Weimar Germany banknote - 500000 mark - year 1923 - Mannheim

Description: The Papiermark (officially just Mark, sign: ℳ) is applied to the German currency from 4 August 1914 when the link between the Goldmark and gold was abandoned, due to the outbreak of World War I. In particular, the name is used for the banknotes issued during the hyperinflation in Germany of 1922 and especially 1923, which was a result of the German government's decision to pay its war debt by printing banknotes. From 1914, the value of the Mark fell. The rate of inflation rose following the end of World War I and reached its highest point in October 1923. The currency was 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 Papiermark = 1 Rentenmark. Later in 1924, the Rentenmark was replaced by the Reichsmark.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.The Papiermark was also used in the Free City of Danzig until replaced by the Danzig Gulden in late 1923. Several coins and emergency issues in papiermark were issued by the free city. The victor nations in World War I decided to assess Germany for their costs of conducting the war against Germany. With no means of paying in gold or currency backed by reserves, Germany ran the presses, causing the value of the Mark to collapse. Many Germans literally carted wheelbarrows of cash to pay for groceries.Between 1914 and the end of 1923 the German papiermark’s rate of exchange against the U.S. dollar plummeted from 4.2 mark/dollar to 4.2 trillion mark/dollar. The price of one gold mark (0.35842g gold weight) in German paper currency at the end of 1918 was two paper mark, but by the end of 1919 a gold mark cost 10 paper mark. This inflation worsened between 1920 and 1922, and the cost of a gold (or conversely the devaluation of the paper mark) rose from 15 to 1,282 paper mark. In 1923 the value of the paper mark had its worst decline. By July, the cost of a gold mark had risen to 101,112 paper mark, and in September was already at 13 million. On 30 Nov 1923 it cost 1 trillion paper mark to buy a single gold mark.In October 1923, Germany experienced a 29,500% hyperinflation (roughly 21% interest per day). 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).On 15 November 1923 the papiermark was replaced by the rentenmark at 4.2 rentenmark/dollar, or 1 trillion papiermark/rentenmark (exchangeable through July 1925).During the hyperinflation, ever higher denominations of banknotes were issued by the Reichsbank and other institutions (notably the Reichsbahn railway company). The Papiermark was produced and circulated in enormously large quantities. Before the war, the highest denomination was 1000-Mark, equivalent to approximately 50 British pounds or 238 US dollars. In early 1922, 10,000-Mark notes were introduced, followed by 100,000- and 1 million-Mark notes in February 1923. July 1923 saw notes up to 50 million-Mark, with 10 milliard (1010)-Mark notes introduced in September. The hyperinflation peaked in October 1923 and banknote denominations rose to 100 trillion (1014)-Mark. At the end of the hyperinflation, these notes were worth approximately 5 pounds or 24 dollars. Hyperinflation in the Weimar Republic was a three-year period of hyperinflation in the Weimar Republic of Germany between June 1921 and January 1924. it caused considerable internal political instability in the country, the occupation of the Ruhr by foreign troops as well as misery for the general populace. To pay for the large costs of the ongoing First World War, Germany suspended the gold standard (the convertibility of its currency to gold) when the war broke out. Unlike the French Third Republic, which imposed its first income tax to pay for the war, German Emperor Wilhelm II and the German parliament decided unanimously to fund the war entirely by borrowing, a decision criticized by financial experts such as Hjalmar Schacht as a dangerous risk for currency devaluation.The government believed that it would be able to pay off the debt by winning the war, and it would be able to annex resource-rich industrial territory in the west and east. Also, it would be able to impose massive reparations on the defeated Allies. The exchange rate of the mark against the US dollar thus steadily devalued from 4.2 to 7.9 marks per dollar. (It was only after the war that the extreme hyperinflation occurred.)The strategy backfired when Germany lost the war. The new Weimar Republic was now saddled with a massive war debt that it could not afford. That was made even worse by the fact that it was printing money without the economic resources to back it up. The Treaty of Versailles further accelerated the decline in the value of the mark so 48 paper marks were required to buy a US dollar by late 1919.German currency was relatively stable at about 90 marks per dollar during the first half of 1921. Because the Western Front was mostly in France and Belgium, Germany came out of the war with most of its industrial infrastructure intact. It was, in fact, in a better position to become the dominant economic force on the European continent.The London Ultimatum in May 1921, however, demanded World War I reparations in gold or foreign currency to be paid in annual installments of 2 billion gold marks, plus 26% of the value of Germany's exports.The first payment was made, when it came due in June 1921. It marked the beginning of an increasingly rapid devaluation of the mark, which fell in value to approximately 330 marks per dollar. The total reparations demanded were 132 billion gold marks, but Germany had to pay only 50 billion marks.Since reparations were required to be repaid in hard currency, not the rapidly depreciating paper mark, one strategy that Germany used was the mass printing of bank notes to buy foreign currency, which was then used to pay reparations. That greatly exacerbated the inflation of the paper mark From August 1921, Germany began to buy foreign currency with marks at any price, but that only increased the speed of breakdown in the value of the mark. As the mark sank in international markets, more and more marks were required to buy the foreign currency that was demanded by the Reparations Commission.In the first half of 1922, the mark stabilized at about 320 marks per dollar. International reparations conferences were being held. One, in June 1922, was organized by US investment banker J. P. Morgan, Jr. The meetings produced no workable solution and so inflation changed to hyperinflation, and the mark fell to 7,400 marks per US dollar by December 1922. The cost-of-living index was 41 in June 1922 and 685 in December, a 15-fold increase.By fall 1922, Germany found itself unable to make reparations payments since the price of gold was now well beyond what it could afford. Also, the mark was by now practically worthless, making it impossible for Germany to buy foreign exchange or gold using paper marks. Instead, reparations were to be paid in goods such as coal. In January 1923, French and Belgian troops occupied the Ruhr, the industrial region of Germany in the Ruhr valley, to ensure reparations payments. Inflation was exacerbated when workers in the Ruhr went on a general strike and the German government printed more money to continue paying for their passive resistance. By November 1923, the US dollar was worth 4,210,500,000,000 German marks.

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Location: Nis

End Time: 2024-03-07T11:53:17.000Z

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