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The hyperinflated cost of post-WWI peace for the Weimar Republic

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Ferguson and Granville state, “The idea that inflation fatally weekend the Weimar Republic retains a special place in both economic and political history.”1 World War II had finally ended, countries around the world were coming together in unity celebrating, and peace had finally arrived. For Germany, however, things were looking slightly different. Further assessment of the primary sources give an exclusive outlook into how this problematic economic mishap was far worse than poverty and possibly could have been a contributing factor in the rise of extremism; more so focused on the Nazi’s and into the Second World War.

The background information behind the reparations are straightforward; famous commanding leaders had different ideals and interests when talking about the stability of Europe. The Prime Minister of France at the time, George Clemenceau, believed that after the events during the Franco-Prussian War, revenge was the right response. Clemenceau demanded compensation for the Great War that took place in France. British Prime Minister, David Lloyd George, believed in taking an aggressive move forward to regain the small amount of political power that he had left. With that said, American president Woodrow Wilson, demonstrated an act of chivalry and asked for an amount that was thirteen times more than what Keynes had suggested. Keynes elaborated on this agreement as “one of the most serious acts of political unwisdom…”2.

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The causes of hyperinflation can be determined easily with a knowledge of basic economics. Firstly, it is crucial to elaborate and analyze the printing off paper marks3 did not play a contributing role in reducing Germany’s debt towards its allies because the payments made were highlighted in gold. Furthermore, there were three main reasons to print more marks. Printing off more marks would help pay the debt from the expanding fiscal policies, help bolster employment and economic growth, spending policies in times of a crisis were being reinstated; with the fall of the exchange rate, there was a better chance of fair trade; depreciation showed how it was the most probable way of convincing the rest of the world in reducing reparations. Those reasons were enough information for the Weimar Republic to print as many marks as possible.

The negative impact on the lives of individuals was the reason that an economic phenomenon as complex as hyperinflation was factor in the rise of extremism. A source states “during the period of hyperinflation, consumers desperately tried to use their rapidly depreciating money to acquire basic goods.”4 The same source describes this time as “an epidemic of fear, naked need: lines of shoppers, long since an unaccustomed sight, once more form in front of shops, first in front of one, then in front of all.”5 This source explains how hyperinflation was a depressing time for many because it gave individuals no hope and left them suffering.

31 gold mark = 23.82 cents

4Friedrich Kroner, “Overwrought Nerves” (1923), In The Weimar Republic Sourcebook, edited by Anton Kaes, Martin Jay, and Edward Dimendberg, (Berkeley: University of California Press, 1994), 63.

5Friedrich Kroner, “Overwrought Nerves” (1923), In The Weimar Republic Sourcebook, edited by Anton Kaes, Martin Jay, and Edward Dimendberg, (Berkeley: University of California Press, 1994), 63.

An individual who has experienced both hyperinflation and poverty can say that they are two completely different things. During this time, the individuals living in poverty were not the only ones living in a difficult position, “all social groups felt the pinch.”6 Members from both the lower and middle class were affected, and those with non-commodity savings were getting it the worst. A source states that, “Among large segments of the German population, hyperinflation, in particular, led to a profound loss of confidence in politics and the market economy.”7 Furthermore, the increased amount of inflation resulted in social instability and made poverty far worse.

Based on the evidence presented, it is not hard to see how and why extremism would be right for everyone. However, giving full credit that hyperinflation was the cause of Hitler and his reign is quite risky but you can argue that it was a good base for the Nazi party to grow on. However, hyperinflation was a contributing factor in what we all know to be a major event in history that we call today, the “Holocaust”. Hitler was able to direct his hate and blame all the negative impacts hyperinflation had on Germany towards this particular race and religion which were the Jews.

As the primary sources stated, Germany was greatly impacted by hyperinflation, not just those that were poor but the society as a whole. Extremists had brainwashed the minds of Germans into thinking that they needed a supreme leader to help them benefit from this economic catastrophe, resulting in the rise of Adolf Hitler.

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.” – Mark Twain


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