The hyperinflation of 1923

1923 hyperinflation
A German woman lights a fire with worthless banknotes, 1923

Not counting the rise of Nazism, the 1923 hyperinflation is arguably the most significant failure of the Weimar Republic. For several months in 1923, Germans battled price inflation so rapid that it created ridiculous situations – along with considerable misery and suffering.


In early 1923, German workers embarked on a prolonged general strike as a protest against the occupation of the Ruhr by French troops. Despite its parlous economic condition, the Weimar government decided to support this strike by continuing to pay striking workers. It did so by increasing print runs of banknotes, a policy the government had been using intermittently since 1921.

Government economists understood the dangers of flooding the economy with paper money, so the policy was intended to be temporary. But as the Ruhrkampf continued into the summer and autumn of 1923, no alternative way could be found to address the crisis. Paper money was continually pumped into the German economy, leading to devaluation and hyperinflation.

By mid-1923, the nation’s central banks were using more than 30 paper factories, almost 1,800 printing presses and 133 companies to print banknotes. Ironically, the production of paper money became one of Germany’s few profitable industries. At the height of the crisis, Germany’s state governments, major cities, large companies, even some pubs were all issuing their own paper money.

Prices and denominations soar

germany hyperinflation
German children are photographed launching a kite made of worthless banknotes

As more banknotes went into circulation, the buying power of each Reichsmark decreased, prompting sellers to raise prices. In 1918, a loaf of bread cost one-quarter of a Reichsmark; by 1922 this had increased to three Reichsmarks. In 1923 the market price for bread spiralled, reaching 700 Reichsmarks (January), 1200 (May), 100,000 (July), two million (September), 670 million (October) and then 80 billion Reichsmarks (November). One dozen eggs cost a half-Reichsmark in 1918 and three Reichsmarks in 1921. In 1923, the market price increased to 500 (January) then 30 million (September) and four billion Reichsmarks (October).

The Weimar government was not strong enough to fix wages or prices, so its only response was to issue more paper money. This cycle of inflation and currency releases spiralled through 1923. The denomination of banknotes increased, the largest note with a face value of 100,000,000,000,000 (100 trillion) Reichsmarks. The face value of postage stamps also skyrocketed. By 1923, the largest-priced stamp cost five billion Reichsmarks – but even this was not enough to post an ordinary letter. 

On one day alone, October 25th 1923, the Weimar government released banknotes with a face value of 120,000,000,000,000 (120,000 trillion) Reichsmarks – while announcing plans to triple its daily output. By November, the Treasury reported there were 400,338,236,350,700,000,000 (400.3 billion trillion) Reichsmarks in circulation across Germany.

The impacts of hyperinflation

The rapid devaluation of paper money caused ludicrous scenes. The value of paper money disappeared so quickly that some companies paid employees in the morning so they could rush off and spend their wages at lunchtime. Wives waited at their husbands’ factories on payday so they could hurry to the stores. One man reported ordering a coffee but found its price had doubled by the time it arrived at his table.

By September 1923, as the hyperinflation crisis neared its worst, Germans needed enormous amounts of paper money for even basic commodities. It was not uncommon to see shoppers hauling buckets, bags, even wheelbarrows full of banknotes. One Munich woman dragged a suitcase of banknotes to her local grocery store; when she left it outside briefly, someone stole the suitcase but emptied the money onto the street.

Children played with worthless banknotes as toys; their mothers used them to light stoves and boilers, line cake tins, even as wallpaper. Many Germans abandoned money altogether and began bartering as a means of obtaining what they needed.

Economic effects

hyperinflation exchange rate
A graph showing the skyrocketing exchange rate between the German mark and US dollar

The hyperinflation crisis also made foreign exchange almost impossible. Before World War I, one US dollar had purchased about four Reichsmarks. By the end of 1920, this had increased to 70 Reichsmarks; a year later it was 180.

At the worst of the hyperinflation in late 1923, the exchange rate for one US dollar had skyrocketed to 48,000 Reichsmarks (January) then 192,000 (June) 170 billion (October) and four trillion (November).

As a consequence, German corporations found it impossible to do business or trade abroad. Unable to acquire gold or foreign currency, the Weimar government had no capacity for meeting reparations instalments. Some claimed the government had deliberately sabotaged the German economy as a protest against Allied reparations, though there is no direct evidence of this.

Winners and losers

There were winners and losers from the 1923 hyperinflation. The worst affected were the Mittelstand (middle class) who relied on investments, savings or incomes from pensions or rents. In 1921, a family with 100,000 marks in savings would have been considered wealthy – but within two years, this would not be enough for a cup of coffee.

Public servants also suffered because increases in their wages failed to keep pace with the private sector. Among those who fared better were farmers, business owners or producers who manufactured and sold important commodities. While the value of money fluctuated, the real value of these goods did not; those who sold them could do so on their own terms.

Germans with large debts also benefited from hyperinflation, since they could be easily repaid. Some clever businessmen borrowed early in the inflationary cycle to buy property, then repaid the loan weeks or months later for next to nothing.


A 10 Rentenmark note, issued in late 1923 as a means of stemming hyperinflation in Germany

The 1923 hyperinflation forced the Weimar government to confront its own extinction. There was open talk that the government might be removed by a popular revolution or a military putsch. An attempted coup in Munich, launched by Adolf Hitler and the National Socialists (NSDAP) in early November 1923, seemed a sign of what might come.

The crisis forced the collapse of two cabinets as ministers bickered about the best way to end the crisis. It was newly appointed finance minister Hans Luther who produced the eventual solution.

The Rentenmark

In October, Luther ordered the formation of a new reserve bank (Rentenbank) and a new currency (the Rentenmark). The value of the Rentenmark was indexed to the value of gold – though it could not be redeemed in gold because the government had no gold reserves. One Rentenmark was initially valued at one billion ‘old’ Reichsmarks while foreign exchange was pegged at 4.2 Rentenmarks to one US dollar. 

Eager to bid farewell to hyperinflation, the German public embraced the new currency. This allowed prices and wages to gradually normalise.

1923 hyperinflation

1. The hyperinflation crisis of 1922-23 was caused in large part by the Weimar government printing banknotes to pay striking workers in the occupied Ruhr.

2. By mid-1923, the printing of these banknotes, which were not backed by gold, was causing a rapid increase in both prices and wages.

3. This hyperinflation led to farcical scenes, such as extraordinary prices and Germans pushing wheelbarrows of cash to buy simple items.

4. Hyperinflation also eroded the cash savings of the middle class and caused foreign exchange rates to skyrocket, disrupting commercial activity.

5. The hyperinflation crisis was eventually ended with the formation of a new reserve bank and the issue of a new national currency called the Rentenmark.

Citation information
Title: “The hyperinflation of 1923”
Authors: Jennifer Llewellyn, Steve Thompson
Publisher: Alpha History
Date published: September 26, 2019
Date accessed: Today’s date
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