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Reichsmark 1914- 1924 1. Treaty of Versailles 2. Weimar Republic 3. The inflationary Decade 4. Hyperinflation 5. Inflationary Value 6. Rentenmark 7. Daily Life 8. Currency Comparison Brent Clair Pat Wotta

Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

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Page 1: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Reichsmark 1914-1924

1. Treaty of Versailles

2. Weimar Republic

3. The inflationary Decade

4. Hyperinflation

5. Inflationary Value

6. Rentenmark

7. Daily Life

8. Currency Comparison

•Brent Clair

•Pat Wotta

Page 2: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Treaty Of Versailles

• June 23, 1919• Many policies outlined in treaty. • Drafted by Britain, France, and the United States.• Germany forced to yield up territory to France, Poland, Denmark,

and Belgium and is not allowed to unite with Austria.• A key to the inflation height

-Germany was forced to pay heavy reparations

Page 3: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Weimar republic 1919-1933

• Nov. 11 1918 Armistice: end of WWI• 1919 collapse of German empire and start of WP• 1919 Treaty of Versailles • A new republic is born….

• 1933-Total Economic and Political Collapse-Hitler

Page 4: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

The Inflationary Decade, 1914-24

• Why hyperinflation happened?• When war started you were no longer to redeem marks for gold• No legal limit to how many notes could be produced• Amount of $ increased 4-fold by the end of the war• Gov. was not printing money fast enough for rising prices• “victory” (never happened)-After defeat in 1918 gov. was not able to pay debts.

Page 5: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Hyperinflation

• 1923 paper mark lost function as medium of payment. • Started buying fixed goods such as art, diamonds, and real estate.• Jan 1923 whole sale price index was 2,783 times higher than its

1913 level• In comparison to 1913 level of CPI, by Dec 1923 it was 1,261

thousand million times higher • 1923 money (reichsmark) is worth nothing

Page 6: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Wholesale Price Index

 

July 1914 1.0

Jan 1919 2.6

July 1919 3.4

Jan 1920 12.6

Jan 1921 14.3

July 1922 36.7

July 1922 100.6

Jan 1923 2,785.0

July 1923 194,000.0

Nov. 1923 726,000,000,000.0

Page 7: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

(A) Value of the gold mark in terms of paper marks.

(B) Price parities (ration of German to American price-index

In Reference To Overhead Graph

1914- 1923

Page 8: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

TABLE XIX

• 1913-6,070 Million in Circulation

• 1923-2.5 Trillion in Circulation

Page 9: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

TABLE III

• Circulation

• Dec. 1923 496.5 Trillions on marks in circ.

Page 10: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

“The Miracle of the Rentenmark”

• November 1923 Gov. stepped in to stop hyperinflation overnight• Rentenbank• 2.4 billion Rentenmarks created, each one exchangeable for 1

trillion old marks• Confidence was developed by government • Businesses slowly began to revive• 1924 new Reichsmark equal in value to the Rentenmark

1 Rentenmark bill 10 Billion Reichsmark bill

Page 11: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Money Over Time

Page 12: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life
Page 13: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life
Page 14: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

1914-100 Mark

•Very detailed and colorful pictures

•Pictures of people and objects show sign of times

Page 15: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

1923- 1 Billion Mark

•Very dull and plain bills

•Show signs of mass production

•Easy to counterfeit (who would want to anyway?)

Page 16: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Comparison

1923-

1914-

•Notes detail changes over time.

•What does this tell you about society’s perception of value?

Page 17: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Text Translation

Paid by the Federal Reserve Bank in Berlin in exchange for this note to the holder. Beginning with September 1st, 1923, this note can be exchanged against another legal type of payment.

Berlin, August 9th, 1923

Dictatorship of Reichsbank

Page 18: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

Hyperinflation Impact on Daily Life

•Inflationary stamps

•People paid 3 times a day in order to buy necessities

•Farmers refused to bring goods to the market for worthless money

•Large businesses actually made profit from hyperinflation

•Oct. 25 1923 Gov. had to produce 1 million trillion marks a day.

-Only could produce 500,000 trillion

Page 19: Reichsmark 1914-1924 1.Treaty of Versailles 2.Weimar Republic 3.The inflationary Decade 4.Hyperinflation 5.Inflationary Value 6.Rentenmark 7.Daily Life

• Questions??

-Questions