German Rentenmark

German Rentenmark
Rentenmark (German)
Central bank Deutschen Rentenbank
User(s)  Germany
Subunit
 1/100 Rentenpfennig
Symbol RM
 Rentenpfennig Rpf.
Plural Rentenmark
 Rentenpfennig Rentenpfennig
Coins 1, 2, 5, 10, 50 Rentenpfennig
1, 3 Rentenmark
Banknotes 1, 2, 5, 10, 50, 100, 500, 1000 Rentenmark
This infobox shows the latest status before this currency was rendered obsolete.
One Rentenmark note

The  Rentenmark  (RM) was a currency issued on 15 October 1923 to stop the hyperinflation of 1922 and 1923 in Weimar Germany. It was subdivided into 100 Rentenpfennig.

History

After the Occupation of the Ruhr in early 1923 by French and Belgian troops, referred to as the Ruhrkampf, the German government of Wilhelm Cuno reacted by announcing a policy of passive resistance. This caused the regional economy of the Ruhr - the industrial heartland of Germany - to virtually grind to a halt. The occupation authorities reacted with arrests and deportations to strikes and sabotage. Those displaced and left without income by the Ruhrkampf and their families fell back on public income support. Tax revenues plunged as economic activity slowed dramatically. The government covered its need for funds mainly by printing money. As a result, inflation spiked and the Papiermark went into freefall on the currency market. Foreign currency reserves at the Reichsbank dwindled.[1]

As hyperinflation took hold, the cabinet of Cuno resigned in August 1923 and was replaced by the cabinet of Gustav Stresemann. After Stresemann reshuffled his cabinet in early October, Hans Luther became Minister of Finance.[1][2]

Working with Hjalmar Schacht at the Reichsbank, Luther quickly came up with a stabilization plan for the currency which combined elements of a monetary reform by economist Karl Helfferich with ideas of Luther's predecessor in office Rudolf Hilferding. With the help of the emergency law (Ermächtigungsgesetz) of 13 October 1923 which gave the government the power to issue decrees on financial and economic matters, the plan was implemented that same day, 15 October 1923.[2]

The newly created Rentenmark replaced the old Papiermark. Because of the economic crisis in Germany after World War I, there was no gold available to back the currency. Luther thus used Helfferich's idea of a currency backed by real goods. The new currency was backed by the land used for agriculture and business. This was mortgaged (Rente is a technical term for mortgage in German) to the tune of 3.2 billion Goldmarks, based on the 1913 wealth charge called Wehrbeitrag which had helped fund the German war effort in World War I. Notes worth 3.2 billion Rentenmarks were issued. The Rentenmark was introduced at a rate of one Rentenmark to equal one million million old marks, with an exchange rate of one United States dollar to equal 4.2 Rentenmarks.[2]

The Act creating the Rentenmark backed the currency by means of twice yearly payments on property, due in April and October, payable for five years. Although the Rentenmark was not initially legal tender, it was accepted by the population and its value was relatively stable. The Act prohibited the recently privatised Reichsbank from continuing to discount bills and the inflation of the Papiermark immediately stopped.

Thus the monetary policy spearheaded by Schacht at the Reichsbank and the fiscal policy of Finance Minister Hans Luther brought the period of hyperinflation in Germany to an end. The Reichsmark became the new legal tender on 30 August 1924, equal in value to the Rentenmark. This marked a return to a gold-backed currency in connection with the implementation of the Dawes plan.[2]

The Rentenbank continued to exist after 1924 and the notes and coins continued to circulate. The last Rentenmark notes were valid until 1948.

Coins

Coins were issued dated 1923, 1924 and 1925 in denominations of 1, 2, 5, 10 and 50 Rentenpfennig. Only small numbers of Rentenpfennig coins were produced in 1925. A few 1 Rentenpfennig coins were struck dated 1929. The 1 and 2 Rentenpfennig were minted in bronze, with the 5, 10, and 50 Rentenpfennig coins in aluminium-bronze. These coins had the same design features and motifs as coins of the Reichsmark from the Weimar and early Third Reich periods.

Banknotes

The first issue of banknotes was dated 1 November 1923 and was in denominations of 1, 2, 5, 10, 50, 100, 500 and 1000 Rentenmark. Later issues of notes were 10 and 50 Rentenmark (1925), 5 Rentenmark (1926), 50 Rentenmark (1934) and 1 and 2 Rentenmark and dated 1937.

See also

References

  1. 1 2 "Das Kabinett Cuno - Einleitung (German)". Bundesarchiv. Retrieved 6 January 2015.
  2. 1 2 3 4 "Biografie Hans Luther (German)". Bayerische Nationalbibliothek. Retrieved 19 January 2015.

Currencies of Germany

Preceded by:
German papiermark
Ratio: 1 Rentenmark = 1,000,000,000,000 Papiermark, and 4.2 Rentenmark = US$1		 Currency of Germany
15 November 1923 – 29 August 1924		 Circulates in Germany
30 August 1924 – 1948
Note: Reichsmark was the legal tender		 Succeeded by:
East German mark
Reason: reaction to the change over in Trizone (later West Germany)
Ratio: 1 Mark = 7 Rentenmark on the first 70 Rentenmark for private individuals, otherwise 1 Kuponmark = 10 Rentenmark
Succeeded by:
Deutsche Mark
Reason: intended to protect West Germany from the second wave of hyperinflation and stop the rampant barter and black market trade
Ratio: 1 Deutsche Mark = 1 Rentenmark for first 600 RM, 1 Deutsche Mark = 10 Rentenmark thereafter, plus each person received 40 Deutsche Mark
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