Strange currencies: Money in the GDR

This week, I’m going to examine a couple of aspects of money in East Germany including the official and unofficial exchange of the East German mark for the hard Western currencies which the GDR regime coveted, consumer choice, the country’s Intershop store network and then wrap up with a few notes on the currency itself.

Exchange Rates

As a soft currency, East German marks were not widely available on world markets the way Deutschmarks, Pounds or Dollars were. The official, largely symbolic, rate of exchange for the Deutsch Mark and East Mark was 1:1, however, one could find illegal currency traders in the West offering rates of between 1:8 and 1:12. I have memories of seeing such rates posted in West Berlin exchange booths in the mid- to late-1980s and remember wondering who would make use of such services as the import of East Marks into the GDR from the West was illegal and subject to criminal prosecution. Over time, I found out . . .

Thanks to the Four Power Agreement governing the city of Berlin, the troops of the occupying armies (Soviet Union, France, Great Britain and the USA) had the right to free, uncontrolled access to one another’s sectors. This access was used for reconnaissance purposes and from time-to-time one did see a Soviet jeep with a team of Red Army soldiers on the streets of West Berlin, however, this unfettered access had another, inadvertent, effect. Knowing that they could not be searched at the border crossings, Allied soldiers stationed in Berlin would exchange their Western currencies for East Marks at the highly advantageous rates and then take this money into the East to shop. On my first visit to East Berlin, I went to the Centrum Department Store, East Germany’s equivalent of Sak’s Fifth Avenue, and was baffled to see an black American GI in full uniform using a dolly to transport a massive East German colour TV across Alexanderplatz to a waiting Jeep, a scene which was both wholly inexplicable to me at the time and one which attracted considerable attention from the local population.

For regular Western citizens visiting the East, in particular the GDR capital of East Berlin, day trips were permitted but at the cost of a mandatory exchange of 25 Deutschmarks for 25 East Marks. This was not exactly pocket change at the time and certainly a considerable amount of money by GDR standards. This exchange meant that many Western visitors were often left pondering how best to spend all of their East German currency before they were forced to leave the country by midnight (Overnight visits by visa only!). On my visits to East Berlin, I remember trolling through a book shop in the shopping passage near the City Hall, where besides some guides to dog breeding and other equally obscure topics, the only books on offer were reasonably-priced, leather-bound copies of Lenin’s Complete Works. In 1985, I bought a GDR flag from Centrum, but typically people spent their East Marks on things like records, museum visits and the like, but food was another popular purchase.  I recall a friend buying a massive and tasteless cream torte and on that same visit with my high school group in 1985, a bunch of us descended on the “Broiler Bude” (a kiosk selling rotisserie chicken) at the foot of the TV Tower. I remember there being quite the crowd and that a number of the men were in uniform. This was vaguely disconcerting but, emboldened by being together, we decided to call further attention to our already conspicuous selves by ordering whole chickens and not the pieces that all the locals were buying. This caused some consternation and our orders were only filled once everyone else had been served. Once we had our chickens, we then had to find a place to eat them as all the tables were occupied. I seem to recall sharing a table with a young guy, couldn’t have been much more than 18 or 19, in what I think must have been his National People’s Army uniform. Such soldiers were forbidden any contact with Westerners, so there was no conversation as we devoured our dinners. My brother visited East Berlin several years after that and his solution to this dilemma was much more creative: he and some of his friends had their hair cut in “Rock Hudson” style at a salon – much to the amusement of the hairdressers. Sadly a wonderful picture of this scene has been lost but it featured several young men, newly coiffed in a completely outdated style, with a gaggle of bemused East German hairdressers smirking in the wings.

Hair: Rock Hudson style

Hair: Rock Hudson style

Author’s note (Feb. 21, 2013): After publishing this several weeks ago, my brother Mark was able to track down several of the photos taken at the East Berlin beauty salon mentioned above (Thanks Craig!) . As you can see below, the reality of these images and my memory of them are at odds with each other. That I recalled East German hairdressers as pushing a completely outdated notion of style shows the extent to which my attitudes have been coloured by prevailing notions of the GDR as hopelessly out-of-date, backwards, etc. As the photos below show, however, the stylists of Capital of the German Democratic Republic were completely up-to-date on the sort of “hair-dos” considered fashion forward back in the 80s. (For those fans of GDR pop music, the female model in the first photo makes me wonder if GDR pop icon Tamara Danz of Silly got her lid done at this place!)

Cultural and Currency Exchange on the Transit Highway: An Episode in 1989

An incident at the end of my two-month stay in West Berlin in early 1989 provided me with some further insight into currency and cultural exchange practices in the Germany of the time. Young and poor, my friend and I decided to take a “ride share” back to West Germany proper and so we set up a ride with two young Turkish “guest workers”.  We dutifully met with them early one grey February morning to discover that they spoke little German and less English. Despite this, they quickly determined that my friend was Brazilian and his country’s soccer prowess earned him the “thumbs-up” from our new friends. I soon learned that Canada’s soccer reputation had registered with our “hosts” as the disclosure of my nationality received a sympathetic head shake and the remark “No goals! No goals!”, a reference to the Canucks’ low-octane performance at the 1986 World Cup.

Private vehicle access from West Berlin to the Federal Republic was provided for by a highway paid for by the West. In addition to Western cars and trucks, however, the highway was also used by East German drivers, and the two groups also shared the rest stops which dotted the route. These were segregated with separate filling stations, cafeterias and rest rooms for GDR citizens and Westerners. (Often there was an Intershop available as well).

Passport stamp marking my exit from West Berlin onto the GDR transit highway via the Drewitz border crossing in February 1989.

Passport stamp marking my exit from West Berlin onto the GDR transit highway via the Drewitz border crossing in February 1989.

After passing through a set of tense border controls on the edge of West Berlin, we travelled on the Transit Highway for a while and the exotic sight of Trabants, Wartburgs and the occasional Lada providing some entertainment for a time. After an hour or so, however, our driver announced that we were going to take a break. The strange atmosphere of the highway was one which begged to be left behind at the earliest possible opportunity and there had been no mention of rest breaks in our discussions with our “hosts” before departure so the news that we were stopping was a bit disconcerting. Using our limited German, we tried to determine what the plan was, but our driver brushed us off. There was, he stated as he pulled into the rest stop, “Kein Problem” (“No problem”), Whatever reassurance this might have given us was short-lived as he quickly parked the car, leapt out of the vehicle, and made a bee-line for the first East Germans he saw.

Now, I was very green in these matters, but I did know that such contacts were forbidden and that the rest stops were closely observed by East German authorities. What the hell was going on!? In my broken German, I asked his companion in the driver seat and he was happy to explain: “Geldwechsel” (“Exchange money”). This was not what I wanted to hear and only complicated my confusion as I watched our driver and a middle-aged East German man disappear behind the filling station. Such transactions were not just frowned upon; they were illegal. But beyond possible legal ramifications of this behaviour, I was thoroughly confused:

“But why,” I asked the man in the passenger’s seat, “does he want East money? What can you buy with that.”

Our new friend turned to us and smiled. Raising an eyebrow, he answered: “Frauen” (“Women”).

I still remember how my stomach dropped at the very idea. What a wonderfully naive young man I was!

Postscript: after the opening of the Wall, I recall reading about how many Turkish guest workers had mistresses/girlfriends on the eastern side of the city. When the Wall fell, many of these came in search of their lovers in the West and were presented with the rude reality that these men had families here as well.

Domestic Supply and Demand Issues

On the surface, money played the same role in the GDR as it does in other economies, that is as a means of facilitating the exchange of goods and services. In reality though, East German currency was less important in the day-to-day lives of residents than was the case in capitalist economies. There were a couple of reasons for this. First, the state’s policy of providing large subsidies for most necessities (food staples, rents, transportation) meant that East Germans had to spend a significantly smaller portion of their income on these items and thus had more disposable income on hand. This reality was compensated for, however, by the high price and poor supply of more desirable consumer goods which left many GDR citizens with few options for spending their earnings and encouraged them to save for “big ticket items”. (Such purchases required considerable planning and discipline as the average East German took home approx. 800 East Marks net each month while “luxury goods” were priced disproportionally high. For example, a washing machine cost 3,000 M, a Sony Walkman went for 1,000 M while a colour TV could be had for 4,500-6,000 M. The cheapest car, the notorious Trabant, went for approx. 9,000 M but this was mitigated by the fact that one had to wait approx. 12-13 years to take delivery for one leaving plenty of time to save up!)

As I’ve alluded to in earlier posts, the supply of consumer goods was an ongoing problem in the country (see my brief history of “Consumer Goods” in the GDR here and my post on shopping bags for more details) and one which citizens and the ruling Socialist Unity Party (SED) tried to respond to in a variety of ways. For most citizens, the poor supply of goods meant that these had elevated value and were hoarded whenever possible to facilitate bartering opportunities. Amongst the Party’s responses to complaints about supply and quality of goods was the establishment of a network of Exquisit and Delikat stores which sold higher quality, East German-produced clothing, shoes, cosmetics and foodstuffs that were otherwise unavailable. As the items on offer here were considered to be luxury goods, they did not qualify for state price subsidies and were therefore relatively expensive by GDR standards. A result of this is that these stores would have served East Germany’s elites who could afford such items, but they did not do much to quell more general dissatisfaction with the availability and quality of mass consumption goods.

Presence of Western Currency in the GDR – Intershops

Abandoned Intershop near East Berlin's Heinrich-Heine Strasse border crossing - its bunker-like design was typical of many and reflected the high value of the goods within (author's photo, 1999)

Abandoned Intershop near East Berlin’s Heinrich-Heine Strasse border crossing – its bunker-like design was typical of many and reflected the high value of the goods within (author’s photo, 1999)

From the outset, the GDR regime was particularly interested in acquiring as much hard currency as it could. High quality goods produced in GDR were often earmarked for export to hard currency markets, but in the interest of generating as much Western currency as possible, the regime set up a network of so-called Intershops targeting Westerners traversing GDR territory. These shops were typically located in transportation hubs such as train stations, airports, ferry terminals and even on the platform of the subway line servicing West Berlin that ran through East Berlin’s Friedrichstrasse Station. These offered Western goods at prices well below what one would have paid in the West but were viewed with disdain by many Westerners. I recall seeing the kiosks on the Friedrichstrasse station platform in 1989 and being told by some West Berliners that it was “unscrupulous” to shop there as the money flowed directly into the hands of the Communist regime.

As East Germans’ contact with West Germans increased with the stabilization of relations between the two Germanies in the early 1970s, so too did their access to Western Deutschmarks, the possession of which was made legal in 1974. Recognizing another hard currency source, the regime expanded the Intershop network throughout the country, giving East Germans with access to Western currency the possibility to purchase a wide range of Western-produced goods such as electronics, cigarettes, alcohol, cosmetics, coffee and sweets. Despite their relatively high prices, the shops did help mitigate some consumer complaints, however, they were not uncontroversial. Indeed, inside the SED, Party members felt particularly discriminated against by the Intershops. They pointed out that Party statutes prohibiting members’ contact with Westerners denied them access to hard currency and, therefore, the luxuries on offer at the Intershop. Similar arguments were put forward by non-Party members without Western relatives as well and Erich Honecker’s public denunciation of the Intershops in 1979 shows that such sentiments were registered at the highest levels, even if the state’s need for the hard currency trumped a practice which clearly was at odds with the GDR’s avowed egalitarian nature.

GDR Currency

I have in my collection a few bills and coins of GDR currency. Haven’t acquired any of the 100 Mark notes with Karl Marx’ likeness on them, but that’s on the agenda. East German coins were made of aluminum and, in reference to their lack of worth relative to the Deutschmark, often disparagingly called “Aluchips”. You’ll notice that the 20 Pfennig piece is made of brass, however, and this was because it was used in public phones and vending machines which wouldn’t work with the lightweight aluminum pieces.

On the bills, it’s interesting to see which historical figures warranted a place on these as they give a clear indication of the historical antecedents with which it wanted its citizens to associate the Workers and Peasants State. That Karl Marx and Friedrich Engels, authors of the Communist Manifesto, found a spot on the 100 and 50 M notes respectively, comes as little surprise. The 5 Note bill featured the GDR’s preferred Reformation leader, Thomas Müntzer, a 16th c. theologian and rebel leader during the Peasants’ War of 1524. The 10 Note features Clara Zetkin, a storied figure in the Women’s and Labour Movements during late-period Imperial Germany and the years of the Weimar Republic. The 20 Note featuring Johann Wolfgang Goethe demonstrates how the GDR laid claim not only to Germany’s progressive political figures but its classical culture as well.

Banknotes Used in the Soviet Zone of Occupation and GDR

June 2013 – Several weeks ago I was contacted by a reader of this blog to ask if I had any interest in posting images of his collection of banknotes and Forum checks which circulated in the Soviet Zone of Occupation and the GDR between 1949 and 1989. Since my collection is far from complete, I thought that these might be of interest to some and you’ll find picture of these in the gallery below. Thanks, Leo!

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9 comments
  1. Will said:

    Regarding the exchange rate: in the GDR it was typically 5 DDR-Mark for 1 West-Mark. At least that’s what I remember. Some West-Mark change, say 50 Pfennige always “trickled down” to the masses and was than turned into Wrigley’s or candy at the Intershop store.

    • Hi Will,
      Thanks for this; I appreciate your comment. Is the rate you refer to what locals would’ve offered a visitor with Deutschmarks in a private exchange or was this an official rate of some sort?
      jpk

      • Will said:

        This was the exchange rate between GDR citizens; so in that sense it was the “official” rate.

  2. It’s worth reading Zatlin’s rather fun book “The Currency of Socialism: Money and Political Culture in East Germany” if you haven’t already. It gives some really great information on the “aluchip” and its various manifestations!

    • Haven’t read it, but will try and track it down. Thanks for the tip!

  3. Hi,
    Just a quick question.Myself and a friend visited East Berlin in 1986 but I had got some East german marks in Munich prior to going across the border.Of course when there we tried to spend our money, but apart from eating we found this difficult.
    Anyway at virtually midnight, on crossing back at Friedricksstrasse I tried to change the money I had back to West German marks.However, the guards knew the money I had was changed illegally because the notes were not new. I thought I was in trouble! However, my memory is that I was sent to a bank in the station and made leave my money their.

    I have tried to find out if this was a common occurrence, but I cannot find anything about such a bank at Friedricksstrasse, can you help?

    • There was indeed a bank/cambio counter at the Friedrichstrasse station to carry out the many required currency exchanges, but western marks were at a premium in the East and they did all they could to keep those they had. To the best of my knowledge, it wasn’t possible for regular tourists to change their unused GDR marks back into western currency via a GDR bank.
      It was illegal to bring GDR marks into the country from the West; visitors were required to make their exchanges with official GDR authorities at the official rates. Naturally there was a flourishing market in the West for illegal exchanges where you could get much better rates, but one ran the risk of facing penalties in the East if caught. However, my sense is that the enforcement of these laws was extremely arbitrary and that border guards tended to simply force those caught with GDR currency which had been acquired via “unofficial” channels to turn in the funds and send them on their way.

      • Yes, that seems to be pretty much what happened to me, but I did get a receipt and I think I remember being told I could reclaim my money if I returned to the GDR at any point.

        In addition her is another part of the story. We crossed at Friedrickstrasse, but tried to return at about 11.30 pm via Checkpoint Charlie. We were told it was not possible as you could only crossback at the point in which you crossed over. I remember clearly the two or us running up Friedrichstrasse, across Unter den Linden and being worried we wouldn’t be able to leave!!

        Am in Berlin at the moment and the city has changed so much, but it is a really fantastic place. Apart from the DDR museums at the Kulturbrauerei and the one near Alexanderplatz?

      • Interesting about the receipt, that is new to me. In terms of GDR-related things to do in Berlin besides those two museums, I always try and stroll the Karl-Marx-Allee from Alexanderplatz to the Frankfurter Tor. While it is much changed, I find it to be one of the few places in the city where the GDR is conjured up for me. The Gedenkstaette der Sozialisten, the official burial site of socialist “notables”, in Friedrichsfelde also remains largely intact, but it’s not that spectacular. Sadly the Nazis destroyed the original memorial designed by Mies van der Rohe, but the GDR-era replacement is still there to be beheld. More on the cemetery at: https://en.wikipedia.org/wiki/Zentralfriedhof_Friedrichsfelde
        Have a great visit!

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