Editing Deutsche Mark (section)

==History==

===Before 1871===
{{See also|North German thaler|South German gulden|German gold mark}}
A mark had been the currency of Germany since its [[Unification of Germany|original unification]] in 1871. Before that time, the different [[List of German Confederation member states|German states]] issued a variety of different currencies, the most common being the [[North German thaler]] and the [[South German gulden]]. By 1857, both currencies were linked to the [[Vereinsthaler]], a silver coin containing {{frac|16|2|3}} [[gram]]s of pure silver. Although the [[German gold mark]] was based on gold rather than silver (at 2.79 marks per gram of fine gold), 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 ''[[German mark (1871)|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 in the Weimar Republic|hyperinflation]] occurred and the currency became exclusively made up of paper money. The ''Papiermark'' was replaced by the ''[[Rentenmark]]'' (RM) from 15 November 1923, and the ''[[Reichsmark]]'' (ℛ︁ℳ︁) 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".<ref name="Nicholas Balabkins p. 145">Nicholas Balabkins, ''"Germany Under Direct Controls: Economic Aspects of Industrial Disarmament 1945–1948"'', Rutgers University Press, 1964 p. 145</ref> As a consequence a separate monetary reform in the U.S. zone was not possible.<ref name="Nicholas Balabkins p. 145"/> Each of the Allies printed its [[AM-Mark|own occupation currency]].

===Currency reform of June 1948===
The Deutsche Mark was officially introduced on Sunday 20 June 1948 by [[Ludwig Erhard]]. Large amounts were exchanged for 10&nbsp;ℛ︁ℳ︁ to 65pf. In addition, each person received a per capita allowance of DM&nbsp;60 in two parts, the first being DM&nbsp;40 and the second DM&nbsp;20.<ref>[http://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Monthly_Report_Articles/2002/2002_03_circulation_mark.pdf?__blob=publicationFile Bundesbank.de] {{webarchive|url=https://web.archive.org/web/20170124020614/http://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Monthly_Report_Articles/2002/2002_03_circulation_mark.pdf?__blob=publicationFile |date=2017-01-24 }} Accessed 2015-01-04</ref>

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.<ref name=cowen>Tyler Cowen, "The Marshall Plan: myths and realities" in [http://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Marshall_Plan.pdf U.S. Aid to the Developing World, A Free Market Agenda] {{webarchive|url=https://web.archive.org/web/20110122232515/http://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Marshall_Plan.pdf |date=2011-01-22 }}, Heritage Foundation, p.65</ref>

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 cigarettes were used as currency). Although the new currency was initially only distributed in the three western occupation zones outside Berlin, the move angered the [[Soviet Union|Soviet]] authorities, who regarded it as a threat.{{Citation needed|date=April 2025}} 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.<ref>{{cite book |first=Frank B. |last=Tipton |title=History of Modern Germany since 1815 |location=Berkeley |publisher=University of California Press |year=2003 |pages=511–13 |isbn=0-520-24050-2 }}</ref><ref>{{cite journal |first=Heinz |last=Sauermann |title=The Consequences of the Currency Reform in Western Germany |journal=[[Review of Politics]] |volume=12 |issue=2 |year=1950 |pages=175–196 |doi=10.1017/S0034670500045009 |jstor=1405052 |s2cid=145428438 }}</ref> 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.<ref>Jörg Roesler: Die Stuttgarter Vorfälle vom Oktober 1948. Zur Entstehung der Sozialen Marktwirtschaft in der Bundesrepublik Deutschlands, in: [[Jahrbuch für Forschungen zur Geschichte der Arbeiterbewegung]], No I/2007; Uwe Fuhrmann: Stuttgart 48 und die soziale Marktwirtschaft, in: Fuhrman et. a. (eds.): Ignoranz und Inszenierung, Münster 2012</ref>

====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 {{lang|de|[[Deutsche Bundesbank]]|italic=no}}. 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|date=August 2018}} It became a source of national pride and an anchor for the country's economic prosperity,{{Citation needed|date=August 2018}} particularly during the years of the ''[[Wirtschaftswunder]]'' in the 1950s.

===Currency union with the Saarland===
The population in the [[Saar (protectorate)|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 [[West Germany|Federal Republic of Germany]] on 1 January 1957. The new German [[States of Germany|member state]] of the [[Saarland]] maintained its currency, the [[Saar franc]], which was in a currency union at par with the [[French franc]]. On 9 July 1959 the Deutsche Mark replaced the Saar franc at a ratio of 100 francs = DM&nbsp;0.8507.

===German reunification===
The Deutsche Mark played an important role in the [[German reunification|reunification]] of Germany. It was introduced as the official currency of [[German Democratic Republic|East Germany]] in July 1990, replacing the [[East German mark]] (''Mark der DDR''), in preparation for unification on 3 October 1990.<ref>{{Cite web |title=East German phantom banknotes – DW – 11/03/2014 |url=https://www.dw.com/en/east-germanys-phantom-banknotes/a-18001532 |access-date=2025-03-29 |website=dw.com |language=en}}</ref> East German marks were exchanged for Deutsche Marks at a rate of 1:1 for the first M&nbsp;4,000 and 2:1 for larger amounts. Before reunification, each citizen of East Germany coming to West Germany was given ''Begrüßungsgeld'' (welcome money),<ref>{{Cite web |last=mdr.de |title=1989: Begrüßungsgeld für DDR-Bürger {{!}} MDR.DE |url=https://www.mdr.de/geschichte/ddr/deutsche-einheit/mauerfall/westgeld-begruessungsgeld-100.html |access-date=2025-03-29 |website=www.mdr.de |language=de}}</ref> a per capita allowance of DM&nbsp;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.<ref name="Times2009.9.11">{{cite news |url=https://www.thetimes.com/comment/register/article/thatcher-told-gorbachev-britain-did-not-want-german-reunification-vwjg8nq375j |title=Thatcher told Gorbachev Britain did not want German reunification|access-date=April 30, 2022 |date=September 11, 2009 |first=Michael|last= Binyon |publisher=Times |location=London }}</ref> However, in late 1989 France extracted German commitment to the [[Economic and Monetary Union of the European Union|Monetary Union]] in return for support for German reunification.<ref name="DW-world2009.11.08">{{cite web |url=http://www.dw-world.de/dw/article/0,,4861759,00.html |title=Germany's neighbors try to redeem their 1989 negativity |author=Ben Knight |date=2009-11-08 |access-date=2009-11-09 |work=Deutsche Welle |url-status=live |archive-url=https://web.archive.org/web/20091111174630/http://www.dw-world.de/dw/article/0,,4861759,00.html |archive-date=2009-11-11 }}</ref>