The German economic crisis was mainly caused by Hyperinflation. Hyperinflation
is when inflation goes out of control, whilst a modern state may have inflation up
to double figures, hyperinflation can reach billions of percent.
Inflation is simple to understand, it is when the buying power of currency
decreases, which causes the value of money to decrease. There is no one cause of
inflation with several different reasons for it. However hyperinflation has one
main cause which is always universally seen, too much money.
The war also made things difficult with manufacturing down
• the allied blockade not being lifted at the end of the war
• the massive reparation that Germany had to pay
• the pensions for all the retired soldiers
• they had lost their colonies so weren't taking materials from them.
• post war trade was down
• they had taken huge loans from the USA
• 2.3 million young men died in the war with hundreds of thousands
more maimed
• millions of women and children lost their fathers and husbands,
• £8.4 billion spent on the war
• the German economy had been dedicated to war, which cost money,
and it cost more to change back
However all countries were suffering however as most of these things had
affected all combatants, the only major nations that got away from this was
America, until the crash, and Japan, who weren't involved heavily in the war.
• 300 paper mills and 2000 printing presses were printing money all
day every day
The Government supported inflation for a time, which was actually economically
sound as it reduced the overall burden of war bonds and loans on the
government. E.g. someone pays 50k marks so with inflation it makes it easier to
pay back that 50k. This also helped the idea that the allies would review Versailles
However it was the Ruhr crisis is one significant cause of Hyperinflation in
Germany the German government decided to support the workers in the Ruhr on
, strike by paying them their wages and financed resistance against the French, yet
they were not making money, lowering the economy, yet they still had to be paid
and that money had to come from somewhere, so they print it. Prinitng money
however does not make more money, all it does it makes the existing money
worth less and as time went on the mark became near worthless. E.g. if I have £10
and print £10 more I don’t have £20, I still have £10, but each pound is now worth
half as no value has been added.
In July 1922 one mark from 1914 was worth 100, one year later that mark would
be worth 194,000 marks, by November of the same year it was 736,000,000,000.
The stories of hyperinflation are funny with wheelbarrows of money being used
to buy bread, and people who had less than 100,000 marks in the bank having
their accounts closed and being given 1 million marks as it was the smallest
denomination they had.
Hyperinflation destroys economies, jobs which can pay in foreign currency are the
best you can get, even if its very low skill. Very few people are willing to use the
hyperinflated currency so the use of bartering comes into play, with items like
gold, tobacco, and alcohol being used to buy thing instead of money.
Those who had their life savings in the bank got ruined by the hyperinflation as
money that had worked years for became worthless in a night.
Most working class Germans were ruined as their daily pay check couldn’t buy
enough food for the next day.
Those who owed money gained a huge amount from this as they were able to pay
of their debts very easily, the government was included in this.
People who had large stockpiles of goods or foreign money also benefited as the
value of these items were not effected by the hyperinflation.
Hugo Stinnes
He benefited hugely, bought over 1,535 companies that had went bust from the
hyperinflation.
Was known as the inflation King (Inflationkoing)
is when inflation goes out of control, whilst a modern state may have inflation up
to double figures, hyperinflation can reach billions of percent.
Inflation is simple to understand, it is when the buying power of currency
decreases, which causes the value of money to decrease. There is no one cause of
inflation with several different reasons for it. However hyperinflation has one
main cause which is always universally seen, too much money.
The war also made things difficult with manufacturing down
• the allied blockade not being lifted at the end of the war
• the massive reparation that Germany had to pay
• the pensions for all the retired soldiers
• they had lost their colonies so weren't taking materials from them.
• post war trade was down
• they had taken huge loans from the USA
• 2.3 million young men died in the war with hundreds of thousands
more maimed
• millions of women and children lost their fathers and husbands,
• £8.4 billion spent on the war
• the German economy had been dedicated to war, which cost money,
and it cost more to change back
However all countries were suffering however as most of these things had
affected all combatants, the only major nations that got away from this was
America, until the crash, and Japan, who weren't involved heavily in the war.
• 300 paper mills and 2000 printing presses were printing money all
day every day
The Government supported inflation for a time, which was actually economically
sound as it reduced the overall burden of war bonds and loans on the
government. E.g. someone pays 50k marks so with inflation it makes it easier to
pay back that 50k. This also helped the idea that the allies would review Versailles
However it was the Ruhr crisis is one significant cause of Hyperinflation in
Germany the German government decided to support the workers in the Ruhr on
, strike by paying them their wages and financed resistance against the French, yet
they were not making money, lowering the economy, yet they still had to be paid
and that money had to come from somewhere, so they print it. Prinitng money
however does not make more money, all it does it makes the existing money
worth less and as time went on the mark became near worthless. E.g. if I have £10
and print £10 more I don’t have £20, I still have £10, but each pound is now worth
half as no value has been added.
In July 1922 one mark from 1914 was worth 100, one year later that mark would
be worth 194,000 marks, by November of the same year it was 736,000,000,000.
The stories of hyperinflation are funny with wheelbarrows of money being used
to buy bread, and people who had less than 100,000 marks in the bank having
their accounts closed and being given 1 million marks as it was the smallest
denomination they had.
Hyperinflation destroys economies, jobs which can pay in foreign currency are the
best you can get, even if its very low skill. Very few people are willing to use the
hyperinflated currency so the use of bartering comes into play, with items like
gold, tobacco, and alcohol being used to buy thing instead of money.
Those who had their life savings in the bank got ruined by the hyperinflation as
money that had worked years for became worthless in a night.
Most working class Germans were ruined as their daily pay check couldn’t buy
enough food for the next day.
Those who owed money gained a huge amount from this as they were able to pay
of their debts very easily, the government was included in this.
People who had large stockpiles of goods or foreign money also benefited as the
value of these items were not effected by the hyperinflation.
Hugo Stinnes
He benefited hugely, bought over 1,535 companies that had went bust from the
hyperinflation.
Was known as the inflation King (Inflationkoing)
