STARVING BERLIN BILLIONAIRES: THE REICHSBANK LAUNCHES NEW BANKNOTES
This week in Berlin: 21 September, 1923
The period in German history known as the Weimar Republic is best known for three things: for the era of the so-called Goldene Zwanziger (a name that’s legendary but not exactly precise or truthful); for the eventually doomed democratic experiment, and for the hyperinflation. The latter, of course, greatly influenced – if not outright decided - both of the former. In the early 1920s the speed at which German economy began sinking, pulling most of the population down with it, was beyond frightening.
On September 21, 1923, the first one-billion-Mark banknotes were launched by the Reichsbank in Berlin. The move was necessary as the country was running out of useful currency: food prices changed (read: went up) even three times a day. The same amount of money which could guarantee food and survival in the morning, was worthless by dusk. Germany was in a downward spin of hyperinflation.
On 20 September, 1923 – one day before the launch – the exchange rate of dollar to Mark reached mind-boggling 1:110 million. The price of five kilo potatoes nearly doubled overnight to six million Mark.
Soon, even those one-billion banknotes were not enough to contain the situation. The market had been flooded by increasingly worthless paper money: not surprisingly, state printers slowly ran out of paper to produce it and the Reichsbank decided to recycle old notes by printing new value on them.
Shopping for food meant literally transporting banknotes by a cartful: while in June 1923 one egg cost 800 Marks, by November of the same year its priced would have ballooned to 320,000,000,000 Marks.
By 21 September, 1923 when the German Reichsbank launched the first one-billion Mark notes in the republic’s capital, German currency was nearly worthless: a tram ticket cost one million Marks. It was an equivalent of 100% lifesavings of many Berlin pensioners.
The new banknotes were “too much, too late”. In November 1923 to buy two pounds of butter Berlin households had to spend 5.6 trillion Marks. Before the First World War it cost 2.6 Marks.
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