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“The Franco-Belgian invasion of the Ruhr was the main cause of the hyperinflation crisis in Germany in 1923”. Assess the validity of this view. (25 marks)£3.58
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“The Franco-Belgian invasion of the Ruhr was the main cause of the hyperinflation crisis in Germany in 1923”. Assess the validity of this view. (25 marks)
“The Franco-Belgian invasion of the Ruhr was the main cause of the hyperinflation crisis in
Germany in 1923”. Assess the validity of this view. (25 marks)
In January 1923, French and Belgian forces combined invaded the Ruhr (an industrial area of West
Germany) due to Germany falling behind on the reparation payments bound to them from the
Treaty of Versailles. WHILST, the Franco-Belgian invasion was certainly a key factor in the
causation of Germany’s hyperinflation crisis other reasons are also to blame for example:
government action and policies, the lingering damage of WW1 and the Treaty of Versailles. The
main cause HOWEVER, was the government action and policies implemented as they significantly
impacted the economy in a negative way leading to the hyperinflation crisis.
The invasion of the Ruhr was a significant cause but was not the main cause of hyperinflation. The
Franco-Belgian invasion caused many economic issues for Germany but these were primarily
short-term ones. By May 1923, only 4 months under foreign occupation, the coal output in the
area had fallen to 1/5 of its preoccupation level. The German miners and steel workers began to
strike, following Chancellor Cuno’s policy of passive resistance. Cuno promised wages for all
strikers which consequently drained government finances. The occupation caused shortages of
goods like coal and steel too, which caused price increases on such goods. The financial
implications of the invasion of the Ruhr were estimated to cost the German government twice as
much as the annual reparation bill they were paying. HOWEVER, the impact of the effects of the
Ruhr crisis can be exaggerated as this cause was only short-term seeing as the French only
occupied the Ruhr for two years (1923-25) which meant the lack of goods which contributed to
hyperinflation did not last forever. The French cannot be blamed for the strikers as it was Cuno’s
decision to encourage passive resistance and to pay all wages for strikers, therefore government
action is accountable.
The decisions of the German government were in fact the main cause of the hyperinflation crisis as
they increasingly exacerbated financial issues in Germany in the long term. Chancellors
Fehrenbach (1920-21) and Wirth (1921-22) had many options for dealing with the state of the
economy for example: raising taxes, cutting expenditure on wages/benefits/welfare. However,
they chose extending loans and printing more money would help alleviate the financial situation.
This did not help as inflation quadrupled between 1919-1921 and the value of the mark fell to
being 1% of its 1914 value by 1922. At the beginning of the war 4.2 marks would have equated to
1 US Dollar, but by the end of 1923 you would have needed 4.2 trillion marks for 1 US Dollar.
Therefore, the government policies caused hyperinflation as they significantly devalued the
currency. NEVERTHELESS, the SPD’s economic policies had initially appeared to be successful prior
to 1921. Initially the Weimar Republic’s economy recovered well from WW1 with an
unemployment rate of only 1.8% in 1921 compared to 17% in the UK. Initial inflation, due to the
SPD’s money printing, had appeared to help the government by reducing its war debts.
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