Page:The Czechoslovak Review, vol3, 1919.djvu/149



For months after the Czechoslovaks got rid of the Austrian yoke they continued to be tied to the defunct empire by one of the strongest bonds in existence—a common currency. And the Austrian currency was in a terrible condition.

Next to the lack of food, inflation of currency was the greatest evil with which all Central Europe, including Bohemia, had to contend. Money was plentiful, far more so than before the war, but it would buy nothing. As a result people did not see any use in working and they squandered their paper money on the few luxuries still obtainable. The Austro-Hungarian Bank is sued during the war 37,000,000,000 crowns, unsecured by any metal, reserve. That meant a per capita circulation of 750 crowns. In Bohemia, the industrial portion of the empire, the amount of paper money to each person was more than one thousand crowns. At normal rate of exchange that would mean more than $200, and even at the terribly depreciated rate of exchange the circulation of fiat money was greater per capita than in the prosperous and wealthy United States.

The break-up of the monarchy and the rise of new national states did not stop the presses of the Austro-Hungarian Bank. The bank continued to create fictitious money which was a burden on all the new states, and it loaned this money to German Austria and Hungary. No attention was paid to the protests of the Czechoslovak government; in fact it was notorious that the new money was sent in bundles to Slovakia and Bohemia to stir up rebellion against the republic among German and Magyar minorities.

The government of Prague realized that the creation of a separate Czechoslovak currency was imperative. But to make plates and print a few billion of notes of entirely new money required a great deal of time and special facilities lacking in the new republic. Other means had to be found, and after two months of secret preparations Alois Rašín, minister of finance, laid his plans before the National Assembly on February 25. The principal provision of his bills set a term of nine days within which all Austrian money circulating in the territories of the Czechoslovak Republic had to be brought in to public offices and banks to be stamped or earmarked; frontiers would be tightly closed in the meantime, to prevent the influx of more bank notes from Vienna and Budapest. After the expiration of this period only stamped bank notes would be legal tender.

But in addition to separating Czechoslovak currency from Austrian and Hungarian currency Rašín’s financial measures dealt also with the problem of inflation. One half of all the currency brought in for stamping was to be retained by the state as a forced loan bearing interest at one per cent only. By this means it was intended to withdraw at one stroke half the money from circulation. Dr. Rašín stated, however, that the government intended to refund soon the smallest amounts thus held back, so as to avoid unnecessary hardship to the poor. And in order to utilize to some advantage the temporary business paralysis created by the period of stamping money, the financial measures provided further for the stamping of all securities held by Czechoslovak citizens, especially Austrian war bonds, and for a census of all movable property, the intention being to get a reliable basis for the imposition of a heavy property tax. In checking up property separate entry was made of property held before the war and that gained during the war; much higher rate is to be imposed upon war profits. Dr. Rašín explained that an extraordinary prop-