EIRP Proceedings, Vol 11 (2016)

Performance and Risks in the European Economy

Romanian Economy

during the Great War 1914-1918

Gheorghe Stefan1

Abstract: Years of neutrality Were Essentially the worsening fiscal period for most of the residents, cashing any type of Authorities rigorously tax. By carrying out a national loan Liberal government managed to reduce the debt to the National Bank HE had. Entry Will the current war exacerbated the decline of the Romanian economy due to this unfortunate campaign year outcome of the first part of the war. In terms of economic recovery Even with economic growth potential of Romania after the union prewar production levels and exports in various fields Will Be Achieved in 1921 and 1924 Which Will Contribute to the deepening economic crisis after the war

Keywords: economic war effort; economic recovery; economic blockage; economic aid; reparations.


The outbreak of World War represents a turning point in the contemporary history of world states due to both causes and consequences it has generated. The struggle for the division and redivision of the world, mainly economic considerations will find most belligerent states unprepared to support an economic war effort so long, among which will include and Romania. The issue of financing military spending will be an extremely urgent for governments of states that are involved in conflict, the only foreign lending. Romania will range from the start in frontline disputed by the two military and political blocs, the Central Powers, the Entente concerned. The political class and public opinion also would divide into two camps on the grounds of sympathy or political expediency country into war supporting one side or the other. Both sides beligernate promising more or less veiled support the interests of Romanian provinces under foreign domination, the Entente guaranteeing the rights of Romanians in the Banat, Transylvania, Bukovina, under the domination Austro-Hungarian to join the Old Kingdom while the Central Powers claimed the right Romania to join Bessarabia, the territory between the Prut and Nistru which was under Tsarist occupation. Given this critical situation and the lack of preparedness of Romania to have a successful military campaign, Crown Council will decide the adoption of neutrality in armed receive years of the war from 1914 to 1916. The dispute between the belligerents did not take into account the status of neutrality of Romania, each side seeking to occupy dominant positions in the Romanian economy, being used every weapon possible economic from buying shares in industrial or banking going to grant credits Romanian state buying large quantities of grain and oil to attract Romania on one side or the other. In 1916 the states' Entente was strengthened strongly detrimental member of the Central Powers, the capital of French, English, Dutch or Belgian already accounted for over 61% of the total foreign capital of industrial companies in the country while the capital of the German and Austro-Hungarian Empire not only held about 36%. The dispute you plan to be sustained and lending, Italy and England being among the states that have supported Romania's military preparations. The war caught unprepared Romanian economy not only for effective participation in the conflict, but also the situation of neutrality since the two sides will mutually boycott trade relations around the globe even with neutral states.

Economic disruption will be a blow strong enough for both import and especially for Romanian exports especially after Turkey's entry into the war on the Central Powers. Moreover, the Romanian army was poorly equipped compared for the other belligerent countries, equipping costs are extremely high. Representing sufficiently weak automobile industry, without having a developed branch of the chemical industry, the Romanian economy nun was able to cope with war, especially since the results had been made public even during Romania's participation in the Balkan campaign. Army had suffered due to less favorable business that the state has with various companies, being high profile scandals. However, in order to fill skills gaps will open more schools for apprentices to prepare turners, personal ethnic adjustors, etc.


Agricultural production situation best reflects the Romanian government's efforts to increase production statistics provided clear: in 1913 wheat production increased from 2229 million to 2440 million tones and area under maize has increased from 1,600,000 ha 2,100,000 ha in the same period. For now need to build state reserves will be crucial for sustaining economic war effort so that the Romanian authorities will stop the export of grain but good harvest of 1915 led to the request of exporters granting special permits for the export of grain. Lower acquisition prices offered by German and Austro-Hungarian Romanian State will boost export grain mainly in the states of the Entente however, blocking the straits Bosporus and Dardanelles Turkey will have decisive effects regarding the decrease in export revenues collected by the state or Romanian companies between 1914-1916 years the situation will worsen greatly residents from cities primarily due to unemployment in industries that had no direct cooperation with the army. (estimates reach the figure of 100,000 unemployed workers in March 1915 in Bucharest no 2/3 were working in Manchester and 44%.) the price of food will increase sharply and rents alike. Impoverishment industrial workers will be enhanced by the concentration of state made massive numerical growth of the army.

Economic War Effort of Romania 1916-1918

The economic situation will worsen further with the entry of Romania into the war on August 14/27, 1916. After a brief victorious campaign in Transylvania joint forces of Austro-Hungary, Germany and Bulgaria will determine the alignment withdrawal Romanian Carpathians and the Danube highlighting weaknesses the national army. Central Powers offensive force will continue Romanian army, with all the support ally, will have to cede the Carpathian mountains, Turtucaia, south of the Danube, and after the Battle of the Neajlov-Arges to evacuate part of the national territory. Fleeing authorities, the military and the large numbers of people in Moldova will create serious economic difficulties, social and political to which should be added the military front line was stabilized and Focsani Eastern Carpathians, Nămoloasa, Galati and the Danube. In enemy-occupied territory will establish a pro-German administration, with the sole purpose to help the soil and subsoil riches looting the benefit of the Central Powers. Military preparations on Romania's imminent entry into the war will not go unnoticed, as well as financial and economic effort to match. The costs will amount to an impressive amount of 539 million in 1913 to 1914, reaching 542.5 million in the 1914-1915 budget year 1916 to 1917 lei 831 mil.

Years of neutrality were essentially a worsening fiscal period for most of the residents, authorities rigorously cashing any type of tax. By carrying out a national loan Liberal government managed to reduce the debt he had to the National Bank. Entry actual war will exacerbate the decline of the Romanian economy this unfortunate campaign due to an outcome of the first part of the war. Offensive Romanian army in August 1916 in Transylvania will end too quickly, after only four months of the onset of operations enemy managed to occupy Oltenia, Muntenia and Dobrogea thus depriving the Romanian authorities of important human and material resources required front, the evacuated population not only . Defeats in the first part of the military campaign will yield about 100,000 dead, 150,000 injured and 250,000 prisoners losses that will result in new recruitments and emphasizing the peasants and workers of industrial and agricultural decline. Evacuation in Moldova and Eastern Carpathians ridges front stabilization and alignment Focsani, Galati-Nămoloasa offered brief respite to prepare recovery with constant support of Romina army allies.

Although previous conditions laid down in the Convention alliance with the Entente have been partially allies economic collapse, military and political foreshadowed on Romania and danger transition resources that occupied Central Powers led supplementation economic aid and military assistance to the Romanian state will succeed unreasonable in the summer of 1917 to record only victories Entente theaters of operations Mărăşti, Marasesti and Oituz. Central Powers in occupied territory shall institute a harsh regime of domination through military administration which will aim Romanian economy enslaving their war effort. It will pass the destruction of all Romanian industry components that could not be made functional occupant or could not be deployed in countries such as the Central Powers extraction industry and oil processing, food, railways, ports, etc.

Particular attention will enjoy oil exploitation, agriculture, monetary circulation and transport. Romanian exports, legal or less legal use on site of the army of occupation will further mitigate the potential national economy (1.2 million tons wheat, 495 000 tones maize, 860,000 cattle, 106,000 pigs, etc.). In unoccupied territory expenditures will increase more in comparison with diminishing resources which causes deficits and fiscal tightening. The large number of refugees, civilian or military, armed resistance or defense reorganization and administration of the territory will burden the state budget and so poor. Agriculture and industry will be reorganized on criteria exploiting oil fields and forests and will increase military spending to cope authorities will more loans from the National Bank for 1.2 billion lei in 1917, and 1,5mld lei in 1918, increasing the money supply in circulation (from 700 million in 1913 to 2 billion lei in 1918) will result in deepening inflation and rising prices highlighting the mismatch between the needs of the market and monetary circulation. The leu's depreciation will impose restrictions on the export of gold, National Bank, buy a site even at high prices in the domestic market.

Economic, social and Political Aspects of the Great Union of 1918

End of the Great War, as it is known in Western historiography, represents a watershed in the history of participating States and especially Europe, the continent that was the main theater of war. Human and material losses were unprecedented at the time and is amounting to approximately 9 million dead, 5 million disappeared infirm 7 million and 15 million wounded. To these will be added economic losses amounting to over 330 billion dollars of which more than 200 billion incumbent allies, and on industrial production in Europe, fell by 40%, agricultural production by 30% and inflation increased more than 10 times. From the political point of view, we are witnessing the collapse of three large multinational empires: the Tsarist Empire, Austria-Hungary and the Ottoman Empire and in its place will come new member independent political as well as Austria, Czechoslovakia, Hungary, Poland, Finland, the Baltic countries and others will complete national unity: Romania, Yugoslavia. The defeat of the Central Powers will have important consequences not only political but also economic as new countries will seek to consolidate positions of political and economic independence internationally. Even if, at the Paris Peace Conference winning states will impose its allies Germany and reparations absolutely huge, they could not even hypothetically to cancel the social, economic and political war. Moreover, the war will contribute definitively to Europe losing its leadership in the economic field, it had to reorganize the areas affected by war. Countries like US, Canada, Japan and Switzerland will record higher profits from trade with belligerents but mostly because lending necessary reconstruction of war European states. The US economy emerges best from war, controlling it already in 1919, large amounts of capital in the European economies, thanks to massive loans granted. It will henceforth dominate the whole world, including Europe that will turn into a market for both goods and especially capital. If in 1913 the US held assets abroad over 3.5 billion dollars in the US economy and foreign capital invested approximately 6.8 million dollars, the war ended foreign investment had fallen by half while the value of US capital placed abroad helping to increase national income had doubled to 30% in 1919 compared to 1911.

Regarding the Romanian economy, it will record special thanks mutations in one state sponsor of all Romanian provinces after some major national events such as those in March 1918 in Chisinau November from the Chernivtsi and concluded on December 1st, 1918 in Alba Iulia. Representatives of the three Romanian historical provinces namely Bessarabia, Bukovina and Transylvania will vote for unification with Romania, their political act constituting a goal millennial fulfillment of all Romanians to live in a single nation state, unitary and independent. Romania Mare will now represent a medium-sized country in Europe thanks to the contribution of economic, territorial and demographic that each province will contribute to the Greater Romania. The process will still be a long one and will require additional costs territorial reorganization of administrative, legislative, economic, cultural, political.

Romanian provinces united in 1918 with the country were in a difficult situation as the ancient kingdom due to foreign domination, but, overall, the Great Union in 1918 will contribute significantly to increase the economic potential of Romania as follows:

  • Romania's population will increase from about 7 million to nearly 18 million;

  • the abolition of customs barriers is achieved a uniform system of national economy (savings and new provinces of the ancient kingdom are complementary);

  • it will increase the potential of natural resources and material and intellectual.

  • In social, mutations occurred in obvious economic weight of large landowners, lessees falls in favor of the bourgeoisie (entrepreneurs), the role of this social category which is now a political one.


Integration into the national economy resources and technical capacities productive of the Romanian territories under foreign domination will diversify the economic capacity of the Greater Romania facilitating tightening economic links between various fields and increase production potential of transport, human and material resources of over 2.5 times the prewar economic potential of the Romanian state. Romania's participation in the war alongside the Allies will result in economically in only 1% of the total of over 132 billion marks that Germany had to pay allies under the title of reparations (during the Conference at Spa, it was absolutely tiny amount compared to the destruction and damage caused by the Romanian Central powers). Although Austria, Hungary and Bulgaria had established obligations to Romania by 10.5% (repair Oriental) yet The Big Four (US, England, France and Italy) will require smaller states (regional powers) payment of release rates, debt that respective countries they had contracted during the war. Also, the Great Powers wanted the successor states of Austria-Hungary to contribute and support proportional debts and reparations, in 1924 Romania establishing him the sum of 235 million francs, gold as share issuance and repayment by its allies. Romania has not paid those amounts but has not received any amounts due from Germany set out in Spa. Monetary and banking system will undergo changes in 1921 resulting from the withdrawal of foreign coins in circulation concomitant with the extension of privileges National Bank of Romania on the entire national territory.

Years of neutrality were essentially a worsening fiscal period for most of the residents, authorities rigorously cashing any type of tax. By carrying out a national loan Liberal government managed to reduce the debt he had to the National Bank. Entry actual war will exacerbate the decline of the Romanian economy this unfortunate campaign due to an outcome of the first part of the war. In terms of economic recovery even with economic growth potential of Romania after the Union, prewar production levels and exports in various fields will be achieved in 1921 and 1924 which will contribute to the deepening economic crisis after the war.

In terms of economic recovery, even in the economic growth potential of Romania after the Union, prewar production levels and exports in various fields will be achieved in 1921 and 1924 which will contribute to the deepening economic crisis since the war. The new national framework required generalization of reforms and measures popular as agrarian reform of 1921 (the most radical in Central and Eastern Europe) in which over 1 million peasant families will receive land by expropriating estates covering more than 500 hectares of farmland . Universal suffrage and the drafting of a constitution unit for all Romanians in 1923 will be the policy measures with significant social and economic implications. Union of Great Romania in 1918 will make an important state average on the map of Europe territorially and demographically, economically and legally, the Romanian state will manage to become the most important competitor interwar period in central and south- East of Europe.


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1 Senior Lecturer, PhD, Department of Economics, Danubius University of Galati, Romania, Address: 3 Galati Blvd., Galati 800654, Romania, Tel.: +40372361102, Corresponding author: stefangheorghe@univ-danubius.ro.


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