War and Money

B07　—　Cross-cutting theme

War breaks monetary systems. And it often builds new ones.

Supervised by: Mitsuru Hayama　／　Reading time (main text): About 8 min (3,853 characters of text at 500 chars/min; exercises and readings not included)　／　Beyond the text: 11 exercises · 3 coins · 11 readings · 1 references

What this course teaches you to do

• You can name the four ways of paying for war and say the side effect of each.
• You can explain, in order, what happens after a war ends.
• You can explain that parliaments and central banks arose out of the need for war finance.
• You can judge where reservations are needed when reading wartime monetary records.
• Can explain "war costs not found in textbooks"—such as ransoms, yasen (war taxes), provisions, and counterfeiting—with concrete examples.
• Can discuss reparations from the perspectives of both the paying and receiving parties.

Lessons (8)

1. There are only four ways to pay for a warThe four ways of paying for war differ only in whom the burden falls on. How many are available shows the state's credit.
2. The biggest thing happens after the war endsWhen reading wartime money, always follow it past the war. Things break after it ends.
3. Reparations become a second warThe shelves were empty for want of credit, not goods. When credit returns, the goods are back by morning.
4. All eight editions carry this themeWar shows up in every monetary history. Reading one war in two editions is where comparison begins.
5. The Price of a King — Ransom as a Cost of WarIn medieval warfare, kings were also commodities. Ransom agreements could be for enormous sums, and sometimes they were never paid in full.
6. Yasen and Saltpeter — The Logistics Economy of the Sengoku PeriodBonds of faith became channels for funds and recruitment, and the raw materials for gunpowder could only be bought from overseas. The Sengoku period was a war of money.
7. Counterfeit Currency as a Weapon — An Attack on CurrencyCounterfeit warfare, aimed at destroying the credibility of an enemy's currency, was repeated from the Revolutionary War to Operation Bernhard.
8. Reparations: Two Sides — The Paying and Receiving NationsThe same "reparations" caused the collapse of a currency for the paying side, and provided the capital for the gold standard for the receiving side.

Readings (11)

• The money of the Hundred Years' War　Britain　1337–1453　The Parliament at Westminster
  The scene where a parliament grew out of the need for war finance. A real instance of "who holds the purse has a voice."
• The gold of the Sun King melts　France　1709–1715　The bedchamber at Versailles
  §2. Check in the original how the treasury empties after the war ends.
• The occupation of the Ruhr　Germany　January 1923　The Ruhr industrial region
  The scene where reparations become a second war. An industrial region is seized as security.
• 20 June 1948　Germany　June 1948　A shopping street in the western occupation zones
  §3. It is explained that the goods came back to the shelves for a reason other than shortage.
• The birth of the franc　France　1360　The autumn plain of Brétigny
  Section 5. "The face value is different from the amount actually paid" — How to interpret the figures for a ransom.
• The gun and the cross　Japan　1552–1586　Sakai in Izumi, and Funai in Bungo
  Section 6. Gunpowder in the Sengoku period came from overseas. The origin of the "five monme of silver" calculation can also be found in the original text.
• A history of false money　Overview: 2,700 years of the world　AD 1942　Operation Bernhard
  Section 7. A record of state-sponsored forgery that even the Bank of England could not distinguish.
• The costs of the wars with China and Russia　Japan　1897–1904　London
  Section 8. "Qualification to Borrow from Abroad." The use of reparations received.
• Debased Coinage　Greece　413 BC　The Fort of Decelea
  The construction of a single fort was enough to cut off the road to the silver mine, halting the supply of silver that had produced the Owl coins. This is an example of how war can stop the supply of materials for coinage before it depletes the state treasury.
• The matter is settled　Austria　circa 1622　Military camp
  This is a scene where soldiers fighting a war begin to refuse the debased currency issued to pay for it. Currency does not circulate by decree, but only with the consent of those who receive it—read to see where that line was crossed.
• The Bank That Wouldn't Lend　Turkey　1914　The boardroom of the Imperial Ottoman Bank
  When the war began, the empire discovered it did not have the right to print its own banknotes. This is a record of how the sole bank of issue, financed by British and French capital, would not open its vaults to fund a war against the investors' home countries.

Assessment

11 exercises in this course (7 check, 1 compare, 3 written). Progress is recorded by self-assessment.

References

• Currency Timeline 1945–1953 (wartime issuance and the fifth currency exchange). — Bank of Korea　Primary source on the first issue of banknotes on 1950-07-22, the emergency order of 1950-08-28, and the exchange of enemy currency.

Only works and primary sources whose existence has been verified are listed.