This page examines the impact of hyperinflation on Germany's economy, society and politics.

1. Hyperinflation:
social, economic and
political impact

2. Early Weimar Germany faced a
series of economic challenges,
but the hyperinflation crisis of
1923 almost brought down the
government.
Inflation is the process of
prices increasing gradually
over time; hyperinflation is
when this happens in a very
short period of time.

3. From 1919 onwards, the
Weimar government faced a
growing budget deficit
(difference between the money
a government has against what
it spends). This was partly
linked to social welfare costs.
As a result the government
started printing more bank
notes to pay for this.

4. The result of doing this is that
German marks became worth
less. As prices rose, the
government in turn had to
print more money.
At the same time, the German
government was struggling to
pay the cost of reparations,
meaning more money was
printed.

5. In January 1923, angry at
Germany’s failure to meet their
Versailles commitments,
French and Belgian forces
invaded the Ruhr, Germany’s
industrial zone.
They did so to gain control of
industries and railways, and
take German resources in lieu
of reparation payments.

6. There were strikes by Germans
in response to France and
Belgium’s actions – resulting in
140 German deaths.
The German government
encouraged these revolts, and
made payments to striking
workers. This involved printing
even more money, hugely
increasing wages and prices too.

7. Price inflation soon turned to
hyperinflation as Germany fell
into a financial disaster.
In January 1919, one US dollar
($1) had been worth 8.9 German
marks. By November 1923, $1
was worth 200 billion marks.
Money became worthless –
stories existed of people stealing
baskets but leaving money.

8. Prices rose so much that
workers would rush to spend
their wages as soon as they got
them. Restaurant prices would
change from the time a meal
was ordered until it was eaten.
The government had 300
paper mills and 2000 printing
companies working 24-hour
shifts to produce banknotes.

9. The effects on most Germans
were devastating.
Huge queues existed for food,
and there was a food shortage
as farmers would not sell for
worthless money.
A barter economy developed,
with people swapping items or
services in exchange for
essential items.

10. People on fixed incomes
(such as pensioners) were
particularly hurt as they
could not afford the hugely
increasing prices.
Many members of the middle
class who had savings saw
the value of their investments
wiped out overnight, forcing
them into poverty.

11. At first, many workers were
given compensatory wage
rises, however eventually
their incomes fell below the
speed of hyperinflation.
Some businesses struggled
to cope, and as a result went
bust or laid off workers,
causing a large increase in
unemployment.

12. Hyperinflation had an
associated impact on health in
Germany too.
The rise of extreme poverty
and food shortages meant that
many people became ill and
undernourished; this was
especially true for pensioners.
Many of these people blamed
the government for their plight.

13. However, some Germans did
profit from hyperinflation.
People who had previously
been in debt – mortgage
holders, for example – easily
paid off their loans.
Others benefitted too; people
on fixed rents or investors
that could get cheap credit and
increase their holdings.

14. Unsurprisingly, the German
government faced public anger.
At first they tried to
compensate by printing more
money, but ultimately this made
the problem worse.
Many Germans became
attracted to extreme political
messages, and began to lose
their faith in democracy.

15. Historians’ views
• Alan Bullock: Believes that the inflation was to undermine
German society in a way which neither the war, nor the
revolution of 1918, nor the Treaty of Versailles had ever done.
• David Evans and Jane Jenkins: Take the view that those
people who lost out were attracted to extremist parties.
• Detlev Peukert: Takes the view hyperinflation left a long-
lasting psychological scar that undermined faith in democracy,
although not entirely easy to assess as people in the same class
were often very differently affected.