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Financial mobilisation in Germany 1914-1918

Gerd Hardach

No 14-08, eabh Papers from The European Association for Banking and Financial History (EABH)

Abstract: The First World War was not only a military conflict, but also an economic war. In all belligerent countries labour and material resources were shifted from civilian production to war-related purposes, and a central planning system was established to organise production and distribution. In this context, financial mobilisation played an important role. In Germany, preparations for financial mobilisation began at the end of the nineteenth century. Since 1891 fiscal and monetary policies were designed for the eventuality of a war and became, with few modifications, the basis for the financial mobilisation implemented in August 1914. In accordance with the strategic planning of the time, fiscal and monetary policies were prepared for a short war. However, the fiscal and monetary instruments remained essentially unchanged when the conflict turned at the end of September 1914 into a long, grim war of attrition. The accumulated government debt and the suppressed inflation left a heavy burden to the post-war world. From March 1918 onwards plans for fiscal and monetary stabilization following the war were discussed, but they remained inconclusive. After the armistice of 11 November 1918 they were soon forgotten as the republican governments embarked on an inflationary reconstruction policy.

Keywords: First World War; public finance; inflation (search for similar items in EconPapers)
JEL-codes: N14 N24 N44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2014
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