The Weimar Republic 1918-1929 - EdexcelThe hyperinflation crisis, 1923

The Weimar government's main crisis occurred in 1923 after the Germans missed a reparations payment late in 1922. This set off a chain of events that included occupation, hyperinflation and rebellions.

French and Belgian occupation of the Ruhr

• In November 1922 Germany defaulted on its reparations payment as scheduled. The first reparations payment had taken all she could afford to pay. The French believed Germany could make the repayment but were choosing not to, however the German government argued they could not afford to pay.
• In response, France and Belgium sent troops into Germany’s main industrial area, the Ruhr Valley. Their aim was to confiscate industrial goods as reparations payments as they didn’t believe Germany was unable to pay the second instalment. They occupied coal mines, railways, steel works and factories – all things that were important to Germany’s economy.
• The German government ordered workers to follow a policy of ‘passive resistance’ – refusing to work or co-operate with the foreign troops and in return the government continued to pay their wages.
• The French responded firmly – in the Krupp steel works, workers refusing to take orders were shot at. Other people were expelled from the Ruhr region altogether. Overall, 132 were killed and approximately 150,000 expelled from the area.
• The immediate consequences of the occupation were not good for the Weimar government – they decided to print more money to pay the workers in the region, contributing to hyperinflation. A general strike (when all the workers in the country stopped work) was called, and political instability was rife.

Revision ideas:

The Ruhr invasion would have added to the German government’s unpopularity, despite the fact that it was the French who killed people. Why was this?

Make a list of the reasons for the Weimar Republic’s unpopularity, with two sections – one looking at failings of the government itself and one looking at other contributing factors.

Hyperinflation

• Germany was already suffering from high levels of inflation due to the effects of the war and the increasing government debt.
• ‘Passive resistance’ meant that whilst the workers were on strike fewer industrial goods were being produced, which weakened the economy still further.
• In order to pay the striking workers the government simply printed more money. This flood of money led to hyperinflation as the more money was printed, the more prices rose.
• Prices ran out of control, for example a loaf of bread, which cost 250 marks in January 1923, had risen to 200,000 million marks in November 1923.
• By autumn 1923 it cost more to print a note than the note was worth.
• During the crisis, workers were often paid twice per day because prices rose so fast their wages were virtually worthless by lunchtime.

Hyperinflation winners:

• Borrowers, such as businessmen, landowners and those with mortgages, found they were able to pay back their loans easily with worthless money.
• People on wages were relatively safe, because they renegotiated their wages every day. However, even their wages eventually failed to keep up with prices.
• Farmers coped well, since their products remained in demand and they received more money for them as prices spiralled.

Hyperinflation losers:

• People on fixed incomes, like students, pensioners or the sick, found their incomes did not keep up with prices.
• People with savings and those who had lent money, for example to the government, were the most badly hit as their money became worthless.

Rebellions

Unsurprisingly, the hardships created during 1923 by hyperinflation led to many uprisings as groups struggled to take power from the government.

• A nationalist group called Black Reichswehr rebelled in September.
• Communists took over the governments of Saxony and Thuringia in October.
• Communists also took over the Rhineland and declared it independent in the same month.
• A fascist group called the Nazis attempted a putsch in Munich in November.