Purchasing power comparisons of historical monetary amounts
In order to determine what a historical amount of money would be worth today, its purchasing power has to be calculated. This provides information on the present-day value of goods and services that could be obtained for a certain sum of money in former times. While it is the current value in euro that is of interest, historical amounts of money are often stated in other currencies that used to be in circulation in Germany. Depending on the currency, different methods of calculation have to be used and various issues taken into consideration.
Before the introduction of the Mark (M) on 1 January 1876, the Prussian thaler and the south German florin (also commonly referred to as the south German gulden) played a prominent role. The Reichsmark (RM) was introduced on 11 October 1924 and was replaced by the Deutsche Mark (DM) on 21 June 1948. On 1 January 1999, the euro (€) was introduced as book money, with euro banknotes and coins coming into circulation on 1 January 2002.
From the thaler and florin to the euro
During the time of the German Confederation (established in 1815), practically all of its almost 40 member states, with the exception of Bremen, had a silver currency. The Dresden Coinage Convention of 1838 and the Vienna Monetary Treaty of 1857, in particular, were instrumental in establishing the Prussian thaler (with a fine silver content of 16.7 g) and the south German florin (with a fine silver content of 9.5 g) in Germany.
The Coinage Act of 9 July 1873 set the exchange rate of the Prussian thaler against the Mark at 1 thaler = 3 Mark and the exchange rate for the south German florin at 1 florin = 12/7 Mark. In 1924, the Mark was replaced as the official currency by the Reichsmark. The currency laws of 30 August 1924 set the exchange rate of the Reichsmark against the Mark at 1 Reichsmark = 1 trillion Mark.
The Goldmark is a special case insofar as it was neither a legal unit of currency nor legal tender, but a short name for the monetary value (price) of a given amount of fine gold payable in monetary tokens of the relevant official currency, ie the Mark from 1876 to 1924, and the Reichsmark from 1924 to 1948. Generally speaking, a Goldmark corresponded to the price of 1/2790 kilogram of fine gold.
Up to the outbreak of the First World War, the legal gold parity at the time meant that one Goldmark was equivalent in value to one Mark. When the Reichsbank suspended the exchange of banknotes for gold on 31 July 1914, the value of the Goldmark in paper Mark increased with rising inflation according to developments in the US dollar exchange rate. On 20 November 1923, the Mark’s exchange rate against the Goldmark and the US dollar, which was likewise on a gold standard, was stabilised. Subsequently, and until the introduction of the Reichsmark on 11 October 1924, the Goldmark had a consistent value of 1 trillion Mark. From the introduction of the Reichsmark up to the 1948 currency reform, one Goldmark was generally equivalent to one Reichsmark.
With the introduction of the Deutsche Mark on 21 June 1948, a conversion rate of 1 Reichsmark = 1 Deutsche Mark applied to everyday payments such as wages and salaries, pension payments from social security funds, other pensions and rental payments (further information on the 1948 currency reform can be found in the "Further information" below).
On 1 January 1999, the euro was launched as book money at an exchange rate of €1 = DM1.95583. Three years later, on 1 January 2002, the first euro banknotes and coins came into circulation.
Specific purchasing power equivalents
Specific purchasing power equivalents are calculated by comparing the historical price of a given product and the current price of the same product or a product that is at least comparable.
Some goods prices from the 1880s are cited in the reference work “Hessen im Wandel der letzten hundert Jahre 1860-1960”, which was published in 1960 by the Statistical Office in Hesse (Statistisches Landesamt Hessen) (see the list of references below). Such prices can be used to ascertain purchasing power relationships; to determine the ranges within which these relationships lie, the 1882 prices quoted in the literature were compared with the corresponding prices for 2018.
Price 1882 in Mark
Price 2018 in euro
equivalent of one Mark in euro1
|1 kg rye bread|
|1 kg wheat flour|
|1 kg potatoes|
|1 l full cream milk|
1 kg butter
|1 The purchasing power of one Mark in 1882 would thus be equivalent to the purchasing power of €... in 2018. This results from the quotients of the prices in 2018 and 1882.|
The calculated values yield quite a wide range for the value of the euro against the Mark. Taking the price of potatoes as a basis for the calculation, for example, one Mark in 1882 would have a purchasing power equivalent to €18 in 2018, while the price of wheat flour produces an equivalent value of only €2.
It should be pointed out that food price comparisons are quite specific in nature. Looking for a more general measure of comparison, amounts of money are often converted into working hours or earnings and compared over time. The German Federal Statistical Office (Statistisches Bundesamt) provides information on historical wage earnings on its website (see „Statistisches Bundesamt – Durchschnittliche Bruttomonatsverdienste“ under „External links“ on the right-hand side).
Naturally, it cannot be ruled out that using other yardsticks would again produce significantly different results.
General developments in purchasing power
The consumer price index calculated by the Federal Statistical Office is commonly used to study general developments in the purchasing power of money rather than changes in the purchasing power of specific goods or services. This index measures the average price movements of all goods and services which are bought by households for consumption purposes – what is known as a “basket of goods”. It is very difficult to compare general purchasing power over extended periods of time, however, since the basket of goods usually becomes less and less representative and patterns of consumption change over time. This is because a basket of goods used to calculate the consumer price index today generally has less and less in common with the consumption habits of earlier years as the time interval between the reference periods lengthens. Consumption patterns in the 19th century were significantly different from those in the present day, for example, if only for the reason that many of the goods and services that are common today were not available then, or not in a comparable form or quality, or they played no significant role. The problems that this entails are discussed in more detail in an expert report which the Bundesbank prepared for the Federal Finance Court (Bundesfinanzhof) in 1965 (see the list of references; reproduced in the March 1968 Monthly Report).
Stable value clauses in contracts, too, are often based on the consumer price index. The Federal Statistical Office provides more detailed information on its website (see „Statistisches Bundesamt – Umrechnung von Wertsicherungsklauseln“ under „External links“ on the right-hand side).
Nevertheless, to gain some idea of purchasing power parities, albeit only as a rough guide, calculations can be performed based on the consumer price index as shown in the PDF document on the right (“Purchasing power equivalents of historical monetary amounts in German currencies”). The sample calculations directly below this document explain how they are performed.
The problems inherent in such purchasing power comparisons can be seen from the fact that quite varied results can be produced when using different price indices. If the price index for newly constructed housing (likewise calculated by the Federal Statistical Office) is used as a basis instead of the consumer price index – which may be appropriate in some cases – this can sometimes lead to vastly different results. For example, according to the consumer price index, one Deutsche Mark in 1955 would have had the equivalent purchasing power of €2.48 in 2018. Based on the price index for newly constructed housing, on the other hand, its purchasing power would be €4.94. The Federal Statistical Office provides data relating to the latter price index on its website (see „Statistisches Bundesamt – Preisindizes für die Bauwirtschaft (Wiederherstellungswerte für 1913/1914 erstellte Wohngebäude“ under „External links“ on the right-hand side).
The calculation is even less informative for the period after the First World War, during the phase of hyperinflation up to 1924, and during the global economic crisis from the end of the 1920s, in particular, because during these times, the economic situation in Germany and thus consumption habits varied greatly from the conditions in “normal” years. Purchasing power comparisons using data relating to periods of exceptional economic conditions such as these are particularly uninformative. Similarly, the price index for the years during the Second World War and the post-war years up until the currency reform in 1948 only takes prices into account that were, to a large extent, regulated by the state. Furthermore, the range of goods on offer at these official prices was very limited. As a result, especially after the war, prices on the black market differed greatly from the official prices. Therefore, the results obtained from purchasing power calculations for this period also have to be viewed in context or even taken to have no informative value at all. This is because, generally speaking, developments in the value of money can only be reliably derived from prices in a setting of free price formation, ie if everyone willing to pay the price can also freely purchase the desired good.
The historical economic importance of a given amount of money could most probably be assessed by setting these amounts against macroeconomic variables, various goods prices or other indications of value (such as wages, food prices or prices for buying land and buildings) from the period in question. The literature listed below provides some points of reference.
Purchasing power equivalents of historical amounts in German currencies
The table on the right-hand side of this page lists purchasing power equivalents for historical amounts in major German currencies since 1810 on an average for 2018. For example, it shows that one florin in 1839 had roughly the same purchasing power as €19.40 in 2018. The calculations are provided without any guarantee on our part.
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- Deutsche Bundesbank (1968), The Extent of Depreciation of Money since 1950, and the Prospective Trend of the Value of Money, Monthly Report, March 1968, pp 3-19.
Wolfram Fischer, Jochen Krengel and Jutta Wietog (1982), Sozialgeschichtliches Arbeitsbuch I, Materialien zur Statistik des Deutschen Bundes 1815-1870, C. H. Beck Verlag, Munich, pp 147-167.
Gerd Hohorst, Jürgen Kocka and Gerhard A. Ritter (1978), Sozialgeschichtliches Arbeitsbuch II, Materialien zur Statistik des Kaiserreichs 1870-1914, C. H. Beck Verlag, Munich, pp 92-117.
Dietmar Petzina, Werner Abelshauser and Anselm Faust (1978), Sozialgeschichtliches Arbeitsbuch III, Materialien zur Statistik des Deutschen Reiches 1914-1945, C. H. Beck Verlag, Munich, pp 90-106.
Bernd Sprenger (2002), Das Geld der Deutschen: Geldgeschichte Deutschlands von den Anfängen bis zur Gegenwart, Schöningh, Munich.
Statistisches Landesamt Hessen (1960), Hessen im Wandel der letzten hundert Jahre 1860-1960, Wiesbaden.