Question

Which of the following statements is true about the economic crisis in Germany in 1923?
A) The value of ‘Mark’ collapsed
B) Prices of goods soared high
C) The Weimer Republic brought economic prosperity
D) Both (a) and (b)

Answer 1

Hint:
Hyperinflation affected the Papiermark, currency of Germany (Weimar Republic), between 1921 and 1923, which became worse in 1923.
It caused internal political instability in the country and was marked as an economic crisis in the history of Germany.
It was mainly due to the war debt after the 1st World War. Germany thought that they could repay it after winning the war but failed as Germany lost the war.

Complete answer:
After losing the war, the currency of Germany, i.e. Papiermark was stable in the starting half of 1921. But as they started repayment of the debt, the price of Mark started to decrease as Germany began to buy foreign currency with marks at any price. At the start of 1922 at the International reparations conferences, no solution was found for the lowering price of Mark and inflation of it resulted in Hyperinflation with Mark falling to 7200 USD by the end of 1922.

The situation became worse in 1923 when a loaf of bread that was around 150 Marks in 1922 cost 200,000,000,000 Marks by the end of 1923. By November 1923, 1 USD was around 4,210,500,000,000 Marks.

During that time, Germany had been fighting wars on loans and paid war reparations with gold. This exhausted the gold reserves of Germany. This in turn reduced the value of the German currency leading to inflation and the prices of goods started soaring high.

Thus, the correct answer is an option (D) Both (A) & (B)

Note:
- The currency of Germany became so worthless that they started paying the debt back using goods like coal.
- When Adolf Hitler came into power, he stopped the payment of a debt which was seen as his sense of patriotism and nationalism.
- Germany paid its last debt on the 3rd October 2010, on the 20th Anniversary of the German reunification.