Outbreak of the war
End of the war

Derek Weber


Schumpeter’s imperialism theory: Did big business press for war?

As in most of the colonies that Germany, Austria Hungary's ally, had occupied before the First World War, there was, to put it bluntly, little to be obtained commercially in Bosnia-Herzegovina. From an economic point of point of view, how much sense did such conquests make? Did commercial considerations play any major role at all in connection with the outbreak of war?


The folly of the erstwhile rulers

In the opinion of Rudolf Sieghart, the governor of one of the largest and most influential Viennese banks before 1914, the Boden-Credit-Anstalt, it was the folly of the erstwhile rulers that led directly into the war. The Boden-Credit-Anstalt was regarded as the bank that was particularly close to the Imperial house.


The underlying causes of the First World War

Did the Great Powers ‘stumble’ into the First World War, as is often claimed? Or were there powerful ‘material’ interests behind the official political rhetoric that made the war appear desirable?


The financial consequences of the war for the new republic

Georges Clemenceau’s famous statement, “Autriche c'est ce que reste” (“What’s left is Austria”) referred to the break-up of the Danube Monarchy at the end of the First World War. The sentence can also be interpreted to mean that the Monarchy's heritage included the debts to be paid by the Republic of Austria.


Discharge of debts through inflation

At the end of the First World War, Austria was suffering not only from material exhaustion, but also from the ruin of state finances. Inflation continued. Ultimately, it was inflation that saved the new state from outright bankruptcy until 1922.


The losers under inflation: huge falls in employee real wages

Blue- and white-collar workers suffered particularly under devaluation. The de facto disappearance of trade union lobbying as a result of the policy of ‘internal peace’ led, as with civil servants, to huge falls in real wages. It was only in 1917 that the condition of wage earners began to improve again.


The mechanism of financing the war

The primary means of raising funds is of relevance not only for the triggering of inflationary processes but also for the operation and long-term consequences of a war economy.


War-related inflation in Austria

During the First World War, the interaction of public debt, increasing money in circulation and a considerable rise in demand for armaments, together with the shortage of food supplies, rapidly led to inflation.


Raising the costs of the war

The costs of a war cannot be raised by the normal financing mechanisms. Ultimately, every war is financed by making excessive use of the gross national product, and the weaker the basis of a country's economy, the greater the burden caused by the war.