Back when the value of currencies was still linked to the precious metals, and their issuance therefore curtailed, many resented the scarcity of money as the cause of their economic ills. Of course, a deficiency of money makes credit similarly scarce and can slow economic growth even when any stimulus at all would be welcomed. However, in some scenarios, a scarcity of money can be so severe that even basic transactions are difficult to execute.

           Economies in the midst of war have witnessed great shortages of coinage, particular in the days before fiat money enabled central banks to issue at will. During the First World War, the economies of various European countries even resorted to making do with ad hoc money. These new currencies were private currencies, issued not even by private banks but rather by chambers of commerce, trade unions, municipalities, and industrial companies.

Wartime Money Shortages

           Shortages of currency were a feature of wartime economies throughout the 19th century. In Britain, the gold standard was suspended during the Napoleonic Wars precisely so the Bank of England could print more notes with which to make up for the panicked hoarding of coins and to support larger state spending. Failure to do so would have meant a contraction in the money supply and the inability of the state to finance its deficits without also depriving the economy of an adequate amount of credit with which to function.

           Relieved of the need to back every pound note with an equivalent amount of gold in reserve, the printing of banknotes was able to take off. By 1814, near the end of the wars, the face value of banknotes in circulation exceeded the value of gold reserves at the Bank of England by almost thirteen-to-one. Besides this situation, there were many other episodes of wartime monetary stress during the 1800s. Across the Atlantic, during the American Civil War, shortages of currency were so severe that change was made by simply cutting up larger bills in lieu of using small coins. The popular hoarding of silver coins even prompted the designation of postage stamps as legal tender starting in 1862.

           To facilitate their new economic role, stamps were encased in round brass frames to enhance their durability. At first, these cases were manufactured privately but the American government soon began to issue dedicated postage-sized banknotes designed specifically to be used as money. They took the place of small denomination coins while the new paper greenbacks replaced larger ones. Wartime money shortages would pop up soon again in Europe during the Franco-Prussian War of the early 1870s. However, they became most severe during the First World War and the result was the introduction of a broad assortment of new monies.

France during the 14-18 War

           In August 1914, Germany declared war on France and initiated a plan for its invasion through Belgian territory. To prevent a rush of people from converting their money into gold at the central bank, the French government suspended their gold standard. A hording of gold and silver nonetheless continued and this withdrew currency from circulation. The resulting shortage of coins hampered the internal trade vital for any economy. As a result, the state began to authorize the issuance of small denomination banknotes. It also appealed to citizens to deposit their gold with the central bank in exchange for transactable gold certificates.

           Rather curiously, the new notes authorized by the state were not all issued by the central government. Indeed, during the war, France saw improvised scrip issued by companies, local governments, and other institutions, much of it with official sanction. These private monies circulated in place of the now scarce precious metal coins. Municipal governments issued their own currencies using deposits at the Banque de France as collateral. The Paris Chamber of Commerce and other similar organizations across the country also issued their own monies.

           It wasn’t just these official or large organizations that took on the role of providing for an adequacy of small denomination notes and coins. Individual retailers, trade unions, and co-ops issued some of the numerous private scrips circulating in France at the time. As these were meant to replace small coins disappearing from use, the localized monies were usually made in small denominations, as little as five centimes.

           Amidst this disruption, private firms in various industries became issuers of their own scrips. An example is a five-centime coin minted for Renault. Unlike some of the new monies issued by governments and the chambers of commerce, there was nothing official about these coins. As the reverse side of the Renault scrip declares, it was only intended for use in their plants. True, the coin was not legal tender but the very need for such a token nonetheless reveals something broken with the country’s monetary system.

Belgium and Luxembourg

           Considering that the German plan to knock France out of the war required an invasion through Belgium and Luxembourg, the two countries faced a similar predicament to France itself. However, the gravity of the economic situation there was greater and more complicated considering that these countries were both under German occupation for much of the war.

           To start with Belgium, there was a run on the central bank in the summer of 1914 as investors sought to convert their money into gold, a safe haven commodity. As in France, there was a similar hoarding of coins unabated by the abandonment of the gold standard. Though eventually overrun, the Germans were delayed in their conquest of the country, allowing time for the evacuation of the government to France.

           Also benefiting from the delay was the central bank. By September 1914, the gold reserves held by the Banque nationale de Belgique had been shipped safely to London. With the government and central bank reserves abroad, a new monetary infrastructure had to be developed for the occupied country. Under this arrangement, the Belgian bank Société Générale (of no relation to the modern French bank) printed the official currency while the Banque nationale was closed for business.

           To ease hoarding of metal during the occupation period, new Belgian coins were minted out of cheaper alternatives to silver, namely zinc and iron. Paper banknotes were also issued with a promise to redeem them into proper gold-linked notes after the war. As in France, municipalities were issuing their own monies as well. In time, nearly five hundred different local currencies were in circulation in occupied Belgium. One of these was issued by the city of Ghent which minted its own copper coins. Yet, when the copper supply in the country dwindled, the city resorted to striking coins on cardboard instead; these were lean times.

           A similar situation presented itself in Luxembourg. The country, also under German occupation, eased the transition for their new rulers by issuing banknotes denominated in both francs and marks. The dual currency notes were even printed in both French and German. Just like in France, companies and other private entities in the Grand Duchy resorted to issuing their own private scrips. In the fashion of Renault in France, one of these unconventional new money issuers was the steel firm Arbed, an ancestor of today’s ArcelorMittal.


            The opposite side of the Western front was facing monetary difficulties of their own. As had France and Belgium, Germany too opted to suspend its gold standard in 1914. Monetary standards that had survived wars, revolutions, and economic panics for centuries prior were all simultaneously crumbling. As it was in France, the suspension in Germany was designed to halt a run on the central bank as people sought the safety and universal value of gold and silver.

           Compared to the French and Belgians though, the Germans practiced the trade of issuing private currencies with particular creativity. The German private monies were called notgeld and were issued by local governments, banks, and other companies. They too mostly focused on providing a low denomination medium of exchange. As they were elsewhere, these scrips were made of common inexpensive materials. These included scraps of paper and even cut up playing cards. Issuers took these playing cards, or spielkarten in German, and simply stamped a denomination over them. Though a sign of the austerity of the era, this approach was among the least creative in common use.

           With the barriers to entry in the money-printing business disintegrating, the opportunity for those frustrated with the boring designs of old to reinvent the coinage was never higher. The notgeld were accordingly issued in a rich variety of designs. Some notes were used to promote local products or tourism in the regions in which they were issued. Others were printed as part of narrative series called serienscheine. The flimsy banknotes were a peculiar place to find artistic expression but the notgeld managed to become collectible, even while the war was still underway.

           However, despite their inventiveness and expressiveness, the monies were no doubt a warning sign of what was to come. They were evidence of the reduced control governments and monetary authorities had over the money supply in their respective countries. The notgeld may have been an omen signaling the rampant issuance of banknotes soon to afflict post-war Germany.


           The First World War was characterized by some inflation across all the belligerent nations and even in neutral ones as well. However, this would hardly be among the most profound economic aspects of the war if it wasn’t a harbinger of the inflation that broke out in Germany after its end. The monetary breakdown suggested that the authorities in Europe had lost control of a critical piece of economic and financial infrastructure, the currency. However, the war years themselves did not see hyperinflation, in turn suggesting that the condition is driven by a combination of several different dimensions of economic breakdown, and not just monetary ones. 

More from the Tontine Coffee-House

Explore a curious example of emergency money issued by the Japanese government in the Philippines. Also read about other intersections between money and wars in ancient Rome and Greece. Lastly, consider learning about how both world wars helped make art an investment.

Further Reading

1.      Berry, Paul S. “Money of the First World War.” Bank of Canada Museum, 8 Nov. 2018.

2.      Dickey, Colin. In Case of Emergency, Print Money. Topic, 9 July 2019.

3.      Kloetzel, James; E. “Encased Postage Stamps.” Arago, 3 Apr. 2006.

4.      Luyten, Dirk. “War Finance (Belgium).” International Encyclopedia of the First World War, 8 Oct. 2014.

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