Oeffa bills
Öffa bills ("ö" is a Germanic umlaut that can be transcribed "oe") or job-creation bills were promissory notes created in 1932 by the German government. They were aimed at additional fund-raising for public building initiatives and later for job creation schemes.[1]
The Öffa bills were the blueprint for the Mefo bills which followed the same scheme.[2]
History
In 1932, Öffa bills were created by the second cabinet under chancellor Heinrich Brüning after consultation with the then President of the Reichsbank, Hans Luther. The bills were issued by the Deutsche Gesellschaft für öffentliche Arbeiten AG (English: German Society for Public Works plc), founded 1 August 1930, and rediscounted by the Reichsbank. With the capital thus raised, the Deutsche Gesellschaft für öffentliche Arbeiten AG financed public building initiatives. It was a shell company without sufficient shareholders' equity. Nevertheless, the bills were discounted by the Reichsbank. This way, the Reichsbank financed public building projects.
In the wake of the Great Depression, this hidden money creation stimulated the German economy. The German Deutsche Gesellschaft für öffentliche Arbeiten AG brought into circulation Öffa bills worth 1.26 billion Reichsmark. In general, the duration of a bill was three months but it could be prolonged to five years.[3]
Economically, this meant an expansion of the money supply. As this would tend towards increasing inflation, Hans Luther agreed to only a small volume.
See also
References
- ISBN 978-3638686556. Retrieved 25 October 2012.
- ^ Meyer-Larsen, Werner (24 Apr 1995). "Der große Showdown". Der Spiegel (in German). Retrieved 25 October 2012.
- ISBN 978-3486583373. Retrieved 25 October 2012.
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