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Word Count: 2,303
In late-1922 the German government were forced to ask the Allies for a moratorium on reparations payments this was refused and she then defaulted on shipments of both coal and timber to France By January of the following year French and Belgian troops had entered and occupied the Ruhr The German people perhaps for the first time since 1914 united behind their government and passive resistance to the occupying troops was ordered A government-funded strike began as thousands of workers marched out of their factories and steel works The German economy already under massive pressure gave way The huge cost of funding the strike in the Ruhr and the costs of imports to meet basic consumer needs were met by the familiar expedient of the printing presses Note circulation increased rapidly and by November 1923 had reached almost 92 trillion marks With less than three per cent of government expenditure being met from income and with the cost of one dollar at four billion marks Germany was in the throes of economic and social chaos Starvation became a reality for millions of people despite a bumper cereal harvest as shops reverted to the barter system Farmers refused to accept the effectively worthless banknotes in exchange for grain and food quickly began to run short in the cities Prices rose one trillion-fold from their pre-war level More importantly for the long-term political future of Germany the middle and working classes saw their savings wiped out These were in essence the people who were later to become the hard-core of the Nazi vote Economists will argue that runaway hyperinflation has two sources Firstly it arises through a fall in the foreign exchange value of a currency when an adverse balance of payments reduces foreign investors demand for the currency A falling exchange rate increases the cost of imports and therefore the cost of living Wages rise as workers try to maintain their standard of living especially
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