One of Strongly economy in European Union which is the fourth strongest in the world where the 2017 Germany’s Gross Domestic product (GDP) amounted to €3.3 trillion. The history is really fascinating where the german’s currency has continually evolved as the country in between the war, division, hyperinflation and recession.
Let’s explore the history of Germany and the currency change within the time.
In 19th century the german confederation was established in 1815 where confederation didn’t have uniform currency which was approximately 35 principalities and cities where they issued they’re own coins.
Further the unification of Germany was done where the Vienna Monetary Treaty was responsible in 1857 where Austria and Liechtenstein was included in currency standard by german states. As a result the Uniform silver coin in circulated called vereinsthaler.
In 1871 the german Empire was established after the Franco-German War in 1871 where the previous currency was Dissolved.
Later German introduce Goldmark to the kingdom which was divided into hundred Pfennig. The gold-backed mark was possible thanks to the French but later on it paid high reparation costs after the war whose payment was made in Gold.
The same amount of gold was given by the central bank exchanged cash money so it means that if someone had that gold they can exchange it in the bank note.
There was huge fall in the value of mark because if Germany’s high reparation cost after the lost war. in 1914 Papiermark came into effect the link between the Goldmark and Gold was abandoned. Due to the low cost of the Papiermark were printed to buy foreign currency & repay war reparation costs. so that the rare inflation rose rapidly. hyperinflation reached its highest point in october 1923. Then the papiermark was worth virtually nothing.
Later on Rentenmark was introduced to promise stability where it replaced Papiermark, 1 Rentenmark was worth 1 billion Papiermark.
There was no gold to back the currency due to the economical crisis, it was backed by real goods. The new currency was backed by the land used for agriculture and business, and was subdivided into 100 Rentenpfennig.
But the Rentermark was only introduced as an interim currency, and was expanded by the Reichsmark in 1924. Until the great depression in 1929, the Reichsmark was very stable.
With the unification of Germany and Austria in 1938, the Reichsmark replaced the Schilling in Austria.
During the Second World War, Germany established fixed exchange rates between the Reichsmark and currencies of occupied and allied countries – these rates were often set to give the Germans economic benefits.
But, during the Nazi regime a lot of unbacked money was spent, which was used to finance war. There was renewed inflation, which the German citizens did not realize at first. When World war II ended, among the many consequences for Germany was another economic crisis.
Massive inflation dating back to the latter stages of the war had rendered the Reichsmark nearly worthless. The Reichsmark continued to circulate in Germany for a few years post war, but with a new look. The banknotes had allied occupation marks, and the coins were now without swastikas.