German Reichsmark exchange rates in 1939

While browsing through various publications about German invasion of Poland in 1939 rate of 1 RM = 2 Zł is popping up all over the place. Same applies to Reichsmark exchange rates used before the war – almost all sources mention only official exchange rate 100 RM = 212 Zł which apparently was used as a base for setting up the rate during German invasion and occupation. All those sources also state authoritatively that the rate set by German invaders was “poor” but none is trying to back this statement up by any facts while comparison of official pre-war rate and the “war” rate suggests that the the “war” one was better than “pre-war” so why it is viewed as “poor”???

This bothered me for some time so I did some digging. My findings are as follows:

Reichsmark in August 1939 was a strictly controlled currency, in practice not convertible for any purposes with very strict foreign exchange controls in place since 1 August 1931, from 29 September 1934 export limit for cash = 10 RM so hefty discount was applied to any reichsmark banknotes tendered abroad.

Złoty in August 1939: currency controlled internally, foreign exchange restrictions in place since 26 April 1936, export limit for cash = 500 Złoty, porous currency controls with limited internal, and almost full external convertibility maintained, so only modest discount for banknotes tendered abroad had been observed.

Warsaw – 100 RM = 212 Złoty (parity rate for official transfers, rarely used in practice).

Warsaw – 100 RM ~ 70 Złoty (free market cash/banknotes rate Feb. 1939).

Warsaw – 100 RM in silver coins only => Buy 83,50-84,00 Sell 85,50-86,00 August 1939 (rate resulting from silver scrap value)

London – 1 Ł = 12 RM (official) and 42-52 RM (free market, banknotes sold)

So in 1939 Reichsmark denominated notes traded at 67% discount to the official rate, while zloty in cash traded almost at parity (+-3%). This means that reichsmark in 1939 was the trash-like currency with no backing, while zloty maintained its internal as well as external value.

Rate fixed after 1 September 1939 on occupied Polish territory:

100 RM = 200 Złoty

100 Złoty = 50 Reichsmark

100 Gulden (Free City of Danzig) = 70 Reichsmark

used for conversion of receivables, debts and cash.

To make long story short: in 1939 Reichsmark was grossly overvalued (2-3 times) and official exchange rates published by Reichsbank were meaningless. Official exchange introduced in Poland by occupiers set at 1 RM = 2 Złote was really poor and benefited holders of Reichsmarks to the detriment of holders of Złoty. In reality the rate was closer to 1 RM = 0,70 Złoty so almost three times less than the rate set by Germans. In practice this amounted to state-sponsored property theft.

PS This text has been published already some time ago, and now it is being published again to preserve it on the Steem blockchain.