Hyperinflation

Hyperinflation

• Post-WW 1 Germany struggled with poverty, high unemployment and a fragile economy. The reparations payment from the Versailles Treaty was an unwelcome burden.
• The government kept up with the payments by printing more money.
• However, in December 1922, Germany failed to make a payment.
• France and Belgium invaded the Ruhr in retaliation in January 1923.
• They seized mines, factories and railways, planning to take what was owed to them in kind.
• The Germans adopted a policy of non-cooperation; workers went on strike so that there would be nothing for the French to take.
• The government responded to the crisis by printing yet more money to pay the striking Ruhr workers and to pay off some of its debt.
• The more money was printed, the more its value decreased. Prices spiralled out of control, resulting in hyperinflation.
• The poor were hard-hit, but wealthier Germans and the middle class felt the most bitter.
• Their savings and pensions were wiped out virtually overnight.
• Hyperinflation caused Weimar government to lose support of middle & lower middle classes.
• Problem was resolved when Gustav Stresemann replaced currency with the new Rentenmark.
• The government responded to the crisis by printing yet more money to pay the striking Ruhr workers and to pay off some of its debt.
• Egs of items showing the decreasing value of the German currency during hyperinflation