Euro kills the Deutschmark

As the Euro replaces the national currencies on 1st January, the national currencies, symbols of national unity, will be replaced. The Deutschmark is perhaps the most powerful example of a currency constituting national unity of all the 12 nations forming Euroland because the history of German Unity is very much a mirror-image of the European Union.

Based on the gold which was stolen from Paris in the Franco-Prussian war, the new Mark was introduced as Germany’s first national currency in 1875, replacing a mixture of currencies such as guilders and talers used in the different States. This was the realisation of a policy which had begun in 1834, when the German Customs Union was formed. In the constitution of this union, it was declared at the time that a single German market was being created, which needed to have a single German currency.

The Mark saw its lowest point in the aftermath of the First World War. The lack of confidence caused by the military defeat and the reparations demanded by the Versailles Treaty bore a heavy price on the German economy, which collapsed. Hyper-inflation, which reached 1,300%, resulted in the now-famous scenes of people carrying a wheelbarrow full of notes to the bakers’ to buy bread.

After coming to power in 1933, Hitler brought financial stability to the country but only for six years, since his constant demands for more land led to the Great Patriotic War (Second World War). After the war, there were a number of currencies used in the German economy, destroyed for the second time in two decades. There was the Allied Military Mark, the Reichsmark and black market currencies which even used cigarette cards.

The Deutschmark quickly took hold as the Germans worked hard to rebuild their country. By the end of the 1950s, the buying power of the Deutschmark, its value strongly protected by the Bundesbank, was a symbol of national pride. Not surprisingly, various countries in Eastern Europe accept DM along with local currencies. The Deutschmark thus assumed an importance superior to that of the Wehrmacht.