This is the first post I will write in English, so please excuse my mistakes. I saw videos on YouTube, where some people, including Mike Maloney in his “Hidden Secrets Of Money”, told us that an ounce or two of gold had bought a house in the past. I think Mike Maloney said, he didn’t search for this, but heard it from the Swiss investor Marc Faber. So I wanted to know if this is a real fact or not. History and specially the history of money was ever interesting for me. For few years I have been living in Germany and I have access to the library of my university, so I started looking for old newspapers. And as many other things, the Germans have done a very good job in scanning old newspapers. It was a bit hard work, because of the old German font used in the books and newspapers. Anyway… in the next lines I will not only present to you some commodity prices, but some other interesting facts in the time before the World War I and the Hyperinflation in 1923.
As first I want to show you two of the major currencies in Europe at this time: The Swiss frank and the Goldmark. Switzerland at time was part of the so called Latin Monetary Union. So the value of the Swiss frank was: 1 Frank = 0,290322g Gold = 4,5g Silver. The German Goldmark itself: 1 Mark = 0,358g Gold = 5,55g Silver. At this way you can always determine what was the commodity price in gold and silver. So lets get started!
1913-09-11
| House with garden | 28 000 M = about 322 oz. gold [1] |
1913-09
| Car = 1 600 M | Motorcycle (second hand) = 250 M |
| Bicycle = 25 – 40 M | Pushchair = 15 M |
| Sofa = 25 M | Stove = 20 M |
| Basler Bank: Interest rate 3,5% – 4,5% | House (Between Karlsruhe and Freiburg) = 6 000 M. |
| Rent 3 floor apartment = 400 – 600 M | 250 decare near Basel (covered with forest) = 40 000 M |
| Rent 5 floor apartment = 1000 M | House (5-6 rooms) Freiburg = 25 000 M |
| Rent 10 floor apartment = 1500 M | House + (32,5 decare) near Freiburg = 12 000 M |
1914-06-02 [2]
| 4 Pound white bread | 0,60 M |
| 4 Pound rye bread | 0,81 M |
| 1 Pound veal | 1 M |
| 1 Pound pork | 0,85 |
| 1 Liter Milk | 0,23 M |
| 4 Eggs | 0,50 M |
1914-06-10[3]
| Car 6 P.S. = 450 M | 2,5 storey house (Freiburg) = 18.000 M |
I also find an interesting article, called “Papier statt Gold” or in English “Paper instead of gold”. It describes how the Germans at that time (1913-09) do not very like the Paper-Marks. Of course you can always change your Paper-Marks for Goldmarks because of the Gold standard, but the people prefer the Goldmark instead of Paper-Marks. You can see in the table the percentage of Paper- and Goldmarks in circulation [4]:
|
1908 |
1911 |
1912 |
|
|
Banknotes |
27,76% |
28,37% |
30,08% |
|
Goldmarks |
72,24% |
71,63% |
69,92% |
Then in August 1914 the World War I started. Weimar Germany needed money to finance the war. And at the beginning of august the gold standard was removed. I found another interesting article [5]: Many business owners didn’t want to accept the Papermarks. They were committed to accept the Papermarks or their localities would be closed.
1919 – So the war ended, Germany have lost and should pay a lot of reparations. The economy was bad and there was a lot of unemployment at this time.
1919-12
| Apple/Pear | 0,60 – 2 M |
| Chicken (alive) | 14 – 20 M |
| Hen (alive) | 25 – 30 M |
| Goose | 60 – 75 M |
| Duck | 25 – 30 M |
| Dove ?!? | 5,50 M |
| Ladies shirt | 18 – 27 M |
1919-12-20
| 1 Swiss Frank | 874 M |
1919-12-28
| Hotel Karlsruhe | 185 000 M |
| Hotel Basel + 125 decare | 185 000 M |
| Cafe-Hotel | 70 000 M |
| Small Hotel | 70 000 M |
1919-12 Income Tax in Baden
| 1 000 M | 100 M |
| 10 000 M | 1 450 M |
| 21 000 M | 4 110 M |
| 31 000 M | 7 080 M |
| 50 000 M | 13 000 M |
| 101 000 M | 38 900 M |
| 200 000 M | 100 000 M |
| 301 000 M | 166 300 M |
| 500 000 M | 60 % |
1923-01-01
| 1 $ = 7 267 M | Flour (50kg) = 42 000 – 47 000 | 1 kg (900) Silver = 144 000 M |
1923 Banknotes in circulation
| 1923-02-23 | 3 123 Milliard Mark |
| 1923-03-24 | 4 000 Milliard Mark |
1923-03-04
| 1 $ = 22 600 M | 1 Swiss Frank = 4 275 | 1 kg (900) Silver = 445 000 |
| Kidney bean = 1 600 M | Pea = 1 600 | Rice = 1 700 |
1923-04-05
| 1 $ = 21079 M | 1 Swiss Frank = 3865 M | 1kg (900) Silver = 420 000 M |
1923-10-19
| 300 decare = 120 000 Goldmark | House (5 rooms) = 25 000 Goldmark |
| 1913-09-01 | 247 |
| 1913-09-30 | 248,25 |
| 1914-06-02 | 239,75 |
| 1914-06-09 | 240 |
| 1914-06-29 | 237 |
| 1919-10-28 | 250 |
| 1919-12-01 | 249 |
| 1919-12-18 | 260 |
| 1923-01-03 | 8 350 |
| 1923-01-29 | 20 000 |
| 1923-02-28 | 27 750 |
| 1923-03-28 | 22 800 |
| 1923-04-27 | 28 500 |
| 1923-05-28 | 50 000 |
| 1923-06-29 | 300 000 |
Flour (100kg) – Q1 1923
| 1923-01-22 | 84 000 M |
| 1923-01-29 | 112 000 M |
| 1923-02-05 | 140 000 M |
| 1923-02-12 | 125 000 M |
| 1923-02-19 | 110 000 M |
| 1923-03-04 | 140 000 M |
So at the end, for every commodity there are picks and downs. It depends on: where the house is, in witch country it is, in witch currency and what the people need more (after a war: house or food) and so on.
I hope you will find my post interesting and if so, please share. Thanks and have a good day!
p.s. And a photo of 20 and 50 million Mark from 1923
[1]Freiburger Zeitung 1913-09-11 Zweites Morgenblatt, Page 3.
[2]Freiburger Zeitung 1914-06-02 Zweites Morgenblatt, Page 2.
[3]Freiburger Zeitung 1914-06-10 Zweites Morgenblatt, Page 3.
[4]Freiburger Zeitung 1913-09-21.
[5]Freiburger Zeitung 1914-08-04.
Very interesting. Thank you for your work!
Excellent work. How many ounces Gold for a house with Garden in 1919?