Notgeld - AbsoluteAstronomy.com

Notgeld is the name of money issued by an institution not authorized for money emission. This occurs usually when money is not available from the central bank. The most well know emergency money emissions occurred in Germany and Austria-Hungary around the end of the first World War, that's why the German term is used. Issuing institutions could be e.g. town savings bank

Savings bank

A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to...

s, municipalities, private and state-owned firms. It was therefore not legal tender

Legal tender

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

, but rather a mutually-accepted means of payment in a particular locale or site. Notgeld is different from occupation money that is issued by an occupying army during a war.

Notgeld was mainly issued in the form of (paper

Paper

Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....

) banknotes. Sometimes other forms were used, as well: coin

Coin

A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....

s, leather

Leather

Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, primarily cattlehide. It can be produced through different manufacturing processes, ranging from cottage industry to heavy industry.-Forms:...

, silk

Silk

Silk is a natural protein fiber, some forms of which can be woven into textiles. The best-known type of silk is obtained from the cocoons of the larvae of the mulberry silkworm Bombyx mori reared in captivity...

, linen

Linen

Linen is a textile made from the fibers of the flax plant, Linum usitatissimum. Linen is labor-intensive to manufacture, but when it is made into garments, it is valued for its exceptional coolness and freshness in hot weather....

, stamps

Postage stamp

A postage stamp is a small piece of paper that is purchased and displayed on an item of mail as evidence of payment of postage. Typically, stamps are made from special paper, with a national designation and denomination on the face, and a gum adhesive on the reverse side...

, aluminium foil

Aluminium foil

Aluminium foil is aluminium prepared in thin metal leaves, with a thickness less than , thinner gauges down to are also commonly used. In the USA, foils are commonly gauged in mils. Standard household foil is typically thick and heavy duty household foil is typically .The foil is pliable, and...

, coal

Coal

Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

, and porcelain

Porcelain

Porcelain is a ceramic material made by heating raw materials, generally including clay in the form of kaolin, in a kiln to temperatures between and...

; there are also reports of elemental sulfur

Sulfur

Sulfur or sulphur is the chemical element with atomic number 16. In the periodic table it is represented by the symbol S. It is an abundant, multivalent non-metal. Under normal conditions, sulfur atoms form cyclic octatomic molecules with chemical formula S8. Elemental sulfur is a bright yellow...

being used, as well as all sorts of re-used paper and carton material (e.g. playing card

Playing card

A playing card is a piece of specially prepared heavy paper, thin cardboard, plastic-coated paper, cotton-paper blend, or thin plastic, marked with distinguishing motifs and used as one of a set for playing card games...

s). These pieces made from playing cards are extremely rare and are known as "Spielkarten", the German word for "playing card".

Notgeld during the Great War

The first large issue of Notgeld started at the outbreak of World War I

World War I

World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

. Due to inflation

Inflation

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

- caused by the cost of the war - the value of the material that a coin was minted from was higher than the value of its denomination

Denomination (currency)

Denomination is a proper description of a currency amount, usually for coins or banknotes. Denominations may also be used with other means of payment like gift cards. See also Redenomination.-Subunit and super unit:...

. Many institutions started to hoard coins. Additionally, the metals used to mint coins were needed for the production

Mass production

Mass production is the production of large amounts of standardized products, including and especially on assembly lines...

of war supplies. This caused a massive shortage of metal for coinage, which was remedied by issuing banknotes in small denominations.

As these banknotes were very colorful, they soon became a target for collectors. As the issuing bodies realized this demand

Demand

- Economics :*Demand , the desire to own something and the ability to pay for it*Demand curve, a graphic representation of a demand schedule*Demand deposit, the money in checking accounts...

, they continued to issue these notes beyond their economic necessity up till 1922. Quite often the validity period of the note had already expired when the notgeld was issued. The sets that were issued in 1920 and predominantly in 1921 were usually extremely colourful and depicted many things, such as local buildings, local scenes and local folklore/tales. These sets (that were not actually issued to go into circulation) were known as "Serienscheine" (serial paper money).

Notgeld during the German hyperinflation

In 1922 inflation

Inflation

started to get out of control in Germany, leading to the German hyperinflation

Inflation in the Weimar Republic

The hyperinflation in the Weimar Republic was a three year period of hyperinflation in Germany between June 1921 and July 1924.- Analysis :...

. Until 1923, the value of the mark deteriorated faster and faster and new money in higher denominations was issued constantly. The central bank could not cope with the logistics of providing the necessary supply of money, and Notgeld (Papiermark

German papiermark

The name Papiermark is applied to the German currency from the 4th August 1914 when the link between the Mark and gold was abandoned, due to the outbreak of World War I...

) was issued again - this time in denominations of thousands, millions and billions of Marks. Because the Mark became so unstable, Notgeld was also issued in the form of commodities or other currencies: wheat, rye, sugar, coal, wood, natural gas, electricity, gold, or US dollars. These pieces were known as 'Wertbeständige' or notes of 'fixed value'.

There were also notgeld coins that were made of compressed coal dust. These became quite rare, as most of them were eventually burned as fuel.

In Sweden 1715-1719

In Sweden, between 1715-1719, 42 million coins with the nominial value 1 daler

Swedish riksdaler

The riksdaler was the name of a Swedish coin first minted in 1604. Between 1777 and 1873, it was the currency of Sweden. The daler, like the dollar, was named after the German Thaler. The similarly named Reichsthaler, rijksdaalder, and rigsdaler were used in Germany and Austria-Hungary, the...

silver were manufactured, but made in copper, with a much smaller metal value. All silver coins were collected by the government, which replaced them with the copper coins. They were called nödmynt (emergency coins). This was done to finance the Great Northern War

Great Northern War

The Great Northern War was a conflict in which a coalition led by the Tsardom of Russia successfully contested the supremacy of the Swedish Empire in northern Central Europe and Eastern Europe. The initial leaders of the anti-Swedish alliance were Peter I the Great of Russia, Frederick IV of...

. The governemt promised to exchange them into the correct value at a future time, a kind of bond

Government bond

A government bond is a bond issued by a national government denominated in the country's own currency. Bonds are debt investments whereby an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country...

made in metal. Only a small part of this value was ever paid.

External links

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.