The German Hyperinflation of 1923

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The German Hyperinflation of 1923
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• 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
  163 marks. 
• By September 1923, this figure had reached
  1,500,000 marks.
• At the peak of hyperinflation, November 1923,
• a loaf of bread cost 200,000,000,000 marks.

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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
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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• 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.

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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".
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Effects This table shows what happened to the
price of bread in Berlin (prices in marks)   
  December 1918 0.5  December 1921
4  December 1922 163  January
1923 250  March 1923
463  June 1923
1,465  July 1923
3,465  August 1923
69,000  September 1923 1,512,000  October
1923 1,743,000,000  November 1923
201,000,000,000
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This is what happened to the price of some other
goods     Item 1913 Summer 1923
November 1923  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  Pair
shoes 12.00 1,000,000
32,000,000,000,000
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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 ...
Egon Larsen, a German journalist, remembering
in 1976
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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
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       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
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              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
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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
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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  
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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  
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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  
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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
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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
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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
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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)
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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
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• 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 arrivethe price had gone up!

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• 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. 

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• 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.

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• 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.