A Comparative Chronology of Money

Monetary History from Ancient Times to the Present Day

1939 - 1959

Based on the book: A History of Money from Ancient Times to the Present Day by Glyn Davies, rev. ed. Cardiff: University of Wales Press, 1996. 716p. ISBN 0 7083 1351 5. (Page numbers in the 3rd edition published in 2002 may be slightly different).

1932-1941	Japan enjoys strong economic growth
Reflation and competitive devaluation stimulate production and exports with the result that Japan recovers rapidly form the world slump of the 1930s and is able to devote increasing resources to rearmament. p 586
1935 - c.1970	Continuous moderate inflation in Britain
The general level of prices rises every year but at a moderate rate. p 395-396
1939-1945	The Second World War
Keynesian policies are successfully put to the test as the British government borrows larger sums than ever before at lower interest rates than in the First World War and other wars. From being a large creditor to, mainly poorer, Commonwealth countries Britain becomes a large debtor. p 389-391,605 The US national debt, which was only $16 billion in 1930, reaches a peak of $269 billion in 1946 but this borrowing is also made at very low interest rates. Whereas the economies of most European countries are devasted the US gross national product rises substantially. p 515-516 Revenue raised from taxation (48% of government expenditure) and the resources of the occupied countries, together with a compulsory price freeze, enable the German authorities to suppress inflation until near the war's end. p 575 In Japan the financial, administrative and industrial powers of the Zaibatsu are strengthened as they form the economic heart of the military machine. p 587
1944-1971	The Bretton Woods agreement
The agreement, reached at Bretton Woods in New Hampshire, USA, envisages a system of convertible currencies, fixed exchange rates, and free trade. New financial institutions are to be established; the International Monetary Fund and the International Bank for Reconstruction and Development. Plans for an International Trade Organization fail as they are not ratified by the US Congress but they pave the way for the General Agreement on Tariffs and Trade (GATT). p 21,444-445,516
1944-1960	Prolonged high inflation in France
Following the Liberation in August 1944 economic controls are lifted step-by-step, releasing previously suppressed inflation. p 563-564
1944-1946	Hungary suffers from the world's worst ever hyperinflation
Hungary's monetary system destroys itself as note issues increase from 12,000 million until at its maximum it comes to a figure containing 27 digits. By July 1946 the 1931 gold pengo is worth 130 trillion paper pengos. p 19,397
1945-1955	Banking boom and crash in Nigeria
Between 1945 and 1948 145 banks are registered followed by a similar number in the next 4 years. However their growth is unregulated and owing to inexperience, incompetence, nepotism and corruption by 1955 all but 3 indigenous banks have failed. p 611,612
1945-1948	Germany suffers from hyperinflation
Owing to the devastation of the war Germany experiences hyperinflation for the second time in a generation. In the official markets ration cards and permits are more important than currency while on the black market cigarettes, soap, tinned beef and chocolate serve as currency. p 443,576
1945-1948	Anti-monopoly and decentralization laws affect Japanese banks
The American occupying forces pass laws to break up the Zaibatsu by separating their banking activities from their industrial bases. They also close down a number of the special banks, such as the Yokohama Specie Bank, and insist on the separation of commercial and investment banking. p 588
1945	Bank of France and the four largest deposit banks nationalised
At the same time a rigid separation between deposit and investment banks is enforced. p 563-564
1946	US Employment Act
This act is evidence of the power of Keynesian philosophy. p 531
1947	The Marshall Plan or European Recovery Programme
General George Marshall proposes a huge programme to assist reconstruction in war-torn Europe. The programme goes ahead the following year. West Germany is later included among the recipients. p 393,516,519,576
1947	IMF, IBRD and GATT start functioning
The International Monetary Fund and the International Bank for Reconstruction and Development, both of which are established as a result of the Bretton Woods agreement start functioning and the General Agreement on Tariffs and Trade, which also inspired by the agreement, holds its first meeting. p 517-518
1948	Organization for European Economic Cooperation formed
Its initial purpose is to distribute Marshal aid effectively. It also broadens the existing bilateral payments systems into wider multilateral clearings. p 444
1948	Germany replaces the Reichsbank by autonomous Landesbanks
Each province has its own central bank. Their activities are coordinated by the Bank Deutscher Lä in Frankfurt. p 576
1948	Germany replaces the Reichsmark by the Deutschemark
Simultaneously the freeze on prices and wages and most of the rationing system are abolished. These reforms lay the foundations for the West German economic miracle. p 443,576-577
1948	Reserve Bank of India nationalized
After independence in 1947 the banking system is reorganised to fit its Indian environment. p 624
1948	Industrial Finance Corporation founded in India
Its goal is to provide medium- and long-term finance to industrialists unable to get such funds from normal banking services. p 624
1949	Britain devalues and starts an international realignment of exchange rates
Britain devalues the pound from $4.30 to $2.80 i.e. by about 30% against the dollar. This sparks off a major international realignment of exchange rates in which most other countries also devalue their currencies against the dollar. Britain's action reduces the value of sterling assets held by other Commonwealth countries and stimulates moves towards financial and political independence in the remaining colonies. p 393,598,606
1949	Manillas withdrawn from circulation in Britain's west African colonies
Even after the Second World War the United African Company found it necessary to trade in manillas (currency worn as ornament) but, after a long struggle, they are officially withdrawn in 1949. p 46,600
1949	Economic reforms in Japan
The US abandons the idea of exacting war reparations and instead supplies aid to Japan, like that given to Europe under the Marshall plan. At the same time rationing is abolished, runaway inflation brought under control, the budget balanced, and a single exchange rate for the yen, at 360 to the dollar, established. p 519,588
1950-1970	Japanese economic miracle
Average annual growth in the 1950s is 9.2%, comfortably exceeding an ambitious plan for doubling the average income in a decade. In the 1960s growth is even higher, averaging 10.7% annually. p 589
1950-1958	The European Payments Union
This is set up by the Organization for European Economic Co-operation. The 15 members can mutually offset deficits and surpluses up to the limits of their quotas which are set according to their share of world trade. By 1958 most European currencies are sufficiently convertible for the payments union to be terminated. p 445
1950-1953	The Korean War
The Japanese economy is boosted as the country benefits from being the main Asiatic base for supplies to the United Nations forces in Korea. p 588
1950	Export Bank founded in Japan
This is established to finance exports as part of Japan's efforts to rebuild the economy after the Second World War. In 1952 it becomes the Export-Import Bank. p 588
1950	The European Coal and Steel Community established
This is the first step towards the creation of the European Economic Community. p 445
1951	Bank rate restored as a policy instrument in Britain
During the era of the gold standard the Bank of England could successfully control the monetary system by varying bank rate. However, when the policy is used again in the 1950s it is much less successful. p 394,399
1951	British colonies' sterling balances exceed £1,000 million
Whereas the independent Commonwealth countries had managed to reduce their sterling balances those of the colonies are still increasing with the result that the British economy is benefiting at the expense of poorer countries. p 606
1951	Canada repeals law against potlatches
The provisions of the 1927 Act are repealed but by this time the custom is already on its last legs and by the end of the 1960s potlatches have virtually died out. p 12
1951	Japan Development Bank founded
This is a special bank for granting long term loans for industrial or regional development. p 588
1952-1967	Mergers and amalgamations greatly reduce the number of Indian banks
The authorities encourage mergers and amalgamation among smaller banks to strengthen the banking system. The number of reporting banks declines from 517 in 1952 to reach its low point of 90 in 1967. p 624
1952	Reconstitution of the Zaibatsu in Japan
Following the peace treaty in 1952 American-type anti-trust laws are repealed and the Zaibatsu, complete with their core banks, are rapidly reconstituted. p 589
1952	German law on Regional Scope of Credit Institutions
This divides the Federal Republic into three zones within each of which branching is allowed to spread. p 576
1952	Japan joins the International Monetary Fund and International Bank for Reconstruction and Development
At the time of joining Japan is running chronic trade deficits. The assistance it gets from the Fund and the Bank in the following years help it to achieve its economic miracle. p 519
1953	Japanese Small Business Finance Corporation founded
Along with the Export Bank (founded in 1950) and the Japan Development Bank (1950) this is one of the financial institutions established to fill gaps in supplying finance for the re-building of the Japanese economy. p 588
1954	First attempt to create a money market in west Africa
The colonial government of the Gold Coast (Ghana) issues its first tranche of 90-day Treasury Bills. p 619
1955	The Imperial Bank is re-formed as the State Bank of India
Its few remaining central banking functions are taken over by the Reserve Bank leaving the State Bank to concentrate on its commercial business but with its duty to promote an active branching policy re-emphasized. p 624
1956	Restrictions on the Regional Scope of German Credit Institutions abolished
The restrictions of the 1952 Act are abolished and nationwide branching is allowed in West Germany. East Germany is included after July 1990. p 576
1956	Milton Friedman's Restatement of the Quantity Theory published
This triggers off the development of modern monetarism. p 429
1956	US Bank Holding Company Act
Holding companies doing some limited banking are allowed to set up shop elsewhere. This act is used as a way of avoiding legal restrictions on branch banking. p 539
1957	The Treaty of Rome establishes the European Economic Community
The original six members are Belgium, Holland, Luxembourg, France, Germany and Italy. The treaty also sets up the European Investment Bank to foster regionally-balanced growth by long term loans for infrastructural projects. p 445
1957	Deutsche Bundesbank founded
The new central bank for the Federal Republic (West Germany) has its headquarters in Frankfurt. The 11 Länder or provinces retain their own subsidiary central banks, each with its own branch system. p 576
1958	Rueff Report on the Financial Situation in France
The committee, chaired by Jaques Rueff, was established because of France's continuing inflation problem. It recommends reform of the currency. p 564
1959	Radcliffe Report on the Working of the Monetary System
Owing to doubts about the effectiveness of bank rate policy the British government set up a committee of enquiry in 1957 which reports 2 years later. No official report in Britain (nor possibly any other country) has shown such scepticism about the idea of trying to control the economy by controlling the money supply, representing the zenith of Keynesianism and the nadir of Monetarism. p 399-402
1959	Central Bank of Nigeria founded
Nigeria's Central Bank is created in advance of the country's independence in 1960. p 608-609

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Roy Davies - Last updated 16 November 2006.