Title: The Invasion of the Ruhr: Reparations and Inflation

There were two main reasons why Germany had to pay reparations.

The victorious Allies, especially France and Belgium, wanted compensation to rebuild their damaged countries.

The French believed that their own safety depended on keeping Germany weak, as a weakened Germany would not be able to attack France.

By 1921, Germany was faced with the total bill for reparations. It totalled £6,600,000,000 to be paid in regular instalments. Reparations were also to be paid in goods as well as money so that France received 5000 trains, 150,000 railway wagons, 10,000 lorries and 140,000 cows.

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By the end of 1922, Germany had fallen behind by several payments. At the heart of Germany’s industrial region, the Ruhr was responsible for 80% of the total steel produced and 71 % of its coal.

In January 1923, France and Belgium sent in the army invading the defenceless Ruhr area in the Rhineland. They took over coal mines and steel works. France demanded that they pay up, or production would be seized in order to control payment. The Germans were in no position to fight back, as the Rhineland was demilitarised. The German workers were encouraged by the government to practice passive resistance. This means peacefully refusing to do anything. In other words the people refused to follow any orders from French or Belgium troops and officers by going on strike.

The actions of France broke international law and the League of Nations rules. It also went against the Treaty of Versailles, but no action was taken against them. By mid 1923, Germany’s economy came to stand still as she could no longer produce any goods to sell. The Weimar government printed more money to pay the men on strike. This led to total economic and collapse and hyperinflation.

The Ruhr was Germany’s richest economic area and produced a great deal of wealth for the country as a whole. The huge Krupps steelworks was there. By not producing any goods whatsoever, Germany’s economy started to suffer. The striking workers had to be paid and the people expelled from their homes had to be looked after. To do this, the government did the worst thing possible - it printed money to cover the cost.

Inflation started to get out of control in Germany. This meant that prices in the shops went up quicker than people could spend their money. For example, in 1922, a loaf of bread cost 163 marks.

By September 1923, this figure had reached 1,500,000 marks and at the peak of hyperinflation, November 1923, a loaf of bread cost 200,000,000,000 marks! This was now called hyperinflation.

Workers had to go out and spend their wages at lunchtime because prices would have risen by the end of the day. A famous story was told of a man who left a suitcase of money outside a shop. When he returned to it the money had been left but the suitcase had been stolen. Restaurants stopped printing menus as by the time food arrived, the price had gone up, and children used blocks of money to play with. The currency had become useless.

Who was worst affected by hyperinflation?

  • The group that suffered a great deal was the middle class. Their hard earned savings disappeared overnight. They did not have the wealth or land to fall back on like the rich had. Many middle class families had to sell family heirlooms, like jewellery, to survive. Savings became worthless. They felt humiliated. Many of this important group lost confidence in the Weimar Government’s ability to cope with the crisis. As a result many of the middle classes turned against the WeimarRepublic and instead turned to Hitler and the Nazi Party.

The working classes, especially those on fixed wages badly hurt. This included old people and war veterans who received pensions. The poor became even poorer and in the winter of 1923 many lived in freezing conditions, burning furniture to get some heat.

However, some people did well out of hyperinflation. People who owned businesses or property took out huge loans to buy property or invest in their business, knowing that in a few months they would be easily able to make the repayments.

The Effects of Hyperinflation on the Weimar government

Hyperinflation caused many people to lose faith in thedemocratic government. Many of the working classes turned to Communism while many in the middle classes turned to the Nazis. When the economy collapsed again in 1929 many were terrified of a return to the unemployment and starvation of 1923.

Many were also angry that the Weimar government had allowed Germany to be invaded by France but were not happy either when the workers in the Ruhr were told to call off the passive resistance. This looked like Germany was yet again caving into France, just as had happened at Versailles.

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[1] This German poster shows French soldiers trying to force a German worker who is on strike. He is saying “No, you can’t force me.”