Hyperinflation (1923) - WR Flashcards
Why was the Ruhr occupied by French and Belgium troops in 1923?
Germany was unable to afford to pay their next reparations payment.
French and Belgians did not believe them and decided to take what they were owed by force.
How many French and Belgian soldiers invanded the Ruhr?
January 1923: 60,000 French and Belgian soldiers marched into the Ruhr, a rich industrial area of Germany.
What did the soldiers do once they had invaded the Ruhr?
They took control of every factory, mine and railway in the region.
They also took food and goods from shops and arrested any Germans who stood up to them.
What did the Weimar government do in response to the occupation of the Ruhr?
The German government ordered its workers to go on strike and not help the French and Belgian troops remove goods from the country through passive resistance.
What was hyperinflation?
Hyperinflation was caused as a result of the German government printing large amounts of money to pay striking workers and the money they owed Belgium and France.
As workers spent money in shops, shopkeepers began to increase their prices.
The German government printed even more money to help their workers.
What were the problems with hyperinflation?
Germany was already suffering from high levels of inflation due to the effects of the war and the increasing government debt.
‘Passive resistance’ meant that whilst the workers were on strike fewer industrial goods were being produced, which weakened the economy still further.
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.
By autumn 1923 it cost more to print a note than the note was worth.
During the crisis, workers were often paid twice per day because prices rose so fast their wages were virtually worthless by lunchtime.
Who was impacted by hyperinflation?
People with bank savings found that the money they had saved was invaluable.
People on fixed incomes, like students, pensioners or the sick, found their incomes did not keep up with prices.
Many small businesses collapsed as normal trade became impossible because of the daily price changes.
Who was benefitted by hyperinflation?
Borrowers, such as businessmen, landowners and those with mortgages, found they were able to pay back their loans easily with worthless money.
People on wages were relatively safe, because they renegotiated their wages every day. However, even their wages eventually failed to keep up with prices.
Farmers coped well, since their products remained in demand and they received more money for them as prices spiralled.
