28. EFFECT OF THE WAR ON CUR RENCY. The World War made great changes in world currency, and especially in the countries participating in that conflict. The paper currency of 30 principal countries of the world at the beginning of the war aggre gated a little over $7,000,000,000; at the end of the war, November 1918, it vras about $40, 000,000,000; and in December 1919 it totaled $51,000,000,000, these figures being of course in very round terms, and exclusive of the currency issues of the Bolshevik government, which alone are estimated at $34,000,000,000. The gold re serve of the 30 countries in question was in 1914 a little less than $5,000,000,000; in 1918 a little over $7,000,000,000; and in 1919 slightly below the $7,000,000,000 line. 'The ratio of gold reserve to outstanding notes in the 30 countries in question was in 1914, 70 per cent; by 1918 it had dropped to 18.4 per cent; and in Decem ber 1919 was 13.7 per cent The world paper currency at the date of the Armistice was more than five times as great as at the beginning of the war, and one year later, December .1919, was seven times as much as at the beginning of the war. The actual in crease during the year succeeding the Armistice was over $10,000,000,000 or a 25 per cent in crease over that existing at the end of hos tilities. These figures of the currencies of the countries named are based upon the normal pre-war value of the respective currencies a,s expressed in United States gold coin.
Most of this increase both during and sub sequent to the war occurred of course in the countries participating in that great conflict. Taking the 23 countries and colonies which were in a greater or lesser degree participants in the war, their paper currency in July 1914 aggregated in round terms $6,000,000,000; in November 1918, $37,000,000,000; and in December 1919, $48,000,000,000; these figures being again in extremely round ternts. Meantime their stock of gold when taken in the aggregate showed but a small increase, from $4,360,000,000 in 1914 to $6,050,000,000 in, 1918, and $5,640,000,000 in 1919. Their ratio, as a group, of gold
to circulating notes, was in 1914, 71.3 per cent; in November 1918 15.8 per cent and in December 1919 112 per cent In certain coun tries, notably those of interior Europe, includ ing the Central Powers and Russia, the ratio of gold to notes fell with a much greater rapidity than that above noted; that of Austria Hungary from 54.8 per cent to about 0.5 per cent; Russia from 98 per cent in 1914 to ap proximately 7 per cent at the date of the advent of the Bolsheviki; Germany from practically 70 per cent in 1914 to 3.5 per cent in 1919. Among the European Allies. the reduction in ratio of gold to notes was also notable but less dramatic than that of the Central Powers, the drop in ratio of gold to notes being in the case of France from 62 per cent in 1914 to 112 per cent at the close of the war, and 9.6 per cent in 1919; Italy from 70 per cent in 1914 to 7.5 per cent m 1919; while in our own case the ratio of gold to notes dropped from 99.6 per cent in 1914 to 63.2 per cent in 1918, and 52.3 per cent in 1919. The Central Powers as a group show a ratio of gold to notes in 1914 49.7 per cent; in 1918 5.5 per cent; and in De cember 1919 but 1.7 per cent. The Allies as a group show a gold ratio in 1914 of 76.6 per cent, in 1918 20.8 per cent and in 1919 17.1 per cent.
The neutrals of course fared better in the matter of their currency than did those partic ipating in the vrar, though the total of their paper figures did increase from $1,166,000,000 in the eight countries for which figures are avail able to $2,421,000,000 in 1919, though the in crease of gold was still larger proportionately, from $516,000,000 in 1914 to $1,451,000000 in 1919, bringing the ratio of gold to notes in this group of eight neutrals from 44,3 per cent in 1914 to 59.9 per cent in 1919. (See accompany ing table for details for each of the 30 coun tries included in the study).