Inflation, Occupation and Outrage

Germany was under pressure from the Allies to make reparation payments. And, to keep its economy going, Germany was printing money and joining in the postwar inflation practiced by some other countries off the gold standard: Hungary, Austria, Bulgaria and Russia. For Germany, basing its money on gold was out of the question. Because of the war, Germany had no gold reserves. The German government was letting the value of the German mark decline. Industrialists benefited as cheaper money allowed them to pay workers less in real wages, and sales abroad expanded, German goods abroad in effect being sold at lower prices. With wages extremely low, businesses could well afford to hire people, and the problem of unemployment ended.

At the beginning of 1920 the German mark had been worth one tenth what it had been before the war. Those who had their money in property or stocks, in anything but cash, were able to hold onto this wealth. Those who lent money lost, as it could be repaid with cheaper money. Those who had savings accounts – cash – were, by 1923, all but wiped out.

The French saw Germany's inflation as an attempt to wheedle out of responsible reparation payments. In January 1923 Germany was late in its reparations deliveries of coal to the French. And, to fetch this coal, French and Belgian troops occupied Germany's Ruhr. French soldiers with artillery and tanks fanned out over the Ruhr. They established machine gun posts at strategic points such as railroad stations and on roofs overlooking city squares. The French took over German customs, German railroads, ports and other transportation routes. They ordered Germans to continue production. Germans in the Ruhr responded with sit-down strikes. The French jailed German civil servants who refused to comply with French orders. The whole German nation was united in its outrage against the French, with some Germans – Hitler among them – favoring more than passive resistance to France's occupation. Some French sentries were shot. And some Germans threw stones at the French troops.

Germany's most productive industries were idle, which brought scarcity and a further rise in prices. And with Germany's economy disrupted, the German mark sank to new lows. The German government started printing more money to pay those who were out of work, which sent the mark lower still. Before the year was over it would cost a billion marks to send a letter from Germany to the United States. Some people had little more than raw cabbage for food. People could not afford fuel with which to cook or heat their homes. Those on fixed incomes – widows, orphans, retired persons, civil servants, teachers, and those who had been receiving benefits from war injuries – in effect lost their incomes. A hatred of those who remained well-to-do was benefiting those like Hitler who were railing against capitalists, financiers, Jews and the Allies and their peace treaty.

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