The much-discussed London Conference came to an end, yet the dark clouds of the Great Depression still hung over the entire world. Inflation had erupted across the board, and the global economy had entered a period of recession.
First came the defeated nations such as Italy and Germany. In order to repay their debts, their governments chose to increase the money supply. In just a few short years, the German mark depreciated by more than four thousandfold, and the wealth of the common people was stripped away completely.
Nor were the victors having an easy time. No one could hope to remain unscathed.
After World War I, France adopted a policy of paper-currency inflation. The franc depreciated, and by 1921 its purchasing power had fallen to 41 percent of what it had been in 1914. Its exchange rate against the pound fell from 25.02:1 in 1914 to 99.6:1 by the end of 1922.
"Your Majesty, the French government has just announced that it is abandoning the gold standard!" Finance Minister Kennedy said gravely.
Ferdinand's expression changed. History had shifted once again. He had originally thought the French would not abandon the gold standard until 1926.
"Do you know why?" Ferdinand asked with concern.
"Your Majesty, France's domestic economy has deteriorated. Their loose monetary policy has caused severe inflation, and now they can no longer hold the line!
"These are the statistics we have compiled. We can be certain that the French economic predicament is directly connected to the war reparations paid by the defeated nations.
"Before the World War, 92 percent of France's industrial goods were produced domestically. But now, 38 percent of the industrial goods used by the French come from Germany, 5 percent from Italy, and another 6 percent from the Austro-Hungarian Empire!" Kennedy replied as he handed