Explain why hyperinflation occurred in Germany in 1923

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Explain why hyperinflation occurred in 1923 (8 marks)

Target: In this essay, I am aiming to prioritise my reasons, and points; link back to the question; and add additional information as an extension.

        An important factor causing German hyperinflation in 1923 was the punitive reparations Germany had to pay to France and the other victors, as stated in the Treaty of Versailles. The price was set at £6.6 billion in 1921, and this was thought by the people, and proven, impossible to repay especially with Germany’s financial situation as poor  as it was after the war. The money was not only given to pay for the damages caused in the war, but also used to cover the pensions of widows, whose husbands had been killed in the war.

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        In addition, another condition of the Treaty of Versailles was that 12% of Germany’s land was given over to the victors. A large proportion of this land was industrial, one of the main areas being the Saar Coalfields; which caused Germany a great loss in areas naturally rich in raw materials, generating a huge loss in income. As well as the reduction in terms of industry, the confiscation of territory caused a massive reduction in the earning population. This not only meant less workers but also less tax payers; and while the obvious solution would have been to raise taxes ...

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