In 1923 the German papiermark became the most famous worthless currency in history. Within a single year the unit that had traded at about 4.2 marks to the US dollar before the First World War fell to roughly 4.2 trillion to the dollar, and the Reichsbank ended up printing a banknote denominated at one hundred trillion marks. The collapse ended on 15 November 1923, when a new currency — the Rentenmark — was issued at the deliberately humiliating rate of one Rentenmark to one trillion old paper marks, and the mark was re-stabilized at the prewar parity of 4.2 to the dollar, now carrying twelve additional zeros’ worth of erased savings.
The cause was not mysterious, and that is the point. Germany had financed the First World War almost entirely on credit, suspending the mark’s gold backing in 1914 and betting that the defeated enemy would pay the bill. Germany lost. The Treaty of Versailles (1919) and the London Schedule of Payments (1921) instead handed Germany a reparations obligation of 132 billion gold marks, and the government — unwilling or unable to cover its deficits with taxes — kept the printing presses running. When France and Belgium occupied the industrial Ruhr in January 1923 to extract reparations by force, Berlin funded a national strike of “passive resistance” the only way it knew how: by printing more money. That converted a fiscal problem into a catastrophe.
At the peak, in October 1923, prices rose at roughly 29,500% per month and doubled every few days. Workers were paid twice daily and ran to spend their wages before lunch made them worthless; banknotes were used as wallpaper, kindling, and children’s playthings because the paper was worth more than the number on it. The savings of an entire middle class — bondholders, pensioners, anyone who had trusted the mark — were annihilated, while debtors and holders of hard assets walked away enriched.
What stopped it was credibility, not collateral. The Rentenmark was notionally “backed” by a mortgage on German land and industry, a backing that could never have been redeemed; it held because it came with a believable promise to stop printing, a fixed quantity, and — in 1924 — the gold-backed Reichsmark and the American loans of the Dawes Plan behind it. The episode burned a fear of inflation into German policy so deep that it still shapes European central banking a century later.
The Soviet sovznak — the “Soviet token” ruble printed by the Bolshevik state from 1919 — was destroyed by the Russian Civil War and the doctrine of war communism, and it was retired in 1924 by the gold-backed chervonets and a hard monetary reform. It is the rare hyperinflation whose architects, for a while, regarded the collapse as a feature rather than a failure. As the presses devoured the value of money, leading Bolsheviks welcomed the prospect of a moneyless economy; war communism spawned, in one historian’s phrase, “fantasies of a moneyless economy,” and the runaway emission was read by some as the death of capitalism’s most basic instrument.
The mechanism was the oldest one in the book. Between 1918 and 1921 the new state fought a civil war against the Whites and foreign interventionists, requisitioned grain, abolished much of normal trade, and met its expenses by the limitless issue of paper. Industrial production collapsed by roughly 85% by 1920, the tax system disintegrated, and the only thriving enterprise — as the joke ran — was the manufacture of banknotes. Prices climbed by factors that defy intuition: by late 1923 the price level stood at hundreds of millions of times its 1913 base, and the government redenominated the currency twice (a new ruble for 10,000 old on 1 January 1922, then another for 100 on 1 January 1923) just to keep the arithmetic of daily life manageable.
By the measured peak in February 1924, consumer prices were rising at roughly 212% a month — prices doubling about every 18 to 19 days, per the Hanke-Krus World Hyperinflation Table — and the largest sovznak-era notes ran to 10 million rubles. What ended it was a deliberate reversal of doctrine. Under the New Economic Policy, a Sovnarkom decree of 11 October 1922 created the chervonets, a gold-backed bank note equal to the prewar 10-ruble gold coin (7.74232 grams of fine gold), at least a quarter of it covered by metal and hard currency. The chervonets circulated alongside the dying sovznak through 1923; in February 1924 it became the sole currency, and the government bought up the remaining sovznaks between 7 March and 10 May 1924 at a ratio of one gold ruble to 50,000 of the 1923 notes — and 50 billion of the original 1922-series rubles.
The reform held because it abandoned the fantasy. The “death of money” had not built socialism; it had paralysed an economy that still needed to count, trade, and save. The chervonets restored a unit people would hold, and the Soviet ruble that grew out of it lasted until 1947.
The Polish marka, the first currency of a nation reconstituted in 1918 after more than a century of partition, was destroyed by war finance and chronic deficits, and it was retired in 1924 by Władysław Grabski’s reform and the gold-backed złoty. Poland came into being broke. It had been carved out of the wreckage of three empires, its territory fought over and its industry shattered, and almost at once it had to defend its frontiers — most consequentially against Soviet Russia in the Polish–Soviet War of 1919–21. With no functioning tax base and a treasury that could not borrow at home or abroad on workable terms, the young state covered its deficits the way young broke states usually do: it printed marki.
The print run never stopped, and by the middle of 1923 ordinary inflation tipped into hyperinflation, with monthly price rises exceeding 50%. The peak came in October 1923, at roughly 275% a month on the Hanke-Krus World Hyperinflation Table. The collapse of the exchange rate tells the story in miniature: the marka traded at about 90 to the US dollar in 1919, around 17,800 by the end of 1922, and roughly 5,000,000 to the dollar by November 1923, climbing toward 9,300,000 by January 1924. The largest notes the state ever printed reached 10 million marek.
What stopped it was a reform of unusual self-reliance. In December 1923 the economist Władysław Grabski became prime minister while keeping the treasury portfolio, and in January 1924 the Sejm passed his currency-and-treasury reform. He balanced the budget largely through a property levy rather than the foreign loans he feared would buy political strings, founded the Bank of Poland (Bank Polski) as a joint-stock company meant to be independent of the treasury, and replaced the marka with the gold-based złoty at 1,800,000 marek to 1 złoty. The new unit was pegged at par with the Swiss franc. The currency was reborn alongside the nation’s solvency, and the złoty — battered and reformed many times since — is Poland’s money to this day.