The Weimar Republic: Inflation in Germany

(Flowchart)
Weimar Germany had greeted
with total horror the financial
punishment of Versailles. If
Germany had paid off the sum of
6,600,000,000, she would have
remained in debt to the Allies
until 1987 !! However, by signing
the Treaty of Versailles, she had
agreed in principle to the issue of
reparations and in 1921,
Germany just about managed to
pay its first installment of 2 billion
gold marks. Weimar Germany
was allowed to pay in kind
(actual materials) as opposed to
just cash. Most of this 2 billion
was paid in coal, iron and wood.

In 1922, Weimar Germany

simply could not manage to pay
another installment. This the
Allies did not believe especially
France where anger towards
Germany still ran deep and the
German government was
accused of trying to get out of
her reparations responsibilities.
This apparent refusal was only
four years after the end of the
war, and the attitude of the public
towards Germany was still very
hostile and not just in France.

In 1923, French and Belgium troops

invaded the Ruhr; Germanys most
valuable industrial area. The
French and Belgium troops took
over the iron and steel factories,
coal mines and railways. Those
Germans who lived in the Ruhr and
were considered not to be cooperating with the Germans were
imprisoned. Food was taken. That
this action by the French and
Belgium broke the rules of the
League of Nations which both
belonged to was ignored by both
countries. France was considered
one of the Leagues most powerful
members and here she was
violating its own code of conduct.

Citations:
--- Trueman, C. (2015, May 22). Hyperinflation and Weimar Germany - History Learning Site. Retrieved March 24, 2016, from http://www.
historylearningsite.co.uk/modern-world-history-1918-to-1980/weimar-germany/hyperinflation-and-weimar-germany/
--- Jung, A. (2009, August 14). Millions, Billions, Trillions: Germany in the Era of Hyperinflation - SPIEGEL ONLINE. Retrieved March 25, 2016, from
http://www.spiegel.de/international/germany/millions-billions-trillions-germany-in-the-era-of-hyperinflation-a-641758.html
--- Llewellyn, J. (2014). The 1923 hyperinflation. Retrieved March 25, 2016, from http://alphahistory.com/weimarrepublic/1923-hyperinflation/

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.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.