October 11, 1923

In the great inflation after WWI the German mark falls to a price of 4 billion per dollar. During a period between 1918 and January 1924, the German mark suffered hyperinflation. It caused considerable internal political instability in the country, the occupation of the Ruhr by foreign troops as well as misery for the general populace. To pay for the large costs of the ongoing First World War, Germany suspended the gold standard (the convertibility of its currency to gold) when the war broke out. Unlike the French Third Republic, which imposed its first income tax to pay for the war, German Emperor Wilhelm II and the German parliament decided unanimously to fund the war entirely by borrowing, a decision criticized by financial experts such as Hjalmar Schacht as a dangerous risk for currency devaluation.

By fall 1922, Germany found itself unable to make reparations payments. The mark was by now practically worthless, making it impossible for Germany to buy foreign exchange or gold using paper marks. Instead, reparations were to be paid in goods such as coal. In January 1923, French and Belgian troops occupied the industrial region of Germany in the Ruhr valley to ensure reparations payments. Inflation was exacerbated when workers in the Ruhr went on a general strike and the German government printed more money to continue paying for their passive resistance. By November 1923, the US dollar was worth 4,210,500,000,000 German marks.

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