Q- How Germany came into the trap of ‘Hyper-inflation’ situation after World War two? How were they saved?
Answer- Germany came into the trap of ‘Hyper-inflation’ situation after World War two because of the following reasons:
1. The depleted gold reserves at a time when resources were scarce.
2. Germany had fought the War from loan and due to defeat they had to carry on the burden of loans as well as reparation of war.
3. In 1932, Germany refused to pay, so France occupied its leading industrial area ‘Rohr’ to claim their coal.
4. Germany retaliated with passive resistance and printed paper currency regularly in a large number.
5. With too much printed money in circulation, the value of German currency fell.
6. Germany people had to carry cartloads of money to purchase a piece of bread.
7. This crisis came to be known as ‘Hyper-inflation’, as a situation in which the value of currency fell and the price of goods grew or increased rapidly.
Germany was saved due to America as Americans intervened and bailed Germany out of the crisis by introducing ‘The Dawes Plan’ which reworked the terms of separation to ease the financial burden of Germany.