Seite - 580 - in THE FIRST WORLD WAR - and the End of the Habsburg Monarchy, 1914 – 1918

580 How is a War Financed ? taxes were continuously increased. Then however  – and again, the break came in 1916  – the grain for the breweries became scarce and the amount of meat available decreased. As a result, there was no longer much money to be made from the consumption taxes. What remained were stamps, duties and taxes, customs and, above all, monopolies. Salt was used, and the tobacco monopoly also brought in revenues. Finally, a twenty per cent tax was raised for the first time on coal after a similar measure had been introduced in Germany in August 1917. In order to finance the war  – it could almost be said ‘self-evidently’  – the banknote press was also put to use. The consequences of the extensive loans granted to the state were that the quantity of money in circulation increased rapidly. Incredibly, price levels initially remained moderate, so that even a type of prolonged war economy engendered the feeling that both victory and defeat were easily affordable. Then, the prices doubled year on year, and everyday goods became increasingly scarce. The turning point came in 1916, and from 1917 onwards, prices began to increase more rapidly than the quantities of money. What use were higher wages and pay when there was nothing left to buy ? At the end of the war, over 33.5 billion kronen were in circulation, as opposed to 3.4 billion in July 1914  – a tenfold increase.1351 This was, of course, paper money, as well as iron coins. The prices increased to sixteen times the original amount. Naturally, it was inevitable that the finance magnates in Austria would obtain infor- mation about the war financing by friends and enemies. In comparison, Austria-Hun- gary came out both well and badly. The first country to be considered was of course the German Empire. There, nine war bonds were issued as time went on. The interest offered was slightly lower than in the Habsburg Monarchy, although the terms were much longer. The last German bond would not have been due for repayment until 1 July 1967.1352 With an equivalent in German marks of 121 billion kronen, the total income from all the bonds exceeded by far the amount raised by Austria-Hungary’s bonds. With the income generated by the nine bonds, Germany was able to cover around 60 per cent of its war costs. German credit institutions also provided funds to the alliance partners, Austria-Hungary, Bulgaria and Turkey. Austria-Hungary’s banks invested in assistance for the allied partners neither voluntarily nor generously, but in spite of this, they did so, and hoped to do big business after the war.1353 France issued four war bonds, Great Britain three, the USA four and Russia seven. Ultimately, however, no-one except the USA was able to ‘afford’ the war. Huge financial and economic crises were inevitable. However, all this lay far in the future and was until then of interest only to economists, futurologists and pessimists. Only later did it become possible to add the figures together, although ultimately only approximate values were available. Even so, the figures exceeded the scope of the imagination. What did it mean, after all, when it was calculated that Austria-Hungary had spent 22.4 billion peacetime kronen, or 80.85 billion kronen (other calculations