Photo of a day

Germany, 1923. Hyperinflation. Kids are playing with money packs because toy blocks are too expensive

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Old photo of kids playing with money packs

Germany, 1923. Hyperinflation made paper notes so worthless that these kids used them as building blocks. By November 1923, the US dollar was worth 4,210,500,000,000 German marks.

Why Germany was so poor after WWI

WWI ended on November 11, 1918, with the capitulation of Germany and its allies. The Versailles Peace Treaty of 1919 consolidated its declassified status: demilitarization, territorial concessions, loss of colonies and foreign investments, reparations. WWI battles didn’t touch Germany’s territory, and aviation at that time could not yet cause any serious destruction. However, Germany was severely exhausted by the war. The monarchy was crushed, and the fragile republic faced enormous economic and political difficulties. Politicians tried to relieve international obligations many times during the numerous summits and negotiations but failed.

The government used direct monetary emission, loading the Reichsbank (central bank) with its obligations. By the end of the war, the money supply exceeded the pre-war numbers by 5 times. 

Kids playing with money blocks

Kids playing with money blocks.

Germans never experienced heavy money inflation. 

The prices began to climb in 1919. The inflation caused political turbulence in 1919-1922. By July 1922, the mass of banknotes had increased more than 7 times compared to the moment of the cease-fire. The price level increased 40 times, and the dollar exchange rate even 75 times. By June 1923, the money supply had increased by about 90 times, prices by 180 times, and the dollar exchange rate by 230 times.

Kids spending their time with German money

Kids spending their time with German money.

The inflationary agony began in the summer of 1923. In the four months before the end of November, the money supply increased 132,000 times, the price level increased 854,000 times, and the dollar exchange rate almost 400,000 times. The history of paper money did not know of such magnitude of depreciation; only inflation in Soviet Russia had a similar scale.

That's what economists call 'the money mass'

That’s what economists call ‘the money mass.’

How could kids play with money blocks?

Reichsbank banknotes in circulation by mid-November hit  500 quintillions. Every month, the government printed more and more banknotes. The most “expensive” in the end was the 100 trillion mark. True, it has “100 billion” printed on it. In fact, this banknote costs less than $25. The blocks of the ‘millions’ banknotes became useless.

This kind of banknotes caused the hyperinflation in Germany

This kind of banknotes caused hyperinflation in Germany.

Yes, German banknotes could be used at the fireplace in 1920s

Yes, banknotes could be used at the fireplace.

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