Economic Problems for the Weimar Government, 1923

Economic Problems for the Weimar Government, 1923

When the German government was ordered to pay £6600m in reparations as part of the Treaty of Versailles, the government announced that they could not afford the payments.
As a result of this, the French invaded the Ruhr, which is Germany's main industrial error. The idea behind this was that they would take what they were owed by force. However, as a passive resistance, the workers went on strike and the industrial production rates dropped to nothing.
 The government tried to solve the problem by simply printing more money. Money lost it's value and went out of control. For example, in 1918 a loaf of bread cost 0.6 marks but in November 1923 it cost 201,000million marks.

Winners from Hyperinflation

• Borrowers: Money borrowed in 1919 was worthless by 1923, so could very easily be paid back.
• Big Businesses: Exporters could sell goods abroad for more valuable currencies.
• Landowners: As prices went up, so did the value of land.

Losers from Hyperinflation

• Workers: The price of goods always rose faster than wages. Trade Union funds were wiped out.
• Savers: Savings in the bank were now worthless.
• People on fixed Incomes (Pensioners): Their incomes were now to low to live on.
• Small Businesses: They could not deal with rapid changes in prices. These were normally ran by the Middle Class, and many of them began to look towards the Nazis for improvement.