The Hyperinflation Crisis of 1923

Franco-Belgian occupation of the Ruhr

• French, together with the Belgians, sent a military force of 60,000 men to occupy the German Ruhr industrial area in January 1923

• Due to Germany falling seriously behind in coal reparations to France

• Force grew to 100,000 - occupied the whole of the Ruhr

How Germany responded to the occupation of the Ruhr

• Didn’t have the forces to fight back - due to reparations including army size and the Ruhr becoming demilitarised

• Chancellor Cuno ordered ‘passive resistance’ - stopping all reparations payment and that no citizens cooporates with the French authorities - with the promise that their wages would continue

The French’s response to German resistance to the Ruhr occupation

• Punished those who wouldn’t comply with their orders

• Miners were shot if resisted

• 132 Germans were shot in the 8 months of the occupation

• In May 1923 deliveries were a third of 1922 monthly levels, and output had fallen to a fifth of its pre-occupation output

Economic effects of the occupation

• Paying wages / providing goods for striking workers was a further drain on government finances

• Tax revenue was lost from closed businesses and workers who became unemployed

• Germany had to import coal and pay for it from the limited foreign currency reserves in the country

• Shortage of goods pushed prices up further

• Goverment still refused to increase taxes, meaning only option was to print more money - trigger for hyperinflation

The hyperinflation crisis

• Money lost its meaning and prices soared to unimaginable levels

• Printing presses became overworked to print more money

• Workers hoarded food before prices rose even further

• Resulted in food riots when crowds looted shops

• People even travelled to the countryside to take food from farms

• There was a large increase in the number of convictions for theft.