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Weimar Republic 101: The Great Inflation 1923


Before Hitler’s rise to power in 1933, Germany experienced its ‘roaring 20s’ through a parliamentary democratic system—the Weimar Republic. Weimar Republic 101 article series aims to introduce some of the key themes and debates in the historiography of the Weimar Republic, from its inception in 1918 to its death in 1933. Chapter one looked at the political landscape of Germany after WWI and the formation of the Republic. Chapter two continues to examine the impact of WWI on German society, this time focusing specifically on the economy and the Great Inflation of 1923.

Weimar Republic 101 is divided into six chapters:

  1. Weimar Republic 101: Germany before and after World War I

  2. Weimar Republic 101: The Great Inflation 1923

  3. Weimar Republic 101: DADA Art and Weimar Culture

  4. Weimar Republic 101: The ‘New Woman’ in Post-War Germany

  5. Weimar Republic 101: The Great Depression 1929-1933

  6. Weimar Republic 101: The collapse of a democracy

German Mark note from 1923. (n.d.). [Photograph]. The Devil’s Porridge Museum.

The Great Inflation of 1923 is traditionally regarded as the beginning of the end for the Weimar Republic. The German government did not expect to be defeated in World War I (WWI) and struggled to recover the economy. There is ongoing debate as to whether it was domestic policies or international pressures that caused hyperinflation. The most reliable conclusion to reach is that both internal and external factors were responsible for the crisis. The Great Inflation is important to study in the context of Hitler’s rise to power in 1933 and how the German people grew to resent the Weimar Democracy.

In economic terms, inflation describes the rate of rising prices. Inflation can be caused when the printed money supply exceeds the relative size of the economy, meaning the value of money decreases while the cost of goods increases (Oner, n.d.). In Weimar Germany, money was being printed at a rate far exceeding the size of the economy after WWI. By the height of the crisis in 1923, inflation was so severe that 800 billion notes were being printed per day, with the cost of basic goods such as eggs and tea being forty times more expensive than before the war (Storer 2013, pp. 90-93). Germany was not prepared for the cost or duration of WWI, neither did it expect defeat. From 1914-1918, people were encouraged to invest in war loans and await a five percent return after ten years (Storer 2013, p. 86). This did not happen when Germany was defeated and burdened with heavy reparations payments to the Allies. During the war, Germany’s domestic economic policies could not be adapted to a defeated economy; the result was inflation.

A display of extremely high food prices during hyperinflation. (n.d.). [Photograph.]. Rare Historical Photos.

The Weimar government pursued a policy of deficit financing in an attempt to handle the crisis. They hoped this would create jobs and cover the costs of government spending (Storer 2013, p. 88). Critically, the approach meant inflation would continue. At first, the policy did help keep Germans employed. In 1919, 93.4% of German trade union members were employed, up to 99% in 1922 (Hill and Butler 1977, p. 301). But by December 1923, employment rates dropped to one-third of trade union members that were unemployed (Hill and Butler 1977, p. 301). Inflation had been a beneficial policy for Germany's domestic situation in the immediate aftermath of WWI. Yet, inflation did not help Germany's international standing, especially its requirement to pay extensive reparations to the Allies.

A Berlin banker counts stacks of bundled marks. (1923). [Photograph.]. Rare Historical Photos.

In 1923, Germany's policy of nonfulfillment was meant to signal to the Allies that Germany could not afford to make the payments outlined in the Treaty of Versailles (Epstein 2015, p. 16). France and Belgium were unconvinced of Germany's policy, and in response, they militarised the industrial Ruhr area. The German government pursued a "passive resistance" policy with France and Belgium, where they incentivized workers to go on strike while continuing to pay them (Epstein 2015, p. 16). The government printed more money to pay the workers, but gold reserves did not back this money; thus, hyperinflation consumed the economy (Epstein 2015, p. 16). In November 1923, the new chancellor, Gustav Stresemann, ended the Great Inflation by introducing a new currency, the Reichsmark (Epstein 2015, p. 16). What was to blame for the inflation, which at length continued from 1919-1923? Debating whether domestic policies or international pressures caused the crisis reveals a powerful national myth.

Domestic factors certainly affected the extent of the crisis. Hill and Butler (1977, p. 301) argue that the coalition government "never developed effective politico-economic policies" to organize society after WWI. The policy of deficit spending worked in the short term. Still, it led to many German citizens losing their savings, which bred a bitter resentment towards democracy and the Weimar government. It was not a responsible decision on behalf of the government to assume victory and direct their economic policies this way (i.e., war-loans). Yet, it is not suitable to represent a dichotomy of internal vs. external factors; both reflect the cause of the Great Inflation. This is most notable in the myth –represented by the Weimar government itself— that international factors rather than internal instability spelled Germany's economic downfall.

The myth that external factors, not internal structural weaknesses, were to blame for the inflation was meant to curb the growing dissatisfaction towards democracy and the Weimar government. Coutu (2020, p. 236) highlights that the myth led to a "national solution to the crisis…[being] unthinkable". Storer (2013, p. 89) explains that Weimar's 'politic' choice to persuade the Allies that Germany was too poor to pay reparations shifted the blame to external factors such as the Treaty of Versailles, thus side-stepping the deficiencies of the government to handle the crisis. It is obvious that external factors were devastating financial blows to Germany, but it is also important to view them in the context of this popular myth. Coutu (2020, p. 231) argues that it was the debt of the Treaty of Versailles and the "measures taken to deal with it" that caused the Great Inflation. It is essential to understand how the Weimar government's handling of the Treaty of Versailles, such as their nonfulfillment policy, affected the extent to which external factors burdened the German economy.

Women Waiting in Line to Buy Sub-Standard Meat. (1923). [Photograph]. Facing History & Ourselves.

External factors continued to drive Germany's economic crisis after the Great Inflation ended. The Dawes Plan was established in 1924 to help the German economy recover. The Plan included an 800-million-mark loan and a moratorium on reparations payments until 1925 (Storer 2013, pp. 100-101). Critically, the Plan meant that Germany entered into a "cycle of debt", which led to the country's "unique vulnerability to global economic instability" (Storer 2013, p. 105). This "cycle of debt" meant that when Germany made payments to Britain and France, that money would go to America to pay off the debts owed by Britain and France. What was now American money would be given back to Germany through the Dawes Plan. Germany's reliance on foreign economic support will bring dire consequences when the Great Depression strikes in 1929. When assessing the internal and external causes of the Great Inflation, it is necessary to understand how domestic economic policies affected the extent to which international economic pressures injured the German economy.

The dominant historical narrative of Weimar Germany accredits the economic crisis of the Great Inflation to the collapse of democracy in 1933. Hill and Butler make the argument that the Great Inflation only served to alienate supporters of democracy while helping the people who were opposed to democracy. They argue that the growing wealth of industrialists, from low wages and high profits, represent how the "enemies of democracy [were]…rewarded with wealth, but the friends…of democracy [workers] were punished with poverty" (Hill and Butler 1977, p. 302). They argue that the resulting resentment towards democracy meant the "stage was set" for the demise of democracy in a slow death from 1923-1933 (Hill and Butler 1977, pp. 305-307). Likewise, Storer (2013, pp. 101-102) recognizes that the economic crisis led to Hitler's rise to power. But Hitler didn't come to power in 1923, so how did democracy survive for the next ten years?

One explanation to how democracy survived after the Great Inflation is offered by Hill and Butler. They argue that there was no opposition strong enough to defeat democracy in the 1920s (Hill and Butler 1977, p. 308). Hitler's failed Beer Hall Putsch in 1923 is a testament to this. Democracy was also 'saved' in the 1920s by "enabling acts" and states of emergency that allowed leaders to stabilize the economy (Hung 2016, p, 446). The "enabling acts" were a double-edged sword, however. Article 48, led to Hitler being able to legally assume power in 1933. These measures may have saved the Weimar democracy in the short term, but in the long term, these measures led to Hitler's dictatorship and the fall of democracy. Hung (2016, p. 444) identifies that the Weimar narrative has been used to "formulate a direct causal relationship between economic crisis and democratic breakdown". The Weimar image has an explicit politically potency in a world impacted by the 2008 global financial crisis, and more recently, the COVID-19 pandemic. From 1925-1929, there was relative economic stability in Germany, credited by foreign economic support such as the Dawes Plan. When the Great Depression rocked the world economy in 1929, economic prosperity was only a thing to dream about. It was the economic crisis brought on by the Great Depression, not the Great Inflation, that led to Hitler's dictatorship and the collapse of democracy in 1933.

Understanding the Great Inflation of 1923 is critical to any study of the Weimar Repub" ic. It is important to recognise how the crisis accelerated a feeling of distrust towards democracy. The dominant narrative of the Weimar Republic locates the Great Inflation as the beginning of a ten-year-long slow death for the democracy. Hitler's rise to power in 1933 is better accredited to the effects of the Great Depression, but it is important to recognize how Inflation from 1919-1923 laid the groundwork for Germany's precarious economic position and the collapse of democracy.


A Berlin banker counts stacks of bundled marks. (1923). [Photograph.]. Rare Historical Photos.

A display of extremely high food prices during hyperinflation. (n.d.). [Photograph.]. Rare Historical Photos.

Coutu, M. (2020). Economic Crises, Crisis of Labour Law? Lessons from Weimar. Journal of Law and Society, 47(2), 221–239.

Epstein, C. A. (2015). Nazi Germany [E-book]. Wiley.

German Mark note from 1923. (n.d.). [Photograph]. The Devil's Porridge Museum.

Hill, L. E., Butler, C. E., & Lorenzen, S. A. (1977). Inflation and the Destruction of Democracy: The Case of the Weimar Republic. Journal of Economic Issues, 11(2), 299–313.

Hung, J. (2016). "Bad" Politics and "Good" Culture: New Approaches to the History of the Weimar Republic. Central European History, 49(3–4), 441–453.

McWorkman, W. O. (1923, November 9). Troops supporting Hitler arrive in Munich during the "Beer Hall Putsch" [Photograph]. United States Holocaust Memorial Museum.

Oner, C. (n.d.). Inflation: Prices on the Rise. International Monetary Fund. Retrieved November 5, 2021, from

Storer, C. (2013). A Short History of the Weimar Republic (I.B.Tauris Short Histories) [E-book]. I.B.Tauris.

Women Waiting in Line to Buy Sub-Standard Meat. (1923). [Photograph]. Facing History & Ourselves.

2 ความคิดเห็น

09 พ.ย. 2564

What makes it so ironic is that, US can print money and not get overwhelmed by inflation while countries like Venezuela or African countries try to do the same they turn into '' Wiemar Republic '' in terms of inflation. What a irony…

28 มี.ค. 2565

America has a massive economy, GDP, power and influence. Printing money for a superpower where their currency is still the world reserve currency (for now) allows for this.

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Amy Mogensen

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