Germany 1918 to 1939 Hyperinflation Mr Scully HSC

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Germany 1918 to 1939 Hyperinflation Mr Scully HSC Modern History

Germany 1918 to 1939 Hyperinflation Mr Scully HSC Modern History

Outcomes for this Lesson Describe what Hyperinflation is. How did it affect Germany? Outline

Outcomes for this Lesson Describe what Hyperinflation is. How did it affect Germany? Outline how everyday workers lived during this time frame. Outline who gained and lost from Hyperinflation.

What is Hyperinflation? Inflation is an economic term meaning a rise in the general

What is Hyperinflation? Inflation is an economic term meaning a rise in the general level of prices. A certain level of gradual inflation is common over time, which is why most everyday items cost more now than they did in our grandparents’ day. Another way of looking at it is to say that our money has ‘lost its value’ because we cannot buy as much with it due to rising prices. Hyperinflation is a rapid and uncontrolled rise in prices that takes place over hours, days and months, rather than years.

 The value of the German mark had already begun to fall before the

The value of the German mark had already begun to fall before the occupation of the Ruhr. In July 1922, one American dollar would buy 550 German marks; by December 1922 the rate had increased to 7500 marks. Nonetheless, the events in the Ruhr worsened the situation and, as the richest part of Germany was no longer producing goods, prices began to spiral. The government reacted firstly by printing more paper money, then when even this proved inadequate to meet the demand old notes were overprinted with new inflated values. In November 1923 it was possible to obtain a one billion mark note, but this was not enough to buy a loaf of bread, the price of which had risen from 0. 63 of a mark in 1918, to 250 marks in January 1923 to 1 512 000 marks in September and 20100000 marks in November 1923.

 This was used to buy a Watermelon in 1923

This was used to buy a Watermelon in 1923

Pay, Employers and Workers The official rate of exchanged several times a day. Workers

Pay, Employers and Workers The official rate of exchanged several times a day. Workers were paid daily instead of weekly in an effort to retain the purchasing power of their wages, and the simplest shopping expeditions would require a suitcase or wheelbarrow full of notes. As confidence in the money supply collapsed, people looked to other commodities as a means of bargaining. At different times, butter, eggs and cigarettes were used as money. Although many suffered because of hyperinflation, the suffering was not evenly felt. Indeed, some did rather well out of the situation.

Gains and Losses GAINS – Those living in rented accommodation where rents were fixed.

Gains and Losses GAINS – Those living in rented accommodation where rents were fixed. Export businesses Anyone with access to dollars or pounds sterling, as they became immediately rich. Large businesses that could acquire a loan, purchase assets, and repay later for a tiny proportion of the original sum. Landowners, large and small, who were paying off mortgages. Country dwellers with supplies of food, such as chickens, eggs, etc. Food, as a tangible product, retained its value. Foreigners, many of whom flocked to Germany at this time, as their foreign currency made them rich. LOSSES – Those living on fixed incomes, for example, pensions. The middle class, many of whom watched their savings vanish. Wage earners. In November 1923 real wages were down 25 per cent compared with 1913. City dwellers, who would travel to the country to exchange jewellery and fine furniture for a chicken or a few eggs.

 1 Billion Marks – A Bank note of 1923

1 Billion Marks – A Bank note of 1923