1871 - 1879
Birth of the German mark
The introduction of a new currency often coincides with a period of political reform. In the case of Germany, the new currency put the finishing touch to the formal unification of the German states. The economic community had been calling for monetary unification for some time, in order to take advantage of the industrial upturn triggered by the creation of the Zollverein in 1834. Monetary fragmentation (at the time there were 7 monetary domains and 33 issuing banks) was hampering trade and preventing the introduction of a strong currency pegged to the British pound and to gold, the main pillars of the international monetary system at the time. There are three key dates in German monetary unification: in 1871, Chancellor Bismarck created the gold mark, which was largely funded by the war reparations paid by France in gold francs; in 1873, a law was passed making the gold mark the official currency of the Reich; and in 1875, the Reichsbank, or central bank of the German Empire, was created in the final step towards monetary unification. The bank was responsible for minting gold coins, issuing banknotes and managing the exchange and discount rates.