IN 1944-45 the monetary situations in Belgium, Denmark, France, Germany, Italy, and the Netherlands were strikingly similar. Each country had financed the war by printing notes, and the rigorous enforcement of price controls had kept price rises to relatively small proportions. Hence, these countries were faced with excess liquidity and repressed inflation. A reduction of the money supply was called for to prevent open inflation and to permit an orderly process of reconstruction. Belgium and Holland reduced excess liquidity through currency reforms, which consisted of the outright cancellation and temporary blocking of the money supply. They were thus spared from open inflation. France and Italy failed to reduce liquidity, and were consequently beset by a price-wage spiral. In Germany inflation was repressed to such an extent that money lost its normal functions and the economy lapsed into a state of barter. Three years elapsed before a currency reform eliminated excess liquidity and restored a credit economy. Only Denmark was able to avoid inflation without reducing the money supply, primarily because its excess liquidity was relatively small. The postwar reconstruction brought new inflationary pressures to all countries. Qualitative credit controls were generally a failure, unless accompanied by price and wage controls, and these were successful in curbing inflation only when supplemented by restrictive monetary or fiscal policies. By the end of 1948 production had reached prewar levels, and inflation had been arrested in all countries. A majority, however, still had deficits in their balance of payments. In countries such as Belgium, France, Germany, and Italy, which had relied primarily on monetary policy during the reconstruction, inflation was followed by a recession. No attempts were made to overcome the recession by expansionary monetary policy, because of the fear of renewed inflation and the persistent deficits in the balance of payments; the mere low-