Dhe memorandum, which the Danzig Finance Senator, the former Ministerialrat from the Prussian Ministry of Finance, Dr. Volkmann submitted to the Finance Committee of the League of Nations is now publicly available verbatim. The first part of the memorandum shows that the conditions in the Free City of Danzig, which was separated from the German Reich after the First World War, are ripe for a currency reform, that the elimination of the mark from traffic, trade and legislation has progressed so far that a currency change is unavoidable appears. It is also stated that the conditions for a currency reform in Gdańsk are favorable.
The second part deals with the requirements of a currency reform in Gdańsk. Under the heading: “Separation from the paper money economy” the reasons for and against a currency reform are again weighed against each other. It is emphasized that the goal of currency recovery can only be achieved at heavy public and individual sacrifices.
Then the individual postulates for a Gdańsk currency are listed. These are: independence of a new Gdańsk currency, stability of the future Gdańsk monetary system, break with the past, good use of Gdańsk money in international transactions, complete separation of state finances and currency factors and finally transitional measures.
The third and practically most interesting part of the memorandum then contains the proposals for a currency reform in Danzig. The guilder and the heller are planned as permanent future money in Gdańsk. The heller should be one hundredth of the guilder. Guilder coins are to be minted as metal money by the Free City of Danzig. Hundred guilder pieces in such a way that they have the same gross and fine weight as English one pound pieces, i.e. almost exactly like the old twenty mark pieces. The memorandum states that these gold coins cannot be produced in larger amounts for the time being, but the issue of silver money, which has the character of fractional coins, as well as nickel or copper coins is envisaged. Silver coins are said to have a gross weight of one gram for five guilders each. The circulation of silver and nickel or copper coins must not exceed one hundred guilders per head of the population. These guilders are linked to the pound sterling by certain monetary measures, in such a way that a hundred guilders are equal to one pound. The memorandum says the following in detail about these monetary measures:
A branch in London
The central bank must have an office in London. She will issue checks to private individuals at her counter in Gdańsk, denominated in Gdańsk guilders in amounts of at least 5000 guilders, against deposit in English pounds sterling at a rate of one pound sterling, one pfennig for one hundred guilders exceeds. The Bank of Issue will also issue checks to its office in Danzig on deposit of Danzig guilders or its own notes in amounts of at least 5,000 guilders, the guilders or notes being offered at a rate of 19 shillings 10 pence for 100 guilders or less become. The guilder would therefore represent a value of around 20 gold pfennigs or around 10,000 paper marks at today’s exchange rate.
Furthermore, the establishment of a Gdańsk central bank is planned, which will be an independent company, will not have the character of a state bank and, above all, will not be burdened with the money needs of the state and municipality in order to prevent new inflation. This central bank is allowed to issue notes up to the amount of 500 guilders on the head of the population, i.e. about 180 million guilders. One third of this must be covered by the banknote reserve. The banknote reserve must be in gold or sterling notes or sterling overnight claims and is to be accumulated from the profits of the bank. As this will take many years, a provisional currency loan of £500,000 must be used as security. The two-thirds of the banknotes in circulation not covered by the banknote reserve must be covered in full by commercial bills of exchange with multiple guarantees.
The Reichsmark becomes a foreign currency
An exchange of Reich banknotes for guilders is not planned. From the day the new currency came into effect, the Reichsmark would be treated like a foreign currency. All private-law market claims that exist after the new currency comes into force and are to be fulfilled in Gdańsk can be settled in marks or in guilders, at the debtor’s choice. If the debtor chooses the guilder, the conversion is made at an exchange rate that is announced on the day it comes into effect and corresponds to the daily rate for English pounds in Gdansk with a slight rounding upwards. The declaration of choice must be received by the creditor on the third day after the exchange rate has been announced. If it is delayed or omitted, the market demands are to be met in guilders according to the exchange rate that has become known.
The introduction of gold clearing transactions, the creation of a fixed standard of value, is planned as a transitional measure. This measure is to be ensured by an equalization office, which is to be set up as an independent institution in close contact with the Danzig banks and is intended to be the forerunner of the central bank. This equalization agency is to be backed up by a preliminary credit on the future currency credit, of the order of £200,000. We reserve the right to make a detailed appraisal of Volkmann’s plan and its prospects.
