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Sunday, 30 November 2014

DID YOU KNOW SERIES (24): A “Hundert Mark” (Hundred Mark) Reichsbanknote dated 1st November 1920 tells a tale of a time when hyperinflation was rampant in Germany after World War I :



DID YOU KNOW SERIES (24): A “Hundert Mark” (Hundred Mark) Reichsbanknote dated 1st November 1920 tells a tale of a time when hyperinflation was rampant in Germany after World War I :


Reichsbank (meaning the “Empire’s Bank”):

The Reichsbank was founded on 01.01.1876 shortly after the establishment of the German Empire in 1871.

 It was the Central Bank of Germany from 1876 to 1945. It was privately owned by the Central Bank of Prussia, functioning under the close control of the Reich Government.

Prior to its establishment, there were 31 Central Banks or “Notenbanken” (Note Banks), functioning in each of the independent states which were issuing their own money.

After the creation of the ReichsBank, four other “Notenbanken” still continued to function till the beginning of World War I, i.e. till 1914. These were Baden, Bavaria, Saxony and Wurttemberg.

German “Goldmark” Currency (1873-1914):

Until World War I, the Reichsbank issued a stable currency called the “Goldmark” (Between 1873 to 1914, the Mark was linked to gold with 2790 Mark being equal to I Kg. of pure gold or 1 Mark being equal to 358 mg. of pure gold). Thus, “Goldmarks” were adequately backed by gold reserves.   

When the World War I broke out, Germany delinked its currency convertibility from gold and funded the War entirely by borrowing which led to a decline in the exchange value of the Mark.

The Mark which was earlier formally backed by gold now evolved into the Papiermark (paper Mark) backed by nothing.

German “Papiermark” Currency (1914-1923):

The term “Papiermark” (or “paper mark”) is used for German currency when the link between the Goldmark and gold standard was abandoned due to the outbreak of World War I.

Just before the World War I, The State Loan Office began issuing paper money known as “Darlehnskassenscheine” (Loan Fund Notes). These circulated alongside the issues of the Reichsbank. Most were in the denominations of 1 and 2, but there were 5, 20, 50 and 100 Mark Notes also.

In addition to the issues of the Government, emergency issues of tokens and paper money, known as “Kriegsgeld” (war money) and “Notgeld” (Emergency money) were produced by local authorities.

“Notgeld/Grossgeld”:

Not” means “Emergency or necessity” while “geld” stands for “money”.

During World War I, money was in short supply and there was rampant hoarding of gold and silver coins across the countries of the World involved in the War effort.

Paper currency hoarding too added to the shortage of money in circulation. Eventually, to overcome this problem, the State Bank of Germany the “Reichsbank”) permitted towns, villages and municipalities to issue their own currency. These old Banknotes have over the years acquired a lot of collector interest. Interestingly, apart from metal issues, Notgeld was usually made of paper. Occasionally, it was issued in the form of card, silk, linen jute, chamois leather, leather, aluminium foil, envelopes, velvet, playing cards, compressed coal dust etc. Most Notgelds have the name of the town mentioned on them.

If, however, a German Banknote had the word “Riechsbanknote” printed on it, then it was issued by the State and is not a "Notgeld".

Grossgeld” are any piece of Notgeld having a face value of 1 Mark or more i.e. 1, 5, 10, 20, 50, 100 and 500 marks etc. The Grossgeld Banknotes are much larger than Serienscheine and Verkehrsausgaben issues but smaller than very large inflationary issues.

Serienscheine:

Serienscheine (meaning “Series Notes”) are a sub-set of “Notgeld” and are the precursors to the famous German inflationary money of the early 1920s. These issues were beautiful, humorous and whimsical and conveyed a sense of hope and stoic optimism designed to take the minds of the users away from the miseries of the War they had gone through. The variety and beauty of these Banknotes made them a desirable commodity. Collectors collected them in sets which narrated stories and legends, which, in turn, led to the production of many different issues and designs.

 For example, in Hamburg town, there was a story of Klaus Stoertbeker which is narrated on two Banknotes:

Klaus was a pirate in the late 1300s and he and his crew were captured and brought to Hamburg and sentenced to death by beheading. Before his execution, the story goes, that he asked to be beheaded standing upright facing his pirate crew and that after his head was cut off, as many of his pirate crew that his headless body walked past, should be spared capital punishment. It is said that his headless body walked past 12 of his crew and he only stopped walking because the executioner tripped him. It is another matter that his crew were executed anyway.

Collectors are on the lookout for entire Series which narrate stories like this one.

Verkehrsausgaben:

These are Notgeld issues that were put into circulation because of the shortage of small change (metal coinage).

Weimar Republic (Weimarer Republik):

This is the name given to the Federal Republic and semi-Presidential representative democracy established in 1919 in Germany to replace the Imperial form of Government after Germany’s defeat in World War I.

 It is named Weimar after the city where the National Assembly took place in 1919 which adopted a new constitution for the German Reich. However, most Germans continued to refer to their Nation the “Deutsches Reich”.

In its 14 years of existence, the Weimar Republic faced numerous problems, including hyperinflation, political extremism and contentious relationships with the victors of World War I. Nevertheless, the Weimar Republic successfully reformed the currency, unified tax policies and the Railway system and met most of the requirements of the Treaty of Versailles, except for meeting the disarmament requirements and eventually paid a small portion of the total reparations required by the Treaty.

Decline of the “Papiermark”:

The Treaty of Versailles accelerated the decline of the Mark. By end 1919, around 6.7 Papiermarks were required to buy a US dollar.

The Allied nations in World War I imposed heavy war reparation payments on Germany which were mentioned to be paid in “Goldmarks” in 1921, 1929 and 1931, as the Allies feared that a defeated Germany might try to pay off the obligation in Papiermark.

Because reparations were required to be paid in hard currency and not the rapidly depreciating Papiermark, Germany adopted a strategy to bulk print Banknotes to buy foreign currency at any price, for paying out reparations, which led to a free fall in the value of the Papiermark and rampant inflation/hyperinflation and ultimate collapse of the German Mark.

By the first half of 1921, the German Mark fell to about 60 to a US dollar. Despite this, the German industry was intact and there were indications that the German economy had withstood the effects of the War rather well.

In May 1921, the “London Ultimatum” required Germany to pay reparations in gold or foreign currency in annual instalments of 2 billion goldmarks (total of 132 billion Goldmarks) along with 26% of the value of German exports.

After making the first payment in June 1921, the Mark began its free fall with about 330 Marks being the exchange value to a US dollar.

Hyperinflation followed and cart-fulls of money could hardly buy groceries

Due to hyperinflation higher denominations of Banknotes were issued by the Reichsbank and other institutions like the Reichsbahn Railway Company in large numbers.

Before the War, the highest denomination was 1000 Mark equivalent to about 50 British Pounds.

In early 1922, 10000 Mark notes were circulated, followed by 100000 and 1 million Mark notes in February 1923. Later several denominations, the highest being 100 Trillion or 100,000 billion marks (Einhundert Billionen Mark) which were equivalent in value to about 100 Rentenmark (the currency which superseded the Papiermarks as a stop gap arrangement , in November 1923, to contain the hyperinflation) were issued.

In January 1923, French and Belgian troops occupied the Ruhr, the industrial region of Germany the “Ruhrgebiet” (or the “Ruhr”) to ensure that the reparations were paid in goods, viz., coal etc., as the Mark had been rendered useless and Germany was in no position to pay its reparations because of the rampant inflation.

The hyperinflation in the Weimar Republic lasted from June 1921 to January 1924.

Introduction of the “Rentenmark” as a stop-gap currency (1923-1924):

The hyperinflation was at its worst by November 1923.

The inflation began to taper off only with the issue of the German Rentenmark printed by the Deutsche Rentenbank, which replaced the worthless papiermark on 16.11.1923.

The currency was stabilised in November 1923 after the Rentenmark, was proposed to be issued, which came into circulation in 1924. The Rentenmark replaced the Papiermark at an exchange rate of 1 trillion Papiermarks to 1 Rentenmark. Rentenmarks were issued in the denominations of 1, 2, 5, 10, 50, 100, 500 and 1000 dated 01.11.1923.

Around 500 million Rentenmarks dated 16.11.1923 were put into circulation, with another 1 billion being circulated on 01.01.1924 and supplemented by 1.8 billion Rentenmarks being added into circulation in July 1924. The exchange value of the Rentenmarks was placed at 1 trillion Papiermark, which still continued to be in circulation.

The hyperinflation of Germany is akin to the Hyperinflation faced by the Hungarian pengo and the Zimbabwean dollar which were even more inflated.

 I have come across a similar story when I was studying the currency of Zimbabwe which can be accessed at the following link:(How to join the super-rich Club? Own a Z$ 100 Trillion Banknote from Zimbabwe)

The Reichsmark (1924-1948):

On 30.08.1924, the Reichsbank began issuing the Reichsmark which served as the currency of Germany till 1948. This was meant to be a permanent replacement of the Papiermark. The exchange rate of the old Papiermark and the Reichsmark was set at 1 Reichsmark to 1 trillion Papiermark in UK and US English and 1 billion Papiermark in German and other European languages.

The Machtergreifung (or the “seizure of power”) by the Nazis in 1933 during the Third Reich led to the Reichsbank falling under Government control in 1937, and in 1939, Adolf Hitler assumed direct control of the Bank and the Bank was renamed as the “Deutsche Reichsbank”.

Following the Nazi seizure of power in 1933, payments of reparations were officially abandoned).

The Deutsche Reichsbank ceased to exist in 1945 after the defeat of Nazi Germany and the last of the Reichsmarks ceased to be legal currency in 1948, when the Deutsche Mark was introduced in West Germany and the East German Mark in East Germany.

In West Germany, the supervision of monetary policy fell upon the “Bank Deutscher Lander” (Bank of the German States) which, later, became the “Deutsche Bundesbank”, while the supervisory & control of monetary policy functions in East Germany fell upon the “Deutsche Notenbank, later the Staatsbank der DDR (State Bank of the German Democratic Republic).

Description of the 100 Mark Banknote of the German Reich (Empire):
 On the Front of this 100 Mark Banknote one can see the following inscriptions in German:

Reichsbanknote; Hundert Mark; ZAHLT DIE REICHSBANKHAUPTKASSE IN BERLIN, GEGEN DIESE BANKNOTE DEM EINLIEFERER BERLIN, DEN 1, NOVEMBER 1920. Reichsbank Directorium”.

The meaning of the above inscriptions is: “Reichsbank note. One Hundred Mark. Reichsbank’s Head Cashier /Main Cash desk in Berlin will pay the Bearer value against this Banknote, the Consignor. The 1st November 1920. Reichsbank’s Governing Body”.

On the upper and lower peripheries are mentioned “R.B.D.” (short for Reichsbank Directorium) and the Banknote’s Serial number: J7111289, both in red colour.

Reichsbanknote” is mentioned on the upper and lower peripheries as well. On both sides of the Banknote is placed the Reichsbank Directorium’s seal bearing the Reichswappen (Reich Coat of Arms).

On the left and right sides is shown the bust of a man facing right and left.

This bust has been variously described as

a)    Obverse: “Links en rechts mannenhoofd met muts” (meaning “and right (noble) men, head with hat”.

b)    Obverse: “Der Bamberger Reiter” in German (meaning “The Bamberg Horseman”).

An image of "Der Bamberger Reiter" or "Bamburg Horseman"

The Bamberg Horseman:

Der Bamberger Reiter” in German (meaning “The Bamburg Horseman”) is a life-size stone equestrian statue sculpted by an anonymous medieval sculptor in the Cathedral of Bamburg, Germany, which dates back to around 1225 AD, which places its creation to a period even before the Cathedral was consecrated in 1237.

The statue is located on a console at the North pillar of the St. George’s choir and is that of a crowned, but unnamed man.

It is believed to represent a particular King of that period, perhaps one who was also a Saint. Historians have narrowed down to Saint Henry II, who was a Holy Roman Emperor (973 to 1024 AD) and who was buried in the premises where the Cathedral was consecrated along with Pope Clement II, but if this was so, he would have been depicted in the imperial Regalia.

Perhaps, because he was of a saintly disposition, he may have shunned Worldly trappings to be depicted in his statue which was being sculpted for posterity.

Another person who this statue could represent was Holy King Stephen I of Hungary (975-1038 AD) who is portrayed as stopping by on his horse for looking towards the tomb of Saint Henry II.

A third version suggests that this statue represents Frederick II, the Holy Roman Emperor at the time, who is said to have financed much of the rebuilding of the cathedral.

A fourth version holds that the figure represents the Messiah according to the Book of Revelation.

Anyone with any other “plausible” version is welcome to contribute his/her version.

Interestingly, Adolf Hitler’s would-be assassin Colonel Claus Schenk Graf von Stauffenberg was a member of the Bavarian Cavalry unit, the “Bamberger Reiter – und Kavallerieregiment 17” (meaning the “17th Cavalry regiment of the Bamberger Horsemen”).

The 20th July 1943 plot known as “Operation Valkyrie” (a Hollywood movie was also made by that name) to assassinate Hitler was unsuccessful (four persons were killed and several injured), but Hitler got saved from the blast by a heavy solid oak conference table-leg which absorbed most of the splinters of the explosion near him. The Colonel was executed by a firing squad on 21st July 1943.
 On the Reverse of the Banknote, we find the value of the Banknote “100” mentioned in bold in the centre with the letters “R.B.D.” (initials for “Reichsbank Directorium”) mentioned on top and “Mark” mentioned below the figure. Around the oblong periphery of the inscription in the centre is mentioned in German, starting from the left, the inscription:

“Wer Banknoten nachmacht oder verfalscht, oder nachgemachte oder verfalschte sich verschafft und in Verkehr bringt, wird mit Zuchthaus nicht unter zwei Jahren bestraft”.

The meaning of the above inscription in German is:

“Anyone who copies or counterfeits or obtains and puts into circulation copied or counterfeited banknotes will be punished with not less than two years of penitentiary (imprisonment)”.

The figure “100” is mentioned in the four corners as well. The description of this face is “Waarde in Cijfer” (meaning “Value figure”).

The Specifications of this Banknote are:

Name of series: 70

Publisher: Reichsbank Hauptkasse Berlin; Authority: Reichsbank Direktorium, Berlin; Country: Germany; Denomination: 100; Currency: MARK; Type: Grossgeld; Material: Paper; Width: 107 mm; Length: 161 mm; Thickness (when placed flat on the table): 1 mm; Banknote issue date: 01.11.1920. Series Name: Weimar Republic 1920 issue.

(The previously circulating 07.02.1908 Series, i.e. before World War I, had security threads in it, but this Series was issued on plain paper only because of the enormous volumes that it was printed in).

The hyperinflated worthless papiermarks are a collector’s item today:

Interestingly, even worn-out pieces of this Banknote are much sought after, as possessing each one of these pieces is like holding a valuable piece of history and time travelling back to the period in the aftermath of the World War I, in Germany.

If only these pieces of Banknotes could talk and narrate a story what a fascinating tale that would be.

Nevertheless, while holding this piece in my hand, I felt like I had, indeed,  time travelled back and “visualised an exciting tale” which this Banknote had witnessed of German history being written first hand as it passed from hand to hand!!

The Official Coat of Arms of Germany:

The Republican Coat of Arms was based on the German crest established by the Paulskirche movement, using the same charge animal, an eagle, in the same colours (black, gold and red), but having one head instead of two.  
                        "Reichswappen" of Tobias Schwab

There were two designs adopted in quick succession – one by Emil Doepler (12.11.1919), another official “Reichswappen” (Reich Coat of Arms) by Tobias Schwab (1928).
                        "Reichsschild" of Emil Doepler

Doepler’s design became the “Reichsschild” (Reich’s escutcheon) and was used as a pennant for government vehicles.

In 1950, the Federal Republic of Germany adopted all the official symbols of the erstwhile Weimar Republic - the Reichswappen (Reich Coat of Arms), as well as, the Reichsschild (Reich’s Escutcheon) and, also, the Reichsflagge (Reich Flag).
              Image of the Eagle taken on the Governmental Flag

The Coat of Arms of Germany displays a black eagle with red feet, beak and a tongue on a yellow field, blazoned:

“Or, an eagle displayed sable armed beaked langued and membered gules”. This is the Bundesadler or “Federal Eagle”, formerly the Reichsadler or the “Imperial Eagle”.

This is the same as the Coat of Arms of the Weimar Republic (in use from 1919-1935), which was adopted by the Federal Republic of Germany on 20.01.1950. The current official design is the one made by Tobias Schwab, introduced in 1928.






(This Banknote has been contributed for my collection by Div Rakesh who was visiting Pune, India from Berlin last week. Seeing my interest in Currencies of the World, Div went out of his way, to an old currency/coinage market in Berlin to collect this piece for me. I will be putting up separate posts on some coins which Div has also brought for me).







12 comments:

  1. Saroj Nanda has commented
    "Very interesting indeed".

    ReplyDelete
    Replies
    1. Thank you. The free fall in the value of this currency in post World War I Germany, led to it being demonetised & the Nazi seizure of power in 1933.

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  2. Choudhary Roy S. has commented:
    "Later on ppl refused Mark.. A big setback in the history of currency..,
    For the first time in life...I could see that German Mark....
    Thanks...good work.."

    ReplyDelete
  3. Ramchandra Lalingkar has commented:
    "Very much interesting to read the "history of German Bank Notes" which is linked to their 'History'. Thanks for sharing".

    ReplyDelete
    Replies
    1. Thank you for your appreciative comment.

      Delete
  4. Suresh Dixit has commented:
    "Interesting!!"

    ReplyDelete
  5. Chandrakant Singh has commented:
    " Interesting indeed! How it contributed to change course of history".

    ReplyDelete
    Replies

    1. It is indeed so. Studying currency and coins is a fascinating way to learn about a country's development/history.

      Delete
  6. Wonderful, So glad I know now what everything on my grandmother's banknote represent. So much more informative than any descriptions I have found on my others. Putting them in a binder for my one of my own granddaughters, who loves the artistry. Thank you so very much.

    ReplyDelete
  7. Wonderful, So great to find all the information on my grandmother's banknote. It is more information that I found on any of the others I have.
    I am putting them all in a binder for one of my own granddaughters who loves their artistry. Thank you so very much

    ReplyDelete
    Replies
    1. Thank you for your extremely encouraging comments. I am happy that you found useful information on this post. You are indeed passing onto your granddaughter a valuable piece of history represented on these Banknotes, which I am sure she will treasure forever.

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