Invasion of the Ruhr & Hyperinflation

• Germany's biggest problem was that it was completely bankrupt
• Germany spent all its reserves in the First World War and the Treaty of Versailles had made things worse by taking away some of the areas from which it gained wealth, for example the coal fields in Silesia
• The reparations payments were totally unmanageable for Germany and the leading politicians appealed to the Allies for the payments to be reduced but they refused
• By 1923 Germany could no longer make the reparations payments
• In December 1922 the Germans missed this payment, and the French immediately sent troops into the Ruhr to collect the coal themselves
• The soldiers collected raw materials and machinery as payment
• The Weimar government called on the citizens of the Ruhr to passively resist the French, and the citizens went on strike thereby obstructing the French and collecting the materials
• The French arrested those who were outright obstructing them and imported their own workers
• Germany was completely unable to resist the French who had 750,000 soldiers to the Germans' 100,000
• Many Germans were angry with the Weimar government for failing to resist the French effectively
• The occupation of the Ruhr by the French further worsened Germany's financial problems because the Ruhr contained many of its coal, iron and steel works along with a high proportion of its factories
• The government had been printing more and more money throughout the 1910s and into the 1920s, causing huge inflation and then hyperinflation in 1923
• Hyperinflation


  When a government prints too much money, the value of each banknote decreases, meaning the things that banknote can buy also decreases, until the banknotes become worthless
• The Kaiser's government had printed more money during the war, then the Weimar government printed more money to pay for the post-war shortages between 1918 and 1922, and finally when the French invaded the Ruhr in January 1923 the government printed even more money to pay the strikers and to make up for the lost income from the Ruhr
• This was the final straw and the German mark became completely worthless
• The price of goods increased rapidly, even day by day - a loaf of bread that cost 1 mark in 1919 cost 100 marks in 1922 and 200 billion marks by the end of 1923
• Hyperinflation


  • Going into a cafe and the price increasing from 5,000 marks to 8,000 marks in the time it took to drink a coffee
• Normal life was impossible to continue, people began to barter goods and services because it wasn't worth trying to spend the useless money
• Wages increased but could not keep up with the price of goods, people were forced to burn banknotes to keep warm as this was cheaper than buying fuel
• Banknotes were so worthless that people gave them to their children to play with
• There were winners and losers - anyone who had debt such as loans or mortgages were able to pay these off easily, and those who created raw materials or products such as farmers were paid very well for their products, but fixed rents for shops and businesses became very cheap
• Many more people lost than won - anyone on a fixed income found themselves destitute, and savings became completely worthless, hitting the middle classes hard
• Some businesses went bankrupt and were bought out by those who had not gone bankrupt for tiny amounts
• Probably most damaging of all was that foreign suppliers began to refuse to be paid in marks, meaning that essentials were not imported into the country leading to severe shortages
• The hyperinflation caused real damage to the Weimar government - it showed the government to be weak, it caused real damage to nearly everybody especially the middle classes who had lost their life savings, and the failures of the government emboldened the extremist parties who gained support from those who felt completely abandoned