This week in history: the rentenmark miracle

On 15 November 1923, Germany introduced the dollar-backed Rentenmark, which helped bring the era of hyperinflation to a close.

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13-11-14-rentenmark

Troubled Germany introduced a gold standard

Germany funded itself in World War I by printing money, drastically devaluing its currency. Post-war, it also turned to the presses to cover reparations.

But as these were payable in a foreign currency and gold, printing had to keep pace with the falling value of the German mark. As a result, prices soared 15-fold between June and November 1922 alone.

Things got worse after Belgium invaded the Ruhr, Germany's industrial region, to take reparations in goods. Strikes caused a collapse in output, and attempts to pay workers' wages with more printed money turned inflation into hyperinflation.

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By November 1923, prices were nearly a trillion times pre-war levels. Amid growing anarchy, culminating in the Beer Hall Putsch, which saw the arrest of Adolf Hitler, Berlin created the rentenmark (RM). It was worth one billion old marks and linked to the US dollar. It was also backed by gold via the Deutsche Rentenbank, which held land and goods.

Prices stabilised, and those speculating on further depreciation made huge losses. Both currencies were superseded by the reichsmark in April 1924, though rentenmarks remained legal tender until the Deutschmark was launched in 1948.

Historian Constantino Bresciani-Turroni has described the end of hyperinflation as the "miracle of the rentenmark". But the end of the Ruhr strikes in 1923 and the Dawes Plan in 1924, which cut the level of reparations, also helped.

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