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On This Day



On This Day… Hyperinflation!

Written by: George Chittenden : 10 Jun 2019

It was on this day, 6th Nov, back in 1923 when hyperinflation caused riots in Germany. In April 1921 the Reparations Commission announced the "London Payment Plan", which meant that Germany would pay reparations in gold or foreign currency in annual instalments of 2 billion gold marks, plus 26% of the value of Germany's exports. One strategy that Germany used was the mass printing of bank notes to buy foreign currency, which was then used to pay reparations, however it greatly exacerbated the inflation of the paper mark.

Children playing with bundles of notes

Children playing with bundles of notes

The crisis began when Germany missed a reparations payment. The sudden flood of paper money into the economy, on top of a general strike meant that no goods were manufactured, so there was more money, chasing fewer goods - combined with a weak economy ruined by the war, all resulted in hyperinflation.

Money being swept away like rubbish

Money being swept away like rubbish

Prices ran out of control, a loaf of bread, which cost 250 marks in January 1923 had risen to 200,000 million marks in November 1923. Germany's currency became worthless, temporarily making bank robberies and mugging crimes of the past: money was just not worth stealing anymore. People collected their wages in suitcases and wheelbarrows. One person, who left their suitcase unattended, found that a thief had stolen the suitcase but not the money!

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