Editing Economy of Austria (section)

=== Foundation and ''Interbellum'' ===
[[First Austrian Republic]], founded as a result of the [[dissolution of Austria-Hungary]], inherited an economy battered by the ravages of the First World War, namely:

* The abolition of the [[gold standard]] in 1914.<ref name=":0">{{Cite web |last1=Beer |first1=Christian |last2=Gnan |first2=Ernest |last3=Teresa Valderrama |first3=Maria |title=A (not so brief) history of inflation in Austria |url=https://www.oenb.at/dam/jcr:29752216-a40d-4f34-bf13-0483032a9bf5/mop_2016_q3_in_focus_01_Beer_Gnan_Valderrama.pdf}}</ref>
* Provision by the central bank of credit to the state, increasing the money supply.<ref name=":0" />
* The balance-of-payments deficit caused by the Austrian need to import food and fuel, devaluing the krone (the Austrian currency at the time).<ref name=":1">{{Citation |last=Cottrell |first=Philip L. |title=Austrian Reconstruction, 1920–1921: A Matter for Private Business or the League of Nations? |date=2013 |url=https://www.cambridge.org/core/books/business-in-the-age-of-extremes/austrian-reconstruction-19201921-a-matter-for-private-business-or-the-league-of-nations/61003231E8C7DE6A842154712B3AC652 |work=Business in the Age of Extremes: Essays in Modern German and Austrian Economic History |pages=59–75 |editor-last=Ziegler |editor-first=Dieter |series=Publications of the German Historical Institute |place=Cambridge |publisher=Cambridge University Press |doi=10.1017/cbo9781139061827.005 |isbn=978-1-107-01695-8 |access-date=2022-09-23 |editor2-last=Berghoff |editor2-first=Hartmut |editor3-last=Kocka |editor3-first=Jürgen}}</ref>
* The use of deficit spending to finance food subsidies,<ref name=":1" /> leading to a 12-fold increase of banknotes in circulation.<ref name=":0" />

A number of international relief schemes failed to garner enough support<ref name=":2">{{Cite web |last=Warnock |first=Barbara |date=2015 |title=The first bailout : the financial reconstruction of Austria 1922-1926 |url=https://eprints.bbk.ac.uk/id/eprint/40237/1/The%20First%20Bailout%20-%20The%20Financial%20%20Reconstruction%20of%20Austria%201922-1926.pdf}}</ref> while a report by Sir William Goode argued that the Austrian economy would collapse without swift foreign intervention.<ref name=":1" /> As such, the Austrian economic crisis stretched into its second year, with inflation running at 99%.<ref name=":0" />

==== League of Nations Bailout ====

Source:<ref name=":2" />

With annual inflation running at 2,877%,<ref name=":0" /> the League of Nations was officially appointed to organise an Austrian reconstruction plan in August 1922. The League scheme was based on the view that Austrian troubles as a result of an inability to pay for necessities and obtain credit, and therefore, an Austrian financial revival was critical to Austrian survival. To this end, the plan was focused solely on financial reconstruction. Austria would receive loans raised from international money markets and the Austrian public, which would be secured on customs and tobacco taxes. In exchange, Austria would in effect lose sovereignty over its economy, agreeing to:

* Relinquish control over the mints to an independent bank, with the aim of returning to the gold standard.
* Terminate the printing of money by the central bank.
* Eliminate the budget deficit (requiring the implementation of austerity measures and monetary control).

The measures took effect in 1923. Short-term effects were impressive; during the announcement to undertake Austrian reconstruction in August 1922, public confidence soared. Foreign currency holdings were converted back into krone, stabilising the currency. This allowed the Austrian Foreign Exchange Agency to finally intervene to fix the krone to the dollar, something that the wild gyrations of the past had not permitted. Capital rushed back into Austria, and domestic prices stabilised, pronouncing the end of hyperinflation.<ref>{{Cite book |last1=Parker |first1=Randall |title=Routledge Handbook of Major Events in Economic History |last2=Whaples |first2=Robert}}</ref>

The steam ran out shortly after implementation. Growth averaged 0.35% per annum until 1929,<ref name=":2" /> unemployment leapt five-fold,<ref>The First Report of the Commissioner-General of the League of Nations for Austria, 15 December 1922 – 15 January 1923</ref> bankruptcies increased 41-fold,<ref>{{Cite book |last=van Waldré de Bordes |first=J. |title=Bankruptcies in Austria |date=27 May 1925}}</ref> and the trade deficit doubled.<ref>The Fourteenth Report of the Commissioner-General of the League of Nations for Austria, 15 January – 15 February 1924</ref>