Philip L. Cottrell - Rebuilding the Financial System in Central and Eastern Europe, 1918–1994

First published 1997 by Ashgate Publishing

Published 2016 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

Copyright P. L. Cottrell and contributors

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:

Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Cottrell, P. L.
Rebuilding the Financial System in Central and Eastern Europe, 1918-1994
1. Financial institutions Europe. 2. Finance Europe. 3. Financial
institutions Europe History 20th century. 4. Finance Europe
History 20th century. I. Title II. European Banking History
Association
332.0943904

Cottrell, P. L.
Rebuilding the Financial System in Central and Eastern Europe, 1918
1994 / Philip L. Cottrell
p. cm.
1. Banks and banking Europe, Eastern History. 2. Banks and
banking Europe, Central History. 3. Finance Europe, Eastern
History. 4. Finance Europe, Central History. I. Title.
HG2980.7.A6C67 1997
332.10943-dc21
96-40378
Transferred to Digital Printing in 2012 CIP

ISBN 9781859284131 (hbk)

Rebuilding the Financial System in Central and Eastern Europe,

Tams Bcskai (Budapest University of Economics)

Gyrgy Szapry (National Bank of Hungary)

P. L. Cottrell (University of Leicester)

Z. Landau (Warsaw School of Economics)

Peter Eigner (University of Vienna)

Vlastislav Lacina (Historical Institute, Czech Academy of Sciences)

Franjo tiblar (University of Ljubljana)

Daniel Daianu (The National Bank of Romania)

Capital stock and balance sheet totals of the main commercial banks (millions of Czech crowns)

Capital sources and credits of commercial banks in the Czech Lands, selected years (millions of Czech crowns)

Savings banks and small loan companies, 1929

Yugoslavia, monetary aggregates 1920-1940 (millions of dinars)

Public Sector Expenditure: State Budget and Budget of Dravska banovina (millions of dinars)

Sectoral shares of the Yugoslav economy, 1923, 1939 (per cent)

Number of business undertakings within commerce and finance in Slovenia and Yugoslavia, 1937 and 1939

Distribution shopping outlets in Slovenia and Yugoslavia, 1922, 1925-31, and 1934-9

National Income and Foreign Trade of Yugoslavia, 1920-1939 (millions of dinars)

Yugoslav stock exchanges, volume of operations, 1929, 1933, 1937, 1939 (millions of dinars)

Slovene Banks, 1918-1937 (millions of dinars)

Joint stock banks in Slovenia and Yugoslavia, 1929, 1933, 1936, 1938

Deposits and credits of Slovenian financial institutions, 1919-1939 (millions of dinars)

Privileged banks in Yugoslavia, 1938 (millions of dinars)

Popular saving institutions in Slovenia and Yugoslavia, 1936 and 1938 (millions of dinars)

This collection of essays, written by former bankers, practising central bankers, government advisers and historians, celebrates the seventieth anniversary of the foundation of the National Bank of Hungary in 1994. From a range of view points, each contribution considers the monetary and financial history of the past century and, in particular, explores in varying ways possible parallelisms between experiences of the collapse of the Habsburg Monarchy in 1918 and of contemporary changes since 1989. , where continuities and discontinuities are reviewed and analysed with respect to Austria, Czechoslovakia, Romania, Slovenia and Yugoslavia.

This collection has a catholic approach and, deliberately so, in order to capitalize upon the greatest possible benefits that might arise when a variety of unfettered views are solicited. Consequently, in his introduction, Pter Bod takes issue with the possibility of there being historical parallels. Rather, he maintains that a process of creation, as opposed to re-creation, is taking place in eastern Europe during the 1990s since the tradition of the market economy within this region has faded into the distant past. He receives some support from Daniel Daianu, who considers that the post-communist transition is an exceptional experience, involving modernization that has to start from scratch. However, Daianu also points to central and eastern Europe being particularly subject to path-dependency, so that bring about economic and societal change involves having to address structures that are a legacy of backwardness and a legacy bequeathed by centuries as opposed to decades or half-centuries.

Despite the old adage, history seldom repeats itself exactly and what emerges from these contributions is that the events of 1918/19 within eastern Europe comprised less of a discontinuity than those that have unfolded since 1989. With the national revolutions of 1918, the major financial problem that had to be resolved was currency reform, posed by wartime and post-war inflation and hyperinflation. In the case of commercial banking, there was greater continuity with the further development of universal banking out of its pre-war mould of the Austrian/German model, albeit after 1918 within new national frameworks for financial systems.

In , there is an over-riding emphasis on central banks being continuously engaged in a struggle for good money, to use the phrase of Tams Bcskai. None the less, Daianu shows that, in the case of at least the National Bank of Romania, the central bank could be expected to discharge a range of other functions, from supporting industrialization since the banks very foundation in the 1880s to refinancing commercial banks during the inflation of the early 1920s to conducting commercial policy over the 1930s and to being an institutional builder during both the interwar period and the post-communist transition. Maintaining the value of the currency through the unrestricted conduct of monetary policy was a delicate task for central bankers, which could bring them into collusion with government. Both Bcskai and Gyrgy Szapry show how the independent position of the National Bank of Hungary was undermined by the states policies, first in 1933 due to reactions to the Great Depression and then in 1938 with the Gyr war programme. Similarly, as Landau argues, the Bank of Polands freedom for manoeuvre was progressively affected and reduced by Pilsudskis coup dtat of May 1926, the 1927 Polish stabilization plan, the requirement to provide state loans from 1931, the imposition of foreign exchange controls from 1936 and the expansion of the currency from 1938.