PAPER
MONEY - PREFACE, INTRODUCTION
(text: Kai Lindman, html+fotos: Oliver Sens)
PAPER
MONEY - PREFACE, INTRODUCTION
(text: Kai Lindman, html+fotos: Oliver Sens)
| The beginning |
| It was a difficult fight for
mankind, but they owned perseverence and no setback could stop them to
beecome the ruling species on our world.
The began as hunters and collectors, but soon became shepherds, fishermen and farmers. The tribes grew and people specialised more and more. Soon trade was necessary and the development made bartering nearly impossible. "What to do?" our ancestor said - and he invented money. |
| The first coins |
| It didn´t take long
and money was ruling the world. But money should make
impression just from the sight of it. So people not only exchanged pieces of raw metall, but they took the chance for showing the own power. The metall was minted and words and pictures appeared on the surface. 
Money makers were important and powerful and the rulers kept more than an eye on their economic balance. But alwyas there were a few, who didn´t watch the flow of money. They preferred just to spend the dough and when it was gone they invented a new tax for their people to pay. It was very easy to life this way. But one day there was nothing more to get and then you just went bankrupt. The money was gone, the power was gone, an - often enough - the life as well. The power of the circulating money grew. Clever rich people became more and more rich. A few clever poor people succeeded in becoming clever rich people. But the grey mass stayed poor and alot became even poorer. |
| Heavy coins |
| Soon the pieces of metall
were so big and heavy, that you could handle them only with very much effort.
Swedish copper money was issued in big plates. The 8 Daler pieces in the
17th century were weighing about 20 kg and much too big for every purse.
The dukes of Brunswik were lucky enough to have gold and silver in the Harz mountains. They struck immense multiple silver Talers, which had a diameter of more than 70 millimeters and a weight of about 465 gramms, as the 16fold Taler of Duke Julius of 1588. These pieces were really a task for the trouser pockets, even if nobody was walking around with such a piece in the pocket, because 16 Talers were a fortune. |
| Banknotes in China |
| So everywhere the wish grew
- of course only those who owned something had this wish - to make the
handling of payment easier. Credit letters, bills of exchange and any kind
of written contracts were used, but the value of the money was still represented
in the value of the metal of the coin.
But, alas, not only we Middle-Europeans were living on this world, even when we were believing to be the middle of everything. No, there had been rumors of people living far away. Hasn´t there been a crazy Venetian daredevil of merchant, who had dared to travel furtheron to the east than anybody before? And hadn´t he come to a highly civilized country were people since some thousand years were using money made of paper? Well, whatever Marco Polo told in 1296 his people about the monetary system of the Chinese, was met with unbelief and rejection. Nevertheless - every single word was true. For the first time paper money was issued in China already in the seventh century, but he oldest notes still known are from the time of the great war (Hung-Wu) of 1368 to 1398.
This note is young for China, but ancient for Europe, because here the first papermoney was issued more than one hundred years later. But the reason for this issue was not because people understood the advantages of papermoney, but only the shortage of metal. |
| The first "Notgeld" consisted paper |
| When in 1483 the Arabs were
besieging the spanish town of Alhama, the commander of the troups inside
the city, the Count of Tendilla, was unable to pay the salary to his men.
But even when the trouble seems to big there has to be order, so the count
ordered his cashier to produce paper money which could be changed into
"real" money after the blockade.
It seems that everybody who ever got one of these paper money pieces was very eager to get rid of it, because there is not one note left. So it was the lack of real money during blockades of their cities that made it necessary for Europeans to use paper money. And paper money remained a matter of blockades, especially during the "Thirty years war" from 1618 to 1648, where a lot of cities were forced to issue their own paper money when the enemy was sitting on the metal for the coins in front of the gates. |
| The first banknotes in Europe |
| These experiences did not
got lost. The time was ripe for the first issue of real paper money. But
where was it possible to start the experiment?
Do you still remember the plate money, made of copper? Yes, right! In Sweden the people had their trouser pockets much too full with this giant´s money and so a royal permission was granted for Johann Palmstruch from Riga to open a bank in 1656. Already in the year 1661 this bank began to issue the first real European banknotes.
|
| There was much trouble with the new money |
| In the beginning all went well, but then Johann Palmstruch made a mistake which most of the paper money emitants made: He could not resist the urge to emit more notes, than were met by real estate.That led everybody into trouble after more or less time, and so the experiments again and again ended in inflations and bank collapses. All these things did not help to promote the people´s confidence into this new kind of payment. |
| French Assignates |
The history of paper money
during the 17. and 18. century ist full of smaller or bigger crashes. The
biggewst of them all was the issuing of banknotes after the revolution
in France. The government printed immense lots assignats - so we call these
notes today - without any covering. No wonder that not only the financial
markets crashed, but that the ideas of the revolution had no chance to
survive because of the crashes.
It took a long time, before people forgot about the consequences of this financial chaos. In the year 1800 Napoleon established a new law for bank management and that was the beginning of the irrisistible triumph of paper money in Europe and the rest of the world. |
| Early German paper money |
| The oldest German notes which have survived are nearly all notgeld notes. We know issues from besieged towns from Mansfeld in Thuringia (1622), Mayence (1793), Kolberg (1807), and Erfurt (1813). |
| At last - genuine German banknotes |
| After that time banknotes
were issued by official authorities and "notgeld" was more or less forgotten.
Everything seemed to be in good order. The economy flourished. The face
value of the notes and the German haughtiness became higher and higher.
Everything went smooth - at least more or less - until that day in June 1914, the 28th exactly, when in far away Serbia the heir to the Austrian Throne Franz Ferdinand and his Wife were assasinated. A few days later Germany found itself in the beginning of WW I, side by side with Austria. |
| First german Notgeld in the 20th century |
| The entrance of Germany into
the war was the beginning of the story of notgeld in the 20th century which
finally ended after the currency reform in 1948. In between there were
times of hope that everything was over; but also times of shere despair,
e. g. the hyperinlation with uncountable zeros on the notes, the economic
crisis of the thirties and - more than everything else - WWII, in which
nobody seemed to be able to find a way out.
The first notgeld note of the 20th century was presumably issued in Bremen on July, 31st, 1914, even before the beginning of the WW I. There followed an unbelievable number of others in a very short time, so that even today we don´t know the exact number. We think that around the beginning of the war about 460 different issuers have issued more than 2000 different notes. This number does not contain differences in controll numbers, in the text, the stamps and the signatures. This development was started by keeping small denomination coins, buying more food and other things than were needed and some more reason especially in the industrial border areas of Alsace and Silesia which were threatened by the enemy. Here most of the early notes were issued. These notes got a lot of publicity, because for the first time the German population which was sure that Germany would win the war could see that not everything was in good shape. These notgeld issues were against the law which allowed only the German Notenbank to issue paper money. But the urgent need of money led to great concern among the people and this was strictly to be avoided. So these notes were legalized.
After the first notgeld onslaught
soon the second one followed. The war already was longer than exspected
and the prices for rare metalls rose and rose. The metall value of the
1/2 Mark coins became higher than the face value and the pieces vanished
from the market. This gap had to be closed by coins made of nickel, but
their number was never big enough. After a short time even the nickel coins
disappeared, because nickel was important for other things which were much
needed. So coins made of iron and zinc were produced, but the mints could
only meet a small part of the ever growing demand.
|
| New Notgeld at the end of the war |
| People who believed the need
to be met one day and that the economy could run smooth again were disappointed.
Not only did the demand for small denomination money persist and more and
more notgeld was issued, no - the end of the war also came with a demand
for hifher denomination notes, so that from the beginning of October 1918
notes with face values from 1 to 100 marks had to be printed and issued
privately.
The flood of notgeld had become so big that it was very difficult to know all the issues of your neighbourhood, but to know the issues from places far away was simply impossible. |
| Notgeld - something to collect, too ! |
| The vast number of notgeld
notes attracted a lot of collectors. Already the issues of 1914 had become
attractive pieces for collectors and after only a short time all new issues
were collected as well. You could buy notgeld everywhere. Nearly every
tobbaconist offered notgeld beside his tobaccos, cigars and cigarettes.
Collector clubs grew like mushrooms after a war rain. City councils,
companies and organisations which had already issued notes nearly drowned
in letters from collectors who wanted to have some notes. Soon special
fees were charged and - because of an ever growing demand for notes - special
notes for collectors were produced.
From the beginning of 1921 nearly all notes were only produced to get the money of eager collectors. In the beginning one note had been enough. Now they issued four, five six, even up to twenty notes with the same face value. So enough money flooded the empty cash boxes of the issuers. But the contest became bigger and bigger. In the end there were more than 1.400 issuers of these notes which were produced in series which belonged together and therefore were called "serienscheine". Good ideas were necessary to sell your own notes. Therefore some really uncommon values were printed like the 99, 199 and 299 pfennig notes of Wittenburg. Some places issued notes you could divide into smaller notes like the Freiberg notgeld from Saxony that could be divided into 1, 2 and 97 pfennigs.
Very often notes were printed
on uncommon stuff. Gustav Habeck of Stralsund printed his notes on the
back of playing cards, and the city of
Bielefeld had their notes printed on linen,
jute,
velvet
or silk.
|
| Notgeld as art |
| For most of the other emitents
the only way to attract attention was to
produce an unusual design. So a competition began among the artists and many unknown artists got the chance to earn a few marks for a good design in very hard times. But even some of the very wellknown artists took part in the game and produced some really great notes. |
| Stampmoney |
| To use stamps instead of small
denomination money had become so commonplace
in Germany, that there were dozens of different systems to protect the stamp and - in the same effort - advertise a product or a company. From everywhere in Germany we know a few thousend of these stamp moneys and incased stamps.
|
| The Reichsbank prohibited the issue of Notgeld |
| Then the year 1922 came. The
issues of notgeld seemed to be without any limits and the efforts of the
Reichsbank to produce enough coins and notes were successful at last.
So many rumours aroused at after a lot of irritation all kinds of notgeld were prohibited on July, 17th, 1922. |
| Emergency money in prisoner of war camps |
| We have to mention another
issue of ersatz money. Very early after the beginning of WW I the German
army made the first prisoners of war.
The military success in the beginning of the war let the number of prisoneres grow in a tremendous way and everywhere in Germany POW camps were erected to house the captured soldiers. The plain soldiers had to work and - after the rules of the Geneva Convention - were paid for their work. Members of the higher ranks got a part of their salary without having the duty to work. But these salaries were not paid in official money. They got special camp money which was only valid inside the camp. So the authorities tried to make it impossible for a refugee to buy goods outside the camp, which could make his escape easier. Camp money is no notgeld which could be used by the population. But these issues were initiated by the events of the war und of course they are ersatz money and so they are often collected. |
| Inflation is beginning |
| We have already mentioned
the prohibition of all kinds of notgeld of July, 17th, 1922. The people
in Germany were very happy that the times of ersatz money were over, but
the dealers and issuers were not so happy, because they had earned a lot
of money with this kind of money.
Collectors´ opinion was somewhat divided. Some hoped to have enough time now to enlarge and complete their collections, others complained that now nothing new would come to the market. But help for these collectors was near. Faster than they or everybody else could have exspected and mightier than everyone could have imagined the floods of inflation closed in upon Germany. Inflation - the nightmare of all savers, earners ministries of finance, the paradise for debtors, profiteers and black marketeers - what is it? Well, it seems to be quite easy: Money looses it value every day. It starts slowly, like in those autumn days of the year 1922 in Germany. Suddenly you feel the shortage of banknotes of the denominations from 100 to 5000 marks. What for do you need these notes at all? |
| Notgeld again |
| Well, all the things you need for everyday life have become scarce. Germany paid the reparations for the lost war not with banknotes but with machinery and goods. These were missing in the home market and so the prices rose. To be able to pay the prices, workers had to earn more To pay more money to their workers, the factories had to raise the prices of the goods. The coil started to turn. The Reichsdruckerei in Berlin was not able to print enough banknotes to cover the need. But people still knew from the past eight years how to deal with the shortage: You produce your own money, notgeld. |
| No end to see |
| But the events in the last
months of 1922 were not the end of the inflation - on the contrary! For
a short time in spring 1923 it seemed, that the efforts of the gouvernement
and the Reichsbank were successful and the rise of the prices could be
stopped.
But then the French occupied the Rhineland, because the Germans hadn´t delivered a waggon full of telegrah poles. A general strike followed and all efforts were in vain. In july the inflation began to show clearly. All goods became more expensive and official coins and banknotes scarcer and scarcer. The Reichsbank desperately tried to get the situation under control. The banknote printing machines worked day and night to cover the growing need, but without any success.
|
| Exertion of the "Reichsbank" |
| The design of the German banknotes became more simple and less ornamented, nothing was printed any longer on the reverse of the notes, but nothing helped. The reichsbank even dared to employ privat printing houses. In the end up to 135 printing houses all over Germany printed exclusively paper money for the state. But - the inflation was faster! |
| As much Notgeld as never before |
| Never before or later there
has been as much notgeld in Germany as in the five months from July to
November in 1923. Today we know of more than 6.000 issuers which have used
from one to some hundred notes.
Nobody knows the number of notes which differ in design, day of issue and face value that have been in use in Germany. It must have ben more than 100.000. If you add those variants which are interesting for collectors like thickness of paper, differnt watermarks, the size of the signatures, the used stamps, the sizes of control numbers, variations of texts and printing errors you will get a numer somewhere between 500.000 and one million. |
| Nobody knows |
| As I have said before: The
inflation was a nightmare for everbody concerned. What is a special kick
for the collector of today - the vast number of differnt issues and the
endless variants - was a part of a terrible every day life for all people
living in Germany in the second half of that year 1923.
Who could have a survey of all circulating notes? Who really knew, if an issue was ment to be redeemed, or only a product of a printing press at home that laid the foundation for a modest fortune. Even the banks had lost control. To gain a little control the banks told the public form time to time that notes of certain - low - face value were not longer accepted and savings under a certain amount not longer got any interest. But only a few days later the left sums were not even worth the paer, on which they were written or printed. |
| A paradise for collectors, a nightmare for everybody else ! |
| The people in offices, shops
and banks spend a lot of time to order and count the notes and to prepare
them for further use.
This work had to be done very fast, because the next day the money was already worth less. |
| The price of an egg |
| At the end of WW I a housewife
had to pay 25 pfennigs for an egg. She could do this with one small coin
from her purse. Four years later - in the aitumn of 1922 - she already
had to take alot of notes from her purse to pay the price of 180 marks.
In November 1923 when inflation reached its peak she had to bring a big basket full of notes to pay 80 Billion (80.000.000.000) Marks for one egg. If you had been able to eat the zeros in the sum instead of the eggs, it would have been ten eggs as you can count for yourself: 80.000.000.000. In 1918 you would have got 320 Billion eggs for 80 Billion marks, enoug to give every inhabitant of Germany about 10 years a free egg for breakfast. |
| What is one "Billion" (trillion) ? |
| But every horror has an end!
On November, 20th, 1923 the end for this horror came. The face values lost
their zeros, but the people had to pay an enormous price. You got 1 Rentenmark
in exchange for 1 Trillion mark. Do you know how much that is, 1 Trillion?
I always have problems to visualize this number.
If you write it, it looks like -that: 1.000.000.000.000, a 1 with twelve zeros. 1 Trillion milimeters are not less than 1 million kilometers that is 25 times around our globe. Even in time dimensions one Trillion is a unbelieveable number. A day has 86.400 seconds. So 1 Trillion seconds are 11.574.074 days or about 31.710 years. The exchange rate for an American dollar even looks more impressive. One dollar was 4,20 Rentenmark, that is 4 Trillion 200 Billion mark. You like to see that as a number? Well, here you are: 4.200.000.000.000! |
| Notgeld of fixed value |
| When in the autumn of the
year 1923 the growing of the numbers of the face value could not really
be expected, but may be suspected, people in many places tried to avoid
the floating zeros. Notgeld not any longer was issued in marks but in dollars
or in gold mark. Standard was the exchange rate of pre-war times which
was also used after the inflation: 4,20 Goldmark for one dollar.
So we had the strange situation in Germany that we used money that had the denomination of a foreign country. (Today you have the same situation in former Yugoslawia, where the German marks is the official currency.) |
| Unusual denomination on Notgeld notes |
| Of course all these notes
had to be backed by certain values, because we are in Germany and here
everything has to be allright. But the backing proved to be a difficult
thing. Gold was not any longer available and so ohter goods had to back
the notes. Very often it was corn, but you can also find wood, gas, waterpower
and electricity. Well, you could even find margarine and bricks as denomination
on the notes.
Many of these so called "notes
of fixed value" were used long after the end
|
| After the inflation |
| After the change to the rentenmark the German economy and the German currency got back their strength an kept it, even when there were some very dangerous obstacles to circumnavigate like the economic crisis in the beginning of the thirties. |
| The second world war and the results |
| Some years later, after presenting himself as saviour from all problems to the Germans, this man from Austria had a very strange idea which he very fast brought to live. The world was facing WW II. The results of that war caused terrible pain all over the world, but especially in Germany. Some people even today fell the pain. |
| Again and again: Notgeld |
| The German economy was hit considerablx during WW II, and so it happened that - beside ersatz money for soldiers, POWs, refugees and incarcerated people - in the last days of the war in 1945 and after the war around the time of the changing of the currency from Reichsmark to German marks again notgeld had to be issued, to deal with the need of small denomination money. |
| You are finished |
| Well, dear reader, you are through. We hope, you found the text not to dry and uninteresting. If you want to know more about notgeld, please, have a look at the other pages of this homepage or contact us directly. |
| Oliver Sens E-MAIL:
lisa and oliver
fon +49 - 3904 - 40129 fax + 49 - 3904 - 40782 Kai Lindman kkk - Verlag
Postfach 22 D - 38522 Sassenburg
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