Throughout the war the economic balance—the balance of payments between the Monarchy and other countries—has been adverse to Austria-Hungary. According to data recently published by the Pester Lloyd the value of imports into Austria-Hungary during the four and a half years from January, 1914, to July, 1918, was 19,574 million crowns, and the value of exports only 7,652 million, showing an adverse balance of trade of 11,922 million crowns. The balance of payments on foreign investments was likewise against Austria-Hungary, though it is not possible to estimate it accurately.
Under such conditions the exchange value of the paper crown in neutral markets naturally declined largely during the war. In Switzerland, for example, the crown was quoted at a discount of 13.30 per cent. at the end of 1914, and in the course of the following years, the discount increased successively to 36.20, 49.17, 50, and 70 per cent. A hundred crowns at par will purchase 105.01 francs; on December 15, 1918, the exchange rate for 100 crowns in Switzerland was only 30.31 francs, a loss of 71.13 per cent.
In Denmark the Austro-Hungarian crown was quoted, at the end of the years 1915–1918, at the successive discounts of 35.20; 49.08; 47.10, and 66.04 per cent. In Sweden the year 1918 closed with a quotation showing a loss of 70.24 per cent. In the Netherlands, the crown was quoted at a discount of 70 per cent. on December 14, 1918. The crown was at a discount even in Germany and Finland, although the currencies of those countries were considerably below par in other countries.
As the Swiss market is the most important of the neutral markets for Austria-Hungary, it is interesting to compare the rates at Berne. On December 15, 1918, the crown was quoted at 0.3031 francs, and the dollar at 4.865 francs. From these figures it is evident that in Switzerland on that date a dollar would purchase 16.05 crowns, so that the exchange value of the crown may be estimated at 6.22 cents in United States currency.
Depreciating currency ordinarily hampers importation and stimulates exportation, the latter in turn contributing to improve the exchange. It can hardly be expected, however, that the new countries will soon be able to resume exportation on a scale large enough to effect an improvement of exchange. Whatever steps are to be taken by the several governments for the rehabilitation of the currency must be taken jointly, as the banknotes are circulating in all the countries of the former Monarchy. During the Christmas holidays of 1918, representatives of Bohemia, Poland, German Austria and Hungary attended a meeting of the board of directors of the Austro-Hungarian Bank at Budapest, and an agreement was reached that the affairs of the bank should be liquidated in the course of the present year and the bank go out of existence December 31, 1919. In the mean time the new States are to establish their own banks of issue. The liquidation is to be carried out by Mr. Maz von Rapp, a former manager of the Loan Branch of the Deutsche Bank, who was installed on January 1, 1919, as general manager of the Austro-Hungarian Bank.
It is estimated that about 10 billion crowns of the banknotes are held by citizens of the Czechoslovak Republic, and a suggestion has been made that the States retire about 500 million crowns of the paper at current rates annually while introducing gradually a gold standard currency, with the franc as unit. Gold is now being collected throughout Bohemia, and measures appear to have been taken to prevent a further influx of notes from other countries, but the retirement of the paper crown will doubtless be slow and difficult. It will have to be accomplished, however, if trade is to be saved from the evils of a fluctuating currency.
Rumors of President Masaryk’s resignation as a result of the communist revolution in Budapest struck the Czechoslovaks in America as silly. Masaryk is not a man to quit his post, when his country faces a crisis.
I saw with my own eyes and came in close touch with the Czechoslovak officers and men. They were admired by all of us, not only for their gallant appearance, but they were also esteemed as brave warriors, most perfect gentlemen and splendid citizens. I always had the most friendly relations with Czechoslovak officers and soldiers. I was interested in their political aspirations, and everywhere and in all circumstances I found them the same: noble, unselfish, strong in their duties and faith. In Omsk I was proclaimed by the Czechoslovaks the “grand mother” of their troops in Russia. There, as well as in Ekaterinburg, in Cheliabinsk, in Ufa, in Samara, in all these places I always found them fine men, beloved and esteemed by all the Russians.—
