Page 159 - The Making of the German Post-war Economy

132 THE MAKING OF THE GERMAN POST-WAR ECONOMY

At the beginning of June, for instance, a pound of coffee cost 2,400 RM.
These developments increasingly reminded many of the traumatic
hyperinflation of 1923 in which countless Germans lost both their savings
and the faith in government. Awaited and feared in equal measure, the
upcoming currency reform at first led to a state of disconcertment. In
some regions the churches offered special services and prayers to help
people cope with the volatile climate which permeated Germany; there
were even fears of suicide attempts. The days preceding the currency
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reform, people gathered in the streets and in front of shops, which were
often closed for the most spurious of reasons; business claimed to be out
of stock or on company holidays or to be inventory-checking. The
discussions centred primarily around one question: what to do with the
old currency? Some suggested depositing the old Reichsmark in the bank,
others made investments. Panic and confusion were considerable. Many
carried out last-minute transactions and bought panic-proof tangible
goods. This often took bizarre forms: ‘70-year olds buying baby soothers
[...] and the granny next door purchased seven lipsticks.’
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Finally, on Friday 18 June, the first two laws for the implementation of
the long expected currency reform on Sunday 20 June were promulgated
by the three western Military Governments, the Chairman of the
Executive Committee, Hermann Pünder, and the president of the
Economic Council, Erich Köhler. The ‘First Law for Monetary Reform
(Currency Law)’ established the Deutsche Mark (DM) as the only legal
currency valid from Monday 21 June and allocated every inhabitant in
exchange for old currency of the same nominal amount a maximum of 60
DM of which not more than 40 DM were paid in cash immediately and
the remainder within two months. The old Reichsmark was to be
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surrendered at specific institutions, primarily banks and Sparkassen. The
‘Second Law for Monetary Reform (Issue Law)’ outlined the terms of
reference of the Bank Deutscher Länder, the newly formed central bank for
the three western zones of occupation, and established reserve
requirements for the Landeszentralbanken (Federal State Central Banks).
Thus, after these laws came into effect and people received their Kopfgeld
(bounty) of 40 DM, which corresponded to almost a week’s pay of a
skilled worker, to many in West Germany, the situation on Monday 21
June when public trading resumed and the black market disappeared
seemed surreal and fairytale-like. The shops presented full displays of
goods held back for days and weeks in anticipation (similarly,
manufacturers had built up stocks of semi-finished goods and raw
materials) and the Germans were often literally ‘drunk’ with the
opportunities the new Deutsche Mark gave them. One contemporary
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described: ‘The shop windows were bursting with long-missed products;