Facing reparations obligations from the Treaty of Versailles and a deficit financed by printing money, the Weimar Republic's currency depreciated from about 4.2 marks per United States dollar in 1914 to roughly 4.2 trillion per dollar by November 1923. Monthly inflation peaked near 29,500 percent that October and November, with prices reportedly doubling every three to four days at the worst of it. Currency Commissioner Hjalmar Schacht halted the collapse on November 15, 1923 by introducing the Rentenmark, a strictly capped new currency nominally backed by a mortgage on German land, exchanged at one Rentenmark per one trillion paper marks.
Facts
Event DateDated to the Rentenmark''s introduction, the currency reform that ended the hyperinflation, rather than to a peak date; the crisis itself built over 1922-23. LocationWeimar Republic (Germany) 2 Connections
Associated With
Fiat Currency, Concepts Weimar is the standard cautionary case cited against unconstrained fiat money creation.
Source The New Palgrave Dictionary of Economics
Commonly compared as history's most severe hyperinflation episodes; Hungary's 1946 collapse exceeded Weimar Germany's in speed and scale.
Source Wikipedia
Additional Source Wikipedia: Great DepressionHungarian pengo
Associated With School
Austrian economists (Mises, later Hayek) treated Weimar as the canonical case of hyperinflation caused by unconstrained central bank financing of deficits.
Source Encyclopaedia Britannica
Held Differently
Why this is disputed. Keynes himself, in The Economic Consequences of the Peace, weighted reparations and the external transfer problem more heavily than domestic money creation as the crisis' root cause, a reading later monetary historians (e.g. Bresciani-Turroni) contested.
Source Encyclopaedia Britannica
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Sources
1. Wikipedia: Great Depression
Hyperinflation in the Weimar Republic, Stabilization section
On 16 November 1923, the new Rentenmark was introduced to replace the worthless paper marks issued by the Reichsbank.
- Associated With: Hungarian Hyperinflation (1945-46), Hungarian pengo
View the Source2. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.- Hyperinflation in the Weimar Republic (1922-23)
- Associated With School: Austrian School
- Associated With School: Keynesian Economics
View the Source 3. Wikipedia
Wikimedia FoundationHyperinflation in the Weimar Republic, Stabilization sectionQuote, Hyperinflation in the Weimar Republic, Stabilization section
On 16 November 1923, the new Rentenmark was introduced to replace the worthless paper marks issued by the Reichsbank.
The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Fiat Currency
Econlib Encyclopedia of Economics: Hyperinflation
Econlib Encyclopedia of EconomicsIn Group: Great Hyperinflations, Page textQuote, In Group: Great Hyperinflations, Page text
The most widely studied hyperinflation occurred in Germany after World War I.
Dissenting Readings (1 dissenting reading)
Description
The standard framing above centers domestic money creation, but Bresciani-Turroni's classic study The Economics of Inflation argued the Reichsbank's policy of discounting government paper without limit, not reparations transfers themselves, was the proximate cause, since the mark had already begun collapsing before the London Schedule of Payments was even set. Keynes, by contrast, in The Economic Consequences of the Peace, weighted the external transfer burden of reparations more heavily. Both camps agree the mark collapsed; they disagree sharply about which mechanism did the damage, a live question in monetary history rather than a settled one.
A dissenting reading, from Costantino Bresciani-Turroni and later monetary historiansEncyclopaedia Britannica, Encyclopaedia Britannica, Inc.
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