1923 Hyperinflation crisis
Causes
Germany were unable to pay the reparations and therefore printed more moeny so to pay them off
More money in circulation = the value of money decreased
Loss of the war led to the Treaty of Versailles, which led to the 6.6 billion reparation bill
Germany also fell behind on payments of Coal to France and Belgium
Large spending on munitions and artillery during the war had led to inflation
Subsequently, France and Belgium invaded the Ruhr driving resources out of Germany
This also sparked passive resistance - paying money and getting no resources - double edge sword
No resoirces = no trade = reduced income
printed even more money, causing the situation to worsen
Those injured by the war were now in need of pensions and sick pay - government spending increased and no cuts were made to compensate for this
What happened?
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Passive resistance worsened the situation
Money became worthless
Gobvernment printed more money because of above reasons
For example - a loaf of bread cpost 166 marks in January 1923, yet cost 233 billion marks in novemeber
5 major banks in Germany collapsed
Germany was in a state of turmoil
Feeling of unfairness surfaced because those who had been careful with money were affected the worst by hyperinflation
Crime rate and suicide rate increased - general suffering in Germany
Who was affected the worst by hyperinflation?
Landlords whose tenants paid fixed rents - their income now had little worth
Middle class who had saving - 5 major banks collapsed and therefore they lost their savings
Those on fixed benefits - these did not rise with hyperinflation so became worthless and people could not survive on them
Majority of society were badly affected by hyperinflation, shown by the increase in crime rates and suicide rates
Who actually benefited from the hyperinflation crisis?
Those who had not been careful with money - they did not lose anything from hyperinflation
Peasanst - people still neeeded food so tehir work was in demand
Those who were in debt - they could now easily pay it back
People like Stinnes who bought cheap loans - when hyperinflation was reversed by Stresemann- his businesses he had bought with the loans reaped him a great amount of money
Consequneces
Standard pf living dramatically decreased
The middle class who had lost their savings truned to the Nazi party for a scapegoat
People could not afford the necessities such as food and couldn't afford to heat their homes
Crime rates and suicide rates also increased
Peoples wages increased - but not to the degree that food prices increased
It was not uncommon that a whole weeks wages could only afford a loaf of bread and small block of cheese
Starvation mounted
People who hadnt been careful with their money actually ebenfitted
This caused tension among society
Blamed the government and the Jews because Jews had achieved prominence in banking and owned 50% of Germany's major banks