Digging for Dollars, German style
By: Marc Bink
Shift work is hard. It’s the classic “hurry up and wait” scenario that only people in the military can understand; hours of sheer drudgery interspersed with a few moments of terror. The other night I was hard at work and had a couple of hours to kill. I soon found myself looking at a couple of coin and banknote websites. Not really looking at anything in particular, it struck me that East German banknotes are still revoltingly expensive. These things had become the bane of my existence as a coin collector. Every time I had made any kind of a prediction about their dis- position and fate it always turned out wrong. I had always wanted to build a collection of these things, but the only thing that scared me off of the idea was the price. There was no way that I would ever pay a premium on essentially worthless money. There had to be a way to get them cheaper, and I thought that once the Wall came down and the OstMark was replaced with the D-Mark that supplies would be- come plentiful as Reichsmark are on eBay. It would seem that I was wrong, as usual. So here’s a quick primer on the East German currency and what eventually happened to it.
The Deutsche Notenbank was created by the East German government in the Russian Zone of Germany in 1948 in response to the western introduction of the Deutsche-Mark. It was a hasty measure. The Soviet occupation authorities had been caught off-guard by the introduction of the new hard currency in the west replacing the worthless Reichs- mark. The Reichsmark had been introduced in Germany in 1925, and served as the national currency through to the end of the war in 1945. The Allies chose to retain it for the time being, even though it was severely devalued and no one really knew how much money was in circulation.
The eventual replacement would be introduced once Germany was de-Naziﬁed and reunified on a platform that all the Allies could agree to. By 1948 that concept was pretty much dead in the water, and it was beginning to look like Germany would re- main (conveniently for the Allies) divided for a long time to come. The Soviets started first by unifying all the political parties in their zone under a Communist dominated leader. This new communist dominated party was given the unwieldy title of the SED, or Socialist Unity Party of Germany. Plans were laid for a new Soviet styled Stalinist puppet state called the German Democratic Republic, (GDR) which drips with irony because there was nothing democratic about that state.
The Western Allies had also introduced an issue of notes nominally tied to the Reichsmark, but redeem- able in hard dollars. These were initially printed in San Francisco in 1944 and were issued by the Allied Military Council. Someone in the State Department thought it would be a wonderful idea (since they were all loving Allies) to give the Soviets a set of plates too. The Soviets, never ones to pass up an opportunity to exploit an unintended economic advantage, proceeded to rev-up the printing presses and try and pay off their Lend-Lease commitments with these dollar –redeemable occupation Marks. This of course further destabilized the Western Zones, and proved the death-knell for the Reichsmark. The regular economy, totally shattered by war and increasingly awash in worthless banknotes was replaced by a Black Market that revolved around a new unit of currency, the American cigarette. Something had to be done, and by early 1948 the Western Allies decided that they had to introduce a new stable dollar backed currency in their zones.
The western Allies “forgot” to inform the Soviets, who were suitably miffed when they found out what had happened. The Soviets in turn decided to “forget” about the fourparty occupation status of Berlin and blockaded it off from the rest of the world. Soon the western Allies had planes flying over Berlin again, this time dropping candy instead of incendiaries. The Cold War was “on”.
The first issues of the Deutsche Notenbank were actually Reichsmark notes with an adhesive sticker attached to them. They didn’t even blot out the swastika on them either, which is funny considering how much the SED hated the Nazis. The subsequent issues of 1948 were similar in design to the Reichsmark issues, but had no pictures or any national symbols on them. These were the first East German issue called the Deutsche Mark, which, like all things East German, was a blatant attempt to curry internal acceptance and international recognition for their Communist system by making it appear “just like in the West”. The East Germans had a major inferiority complex, and their whole economy mirrored what was happening in the west, just with a Stalinist slant. Internationally, they desperately tried to prove to the rest of the world that they were the “rightful” successors to the former German Reich, and that they were better than the imperialist fascists in the West.
These notes circulated until 1964 when a modernized issue was introduced. These new notes were extensively revamped from the previous issues. They featured famous German historical figures on the front, and had images of important buildings that had survived the war on the back. The currency was now referred to as a “Mark der Deutschen Notenbank. This was partly to differentiate a now burgeoning Eastern economy from the West, but also because the West Germans had trademarked the term “Deutsche Mark” for themselves. The GDR government had al- ready been forced to change the name of their airline, change the national flag, and probably weren’t ready to fight over the money supply, so they changed it before anything could go wrong. This also coincided with a surge of national pride in the GDR; they had actually surpassed the 1937 gross domestic product by then, and were rightly proud of it. That the West had done that as early as 1954 was seemingly irrelevant…
The 1964 issue of notes remained in circulation until the mid-seventies. It was replaced by yet another incarnation of the “Socialist” bank, the Staatsbank Der DDR. Gone was the Deutsche Notenbank, and any allusions to the west; – it was replaced by visions of East German industrial progress complete with dead communist heroes on the front. This last series of notes remained in circulation until Uniﬁcation in 1990. Now here’s where things get interesting. The East German state fell apart in 1989. The population had finally had enough of the empty promises, no consumer goods, and no real future as compared to their wealthier cousins in the West. And there was this “Wall”, which prevented free travel to the West. The implosion of the Soviet Union and “Glasnost” spurred the local population to overthrow the “Socialist” régime; and the subsequently elected government negotiated a quick reuniﬁcation with the West. The Wall came down in November of 1989, and with it a Pandora’s Box of economic problems was opened. The East German public ran their lives on a cash ba- sis; there was no real credit available to individuals. There were some forms of credit, things like mort- gages, small business loans, but no consumer credit like we have here in the West. Not only would a large amount of cash have to be transferred, people would have to be re-educated in Western monetary ways as well.
They had a lot of cash, because there was never anything to buy. So what did they do with their money? They stuffed mattresses with it, -literally. My mother went back to visit relatives in the East Zone in 1987 and she reported that they had tons of cash on hand, but there was never anything in the stores to buy. The problem that faced most people in the new eastern provinces was what would become of their savings, cash, pensions, and paycheques upon uniﬁcation. The monetary union had to take place first before the political one, mainly because the East German regime was hemorrhaging foreign exchange cash that they didn’t have. The GDR had been effectively bankrupt since the seventies. The leaders in the SED couldn’t understand why their economics weren’t working. The Soviets propped them up militarily, and the West Germans paid for dissidents and political prisoners with cold hard D-Marks, and lent the SED huge amounts of cash to keep the country aﬂoat. Another favorite trick of the East German regime was to ex- tort hard currency out of western tourists by forcing them to exchange a minimum of DM 25.00 per day, and then seizing their East Marks upon departure. So to answer these problems and stop the hemorrhage, the Federal government in Bonn decided to exchange the East Mark at 1 to 1 for the ﬁrst 4,000 of savings, and at 2:1 for every 1000 after that. Soon the entire money supply of the old GDR was turned into the Bundesbank, which in turn passed it over to the “Kreditanstalt fuer Wiederaufbau” (KfW, successor to the Staatsbank der DDR) for safe keeping.
After the currency became obsolete in 1990, German mint officials began melting down the huge stocks of East German coinage in their possession. That German beer can you might be holding may contain aluminum that used to circulate as money at one point.
The mass of banknotes amounted to 100 billion Marks, or about 620 million banknotes. It took up a space of around 160,000 cubic feet (4500m3) weighed about 3000 tonnes, and would ﬁll 300 box cars. This whole lot of money, including pass- books, cheques, military notes, and the entire run of unused 200 and 500 Mark notes was transported by military convoy to a series of
caverns in the Thekenberge near Halberstadt. These caverns had been made by concentration camp inmates during the war, and were at that time used by the Reichsbank to store all of their gold and foreign exchange before being “liberated” by the Americans in 1945. This same set of caverns was then turned over to the Soviets, who in turn left them to the East German Volksarmee (National People’s Army). The money was then sealed off in two 1000 ft caverns, sealed in by 2 meter thick concrete and steel doors. Since all this cash was still considered redeemable in D-Marks, it was important that stayed out of circulation and never ever reappeared. It was hoped that it would all just rot away naturally in the caverns.
But it was all for naught. Like any secrets or legends of treasure, the news of a potential “motherlode” attracts many types who are looking to strike it rich. In 2001 two locals from Halberstadt managed to get into these caverns and make off with a sizeable cache of notes. What gave them away was the 200 and 500 Mark notes (neither of which had ever been released to circulation,) suddenly appearing on the collector market. (And I never got one, Rats!) So after these two miscreants were sentenced to some trivial sentences in 2001, the KfW decided to get rid of the rest the money. Between April and June 2002, 298 containers of old East German currency were incinerated along with household garbage.
Any chance of me obtaining cheap East German banknotes for my collection evaporated in a cloud of smoke on June 25, 2002, when the last container-full was burned.
Previously published in the ENS “The Planchet” Magazine Vol-56 Issue-06