Papiermark

Papiermark (paˈpiːɐ̯ˌmaʁk; 'paper mark') was a derisive term for the Mark (sign: ℳ︁) after it went off the gold standard, and most specifically with the era of hyperinflation in Germany of 1922 and 1923. Formally, the same German mark was used from 1871 to 1923. Like many countries, Germany departed the gold standard due to the outbreak of World War I, and stopped issuing gold coins backed in marks in August 1914. Precious metals rapidly disappeared from circulation, and inflation occurred as paper money was used to cover war debts in 1914 to 1918. Still, the papiermark is more associated with the early Weimar Republic era, when inflation grew out of control. By the time the mark was retired from circulation and redenominated in December 1923, banknotes had amounts in the billions and trillions of marks by face value.^[1][2][3]

History

From 1914, the value of the mark fell.^[4] The rate of inflation rose following the end of World War I and reached its highest point in October 1923. The currency stabilized in November 1923 after the announcement of the creation of the Rentenmark, although the Rentenmark did not come into circulation until 1924. When it did, it replaced the Papiermark at the rate of 1-trillion (10¹²)-ℳ︁ to RM1. On 30 August 1924 the Rentenmark was replaced by the Reichsmark.^[5]

In addition to the issues of the government, emergency issues of both tokens and paper money, known as Kriegsgeld (war money) and Notgeld (emergency money), were produced by local authorities.^[6]

The Papiermark was also used in the Free City of Danzig until it was replaced by the Danzig Gulden in late 1923. Several coins and emergency issues in Papiermark were issued by the free city.^[7]

Coins

During the war, cheaper metals were introduced for coins, including aluminium, zinc and iron, although silver ¹⁄₂ℳ︁ pieces continued in production until 1919. Aluminium 1₰ were produced until 1918 and the 2₰ until 1916.^[8] Whilst iron 5₰, both iron and zinc 10₰, and aluminium 50₰ coins were issued until 1922.^[9][10][11] Aluminium 3ℳ︁ were issued in 1922 and 1923,^[12] and aluminium 200ℳ︁ and 500ℳ︁ were issued in 1923.^[13][14] The quality of many of these coins varied from decent to poor.

During this period, many provinces and cities also had their own corresponding coin and note issues, referred to as Notgeld currency. This came about often due to a shortage of exchangeable tender in one region or another during the war and hyperinflation periods.^[6] Some of the most memorable of these to be issued during this period came from Westphalia and featured the highest face value denominations on a coin ever, eventually reaching 1-billion-ℳ︁.^[15]

First World War issues

In 1914, the State Loan Office began issuing paper money known as Darlehnskassenschein (loan fund notes). These circulated alongside the issues of the Reichsbank. Most were 1ℳ︁ and 2ℳ︁ notes but there were also 5ℳ︁, 20ℳ︁, 50ℳ︁ and 100ℳ︁ notes.^[16]

Post-war issues

Between 1914 and the end of 1923 the Papiermark's rate of exchange against the U.S. dollar plummeted from 4.2ℳ︁ = US$1 to 4.2-trillionℳ︁ = US$1.^[17] The price of one gold mark (358 mg of pure gold) in German paper currency at the end of 1918 was 2ℳ︁, but by the end of 1919 a gold mark cost 10ℳ︁.^[18] This inflation worsened between 1920 and 1922, and the cost of a gold mark (or conversely, the depreciation of the paper mark) rose from 15ℳ︁ to 1,282ℳ︁.^[18] In 1923 the value of the paper mark had its worst decline. By July, the cost of a gold mark had risen to 101,112ℳ︁, and in September was already at 13-million-ℳ︁.^[18] On 30 Nov 1923 it cost 1-trillion-ℳ︁ to buy a single gold mark.^[18]

In October 1923, Germany experienced a 29,500% hyperinflation (roughly 21% interest per day).^[19] Historically, this one-month inflation rate has only been exceeded three times: Yugoslavia, 313,000,000% (64.6% per day, January 1994); Zimbabwe, 79.6 billion% (98% per day, November 2008); and Hungary, 41.9 quadrillion% (207% per day, July 1946).^[19][20]

On 15 November 1923 the Papiermark was replaced by the Rentenmark at RM4.2 Rentenmark = US$1,^[17] or 1 trillion-ℳ︁ = RM1 (exchangeable through July 1925).^[21]

During the hyperinflation, ever higher denominations of banknotes were issued by the Reichsbank^[22] and other institutions (notably the Reichsbahn railway company).^[23] The Papiermark was produced and circulated in enormously large quantities. Before the war, the highest denomination was 1,000ℳ︁, equivalent to approximately £48 18s sterling or US$238.09. In early 1922, 10,000ℳ︁ notes were introduced, followed by 100,000ℳ︁ and 1-million-ℳ︁ notes in February 1923. July 1923 saw notes up to 50-million-ℳ︁, with 10-milliard (10¹⁰)-ℳ︁ notes introduced in September. The hyperinflation peaked in October 1923 and banknote denominations rose to 100-trillion (10¹⁴)-ℳ︁. At the end of the hyperinflation, these notes were worth approximately £5 4s sterling or US$23.81.^[24][25][26]

Weimar Republic (1920–24)

Danzig

The Danziger Privat Actien-Bank (opened 1856) was the first bank established in Danzig.^[39] They issued two series of notes denominated in thalers (1857 and 1862–73) prior to issuing the mark (1875, 1882, 1887).^[40] These mark issues are extremely rare.^[40] The Ostbank fur Handel and Gewerbe opened 16 March 1857, and by 1911 two additional banks (the Imperial Bank of Germany and the Norddeutsche Credit-Anstalt) were in operation.^[41]

Issuance of the Danzig Papiermark

The Papiermark was issued by Danzig from 1914 to 1923.^[42] Five series were issued during World War I by the City Council (1914, 1916, 1918 first and second issue, and 1919).^[43] Denominations ranged from 10₰ to 20ℳ︁.^[43] The Free City of Danzig municipal senate issued an additional four post-World War I series of notes (1922, 1923 First issue, 1923 Provisional issue, and 1923 Inflation issue).^[44] The 1922 issue (31 October 1922) was denominated in 100ℳ︁, 500ℳ︁, and 1,000ℳ︁ notes.^[45] The denominations for the 1923 issue were 1,000ℳ︁ (15 March 1923), and 10,000ℳ︁ and 50,000ℳ︁ notes (20 March 1923).^[46] The 1923 provisional issue reused earlier notes with a large red stamp indicating the new (and higher) denominations of 1 million-ℳ︁ (8 August 1923) and 5 million-ℳ︁ (15 October 1923) mark.^[47] The last series of Danzig mark was the 1923 inflation issue of 1 million-ℳ︁ (8 August 1923), 10 million-ℳ︁ (31 August 1923), 100 million-ℳ︁ (22 September 1923), 500 million-ℳ︁ (26 September 1923), 5 billion-ℳ︁ and 10 billion-ℳ︁ notes (11 October 1923).^[48] The Danzig mark was replaced by the Danzig gulden, first issued by the Danzig Central Finance Department on 22 October 1923.^[48]

Note on numeration

In German, Milliarde is 1,000,000,000, or one thousand million, while Billion is 1,000,000,000,000, or one million million.

See also

• 1922 in Germany
• 1923 in Germany
• Hyperinflation
• Hyperinflation in Zimbabwe
• Inflation hedge

Notes

1. ^ All values are in Reichsbank Mark.
2. ^ Series date printed on the banknote.

Citations

1. ^ Knapp, George Friedrich (1924), "The State Theory of Money", Macmillan and Company, p. vxi
2. ^ Patrick Spread (2022). Economics, Anthropology and the Origin of Money as a Bargaining Counter. Taylor & Francis 2022. p. 290. ISBN 9781000770841.
3. ^ Randall E. Parker & Robert M. Whaples (2013). Routledge Handbook of Major Events in Economic History. Routledge. p. 372. ISBN 9781135080792.
4. ^ "Measuring Worth – Measures of worth, inflation rates, saving calculator, relative value, worth of a dollar, worth of a pound, purchasing power, gold prices, GDP, history of wages, average wage". www.measuringworth.com. Retrieved 2024-06-30.
5. ^ "Biografie Hans Luther" (in German). Bayerische Nationalbibliothek. Retrieved 15 August 2020.
6. ^ "Guide to Notgeld Collection 1914–1923". www.lib.uchicago.edu. Retrieved 2024-06-24.
7. ^ "Danzig to Establish New Currency System". The New York Times (1851–2010). 20 July 1923. p. 3.
8. ^ "Germany 1 Pfennig, Aluminum (1916–1918)". CoinKing® – GermanCoins.com. Retrieved 2024-06-24.
9. ^ smithwicknumismati (2021-12-21). "Coins Of The Great War: 5 Pfennig (Imperial Germany, 1918)-Article". Smithwicknumismatics. Retrieved 2024-06-24.
10. ^ "Germany – Empire 10 Pfennig KM 20 Prices & Values | NGC". www.ngccoin.com. Retrieved 2024-06-24.
11. ^ "Germany – Empire 10 Pfennig KM 26 Prices & Values | NGC". www.ngccoin.com. Retrieved 2024-06-24.
12. ^ "3 Mark 1922–1923 coin value Germany Weimar Constitution – detailed description with image and worth". worldcoinsinfo.com. Retrieved 2024-06-24.
13. ^ "200 Mark 1923 German Weimar coin value – detailed description with image and worth". worldcoinsinfo.com. Retrieved 2024-06-24.
14. ^ "1923 German Coins – Coin Values | Coinstrail". coinstrail.com. Retrieved 2024-06-24.
15. ^ 1 Billion Mark – Westfalen at Numista.com. Accessed on 13 August 2020.
16. ^ "Banknotes Catalog – List of banknotes for The state loan office note (Darlehnskassenschein) 1914–1924, Germany". www.allnumis.com. Retrieved 2024-06-24.
17. ^ Barisheff 2013, p. 32.
18. ^ Fischer 2010, p. 85.
19. ^ "World Hyperinflations". CNBC. 14 February 2011. Archived 5 September 2013 at the Wayback Machine. Retrieved 13 July 2012.
20. ^ "World Hyperinflations | Steve H. Hanke and Nicholas Krus | Cato Institute: Working Paper". Cato.org. 15 August 2012. Archived 17 October 2012 at the Wayback Machine. Retrieved 15 October 2012.
21. ^ Widdig 2001, p. 48.
22. ^ Cuhaj 2010, pp. 555–64.
23. ^ Cuhaj 2009, pp. 629–36.
24. ^ "Hyperinflation in the Weimar Republic | Description & Facts | Britannica". www.britannica.com. Retrieved 2024-07-03.
25. ^ "The German Hyperinflation of 1923". www.amusingplanet.com. Retrieved 2024-07-03.
26. ^ Bisno, Adam. "How Hyperinflation Heralded the Fall of German Democracy". Smithsonian Magazine. Retrieved 2024-07-03.
27. ^ Cuhaj 2010, pp. 555–56.
28. ^ Cuhaj 2010, pp. 556.
29. ^ Cuhaj 2010, pp. 557.
30. ^ Cuhaj 2010, pp. 558.
31. ^ Cuhaj 2010, pp. 558–59.
32. ^ Cuhaj 2010, pp. 559.
33. ^ Cuhaj 2010, pp. 560–61.
34. ^ Cuhaj 2010, pp. 561–62.
35. ^ Cuhaj 2010, pp. 562.
36. ^ Cuhaj 2010, pp. 562–63.
37. ^ Cuhaj 2010, pp. 563.
38. ^ Cuhaj 2010, pp. 563–64.
39. ^ Kelly 1920, p. 30.
40. ^ Cuhaj 2009, p. 613.
41. ^ Rand McNally 1911, p. 972.
42. ^ Cuhaj 2010, pp. 427–30.
43. ^ Cuhaj 2010, pp. 427–28.
44. ^ Cuhaj 2010, pp. 428–30.
45. ^ Cuhaj 2010, pp. 428.
46. ^ Cuhaj 2010, pp. 429.
47. ^ Cuhaj 2010, pp. 429–30.
48. ^ Cuhaj 2010, pp. 430.

References

• Barisheff, Nick (2013). $10,000 Gold – Why Gold's Inevitable Rise is the Investor's Safe Haven. John Wiley & Sons Canada, Ltd. ISBN 978-1-118-44350-7.
• Cuhaj, George S. (ed.) (2009). Standard Catalog of World Paper Money Specialized Issues. 11 ed. Krause. ISBN 978-1-4402-0450-0.
• Cuhaj, George S. (ed.) (2010). Standard Catalog of World Paper Money General Issues (1368–1960). 13 ed. Krause. ISBN 978-1-4402-1293-2.^{[dead link]}
• Fischer, Wolfgang C. (ed.) (2010). German Hyperinflation 1922/23: A Law and Economics Approach. Josef Eul Verlag GmbH. ISBN 978-3-89936-931-1.
• GermanNotes.com (2005). German Paper Money 1871–1999. eBook from germannotes.com
• Kelly, William J. (1920). "The Situation at Danzig". Journal of the American-Polish Chamber of Commerce and Industry. 1 (6). American-Polish Chamber of Commerce and Industry.
• Rand McNally (1911). "The Rand-McNally Banker's Director and List of Attorneys". Rand McNally International Bankers Directory. 70 (1). Rand McNally & Company.
• Widdig, Bernd (2001). Culture and Inflation in Weimar Germany. University of California Press. ISBN 0-520-22290-3.

External links

• Exchange rates