For its first ten years, East Germany flew a flag indistinguishable from West Germany's. Two rival states, each claiming to be the real Germany, each waving the same black-red-gold tricolor at the other across the inner German border: the arrangement was as awkward as it sounds, and it ended in 1959 when the German Democratic Republic stamped its state emblem, a hammer and compass wreathed in rye, onto the middle stripe. That small addition gave the Cold War one of its more contested pieces of cloth. The West refused to recognize it, coined a dismissive name for it, and for a decade sent police to haul it down wherever it appeared.
Two Germanys, one flag
When the GDR was founded on 7 October 1949, five months after the Federal Republic in the West, its leadership had a flag debate with real stakes. An early proposal in the People's Congress favored black-white-red, the colors of imperial Germany, partly as a nationalist gesture against the occupying powers. Friedrich Ebert Jr., the Social Democrat turned SED functionary and son of the Weimar Republic's first president, pushed instead for black-red-gold: the colors of the 1848 revolutionaries and of Weimar democracy, which the Nazis had spent twelve years denouncing. His argument won, and the GDR adopted exactly the flag West Germany had chosen in May of the same year.
The duplication was deliberate on both sides. Each state presented itself as the whole of Germany temporarily divided, so neither wanted a flag that conceded separateness. The result was ten years in which the flag said nothing about which Germany you were looking at.
A hammer, a compass and a ring of rye
The tie was broken on 1 October 1959, when the GDR amended its flag law to place the state coat of arms at the center of the tricolor. The emblem, in use on state seals since the early 1950s, is a small diagram of the society the GDR claimed to be: a hammer for the working class, a compass (the drafting instrument) for the intelligentsia, and a surrounding ring of rye for the farmers. It was the Soviet hammer and sickle rethought for a country that took pride in its engineers; the GDR was the only Warsaw Pact state to put the technical intelligentsia into its national emblem. The flag's proportions were 3:5, the emblem overlapping all three stripes.
The timing was no accident. By 1959 the Hallstein Doctrine had West Germany breaking relations with any state that recognized the GDR, hundreds of thousands of East Germans were leaving through Berlin each year, and the SED wanted symbols that made the division permanent. A distinct flag did that job every time it was raised.
Spalterflagge
West Germany's response was immediate and hostile. The modified flag was dubbed the "Spalterflagge," the divider flag or splitter flag, and its public display in the Federal Republic and West Berlin was treated as a breach of the constitutional order. Through the 1960s, West German police removed the flag wherever it appeared, which produced recurring farce at international sporting events whenever an East German team showed up entitled to its own colors.
Sport, in fact, generated the era's strangest compromise. From 1960 to 1968, German Olympic athletes competed under a specially invented neutral flag, the black-red-gold tricolor with the five Olympic rings in white on the middle stripe, first for the combined United Team of Germany and then, in 1968, for the two separate teams. A flag designed by committee to offend neither Germany is about as Cold War as vexillology gets.
The ban outlived its usefulness as West Germany's Ostpolitik warmed. On 22 July 1969, the federal government ordered police to stop acting against the flag's display, and after the Basic Treaty of 1972 the two states recognized each other's symbols as a matter of course. The Spalterflagge flew at the United Nations from 1973, when both Germanys joined on the same day.
The hole in the flag, then no flag at all
In the autumn of 1989, as Monday demonstrations filled Leipzig and the Wall opened on 9 November, the flag became a target of the very people it claimed to represent. Some demonstrators cut the hammer-and-compass emblem out of the tricolor, leaving a hole: partly a practical way to make a West-compatible flag out of an Eastern one, partly a deliberate echo of Hungary in 1956 and, within weeks, of Romania, where protesters cut the socialist arms from their flag in December 1989. A tricolor with a circular hole where the state used to be needed no caption.
The GDR's first freely elected government negotiated the state out of existence, and at midnight on 3 October 1990 the country acceded to the Federal Republic. The flag was not lowered in favor of a successor; its state simply ended, and the plain black-red-gold that had flown in 1949 was, once again, the flag of every German.
Unified Germany never banned GDR symbols, in contrast to its criminal prohibition of Nazi ones. The flag survives in museums, in Ostalgie souvenir shops along the former course of the Wall in Berlin, and in the occasional protest appearance. A flag that once required a police response in half of Germany now sells to tourists a short walk from where the border ran.
References
[1] "Flag of East Germany," Wikipedia, covering the 1949 adoption, the 1959 emblem law and the Spalterflagge period. https://en.wikipedia.org/wiki/Flag_of_East_Germany
[2] "National emblem of East Germany," Wikipedia, on the hammer, compass and ring of rye and their symbolism. https://en.wikipedia.org/wiki/National_emblem_of_East_Germany
[3] Deutsches Historisches Museum, Berlin, collection and exhibition material on the state symbols of the GDR. https://www.dhm.de/
[4] Bundeszentrale für politische Bildung, background material on black-red-gold and the German flag debates of 1949. https://www.bpb.de/
[5] Smith, Whitney. Flags Through the Ages and Across the World (1975). McGraw-Hill.