The end of hyperinflation

It was obviously essential that hyperinflation was quickly

ended – something recognised in Germany and abroad.

All groups feared a rise of extremism in response to the crisis, something which could

increase economic and political instability across Europe.

In August 1923, Gustav Stresemann was appointed as

Germany’s new Chancellor.

In September 1923, Stresemann announced the end to resistance to the occupation

of the Ruhr.

On November 16, 1923 the Reichsbank mark was

replaced by the Rentenmark.

The Rentenmark involved 12 zeroes (000,000,000,000) being

taken off prices. It was sub-divided into 100 Rentenpfennig.

This new currency was very stable, and ended the crisis. For instance one German newspaper cost that cost 1 billion marks in

November only cost 20 pfennigs by December.

Rentenmark’s were successful because only a limited

number of notes were printed, which made it harder for them to lose their worth. Their value was also backed by real assets.

Governments and businesses could not borrow

Rentenmarks, as they were only a temporary currency.

Eventually on 30 August 1924, a new permanent currency –

the Reichsmark – was introduced. One Reichsmark

was equivalent to one Rentenmark.

Although the Reichsmark was the official currency, both

remained in use in Germany until 1948.

A common belief is that hyperinflation undermined

democracy, allowing the rise of extremist parties.

Whilst true, many Germans gave Weimar their backing

because the crisis ended quickly. Right-wing parties saw

support increase but did not win control of the government.

Historians’ views

• Mary Fulbrook: “The psychological shock eroded democratic values and instilled a … fear of … economic instability.”

• Hans Mommsen The desperate conditions that had been created by the hyperinflation crisis encouraged a process of extreme political polarisation.

• A J Nicholls Popular faith in the Republican system ‘was badly, and in some cases permanently shaken’ by the events of 1923. The collapse of the currency ‘left behind it a legacy of resentment’, especially among the lower middle class.