War and Paper Money - The Fall of the Old German Reichsmark
Here we go again. The Canadian dollar is on its way up and so are oil prices and gas at the pumps. In the last year we have seen foreign currencies go up and down in value like yo-yo’s. Even our own Canadian dollar has been on its own roller coaster ride, mostly downhill except for that glorious, short period of time in the 1970's when the buck was worth $1.10 U.S. (Remember when we used to rub it into our American neighbours). The world currency fluctuations can't hold a candle though to the post World War 1 German Reichsmark. This unfortunate currency suffered on of the most disastrous plunges of any legal tender ever, back in 1922.
The chain of events that led to this disaster is said to have begun with the Paris Peace Conference of 1919 when the victorious powers from World War 1 met to draw up a peace settlement. The agreement that was signed at that time is referred to as the "Treaty of Versailles", Versailles being the palace near Paris where the meeting took place. History notes that the treaty provided an official peace between Germany and the 30 or so victorious Allied nations. It also provided for a reorganization of the boundaries of the pre-war European nations. It in fact completely changed the face of Europe, dismantling the Austria-Hungary and Ottoman Empires.
Germany was forced to give up its foreign colonies in the North Pacific and China to Japan and they gave up territory to Belgium, Czechoslovakia, Denmark, France and Poland. France got Alsace-Lorraine and was given control of the German coal fields of the Saar Valley for 15 years and part of Germany's Rhineland was to be occupied by Allied troops for up to 15 years. The German army was reduced to 100,000 men and they were forbidden from having an air force or a navy. They were also required to pay the Allies reparations for war damages to the tune of 33 billion dollars. Starting to get the picture yet?
There was really no negotiation of this treaty, Germany was told to sign or risk invasion. Interestingly enough the United States did not sign the Versailles Treaty, their Senate finding the generous approach of the war torn nations of Europe objectionable. The U.S. president at the time, Woodrow Wilson, had put forth his own proposal referred to as the "14 points". He felt that Germany's economic and territorial punishment should be more moderate. An approach he felt would encourage Germany to establish a democratic government, to help rebuild Europe and to refrain from waging war in the future out of bitterness.
One of the things Wilson objected to at Versailles was the fact that as early as 1915 some Allies had actually met and drawn up secret pacts with regards to the carving up of Europe after the war was ended. Rather diabolical, aye whot? In fact the promise of some of the "pie" is what convinced Italy to join the Allied war effort.
It does not take a rocket scientist to figure out what happened to Germany's economy because of this treaty. In 1922 and 1923 their economy totally collapsed, inflation ruined the value of their money and the old “Reichbanknote mark” became not worth the paper it was printed on, literally. Burning money for fuel became a symbolic gesture in Germany in the 1920's.

Throughout the inflationary period the Reichsbank in Berlin had to re-issue more and more banknotes as previous issues lost their value. In the end, a colossal 10,000,000,000 notes had been issued. In order to produce all of these, a total of 30 paper mills were in full production providing paper, and 132 private printing firms were contracted to assist the Reichsbank print the actual notes.
The effects of the treaty, the lost land and the huge reparations greatly angered many Germans. They also felt bitter about a "war guilt" clause in the treaty that declared Germany solely responsible for the war. It is widely felt that these factors contributed to the rise of Adolf Hitler and his Nazi Party during the 1930's. Germany had been crushed economically and politically by the Allies and the Nazi Party declared that Germany had a right to become strong again. Nationalism was the chief cause of World War 1 and it grew even stronger after that war. While it is understandable that the German people desired to regain some national pride and control over their country nothing could ever justify the terrible path that Hitler took them down.
I was fortunate enough to acquire a few dozen of these infamous "Reichsmarks" from my daughters who spent time stationed in Germany in the 1960's with the Canadian Armed Forces. They found them stuffed in a barn wall near Baden Solingen, no doubt being used for insulation, their only apparent worth back then. The Reichsmarks are of a variety of sizes and colors and the intricacy of their design is mind boggling. They range in denomination from 10 (zehn mark) to 50 million ( funfzig millionen mark). One brilliant blue colored note, twice the size of our dollar bill, is of particular interest. It is a 100 mark bill, dated April, 1910.
The note has a white two inch by four inch panel on the right side that appears blank until you hold it up to the light where upon the ghostly embossed image of Kaiser Wilhelm the Second is revealed. This mark is a marvellous piece of work and the craftsman who produced the intricate master template for it was truly a remarkable artist.
It is kind of sad that as we move inexorably toward dealing almost exclusively with electronic money that the wonderful world of paper currency will eventually be relegated to the collector’s domain only. I suppose someday bank cards and Visa cards will be obsolete and we will be able to view collections of them at flea markets as oddities of the past.
I did find it no small irony, though, that the modern version of the Reichmark, the Deutschmark was in its day one of the strongest currencies in the modern world. The Americans dollar on the other hand is heading the way of the old German mark. The American treasury just keeps printing billions of dollars worth of paper money which could easily turn into insulation for barns like the mark did.
Hopefully not!