The Allies were less than sympathetic toward Germany's cries of poverty. There was clear evidence that while the German government might have been poor, the Germans were considerably more wealthy. That is to say, the Allies complained that the German government was less than forceful in taxing the often sizable assets that remained in private hands. The French in particular suspected that the Germans were husbanding their resources in order to regain their military strength. Allied control teams reported that there seemed to be secret paramilitary groups all over Germany, often trained by regular army officers, with hidden caches of arms. Although the Allies presented a united front toward Germany on the reparations issue, they differed on the best approach. Generally speaking, Belgium, France, and Italy formed a hawkish bloc, while Great Britain took a more dovish approach. The reason for England's different attitude was not so much credence in Germany's claims of poverty as concern for the revival of international trade. Increasingly, Great Britain recognized that without German recovery there would be little hope of a return to Europe's prewar prosperity.

200,000-mark banknote, Germany, August 1923	One million mark banknote, Germany, September 1923

To demonstrate its earnestness on the reparations issue, the Reich government turned to something called the "fulfillment policy." The strategy was not mere subterfuge. German leaders were truly convinced that the country did not have the resources to continue reparations payments for any length of time. In his capacity as minister for recovery, Walther Rathenau took the lead in attempts to negotiate a series of agreements with the French that would have converted some of Germany's cash payments into alternative forms of compensation, such as supplying German laborers for construction work in the devastated areas of France. But the fulfillment policy did not succeed, and in Germany inflation continued unabated: the mark fell from 4,500 to the dollar in October 1922 to 18,000 in January 1923. The unequal struggle over reparations came to a head in the Ruhr crisis, when the Germans again fell behind in their payments (at issue was a shipment of telephone poles). Distrustful of Germany's intentions, a reparations commission (consisting of representatives from France, Belgium, Italy, and Great Britain) voted three-to-one to declare the Reich in violation of her treaty obligations, and authorized France and Belgium to take punitive action. In January 1923 the two countries moved a contingent of engineers, accompanied by a small military force, into previously unoccupied parts of the Ruhr region to oversee the operations of the coal mines in that area. Ostensibly, their purpose was to ensure that coal earmarked for France and Belgium was actually shipped. The Germans, however, were convinced that the real aim of the French was to sever the Ruhr area from the Reich and consequently destroy Germany's national unity.

A German poster urges passive resistance during the Ruhr crisis, under the motto "No! You won't subdue me!"	Inflation and food shortages during 1923: German shoppers line up in front of a Berlin bakery

 Recognizing the Reich's inability to oppose the Allied moves with military force, the German government resorted to a policy of passive resistance. This meant political and economic leaders in the Ruhr, with the full support of the Reich and Prussian governments, called upon the population of the occupied areas to stage what amounted to a general strike. Less coal was mined in the months from January to September than in the first ten days of the year. While passive resistance inconvenienced the occupiers, their difficulties were minor compared to those the Germans caused for themselves. The Cuno government supported the idle population of Germany's industrial heartland with federal cash grants-in-aid. In effect, passive resistance was financed by authorizing the indiscriminate printing of money. The result was to open the floodgates of uncontrolled inflation. Between early January and November 15, 1923, when inflation finally was brought under control, the German mark in relation to the U.S. dollar fell from an already unprecedented 18,000 to the dollar to an astronomical 4.2 trillion. The social and economic consequences of state-sponsored inflation were enormous and disastrous. Tax collections (and government budgets) became meaningless as money lost its value by the hour. Worse, lifetime savings vanished overnight, while economic life was reduced to barter.

Twenty million mark banknote, Germany, July 1923	Fifty million mark banknote, Germany, September 1923