After World War 1 Germany was hit with a three year period of hyperinflation during the reign of the Weimar Republic which started in 1921 and ended in 1924. Hyperinflation meant that the money was virtually worthless therefore prices shot up. Workers needed wheelbarrows to carry their notes as there was so much of it. Wages began to be paid daily instead of weekly. In this essay I will discuss if hyperinflation was completely caused by the Treaty of Versailles (1918-19).
The Treaty of Versailles was responsible for thee suspension of the Ruhr, this was a place of great industrial power and brought in a lot of money to Germany. However when it was taken away from the Germans, there was halt in the industrial production which caused the collapse of the German economy. This meant that there were very few goods therefore the government printed the money. This lead to prices rocketing and the savings unfortunately became worthless. The Treaty was largely responsible for this.
During the World War in order to pay the large costs of it, the Kaiser suspended the convertibility of its currency into gold when the war broke out. Unlike France, which imposed its first income tax to pay for the war, the German parliament decided to fund the war entirely by borrowing. The result lead to the rate of the value of Marks against dollar increasing greatly. When the Treaty of Versailles was signed, the allies demanded for 6.6 billion pounds in reparations for the war. The Germans could not possibly paid this and entered into debt. Progressively this lead to hyperinflation and the Germans printed way to many Marks bringing the value down enormously. One dollar equaled 320 Marks in 1922, then falling to 800 marks per dollar! The German government started to pump money into the economy to encourage spending. This is known as quantitative easing.
To conclude, the Treaty of Versailles was not completely responsible for the country being into hyperinflation. It...