1935 Nazi Germany 500 Swiss Francs Konversionskasse Ten Year Bond VF+

Description

1935 Third Reich 500 Francs Ten Year 4% Bond
Swiss Issue Series 1B
Konversionskasse für Deutsche Auslandsschulden
What You See Is What You Get
A very fine example of a German bond for 500 Swiss Francs from the Third Reich; verso describing in German and French the terms of the bond, and endorsed by the Führer and Reichschancellor Adolf Hitler, Reichsminister of Finance Graf Schwerin von Krosigk, and Reichsminister of Economics and President of the Reichsbank, Hjalmar Schacht.
Authentic historical artifacts documenting turbulent times. The last few remaining examples of these canceled VF+ certificates from the vaults of the former Reichsbank in Berlin were auctioned off by the German Federal Office for Central Services and Unresolved Property Issues (BADV) in 2008.
The face of the bond for sale is pictured above, images of the backs are examples. The stamp cancel declares the item to be a certificate of no value from the stocks of the BADV.
Condition: VF+ Measures approx. 11.25"x8.25". Lithograph by the State Printing Office in Berlin. Certificate numbers will vary, but the Quality will not!
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Q: What am I buying, and why would I want it?
A:
Three years of the Great Depression had nearly depleted Germany's foreign reserves. This foreign exchange shortage in the waning days of the Weimar Republic left the Reich struggling to service its large foreign debt, and threatened to cripple its overseas trade. The
Konversionskasse für Deutsche Auslandsschulden
was established 9 June 1933 as a means to control the outflow of foreign exchange from Germany.
Administered by the German central bank, the Reichsbank, the Konversionskasse was responsible for settling international transactions. Under the law, Germans owing payments of rent, interest, dividends, or amortizations on foreign debts contracted before 15 July 1931 (excepting certain obligations, such as the Dawes and Young loans,) would pay to the Konversionskasse the amount due in Reichsmarks, thereby discharging their debt. The Konversionskasse would then pay to the foreign creditor an equivalent sum, only partly in cash, with the balance paid in non-convertible Reichsmark denominated scrip or interest bearing foreign denominated bonds. All of these funds were "blocked," in that they could only be used to buy German goods for export, or for certain trade related expenses. But, while they could not be used to purchase hard assets or for speculative purposes they could sometimes be exchanged for hard currency (albeit at a 50% discount,) at the Reichsbank controlled
Golddiskontbank
, when foreign exchange was made available.
As of March 1940 the Konversionskasse had the following in outstanding bonded debt (in millions of Reichsmarks):
4% G.B. Sterling – 101.9
4% Swiss Francs – 63.1
4% Dutch Guilders – 5.4
4% Swedish Kroner – 22.2
3% Reichsmark – 70.3
3% Swiss Francs – 3.9
3% Dutch Guilders – 11.3
3% French Francs – 0.5
3% U.S. Dollars – 125.7
3% Canadian Dollars – 0.2
3% G.B. Sterling – 0.9
In the United States, trading in the bonds was made illegal after 21 December 1941. Following World War II, the London Agreement on German External Debts, negotiated in 1952 and implemented in 1953, provided that 2/3rds of the outstanding interest then in arrears was to be waived with the remaining 1/3rd being recapitalized. The agreement also provided that the maturity of the bonds be extended 17 years, and that Reichsmark denominated bonds and scrip be converted to the Deutsche Mark on a 10:1 (old to new,) ratio.
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