In 1923 the German economy was nearly destroyed by hyperinflation. This means that prices rose incredibly fast - for example a single egg cost 91 million marks.

Causes of hyperinflation

Treaty of Versailles: Germany fell behind with her reparations payments. Therefore France and Belgian troops invaded the Ruhr area and started taking goods instead.

Government actions: the government told workers not to co-operate and go on strike. This was called passive resistance. The government then printed more money to pay the striking workers and to pay the reparation payments. This meant that money lost its value and prices went up. As money lost its value the government printed more and more money which made prices go up even worse.

Consequences of hyperinflation

Economic:

The middle classes lost their savings.
People on fixed incomes - such as pensioners - suffered extreme poverty.
There was no money left in the economy to invest in business.
However, some people benefitted. Those in debt could pay it off for virtually nothing and those with goods to sell, e.g. farmers, could barter and make money.

Political:

Many, especially the middle classes, lost faith in the Weimar Republic and in democracy. Hyperinflation was a long-term cause of the collapse of the Weimar Republic.

GCSE Germany 1890 - 1945 AQA

Hyperinflation Crisis 1923