Notgeld

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A 50 Pfennig Notgeld banknote from 1922 issued by the town of Kunzendorf, Upper Silesia, Germany (after 1945 Kończyce, Poland)

Notgeld (German for "Emergency Money" or "necessity money")

During the early 20th century special money was issued in several countries, but primarily Germany and Austria, to deal with economic crisis situations. There was a shortage of small change, due to the need for metal to be used for the war effort rather than for coinage. This emergency money was not issued by the central bank (Reichsbank), but by various other institutions, e.g. town savings banks, municipalities, private and state-owned firms. It was therefore not legal tender, but rather a mutually-accepted means of payment in a particular locale or site.

Notgeld was mainly issued in the form of (paper) banknotes. Sometimes other forms were used, as well: coins, leather, silk, linen, stamps, aluminium foil, coal, and porcelain; there are also reports of elemental sulfur being used, as well as all sorts of re-used paper and carton material (e.g. playing cards These pieces made from playing cards are extremely rare and are known as 'spielkarton'.

[edit] Notgeld during the Great War

A 1/2 Million Mark Notgeld coin from 1923 issued by the city of Hamburg, Germany

The first large issue of Notgeld started at the outbreak of World War I. Due to Inflation - 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. Many institutions started to hoard coins. Additionally, the metals used to mint coins were needed for the production 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 realised this demand, 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 very colourful sets (that were not actually issued to go into circulation) were known as 'serienscheine'

[edit] Notgeld during the German hyperinflation

A 500,000,000 Mark Notgeld banknote from 1923 issued by the city of Düsseldorf, Germany

In 1922 inflation started to get out of control. Until 1923 the value of the mark deteriorated faster and faster. 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) 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 'wertbestandige' or notes of 'fixed value'.