Novčano-kreditni poslovi Narodne banke Srbije 1914–1915.
Monetary and Credit Operations of National Bank of Serbia in 1914–1915

Summary/Abstract: This paper analyses the operations of the National Bank at the beginning of the World War One when Serbia was still free. The National Bank was subjected to unfavorable legislation at the beginning of the World War One and this has prevented its normal functioning and greater contribution to the war efforts. Major difficulties were caused by limited money contingent and debt moratorium, which practically made impossible to finance economy, banks and the population. For this reason the Bank was formally transformed into an exchange office of governmental foreign currency, and basically into a printing press for inflationary money for the needs of the State. This was undoubtedly useful duty in the wartime, but with negative consequences. The restricted operations of the National Bank, as well as related measures (suspension of convertibility, the ban of food and gold export, price control), in conjunction with an ongoing war effort, contributed to the great economic crisis in 1915. Rigorous measures made sense in the short run at the beginning of the war and they were imposed because „it was general belief (in Serbia) that war cannot last long, because of high cash needs and huge military movements“ according to the report of Finance Ministry of 1925. However, these measures were maintained for too long, causing negative effects on economic affairs. It is not clear why they were not changed sooner. The Finance Minister Paču clearly saw the problems but, already sick and near the end of his life, may not have had the energy to convince the Prime Minister Pašić who was occupied with important military and political issues. The National Bank did not play particularly positive role in the World War One. The Government was mostly responsible for this because it did not allow necessary changes of the National Bank’s regulation on the eve of and during the war and also for implementing the problematic package of economic and financial policies during the war.

• Details
• Contents