of it to pay the man who washed the windows, the answer probably was that the firm hadn’t got more than seventy cents in cash.

This is the principle of finance. So long as you can pronounce any number above a thousand, you have got that much money. You can’t work this scheme with the shoe-store man or the restaurant-owner, but it goes big on Wall Street or in international financial circles.

This much understood, we see that when the Allies demand 132,000,000,000 gold marks from Germany they know very well that nobody in Germany has ever seen 132,000,000,000 gold marks and never will. A more surprised and disappointed lot of boys you couldn’t ask to see than the Supreme Financial Council would be if Germany were actually to send them a money-order for the full amount demanded.

What they mean is that, taken all in all, Germany owes the world 132,000,000,000 gold marks plus carfare. This includes everything, breakage, meals sent to room, good will, everything. Now, it is understood that if they really meant this, Germany couldn’t even draw cards; so the principle on which the thing is figured out is as follows: (Watch this closely; there is a trick in it).

You put down a lot of figures, like this. Any figures will do, so long as you can’t read them quickly:

  • 132,000,000,000 gold marks
  • $33,000,000,000 on a current value basis
  • $21,000,000,000 on reparation account plus 12-1/2% yearly tax on German exports
  • 11,000,000,000 gold fish
  • $1.35 amusement tax
  • 866,000 miles. Diameter of the sun
  • 2,000,000,000
  • 27,000,000,000
  • 31,000,000,000

Then you add them together and subtract the number you first thought of. This leaves 11. And the card you hold in your hand is the seven of diamonds. Am I right?