The Euro, The Deutsche Mark, And The Greatest Charity Idea Ever

(Note: There are ten questions I ask in this post.  Please feel free to submit your answers to some or all of them).

I spend a lot of time thinking about outlier ideas.  When I was a kid it was things such as “would I have to board up the second story windows in our house in case of a zombie attack” or “how many blankets would be needed to keep me warm if my family ever moved into an igloo?”

So it’s no wonder that I once came up with an odd but interesting idea while looking at a bag of old foreign coins that my grandparents had given me.

I probably had that bag of coins (which consisted of the leftover change from numerous vacations to Europe and Asia) since I was seven or eight years old. For as long as I could remember I was fixated with the idea that some of that money still had value. However, since I was just a dumb kid I never pursued it any farther and put the bag away in some cabinets at my parent’s house.

A couple of years ago, as I was clearing out those cabinets in preparation for the sale of their house, I came across that mysterious bag again.

My boyhood fantasy of finding value in those coins came rushing back, but it still remained a silly idea.

None of the coins had any numismatic value. None had any silver or gold content. Most were of small denomination and from countries that had devalued their currency a number of times.  Even the coins from the continent were worthless since the introduction of the Euro in 2002……

….or were they?

Through what I can only call “nerdly-hyper-focused-minutia-web-searching” I found out something that completely stunned me.

I found out that many of the “obsolete” currencies from European countries were exchangeable for Euros at their respective central banks long after the changeover date, and that some are still exchangeable even today.

As the chart above illustrates, as of today you can still exchange banknotes (paper money) and coins for Euros in Austria, Estonia, Finland, Germany, Ireland, Slovakia, Slovenia, and Spain.  Banknotes only can still be exchanged in Cyprus, France, Greece, Luxembourg, Malta, Netherlands, and Portugal.  Some countries have end dates for redemption (a few in 2012), but Austria, Ireland, Spain, and Germany’s are indefinite.

Germany, with the world’s fourth largest GDP is the one that got my attention.  As I probed further I found out that with a few minor exceptions, German coins and bills from as far back as 1948 were eligible for exchange. You can even exchange Deutschmarks by mail.

This left me with a number of tantalizing questions.

Question #1: How many DM’s could there really be left out there?

According to this chart from the Bundesbank, as of November 30th, 2011 there is a total of 13.31 billion D-marks still in circulation.  The exchange rate is pegged at 1.96 DM per Euro, which translates into roughly $8.9 billion dollars USD still floating around out there.

Obviously a portion of that $8.9 billion would have been destroyed or lost over the years by circumstance, so let’s estimate that figure at five percent.

That leaves $8.46 billion USD.

Question #2: How much of it is still in Europe?

My first reaction is to say that a big chunk of it is still in people’s hands in Germany and the surrounding countries since that is where the DM originates.

But by the same token it would seem that those same people would have been the most aggressive in turning their money in when the Euro exchange process began. They would have been the people with the most notice, the most convenience, and the most motivation to turn their DM’s in.

But let’s say that fifty percent of the outstanding and surviving DM’s are in Europe, that still leaves $4.23 billion USD somewhere else

Question #3: How much of that might be in the United States?

Taking Europeans out the mix, The United States is by far been the largest source of tourism to Germany.  It has the largest number of citizens with German heritage and it also has the largest foreign military presence in Germany.

That means for sixty years family members, servicemen, and tourists have been traveling to and from Germany, each time bringing back the unspent bits and pieces of that lost $4.23 billion in their wallets, purses, and luggage.

I am willing to say that twenty-five percent of that total is possibly in Asia or South America, leaving $3.23 billion USD in the States.

Question #4: So where exactly are those DM’s in the United States?

And there’s the rub right?  Whatever money is here in the US is probably spread about in small amounts, hidden in desk drawers, old coffee cans, or bags like the one my grandparents gave me.

The bag my grandparents gave me had a little over $100.00 USD worth of DM’s in it, which I have to assume is a rather large amount for an individual to have.

(Note: I sold all the DM’s on Ebay.  All of the coins were common date, with no collector or precious metal value.  With shipping costs the sale totaled about 95% of the then current exchange value.  You can find “lots” of common DM’s being sold on Ebay on a regular basis, which usually sell between 90-95% of current USD value.  Remember, the DM/Euro rate is fixed, but the Euro still fluctuates against the USD).

This begs the next question.

Question #5: How can you monetize DM’s dispersed in small amounts among millions of people?

There really is no commercial way to monetize all these DM’s from business standpoint.  It’s not even an issue of being able to reach the millions of people who might have a few DM’s here and there, because you could set up a web site to do that (which I saw attempted at one time).  It’s more an issue of motivation and scale.

Most people can’t be motivated to make even small beneficial changes in their lives let allow to dig through their clutter in order to find DM’s, put them in a package, and mail off only to get a few dollars in return.  You just couldn’t get enough volume to make it profitable.

However, I think that charitable organizations could make it work.

Imagine your local church, synagogue, school district, Kiwanis club, or any charitable organization doing a “foreign coins fund-raising drive”.  They would ask their members to gather all their old foreign coins and put them in a “drop box”.

The drive could run for a couple of weeks, a month, or even a year.  It could be regularly mentioned at the close of every service or in each newsletter.  People would be motivated to take part because they would be taking something that LITERALLY had no value to them, and converting it into monetary value for an organization they believe in.  It is akin to them taking some dirt from their backyard and having it accepted as a contribution.  They might even get a tax deduction.

Volunteers could be easily taught which bills and coins had value and they could be sorted according to type.  You probably would not just get DM’s, but Pesetas, Guilders, and other “obsolete” currency as well.  Not to mention all the Pounds, Euros, and other “active currencies” that would probably find their way into the drop boxes.

Since all the work would be done by volunteers there would be no monetary cost, just the time of those involved in the process.

In the words of Dana Carvey imitating Johnny Carson, “it’s weird, wild stuff….”, but it’s fun for me to think about.

In conclusion, let me leave you with a few more questions to ponder…….

Question #6: Once you have gathered all the currency, what would be the most cost-effective way to get it exchanged?

Question #7:  What do you think the deal is with people buying obsolete DM’s on Ebay?

Question #8: Why do you think these countries are still willing to exchange obsolete currency for Euros?  

Question #9: Am I just smoking crack and this concept is full of shit?

Question #10: Does everybody already know this and the “Emperor has no clothes?” (With me being the Emperor….get it?)

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Brian C. Lund

Brian C. Lund

Great father. Good friend. Decent trader/writer. Lacking husband. Solid drummer. Sometimes funny. Often A-hole. Terrible poker player. Too smart. Punk rock. Work in an ice cream shop.

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