The Flag was first created by the Communist Party when they acquired an unused Nazi German flag after the German Revolution ended. As materials were scarce at the time, and a flag was needed quickly, the Communists cut out the swastika of the flag and cut up the swastika into pieces before reshaping it into a hammer and sickle. The designers then sewed the pieces back together. The flag was paraded through the streets of Berlin amid the screams of both Communists and Nazi loyalists. Several Nazis threw food at the flag, and some of these objects hit the flag and stained it. The newly formed Volkspolizei (VoPo) arrested those who were caught throwing objects and these were executed for defaming the flag several days later. The flag itself was cleaned up and raised one of the main flagpole in front of the Reichstag building (renamed the Volkstagsgebäude) on January 1st 1940, alongside the flag of the Soviet Union on the other main flagpole next to it.
The Communist Party in 1940 commissioned the mass production of the new German flag, and more professional-looking flags were produced. New manufactured flags replaced both the original and the flag of the USSR on the main flagpoles of the Volkstagsgebäude. Four more flags were raised on the flagpoles standing on top of the corner towers of the building.