Page - 559 - in THE FIRST WORLD WAR - and the End of the Habsburg Monarchy, 1914 – 1918

The Search for the Nervus Rerum 559 endured without any great difficulty. Money was available, and the only significant problem, the lack of small banknotes, could be resolved by completing the existing semi-finished notes with a value of 400 million kronen.1310 Then, however, the general mobilisation got underway, the need for money increased dramatically, and the first emergency measures became necessary. Bank statutes were suspended and a morato- rium imposed, according to which only amounts of up to 200 kronen could be drawn from savings books. This prevented the depositors from storming the financial institu- tions. However, this might never even have happened, since at the beginning of the war, the mood was largely confident. As the slogan ran : ‘Serbien muss sterbien’ (a rhyming variation on ‘Serbia must die’). On the Vienna Stock Exchange, the rates had slipped to negative figures during the July Crisis, but had soared again after the démarche was sent to Serbia. This was interpreted in such a way that it was assumed Serbia would submit.1311 In actual fact, the depositors may have calculated that the listed stocks and shares would rise in value as a result of the war, and wanted to profit from this rapid increase. However, business transactions in the securities department of the Vienna Stock Exchange were then suspended until further notice. The stock exchanges in Budapest, Prague and Trieste (Triest) also closed. On 1 August, the commodity exchange was shut down, and busi- ness transactions in stock exchange values were prohibited.1312 From then on, the ‘cor- ner stock exchanges’ in the coffee houses flourished. This would remain the case until March 1916. For the financial experts, a fundamental question arose as early as July and Au- gust 1914 : how is a war financed ? No-one had experience in this area. Here, also, the Habsburg Monarchy was in a worse position than Great Britain, France or Russia, since these states  – like others  – had most certainly been faced time and again with the issue of where the money should come from to pay for the military expenses during periods of war. One answer to the problem appeared to be to refer to the still extant and functioning commercial relationships. The scope and consequences of the export problems could not initially be estimated. However, one thing was clear from the first moment on : domestic demand would increase to a very significant degree. Since most goods were required by Austria-Hungary’s own military, however, the sudden increase in supplies to the military would at least compensate for the lack of export. However, any number of theoretical papers and domestic economy models would have achieved little more than to describe the dilemma in detail. It was and remained a point of debate what could be done to counteract the situation. With the suspension of the metallic, i.e. primarily gold coverage for the banknote circulation, however, Pandora’s box had been opened for the first time. Not everything had to be gold in order to glitter. On 23 July 1914, the Austrian currency still had a coverage of almost 75 per cent of the banknotes then in circulation. On 31 July, the figure had decreased to 46.3 per cent. On the same