Mark (money)


Mark (money)
1923 50 Million Mark - this amount was worth about US$12 million (US-1923) 9 years earlier, but only $1US when printed; it was worthless a few weeks later.

Mark (from a merging of three Teutonic/Germanic languages words, Latinized in 9th century post-classical Latin as marca, marcha, marha, marcus)[1] was a measure of weight (see mark (mass)) mainly for gold and silver, commonly used throughout western Europe and often equivalent to 8 ounces. Considerable variations, however, occurred throughout the Middle Ages (see du Cange, Gloss. med. et infim. Lat., s.v. Marca for a full list).

Contents

England and Scotland

In England the "mark" never appeared as a coin, but was only used as a unit of account. It was apparently introduced in the 10th century by the Danes. According to 19th century sources, it was first equivalent to 100 pence, but after the Norman Conquest it was worth 160 pence, or 13 shillings and 4 pence, ie ⅔ of a Pound Sterling.[2]

In Scotland, the Merk Scots was a silver coin of that value, issued first in 1570 and afterwards in 1663.

Germany

In northern Germany (especially Hamburg) and Scandinavia, the Mark was a unit of account, and also a coin, worth 16 schillings or skillings.

17th century

In an attempt to prevent debasement of the currency, the Bank of Hamburg (German: Hamburger Bank) was founded in 1619, after the example of the Bank of Amsterdam. Both these banks established a stable money of account. The Hamburg unit of account was the Mark Banco. It was credited in exchange for the sale of bullion or by way of credit against collateral. No coins or banknotes were issued, but accounts were opened showing a credit balance. The account holders could use their credit balances by remittances to other accounts or by drawing bills of exchange against them. These bills circulated and could be transferred by endorsement, and were accepted as payment. They could also be redeemed. This currency proved to be very stable.

19th century

In 1873 Germany adopted the Mark (colloquially also called the Goldmark) as its currency, following unification in 1871. The name was taken from the Mark Banco. Initially the coins and banknotes of the various predecessor currencies, such as the Thaler, the Kreuzer, and the Guilder, continued to circulate, and were treated as fixed multiples of the new unit of account. (This is similar to what happened between 1999 and 2001 when the euro was introduced.) Coins denominated in Marks were first issued in 1873, and gradually replaced the old coins. The Mark Banco was converted into the new Mark at par and the Bank of Hamburg was incorporated as the Hamburg subsidiary into the newly founded Reichsbank (est. 1876), issuing banknotes denominated in Marks.

Early 20th century

In 1914 the Reichsbank stopped demanding first-class collateral (eg good bills of exchange, covered bonds such as Pfandbriefe) when providing credit to borrowers. The Mark became a weak currency, colloquially referred to as the paper mark, in order to finance the war effort. In 1918 the pre-war sound money policy was not re-established, and the continuing loose money policy resulted in inflation and then hyperinflation in 1923 (see inflation in the Weimar Republic). In late 1923, when the former currency was virtually worthless, a new Mark was introduced, called the Rentenmark (worth 1,000,000,000,000 Papiermark). This was issued by the new Rentenbank as credit to borrowers, but requiring collateral in the form of first-class claims to real estate. In 1924 the Reichsbank stopped providing unrestricted credit against worthless financial bills, and pegged its new currency, the Reichsmark, to the stable Rentenmark. The Reichsbank rationed its lending, so that the Reichsmark remained at par with the stable Rentenmark. Both currencies, abbreviated RM, continued to exist.

The Rentenmark was originally intended to be withdrawn by 1934, but the Nazi government decided to continue to use the Rentenmark, which enjoyed a considerable trust due to its stability. Nevertheless, the Nazis deliberately overissued both currencies to finance infrastructure investments by the state, expanded government employment and expenditure on items such as armaments. By 1935 laws to limit price, wage and rent increases were needed to suppress inflation. Enormous extra taxes, charged on real estate owners (RM 1 bn. in 1936) and — on the occasion of the anti-Semitic November Pogrom — charged on Jewish Germans (RM 1 bn. in 1938), could not stabilise the economy for long. The start of World War II was used to justify general price controls and rationing. Thus inflation was hidden and materialised in ever-growing aggregate savings of the population, which could not spend its earnings except on limited rations of goods at artificially low prices. However inflation could clearly be seen in prices on the black market, which was severely punished. Initially the economy was supported by war booty taken from occupied countries; this continued to some extent until 1944. However by the end of the war the oversupply of banknotes and coins (RM 3.9 bn. in 1933, 60 bn. in 1945) became obvious, openly showing up in inflated black market prices.

From 1944 the Allies printed occupation marks (also called military marks). The Allies decreed that military marks were to be accepted at par with the Rentenmark and Reichsmark. Banknotes worth 15 to 18 bn. military marks were issued for purchases of the occupying forces in Germany, and for soldiers' wages. However in June 1948 military marks were demonetised as part of the Western and Eastern currency reform in Germany.

In June 1947 the French occupying force in the Saar Protectorate introduced the Saar Mark, which was at par with Rentenmark and Reichsmark. In November 1947 it was replaced by the Saar franc.

On June 21, 1948 the Deutsche Mark (German Mark) was introduced by the Bank deutscher Länder in the western zones of occupation in Germany; the Deutsche Emissions- and Girobank (German bank of issue and giro centre) of the Soviet zone followed suit on June 23, 1948, issuing its own Deutsche Mark (colloquially referred to as the East German Mark or Ostmark), later officially called "Mark der Deutschen Notenbank" (1964–1967) and then "Mark der DDR" (1968–1990), through to the adoption in reunified Germany of the euro in 1999, with Germany minting its own German euro coins and using the unified Euro banknotes used all over the Eurozone of the 21st century.

Modern usage

"Mark" can refer to the following currencies:

  • In Germany:
    • 1619–1873 Mark Banco of Hamburg
    • 1873–1914 German Goldmark, the currency of the German Empire
    • 1914–1923 German Papiermark
    • 1923–1948 German Rentenmark
    • 1924–1948 German Reichsmark
    • 1944–1948 military mark of the occupational forces
    • June – November 1947 Saar Mark
    • 1948–1990 East German Mark or Ostmark, the currency first in the Soviet zone of occupation and later in the German Democratic Republic and in Berlin (East)
    • 1948–1999/2001 German Mark or Deutsche Mark (D-Mark, DM), the currency in the western zones of occupation and the later Federal Republic of Germany as well as in Berlin (West)

See also

Notes

  1. ^ OED, DRAFT REVISION June 2002
  2. ^ 1863 1849 1845.

References


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