Hyperinflation and the Ruhr

• Reparations


  Payments to the victors made by Germany under the Treaty of Versailles
• Germany had to pay £6.6 billion in reparations to the Allies
• This was a huge burden and Germany found it hard to pay
• Difficulty with paying reparations


  1. 1919 to 1923 was particularly difficult for Weimar Germany

  2. Unable to pay their reparation instalments (fixed regular payments)
• In 1922, the Weimar Republic stopped paying their reparation instalments (fixed regular payments)
• The seizing of the Ruhr


  1. France and Belgium retaliated by seizing the Ruhr (German region) in 1923

  2. To take what they believed Germany owed in the form of coal and other goods
• The Ruhr


  • Main industrial region in Germany
  • France and Belgians took control of all factories, mines and railways in the area
• The actions of the French and Belgians were legal in the eyes of the international community because of the Treaty of Versailles
• The German reaction


  1. Ebert told German workers to go on strike (passive resistance)

  2. France and Belgium brought their own workers in to take their place

  3. Over 8 months, 132 people were killed and 150,000 Germans were kicked out of their homes in the Ruhr
• After the Ruhr crisis

  To help pay France and Belgium quicker, the Germans printed more money
• This led to hyperinflation and had disastrous effects on the economy
• Hyperinflation


  The price of everything increases extremely quickly
• Weimar Germany did not have enough gold to match the amount of money it was printing
• This meant that the value of the German mark fell and that the price of goods increased rapidly
• Germany's war debts and the interest payments on these meant that they had debts worth 175% of their total national output (Debt: GDP of 175%)
• This is the same level as Greece in the Eurozone crisis
• Consequences of hyperinflation


  • In 1918, a loaf of bread cost 0.6 German marks. By November 1923, it cost 201 billion German marks.
  • People bought goods as soon as they were paid and carried money round in wheelbarrows
  • People used a barter system (trading items) instead of money
• Social problems caused by hyperinflation

  • People with savings (especially the middle class) lost their money
  • People with a fixed income could not renegotiate their earnings
  • The elderly with fixed pensions had their incomes destroyed
  • Small business owners went bankrupt
• A few people benefitted from hyperinflation, such as people with debt and farmers
• However, it is important to remember that most people suffered because of hyperinflation. People did not get their savings back when hyperinflation ended