Inflations during Napoleonic Wars

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The period of Napoleonic Wars has seen inflations in several countries.

Austria 1792-1815

At the end of the Seven Years' War in 1762, the government of Maria Theresa decided to introduce paper money, the "Bankozettel", in value of 12 million gulden, in denominations of 5, 10, 25, 50 and 100 gulden. There was no forced exchange ratio with specie. However, one third of tax payments had to be made in the Bankozettel. They could be also exchanged for 5% state obligations. The paper money was after some difficulties accepted and its usefulness recognized; an agio of 1-2% was paid on it against coins. In 1771 followed another emission of the Bankozettel, not exchangeable for obligations.

At the beginning of the Seven Years' War was Austria's state debt 118 million gulden, after it 271 million. Maria Theresa took special care to stabilize the budget. Under her son, Joseph II., however, the fiscal situation worsened. With new offices the civil budget rose from 18 to 28 million gulden; the expenses for the army grew from 33 to 66 million, total expenses of the state to over 100 million. Since 1782 had all budgets a deficit - at first it was small, but in in 1787-1790 yearly over 20 million. The in 1785 existing Bankozettel of almost 7 million were withdrawn and new ones were issued in value of 20 million gulden, for all taxes above 10 gulden, a half should be paid in them. In 1787 were almost 11 million more issued. Under Joseph II's successor Leopold II the debt increased again.

A period of wars with France followed under emperor Francis II. The churches were requested to give away their silver and gold items, to support the war against France, hostile to religion. New state debt was emitted, more Bankozettels were issued and token coins in circulation were strongly devalued. But the debt emissions had little success, evidence of Austria's weak credit. Forced war loans were instituted, in form of surcharges to taxes. The paying of interest on these loans was stopped in 1804 and in 1815 they were exchanged for a fifth of their worth. Lottery loans also produced some income. Finally, allied England paid some subsidies and granted two loans of 103 million gulden in total.

All that did not help. The debt grew from 399 millions in 1791 to 680 in 1802; the state income did not rise in this period and actually decreased slightly. The volume of the Bankozettel grew from 26.7 million in 1793 to 91.86 in 1798. 1 and 2 gulden Bankozettel were introduced to make up for the vanishing silver money. In 1800 their exchange rate rose to 118 3/8 % against silver (100).

More devaluations of coinage followed, more issues of Bankozettel and more taxes. The outcome of war in 1805 cost Austria dearly, with Venetia, Tirol and other lands lost. The increasing emissions inspired counterfeiting and mistrust among the population. In a 1806 patent, it was declared, that it was purely a war measure. But the funds collected to lower their amount had to be used against another war threat. In 1807 were the Bankozettel in circulation at almost half a billion, the budget deficit 23 million. Several attempts to loan more money from the population have failed. More emissions and the loss of land with war damages due to the Treaty of Schönbrunn led to a fall in the exchange rate in 1809 - 100 silver gulden cost about 221 in Bankozettel in January, and 404 in December.

To pay for war damages, the so-called "Silverpatent" was passed, demanding that all silver, with few exceptions, should be delivered to the state. In exchange were given shares on lottery loans or Bankozettel. Hardest hit by the dispossession were churches and cloisters, and the state-managed properties of urchins and minors. The patent was not valid in Hungary, so much silver was brought there. The conditions of the lottery loan show the real state of Austrian credit - properties of the state were mortgaged with an option on a forced sale, and the emperor had to personally sign them. All old silver coins have vanished from Austria.

After the unfortunate war of 1809 against Napoleon was the rate of the Bankozettel in a serious fall, accompanied by rising prices. Forced to enter the "continental blockade", the empire was hit hard, and import of many goods was forbidden. Those with a fixed income were barely able to avoid starvation. Corruption of civil servants grew massively. Great fortunes were made by some; the stock market turned into a literal "gambling hell". The government made things worse by forbidding the publishing of prices in the newspapers. The farmers calculated their prices according to the stock market price of the Bankozettels and became rich, buying jewelry and luxuries for their women, to save money in goods as soon as possible. Real estate speculation has broken out, and the prices of goods were rising into the sky.

Another attempt was made to reform the state's finances, exchanging the Bankozettel against another paper money, backed by a mortgage on church properties (the practical assumption, that they belong to the state, has spread widely after the French Revolution). This attempt failed as well.

It took the count Joseph Wallis, the president of the Hofkammer, to resolve the issue. He planned a devaluation in utter secrecy. The Bankozettel were falling ever deeper, and the budget for 1811 planned a large deficit. On the 15th March, 1811, were everywhere at the same hour opened the envelopes with the "Bankrottpatent". The over 1 billion Bankozettel were exchanged in a ratio of 1:5 for "Einlösungsscheine", as well as all taxes and other payments. The copper coins were likewise devalued. The rates on state debt should be halved.

The police acted strongly against any price increase. These "Einlösungsscheine" were not covered in any way - and yet, by the end of the year, were they accepted by the public. It was promised, that under no circumstances would be their amount in circulation increased - the promise was broken, later even with secret issues. It took until the 30s of the 19th century until the paper money was exchanged. But for the moment was the worst averted.[1]


In Russia was the paper Ruble ("Ruble Assignationes") introduced as a consequence of the Turkish Wars under Catharina the Great and her plans to open up the newly acquired lands at the Black Sea. At first were issued only 40 millions, at the end of the Napoleonic Wars it was over 750 millions. A silver ruble was in 1815 worth 426 paper rubles; but the silver never vanished and remained the basis of the currency. In 1839 was the inflation ended by declaring that all contracts and prices should be in silver.[1]


England stopped to redeem its banknotes for hard money in 1797, until the resumption in 1815, but the disagio was never more than 31%. The 1793-1815 war cost around 830 million pounds, 391 was financed from war taxes and 440 from loans. But the troops and subsidies to allies had to be paid mainly in gold; in 1814 had the Bank of England less than 1/10 of gold compared to the banknotes in circulation, but their agio to gold was only 9%. One reason for the relative stability was the burgeoning foreign trade, exports much higher than the imports. During the war in 1814 and 1815, the gold reserves were 2 to 3 million pounds. After the war, with banknotes in circulation at 26,6 million, the reserves rose to 7,6 million by August 1816 and 12 million in October 1817. England's healthy economy weathered the monetary disturbances quite easily.[1]


The Prussians were strongly inclined against paper money after seeing the French Assignats in action. But the threat of a coming war persuaded the government otherwise. In February 1806 were issued "Tresorscheine" in value of 4 million thaler, due to a "lack of currency". They were fully redeemable in good silver coins, and were mandatory to accept. One quarter of all payments to the royal cashier's offices should be rendered in these notes. After the battle of Jena and Auerstedt and French occupation of all Brandenburg and Silesia had the government escaped to East Prussia. The redemption of the notes was suspended and their value on the stock market rose and fell with the developments on the field of war. The total amount of the "Tresorscheine" was limited to 10 million thaler; although there was also a 2 million issue of "Thalerscheine" in 1810. In 1813 was the redeemability of the "Tresorscheine" restored. The paper inflation in Prussia turned out to be very limited, with the silver coins remaining in circulation.[1]


  1. 1.0 1.1 1.2 1.3 Richard Gaettens. Geschichte der Inflationen Von Altertum bis zum Gegenwart (German: History of Inflations from Old Ages to the Present), Inflationen im Gefolge der Napoleonischen Kriege (Inflations following the Napoleonic Wars) p. 199-212. ISBN: ISBN 3-87045-211-0. Referenced 2010-11-09.