Invasion of the Ruhr and Hyperinflation

• Germany's biggest problem was that it was completely bankrupt after spending all its reserves in the First World War and facing worsened conditions due to the Treaty of Versailles
• The Treaty of Versailles took away some areas from Germany that were sources of wealth, such as the coal fields in Silesia
• Reparations payments were unmanageable for Germany, and despite appeals to the Allies for reduction, they were refused
• In 1923, Germany could no longer make the reparation payments
• Reparation agreement

  Germany would pay some of the money in kind, for example, paying in coal from the Ruhr to the French
• In December 1922, the Germans missed a payment to the French, leading to French troops entering the Ruhr to collect the coal themselves
• The Weimar government called on the citizens of the Ruhr to passively resist the French, leading to strikes and obstruction of the French troops
• The French arrested those who were obstructing them and imported their own workers into the Ruhr
• Germany was unable to resist the French effectively due to the large difference in military strength
• The occupation of the Ruhr by the French worsened Germany's financial problems as it contained many crucial industrial facilities
• The German government resorted to printing more money throughout the 1910s and 1920s, leading to inflation and hyperinflation in 1923
• Printing more money decreased the value of the German mark, leading to rapid price increases
• By the end of 1923, a loaf of bread in Germany cost 200,000 billion marks due to hyperinflation
• Prices increased so rapidly that a loaf of bread that cost one mark in 1919, cost 100 marks in 1922, and 200,000 billion marks by the end of 1923
• Bread cost a hundred marks


  1922
• A loaf of bread cost 200,000 billion marks


  End of 1923
• Prices increased rapidly during this time period
• People began to barter goods and services due to the increase in prices
• Wages increased but could not keep up with the price of goods
• People were forced to burn banknotes to keep warm as it was cheaper than buying fuel
• Banknotes became so worthless that people gave them to their children to play with
• Debt such as loans or mortgages could be paid off easily due to the hyperinflation
• Those who created raw materials or products, such as farmers, were paid very well for their products
• Fixed rents for shops and businesses became very cheap
• Many people lost due to hyperinflation, especially those on a fixed income who found themselves destitute
• Savings became completely worthless, hitting the middle class hard
• Some businesses went bankrupt and were bought out by those who had not gone bankrupt for tiny amounts
• Foreign suppliers began to refuse to be paid in marks, leading to severe shortages of essentials
• Hyperinflation caused real damage to the Weimar government
• The challenges of 1923 showed the Weimar government to be weak
• The failures of the government emboldened extremist parties, gaining support from those who felt abandoned