The franc commonly distinguished as the French franc, was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money, it was reintroduced in 1795. After two centuries of inflation, it was revalued in 1960, with each new franc being worth 100 old francs; the NF designation was continued for a few years before the currency returned to being the franc. The French franc was a held international reserve currency of reference in the 19th and 20th centuries; the first franc was a gold coin introduced in 1360 to pay the Ransom of King John II of France. This coin secured the king's freedom and showed him on a richly decorated horse earning it the name franc à cheval; the obverse legend, like other French coins, gives the king's title as Francorum Rex and provides another reason to call the coin a franc. Its value was set as one livre tournois. John's son, Charles V, continued this type, it was copied at Brabant and Cambrai and, with the arms on the horse cloth changed, at Flanders.
Conquests led by Joan of Arc allowed Charles VII to return to sound coinage and he revived the franc à cheval. John II, was not able to strike enough francs to pay his ransom and he voluntarily returned to English captivity. John II died as a prisoner in England and his son, Charles V was left to pick up the pieces, and so he did. Charles V pursued a policy of reform, including stable coinage. An edict dated 20 April 1365 established the centerpiece of this policy, a gold coin called the denier d’or aux fleurs de lis which had a standing figure of the king on its obverse, pictured under a canopy, its value in money of account was one livre tournois, just like the franc à cheval, this coin is universally known as a franc à pied. In accordance with the theories of the mathematician and royal advisor Nicolas Oresme, Charles struck fewer coins of better gold than his predecessors. In the accompanying deflation both prices and wages fell, but wages fell faster and debtors had to settle up in better money than they had borrowed.
The Mayor of Paris, Étienne Marcel, exploited their discontent to lead a revolt which forced Charles V out of the city. The franc fared better, it became associated with money stable at one livre tournoisHenry III exploited the association of the franc as sound money worth one livre tournois when he sought to stabilize French currency in 1577. By this time, inflows of gold and silver from Spanish America had caused inflation throughout the world economy and the kings of France, who weren't getting much of this wealth, only made things worse by manipulating the values assigned to their coins; the States General which met at Blois in 1577 added to the public pressure to stop currency manipulation. Henry III agreed to do this and he revived the franc, now as a silver coin valued at one livre tournois; this coin and its fractions circulated until 1641 when Louis XIII of France replaced it with the silver écu. The name "franc" continued in accounting as a synonym for the livre tournois; the decimal "franc" was established as the national currency by the French Revolutionary Convention in 1795 as a decimal unit of 4.5 g of fine silver.
This was less than the livre of 4.505 g, but the franc was set in 1796 at 1.0125 livres, reflecting in part the past minting of sub-standard coins. Silver coins now had their denomination marked as "5 FRANCS" and it was made obligatory to quote prices in francs; this ended the ancien régime's practice of striking coins with no stated denomination, such as the Louis d'or, periodically issuing royal edicts to manipulate their value in terms of money of account, i.e. the Livre tournois. The franc became the official currency of France in 1799. Coinage with explicit denominations in decimal fractions of the franc began in 1795. Decimalization of the franc was mandated by an act of 7 April 1795, which dealt with of weights and measures. France led the world in adopting the metric system and it was the second country to convert from a non-decimal to a decimal currency, following Russia's conversion in 1704, the third country to adopt a decimal coinage following the United States in 1787. France's first decimal coinage used allegorical figures symbolizing revolutionary principles, like the coinage designs the United States had adopted in 1793.
The circulation of this metallic currency declined during the Republic: the old gold and silver coins were taken out of circulation and exchanged for printed assignats issued as bonds backed by the value of the confiscated goods of churches, but declared as legal tender currency. The withdrawn gold and silver coins were used to finance wars and to import food, in short supply; as during the "Mississippi Bubble" in 1715–1720, too many assignats were put in circulation, exceeding the value of the "national properties", the coins, due to military requisitioning and hoarding, rarefied to pay foreign suppliers. With national government debt remaining unpaid, a shortage of silver and brass to mint coins, confidence in the new currency declined, leading to hyperinflation, more food riots, severe political instability and termination of the First French Republic and the political fall of the French Convention. Followed the economic failure of the Directoire
National Farmers' Union of England and Wales
The National Farmers' Union is a member organisation/industry association for farmers in England and Wales. It is the largest farmers' organisation in the countries, has over 300 branch offices. On 10 December 1908, a meeting was held in an ante-room at the Smithfield Show to discuss whether a national organisation should be formed to represent the interests of farmers; the outcome was the National Farmers' Union. The first President, Colin Campbell, worked tirelessly to get new branches off the ground, encourage membership and establish the NFU’s credibility with Government, at a time when farming was going through the longest and deepest depression in its history, as imports of cheap grain and frozen meat flooded in from abroad. At the 1918 general election, the union ran none of whom were elected. In 1922, it sponsored three unsuccessful candidates under its own name, four successful Conservative Party candidates, it again has not done so since. The organisation celebrated its Centenary in 2008.
The NFU is registered as an association of employers under the 1974 Trade Union and Labour Relations Act. In 2000 it founded Assured Food Standards. Barnard was sponsored by the National Party. Blundell, Bruford and Shepperson stood for the Conservative Party. All candidates stood for the Conservative Party. Both candidates stood for the Conservative Party. Two candidates were elected for the Conservative Party. There are several tiers of NFU membership: Farmer and Grower: The NFU is the only organisation that champions all farmers and growers in England and Wales. We're here to protect your way of life now and in the future. Our strength is in our numbers. With over 50,000 farmer and grower members, we are heard when it counts – locally and internationally. Countryside: NFU Countryside is a membership that celebrates the British countryside from great food, stunning wildlife and places to visit, to what to do with your garden or veg patch, how to get the most from your equine and canine companions.
NFU Pro: If you are a professional working in agriculture whether in a legal, financial, veterinary or any other capacity, becoming a member of NFU Pro helps you enhance the service you offer your customers. Student: NFU Student is a free membership category for anyone studying a full or part-time agricultural, land-based or related course at university or college. Known as'The Voice of British Farming', the NFU states that it "champions British farming and provides professional representation and services to its Farmer and Grower members."It negotiates with the government and national organisations on behalf of English and Welsh farmers. The NFU's Back British Farming campaign highlights hundreds of reasons why farming deserves public support; the NFU is governed by its Constitution and Rules. Under the Constitution and Rules the NFU shall maintain a number of bodies, which are responsible for the Governance of the NFU; these include NFU Council, Governance Board, Policy Board, National Commodity Boards, Regional Commodity Boards, an Audit and Remuneration Committee and Legal Board and Regional Boards.
The NFU has an office in Brussels, Belgium to represent the interests of British farmers to the European Union. The NFU is associated with the insurance mutual company NFU Mutual, based in Warwickshire. NFU Cymru is based at the Royal Welsh Showground in Builth Wells; the archives of the NFU are deposited with the Rural History Centre at Reading University. North West - Skelmersdale, Lancashire North East - Dringhouses, York West Midlands - Telford, Shropshire East Midlands - Uppingham, Rutland South West - Exeter, Devon South East - Petersfield, Hampshire East Anglia - Newmarket, Suffolk National Farmers' Union of Scotland Ulster Farmers Union British Agriculture Bureau - its base in Brussels Department for Environment and Rural Affairs NFU Mutual NFUonline NFU Cymru NFU Countryside
The European Union is a political and economic union of 28 member states that are located in Europe. It has an area of an estimated population of about 513 million; the EU has developed an internal single market through a standardised system of laws that apply in all member states in those matters, only those matters, where members have agreed to act as one. EU policies aim to ensure the free movement of people, goods and capital within the internal market, enact legislation in justice and home affairs and maintain common policies on trade, agriculture and regional development. For travel within the Schengen Area, passport controls have been abolished. A monetary union was established in 1999 and came into full force in 2002 and is composed of 19 EU member states which use the euro currency; the EU and European citizenship were established when the Maastricht Treaty came into force in 1993. The EU traces its origins to the European Coal and Steel Community and the European Economic Community, established by the 1951 Treaty of Paris and 1957 Treaty of Rome.
The original members of what came to be known as the European Communities were the Inner Six: Belgium, Italy, the Netherlands, West Germany. The Communities and its successors have grown in size by the accession of new member states and in power by the addition of policy areas to its remit; the latest major amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009. While no member state has left the EU or its antecedent organisations, the United Kingdom signified the intention to leave after a membership referendum in June 2016 and is negotiating its withdrawal. Covering 7.3% of the world population, the EU in 2017 generated a nominal gross domestic product of 19.670 trillion US dollars, constituting 24.6% of global nominal GDP. Additionally, all 28 EU countries have a high Human Development Index, according to the United Nations Development Programme. In 2012, the EU was awarded the Nobel Peace Prize. Through the Common Foreign and Security Policy, the EU has developed a role in external relations and defence.
The union maintains permanent diplomatic missions throughout the world and represents itself at the United Nations, the World Trade Organization, the G7 and the G20. Because of its global influence, the European Union has been described as an emerging superpower. During the centuries following the fall of Rome in 476, several European States viewed themselves as translatio imperii of the defunct Roman Empire: the Frankish Empire and the Holy Roman Empire were thereby attempts to resurrect Rome in the West; this political philosophy of a supra-national rule over the continent, similar to the example of the ancient Roman Empire, resulted in the early Middle Ages in the concept of a renovatio imperii, either in the forms of the Reichsidee or the religiously inspired Imperium Christianum. Medieval Christendom and the political power of the Papacy are cited as conducive to European integration and unity. In the oriental parts of the continent, the Russian Tsardom, the Empire, declared Moscow to be Third Rome and inheritor of the Eastern tradition after the fall of Constantinople in 1453.
The gap between Greek East and Latin West had been widened by the political scission of the Roman Empire in the 4th century and the Great Schism of 1054. Pan-European political thought emerged during the 19th century, inspired by the liberal ideas of the French and American Revolutions after the demise of Napoléon's Empire. In the decades following the outcomes of the Congress of Vienna, ideals of European unity flourished across the continent in the writings of Wojciech Jastrzębowski, Giuseppe Mazzini or Theodore de Korwin Szymanowski; the term United States of Europe was used at that time by Victor Hugo during a speech at the International Peace Congress held in Paris in 1849: A day will come when all nations on our continent will form a European brotherhood... A day will come when we shall see... the United States of America and the United States of Europe face to face, reaching out for each other across the seas. During the interwar period, the consciousness that national markets in Europe were interdependent though confrontational, along with the observation of a larger and growing US market on the other side of the ocean, nourished the urge for the economic integration of the continent.
In 1920, advocating the creation of a European economic union, British economist John Maynard Keynes wrote that "a Free Trade Union should be established... to impose no protectionist tariffs whatever against the produce of other members of the Union." During the same decade, Richard von Coudenhove-Kalergi, one of the first to imagine of a modern political union of Europe, founded the Pan-Europa Movement. His ideas influenced his contemporaries, among which Prime Minister of France Aristide Briand. In 1929, the latter gave a speech in favour of a European Union before the assembly of the League of Nations, precursor of the United Nations. In a radio address in March 1943, with war still raging, Britain's leader Sir Winston Churchill spoke warmly of "restoring the true greatness of Europe" once victory had been achieved, mused on the post-war creation of a "Council of Europe" which would bring the European nations together to build peace. After World War II, European integration was seen as an antidote to the extreme nationalism which had devastated the continent.
In a speech delivered on 19
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Western European countries and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was the first example of a negotiated monetary order intended to govern monetary relations among independent states; the chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained its external exchange rates within 1 percent by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments. There was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well. Preparing to rebuild the international economic system while World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference known as the Bretton Woods Conference.
The delegates deliberated during 1–22 July 1944, signed the Bretton Woods agreement on its final day. Setting up a system of rules and procedures to regulate the international monetary system, these accords established the International Monetary Fund and the International Bank for Reconstruction and Development, which today is part of the World Bank Group; the United States, which controlled two thirds of the world's gold, insisted that the Bretton Woods system rest on both gold and the US dollar. Soviet representatives attended the conference but declined to ratify the final agreements, charging that the institutions they had created were "branches of Wall Street"; these organizations became operational in 1945 after a sufficient number of countries had ratified the agreement. On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold bringing the Bretton Woods system to an end and rendering the dollar a fiat currency; this action, referred to as the Nixon shock, created the situation in which the U.
S. dollar became a reserve currency used by many states. At the same time, many fixed currencies became free-floating; the political basis for the Bretton Woods system was in the confluence of two key conditions: the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second. There was a high level of agreement among the powerful nations that failure to coordinate exchange rates during the interwar period had exacerbated political tensions; this facilitated. Furthermore, all the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons; the experience of World War II was fresh in the minds of public officials. The planners at Bretton Woods hoped to avoid a repeat of the Treaty of Versailles after World War I, which had created enough economic and political tension to lead to WWII. After World War I, Britain owed the U. S. substantial sums, which Britain could not repay because it had used the funds to support allies such as France during the War.
S. The solution at Versailles for the French and Americans seemed to entail charging Germany for the debts. If the demands on Germany were unrealistic it was unrealistic for France to pay back Britain, for Britain to pay back the US. Thus, many "assets" on bank balance sheets internationally were unrecoverable loans, which culminated in the 1931 banking crisis. Intransigent insistence by creditor nations for the repayment of Allied war debts and reparations, combined with an inclination to isolationism, led to a breakdown of the international financial system and a worldwide economic depression; the so-called "beggar thy neighbor" policies that emerged as the crisis continued saw some trading nations using currency devaluations in an attempt to increase their competitiveness, though recent research suggests this de facto inflationary policy offset some of the contractionary forces in world price levels. In the 1920s, international flows of speculative financial capital increased, leading to extremes in balance of payments situations in various European countries and the US.
In the 1930s, world markets never broke through the barriers and restrictions on international trade and investment volume – barriers haphazardly constructed, nationally motivated and imposed. The various anarchic and autarkic protectionist and neo-mercantilist national policies – mutually inconsistent – that emerged over the first half of the decade worked inconsistently and self-defeatingly to promote national import substitution, increase national exports, divert foreign investment and trade flows, prevent certain categories of cross-border trade and investment outright. Global central bankers attempted to manage the situation by meeting with each other, but their understanding of the situation as well as difficulties in communicating internationally, hindered their abilities; the lesson was that having responsible, hard-working central bankers was not enough. Britain in the 1930s had an exclusionary trading bloc with nations of the British Empire known as the "Sterling Area". If Britain imported more than it exported to nations such as South Africa, South African recipients of pounds sterling tended to put them into London banks.
This meant that th
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys services; the measure of inflation is the inflation rate, the annualized percentage change in a general price index the consumer price index, over time. The opposite of inflation is deflation. Inflation affects economies in various negative ways; the negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, avoiding the inefficiencies associated with deflation.
Economists believe that the high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth. Today, most economists favor a steady rate of inflation. Low inflation reduces the severity of economic recessions by enabling the labor market to adjust more in a downturn, reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy; the task of keeping the rate of inflation low and stable is given to monetary authorities. These monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, through the setting of banking reserve requirements.
Rapid increases in the quantity of money or in the overall money supply have occurred in many different societies throughout history, changing with different forms of money used. For instance, when gold was used as currency, the government could collect gold coins, melt them down, mix them with other metals such as silver, copper, or lead, reissue them at the same nominal value. By diluting the gold with other metals, the government could issue more coins without increasing the amount of gold used to make them; when the cost of each coin is lowered in this way, the government profits from an increase in seigniorage. This practice would increase the money supply but at the same time the relative value of each coin would be lowered; as the relative value of the coins becomes lower, consumers would need to give more coins in exchange for the same goods and services as before. These goods and services would experience a price increase. Song Dynasty China introduced the practice of printing paper money to create fiat currency.
During the Mongol Yuan Dynasty, the government spent a great deal of money fighting costly wars, reacted by printing more money, leading to inflation. Fearing the inflation that plagued the Yuan dynasty, the Ming Dynasty rejected the use of paper money, reverted to using copper coins. Large infusions of gold or silver into an economy led to inflation. From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary cycle referred to as the "price revolution", with prices on average rising sixfold over 150 years; this was caused by the sudden influx of gold and silver from the New World into Habsburg Spain. The silver spread throughout a cash-starved Europe and caused widespread inflation. Demographic factors contributed to upward pressure on prices, with European population growth after depopulation caused by the Black Death pandemic. By the nineteenth century, economists categorized three separate factors that cause a rise or fall in the price of goods: a change in the value or production costs of the good, a change in the price of money, a fluctuation in the commodity price of the metallic content in the currency, currency depreciation resulting from an increased supply of currency relative to the quantity of redeemable metal backing the currency.
Following the proliferation of private banknote currency printed during the American Civil War, the term "inflation" started to appear as a direct reference to the currency depreciation that occurred as the quantity of redeemable banknotes outstripped the quantity of metal available for their redemption. At that time, the term inflation referred to the devaluation of the currency, not to a rise in the price of goods; this relationship between the over-supply of banknotes and a resulting depreciation in their value was noted by earlier classical economists such as David Hume and David Ricardo, who would go on to examine and debate what effect a currency devaluation has on the price of goods. The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Rapid increases in the money supply have taken place a number of times in countries experiencing political crises, produ
Labour government, 1974–1979
The Labour Party governed the United Kingdom of Great Britain and Northern Ireland from 1974–1979. Harold Wilson and James Callaghan were appointed as Prime Minister of the United Kingdom by Queen Elizabeth II; the end of the Callaghan ministry was marked by the Winter of Discontent, a period of serious industrial discontent. This was followed by the election of Conservative leader Margaret Thatcher in 1979. Historian Kenneth O. Morgan states: The fall of James Callaghan in the summer of 1979 met, according to most commentators across the political spectrum, meant the end of an ancien régime, a system of corporatism, Keynesian spending programmes, subsidised welfare, trade union power; the government consisted of three ministries: the third Wilson ministry, the fourth Wilson ministry, the Callaghan ministry. After the February 1974 general election, no party had a majority of seats; the incumbent Conservative Party won the popular vote. Edward Heath, the Conservative Prime Minister, attempted to negotiate a coalition agreement with the Liberal Party, but resigned as Prime Minister after failing in this regard.
The Labour Party, led by Harold Wilson established a minority government, which took office on 4 March 1974. It was recognised that this had no long-term stability, that another general election was within a few months. Wilson called for another general election for 10 October, which resulted in a narrow victory for the Labour Party with a majority of three seats; the economy was in recession by the time of the first general election, but economic growth was re-established by 1976, although inflation which had run into double digits before Labour came to power was now above 20%. It would remain high for the rest of this ministry falling below 10%. Unemployment was now well in excess of 1,000,000 people, whereas it had been less than 600,000 at the start of the decade; this was the result of the economic decline, as well as advancing engineering techniques which required fewer personnel, along with other factors including the closure of unprofitable factories and coalmines. In March 1976, having just turned sixty years old, Wilson resigned as Prime Minister, ending his leadership of the Labour Party after thirteen years, a total of nearly eight years as Prime Minister.
He was replaced by James Callaghan, who had held senior government positions during both of Wilson's ministries, had served as a Shadow Cabinet member in the early-1960s. In 1976, Britain faced financial crisis; the Labour government was forced to apply to the International Monetary Fund for a loan of nearly $4,000,000,000. IMF negotiators insisted on deep cuts in public expenditure affecting economic and social policy. Within a year of Callaghan taking office, the narrow Labour majority was eliminated due to by-election defeats, prompting a vote of confidence which prevented the government's collapse and a general election from being called. In order to sustain the government, Labour formed the Lib-Lab pact in March 1977 and this remained in force for sixteen months; this minority government managed to stay in power with unofficial deals with the Ulster Unionist Party and Scottish National Party. By September 1978, economic growth was re-established and inflation was below 10%, although unemployment now stood at a post-war high of 1,500,000.
With most of the opinion polls showing a clear Labour lead, it was expected that Prime Minister James Callaghan would call a general election that autumn, despite having another year to do so, in order to gain a majority and give his government the chance of surviving in office until 1983. However, he resisted these calls and Britain began 1979 with Labour still in power and Callaghan still in charge, but his failure to call a general election during the autumn of 1978 would prove to be the end of this Labour government. Although the 1974–79 Labour Government faced a number of economic difficulties, it was able to carry out a broad range of reforms during its time in office. During Harold Wilson's final premiership from 1974–1976, a number of changes were carried out such as the introduction of new social security benefits and improvements in the rights of tenants. In March 1974, an additional £2,000,000,000 was announced for benefits, food subsidies, housing subsidies, including a record 25% increase in the state pension.
Council house rents were frozen. Council house building continued on a substantial scale, although there was now a greater emphasis on modernising older properties rather than replacing them with new ones; that year, national insurance benefits were increased by 13%, which brought pensions as a proportion of average earnings "up to a value equivalent to the previous high, reached in 1965 as a result of Labour legislation." In order to maintain the real value of these benefits in the long term, the government introduced legislation which linked future increases in pensions to higher incomes or wages. In 1974-5, social spending was increased in real terms by 9%. In 1974, pensions were increased in real terms by 14%, while in early-1975 increases were made in family allowances. There were significant increases in rate and rent subsidies, together with £500,000,000 worth of food subsidies. An independent Advisory and Arbitration Service was set, which according to Robert Taylor continues to provide "an impartial and impressive function in resolving disputes and encouraging good industrial relations practice."
A Manpower Services Commission was set up to encourage a more active labour market policy to improve job placements and deal with unemployment. The Pay Board was abolished, while the Price Comm
The Deutsche Mark, abbreviated "DM" or "D-Mark", was the official currency of West Germany from 1948 until 1990 and the unified Germany from 1990 until 2002. It was first issued under Allied occupation in 1948 to replace the Reichsmark, served as the Federal Republic of Germany's official currency from its founding the following year until the adoption of the euro. In English it is called the "Deutschmark"; the Germans called it D-Mark when referring to the currency, Mark when talking about individual sums. In 1999, the Deutsche Mark was replaced by the Euro; the Deutsche Mark ceased to be legal tender upon the introduction of the euro — in contrast to the other eurozone nations, where the euro and legacy currency circulated side by side for up to two months. Mark coins and banknotes continued to be accepted as valid forms of payment in Germany until 28 February 2002; the Deutsche Bundesbank has guaranteed that all German marks in cash form may be changed into euros indefinitely, one may do so in person at any branch of the Bundesbank in Germany.
Banknotes and coins can be sent to the Bundesbank by mail. In 2012, it was estimated that as many as 13.2 billion marks were in circulation, with one poll showing a narrow majority of Germans favouring the currency's restoration. On 31 December 1998, the Council of the European Union fixed the irrevocable exchange rate, effective 1 January 1999, for German mark to euros as DM 1.95583 = €1. One Deutsche Mark was divided into 100 Pfennige. A mark had been the currency of Germany since its original unification in 1871. Before that time, the different German states issued a variety of different currencies, though most were linked to the Vereinsthaler, a silver coin containing 16 2⁄3 grams of pure silver. Although the mark was based on gold rather than silver, a fixed exchange rate between the Vereinsthaler and the mark of 3 marks = 1 Vereinsthaler was used for the conversion; the first mark, known as the Goldmark, was introduced in 1873. With the outbreak of World War I, the mark was taken off the gold standard.
The currency thus became known as the Papiermark as high inflation hyperinflation occurred and the currency became made up of paper money. The Papiermark was replaced by the Rentenmark from November 15, 1923, the Reichsmark in 1924. During the first two years of occupation the occupying powers of France, United Kingdom, United States, the Soviet Union were not able to negotiate a possible currency reform in Germany. Due to the strains between the Allies each zone was governed independently as regards monetary matters; the US occupation policy was governed by the directive JCS 1067, which forbade the US military governor "to take any steps to strengthen German financial structure". As a consequence a separate monetary reform in the U. S. zone was not possible. Each of the Allies printed its own occupation currency; the Deutsche Mark was introduced on Sunday, June 20, 1948 by Ludwig Erhard. The old Reichsmark and Rentenmark were exchanged for the new currency at a rate of DM 1 = RM 1 for the essential currency such as wages, payment of rents etc. and DM 1 = RM 10 for the remainder in private non-bank credit balances, with half frozen.
Large amounts were exchanged for RM 10 to 65 Pfennig. In addition, each person received a per capita allowance of DM 60 in two parts, the first being DM 40 and the second DM 20. A few weeks Erhard, acting against orders, issued an edict abolishing many economic controls, implemented by the Nazis, which the Allies had not removed, he did this, as he confessed, on Sunday because the offices of the American and French occupation authorities were closed that day. He was sure; the introduction of the new currency was intended to protect western Germany from a second wave of hyperinflation and to stop the rampant barter and black market trade. Although the new currency was only distributed in the three western occupation zones outside Berlin, the move angered the Soviet authorities, who regarded it as a threat; the Soviets promptly cut off all road and canal links between the three western zones and West Berlin, starting the Berlin Blockade. In response, the U. S. and Britain launched an airlift of food and coal and distributed the new currency in West Berlin as well.
Since the 1930s, prices and wages had been controlled. That meant that people had accumulated large paper assets, that official prices and wages did not reflect reality, as the black market dominated the economy and more than half of all transactions were taking place unofficially; the reform replaced the old money with the new Deutsche Mark at the rate of one new per ten old. This wiped out 90% of government and private debt, as well as private savings. Prices were decontrolled, labor unions agreed to accept a 15% wage increase, despite the 25% rise in prices; the result was the prices of German export products held steady, while profits and earnings from exports soared and were poured back into the economy. The currency reforms were simultaneous with the $1.4 billion in Marshall Plan money coming in from the United States, used for investment. In addition, the Marshall plan forced German companies, as well as those in all of Western Europe, to moder