Inflationary Period

The large borrowings for the financing of the war and the reparation payments imposed by the victorious powers led to a devaluation of currency, further hastened after the end of the war through increased purchasing power with a simultaneous shortage of consumer goods. Added to these were burdens resulting from the war such as the care of war victims, bereaved and discharged professional soldiers who were intercepted through further borrowing.

The rapid decline of the Reich currency began in August 1922. There resulted a constant devaluation which reached its apex in 1923. The rate of exchange of 18,000 marks per dollar in January rose to 40 billion marks in October 1923. The inflation led to an impoverishment of broad segments of the population.

A new monetary system was introduced on 15 November 1923. One Rentenmark was now worth one trillion paper marks. In the ensuing months, Germany succeeded in achieving a balanced national budget again.