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The first coins were probably issued in Germany by Celtic tribes in the third century BC. Although Germany east of the Rhine was not incorporated into the Roman Empire, Roman coins circulated in Germany until the fall of the Roman Empire. During the early Middle Ages, Merovingian and Carolingian coins circulated in present-day Germany with coins issued at a number of local mints. Most coins were either silver denar/pfennigs or obole/half denars.
German coinage was reformed in the 1130s when silver bracteates generally replaced shrinking pfennigs. Hellers, equal to half a pfennig were introduced in southern Germany in the 1200s while groschen (equal to 12 pfennigs or 6 rappen), witten (equal to 4 pfennigs) and other coins were introduced across Germany. Gold coinage was introduced by Emperor Ludwig IV of Bavaria (1314-47) striking copies of French ecus, though Rhenish gulden imitating florins in the 1360s became the predominant gold coins of Germany.
The discovery of silver mines in the mid-fifteenth century led to the issue of the taler which was initially equal in value to a gold gulden. Frederick III of Saxony began the production of talers in Germany in 1500. These large silver coins enabled Germany princes, bishops and others to put their portraits on the coins or commemorate important events. The spread of mechanized coin production in the sixteenth and seventeenth centuries further strengthened the importance of the Taler in Germany. The combination of large silver discoveries, regal vanity and technological innovations in coin production made the taler, and thus the dollar, the basis of currency systems for the next 500 years.
In 1701 the lands of the Hohenzollern margraves of Brandenburg were unified as the Kingdom of Prussia. Frederick II the Great (1740-85) extended Prussia to Silesia in Austria. During the eighteenth century, Germany was a collection of principalities, bishoprics and other political entities, which together had formed the Heiliges Romisches Reich (Holy Roman Empire) from the Middle Ages until the Empire was dissolved on August 6, 1806 during the Napoleonic Wars.
The Holy Roman Empire was succeeded by the Confederation of the Rhine, which was formed on July 25, 1806 with Napoleon as the Protector of the Confederation. The Confederation collapsed in 1813, and there was no formal political entity until the formation of the German Confederation on June 20, 1815. The North German Confederation (Bremen, Brunswick, Hamburg, Luebeck, Mecklenburg-Schwerin, Mecklenburg-Strelitz, Oldenburg, Prussia, Saxony, etc.) was formed on July 1, 1867, and the German Reich was formally declared on January 1, 1871 when the North German Confederation was combined with Baden, Bavaria and Wuerttemburg. Germany became a Republic on November 10, 1918. After World War II, Allied occupation began on May 23, 1945. The Federal Republic of Germany was formed on September 7, 1949. The German Democratic Republic was formed on October 7, 1949 and incorporated into the Federal Republic of Germany on October 3, 1990.
During the time of the Holy Roman Empire, and until the 1930s, German states, bishoprics, principalities, state banks, private banks and others were able to issue their own specie money and/or banknotes. Bishoprics could issue coins until 1803. State banks lost the right to issue banknotes under the Law of December 1933, which became effective on December 31, 1935. A book itself could be written on all the monetary variations that resulted from this multitude of issuers. Nevertheless, there were several monetary systems that the issuers tried to adhere to in order to simplify transactions and insure that coins and banknotes issued in one part of Germany were accepted in other parts of Germany.
There were basically three monetary systems in Germany, one for the Northern states, one for the Southern states, and a separate system for Hamburg and Luebeck. These three systems were consolidated in 1871 when the Mark replaced the Thaler, Gulden, and Schilling. There were numerous variations on the various units of account, specie money, ghost moneys and other moneys that circulated in Germany, so the discussion below reveals the system at its theoretical best. At various points in time, rulers and monetary conventions tried to give Germany a common monetary system, but the multitude of issuers, and the resistance of many of them to change and uniformity made this virtually impossible until political unification occurred.
The principal currencies in Germany were the Thaler and the Gulden. In 1524 Emperor Charles V (1519-58) established the guldiner/taler as the monetary standard for his domains. The Thaler was divided into 24 Groschen, 288 Pfennige and 576 Heller, while the Gulden was divided into 60 Kreuzer, 240 Pfennige and 480 Heller, and during the Holy Roman Empire 1 Thaler was equal to 1.5 Gulden. But these relationships rarely held. In 1566 the silver Reichsthaler was introduced, equal to 68 copper Kreuzer, but during the Thirty Years war, the rate fell to 600 Kreuzer in March 1622 as silver became scarcer than copper. Moreover, the divisions into subunits often varied from one city to another, as well as from one point in time to another. The taler was divisible into 72 kreuzer in Austria and northern Germany, but 60 kreuzer in Austria and in southern Germany and 68 kreuzer in Saxony. Gold coinage followed the standard of the Venetian ducat with 1 gulden equal to 75 kreuzer in the mid-sixteenth century and the ducat equal to 104 kreuzer.
The Thirty Years War led to a severe depreciation in silver coins, and after the war the taler, now equal to 90 kreuzer, became secondary to the silver gulden equal to two-thirds of a taler.
As the relationships fluctuated, rulers and monetary conventions tried to redefine the currencies they used, but as long as the issuers debased the currencies they issued, the fixed relationships could never hold and did not. This meant that the Thaler went through several reincarnations as the Reichsthaler, Speciesthaler and Conventionthaler. The Gulden had fewer reincarnations, but its value fluctuated over time as well. Although 1 Silver Gulden equaled 60 Copper Kreuzer in 1524, by 1736 it took 180 Kreuzer to obtain a Gulden.
The monetary systems we use to describe Germany before 1871 is a vast oversimplification of the real situation, but to be completely accurate, it might be necessary to create a 100 or more different monetary systems for Germany during the period from 1500 to 1871. Germany has a history of reforming and centralizing its currency, and has a fear of monetary chaos because of the experience with inflation after each of the World Wars. Given the repeated historical attempts at unifying the monetary system in Germany over the past 500 years, it should come as no surprise that having failed in their attempt to bring political unification to Europe in the 20th Century that Germany should settle for monetary unification in the 21st Century.
The Thaler represented both a silver coin and a unit of account, and the Joachimsthaler (XDHT) is the ultimate forefather of the today's Dollar. The Thaler, equal to 60 Kreuzer, became a unit of account in the Northern German states in 1555 and in 1566 became the money of the Holy Roman Empire under the name of the Reichsthaler (XDRT), equal to 68 Kreuzer and making it slightly heavier than the Thaler.
The Conference of Leipzig in 1690 extended the use of the Thaler to the entire Holy Roman Empire (except Hamburg and Luebeck) in 1693. It became known as the Speciesthaler (XDST), equal to 120 Kreuzer. Frederick the Great's wars led to a further debasement of the coinage, and at the Convention of Vienna in 1753, the Speciethaler was redefined as being equal to 1.33 Thaler, 1.5 Gulden in northern Germany, and 2 Gulden/Florins in southern Germany (Bavaria and Austria), creating the Convention Thaler (XDCT). Subdivisions of the Thaler varied from one German state to another.
On July 30, 1838, the Convention of Dresden tried to establish a single monetary system for Germany, based on silver, leading to the introduction of the North German Thaler (XDET). The Convention set 1 Thaler equal to 1.75 Florins/Gulden. On January 24, 1857, the Austro-German Monetary Convention made the Silver Thaler (South German Vereinsthaler-XDNT) the monetary unit of the North German Confederation, and set it equal to 1.5 Austrian Florins and 1.75 South German Florins. Hamburg, Bremen, Luebeck and Holstein remained outside of the Monetary Convention, and Austria withdrew from the German Monetary Union on January 13, 1867. Unification finally occurred on December 4, 1871 with the creation of the German Mark, equal to 0.333 Thaler, 0.55 Gulden and 0.833 Hamburg Marks. The Thaler was finally demonetized on October 1, 1907.
The Gulden (XDRG) had its origin in the gold Florin that was introduced in Venice in 1252. It was first issued in the Holy Roman Empire in the 14th Century, but it wasn't until around 1524 that the system of accounting whereby 1 Gulden equal to 60 Kreuzer or 240 Pfennig was established. Attempts to unify the Gulden occurred with the Treaty of Munich on August 25, 1837, the Accord of Dresden on July 30, 1838 (South German Gulden-XDEG), and the Austro-German Monetary Agreement of January 24, 1857 (South German Vereinsgulden-XDSG). The Law of December 4, 1871 replaced the Gulden with the Mark, divisible into 100 Pfennige.
Hamburg had a Banco (bank money) monetary system and shared its system with Luebeck. The Mark-Banco often commanded a premium over Mark coins since the Mark-Banco was a unit of account, and the Mark coins were debased over time. Consequently, when the German Mark was introduced in 1871, it took only 8 Mark 5 1/3 Schilling of Hamburg (HAMS) to get 10 German Marks. Thaler, Gulden and Mark banknotes were issued by State Banks, private banks, and local governments.
The German Mark (DEP) replaced the Thaler, Gulden and Schilling with the Law of December 4, 1871 that provided the right to issue Gold Mark coins. The Law of March 14, 1875 tightened restrictions on banks of issue, and in 1876 the Reichsbank was established and became the principal note-issuing authority in Germany.
During World War I, Germany issued currency in occupied territories, issuing Marks in Poland (PLM), Ruble-denominated notes in Lithuania (DEOR) in 1916, and Mark-denominated notes (Darlenskasse Ost Mark-DEOM) in 1918 in occupied Lithuania. Germany also issued banknotes in occupied Belgium and Romania. Bavaria was a separate republic between 1918 and 1920, but did not issue a separate currency.
Originally backed by gold, the Mark collapsed in a paper hyperinflation in 1923. A Gold Mark (DEG) was issued from August to October 1923 with 4.2 Gold Marks equal to 1 US Dollar. The paper mark was replaced with the Rentenmark (DEN) on October 15, 1923 with 1 Rentenmark equal 1,000,000,000,000 Paper Mark. The Reichsmark (DER) was created on August 30, 1924 at par with the Rentenmark.
After the Nazis seized power, Germany increased the official value of the Reichsmark, but allowed several "free" Mark rates to persist, all of which traded at substantial discounts to the official value of the Reichsmark. These included the Registermark (DERR), arising from foreign claims consolidated in 1933 and utilized for traveling, investments in Germany, etc.; the Reisemark (DERR) for tourists; the Kreditsperrmark (DERK), which arose from credits not subject to "Standstill" agreements and from sales of property belonging to foreigners; and the Effektensperrmark (DERE), arising from the sale of securities in Germany. The Kreditsperrmark and Effektensperrmark were consolidated into the Handelsperrmark (DERH) in 1939. All of these account currencies fluctuated in value according to supply and demand. Banknotes issued by the Reichsbank were legal tender in Germany between 1871 and 1945. Regional banks had the right to issue banknotes between 1871 and 1935, but they were not legal tender. During the hyperinflation, banknotes were issued by states, municipalities, railroads, private companies and virtually anyone that had access to a printing press. Between 1924 and 1945, both the Rentenbank and Reichsbank issued banknotes.
Germany issued Reichskreditkassenschein (XDEK) in occupied territories, which traded at par to the Reichsmark. The Nazis had planned on introducing a separate currency in Ostland (the occupied Baltic states), but the currency never materialized and Reichskreditkassenschein were used instead. Finally, Germany issued Behelfszahlungsmittel fuer die Deutsche Wehrmacht (XDEB), or Auxiliary Payment Certificates, German Armed Forces for the military. These notes were legal tender within the services during World War II that were worth ten times their face value if spent in military channels. Germany also issued banknotes in occupied Czechoslovakia (Protectorate of Bohemia and Moravia), Poland, Ukraine and Slovenia.
After the Allies defeated Germany, they introduced German Allied Marks (DEA) to replace the Reichsmark and other Nazi currency. However, overissue of the Allied Marks by the Russians led to inflation. The western Allies introduced the Deutsche Mark (DEM) on June 20, 1948, allowing conversion at 1 Deutsche Mark equal to 10 Reichsmark, though with limits on the rights of conversion. The black market rate was around 1000 Reichsmark to the Deutschemark. All previous currencies, including the Reichsmark and Allied Marks became worthless. The Bank Deutscher Laender became the issuing authority for Deutschemark on March 1, 1948, and it was renamed the Deutsche Bundesbank on July 26, 1957.
Although the Deutsche Mark was not fully convertible, Germany created the Sperrmark (DES) on March 31, 1951 for negotiable blocked Deutsche Mark accounts. The Sperrmark was reorganized in 1954 into the Bekomark (Beschraenkte Konvertierbare Deutsche Mark) and Libkamark (Liberalisierte Kapital Deutsche Mark). Both were abolished in 1958 when the Deutsche Mark was made freely convertible. The U.S. Army Command issued banknotes in 1948. The Bank Deutscher Laender took over the issuance of banknotes on March 1, 1948. It was renamed the Deutsche Bundesbank on July 26, 1957.
When the western Allies introduced the Deutsche Mark, the Russians followed suit with the Couponmark on June 24, 1948. It received its name from the coupons that were placed on Reichsmarks and circulated in the German Democratic Republic. The Ostmark replaced the Couponmark on July 20, 1948 with an initial exchange rate of 1 Deutsche Mark equal to 1.25 Ostmark. The Ostmark was demonetized when the German Democratic Republic was incorporated into the German Federal Republic on October 3, 1990. Former East German citizens were allowed to convert a fixed number of Ostmarks into Deutschemarks at par. Banknotes were issued by the Deutsche Notenbank between July 20, 1948 and January 1, 1968, and by the Staatsbank der DDR between 1968 and the abolishment of the Ostmark on July 1, 1990.
With the coming into effect on July 1, 1990 of the treaty on German Economic, Monetary, and Social Union (GEMSU) between the former Federal Republic of Germany (FRG) and the former German Democratic Republic (GDR), the deutsche mark became the sole currency of the GEMSU area, and customs borders between the two states were abolished. On October 3, 1990, the former GDR became part of the FRG under international law.
Germany brought about European monetary unification with the introduction of the Euro (EUR) on January 1, 1999 with 1 Euro equal to 1.95883 Deutsche Marks. Euro Banknotes and coins replaced the Deutsche Mark on January 1, 2002, and the Deutsche Mark ceased to be legal tender on February 28, 2002. The Euro is divisible into 100 Cents, and is issued by the European Central Bank. |
