Page - 560 - in THE FIRST WORLD WAR - and the End of the Habsburg Monarchy, 1914 – 1918

560 How is a War Financed ? day, the issuing of foreign currencies was halted. Four days later, permission was issued for the metallic coverage of the banknote circulation to fall below forty per cent.1313 Next, the state began to borrow money.1314 The war bonds were intended to pre-fi- nance the expenditure, even if national debt increased as a result. The fact that here, the division of the Empire made itself felt, and made it impossible to implement uniform procedures, once again turned out to be a problem. And the Joint Finance Ministry, from which it could have been expected, precisely in the situation that arose during 1914, that it would be the highest authority when it came to money matters, played a remarkably minor role. This ministry was in fact only responsible for national debts, customs, indirect taxes and border railways. As a result, until November 1916, the Joint Imperial and Royal Finance Minister, Baronet Leon von Biliński, and after him, Ernest von Koerber, were not the ones to set the policy when it came to money matters, but the finance ministers of the two halves of the Empire, Baron August von Engel, fol- lowed by Alexander Spitzmüller in Austria, and the Hungarian Finance Minister, János Teleszky. It was they who were to function as a type of transmission belt between the Army Administration and the financial institutions. The fact that the ongoing and already stressed budgets would not be sufficient was clear for all to see. As a result, financial measures had to be initiated. First, treasury notes were issued by the Austrian and Hungarian financial administration, which could then be pledged by the banks at 85 per cent of the nominal rate. This brought in cash after the Army Administration had specified the amount of money required for the first 15 days of the war as 608.6 million kronen.1315 Next, the Imperial and Royal War Ministry claimed a loan from the finance ministries of both halves of the Empire to the tune of two billion kronen. This, too, was raised by the banks. 1.272 million were allotted to Austria, and the remainder to Hungary. Almost all of the money was for- warded to the military payment authorities. In Austria, it lasted until 15 October, and in Hungary until 28 October ; by then, the loans had been spent. The money from the collateral loans had also been used up. The relevant ministries then produced bills for a further two billion kronen. The money was to be divided according to the same ratio. The funds were used primarily to attempt to satisfy the needs of the Army Adminis- tration. And already after the first months of the war, it was known that the cost would be enormous, and that not only the more or less ‘normal’ expenditure would have to be financed, but also the vast material losses of millions of rifles, thousands of pieces of artillery and the war equipment that ran to hundreds of thousands of items that were broken, abandoned or also fell into the hands of the Russians and Serbs. As a result, it became necessary to make further financial efforts in order to procure replacements, something that was not known on such a scale in Germany or France, or even in Russia and Serbia, during the first months of the war. The consequences of the war could after all be measured not only in the number of dead, wounded, missing and soldiers taken