probably happened because the Weimar government printed
banknotes to pay reparations and - after the 1923 French
invasion - the Ruhr strikers. Because these
banknotes were not matched by Germany's production, their
value fell. Prices spiralled out of control and
people with savings and fixed incomes lost everything.
Anger at foreigners, and at the rich profiteers who made their
fortunes from the hyperinflation, added to the support of
extreme political parties such as the fascists and the
- basic overview of 1923
- showing pictures of actual money
Here is a really clear explanation by a modern
historian about why the hyperinflation happened:
The word `inflation' describes a situation in
which prices are rising and the value of money is falling. It
is commonly said that inflation is caused by too much money
chasing too few goods. Inflation occurs, in other words, when
the supply of goods fails to keep up with demand. Inflation is
not easy to stop once it has got started. An inflationary
spiral tends to set in. Rising prices produce a demand for
higher wages: higher wages mean that goods cost more to
produce: prices have to go up again to pay for the wage
Germany began to suffer serious inflation during the war. The
German government did not pay for the war by taxing people
more heavily. Instead it paid its bills by printing banknotes.
Soon there was too much money chasing too few goods. An
inflationary spiral had started.
worse at the end of the war. A huge amount in reparations was
demanded from Germany. The sum to be paid was fixed at
£6,600,000 in 1921. Many foreigners thought that Germany would
be unable to pay. They began to lose confidence in Germany's
currency. Foreign banks and businesses expected increasingly
large amounts of German money in exchange for their own
currency. It became very expensive for Germany to buy food and
raw materials from other countries. This led to a further
increase in prices in Germany.
1922 Germany failed to pay an instalment of reparations on
time. France replied in January 1923: French troops occupied
Germany's main industrial region, the Ruhr. The French were
determined to make Germany pay every penny she owed. They
wanted to keep Germany weak. A weak Germany meant that France
was safe from the threat of attack.
German government ordered a policy of passive resistance in
the Ruhr. Workers were told to do nothing which helped the
invaders in any way. What this meant in practice was a general
strike. The cost of the government's policy was frightening.
All the workers on strike had to be given financial support.
The government paid its way by printing more and more
banknotes. Germany was soon awash with paper money. The result
White and Eric Hadley, Germany 1918-1949 (1990)
It was cheaper to light the
fire with paper money than with newspaper.
This table shows what happened to the price of
bread in Berlin (prices in marks):
and this is what happened to the price of some
1 kg butter
1 kg beef
There are many descriptions of what it was like
to live through these times:
Bartering became more and more widespread . . . A haircut cost
a couple of eggs . . . A student I knew . . . had sold his
gallery ticket . . . at the State Opera for one dollar to an
American; he could live on that money quite well for a whole
week. The most dramatic changes in Berlin's outward
appearance were the masses of beggars in the streets . . .
The hard core of the street markets were the petty black-marketeers
... In the summer of that inflation year nay grandmother found
herself unable to cope. So she asked one of her sons to sell
her house. He did so for I don't know how many thousands of
millions of marks, The old woman decided to keep the money
under her mattress and buy food with it as the need arose -
with the result that nothing was left except a pile of
worthless paper when she died a few months later.
As soon as
the factory gates opened and the workers streamed out, pay
packets (often in old cigar boxes) in their hands, a kind of
relay race began: the wives grabbed the money, rushed to the
nearest shops, and bought food before prices went up again.
Salaries always lagged behind, the employees on monthly pay
were worse off than workers on weekly. People living on fixed
incomes sank into deeper and deeper poverty.
sight in the streets were handcarts and laundry baskets full
of paper money, being pushed or carried to or from the banks.
It sometimes happened that thieves stole the baskets but
tipped out the money and left it on the spot. There was dry
joke that spread through Germany: papering one's WC with
banknotes. Some people made kites for their kids out them.
Egon Larsen, a German
journalist, remembering in 1976
At eleven in the morning a siren sounded.
Everybody gathered in the factory yard where a five-ton lorry
was drawn up, loaded with paper money. The chief cashier and
his assistants climbed up on top. They read out names and just
threw out bundles of notes. As soon as you caught one you made
a dash for the nearest shop and bought anything that was
often bought things you did not need. But with those things
you could start to barter. You went round and exchanged a pair
of shoes for a shirt, or a pair of socks for a sack of
potatoes; some cutlery or crockery, for instance, for tea or
coffee or butter. And this process was repeated until you
eventually ended up with the thing you actually wanted.
Willy Derkow, who was a
student at the time, remembering in 1975.
I vividly remember pay days at that time. I
used to have to accompany the manager to the bank in an open
six-seater Benz which we filled to the brim with bundles and
bundles of million and milliard mark notes. We then drove back
through the narrow streets quite unmolested. And when they got
their wages, the workmen did not even bother to count the
number of notes in each bundle.
A worker in a transport firm in Berlin
My father began to pay wages largely in goods,
mostly foodstuffs. My mother stacked these in the flat where
we lived. Livestock, such as chickens, was kept in the
bathroom and on the balcony. Flour, fats etc. were bought in
bulk as soon as money became available. My mother had to
parcel all this food out in rough proportion to the employee's
entitlement. Come pay-day the workforce assembled in. the flat
in groups for their handouts.
A man whose father owned a small business
Some of the
experiences are almost amusing:
One fine day I dropped into a cafe to have a
coffee. As I went in 1 noticed the price was 5000 marks - just
about what I had in my pocket. I sat down, read my paper,
drank my coffee, and spent altogether about one hour in the
cafe, and then asked for the bill. The waiter duly presented
me with a bill for 8000 marks. 'Why 8000 marks?' I asked. The
mark had dropped in the meantime, I was told. So I gave the
waiter all the money I had, and he was generous enough to
leave it at that.
The memories of a German writer
We were out playing football and one of my
firends said: 'I'm going to the shop to buy a couple of bread
rolls.' he had a 500,000 mark note...
But he only came back with one, because a roll now cost
The memories of a Karl Nagerl, who was a school
boy in 1923
Two women were carrying a laundry basket filled
to the brim with banknotes. Seeing a crowd standing round a
shop window, they put down the basket, for a moment to see if
there was anything they could buy. When they turned round a
few moments later, they found the money there untouched. But
the basket was gone.
was in many ways a cheerful time for the young. When I grew up
we were taught to save money and not throw it away. But in the
worst days of the inflation this principle was turned upside
down. We knew that to hold on to money was the worst thing we
could do. So this allowed us, with a good conscience, to spend
whatever we had available.
A currency dealer
But for many
people - especially those on a fixed income, hyperinflation was
As soon as I received my salary I rushed
out to buy what I needed. My daily salary was just enough to
buy one loaf of bread and a small piece of cheese .... A
friend of mine, a vicar, came to Berlin to buy some shoes with
his month's wages for his baby. By the time he arrived, he
only had enough to buy a cup of coffee.
A German woman writing about the effects of
father had sold his business during the war, together with all
the real-estate property he owned, and retired from business.
He was, by middle-class standards, a rich man, and intended to
live on the income from his investments. These were mainly
life-insurance policies, fixedvalue securities and a mortgage
on a large agricultural estate, whose yield of 15,000 marks
per annum would have provided a very good income.
course, to zero - my father only managed to keep his head
above water by resuming work. "
writer remembering the effects of the inflation on his father
Countless children, even the youngest, never
get a drop of milk and come to school without a warm breakfast
... The children frequently come to school without a shirt or
warm clothing or they are prevented from attending school by a
lack of proper clothing. Deprivation gradually stifles any
sense of cleanliness and morality and leaves room only for
thoughts of the struggle against the hunger and cold.
Report by the Mayor of Berlin, 1923
A friend of mine was in charge of the office
that had to deal with the giving out of ... pensions ...in the
district around Frankfurt.... One case which came her way was
the widow of a policeman who had died early, leaving four
children. She had been awarded three months of her husband's
salary (as a pension). My friend worked out the sum with great
care ...and sent the papers on as required to Wiesbaden. There
they were checked, rubber stamped and sent back to Frankfurt.
By the time all this was done, and the money finally paid to
the widow, the amount she received would only have paid for
three boxes of matches.
A German woman who ran
a Christian relief centre for the poor
Billion mark notes were quickly handed on as
though they burned one's fingers, for tomorrow one would no
longer pay in notes but in bundles of notes... One afternoon
I rang Aunt Louise's bell. The door was opened merely a
crack. From the dark came an
broken voice: 'I've used 60 billion marks'
worth of gas. My milk bill is 1 million. But all I have
2000 marks. l don't understand any more'.
E Dobert, Convert to Freedom (1941)
importantly, not everybody suffered. A secondary
historian sums up the situation:
impact of hyperinflation within Germany was uneven. Some
profited from it. Adroit speculators like the tycoon Hugo
Stinnes made fortunes, and industrialists and landowners who
owed money were able to pay off their debts in devalued
currency. Others were able to escape the worst - those, for
example, whose wealth took the form of property or those with
goods or skills which could be readily bartered. Initially the
working class suffered comparatively little because trade
unions ensured that wages kept pace with rising prices, but as
1923 wore on their position deteriorated. The principal losers
in 1923, though, were those with cash savings, many but not
all of whom were in the middle class (the
Middle-class savers experienced the trauma of seeing the value
of their savings completely wiped out.
White, The Weimar Republic (1997)
and one writer remembers a
specific example of the rich getting richer:
A German landowner bought, on credit, a whole
herd of valuable cattle. After a certain time he sold one cow
from the herd. Because of the depreciation of the mark, the
price he got for it was enough to pay off the whole cost of
The memories of a German writer
Certain things about the inflation roused people
to anger, and this anger led to outbreaks of violence:
At Cologne yesterday outbreaks of looting were
a frequent occurrence in spite of the activity of all the
available police. Many shops remain unopened and others are
barricaded ... Many lorries were held up on their way to
market and were looted of potatoes, meat and bread as well as
of tobacco and boots.
Evening Standard (a British newspaper)
for 13 October 1923
For many, the memories of 1923 were to be one of
the reasons they supported Adolf Hitler in the 1930s:
financial disaster had profound
effects on German society: the
working classes were badly hit; wages failed to keep pace with
inflation and trade union funds were wiped out. The middle
classes and small capitalists lost their savings and many
began to look towards the Nazis
for improvement. On the other
hand landowners and industrialists came out of the crisis
well, because they still owned their material wealth - rich
farming land, mines and factories. This strengthened the
control of big business
over the German economy. Some
historians have even suggested that the inflation was
deliberately engineered by wealthy industrialists with this
aim in mind. However, this accusation is impossible to prove
one way or the other, though the currency and the economy
recovered remarkably quickly.
Lowe, Mastering Modern World History (1982)
were deceived, too. We used to say, "All of Germany is
suffering from inflation." It was not true. There is no game
in the whole world in which everyone loses. Someone has to be
the winner. The winners in our inflation were big business men
in the cities and the "Green Front", -from peasants to the
Junkers, in the country. The great losers were the working
class and above all the middle class, who had most to lose.
How did big business win? Well, from the very beginning they
figured their prices in gold value, selling their goods at
gold value prices and paying their workers in inflated marks.
. You could go to the baker in the morning and buy two rolls
for 20 marks; but go there in the afternoon, and the same
rolls were 25 marks. The baker didn't know how it happened
that the rolls were more expensive in the afternoon. His
customers didn't know how it happened. It had somehow to do
with the dollar, somehow to do with the stock exchange - and
somehow, maybe to do with the Jews.
Erna von Pustau remembering life in Hamburg
at the time
When I was a student in Freiburg only some 30
miles from the Swiss border there was a regular influx of
visitors from nearby Basle. They were quite ordinary people
who came for a day's shopping and enjoyment. They filled the
best cafes and restaurants, bought luxury goods. Most of us
had very little money and could never afford to see the inside
of all those glamorous places into which the foreigners
crowded. Of course we were envious . . . Contempt for such
visitors combined with envy to produce in most of us a great
deal of anti-foreigner and nationalist feeling.
of William Guttman
On Friday afternoons in 1923, long lines of
manual and white-collar workers waited outside the pay-widows
of the big German factories, department stores, banks, offices
... staring impatiently at the electric wall clock, slowly
advancing until at last they reached the window and received a
bag full of paper notes. According to the figures inscribed on
them, the paper notes amounted to seven hundred thousand, or
five hundred million, or three hundred and eighty billion, or
eighteen trillion marks - the figures rose from month to
month, then from week to week, finally from day to day. With
their bags the people moved quickly to the door, all in haste,
the younger ones running. They dashed to the nearest food
store, where a line had already formed. Again they moved
slowly, oh, how slowly, forward. When you reached the store, a
pound of sugar might have been obtainable for two millions;
but, by the time you came to the counter, all you could get
for two millions was half a pound, and the saleswoman said
the dollar had just gone up again. With the millions or
billions you bought sardines, sausages, sugar, perhaps even a
little butter, but as a rule the cheaper margarine - always
things that would keep for a week, until next pay-day, until
the next stage in the fall of the mark....
printing presses of the government could no longer keep
pace.... You could see mail-carriers on the streets with sacks
on their backs or pushing baby carriages before them, loaded
with paper money that would be devalued the next day. Life was
madness, nightmare, desperation, chaos.... Communities printed
their own money, based on goods, on a certain amount of
potatoes, of rye, for instance. Shoe factories paid their
workers in bonds for shoes which they could exchange at the
bakery for bread or the meat market for meat.
suddenly, the mark lost its value. The war loan was worth
nothing. Savings of a lifetime were worth nothing. . ..
lost its value - what, then, could have value? Of course, many
were accustomed to having no money; but that even with money
you had nothing.... First the Kaiser gone, then the silver
coins with his likeness had gone and unknown faces, sometimes
distorted to frightful grimaces by eccentric artists, stared
at you from worth less paper notes.
During the hyperinflation,
many towns issued their own emergency money, called 'notegeld'.
Many of these notes contained anti-Jewish images; this example
is from Robnitz.