Reichsmark
The Reichsmark arrived in Germany in 1924 at the end of a monetary catastrophe. One new Reichsmark was worth one trillion of the Papiermarks it replaced. The word "mark" had deep roots, stretching back to an ancient Germanic weight measure, traditionally half a pound. "Reich" came from Deutsches Reich, the official name of the German state from 1871 to 1945. This currency was built to be permanent, and it endured twenty-one years before meeting its end. How did a government desperate for funds find ways to expand the money supply while keeping up the appearance of fiscal discipline? And what does a printing plant in occupied Leipzig have to do with about 380 million dollars of currency that no one had authorized?
Germany's inflation crisis peaked in 1923, the year before the Reichsmark was established. The crisis had been building through the preceding years, eroding savings and upending ordinary economic life. Replacing the Papiermark required more than just printing new notes. The Papiermark gave way first not to the Reichsmark but to the Rentenmark, an interim currency.
The Deutsche Rentenbank stood behind the Rentenmark, holding industrial and agricultural real estate assets as its security. Once the economy had stabilized, the Reichsmark took over. It was placed on the gold standard at the same rate the old German mark had previously carried. The new currency was designed to anchor confidence, not just substitute for what came before.
The Reichsbank, while maintaining the gold standard officially, quietly discounted bonds that shell companies had been authorized to issue outside the Reichsmark system. These bonds were nominally exchangeable one to one for Reichsmarks. The gap between their stated and actual value created a mechanism for secret monetary expansion. Germany was growing its money supply without formally renouncing the gold standard it had adopted. When German forces moved into Austria in 1938, the Reichsmark would take on a much more visible role in the wider world.
The annexation of Austria in 1938 brought the Reichsmark into a country where, just months earlier, the schilling had been legal tender. As German forces extended their reach across Europe, each newly occupied or allied nation received a fixed exchange rate for its currency against the Reichsmark. These rates were set to benefit German soldiers and civilian contractors. Paid in local currency at exchange rates Germany controlled, they could acquire goods far more cheaply than the true economic relationship would have justified.
The Belgian franc was initially pegged at 100 to the Reichsmark in May 1940, then revised upward to 125 in July. The French franc was fixed at 200 per Reichsmark from May 1940. In occupied Poland from 1939, the exchange stood at 20 zloty per Reichsmark. The Norwegian crown began at 13.33 per Reichsmark in 1940, later revised to 17.50. Even in the Channel Islands, where British administration had continued under occupation, sterling was drawn into the system. It was fixed at seventeen shillings to the Reichsmark. The Slovak crown was set at 100 per Reichsmark in 1939, then raised to 116.20 on the 1st of October 1940.
The Reichskreditkassen issued a separate physical currency for use in occupied territories. Holed zinc coins in five and ten Reichspfennig denominations were struck in 1940 and 1941. The original production target for the ten-Reichspfennig coin alone was 250 million pieces. The first embossing order, issued in April 1940, called for 40 million of the five-Reichspfennig and 100 million of the ten-Reichspfennig coins. The Wehrmacht no longer needed them for Belgium and France by August 1940, and the contract was halted. Most were melted down due to metal shortages, leaving many of those mint marks exceptionally rare today.
Wehrmacht notes were produced from 1942 to 1944 as a separate military currency. The first military issue carried an unusual conversion rate: one military Reichspfennig equaled ten civilian Reichspfennig, and the notes were printed on one side only. A second military issue followed, equal in value to the ordinary Reichsmark and printed on both sides. For concentration camps and prisoner of war camps, entirely separate issues circulated, none of them legal tender in Germany itself. Between 1942 and 1943, tokens were struck specifically for the Lodz Ghetto. The coins circulating within Germany carried a separate history, including one that became a byword for political failure.
Seven denominations made up the Reichsmark's initial coin series: one, two, five, ten, and fifty Reichspfennig, plus one and three mark pieces. In 1932, Reichskanzler Heinrich Bruning added an unusual entry to that lineup. His four-Reichspfennig piece was an instrument of price theory. Bruning believed that replacing the five-Reichspfennig coin would force shopkeepers to price things differently. Without five-pfennig increments as a standard, they would have no choice but to lower prices. Germans were not persuaded. The coin quickly acquired the nickname Bruningtaler, and more pointedly, Armer Heinrich, meaning "poor Heinrich." It was demonetized in 1933.
Between 1940 and 1945, the zinc ten-Reichspfennig coin replaced the earlier aluminum-bronze version, which had carried a distinct golden colour. One and five-Reichspfennig coins also shifted to zinc, while the fifty-Reichspfennig coin was switched to aluminum. These were emergency issue types, dictated by wartime metal shortages. The demonetized four-Reichspfennig coins from Bruning's era had not disappeared. They were only slightly larger than the one-Reichsmark coin, and both bore a similar imperial eagle. A scheme emerged to silver the four-Reichspfennig piece and pass it off as the higher denomination.
The Berlin mint, identified by the letter A, consistently produced the most coins of any German mint location. Vienna used letter B, Munich used D, a site near Dresden used E, Stuttgart used F, Karlsruhe used G, and Hamburg used J. Not all mints produced coins every year, and each had a different production allocation. Mintage figures for the zinc ten-Reichspfennig coin follow the trajectory of the war. In 1940, the Berlin mint struck over 212 million of these coins. By 1943, that figure had fallen to around 157 million. By 1945, only two mints were still operating, producing a combined total of about twelve million. The 1943 Karlsruhe issues and the 1945 Berlin and Dresden-area issues are now classified as rare. The coins' story was only part of the Reichsmark's physical legacy. The printed notes circulating through this same era carried their own layer of secrets.
The first Reichsmark banknotes appeared in 1924, issued by the Reichsbank alongside notes from state banks in Bavaria, Saxony, and Baden. Between 1929 and 1936, a second series replaced them. These notes commemorated Germans who had shaped their country's agriculture, industry, economy, science, and architecture. Rather than the usual symbols of state, each denomination carried a portrait.
Among the 1929 notes, one denomination carried a portrait of Albrecht Thaer, an agronomist. Another 1929 denomination commemorated Werner von Siemens, the engineer, inventor, and industrialist. A 1933 note bore the image of David Hansemann, a Prussian politician and banker. The one hundred Reichsmark note of 1935 featured Justus von Liebig, a chemist widely credited as the "father of fertilizer industry." The series closed in 1936 with a note bearing the portrait of Karl Friedrich Schinkel, a Prussian architect. In 1939, one denomination received a new design adapted from an Austrian banknote type that had been prepared but never issued.
Dated 1944, American occupation banknotes were printed by the Forbes Lithograph Printing Company of Boston, in preparation for Germany's occupation. Each note identified its issuer as the Alliierte Militarbehorde, the Allied military authorities. On the obverse, it stated that the note was in legal circulation in Germany. Denominations ran from half a mark to one thousand marks. These notes converted to US dollars at a rate of ten to one.
On the 14th of April 1944, Henry Morgenthau and Harry Dexter White of the US Treasury Department authorized a transfer. The engraving plates, ink, and associated equipment used to print the occupation marks were flown to the Soviet Union by air. Soviet authorities established a printing operation at a plant in occupied Leipzig. Running the presses at high volume, they produced large quantities of occupation marks. Each mark could be converted to dollars, filling Soviet reserves with hard currency. A United States Congress investigation later concluded that about 380 million dollars "more currency than there were appropriations for" had entered circulation. By the time the Senate hearings concluded in 1947, the Reichsmark itself had nearly ceased to function as a practical currency.
After V-E Day, the Reichsmark's value dropped to 200 per dollar. Inflation in the war's final months had already gutted purchasing power. Allied Occupation Marks, printed in both US and Soviet zones, circulated alongside remaining Reichsmark notes. New coins were issued without swastikas.
German civilians found one Allied Occupation Mark equal to one Reichsmark. For soldiers, the arithmetic was far more favorable. A soldier could sell goods on the black market for Reichsmarks, then convert those marks to Allied Occupation Marks at one to one. Allied Occupation Marks then exchanged for dollars at ten to one. A carton of cigarettes from a US military post exchange cost fifty cents. On the black market, that same carton fetched 150 marks from German civilians, the equivalent of fifteen dollars. Matches served as small change.
The solution to Germany's monetary chaos came abruptly on the 21st of June 1948. Edward A. Tenenbaum, an economist with the US military government, had secretly designed the plan. Ludwig Erhard directed the reform. The Reichsmark was replaced by the Deutsche Mark at a rate of ten Reichsmarks to one Deutsche Mark. Cash and current accounts converted at one to one. Three days later, on the 24th of June, the Deutsche Mark also replaced the Reichsmark in the three Western sectors of Berlin. The reform under Erhard is considered the beginning of the West German economic recovery.
The Soviet Occupation Zone followed one day after the Western zones. The Reichsmark there gave way to the East German mark, colloquially called the Ostmark, a name it held officially from 1968 onward. Austria had made the transition earlier. In November 1945, the Second Austrian schilling had replaced the Reichsmark there. The Saar region introduced its own Saar mark in 1947, later replaced by the Saar franc. In 1947, Rhineland-Palatinate issued its own five and ten Pfennig notes, each bearing the word Geldschein. After German reunification in 1990, the Deutsche Mark became the currency of all of Germany. The recovery that Erhard's reform had set in motion had, by then, long since proved itself.
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Common questions
Why was the Reichsmark introduced in Germany in 1924?
The Reichsmark was introduced in 1924 to replace the Papiermark, which had become nearly worthless during the German inflation crisis that peaked in 1923. One Reichsmark replaced one trillion Papiermarks. The transition used the Rentenmark as an intermediate step before the Reichsmark was placed on the gold standard.
What was the Bruningtaler or Armer Heinrich Reichsmark coin?
The Bruningtaler, also called Armer Heinrich meaning "poor Heinrich," was a four-Reichspfennig coin introduced in 1932 at the direction of Reichskanzler Heinrich Bruning. Bruning intended it to lower retail prices by replacing the five-Reichspfennig coin, which he believed set pricing conventions shopkeepers would no longer be able to follow. It was unpopular and demonetized in 1933.
How did Germany use Reichsmark exchange rates to exploit occupied countries during World War II?
Germany set fixed exchange rates between the Reichsmark and the currencies of occupied and allied countries, calibrated to give German soldiers and contractors significant purchasing advantages at local expense. The French franc was fixed at 200 per Reichsmark from May 1940, the Belgian franc at 100 (revised to 125 in July 1940), and the Polish zloty at 20 per Reichsmark from 1939. Even sterling in the Channel Islands was pegged at seventeen shillings to the Reichsmark.
Who authorized the transfer of Reichsmark printing plates to the Soviet Union in 1944?
Henry Morgenthau and Harry Dexter White of the US Treasury Department authorized the air transfer of the engraving plates, ink, and equipment to the Soviet Union on the 14th of April 1944. The Soviets used them at a printing plant in occupied Leipzig to produce large quantities of occupation marks exchangeable for dollars. A subsequent congressional investigation found about 380 million dollars "more currency than there were appropriations for" had been circulated.
What currency replaced the Reichsmark in West Germany after World War II?
The Deutsche Mark replaced the Reichsmark in the American, British, and French occupation zones on the 21st of June 1948, at a rate of ten Reichsmarks to one Deutsche Mark, with cash and current accounts converting at one to one. The reform was directed by Ludwig Erhard and is considered the beginning of the West German economic recovery. Three days later, on the 24th of June, the Deutsche Mark also replaced the Reichsmark in the three Western sectors of Berlin.
What was the black market value of American cigarettes in Reichsmarks in postwar Germany?
A carton of American cigarettes that cost fifty cents at a US military post exchange fetched 150 marks from German civilians on the postwar black market, the equivalent of fifteen dollars. The gap existed because Allied Occupation Marks converted to US dollars at ten to one, letting soldiers turn black-market Reichsmarks into hard currency. Matches served as small change in the same economy.
All sources
13 references cited across the entry
- 2MIWI Institute – 150 years of German monetary historyYuri Kofner — 2023-01-03
- 3BookArbeitsbeschaffungsmaßnahmen im Dritten Reich von 1933-1936Bastisch, Andre — GRIN Verlag — 2007
- 4JournalBanking in National Socialist Germany, 1933–39Christopher Kopper — April 1998
- 5BookThe US Army in the Occupation of Germany, 1944-1946Earl F. Ziemke — Center of Military History, United States Army — 1975
- 7JournalLaw 1947-2158 of 15 November 194715 November 1947
- 13Allied Military CurrencyStrictly G.I.