The Reichsmark: Stabilization and Foreign Loans

Abstract

Germany’s political situation worsened in 1923. Passive resistance in the Ruhr meant that whenever Allied troops moved into a factory, a mine or an office, everyone stopped working. Government payments to finance passive resistance in the region fuelled further printing of money and subsequent inflation. The government made huge amounts of credit available to firms in the region while funding welfare and unemployment benefits, wages for unproductive work, and subsidies to railroads and postal services. The economic importance of the Ruhr meant its loss had significant consequences for the entire national economy.¹ Real wages started to decline, and industrial unemployment, until then fairly subdued, leapt from 1.5 per cent in 1922 to 10.2 per cent in 1923.² National solidarity was severely strained as interest groups vied to belittle one another’s suffering. In 1923 hyperinflation reached its peak, with prices increasing by 29,525 per cent in a month.³ The political unity of the Weimar Republic started wobbling.