The first bailout : the financial reconstruction of Austria 1922-1926

Warnock, Barbara Susan (2016) The first bailout : the financial reconstruction of Austria 1922-1926. Doctoral thesis, Birkbeck, University of London.

Abstract

This thesis examines the League of Nations’ project for Austrian financial reconstruction 1922- 1926. By 1922, the First Austrian Republic (1918-1938) was experiencing enormous problems, including hyperinflation. Little confidence existed that the country could survive as a unified and independent entity. In this context, the Economic and Financial Organisation (EFO) of the League designed a financial reconstruction scheme for Austria. The scheme was the first such project carried out by an international institution and this thesis explores its genesis, attributes and impacts. This thesis argues that this programme came into existence less, as is sometimes argued, because of the work of idealistic internationalists at the League of Nations, and more because the governments, diplomats and officials of certain powers, particularly France, but also Britain and others, wished to see Austria survive because they regarded its continued existence to be an important part of upholding post-war European order, and furthering their interests and diplomatic strategies. Furthermore, the support of financial elites was crucial in successfully launching the scheme, and representatives of these groups were centrally involved in the design and implementation of the programme via the EFO’s Financial Committee. The programme reflected their beliefs about the proper operation of finance and economics, and introduced to Austria orthodox financial measures that had a mixed, in many ways negative, effect on the Austrian economy and on Austrian prospects for stability. This thesis explores the often neglected political and social impact of the programme, such as the detrimental effects of unemployment, and the tensions generated between central government and the regional governments of Austria, particularly the City Government of Vienna. Ultimately, a programme that was created as an extension of the peace settlement worked in some respects to exacerbate the difficulties that would lead to crisis in Austria and in Europe in the 1930s.

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