Inflation

Inflation


Workers usually get paid once a week, but
in Germany in the early 1920s they got paid twice a day. Besides that, they had an extra half-hour
every morning to go shopping for food, if that sounds wonderful, let’s see what one
normal day in 1923 was really like. At 11:30 A.M. work stopped at the factory,
and Karl Hoffman lined up with the other workers. The boss gave hime two huge bags. “Here’s your morning’s salary,” the
boss said. “Fifty million German marks in cash”. He loaded his salary into a wheelbarrow and
started to run in the direction of a big produce store. Inside, he stood in a long line of people,
all with huge bags of money. “How much are the onions?” he asked the
sales clerk. “Twenty-five million marks for one”, she
answered. Karl bought two onions and gave her the contents
of his wheelbarrow. Then he return to work for the afternoon. When Karl arrived home in the evening, he
gave his wife the two onions. “I worked all morning to by two onions,”
he told her. “I passed the produce store on my way home
and in just a few hours food doubled in price”. “Onions now cost 50 million mark each.” “My afternoon’s salary is almost worthless.” “It would buy only one onion”. “I’m going to burn the bills for heat.” He threw the paper money into the fire. This story was typical for millions of Germans
in the early 1920s. People burn money for heat. They work for three days to buy a pound of
butter, and twenty weeks to buy a suit. In the chart below, you can see how the value
of the German mark dropped in just nine years. In 1914, about four marks equaled a dollar. Nine years later, about four trillion (4,000,000,000,
000) marks equaled a dollar. INFLATION IN GERMANY IN THE 1920s. The column on the right shows how many German
marks were paid for one US dollar. For example, in Jan 1923, one US dollar was
worth 353,412 German marks. July 1914 …. 4.2 marks=$1. January 1919 …. 8.9 marks=$1. July 1919 …. 14.0 marks=$1. January 1920 … 64.8 marks=$1. January 1922 …. 191.8 marks=$1. July 1922 …. 493.2 marks=$1. January 1923 …. 17,972.0 marks=$1. July 1923 …. 353,412.0 marks=$1. August 1923 …. 4,620,455.0 marks=$1. September 1923 …. 98,860,000.0 marks=$1. October 1923 …. 25,260,208,000.0 marks=$1
November 1923 …. 4,200,000,000,000 marks=$1
What took place during those nine years is called runaway inflation. Prices increase by millions of marks in a
few hours. It’s normal for countries to have a little
inflation, but usually it’s very slow.. Prices increase by a few cents every year. For example, in 1926 a US postage stamp cost
just two cents. Today it cost almost 30 cents. In contrast to that example of normal inflation,
the German government reprinted the postage stamp again and again in the early 1920s. Eventually a postage stamp cost over one million
marks. And what happened to Karl? He survived. The government changed the name of the currency
and minted new money, and prices went down and order was restored. Today German mark is stable, and will probably
stay that way.

Randy Schultz

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