Page - 565 - in THE FIRST WORLD WAR - and the End of the Habsburg Monarchy, 1914 – 1918

The War Bonds 565 for the war, and for affecting the senses as well as sentiments. Almost everyone knew about war bonds.1323 The War Bonds Initially, it had still been assumed in the finance ministries that no bonds should be issued. It was not yet felt that the moment had come to siphon off money. Since it could not be taken for granted that the money from a bond would be ‘put on ice’, but would instead immediately have to be used in order to cover financial needs, the finance experts feared an inflationary effect.1324 However, it was of no use. Either the taxes were drastically increased, or the state was forced to borrow money by taking out bonds. Whether the money borrowed could one day be paid back and, if so, how, was anybody’s guess. However, there is no doubt that all monetary transactions were accompanied by the hope that the conquered enemies would one day be forced to pay vast sums in reparations, and be called on to settle the debts. In the autumn of 1914, the first war bond was issued. It was offered on 16 November as a five-and-a-half per cent bond, and was to be paid back in the Austrian half of the Empire by 1 April 1920. Subscriptions could be made at the post office savings banks and all large credit institutions, as well as at the Austro-Hungarian Bank. 15 credit institutions combined to form a syndicate chaired by the Austrian Post Office Savings Bank, which made decisions regarding denominations, settlements, advertising and propaganda, and not least also regarding the commissions. The result was unexpected and certainly remarkable : the bond raised a nominal value of around 2.2 billion kronen in Cisleithania alone.1325 However, the funds from this bond were quickly used up. As a result, a second bond was issued in May 1915, and finally a third in the autumn of the same year. Redemption was deferred by five years in each case. The repayment date for the third bond was set at 1 October 1930. The willingness to invest money in war bonds, or at least to set an example, had grown considerably in comparison with the first two bonds. And the result of 4.2 bil- lion kronen far exceeded the earlier sums. Ultimately, things were to move forward rapidly, until finally, on 28 May 1918, the eighth war bond was issued in Austria. It still yielded a subscribed amount of over 5.8 billion kronen, even if the currency was highly inflationary, and was thus just below the total brought in by the seventh war bond, which with over 6 billion kronen yielded the best result in nominal terms of all the Austrian bonds. However, due to the rate of inflation, it fell far short of the third bond. The last bond in Cisleithania was due for repayment by 1958. In total, over 35 billion kronen were subscribed to bonds in the Austrian half of the Empire alone, although according to the currency value of 1914, this was the equivalent of only 9.1