CBSE Class 9 Answered

Germany fought many wars largely based on loans, which had to be repaid back, in gold. However, the gold reserves during that time were scarce. In 1923, the Germans refused to pay, which made the French occupy its leading industrial area, Ruhr, to claim their coal. This led to massive retaliation and reckless printing of paper currency by the Germans. With too much printed money in circulation, the value of the German mark fell. In April, the US dollar equalled 24,000 marks, in July 353,000 marks, in August 4,621,000 marks and at 98,860,000 marks by December, the figure ran into trillions. The decrease in the value of the mark increased the prices of goods. This crisis came to be known as hyperinflation, a situation when prices rise phenomenally high.