Money, Banks, and Tradition in East Germany until 1961

• In Event: Social Histories of Money in Socialism: The GDR, Hungary, and the USSR

Abstract

Although the East German Mark was never as strong as its Western counterpart, its unofficial exchange rate remained quite stable until the mid-1970s. Until then, the socialist regime was reasonably successful in remonetising the barter economy post WWII, making its currency “sovereign” by ending rationing in 1958 and coping with excess liquidity. Its vision of how the East German Mark should be handled by its citizens was rather traditional, i.e. to be deposited in bank accounts and to be spent thriftily. These expectations corresponded with a pragmatic approach to monetary policy and notable continuities within regards to the inherited banking system. This paper argues that particularly retaining the savings banks was pivotal, not only as bearers of the “German virtue” of frugality but also due to the high levels of trust which this traditional type of municipal bank enjoyed in the population. This trust was arguably most vital during the demonetisation of 13 October 1957 in which all banknotes in circulation were exchanged on a single day. However, incorporating sources of the under-researched (savings) banks also reveals surprising concessions of the regime to the population such as the existence of number accounts which allowed saving money anonymously. This case study thus analyses ways in which a socialist regime modified rather than revolutionised the inherited monetary and banking system and how pre-existing organisations and norms persisted and evolved as parts of negotiation processes between the regime and the population.

Author

• Gunnar Kristian Take, U of Stuttgart (Germany)