The most popular image of
the German Inflation is the flood of paper money which issued from the printing
presses and engulfed the nation. The struggle against it was hard, tragic and
often ridiculous, and innumerable stories are still told about it. A German
girl neatly sum it up: "You could see mail carriers on the streets with
sacks on their backs, or pushing baby carriages loaded with paper money which
would be devalued the next day. Life was madness, nightmare, desperation,
The chief cause was the Reichsbank’s
policy of simply printing more money to counter the country’s debt in
view of the cost the First World War and the reparations owing. The mark
plummeted on the international money markets and inflation soared.
The inflation peaked in 1923 where for the
last 5 months it was a staggering 300 million percent. When the inflation was
finally stopped by the introduction of the Rentenmark
on 16th November 1923, the exchange rate was 4.2 trillion marks to the US
dollar - ie 4,200,000,000,000 marks.
Effects of the Inflation
Prices and incomes
changed daily. A former student recalls: "One fine day, I dropped into a
café to have a cup of coffee. As I went in I noted that the price was
say 5,000 marks - just about what I had in my pocket. I sat down, read my
paper, drank my coffee and spent altogether one hour on the café, and
then asked for the bill. The waiter duly presented me with the bill for 8,000
marks. 'Why 8,000 marks?' I asked? The mark had dropped in the meantime I was
told. The 'index' based on the dollar exchange rate had altered so much that
the price had gone up by 60% while I was sitting at the table. So I gave the
waiter all the money I had - and he was generous enough to leave it at
People who did not convert their savings into
tangible assets (or Sachwerte) lost them.
Pensions became worthless, the middle class was by
and large reduced to poverty. Many starved to death. Conditions were so harsh
that people even ate dog meat: around 20,000 dogs were slaughtered for human
consumption in 1923 alone.
Typical is the case of a bank which, unwilling
to keep open an account with 68,000 Marks, informed the customer that it was
to be closed. "Since we have no banknotes in small enough denominations
at our disposal, we have rounded up the sum to 1 million marks. Enclosed: one
1 million mark note."
On the 17th July 1922, a law was passed to
permit the printing of emergency money with certain safeguards. After that municipal banks, the railways, local authorities and
also private firms used this law to start printing their own money. In the
end it was estimated that more than 2,000 kinds of emergency money were
circulating, and many of them were not authorised.
Many municipalities, reacting to the Reichsbank notes which became more drab and dull, took
pride by giving their money and attractive look by good design and witty
texts - often in verse or the local dialect. Some advertised their local
industries by using leather, linen or silk to print on. One town issued money
consisting of leather suitable for soling shoes as a truly inflation-proof
form of currency, while one private firm promised the bearer "one pound
Before World War I, the highest denomination
note had been the 1,000 mark note, affectionately known as the "brown
rag". Being the equivalent of some 250 US dollars, it was rarely seen by
most people before the inflation. Today, a note in perfect condition fetches
no more than a couple of dollars or so.
At some stages during the
inflation the inflation rate had jumped ahead so far that large amounts of
money still sitting in the Reichsbank vaults were
already worthless. For instance, in 1923 the worthless 1,000 mark note of
1922 was overprinted and re-issued at one million times its previous
value: "eine Milliarde
mark" - a billion marks.
Many Notgeld notes
were also overprinted as the 500 Milliarden Mark
note from Konstanz illustrates.
Source: William Guttman's
"The Great Inflation" - a very worthwhile read.
Click here to return to the Notgeld
This page was updated by Richard Holmes on Friday, 27 July 2001
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