Deutsche Mark

• 1. Origins And Predecessors

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  Before 1871, the German states issued a variety of different currencies. The North German thaler and the South German gulden were the most common forms of money in circulation. By 1857, both currencies linked to the Vereinsthaler, a silver coin containing 16.66 grams of pure silver. A fixed exchange rate between the Vereinsthaler and the mark used three marks for one Vereinsthaler. The first official mark known as the Goldmark arrived in 1873. World War I forced Germany off the gold standard. High inflation turned the currency into paper money called the Papiermark. Hyperinflation destroyed its value completely. The Rentenmark replaced the Papiermark on the 15th of November 1923. The Reichsmark followed in 1924.

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• 2. The June 1948 Reform

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  Ludwig Erhard officially introduced the Deutsche Mark on Sunday the 20th of June 1948. Large amounts exchanged at ten old Reichsmarks for sixty-five pfennigs. Each person received a per capita allowance of sixty Deutsche Marks split into forty and twenty parts. Edward A. Tenenbaum managed eleven experts who devised this reform. They created the name Deutsche Mark as a temporary title that became permanent. Erhard issued an edict abolishing economic controls on that same Sunday. He acted against orders because American, British, and French occupation offices were closed. He knew they would countermand the order if open. The new currency protected western Germany from hyperinflation. It stopped rampant barter trade where cigarettes served as money. Soviet authorities cut all road links between western zones and West Berlin. The United States and Britain launched an airlift to distribute the new currency in West Berlin.

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• 3. Economic Miracle And Stability

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  Prices and wages remained controlled since the 1930s while money stayed plentiful. People accumulated large paper assets despite official prices not reflecting reality. More than half of all transactions took place unofficially on the black market. The reform replaced old money with new marks at one new for ten old rates. This wiped out ninety percent of government and private debt plus private savings. Prices decontrolled while labor unions accepted fifteen percent wage increases despite twenty five percent price rises. German export product prices held steady while profits soared. Profits poured back into the economy alongside Marshall Plan money totaling 1.4 billion dollars. Consumer goods appeared overnight in stores because sellers could charge higher prices. A giant wave of strikes swept over West Germany during summer 1948. Strikers met US tanks in Stuttgart during the Stuttgarter Vorfälle incident. The population accepted free ranging prices only after the wage freeze ended. The Deutsche Mark earned a reputation as a strong store of value. It became a source of national pride during the Wirtschaftswunder years of the 1950s.

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• 4. Reunification And Exchange Rates

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  The Deutsche Mark served as the official currency of East Germany starting July 1990. It replaced the East German mark before unification occurred on the 3rd of October 1990. East German marks exchanged for Deutsche Marks at one to one rates for the first four thousand marks. Larger amounts received two to one exchange ratios. Each citizen of East Germany coming to West Germany received welcome money of one hundred Deutsche Marks in cash. The German government and Bundesbank disagreed over the exchange rate between the two currencies. France and United Kingdom opposed reunification and tried to influence the Soviet Union to stop it. Late 1989 France extracted German commitment to Monetary Union in return for support. The European Central Bank adopted policies based on the hard monetary policy of the Bundesbank. Speculation on the French franc caused changes in the European Exchange Rate Mechanism in 1993. Purchasing power reduced by over seventy percent during its fifty three year history despite stability claims.

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• 5. Coins And Design Evolution

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  First Deutsche Mark coins issued by the Bank deutscher Länder appeared in 1948 and 1949. Denominations included one pfennig, two pfennigs, five pfennigs, ten pfennigs, and fifty pfennigs. One pfennig and two pfennig struck in bronze clad steel while five pfennig and ten pfennig used brass clad steel. Fifty pfennig coins contained cupronickel. Cupronickel DM1 coins released in 1950 followed by cupronickel DM2 and silver DM5 in 1951. Silver replaced copper nickel in the DM5 coin in 1975. Commemorative silver DM10 coins found their way into circulation periodically. Germany retained smallest coins until euro adoption unlike other countries. A special .999 pure gold DM1 coin authorized the 27th of December 2000 commemorated the end of the mark. One million gold coins minted at five mints sold for approximately US$165 each. Mint marks indicated origin with D Munich F Stuttgart G Karlsruhe J Hamburg. Coins minted during World War II included A Berlin and B Vienna marks.

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• 6. Banknote Series And Security

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  Four series of German mark banknotes existed from 1948 to 2001. First series issued 1948 by Allied military included denominations up to one hundred marks. Second series introduced 1948 by Bank deutscher Länder shared design jobs between Bank of France and American Bank Note Company. Third series arrived 1960 depicting neutral symbols paintings by German painters and buildings. Fourth series launched 1990 countered forgery technology advances. New security features included windowed security thread watermarks microprinting intaglio printing color shifting ink. The fourth series added a two hundred mark denomination to decrease use of one hundred mark notes. Two hundred mark notes made up fifty four percent of all circulating banknotes before introduction. Reserve series BBk II printed 670 million notes totaling twenty five billion marks value. These stored in Bundesbank underground bunker in Cochem or Frankfurt vault. Third series banknotes entered circulation the 10th of February 1961 with the twenty mark note. High denomination notes like one thousand marks rarely seen in circulation ceased legal tender the 30th of June 1995.

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• 7. Transition To The Euro

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  Council of European Union fixed irrevocable exchange rate the 31st of December 1998 effective the 1st of January 1999. One Deutsche Mark equaled 1.95583 euros. Deutsche Mark replaced by euro in 1999 while coins and banknotes remained defined in terms of euros until the 1st of January 2002. Euro notes and coins introduced the 1st of January 2002 ended legal tender status immediately for Deutsche Mark. Other eurozone states allowed dual circulation up to two months but Germany did not. Mark coins and banknotes accepted as valid payment forms until the 1st of March 2002. All German marks cash form may change into euros indefinitely at any Bundesbank branch. Banknotes and coins sent to Bundesbank by mail also accepted. Estimated thirteen point two billion marks circulated in 2012. Polls from 2011 showed narrow majority favoring currency restoration though few believed economic benefit would follow. Early 2020s polls indicated minority support reintroduction of the Deutsche Mark.

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