The hyperinflation crisis, 1923 - Weimar Germany, 1918-1924 - Eduqas - GCSE History Revision - Eduqas - BBC Bitesize (2024)

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What was the hyperinflation crisis of 1923 in Germany? ›

In order to pay the striking workers the government simply printed more money. This flood of money led to hyperinflation as the more money was printed, the more prices rose. Prices ran out of control, for example a loaf of bread, which cost 250 marks in January 1923, had risen to 200,000 million marks in November 1923.

Hyperinflation, or a rapid increase in prices, was a major problem for the Weimar Republic, particularly as it struggled with the problems caused by the occupation of the Ruhr by France. The occupation of the Ruhr lead to significant shortages for goods and food, and as these were rationed prices rose.

In the years following World War I, there was spiraling hyperinflation of the German currency (Reichsmark) by 1923. The causes included the burdensome reparations imposed after World War I, coupled with a general inflationary period in Europe in the 1920s (another direct result of a materially catastrophic war).

One point on which historians tend to agree is that the printing of cash by the German government to make payments to striking workers in the Ruhr, who were refusing to make reparations deliveries to the Allies, contributed to hyper-inflation. The occupation of the Ruhr also caused German output to fall.

The Weimar government was still in a position to get a grip on the economy; instead, it chose to print yet more money in order to pay the reparation debt. By July 1922 prices had risen by some 700 percent, and hyperinflation, with too much money chasing goods that were far too scarce, had arrived.

There were multiple reasons for this hyperinflation: The Weimar economy was still suffering from the effects of World War I, when the German government had printed more and more money to pay for the ever-escalating costs of the war, thus significantly devaluing the mark.

The two primary causes of hyperinflation are (1) an increase in money supply not supported by economic growth, which increases inflation, and (2) a demand-pull inflation, in which demand outstrips supply. These two causes are clearly linked since both overload the demand side of the supply/demand equation.

The world's first recorded hyperinflation came during the French Revolution, where monthly inflation peaked at 143 percent, but it took until the 20th century for this type of out-of-control inflation to happen again.

Hitler's various maneuvers resulted in the winner, Paul von Hindenburg, appointing him chancellor in January 1933. The following month the Reichstag fire occurred, and it provided an excuse for a decree overriding all guarantees of freedom. Then on March 23 the Enabling Act was passed, giving full powers to Hitler.

As a result, imports to Germany fell and the shortages became worse. Germany could not import the goods it needed for survival. Daily life became difficult for many. Hyperinflation created a situation whereby prices rose almost hour by hour.

What was the primary source of hyperinflation in Germany? ›

Hyperinflation probably happened because the Weimar government printed banknotes to pay reparations and - after the 1923 French invasion - the Ruhr strikers. Because these banknotes were not matched by Germany's production, their value fell.

As a result of the inflation, Germans who had their savings in banks or were living on pensions or disability checks found themselves virtually bankrupt. Workers increasingly discovered that no matter how high their wages rose, they could not keep up with rapidly soaring prices.

In order to pay the striking workers the government simply printed more money. This flood of money led to hyperinflation as the more money was printed, the more prices rose. Prices ran out of control, for example a loaf of bread, which cost 250 marks in January 1923, had risen to 200,000 million marks in November 1923.

Stresemann also appointed Hjalmar Schacht , a banker, to tackle the issue of hyperinflation. In November 1923, Schacht introduced a new German currency, the Rentenmark, based on land values and foreign loans. One Rentenmark was worth 10,000,000,000,000 of the old currency.

In 1923, the Nazi Party was a small, right-wing extremist group. In November of that year, they conspired to overthrow the democratic government of Germany by launching an ill-fated insurrection. The Beer Hall Putsch was put down by authorities. Its ringleaders, including Adolf Hitler, were arrested.

Between the end of 1945 and July 1946, Hungary went through the highest inflation ever recorded. In 1944, the highest banknote value was 1,000 P. By the end of 1945, it was 10,000,000 P, and the highest value in mid-1946 was 100,000,000,000,000,000,000 P (10²⁰ pengő).

By March 1923, one US dollar was worth 20,000 marks. By August, when the above mark was printed, a dollar cost more than a million marks. At the height of Germany's hyperinflation crisis in November, a dollar was worth 4,210,500,000,000 marks.