2. 1 Background
2 Prices and denominations soar
3 The impacts of hyperinflation
4 Economic effects
5 Winners and losers
6 Outcomes
7 The Rentenmark
3. Background
In early 1923, German workers embarked on a prolonged general strike as
a protest against the occupation of the Ruhr by French forces .
4. Prices and denominations soar
As more banknotes went into circulation, the buying
power of each Reichsmark decreased, prompting sellers
to raise prices. In 1918, a loaf of bread cost one-quarter
of a Reichsmark; by 1922 this had increased to
three Reichsmarks. In 1923 the market price for bread
spiralled, reaching 700 Reichsmarks (January), 1200
(May), 100,000 (July), two million (September), 670
million (October) and then 80
billion Reichsmarks (November).
5. The impacts of hyperinflation
➢The rapid devaluation of paper money.
➢worthless banknotes .
➢Uncertinity
6.
7. Economic effects
The hyperinflation crisis also made foreign exchange almost impossible.
Before World War I, one US dollar had purchased about four Reichsmarks.
By the end of 1920, this had increased to 70 Reichsmarks; a year later it was
180. At the worst of the hyperinflation in late 1923, the exchange rate for
one US dollar had skyrocketed to 48,000 Reichsmarks (January) then
192,000 (June) 170 billion (October) and four trillion (November).
8. Winners and losers
There were winners and losers from the 1923 hyperinflation. The worst
affected were the Mittelstand (middle class) who relied on investments,
savings or incomes from pensions or rents. In 1921, a family with 100,000
marks in savings would have been considered wealthy – but within two
years, this would not be enough for a cup of coffee.
9. Outcomes
A 10 Rentenmark note, issued in late 1923 as a means of stemming
hyperinflation in Germany
10. 1. The hyperinflation crisis of 1922-23 was caused in large part by the
Weimar government printing banknotes to pay striking workers in the
occupied Ruhr.
2. By mid-1923, the printing of these banknotes, which were not backed by
gold, was causing a rapid increase in both prices and wages.
3. This hyperinflation led to farcical scenes, such as extraordinary prices
and Germans pushing wheelbarrows of cash to buy simple items.
4. Hyperinflation also eroded the cash savings of the middle class and
caused foreign exchange rates to skyrocket, disrupting commercial
activity.
5. The hyperinflation crisis was eventually ended with the formation of a
new reserve bank and the issue of a new national currency called
the Rentenmark.
