1 gulden Austrian currency, January 1, 1858, issued December 21, 1858 

1 krone Association coin,
1858, Vienna,
Francis Joseph I (1848 to 1916) 

Slide rule for coins, developed for the conversion of Convention coin gulden into Austrian currency gulden at a rate of 1 to 1.05. Additionally, it indicated the silver premium on the copper kreuzer. Specifically made for use by the officers (paymasters) of the imperial army. 

4 gulden Austrian currency, 1875, Kremnitz (Kormoczbanya), Francis Joseph I (1848 to 1916), worth 10 francs 

Reestablishing monetary stability after the events of 1848–49 was difficult for a number of reasons. Monetary policy was affected by the cost of maintaining Austria’s position as a major power in the Crimean war (1855–1856) and in the Italian war (1859), which thwarted the efforts to consolidate the national budget, as well as by the development of world market prices for precious metals. The high premium on silver in the wake of the gold rushes in California and Australia triggered heavy outflows of European silver coins, above all to eastern Asia and America. For many European countries, the switch to a gold standard appeared attractive. 

Austria, however, decided to keep its silver currency and sought to join the German Zollverein, a customs union established in 1834. The member states of the Zollverein had already embarked on a unification of currency systems with the agreement of Munich in 1837. Twenty years later, Austria relinquished its Convention monetary standard in the Vienna monetary agreement of 1857 and adjusted its gulden to the north German thaler. 1.5 Austrian gulden were equal to a Convention thaler. The coin weight unit was the “pound” of 500 grams, with 30 Convention thalers (45 Austrian gulden) being struck from 1 pound of fine silver. Under the decimal system that was obligatory for the Zollverein currency, the Austrian gulden was subdivided into 100 kreuzer. 

After Prussia defeated Austria at the battle of Königgrätz in 1866, Austria pulled out of the Zollverein and in 1867 oriented its coinage on the bimetallic standard of the Latin Monetary Union founded by France, Belgium, Switzerland and Italy in 1865. In a nod to the Latin Monetary Union, Austria minted gold coins of a value of 8 and 4 gulden, which was the equivalent of 20 and 10 francs. However, Austria never actually joined, a step it had planned for 1870, because its monetary system remained in disarray.

The provisions of the coinage agreements did not apply to paper money, even though paper money had been legal tender since the suspension of convertibility in 1848. Next to the silver gulden, Austria had the paper gulden, which was exchangeable for silver coins at a discount. All efforts to eliminate the discrepancy between the paper currency and silver coin, which would have necessitated a devaluation of the paper currency, were unsuccessful because the state’s financing needs remained so high. At the beginning of the 1860s the premium on silver coins versus paper currency had augmented to more than 40%, prompting the government to issue a new central bank act, the Plener Act, named for the minister of finance. Its purpose was to bind the issue of paper money to the size of the currency reserves. While this move succeeded in reducing the silver premium compared to paper money, the contraction of the money supply acted as a damper on business. 

In 1867 Hungary was recognized as an autonomous part of the Empire, a fact reflected by the use of Hungarian legends on the coins circulating in Hungary. The currencies of the Austro-Hungarian Empire, however, were not changed by this “Ausgleich,” or partial autonomy. In 1878 the Privilegirte Oesterreichische National-Bank became the Austro-Hungarian Bank, and the banknotes of the dual monarchy were issued with German and Hungarian legends.

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  Austro-Hungarian Bank stock 

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  1 gulden, 1869, Kremnitz (Kormoczbanya), Francis Joseph I (1848 to 1916), with inscription in Hungarian and Hungarian coat of arms 

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  1 gulden, 1869, Kremnitz (Kormoczbanya), Francis Joseph I (1848 to 1916), with inscription in Latin and Austrian coat of arms 

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  100 gulden Austrian currency, 1880, issued October 31, 1881, obverse in Hungarian 

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  100 gulden Austrian currency, 1880, issued October 31, 1881, obverse in German 

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The collapse of bimetallism and the price of silver had the greatest impact on the development of Austrian coinage and the monetary system in the last third of the 19th century. The sharp contraction of the value of silver against gold from the mid-19th century was in fact accelerated by the move to gold of Germany and Scandinavia at the beginning of the 1870s. In Austria, which was still on a silver standard, this development led to a shrinking premium of silver against paper currency from 1872 that turned into a steadily growing discount from 1878. Thus silver coins were no longer suited to use as a standard. Paper currency became the standard, and silver only served as the precious metal cover for the banknotes. The importance of coins diminished as the volume of cashless payment transactions surged. 

At the end of the 1870s nearly all European countries and the U.S.A. had adopted a gold standard. Austria remained on a silver standard, which entailed steadily growing losses. Finally, Austria adopted a gold standard with the introduction of the krone in 1892, satisfying an urgent need for monetary reform. The Austrian gulden was valued at 2 kronen, with 1 krone subdivided into 100 hellers. Banknotes entitled “Österreichische Währung” (Austrian currency) remained legal tender until 1900, when the krone was declared sole legal tender.

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  Thank-you letter to the Secretary General of the Austro-Hungarian Bank, Emil von Mecenseffý, with representation of banknote production 

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  1 krone, 1892, Vienna, Francis Joseph I (1848 to 1916) 

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  1 heller, 1892, Vienna, Francis Joseph I (1848 to 1916) 

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  20 krone banknote, issued June 22, 1908 

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Poster for the 7th war loan, 1917, designed by Alfred Roller (1864 to 1935) 

100 krone Austrian war loan, graphic design by C. O. Czeschka, Wiener Werkstätte 

1 krone banknote, 1916, imprint DEUTSCHÖSTERREICH 

Marked 50 krone banknotes in the printing works of the Austro-Hungarian Bank, Austrian management 

The krone currency began to deteriorate as a consequence of WWI. The war was financed only to a small degree by taxes; most of the funds were raised through war bonds – and government debts incurred with the central bank. The money supply exploded from 3.4 billion kronen to 42.6 billion kronen, and consumer prices rose sixteenfold during the war. Austria did not hesitate to set in motion the money printing presses, nor did it institute strict price controls, so that inflation was more rampant than in the other warring nations. 

After WWI, monetary conditions in the Republic of Austria – the tiny state that remained after the demise of the monarchy – were precarious. The initial hope that the krone could be maintained in a monetary association with the successor states quickly evaporated. Yugoslavia was the first country to stamp the banknotes of the Austro-Hungarian Bank as their own in January 1919, and Czechoslovakia followed suit in February. From March 12, Austria stamped the banknotes circulating on its territory with the mark “DEUTSCHÖSTERREICH.” 

Coins had been in short supply already during the war. First the gold and silver coins disappeared from circulation, then even the copper and nickel divisional coins vanished and were replaced by iron coins. A drastic emergency measure used to produce small denominations was to halve or quarter krone banknotes. At the end of November 1918, coins were in such short supply that the ministry of finance even issued a recommendation to public authorities and institutions to issue tokens.

50,000 krone banknote, issued January 28, 1922 

Container with 4 billion krone worth of banknotes, printing works of the Austro-Hungarian Bank, Austrian management 

100,000 krone banknote, issued August 2, 1922 

Along with Germany and Hungary, Austria was one of the countries which did not succeed in stabilizing its currency after WWI. The decline in industrial production and poor harvests had further devastated the economy. Moreover, Austria, which had been used to a large economy under the monarchy, now had to struggle with the structural problems of a smaller economy: It was compelled to import energy, raw materials and food. This imposed a burden on the budget, which already had to cope with war debts. Food subsidies became the largest expenditure item next to the inflated civil service, the railroad administration and unemployment benefits. 

Plans to redeem the war debt by imposing a tax on assets failed. The growing deficit was covered by direct credits taken out from the central bank. The money supply burgeoned from 12 billion kronen to 30 billion kronen in 1920, rising to roughly 147 billion kronen by the end of 1921. While the devaluation eased the debt burden and made it easier to pay civil servants, the expenditure for food subsidies jumped, too. Food subsidies, a quarter of state expenditure in the financial year 1919/1920, expanded to nearly 60% of total outlays in 1920/1921. 

From the summer of 1921, the devaluation was out of control. Initially, it had helped jumpstart the economy – Austria’s industry benefited from the export revenue, cheaply priced assets attracted foreign investors and tourism received a boost – but soon monthly price increases of 60% and more had, in the words of Gustav Stolper, “evolved into a hurricane that knocked the wind out of the population.” In August 1922, the cost of living was 14,000 times as high as before the war. There was no more currency to pay for food, coal and raw material imports. Austria’s very existence as a state appeared to be in jeopardy.

The height of inflation is symbolized by a banknote at a denomination of 500,000 kronen issued in 1922. The currency had lost its value, and people had lost their trust in it – hardly anyone was willing to accept kronen tendered in payment. Merchants or traders who did accept kronen had the power to arbitrarily fix the price of their goods. Prices were raised by the day, even by the hour. Wages rose in nominal terms, but their purchasing power diminished. A metallworker’s minimum wage, 11,041 kronen in December 1921, climbed to 184,896 kronen in September 1922 – but was worth only three-quarters of the December 1921 wage in real terms. People on fixed salaries or pensions suffered even greater income losses. 

People carried the banknotes around in knapsacks or huge baskets and were intent on spending money as fast as it came in. Whoever held banknotes quickly added to the panicked rush on physical goods. Many people were forced to sell their assets at a pittance and were at the mercy of profiteers and speculators. The monetary crisis had social repercussions: A scapegoat for the economic misery was sought, which contributed to the rise of anti-Semitic and xenophobic feelings. 

At the end of 1918 the central bank had issued cash certificates, as the paper and coal shortages thwarted efforts to supply a sufficient amount of krone banknotes. Moreover, a number of towns had been given permission to issue emergency money (notgeld). Other municipalities circumvented the central bank and soon followed suit. They saw the issue of notgeld, frequently produced simply as a collector’s item, as a source of funds. Some 1,300 municipalities and institutions put out sometimes quite sophisticated and attractive notgeld.

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  500,000 krone banknote, issued September 26, 1922 

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  Money transport from the printing works to the counters of the Austro-Hungarian Bank, Austrian management. One basket contained 2.5 billion krone worth of currency. 

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  Emergency money (Notgeld) of the provincial and local governments, samples 

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  Emergency money (Notgeld) of the provincial and local governments, samples 

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  9,9 Heller, Emergency money (notgeld) of the local governments, 1920

  From the Schilling to the Euro

  
  

  Stabilization: The Schilling

  In September 1922 the Austrian government succeeded in securing financial aid from the League of Nations. The Geneva Protocols of October 4, 1922, specify the conditions for the extension of a 650 million gold krone loan. Austria was obligated to shore up its budget and to stop the money printing press. In a partial waiver of sovereign rights, Austria had to submit to the control of a Commissioner of the League of Nations endowed with substantial financial authority. The announcement of the agreement of Geneva was enough in itself to stabilize the Austrian currency at 14,400 paper kronen to 1 gold krone. 
  
  The initial step in the bailout and reconstruction program was the foundation of the Oesterreichische Nationalbank by the law of November 14, 1922, as the sucessor to the Austro-Hungarian Bank under Austrian management, which had gone into liquidation. Apart from the settlement of payment transactions, the first and foremost objective of the new Oesterreichische Nationalbank, which went into operation January 2, 1923, was to safeguard the stability of the currency. 
  
  The transition to the schilling currency evidenced the new monetary policy course. In December 1923 the Nationalrat, the lower house of Parliament, authorized the government to issue silver coins at a denomination of 5,000, 10,000 and 20,000 kronen with the designation half schilling, schilling and double schilling. A comprehensive monetary reform a year later established the schilling as the official currency with the Schilling Act (Schillingrechnungsgesetz) of December 20, 1924, and set a rate of 10,000 kronen to the schilling. 
  
  The first actual schilling note was a banknote at a denomination of 100 schillings issued in 1925. More banknotes followed. In 1926 gold coins at a value of 100 and 25 schillings followed, and in 1928 a series of 2 schilling silver coins commemorating the 100th anniversary of composer Franz Schubert’s death was started.

  
  

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    Poster of the League of Nations bond, designed by Julius Klinger (Vienna City Library) 

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    Stock of the new Oesterreichische Nationalbank 

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    10,000 krone banknote, 1924 / 1 schilling banknote, issued May 11, 1925 

  
  

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    1 schilling coin, 1924 

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    100 schilling banknote, issued March 26, 1925 

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    2 schilling coin, 1930 

  
  

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    25 schilling gold coin, 1926 

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    100 schilling gold coin, 1926 

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  Monetary Policy during the Great Depression

  After Austria’s experience with hyperinflation and the breakdown of its monetary system, stability was defined as the key object of monetary policy. Fiscal prudence and a tight monetary policy were broadly endorsed by the general public as well. Even at the height of the Great Depression at the beginning of the 1930s, when the number of unemployed persons climbed to 600,000, the monetary policy course was not challenged. 
  
  On the basis of a strict hard currency policy, the Austrian schilling emerged as one of Europe’s most stable currencies, which earned it the moniker “Alpendollar.” The repercussions of the Great Depression and capital flight in the wake of Austrian banks’ difficulties entailed a 28% devaluation of the schilling. Nevertheless, Austria continued to observe restrictive monetary and fiscal policies in the following years. 
  
  After Austria had become an authoritarian corporative state under Chancellor Engelbert Dollfuss in 1934, the central bank was authorized to issue new divisional coins at the end of February 1934. The silver coins issued up to then – the half schilling and the schilling – and the 5 schilling note were withdrawn from circulation and replaced by new coins. The 50 groschen coin (the schilling was subdivided into 100 groschen) and the 1 schilling coin were struck in nickel, the 5 schilling piece in silver. All coins bore the image of the new national coat of arms, the double eagle. The 50 groschen coin caused problems: It was the same size as the 1 schilling coin, so that people frequently mistook one for the other. Therefore, in 1935 the central bank decided to redesign the 50 groschen coin, which had come to be known as a “Nachtschilling” – because it could pass for a schilling at night.

  
  

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    1,000 schilling banknote, 1930, issued May 15, 1931 

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    10 schilling banknote, 1933, issued April 9, 1934 

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    1 schilling coin, 1934 

  
  

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    5 schilling coin, 1934 

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    50 groschen coin, 1934, so-called night schilling (Nachtschilling) 

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    50 groschen coin, 1936 

  
  
  

  The Anschluss: The End of the Schilling

  

  100 schillings, 1936. This banknote was not issued. 

  

  20 reichsmarks, 1939, essai 

  When German troops occupied Austria on March 12, 1938, Austria’s national sovereignty ended. Five days later, the German reichsmark was declared the official currency and the Reichsbank was entrusted with the liquidation of the Oesterreichische Nationalbank. The OeNB’s right to issue banknotes was suspended on April 23, and on April 25, schilling banknotes were stripped of their legal tender status. Schillings were exchanged for reichsmarks at a rate of 1.5 schillings to the reichsmark, a populistic step representing a revaluation of the schilling. This cunning measure helped enable the National Socialist regime to conceal the actual purpose of the occupation. 
  
  For Germany, the Anschluss meant access to desperately needed economic and financial resources to keep the armaments industry running at top speed. Now that it had access to the Oesterreichische Nationalbank’s gold and currency reserves, the National Socialist state was able to replenish its severely depleted reserves. 78.2 tons of fine gold worth 467.7 million schillings at the lower Berlin exchange rate and foreign exchange and currency valued at 60.2 million schillings were transferred to the Reichsbank in Berlin.

  
  
  

  Return to the Schilling

  Reestablishing monetary order was one of the prime economic policy tasks after WWII was over and National Socialist control had ended in Austria. A first step in reintroducing the Austrian schilling was to restore Austrian monetary sovereignty. At the same time a huge liquidity overhang had to be neutralized. Apart from the reichsmark, the Allied military schilling, a type of transitional currency, was in circulation in 1945, which led to a destabilizing expansion of the money supply. The low volume of goods by comparison to 1938 contrasted with a money supply six times the pre-war level. 
  
  On July 3, 1945, the statute of the Oesterreichische Nationalbank went into force. Simultaneously, a law limiting access to deposits, the Schaltergesetz, was passed. About five months later, on November 30, 1945, the Schilling Act decreed the exchange of reichsmarks and Allied military schillings for schillings at a rate of 1 to 1. After the Allied military schillings and reichsmarks had been withdrawn from circulation, the schilling was the sole legal tender. 
  
  The restitution of monetary order was increasingly threatened by the specter of inflation, however. In 1946–47, the volume of banknotes in circulation expanded as a result of Austria’s precarious economic situation and the high cost of the Allied occupation. While inflation was kept in check by the first of five wage-price agreements concluded between the two sides of industry represented in Austria’s trademark social partnership, the schilling could not be stabilized until it had been devalued under the provisions of the Currency Protection Act of November 1947 and until a restrictive monetary course had been established in 1952. This stabilization was the prerequisite for a normalization of economic and monetary conditions.

  
  

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    5 Allied military schilling banknotes, 1944 series 

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    100 Allied military schilling banknotes, 1944 series 

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    1 schilling coin, 1952 (designed by Michael Powolny) 

  
  

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    10 schilling banknote, 1945, interim banknote 

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    100 schilling banknote, 1945, interim banknote 

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    People waiting in line to exchange money after the currency reform, December 1947. 

  
  
  

  The Schilling in the Second Republic

  Austria’s successful monetary reorganization and currency stabilization in the years after WWII made it possible to fix the schilling’s dual exchange rate at 26 schillings to the U.S. dollar in 1953. While the schilling was clearly devalued at this rate, the exchange rate link to the dollar paved the way for Austria’s membership in the IMF. When the countries of Western Europe declared their currencies convertible in December 1958, Austria had no problems following precedent in 1959. 
  
  In September 1955 a new National Bank Act was promulgated. It stated that the legal continuity of the OeNB had been unbroken since 1922 and contained provisions to ensure a high degree of central bank independence from the state. Moreover, the law enabled the Oesterreichische Nationalbank to play a central role as an economic policymaker by providing it with the legal basis for new policy instruments, namely minimum reserves and open market operations. The coordination of fiscal and monetary policy created the prerequisites for economic growth while preserving the stability of the currency. 
  
  After the breakdown of the Bretton Woods system in 1971, when the gold convertibility of the U.S. dollar was suspended, Austria adjusted its monetary policy accordingly. The central bank kept the value of the schilling stable by opting for a hard currency policy, which in a first stage consisted in tying the schilling’s exchange rate to a basket of currencies, and from 1976 to the Deutsche mark. By constantly adjusting its monetary policy instruments to take into account changing market conditions, Austria had achieved a high degree of monetary integration with the international economic community by the beginning of the 1990s.

  
  

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    10 schilling banknote, 1950, issued September 24, 1954 (first issued May 26, 1951) 

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    20 schilling banknote, 1950, issued September 25, 1950 

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    50 schilling banknote, 1951, issued October 25, 1952 

  
  

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    100 schilling banknote, 1954, issued October 14, 1955 

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    500 schilling banknote, 1953, issued December 2, 1953 

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    1,000 schilling banknote, 1954, issued January 23, 1956 

  
  

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    100 schilling banknote, issued June 1, 1981 (first issued October 19, 1970) 

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    500 schilling banknote, issued October 24, 1966 

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    1000 schilling banknote, 1966, issued September 21, 1970 

  
  
  

  The Last Schilling Banknotes – Schilling banknotes issued for circulation:

  

  20 schilling banknote 

  20 schilling banknote, dated October 1, 1986, issued October 19, 1988 

  front: 
  Moritz Michael Daffinger, b. Vienna, January 24, 1790, d. Vienna, August 21, 1849. One of the premier watercolor painters of the Biedermeier period.

  back:
  The Albertina in Vienna, which houses one of the largest collections of graphic art in the world, including an unparalleled collection of graphic art by Albrecht Dürer. The building, constructed from 1742 to 1745 and originally known as the Palais Taroucca, was later expanded with additions of a Reading Room and the Minerva Hall designed by Josef Georg Kornhäusel. 

  
  
  
  

  50 schilling banknote 

  50 schilling banknote, dated January 2, 1986, issued October 19, 1987 

  front: 
  Sigmund Freud, b. Freiberg (Prìbor), Moravia, May 6, 1856, d. London, September 23, 1939. Known as the father of psychoanalysis and for having developed the theory of the unconscious.

  back: 
  Josephinum Wien, designed by Isidore Canevale during the reign of Joseph II from 1782 to 1785. Since 1920 it has housed the Institute of Medical History with its impressive collection of life-sized anatomical wax models. 

  
  
  
  

  100 schilling banknote, dated January 2, 1984, issued October 14, 1985 

  100 schilling banknote, dated January 2, 1984, issued October 14, 1985

  front: 
  Eugen Böhm von Bawerk, b. Brno (Czech Republic), February 12, 1851, d. Kramsach (Tyrol), August 28, 1914. Important economist, president of the Austrian Academy of Sciences from 1911. Founded the Austrian school of political economy (marginal utility theory) along with Karl Menger and Friedrich Wieser.

  back: 
  Austrian Academy of Sciences, built from 1735 to 1755 by Jean Nicolas Jadot de Ville-Issey as the assembly hall of the old university; has housed the Austrian Academy of Sciences since 1857. 

  
  
  
  

  500 schilling banknote 

  500 schilling banknote, dated January 1, 1997, issued October 20, 1997 

  front: 
  Rosa Mayreder, b. Vienna, November 30, 1858, d. Vienna, January 19, 1938. Leading women’s rights advocate, painter, writer. Founded the “Allgemeiner Österreichischer Frauenverein” (General Austrian Women’s Association) in 1893.

  back: 
  Group picture of the meeting of Austrian Womens’ Associations in Vienna in 1911. Portraits of Rosa und Karl Mayreder. 

  
  
  
  

  1000 schilling banknote 

  1,000 schilling banknote, dated January 1, 1997, issued October 20, 1997

  front: 
  Karl Landsteiner, b. Baden (south of Vienna), June 14, 1868, d. New York, June 26, 1943. Medical scientist of high renown who was awarded the Nobel Prize for Physiology or Medicine in 1930 for his discovery of human blood groups. In 1940, he discovered the rhesus factor.

  back: 
  Karl Landsteiner in his laboratory at the Pathological Anatomy Institute of the University of Vienna. Model of a polio virus and stylized process of blood group determination. 

  
  
  
  

  5,000 schilling banknote, dated January 4, 1988, issued October 17, 1989 

  5,000 schilling banknote, dated January 4, 1988, issued October 17, 1989

  front: 
  Wolfgang Amadeus Mozart, b. Salzburg, January 27, 1756, d. Vienna, December 5, 1791. Composer, main representative of Vienna Classicism.

  back:
  Vienna State Opera, important example of Ringstraße period building. Built 1861 to 1869 by architects Eduard van der Nüll and August Sicard von Sicardsburg and inaugurated with a performance of Mozart’s opera Don Juan on May 25, 1869.

  
  
  

  The Euro: European Monetary Union

  

  European Central Bank, Frankfurt 

  

  Governing Council of the European Central Bank 

  Since joining the European Union in 1995, Austria has actively participated in the development of the framework conditions for Europe’s economic and monetary policy. The pinnacle of European integration since the foundation of the Common Market has been the introduction of the single currency, the euro, which will replace the national currencies of the Member States in the euro area by mid-2002 in a step-by-step process. On January 1, 1999, the 11 euro area Member States agreed on a fixed conversion rate between the euro and the national currencies and on a single monetary policy. 
  
  The new currency is solidly based on the stability culture carefully developed in Europe in the past years, a process to which the Oesterreichische Nationalbank and Austrian economic policymakers have contributed. The Oesterreichische Nationalbank is an integral part of the European System of Central Banks, the ESCB (comprising the European Central Bank, ECB, and the national central banks, NCBs, of the 15 EU Member States), which now bears responsibility for the monetary policy of the euro area. Within the ESCB, the Oesterreichische Nationalbank continues to ensure with all means at its disposal the stability of the currency, as stipulated by the Nationalbank Act. The Austrian stability approach is now fully represented in the Stability and Growth Pact, guaranteeing a smooth and continuous development from the schilling to the euro.

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