The German Hyperinflation of
1923
Hyperinflation
•The drop in confidence caused by the invasion of the Ruhr
caused a crisis in Weimar Germany. The government printed
money but this which caused inflation. Prices started to rise
to match inflation. Very quickly, things got out of control and
what is known as hyperinflation set in.
•Prices went up quicker than people could spend their money.
In 1922, a loaf of bread cost
By September 1923, this figure had reached
At the peak of hyperinflation, November 1923,
a loaf of bread cost
163 marks.
1,500,000 marks.
200,000,000,000 marks.
1914
10 Pfennig, Copper-Nickel
This would buy ½ dozen eggs or 2 ½ pounds of potatoes.
Bread is 13 Pfennig for a 1 pound loaf.
WORLD WAR I STARTS.
GERMANY INVADES BELGIUM AND FRANCE
1916
10 Pfennig, Iron
Would buy 2 Eggs or 1 ½ Pounds of Potatoes.
Bread is 19 Pfennig a loaf.
HEAVY FIGHTING ALONG THE WESTERN FRONT RESULTS IN
TREMENDOUS CASUALTIES ON BOTH SIDES WITH FEW
TERRITORIAL CHANGES.
THE BRITISH USE TANKS IN BATTLE FOR THE FIRST TIME.
1918
½ Mark, Silver
Would buy 1 Dozen Eggs,
5 Pounds of Potatoes or a ¼ pound of Meat
Bread is 22 Pfennig a loaf.
KAISER WILLIAM II ABDICATES.
ARMISTICE IS SIGNED.
HOSTILITIES CEASE ON NOVEMBER 11, 1918
1919
50 Pfennig, Iron, issued by the City of Sinzig
Would buy a pound of Sugar or
4 Pounds of Potatoes
Bread is 26 Pfennig a loaf.
A HARSH PEACE TREATY THAT INCLUDES HEAVY DEMANDS
FOR REPARATIONS IS IMPOSED ON GERMANY
1920
1 Mark, Paper Money
Would buy ½ Dozen Eggs or a pound of flour.
Bread is 1.20 Mark a loaf.
The 1 Mark note, called a "State Loan Currency
Note" was not backed by reserves or hard assets.
RIOTS TAKE PLACE IN BERLIN AND THE RUHR.
1921
50 Pfennig, aluminum.
Would buy 2 Eggs, 1/8 Pound of sugar or
¼ Pound of potatoes.
Bread is 1.35 Mark a loaf
THE ALLIES OCCUPY DUSSELDORF AND OTHER CITIES
BECAUSE OF ALLEGED DEFAULTS IN REPARATION
PAYMENTS.
1922
10,000 Mark January 19, 1922 Reichsbanknote
In early 1922 10,000 Mark would buy over 250 Pounds of Meat.
By the end of the year it would buy only 5 pounds of Meat.
In June bread is 3.50 Mark a loaf.
When first issued in January of 1922 this note was the highest
denomination of circulating currency ever issued by the German
government. It would soon become small change. The note is sometimes
called the "Vampire Note" . If you look carefully, and have a good
imagination, you will see a vampire on the neck of the German worker.
This was said to represent the French sucking the blood from Germany
through the war reparations.
BY AUGUST THE MARK BEGINS A
COMPLETE COLLAPSE DUE TO
HEAVY REPARATION PAYMENTS.
JANUARY 1923
500 Mark, Aluminum
Would buy 1 dozen eggs or a pound of flour.
Bread is 700 Mark a loaf.
This 500 Mark coin was the highest denomination issued
for circulation by the German Government. Due to its
rapidly decreasing value it rarely circulated.
FRENCH AND BELGIAN FORCES OCCUPY THE RUHR AND
TAKE OVER MINES AND RAILROADS.
MAY 1923
500,000 Mark May 1, 1923 Reichsbanknote
Would buy about 40 pounds of meat.
Bread is 1200 Mark a loaf.
Suitcases, rather than wallets, were used to carry money.
JULY 1923
10 Million Mark July 25, 1923 Reichsbanknote
Would buy 12 Pounds of Meat or 7 pounds of butter.
Bread is 100,000 Mark a loaf.
To save printing cost and produce currency faster, the note was
printed only on one side.
SEPTEMBER 1923
10 Million Mark September 2, 1923, German Railroad Note
Would buy about ½ Pound of Meat, 4 eggs or
2 pounds of potatoes.
Bread is 2 Million Mark a loaf.
The German National Railroad, along with many companies and towns
issued their own inflationary currency as the German Government was
unable to print money fast enough to keep up with the roaring inflation.
As might be expected, these additional issues only further fueled
inflation by increasing the money supply.
OCTOBER 1923
1 Billion Mark, October 20, 1923 Reichsbanknote
Would buy ¾ Pound of Meat, 3 eggs or 1/6 Pound of Butter
Bread is 670 Million Mark a loaf.
Upon being paid, workers would rush to stores to buy anything
they could get, as they knew the prices would be higher in a
matter of hours.
UPRISINGS, CAUSED IN PART BY THE CONTINUING INFLATION,
BREAK OUT THROUGHOUT GERMANY.
NOVEMBER 1923
100 Billion Mark, Nov. 3 1923 City of Freital
On November 1 100 Billion Mark would buy 3 pounds of meat.
Bread is 3 Billion Mark a loaf.
On November 15 100 Billion Mark would buy 2 glasses of beer
Bread is 80 Billion Mark a loaf.
NOVEMBER 1923
•
On November 15 a new currency, the Retenmark was
introduced. The Retenmark was theoretically backed by all
land and industry owned by the government.
•One new Retenmark was worth a Trillion of the old Marks.
•Prices stabilized under the new currency, however the
wealth of most of the nation's citizens had been destroyed.
1924
10 Retenpfennig, aluminum-bronze
Would buy 3 Eggs or 2 pounds of Potatoes.
Bread is 35 Pfennig a loaf.
ADOLF HITLER WRITE "MEIN KAMPF".
Effects
This table shows what happened to the price of bread in
Berlin (prices in marks):
December 1918
December 1921
December 1922
January 1923
March 1923
June 1923
July 1923
August 1923
September 1923
October 1923
November 1923
0.5
4
163
250
463
1,465
3,465
69,000
1,512,000
1,743,000,000
201,000,000,000
This is what happened to the price of some other
goods:
Item
1913
1 egg
0.08
5,000
80,000,000,000
1 kg butter
2.70
26,000
6,000,000,000,000
1 kg beef
1.75
18,800
5,600,000,000,000
12.00
1,000,000
32,000,000,000,000
Pair shoes
Summer 1923
November 1923
“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 blackmarketeers ... “
Egon Larsen, a German journalist, remembering in 1976
“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.”
Egon Larsen, a German journalist, remembering in
1976
“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.”
Egon Larsen, a German journalist, remembering in
1976
“A familiar 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 going....
You very 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
“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
“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. “
The memories of a German writer
“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
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 herd”
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
“This 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.”
Norman Lowe, Mastering Modern World History (1982)
“We 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
The impact of hyperinflation was huge :
•People were paid by the hour and rushed to pass money to
loved ones so that it could be spent before its value meant it
was worthless.
•People had to shop with wheel barrows full of money
•Bartering became common - exchanging something for
something else but not accepting money for it. Bartering had
been common in Medieval times!
•Pensioners on fixed incomes suffered as pensions became
worthless.
•Restaurants did not print menus as by the time food
arrive…the price had gone up!
•The poor became even poorer and the winter of 1923 meant
that many lived in freezing conditions burning furniture to get
some heat.
•The very rich suffered least because they had sufficient
contacts to get food etc. Most of the very rich were land owners
and could produce food on their own estates.
•The group that suffered a great deal - proportional to their
income - was the middle class.
Their hard earned savings disappeared overnight. They did
not have the wealth or land to fall back on as the rich had.
Many middle class families had to sell family heirlooms to
survive.
It is not surprising that many of those middle class who
suffered in 1923, were to turn to Hitler and the Nazi Party.
•Hyperinflation proved to many that the old mark was of no
use. Germany needed a new currency.
•In September 1923, Germany had a new chancellor, the
very able Gustav Stresemann.
•He immediately called off passive resistance and ordered
the workers in the Ruhr to go back to work. He knew that this
was the only common sense approach to a crisis.
•The mark was replaced with the Rentenmark which was
backed with American gold.
•In 1924, the Dawes Plan was announced. This plan, created
by Charles Dawes, an American, set realistic targets for
German reparation payments. For example, in 1924, the
figure was set at £50 million as opposed to the £2 billion of
1922. The American government also loaned Germany $200
million.
•This one action stabilised Weimar Germany and over the
next five years, 25 million gold marks was invested in
Germany.
•The economy quickly got back to strength, new factories
were built, employment returned and things appeared to
be returning to normal.
•Stresemann gave Germany a sense of purpose and the
problems associated with hyperinflation seemed to
disappear.
•1924 to 1929 is known as the Golden Age of Weimar.
Berlin became the city to go to if you had money, the
Nazis were a small, noisy but unimportant party.
•Above all, Stresemann gave Germany strong leadership.