Revolutionary changes in the European monetary systems in the interwar period still receive limited historiographical attention at the transnational level. The aim of the panel was therefore to complement the histories of national economies and counter a Western-leaning narrative on the economic history of new monetary orders by focusing on East Central and Eastern Europe as well as former German colonies.

Johannes Gleixner opened the panel with an outline of problems in economic historiography regarding the question of space. He criticised the fact that it mainly deals with this question on a regional level that treats East Central Europe and Eastern Europe as separate spatial units instead of regarding the spatial frame of reference as a methodological issue. Sebastian Teupe then outlined the problem of money in economic historiography in relation to the problem of space. He pointed out the need to open thinking about this relationship. The concentration of economic historiography on nation states would be problematic for the European interwar period, which shows the need for a transnational perspective.

In the first lecture of the panel on the German Inflation from an Eastern European perspective, SEBASTIAN TEUPE (Bayreuth) criticised the fact that this inflation is commonly treated as a Western problem. From a monetary point of view, the German Inflation was anything but unique because it showed many similarities with hyperinflations in Eastern European countries, which proves it was a European phenomenon rather than a national one. A comparative perspective would show that the question of violence and fragility of national sovereignty was of central importance. Money printing as a factor of stabilising national sovereignty exposed the inflation as an existential thread to the survival of the state. In addition, a transnational perspective is required due to the relative values of currencies and their relationship to inflation expectations. Teupe illustrated his arguments using the case study of Upper Silesia in the interwar period, showing that the economic entanglement between Poland and Germany was supposed to be contained through currencies, but that the idea of borders in relation to monetary flows wasn’t realistic. Furthermore, he emphasised that exchange rates cannot be equated with national currencies and nation states. In summary, Teupe insisted that the Eastern perspective may not be crucial for understanding the German inflation as such but is nevertheless important for analysing it as a European phenomenon on a transnational level.

MISCHA SUTER (Geneva) demonstrated that the monetary turmoil in the interwar period wasn’t limited to Europe by examining currency transitions in Tanzania. He expressed reservations about the thesis of currency revolutions in 19th century, arguing in favour of its replacement by a focus on transitions between currencies. In African history, “revolution” often meant a transition from one colonial power to another and “currencies” functioned as laboratories of monetary regimes. Suter exemplified this thesis with the afterlife of the German rupee, which was introduced as a copy of the Indian original. Although it didn’t have a gold standard, unlike the Indian rupee, the two circulated in parallel. The German rupee was therefore nationalised at the beginning of the 20th century, which included the establishment of a local central bank. According to Suter, this shows that monetary policy was an instrument for cementing racial hierarchies and that state power was used for private capitalist gains. Taxes and labour conscriptions acted as levers of the colonial cash economy, as they served to obtain the colonial currency for taxes. The need to pay soldiers during the war led to a significant reduction in the radius of use of the German rupee. To compensate for the resulting cash supply problems, the issue of the German rupee was expanded with improvised banknotes, resulting in its collapse after the war. However, its transition into the East African shilling under British Mandate rule through a secession of currency transitions was remarkably slow and due to the Sterling deflation, the exchange-rate of the new colonial currency was over-valuated. Suter concluded that the monetary turmoil in interwar Europe should be put in perspective by recognizing the currency turbulences in East Africa, which can give an indication of larger historical entanglements.

In the following, MAX TRECKER (Leipzig) took a closer look at the monetary crisis and stabilisation in Hungary. He emphasised that Hungary was an agriculture country relying on an influx of foreign capital despite rapid economic growth before the First World War. Government measures like price controls couldn’t prevent price increases and falls in production, leading to an inflation. After Mihály Károlyi became Prime Minister, the inflation fell due to state measures, the anticipation of resumed imports and financial consolidation. It remained low at first, after Romania installed Miklós Horthy as Reichsverweser following its victory in the war. However, by late 1920, prices rose again while the standard of living fell. Under the government of Pál Teleki, the old korona was replaced by a new one to stabilise the currency. But because of the extensive government sector, this attempt on stabilisation failed, leading to the replaced of Finance Minister Frigyes Korányi by Lóránt Hegedüs. The latter’s attempt at stabilisation through austerity measures also failed, as he lost political support due to a lack of political confidence, which led to an acceleration of inflation. According to Trecker, the main causes for the failure of the first two attempts were the economic consequences of the peace time, the catastrophic situation of agriculture, delayed normalization of foreign trade relations and limited support by political power brokers. After the beginning of a hyperinflation, the new Prime Minister Bethlen asked the League of Nations for international loans, which marked a political turning point. Finance Minister Kallay Tibor tried to stabilise the economy through austerity measures, for which he now got the political support, leading to a stabilisation of the financial sector and state finances. The inflation moderated down and turned into slight deflation. The ending of the economic and financial transition period was finally marked by the introduction of the Pengő as new currency. Trecker summarized that the reasons for this success were political support and outside help.

THEA DON-SIEMION (Cambridge) subsequently gave an insight into the Polish hyperinflation and the difficulties of peace making in Central Europe in the interwar period. She pointed out that hyperinflation was a link in the broader political and economic context of Eastern Europe, especially regarding the connection between its dynamics and armed conflicts such as border wars. In contrast to other countries, Poland achieved stabilisation not through foreign aid, but its own resources. It wasn’t a defeated power and continued to have a moderate inflation in the mid-1920s but didn’t return to hyperinflation. Don-Siemion made her approach of an event study using structural-break analysis to identify critical breaking points in economic history transparent. The key findings of her research demonstrate the role of conflict in fuelling inflation that led to the linking of the hyperinflations in Poland and Germany. The Polish hyperinflation was fuelled by the Silesian Uprisings. The securing of the industrial region for Poland in the third uprising led to a short period of stabilisation, before the treaty of Rapallo functioned as new fuel. An initial attempt at stabilisation under Finance Minister Jerzy Michalski was thwarted by Marshal Józef Piłsudski, who abused his power as interim Head of State. The need to reduced military spending as measure against the inflation led to him forcing the Polish government to resign, which became a precedence for further governments to not cut military spending. The invitation to British Deputy Finance Minister Hilton Young by Prime Minister and Finance Minister Władysław Grabski to develop a stabilisation plan was only successful until Marshal Józef Piłsudski’s coup. In conclusion, the Polish hyperinflation can be characterised not only as an economical, but also a geopolitical problem because of the constrains by the state capacity and the ability to promote political interests with the means of military action. Her research findings led Don-Siemion to draw parallels to the current war in Ukraine, as Poland in the interwar period can be seen as an antecedent of Ukraine in relation to the trilemma of national sovereignty, economic stability, and national independence.

Finally, JOHANNES GLEIXNER (Munich) showed that the failure of deflationary politics in Czechoslovakia actually was a success. He emphasised that Czechoslovakia as a model for the study of successful economic history, as it is considered a typical Central Eastern European economy, but at the same time unusual in that it stands out in the wider European context. Its economic policy in the interwar period was as an experiment that worked, but in a different way than expected. A lot of liquid cash was circulating in Czechoslovakia after the First World War because the Austrian crown banknotes were no longer accepted, as the new state wanted to break free from the Habsburg currency. To avoid inflation, the money in circulation had to be reduced. The introduction of the Czechoslovak crown by Finance Minister Alois Rašín led to calling deflation but acting flexible. As the coverage of the rising amount of money in circulation was sinking, the introduction of the new currency led to an immediate deflationary effect. A “second deflation” set in after the Czechoslovak crown disentangled from the closely linked German Mark in anticipation of German hyperinflation. However, the core of Czechoslovakia’s deflationary politics were foreign denominated bonds which led to a stabilization of the new currency. In his concluding remarks, Gleixner claimed that it wasn’t the Rašín experiment, but follow up decisions like state bonds which shaped the economic development of Czechoslovakia in the interwar period. Central and Eastern Europe must therefore be seen as an intermediate economic area that depended on political decisions.

The discussion highlighted that the factors behind German inflation need to be considered as broader phenomena, such as the creation of states, the cost of stabilisation leading to the acceptance of inflation, which in turn leads to further destabilisation, and national sovereignty. The costs of stabilisation and national sovereignty can be directly linked, like in the case of Hungary. Furthermore, it was emphasised that the question of sovereignty must be answered empirically, as the colonial context shows. Doubts were expressed as to whether it was possible to speak of a tipping point at which inflation, which stimulated investment and had a positive effect on the economy, turned into destructive hyperinflation, as some of the effects of inflation, which were initially positive, continued in hyperinflation, with political factors also playing a role.

Overall, the section made an important contribution to understanding the changes in monetary systems and the emergence of new currencies in the interwar period. It succeeded in pointing out the importance of economic entanglements in Europe and beyond in the context of the revolutionary situation of the early 1920s. It thus demonstrated the great potential that a translational perspective has in economic historiography.

Section overview:

Head of section: Johannes Gleixner (Munich) / Sebastian Teupe (Bayreuth)

Sebastian Teupe (Bayreuth): The German Inflation in (Eastern) European Perspective

Mischa Suter (Genf): Paper Values and Currency Transition: the Afterlife of German Colonial Currency in Tanzania, 1914–1925

Max Trecker (Leipzig): Monetary Crisis and Stabilisation in Hungary (1918–1927)

Thea Don-Siemion (Cambridge): The Currency as a Weapon of War: The Polish Hyperinflation of 1918-1924 and the Difficulties of Peacemaking in Central Europe

Johannes Gleixner (Munich): The Successful Failure of Deflationary Politics in Czechoslovakia