End of Inflation

 End of Inflation

End of Inflation
1)Although the high inflation of the postwar years benefited the film industry in the short run,
    it was impossible for Germany to continue functioning under such circumstances.
2)By 1923, hyperinflation brought the country to near chaos, and the film industry began to
    reflect this.
3)At a time when a potato or a postage stamp cost hundreds of millions of marks,
    budgeting a feature film months in advance became nearly impossible.

Trying to halt hyperinflation
1)In November 1923, the government tried to halt hyperinflation by introducing a new form
   of currency, the Rentenmark.

2)Its value was equal to 1 trillion of the worthless paper marks.
3)The new currency was not completely effective, and
4)in 1924, foreign governments, primarily the United States, stepped in with loans to stabilize
   the German economy further.
5)The sudden return to a stable currency caused new problems for businesses.
6)Many firms that had been built up quickly on credit during the inflationary period either
   collapsed or had to cut back.
7)The number of movie theaters in Germany declined for the first time, and
8) some of the small production companies formed to cash in on inflationary profits
   also went under.

Easier to Import Films
1)Unfortunately for film producers, stable currency often made it cheaper for distributors to
   buy a film from abroad than to finance one in Germany.
2)Moreover, in 1925 the government’s quota regulations changed.
3)From 1921 to 1924, the amount of foreign footage imported had been fixed at 15 percent
   of the total German footage produced in the previous year.
4)Under the new quota, however, for every domestic film distributed in Germany,
   the company responsible received a certificate permitting the distribution of an imported
   film.
5)Thus, up to 50 percent of the films shown could be imported.

Poststabilization Crisis
1)Perhaps the most spectacular event of the German film industry’s poststabilization crisis
   came in late 1925,
2) when Ufa nearly went bankrupt.
3) Rather than cutting back production budgets and reducing the company’s debt,
4) Ufa head Erich Pommer continued to spend freely on his biggest projects,
    borrowing to finance them.
5)The two biggest films announced for the 1925–1926 season (German seasons ran from
   September to May) were Murnau’s Faust and Lang’s Metropolis.
6)Both directors, however, far exceeded their original budgets and shooting schedules.
7)Indeed, the films were not released until the 1926–1927 season.
8)The financial fate of late Expressionist films parallels what happened to some of
   the French Impressionists;
9)two ambitious projects, Napoléon and L’Argent, curtailed Gance and L’Herbier’s power
   within the film industry.

UFA Deep in Debt
1)As a result, in 1925 Ufa was deep in debt, with no prospects of its two blockbuster films
   appearing anytime soon.
2)A crisis developed when a substantial portion of Ufa’s debts were abruptly called in.
3)Then, in late December, Paramount and MGM agreed to loan Ufa $4 million.
4)Among other terms of the deal, Ufa was to reserve one-third of the play dates in its
    large theater chain for films from the two Hollywood firms.

Parufamet
1)The arrangement also set up a new German distribution company, Parufamet.
2)Ufa owned half of it, while Paramount and MGM each held one-quarter.
3)Parufamet would distribute at least twenty films a year for each participating firm.
4)Paramount and MGM benefited, since a substantial number of their films would get
    through the German quota and be guaranteed wide distribution.
5)After the deal was made, Pommer was pressured into resigning, and more cautious
    budgeting policies were initiated at Ufa.