5 Mark (Philipp Reis) – German Democratic Republic

In 1974, the German Democratic Republic (GDR) operated under a strict dual-currency system that was a fundamental feature of its planned economy and a tool for political control. The official currency was the East German Mark (Mark der DDR, or M), which was non-convertible and isolated from international financial markets. Its value was artificially set by the state and bore no relation to its actual purchasing power or exchange rate with Western currencies. For ordinary citizens, the M was used for all domestic transactions, but its utility was constrained by chronic shortages of desirable consumer goods, leading to a situation where money often could not buy what was not available.

The critical second pillar of this system was the privileged role of the Deutsche Mark (DM) from the Federal Republic of Germany (FRG). While possession of West German currency by GDR citizens was technically illegal, it was widely circulated on a thriving black market and was essential for accessing high-quality or scarce goods in Intershop stores. These state-run shops, which proliferated in the 1970s, sold imported Western products exclusively for hard currency, creating a two-tiered consumer society. This arrangement allowed the SED regime to capture valuable foreign exchange from its own population, often remitted from West German relatives, to bolster the struggling economy and import critical technology.

The currency situation in 1974 thus reflected the broader contradictions of the GDR. Economically, it highlighted the state's failure to create a productive economy capable of satisfying consumer demand, forcing it to rely on the very capitalist system it ideologically opposed. Socially, it created deep inequalities between those with access to hard currency and those without, undermining the official doctrine of socialist equality. Politically, it was a humbling concession that the legitimacy of the state depended, in part, on the economic strength of its Western rival, as the DM became a symbol of a higher standard of living and greater personal freedom.