In the summer of 1914. Europe stood on the catastrophe that would forever alter the course of history. By the mid summer of 1914 more than a decade of belligerent erraticism by German leaders, who lacked the diplomatic skill and self restraint of Chancellor Otto Von Bismarck, contributed to the feeling among German neighbours that there were bounds which she should not be permitted to cross. Hence a regional Balkan conflict involving Germany’s Ally Austria- Hungary and Serbia supported by her Russian patron rapidly escalated into a continental and then a General World War. Aspirations of a continental domination by Imperial Germany was shattered in the First Battle of the Marne(September 5-12,1914). The unexpected defeat and the industrialised warfare distorted the German Economy. Taxation covered roughly 14 percent of expenditure. The imperial government had no choice but to finance the war through borrowing in the form of war bonds purchased by patriotic citizens. Even this patriotism failed to match the spiralling costs of war, the German government simply printed more money, which sent annual average rate of inflation skyrocketing from 1 percent in 1890-1914 to 32 percentage . By 1918 German Mark had lost 3 quarters of its pre war value thereby marking the beginning of a crisis.