This paper pays brief attention, although more than the recent flood of 1914
centenary books, to economic causes of the First World War before turning to
it fateful economic consequences for Southeastern Europe. The Austrian lack
of economic leverage over Serbia is cited as a reason for its resort to the
military option. At the war?s end, the option of the victorious powers to
provide significant economic relief to the region where the conflict had
begun was not taken. After tracking the brief, limited assistance provided,
the paper reviews to the massive economic problems confronting four of the
five of independent states, neglecting Albania as a special case, that could
now be called Southeastern Europe. First Greece and then Bulgaria faced
forced inflow of refugees. Romania and the Yugoslav Kingdom faced the
economic integration of large new, formerly Austro-Hungarian lands. All of
them were left not only with war deaths and destruction but also with large
war debts, or in Bulgaria?s case, reparations. The paper concentrates on the
primary Western response to these four economies, an effort led by the Bank
of England to replace immediate postwar inflation with the deflation needed
to reestablish currencies with prewar convertibility to gold, now with Pound
Sterling added to a gold reserve standard. Independent central banks, the
major positive legacy of this initiative, were to lead the way. But the
financial stability that all four economies did eventually achieve in the
1920s served only to reduce their war debts. Otherwise, maintaining the fixed
and overvalued exchange rates restricted domestic credit, encouraged
protective tariffs, and did not attract the foreign capital, especially new
state loans, that this emphasis on a single, European financial framework had
promised. A concluding section considers the lessons learned from a postwar
period that promoted economic disintegration by the 1930s. Looking at the
period since the end of the Cold War and then the wars of Yugoslavia?s
dissolution, we see EU leadership in the reduction of trade barriers, the
promotion of common fiscal practice and the prospect of genuine European
integration as Western lessons learned. Within the region, independent
central banks have helped the process. But the stabilization of currencies
around the overvalued Euro has posed a familiar post- 1918 problem since the
European downturn of 2008.
Fabianism and Guild Socialism: Two Views of Democracy
