I, Reichsbanknote
It is striking that we have approached the 100-year jubilee of German hyperinflation. The history rhymes with itself: everybody knows that everybody knows that we are in an accelerating inflation regime. Yet the consensus is about not calling price rise as inflation or debasement of money, and depreciation of savings. Just like in Weimar Germany we are looking for a particular reason for “supply chain issues” while ignoring that expansion of credit and money printing should have something to do with the current situation. Let me tell the story which is special because it was well documented and happened in the advanced, modern country.
***
I am not so called emergency money, or in German “Notgeld”. These were issued by multiple entities in the late stages of hyperinflation. Notgeld played an important role in local economies by making barter just a little more convenient. Usually still backed by something, chicken or shoes, they couldn’t be a reliable medium of exchange even in the different states of Germany. Some of these Notgeld’s were indeed a piece of art. For example, those designed by the Bauhaus school of design and issued by Thuerengen had distinctive design and were colorful.
So I am a Reichsmark bill, but not that “Mark gleich Mark” which literally meant “Mark just mark”. That Mark was a measure of gold weight as many of the world’s currencies. In the early stages of German inflation, people were still believing that Mark will restore its value. The 1000 Mark note was the old friend of all germans since it was the highest denomination as long before as 1876. Before 1922 someone could still hope that the 1000 Mark bill issued in 1910 will regain some value after everything calms down and the government stops foreign exchange speculators and Berlin banks from playing against good old Mark. But Reichsbank didn’t stop printing press and soon 1000 Mark banknotes of 1910’s issuance became worthless. Even these days there are enough of them around.
I am from December 1922. In this month one could buy only approximately 5 liters of milk for it. The same amount of paper money had enough purchasing power for buying 227.27 liters of milk in pre-war 1913. In the summer of 1923 the real value of 1000 Mark bill crashed so low it didn’t make economic sense “to produce low-currency notes far more working time was required by paper-makers, engineers, printers, lithographers, colour experts and packers than was represented by the value of the finished article”* and it was withdrawn “because rumours were circulating that it might be revalorised at its old gold rate”*.
Thus, the overprint is an important part of me. These red letters signify the peak utilitarian meaning of paper to transfer information between people in society but not storing the value. The increasing denomination of paper marks signified not just ever-accelerating pace of hyperinflation but also extremely high distress of the central bank money supply logistics. Reichsbank had real “supply issues” to meet business demand. Suspended banknotes were recycled with new denominations printed over the old ones.
“The dispatching of cash sums must, for reasons of speed, be made by private transport. Numerous shipments leave Berlin every day for the provinces. The deliveries to several banks can be made … only by aeroplanes”. (Havenstein, the President of the Reichsbank 1921–1923)
I can not assure you that I was delivered by airplane to at that time young German city Freital. It was more like a rural area. For the next decades, I belonged to a local butcher, his son, and his granddaughter. Red letters on me suggest that I likely lost my value very soon. “The first 100-billiard note** (The highest denomination ever printed: 100,000,000,000,000 marks, referred to in Germany (as in Britain) as one hundred billion.) was already out” to the end of 1923. In 1922 the price of beef rose by 17 times, pork by 23 if compared to 1913 but I was printed only in late 1922 and then restamped in the second half of 1923. Between May and June of 1923 pork went from 10400 to 32000. Does one milliard seem reasonable with such scales of prices? Probably not. It should be 1/100000 of the largest denomination later that year, however, still equal to one old gold mark in the middle of 1923. Summer or autumn of 1923 might be that time when butcher in Freital could receive me but then he should spend it as soon as he can and he didn’t. So likely, he acquired me later, in the autumn, when one milliard already lost its value and local shops might be accepting something different than paper marks. Maybe local “emergency money”?
* Adam Fergusson, When money dies
