Marshall Plan Was 10-1 Conversion After The 1st 60 At 1-1
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I HAVE BEEN DOING LOTS OF RESEARCH AND HAVE COME ACROSS THIS:-
implications of the arguments which were advanced for and against a Currency Reform
during the 1940s.
2. The Currency Reform: Terms and Conditions
The German Currency Reform involved both the substitution of one currency for another, and
the sterilisation of monetary assets. The process began on Friday 18.June 1948 with the
promulgation by the three western Military Governments of the first two laws, to come into
force on Sunday 20.June 1948. Article I of Law No. 61, the “First Law for Monetary Reform
(Currency Law)”, established the Deutsche Mark as the legal currency from Monday 21.June,
with Allied Military Marks of 1 and ½ Mark denominations, and Rentenbank notes of 1
Mark, being recognised until 31.August at one-tenth of their face value – resolving the
problem that no small coin for the new currency yet existed.
6 Where existing laws and
ordinances employed the Reichsmark, Rentenmark or Goldmark as a unit of account this
should in general be henceforth read in DM (Art. II). Monetary obligations arising from
application of these laws and ordinances were therefore to be written on 1:1 from the old to
the new currency. A deadline of midnight on 26.June (ie. the Saturday of the week following
the Reform) was set for all RM obligations (Art. IV). Article V provided for wages and
salaries due later than the end of June, and this concluded Part One of the Law, subtitled
“Conversion of Currency”. Note that it includes two conversion rates, 1:1 under Article II
and 10:1 under Article I.
Part Two of the Law dealt with the allocation of new DM to individuals above and beyond
the conversion of their pending wages and salaries. Here commentary is often rather blurry,
and so it is worth quoting Article VI in its entirety:
Every inhabitant of the specified area shall receive in cash Deutsche Marks, in
exchange for old currency notes as defined in Article IX paragraph 1(i)7 of the
same nominal amount to a maximum of 60 Deutsche Marks (quota per capita),
of which not more than 40 Deutsche Marks shall be paid immediately and the
remainder within two months. Where the person entitled can claim amounts
in Deutsche Marks as a result of the subsequent conversion of old currency as
defined hereinafter (Altgeld), the quota per capita shall be charged against the
amount thus due.
The quota was to be issued to ration card holders, who in turn were required to surrender 60
RM in order to receive 40 DM immediately, and a further 20 DM at a later date. The 60 DM
was an exchange for a nominal equivalent amount of cash denominated in the old currency; it
6
Military Government Gazette No. 25 Law no. 61 pp. 848-9.
7
Reichsmark notes, Rentenbank notes greater than 1 RM, and Allied Military Marks with a value greater than 1
Mark –
Gazette No. 25 Law No. 61 Art. IX p. 850.
was a maximum, so that if you did not have 60 RM in cash
8 you did not get the full 60 DM
allocation. Furthermore, where individuals held accounts which were to be converted from
old to new money, the quota was to be charged against these accounts. As we shall see, this
meant that account holders could end up paying 600 RM for their 60 DM quota, instead of 60
RM, although they would not have become aware of this until the following October.
The old currency became invalid for new transactions from 21.June (Art. VIII), and all RM
credit balances held in specified financial institutions became defined as “old currency” along
with RM notes and Allied Military Marks (Art. IX). All old currency was, as we have
already seen, to be declared and surrendered by 26.June 1948, the obligation to do so being
laid upon juridical and natural persons, the latter taxable subject
9 then acting on behalf of any
dependants (wife and children). Currency was to be surrendered at specific institutions,
primarily banks and buildings societies of various kinds, but not the Postal Cheque Office
and the Postal Savings Institute (Art. XII). Large private and government places of
employment were also authorised for this purpose on behalf of the Land Central Banks. On
receipt of the form declaring monetary assets the identity cards of those included on the form
were punched in a defined manner to obviate future claims (Art. XII.5), and the balances
placed in a Reichsmark Liquidation Account (Art. XIV). Procedures were also outlined to
cover misreporting of various kinds. Part Five, the final substantive section of the First Law,
dealt with the issue of new currency to public authorities and businesses. The Land Central
Bank was made responsible for supplying agencies and offices with a sum of DM one-sixth
of Land receipts during the last quarter of 1947 and the first of 1948, to which was added
one-sixth of Zone receipts during the same period (Art. XV). For the ensuing half a year,
therefore, public authorities received an allocation about one third of former annual receipts,
introducing a further variation on the rate of exchange between DM and RM. Businesses
were entitled to claim 60 DM per employee payable against their balances of old money, a
requirement being that payment so made
8
60 DM was roughly a week’s pay for a working man; a skilled worker in Hamburg at this time would have
earned 10 RM per eight hour day, and a six-day week was the official norm (official statistic cited in
Buchheim, “Die Währungsreform in Westdeutschland”, p. 193). Mendershausen and Matchett in their
estimate of cash and deposit holdings in early 1946 estimated that 66.5% of the population in the US Zone
and Berlin Sector held less than RM 250 in cash, that 28% of the adult population had no bank accounts,
and that another quarter of the population had less than 2000 RM in bank and savings accounts: “Annex H:
Analysis of Size Distribution of Cash and Bank Deposits”, Colm-Dodge-Goldsmith Plan, reprinted in H.
Möller (ed.) Zur Vorgeschichte der deutschen Mark, J. C. B. Mohr (Paul Siebeck), Tübingen 1961, pp.
459, 457. It is reasonable to suppose that during 1947 redistribution from poorer to richer households, and
from urban dwellers to farmers, exacerbated this position. Burchardt and Martin drew attention to this
when they noted that “…it must not be forgotten that in contrast to a country such as Britain all goods, bar
the most essential ones, have become liquid assets and that the process of inflation continues to be fed by
turning household stocks into money or directly into other goods.” – F. A. Burchardt, K. Martin, “Western
Germany and Reconstruction”, Bulletin of the Oxford University Institute of Statistics Vol. 9 (December
1947) p. 409. It is therefore more than probable that many poorer urban households did not receive their
full 60 DM allocation per person.
9
The German text is more precise here; it refers to those natural and juridical persons which are
“steuerpflichtig” rather than “subject to taxation” - Gazette No. 25 Law No. 61 § 11 p. 850.
AI
