The Seeds of Evil: Germany 1919 - 1933.

The Rentenmark

The introduction of the Rentenmark was highly significant, it allowed the currency to stabilise and supported by the Dawes Plan it stood a good chance of not succumbing to inflationary pressures as had previously happened. The new Rentenmark was valued at 1 Rentenmark to One Trillion old marks (no typographical error there). The Rentenmark was exchangeable for bonds in land and industrial plant – in other words they were worth something. Inflation ceased to be a problem, the German people accepted the value of the new currency and businesses accepted it as being of worth.

The stability of the new currency couldn’t be taken for granted however and a range of new fiscal measures were implemented that would keep inflation and the exchange rate at acceptable levels. For example, the government opted to stop offering credit to industry as this had led to widespread speculation and consequently inflation. Borrowing therefore slowed and the circulation of money returned to ‘normal’ levels. Similarly the government altered the policy with regards the printing of money. Previously the government had increased the amount of money being printed as inflation had risen, this had simply led to prices rising even more rapidly. Now the government decided that the amount of money in circulation would be strictly limited to the real worth of economy.

The Treaty of Versailles

Germany 1919 - 1923

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