Hyperinflation Crisis 1923

Social and Political effects of the hyperinflation crisis, 1923

* Examples of some ‘losers’ from the hyperinflation crisis and an explanation of how and why this happened.

* Inflation had no consolation for the small saver or investor whose carefully collected sums and guaranteed interest became worthless.

* The group that suffered a great deal - proportional to their income - was the middle class. Their hard earned savings disappeared overnight. They did not have the wealth or land to fall back on as the rich had. Many middle class families had to sell family heirlooms to survive. It is not surprising that many of those middle class, who suffered in 1923, were to turn to Hitler and the Nazi Party.

* Anyone who depended on their savings did poorly during hyperinflation. Most famously, millions who had bought and invested in war bonds couldn’t get their money back. The bonds were worth nothing.

* Those living on fixed incomes such as pensioners, found themselves in a similar plight, their savings quickly lost value.

* Recipients of welfare now depended on charity or on the state; payments fell behind the inflation rate.

* By 1923 the cost to a landlord of one window replacement might be greater than all the rent he had received in the last ten years.

* Examples of some ‘winners’ from the hyperinflation crisis and an explanation of how and why this happened.

* In some respects the government actually favoured inflation, since it reduced the real burden of its internal debt- interest and debt repayments on money borrowed from citizens.

* Skilful risk-takers like the Tycoon Hugo Stinnes made fortunes. By the end of 1923, he controlled 20% of German Industry.

* Industrialists and landowners who owed money were able to pay off their debts in devalued currency.

* Some businessmen profited from the situation by borrowing cheaply and investing in new industrial enterprises.

* Those whose wealth came in the form of...