Austrian Reconstruction and the Collapse of Global Finance, 1921–1931 by Nathan Marcus

Abstract

Reviewed by: Austrian Reconstruction and the Collapse of Global Finance, 1921–1931 by Nathan Marcus Michael Burri Nathan Marcus, Austrian Reconstruction and the Collapse of Global Finance, 1921–1931. Cambridge: Harvard UP, 2018. 546 pp. The postwar hyperinflation that struck the First Austrian Republic between June and December 1921 and then again from June to August 1922 is often regarded as a sort of poor cousin to the more spectacular hyperinflation that hit the Weimar Republic in 1923. That latter spectacle is memorialized in a widely circulated—and entirely staged—photo of a well-dressed man transporting a large pile of banknotes in a wheelbarrow. In Austrian Reconstruction and the Collapse of Global Finance, Nathan Marcus tracks how intervention by the League of Nations helped contain the earlier episode of hyperinflation in Austria and how the aftershocks of the League's withdrawal from the country subsequently resonated in Austrian politics and finance. Far from confirming the centrality of the economic predicament of Germany, his book is a remarkable testimony to the "attention Austrian affairs garnered around the world" and "the pivotal role Austria played in European politics and economic reconstruction during the interwar years" (11). The research is divided into [End Page 111] three parts: Section I, "The Crisis" (1921–1922); Section II, "Control" (1923–1926); and Section III, "Collapse" (1927–1931). First Republic Austria is, of course, not widely considered as being shaped by its financial crisis but rather by crises of culture, gender, politics, and psychology, among others. The details of the financial instability of the Austrian state that fueled these other crises have held a secondary relevance. But if it seems self-evident that in 1918 the collapse of the Habsburg state left a small republic to deal with the problems of the empire, Austrian Reconstruction and the Collapse of Global Finance shows that the difficulty of devising solutions to those problems was compounded because the problems themselves were remarkably novel. Hyperinflation, for example, was simply unknown in the nineteenth century, and thus no professional experience in putting an end to it existed. Meanwhile, hyperinflation—defined as a rate of inflation of more than 50 percent per month—had widespread consequences. It manifested itself, for example, in the subjective sense of time of individuals. As the decline in the value of money accelerated, the individual perception grew that decisions needed to be made quickly. Indeed, in an extraordinarily suggestive analysis, Marcus correlates conditions of hyperinflation with statistical anomalies such as a lower number of out-of-wedlock births (less perceived time to decide whether to terminate a pregnancy and thus an increase in illegal abortions) and higher tobacco consumption. Other forms of behavior elicited by the financial crisis were more traditional. The book is especially strong in showing how Austrian press caricatures linked inflation in 1921–22 to popular attitudes toward women and racial stereotypes of Jews. If an economy gripped by hyperinflation was a novel problem, so, too, was the solution that arrived in the shape of the League of Nations and its intervention to stabilize the Austrian currency and the state budget. Indeed, one might imagine Austrian Reconstruction and the Collapse of Global Finance as the story of a freshly minted intergovernmental organization, brimming with the high ideals of a new postwar internationalism, riding to the rescue of a feeble and friendless Austria. But among its many virtues, this book consistently challenges such preprogrammed narratives. In fact, as Marcus argues, defeated Austria was no passive recipient of loan guarantees but rather aggressively challenged the terms of the victors, while the League of Nations was far from the preferred choice as a loan administrator. In 1921, for example, the Austrian chancellor Michael Mayr rejected a first rescue scheme of the League because he "refused to accept foreign control over pledged [End Page 112] revenues and moneys lent" (79). With the second wave of hyperinflation in 1922, the League and new Austrian chancellor Ignaz Seipel were back at the table, and in October 1922, Seipel agreed to the League reconstruction plan, called the "Geneva Protocols." These Protocols included infringements upon Austrian sovereignty, and between 1923 and 1926, state finances remained under League of Nations control. During these...