Deutsche Mark

Deutsche Mark
Deutsche Mark (German)
Marka Gjermane (Albanian)
Njemačka marka (Croatian)
Nemačka marka / Немачка марка (Serbian)
100 Mark (O).jpg
DM 100 banknote from 1989
ISO 4217
CodeDEM
Denominations
Subunit
 ​1100Pfennig
PluralMark
PfennigPfennig
SymbolDM
Pfennigpf
Banknotes
 Freq. usedDM 10, DM 20, DM 50, DM 100, DM 200
 Rarely usedDM 5, DM 500, DM 1000
Coins
 Freq. used1 pf, 2 pf, 5 pf, 10 pf, 50 pf, DM 1, DM 2, DM 5
Demographics
Official user(s)
Unofficial user(s)
Issuance
Central bankwww.bundesbank.de
Printer
 Website
Mint
List
 Website
Valuation
Inflation1.4%, December 2001
Pegged byBosnia and Herzegovina convertible mark, Bulgarian lev at par
ERM
 Since13 March 1979
 Fixed rate since31 December 1998
 Replaced by €, non cash1 January 1999
 Replaced by €, cash1 January 2002/28 February 2002
=DM 1.95583
This infobox shows the latest status before this currency was rendered obsolete.

The Deutsche Mark (German: [ˈdɔʏtʃə ˈmaɐ̯k] (About this soundlisten), "German mark"), abbreviated "DM" or About this sound"D-Mark" , was the official currency of West Germany from 1948 until 1990 and later the unified Germany from 1990 until 2002. It was first issued under Allied occupation in 1948 to replace the Reichsmark, and served as the Federal Republic of Germany's official currency from its founding the following year until the adoption of the euro. In English it is commonly called the "Deutschmark" (k/); this expression is unknown in Germany. The Germans usually called it D-Mark when referring to the currency, and Mark when talking about individual sums.

In 1999, the Deutsche Mark was replaced by the Euro; its coins and banknotes remained in circulation, defined in terms of euros, until the introduction of euro notes and coins on 1 January 2002. The Deutsche Mark ceased to be legal tender immediately upon the introduction of the euro—in contrast to the other eurozone nations, where the euro and legacy currency circulated side by side for up to two months. Mark coins and banknotes continued to be accepted as valid forms of payment in Germany until 28 February 2002.

The Deutsche Bundesbank has guaranteed that all German marks in cash form may be changed into euros indefinitely, and one may do so in person at any branch of the Bundesbank in Germany. Banknotes and coins can even be sent to the Bundesbank by mail.[2] In 2012, it was estimated that as many as 13.2 billion marks were in circulation, with one poll showing a narrow majority of Germans favouring the currency's restoration (although a minority believed this would not bring any economic benefit).[3]

On 31 December 1998, the Council of the European Union fixed the irrevocable exchange rate, effective 1 January 1999, for German mark to euros as DM 1.95583 = €1.[4]

One Deutsche Mark was divided into 100 Pfennige.

History

Before 1871

A mark had been the currency of Germany since its original unification in 1871. Before that time, the different German states issued a variety of different currencies, though most were linked to the Vereinsthaler, a silver coin containing ​16 23 grams of pure silver. Although the mark was based on gold rather than silver, a fixed exchange rate between the Vereinsthaler and the mark of 3 marks = 1 Vereinsthaler was used for the conversion.

1873–1948

The first mark, known as the Goldmark, was introduced in 1873. With the outbreak of World War I, the mark was taken off the gold standard. The currency thus became known as the Papiermark, especially as high inflation, then hyperinflation occurred and the currency became exclusively made up of paper money. The Papiermark was replaced by the Rentenmark (RM) from November 15, 1923, and the Reichsmark (ℛℳ) in 1924.

Early military occupation following WWII

During the first two years of occupation the occupying powers of France, United Kingdom, United States, and the Soviet Union were not able to successfully negotiate a possible currency reform in Germany. Due to the strains between the Allies each zone was governed independently as regards monetary matters. The US occupation policy was governed by the directive JCS 1067 (in effect until July 1947), which forbade the US military governor "to take any steps to strengthen German financial structure".[5] As a consequence a separate monetary reform in the U.S. zone was not possible.[5] Each of the Allies printed its own occupation currency.

Currency reform of June 1948

The Deutsche Mark was officially introduced on Sunday, June 20, 1948 by Ludwig Erhard. The old Reichsmark and Rentenmark were exchanged for the new currency at a rate of DM 1 = RM 1 for the essential currency such as wages, payment of rents etc., and DM 1 = RM 10 for the remainder in private non-bank credit balances, with half frozen.[clarification needed] Large amounts were exchanged for RM 10 to 65 Pfennig. In addition, each person received a per capita allowance of DM 60 in two parts, the first being DM 40 and the second DM 20.[6]

A few weeks later Erhard, acting against orders, issued an edict abolishing many economic controls which had been originally implemented by the Nazis, and which the Allies had not removed. He did this, as he often confessed, on Sunday because the offices of the American, British, and French occupation authorities were closed that day. He was sure that if he had done it when they were open, they would have countermanded the order.[7]

The introduction of the new currency was intended to protect western Germany from a second wave of hyperinflation and to stop the rampant barter and black market trade (where American cigarettes acted as currency). Although the new currency was initially only distributed in the three western occupation zones outside Berlin, the move angered the Soviet authorities, who regarded it as a threat. The Soviets promptly cut off all road, rail and canal links between the three western zones and West Berlin, starting the Berlin Blockade. In response, the U.S. and Britain launched an airlift of food and coal and distributed the new currency in West Berlin as well.

Economics of 1948 currency reform

Since the 1930s, prices and wages had been controlled, but money had been plentiful. That meant that people had accumulated large paper assets, and that official prices and wages did not reflect reality, as the black market dominated the economy and more than half of all transactions were taking place unofficially. The reform replaced the old money with the new Deutsche Mark at the rate of one new per ten old. This wiped out 90% of government and private debt, as well as private savings. Prices were decontrolled, and labor unions agreed to accept a 15% wage increase, despite the 25% rise in prices. The result was the prices of German export products held steady, while profits and earnings from exports soared and were poured back into the economy. The currency reforms were simultaneous with the $1.4 billion in Marshall Plan money coming in from the United States, which primarily was used for investment. In addition, the Marshall plan forced German companies, as well as those in all of Western Europe, to modernize their business practices, and take account of the wider market. Marshall plan funding overcame bottlenecks in the surging economy caused by remaining controls (which were removed in 1949), and opened up a greatly expanded market for German exports. Overnight, consumer goods appeared in the stores, because they could be sold for higher prices.[8][9] While the availability of consumer goods is seen as a giant success story by most historians of the present, the perception at the time was a different one: prices were so high that average people could not afford to shop, especially since prices were free-ranging but wages still fixed by law. Therefore, in the summer of 1948 a giant wave of strikes and demonstrations swept over West Germany, leading to an incident in Stuttgart where strikers were met by US tanks ("Stuttgarter Vorfälle"). Only after the wage-freeze was abandoned, Deutschmark and free-ranging prices were accepted by the population.[10]

Currency reform in the Soviet occupation zone

In the Soviet occupation zone of Germany (later the German Democratic Republic), the East German mark (also named "Deutsche Mark" from 1948 to 1964 and colloquially referred to as the Ostmark—literally Eastmark) was introduced a few days afterwards in the form of Reichsmark and Rentenmark notes with adhesive stamps to stop the flooding in of Reichsmark and Rentenmark notes from the West. In July 1948, a completely new series of East German mark banknotes was issued.

Bank deutscher Länder and the Deutsche Bundesbank

Later in 1948, the Bank deutscher Länder ("Bank of the German States") assumed responsibility, followed in 1957 by the Deutsche Bundesbank. The Deutsche Mark earned a reputation as a strong store of value at times when other national currencies succumbed to periods of inflation.[citation needed] It became a source of national pride and an anchor for the country's economic prosperity,[citation needed] particularly during the years of the Wirtschaftswunder in the 1950s.

Currency Union with the Saarland

The population in the Saar Protectorate rejected in a referendum the proposal to turn it into a "European territory". Despite French pre-referendum claims that a "no" vote would mean that the Saar would remain a French protectorate it in fact resulted in the incorporation of the Saar into the Federal Republic of Germany on January 1, 1957. The new German member state of the Saarland maintained its currency, the Saar franc, which was in a currency union at par with the French franc. On July 9, 1959 the Deutsche Mark replaced the Saar franc at a ratio of 100 francs = DM 0.8507.

German reunification

The Deutsche Mark played an important role in the reunification of Germany. It was introduced as the official currency of East Germany in July 1990, replacing the East German mark (Mark der DDR), in preparation for unification on 3 October 1990. East German marks were exchanged for German marks at a rate of 1:1 for the first 4000 marks and 2:1 for larger amounts. Before reunification, each citizen of East Germany coming to West Germany was given Begrüßungsgeld (welcome money), a per capita allowance of DM 100 in cash. The government of Germany and the Bundesbank were in major disagreement over the exchange rate between the East German mark and the German mark.

France and the United Kingdom were opposed to German reunification, and attempted to influence the Soviet Union to stop it.[11] However, in late 1989 France extracted German commitment to the Monetary Union in return for support for German reunification.[12]

Stability

The German mark had a reputation as one of the world's most stable currencies; this was based on the monetary policy of the Bundesbank. The policy was "hard" in relation to the policies of certain other central banks in Europe. The "hard" and "soft" was in respect to the aims of inflation and political interference. This policy was the foundation of the European Central Bank's present policy[clarification needed] towards the euro. The German mark's stability was greatly apparent in 1993, when speculation on the French franc and other European currencies caused a change in the European Exchange Rate Mechanism. However, it should be remembered that "hard" is relative only if it is compared to other currencies, as in its 53-year history, the purchasing power of the German mark was reduced by over 70%.

Other Languages
Alemannisch: Deutsche Mark
العربية: مارك ألماني
azərbaycanca: Alman markı
Bân-lâm-gú: Tek-kok mark
български: Германска марка
Boarisch: Margl
bosanski: Njemačka marka
català: Marc alemany
čeština: Německá marka
dansk: D-mark
Deutsch: Deutsche Mark
eesti: Saksa mark
español: Marco alemán
Esperanto: Germana marko
français: Deutsche Mark
한국어: 독일 마르크
hrvatski: Njemačka marka
Bahasa Indonesia: Mark Jerman
íslenska: Þýskt mark
italiano: Marco tedesco
latviešu: Vācijas marka
македонски: Германска марка
Bahasa Melayu: Deutsche Mark
Nederlands: Duitse mark
Nordfriisk: D-Mark
norsk: Tysk mark
norsk nynorsk: Tysk mark
português: Marco alemão
română: Marcă germană
Simple English: Deutsche Mark
slovenčina: Nemecká marka
српски / srpski: Немачка марка
srpskohrvatski / српскохрватски: Njemačka marka
svenska: D-mark
Türkçe: Alman markı
українська: Німецька марка
Tiếng Việt: Mác Đức
吴语: 德国马克
中文: 德國馬克