We have all seen pictures and films of the super rich flashing their inexhaustible wealth. Rock stars and Texas oil barons, lighting their cigars with $100 banknotes or doing something equally absurd that literally just burnt their money up for no good reason and simply because they could afford to do so. Money means so very little to you when you have so much.
What would you say if I told you that there was a time when a whole nation of people had a lifestyle like that? What would be your reaction on seeing even little children with billions to play with in the playground and using the banknotes for the fashioning of kites or building pyramids from bundles of notes? Well there was a time and a place where this occurred and this short tale is the background behind those extraordinary times.
Who would not love to have been so rich that you could use banknotes to heat your stove for a cup of tea like the lady in this picture here below.
Around 100 years ago in Europe a war was raging out of control that involved most of the countries in Europe. It was a long and bloody conflict that cost in excess of 38 million lives.
The aftermath of this tragic event left the defeated nation of Germany in a very bleak position.
Under the provisions of the Versailles Treaty Germany was forced into making vast reparations to the countries it had fought against. As a result of the armistice and the reparations to neighbouring countries, Germany was forced to hand over large numbers of livestock. France alone received 65,000 cattle and 30,000 horses. Other countries affected by the war received huge numbers as well. Germany had a shortfall of livestock which affected everything from meat to leather to wool and animals for use in agriculture. In short, livestock, food stuffs and production from mining and industry were leaving the country without generating any income. On top of this France and Belgium controlled the Ruhr Valley, Germany’s largest and most profitable industrial zone.
The eventual outcome was that in the end Germany was left with nothing to trade. The economic knock on of this was that the national finances of Germany started implode and so began the period of hyperinflation which would ultimately collapse the entire economy. A great deal of additional currency was printed by the Weimar republic to pay workers their state benefits even though the money issued was not secured. More and more payments were made with what was basically worthless money which in turn led to spiralling wage increases and an ever-growing list of bankrupt companies.
Rudolf Havenstein was President of the Reichsbank during this period, which would not have been an enviable position to hold. The Reichsbank was always a volatile institution but the economic burden imposed by the reparations to other countries at the end of the war were enough to break it completely. Hyperinflation would be the end result of it all and by November 1923 the entire economy would in fact collapse.
To compound problems further, with the shortage of food and general medicines, starvation became common and in turn illnesses and infection became rampant. The people of Germany would continue to suffer for many years to come until the economy healed and the nation got going again.
As the Reichsmark started to fail the banks began to produce an ever steadier stream of currency notes with the denominations becoming ever larger as the currency devalued. In 1920 the Mark was going into free fall with exchange rates at about 200 Marks to one Pound Sterling. From there on in the spiral of decline grew ever faster. A good example of this in the overall period of hyper inflation is the Badische Bank or Bank of Baden. It released in a one year period beginning on 01 August 1922 bank notes with denominations of 500 marks, 5000 Mark, 10,000, 500,000 marks, 1 Million Mark, 20 million, 2 billion dollars and finally 100 billion Mark which was released on 30 October 1923.
One of the most interesting things to occur was the incredible designs and art work that proliferated as a result of the myriad releases of banknotes over this period of hyperinflation. The banknotes offered a huge opportunity for the collectors market and it was not long before highly colourful and masterful designs were being issued all over Germany. The nature of the art work, the beautiful imagery and the historical content, social and religious proverbs, that were often placed upon them soon made them forever popular amongst collectors both in Germany and overseas. So many of these notgeld or emergency money banknote variants were produced that if you wish to purchase the catalogues for them you will need to purchase a virtual library as there are literally dozens of them.
As these banknotes were so very colourful, they soon became a top end target for collectors. As the issuing bodies realised this demand, they continued to issue these notes beyond their economic necessity up until 1922. Quite often the validity period of the note had already expired when the notgeld was issued. The sets that were issued in 1920 and predominantly in 1921 were usually extremely colourful and depicted many subjects, such as local buildings, local scenes and local folklore/tales. Many series tell a short story, with often whimsical illustrations. These sets, that were not actually issued to go into circulation, were known as Serienscheine or a piece issued as a part of a series or set. As they were never issued to go into circulation, they are usually found in uncirculated condition, and are still collected by notgeld collectors all over the world. In a great many cases the notes were printed and sold past their expiry date in an effort to stabilise the local economy. In other words you purchased banknotes for collecting with no intention of ever redeeming them and hence the local economy got a boost from it.
In the start-up phase more than 450 different localities released 5,500 banknotes or an average of around 12 different notes per release point. Even local retailers released their own trade notes. By 1923 as hyperinflation was truly at its peak almost 6,000 places released bank notes with varying designs and denominations. In that final year up to 70,000 various notes were recorded.
Throughout the country emergency money or notgeld was produced by hundreds of different cities and towns. A handful of these places decided that their notes would highlight the unique trades for which their town or city was best known. From an availability standpoint, paper was the obvious choice as it was cheap and plentiful.
The “Bielefelder Stoffgeld“ or cloth money of Bielefeld, was unique in its own right. They produced banknotes which were sublime both in texture and in art.
Bielefeld was a well-known centre for the production of linen, velvet and silk. To this end they decided to highlight their trades by printing on woven materials. This was referred to as “Stoffgeld” or cloth money. Many examples were elaborately embroidered and quickly became collectors pieces, this in turn had the effect that people from outside the region were investing in these special notes and this in turn saw the city bank becoming ever wealthier from outside investment. The borders of the notes were often printed with advertising for local companies and this again was also a revenue source for the bank. Well ahead of their times in terms of advertising smarts.
Other towns followed suit producing notes on the materials that were the main stay trades of their region. Osterwiek am Harz and Poessneck in Thuringia were both towns that produced fine leather goods such as shoes, gloves and bags. They both had major tanneries and as a result they started producing their notes on leather. This form was called “Ledergeld” or leather money and it to become a highly collectible form of emergency money. In the town of Lautawerk the local firm Vereinigte Aluminium-Werke A.G produced a series of notes on aluminium foil and this inspired yet another town, Teningen, to do like wise. The aluminium notes are amongst the most fragile and hence the most valuable of all.
Examples have been found of notes printed on wood and even some industrious businesses made their own in the form of tokens with a good example being a hotel in Passau which made beer tokens from the plywood recovered from matchboxes. These were marked as “Bierpfennige” and could be redeemed against a glass of the amber fluid.
During the worst of the hyperinflation period as the economy went into meltdown between 1922-1923 a great many stories arose surrounding the people and how the inflation affected their everyday lives. Some of these stories are almost beyond belief. One I recently came across was a housewife who was paying about 25 pfennigs for an egg in 1918 at the end of World War One when prices were already far higher than usual.
When the banknote on offer here above was released around 4 years later she was then paying about 180 Marks for the same egg which is an increase of about 7,200 percent. Just one more year later and that sum had altered wildly to become the sum of 80 billion Marks and she would have needed a wheel barrow just to carry the banknotes when she went shopping. In retrospect, had she spent that same amount of money 5 years before buying eggs she would have walked away with 320,000,000,000 of them and would have needed a fleet of trucks to haul the eggs let alone a wheel barrow. To put this silly number in perspective if one was to take that it a step further we could really have some fun. If we say that the average chicken egg is 2 inches or 50.8 mm long then this many eggs laid (unintended pun) end to end would be 16,682,666 kilometers long. As the earth is 40,075 kilometers around on the equator this string of eggs would pass around the world 416.28 times. I very much doubt if it was a good time for placing all of your eggs in the one basket even if you could find one large enough.
Mind blowing stories truly abound from this period that illustrate the severity of the situation nation wide.
One gentleman visited a coffee shop were he sat and ordered a cup of coffee which was listed at 5,000 Marks. Upon finishing it he ordered a second cup. When his bill arrived it was for a total of 14,000 Marks and the waiter informed him that had he ordered both at the same time the cost would have been 10,000 Marks but as he waited in between the cost had risen on the second cup.
Another family sold all they owned, their house and land and belongings. They had decided to leave Germany and travel to America in search of a better life. When they reached the ship at Hamburg a few days later they found to their utter dismay that not only did they no longer have enough money to purchase the tickets for berths on board but their money had become worthless and to add insult to injury they did not even have sufficient to travel back to their home town. stranded penniless in a strange town on the other side of the country.
By November 1922 the gold value of money in circulation fell from £300 million before WWI to £20 million. The Reichsbank responded by the unlimited printing of notes, thereby accelerating the devaluation of the mark. In his report to London, Lord D’Abernon wrote: “In the whole course of history, no dog has ever run after its own tail with the speed of the Reichsbank.”
In December of 1922 the Reichsbank issued a new banknote for the sum of 1,000 Marks. Just before its release they realised that these 1,000 marks were only worth about one eighth of a U.S. dollar. They then decided that it was not worth while to release them as they were almost worthless or soon would be. The banknotes were then shelved until 9 months later at which time they really needed some new notes to boost circulation and they remembered the bills they had printed and stored the previous year.
As the German currency was depreciating so swiftly it was expedient to apply an overprint or überdruck stamp to them for the new value of One Billion Marks. It saved on printing, design and paper costs. The note was now worth substantially more and at its time of release had a value of USD$6.25. This was for a brief time only however.
Banknotes like the one pictured here above with the overprint were required by the basket full just to purchase a loaf of bread by the end of 1923. A five million Mark note would have been worth USD$714.29 in Jan 1923 and nine months later in October its value had fallen to about 1 thousandth of one cent.
By 1923, the highest denomination was 100,000,000,000,000 Mark. In December 1923 the exchange rate was 4,200,000,000,000 Marks to 1 US dollar.In 1923, the rate of inflation hit 3.25 × 106 percent per month (prices double every two days). Money was devaluing so quickly that cash transactions were done by banknote weight rather than trying to count it.
Goods were at a premium as costs spiralled skyward. Farmers refused to deliver goods as the payment they received was basically worthless. Families and workers turned to looting farms for vegetables and fruit. Many workers were paid up to 3 times daily, their wives taking the money and running for the local store in an attempt to buy something before the money became totally worthless. Food riots were common place and unemployment soared as the economy collapsed.
In November of 1923 the American dollar was valued at 4,210,500,000,000 German marks. Hyper inflation spiralled out of control and around the country some 300 paper mills were working at top speed to make paper that went out to over 150 different printing companies which in turn were running some 2000 printing presses around the clock to meet demand for the nigh worthless banknotes. Children used bundles of money to build play structures in playgrounds and on the streets whilst some people found that it was cheaper to burn bundles of banknotes than to buy firewood. In the peak month the rate of inflation in November 1923 was 29,525%.
The big saviour in all this was the introduction of the Rentenmark which finally stabilised the currency. It was brought into circulation in late November of 1923 and exchanged at the rate of 1 Gold Mark for 1,000,000,000,000 paper Marks. It was none to soon either as starvation and illness was widespread in Germany with children suffering from rickets and tuberculosis was almost at epidemic levels. By November 1923 a single U.S. dollar was valued at 4.2 trillion marks.
Hyperinflation was at its peak in November of 1923 when the German Government ceased its struggle to remove the French and Belgian troops from the Ruhr Valley which was a major industrial zone for the German economy. It had been seized by the foreign troops based on the fact that Germany had failed to maintain their war reparations as agreed in 1918. The German Government regained control by subterfuge and did this by undermining the foreign management of the area. When the workers went on strike, they were supported in their actions by the German Government who happily printed all the cash required to pay them whilst they downed tools. Needless to say this was untenable for the French and Belgians who packed up and left. Germany had its industrial heartland back and things were starting to mend.
Beginning on 20 November 1923 the official exchange was set for re-denomination at 1,000,000,000,000 (One Trillion) old Marks for 1 Rentenmark. This was then calculated at 4.2 Rentenmarks to 1 US dollar which was exactly the same rate the Mark had in 1914 before the outbreak of the Great War. Following this fiscal action and a return to a currency with value, the Germans resumed repayment of the reparations as laid out in the Versailles Treaty. In return the Ruhr Valley was returned to them via the auspices of the new Locarno Treaties. No mention was made of Germany paying the striking workers at this point of the negotiations.
The entire period from 1914 to 1923 truly is fascinating and for any numismatics buff a great area to sink your teeth into given the endless varieties.
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