Deutsche Mark – DM – History

The history of the emergence, existence and exit from circulation of the German brand Deutsche Mark in Germany.

Background

Many Germans still remember well what the good old German mark is. For post-war Germany, it was a symbol closely related to the history of the Federal Republic. DM was stable, strong and respected. After the euro was introduced in 2002 as a common currency between the EU countries, many burghers mourned their beloved German mark for a long time.

The term “Mark” (Mark) as a designation of the denomination was in use already in the Middle Ages. In the small German states, money at that time was a complete mess: there were many different currencies in circulation in the form of coins, bills and banknotes. Florins, thalers, pennies, shillings, cents and pence were used. In 1873, after the founding of the German Empire, a single German currency, the Reichsmark, was introduced. But after severe inflation and in order to somehow survive the crisis in the German Empire at the end of 1923, another currency, Rentenmark, appeared temporarily (for a year). But as soon as inflation was curbed, the Reichsmark was returned and it remained until 1948.

Birth of DM

Three years after the end of World War II, the economic situation in Germany was very dire. During this time, barter and the black market began to flourish, and most people were starving. Food and other consumer goods were assigned and given out to burghers only by cards. In the strictest confidence, the monetary reform was being prepared. But there were rumors about this and the Germans, who had cash, expecting that the Reichsmark would soon cease to exist, tried to buy up everything that could be bought for money at that time. As a result, prices on the black market have jumped to astronomical heights.

On the 18th of June, Friday evening, it was officially announced that the currency reform would take place on Sunday 20th. Each adult citizen could exchange 60 Reichsmarks for 40 new German marks, and later “receive” another 20 DM. The people had to hurry: only a couple of days were given to exchange all their savings; otherwise, they simply depreciated. On June 21st, 1948, the Deutsche Mark was already the legal tender currency of Germany, and the Reichsmark ceased to be a valid means of payment.

In the memory of the German inhabitants, the reform and the introduction of the Deutsche Mark was a decisive step on the way to the founding of the Federal Republic: from that day everything changed, life began to improve again. It should be noted, however, that in the eastern sector, the monetary reform followed immediately: the “Ostmark” in the GDR and “D-Mark” in the FRG actually divided old Germany into two states. And a few days after the currency reform, the eastern sector of Berlin cut off the western sector of the city from food supplies. Ground routes to the city were blocked.

Stability course

Stable prices and a stable exchange rate were the main objectives of Ludwig Erhard’s economic policy at the time. But prices began to rise. With an average salary of 300 marks and a limited rental price of 40 marks, heating and food remained relatively expensive. But in spite of everything, already in 1958 the German mark (D-Mark) was considered one of the most stable currencies in the world. And soon Germany received the status of a creditworthy country. In addition, DM was an unofficial reserve currency for neighboring countries; along with the national currency, citizens kept their savings, including in German marks.

Freedom symbol

Time passed and the brand lost a lot in its value: in 1990 it had only 27% of its 1949 purchasing power. It should be noted that by that time much had changed in the world, and the currencies of other countries also underwent crises and inflation. Therefore, despite everything, D-Mark still remained stable and respected not only in the world market, but also among its burghers. In addition, the citizens of the GDR also dreamed of the arrival of the DM. “Kommt die D-Mark, bleiben wir, kommt sie nicht, geh’n wir zu ihr!” (“If the German mark comes, we will stay; if it does not come, then we will go to it!”) – these slogans were written on the banners of protesters in the GDR in the spring of 1990. A common currency between the FRG and the GDR was the first requirement, even before the negotiations on German reunification. Given the incessant flows of emigrants, the participants in the negotiations were forced to hurry. On July 1, 1990, the German mark became the only solvent currency in the GDR.

Farewell to DM

Around the same time that the reunification of Germany took place, it was decided to form the European Economic Union, and within its framework to facilitate economic and trade relations. For this, it was decided to introduce a single stable currency between all participating countries. In June 1997, 15 heads of state and government, including at the insistence of Germany, signed a stability pact for €. Among other conditions, it stated that the country’s debt, even if it is already a member of the EEC, should not exceed 3% of GDP.

On January 1, 2002 in Luxembourg, Finland, Ireland, Belgium, Holland, Austria, France, Italy, Spain, Portugal, Greece and, of course, in Germany, a single currency was introduced – the euro (Euro). The exchange rate for the German mark was DM 1.95583 = 1 Euro.

The departure of the German mark from the country’s foreign exchange market was morally difficult for many Germans: for them, it was their beloved DM that was a symbol of prosperity and a guarantor of security. But two and a half years after the introduction of the euro, the survey revealed that the people had already got used to it: 60% of respondents were positive about the new currency, considering it especially convenient for traveling to neighboring states: France, Spain, Italy, Austria or Belgium. … And only the old Germans were skeptical about the newcomer, either as a joke or seriously calling him to themselves “Teuro” (note: pun. In German, “euro” is pronounced “oiro”, and the word “teuer” means dear ).

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Igor Smith/ author of the article
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