Out of the total of $3 billion for which German institutions signed up in those years, a little less than $2 billion came in the form of stable long-term loans. But more than $1 billion was “hot money,” short-term deposits attracted to German banks by high interest rates—7 percent in Berlin compared to 5 percent in New York—and subject to being pulled at any time. In late 1928, as the U.S. stock market kept climbing and call money rates on Wall Street skyrocketed, American bankers mesmerized by the phenomenal returns at home suddenly stopped coming to Berlin.
