Describe the conditions prevailing in Germany,
which led to the situation of Hyperinflation.
Answers
Answer:
The political atmosphere in Berlin was charged with
demands for Soviet-style governance. Those opposed to this such
as the socialists, Democrats and Catholics met in Wiemar
to give
shape to the democratic republic. The Weimar Republic crushed the
uprising with the help of a war veterans organisation called Free
Corps. The anguished Spartacists later founded the Communist Party of
Germany. Communists and Socialists henceforth became irreconcilable
enemies and could not make common cause against Hitler. Both
revolutionaries and militant nationalists craved for radical solutions.
Political radicalization was only heightened by the economic crisis
of 1923. Germany had fought the war largely on loans and had to
pay war reparations in gold. This depleted gold reserves at a time
resources were scarce. In 1923 Germany refused to pay, and the
French occupied its leading industrial area, Ruhr, to claim their coal.
Germany retaliated with passive resistance and printed paper currency
recklessly. With too much printed money in circulation, the value
of the German mark fell. In April the US dollar was equal to 24,000
marks, in July 353,000 marks, in August 4,621,000 marks and at
98,860,000 marks by December, the figure had run into trillions. As
the value of the mark collapsed, prices of goods soared. The image of
Germans carrying cartloads of currency notes to buy a loaf of bread
was widely publicized evoking worldwide sympathy. This crisis came
to be known as hyperinflation, a situation when prices rise
phenomenally high.
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