100 years since the introduction of the schilling
After the First World War, the young Republic of Austria faced major monetary policy difficulties. The remnants of the Austro-Hungarian Empire struggled with social and economic problems. In addition, the supply and sales markets previously used by Austrian industry collapsed, and crop failures hampered any recovery.
Although the currency of the monarchy, the krone, continued to be issued, the economic crises led to inflation, which reached uncontrollable proportions by the summer of 1921 at the latest. In some cases, monthly price increases exceeded 60 percent. By August 1922, the cost of living had risen to 14,000 times its pre-war level. Increased wages in industry further fuelled the downward spiral. Pensioners and people on fixed salaries were the big losers, as were those with large cash reserves. Even the issue of the 500,000-crown banknote in September 1922 could not prevent the complete loss of confidence in the currency. No one wanted to accept the paper notes anymore.
Only the League of Nations' promise of financial aid stopped inflation and stabilised the paper krone against the gold krone. As a further measure to stabilise the monetary situation, the Austrian National Bank was established in November 1922 and shortly afterwards a fixed exchange rate between the Austrian krone and the US dollar was set. The Schilling Bill was introduced in Austria by 1924. The next year several banknotes and schilling coins were issued, with the name Groschen being chosen – even though historically these had been two silver coins of equal value.
The schilling remained the currency of the First Republic and the authoritarian Ständestaat, and was popularly known as the ‘Alpine dollar’ due to its stable value. It was not until Austria's annexation by the German Reich in 1938 that the Reichsmark became the official currency. After the Second World War, the schilling was reintroduced in 1945 and remained legal tender for almost six decades until the introduction of the euro in 2002. The current euro banknotes and coins were introduced together with eleven other EU countries and finally replaced the schilling as the currency within the Economic and Monetary Union.
Schilling banknotes from the last series that have not yet been exchanged, as well as some of the schilling coins, can be exchanged for euros at the OeNB without any time limit. The exchange is free of charge at face value and at the irrevocably fixed rate of 1 euro = 13.7603 schillings. Approximately 6.8 billion schilling coins and banknotes have not yet been exchanged (as of 2024) – this corresponds to a value of approximately 495.8 million euros.
Image: Austria, First Republic, one schilling, 1925
