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Why Did Weimar Germany Experience Hyperinflation In 1923?

1426 words - 6 pages

Why did Weimar Germany experience Hyper-Inflation in 1923?In 1923 the Weimar Republic experienced its biggest economic crisis yet, hyperinflation. The crisis was not created because of one event, but due to several, whose consequences escalated as the years went on. The root of the problem lay in the economic aftermath of WWI as Germany lost the war and was severely in debt. The Weimar constitution prevented quick decisions to be taken and so the resolves were the 'easy way out' rather than those that would help the republic in the long-term. The invasion of the Ruhr was the last measure for the German economy, and as a result it succumbed to hyperinflation. It was unknown at the time how the decisions taken would affect Germany's economy later on, and so the government acted in the present rather than the future. However, with hindsight, it is possible to outline the lead up to the economic crisis and hyperinflation in Germany. After WWI, the defeated Germany was in a very bad position economically. Inflation had begun during the war itself, as the government of the time funded the war by borrowing and printing more money. The government's expenditure was high and taxation low. It had been assumed that Germany would actually win the war and that peace would lead to economic stability. However, Germany lost the war and there was a need for high levels of public spending to overcome post-war social difficulties, such as the injured soldiers who needed money. Yet the defeat had reduced Germany to a poor country most of whose population was starving and in need of welfare. There was next to no money entering the economy and so the government printed more money in 1919, which caused a rise in inflation. Germany had many economic problems, which could have tested the most stable of governments, yet the nature of the Weimar Constitution affected the decisions that were taken. The Weimar Constitution stated that the government took responsibility for assuring the basic health and well-being of all its citizens, and would provide a basic level of welfare if necessary. At the time, Germany was heavily in debt so the government was printing more money and inflation was creeping up on the economy. Since there was more money in the economy, prices went up, yet fixed wages stayed the same. The German people were encountering a problem. They were not able to buy the same items for the same amount of money. The standard of living in Germany was beginning to fall and more people needed support. Yet the government had no money to pay for welfare for such a large number of people. The government were at a loss as they felt that they could not go against the constitution so soon after it was written. The government had to try to pay these people and this affected their decisions accordingly. Also, due to the fact that the constitution gave the right to proportional representation, coalition governments emerged in the Reichstag, which were indecisive and liable to...

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