Akademik

   The National Mortgage Bank (Rentenbank) originated in the monetary theories of Karl Helfferich* and Rudolf Hilferding,* men who oth-erwise had little use for one another. But it was Hans Luther,* Hilferding's successor at the Finance Ministry, and Hjalmar Schacht,* Currency Commis-sioner and Reichsbank President, who initiated the reform that ended Germany's runaway inflation* and introduced a new currency. Empowered by an Enabling Act,* Luther presented the cabinet with currency legislation on 15 October 1923 that combined Helfferich's ideas with Hilferding's tactics. Basing German assets on industrial and agricultural land rather than gold (of which Germany had precious little), Luther defied the opposition of the Central Association of German Banks and conceived a temporary currency called the Rentenmark. Less legal tender than medium of exchange, the Rentenmark replaced the nearly worthless Reichsmark on 15 November. To augment the transition, the paper Reichsmarks were stabilized on 20 November at 4.2 trillion to the dollar, thus allowing Luther and Schacht to reestablish the exchange rate for a gold mark at its 1913 value—that is, 4.2 marks to the dollar—and yielding an exchange rate between Reichsmark and Rentenmark of one trillion to one.

   While the Rentenmark was in circulation, Germany's landed property was encumbered to the Rentenbank. Luther calculated Germany's landed assets at a value of 3.2 billion gold marks. August Lentze, a member of the DNVP and a former Prussian Finance Minister, was chosen to lead the Rentenbank's admin-istrative council. The Rentenmark performed its needed function because Schacht, Reichsbank President since December 1923, instituted a very restrictive credit policy while Luther redressed the national deficit, the chief cause of the inflation. The harsh rehabilitation of finances was achieved on the income side by a large reduction in the size of the bureaucracy and by three emergency revenue decrees that dramatically increased taxes on a gold basis and imposed large taxes on inflation profits. Once stability was achieved—the point of the Rentenbank and the Rentenmark—Luther returned Germany to a currency based on gold. On 30 August 1924, one day after the Reichstag's* acceptance of the Dawes Plan,* the Rentenmark was replaced by a Reichsmark tied again to the international gold standard.

   The success of the Rentenbank must be viewed with the 1924 London Con-ference* as backdrop; the conference, in which Luther and Schacht took part, produced the Dawes Report. Dawes prompted several American loans to Ger-many while bringing rationality to reparation* payments.

   REFERENCES:Feldman, Great Disorder; James, German Slump and Reichsbank.