The German Inflation of 1923
French and Belgian occupation of the Ruhr in 1923 coincided with the worsening of a major inflation of the German currency into a runaway inflation. The mark had depreciated substantially during the war, falling to barely half its prewar value by 1918. Inflation increased throughout 1921 as the heavy demands of reparations upon the state budget were covered by the printing of currency rather than revenues. During 1922 the mark fell precipitously. In January 1922 the gold mark was worth 48 paper marks; in July it was worth 160; and by December, 1,750. When the Ruhr was occupied, the German government lost the revenue of that rich industrial area. Because it also took upon itself the support of the population in passive resistance to the occupying armies, its outlays increased enormously. These costs, mainly unemployment insurance, were covered by astronomical issues of currency. By May, 1923, a gold mark equaled 16, 556 paper marks; by the end of August it equaled 2, 453, 595; on October 11, 1, 205, 358, 227; and by November over 1 trillion. Currency lost value by the hour, payments and purchases became impossible. Small businesses collapsed, and people on fixed incomes were ruined, but people with debts or those who held real assets gained, and many large industrial organizations profited amid the chaos.
KeywordsUnemployment Insurance Private Bank Treasury Bill Wage Bill Passive Resistance
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