Did you know? During the First World War, there were no fewer than four currencies circulating within the territory of occupied Belgium. First of all, the Belgian franc, of course, minted and circulated by the Belgian National Bank, the only institution authorised to manage the monetary policy up to that time; next came the Deutschmark, introduced within the interior channels by the German occupier starting in October 1914; Finally, in addition to these two official currencies, there were the Belgian franc bills temporarily printed by the Société Générale de Belgique starting in 1915 and the "currencies of necessity" produced by several hundred communities, charitable organisations and companies, in order to overcome the monetary instability that reigned throughout the conflict. Each community or each institution had its own money, often bills but sometimes metal coins, that were only valid within the territory of the given community, or at food banks... Not issuing any currency at all could naturally have been a serious hindrance to the German occupier, but the circulation of these various currencies was, despite whatever logistical and political difficulties, absolutely necessary to avoid Belgium's total ruin.
Summer of 1914, run on the National Bank
While the assassination of the Archduke of Austria-Hungary and of his wife caused some disturbances in the European financial markets, Belgium remained relatively calm, certain to remain outside of any conflict. However, the start of the war between the major powers at the end of July and then, in particular, Germany's ultimatum to Belgium on 2 August caused panic within the Belgian population. While the stock exchanges in Brussels and Antwerp immediately closed their doors, the public pours into the National Bank in order to change any banknotes against metal currency. Indeed, over several years, coins (made of gold or silver) have progressively been replaced by the first paper banknotes; in 1913, such coins now represented only 4% of the money circulating in Belgium, and their usage was limited to small transactions. The Belgian population had easily accepted the introduction of these paper banknotes, but in these troubled times, they feel far less confidence in them: during the week preceding the German ultimatum, nearly 66 million francs were therefore converted from paper into silver coins… that were then quickly hidden away in some wool sock or under a mattress! Accordingly, faced with growing pressure and after the rejection of the ultimatum, the Government passes royal decree N°216 of 2 August 1914, which authorises the National Bank to discontinue currency exchanges.
The exchange in silver coins (primarily of five francs) allowed to the National Bank to keep its gold reserves intact, but the massive hoarding of these same coins by the population and the discontinuation of exchanges seriously disturb the payment circuits. In response to this equity shortage, the National Bank then begins circulating, as of 3 August, five franc notes for which the printing had begun secretly – and most conveniently – in 1912; it also issues special vouchers in order to reimburse current accounts and to guarantee the debts of private banks… Moreover, with the Germans progressing across Belgian territory in the direction of Brussels, the Government orders the discreet evacuation of the metal reserves and monetary printing presses from the headquarters of the National Bank to its branch in Antwerp, and then to London where they will be stored by the Bank of England for the duration of the conflict. This measure results in a new liquidity shortage; in early September, a series of five so-called "current account" notes is created and, for the first time, a personality is depicted on them: Leopold 1st, first King of the Belgians. They are also the last banknotes printed by the National Bank during the Great War. The German authorities, once established in the capital, demand the return to Brussels of the stocks of metals and banknote printing presses, which the Government in exile in Le Havre (Northern France) refuses; on 24 September 1914, the Germans strip the National Bank of its right to issue banknotes, and dismiss the Governor of the Bank.
As such, nearly 66 million francs were converted from banknotes into silver coins... which are then quickly hidden away in some wool sock or under a mattress
Banknotes from the Société Générale and Deutschmarks
However, for the Belgian financial and political world, the currency management had to be prevented from falling completely into the hands of the German occupier! As such, supported by a consortium of Brussels banks, the Société Générale, Belgium's largest investment group, offers to temporarily take over the issuing of banknotes, which the German authorities accept. Starting in January 1915, the first notes issued by the Société Générale join the ones from the National Bank, which were still valid, in the wallets of Belgians; this time, it's Louise-Marie, the first Queen of the Belgians and a figure unknown to the Germans, who is depicted. We note that this is not one company gaining an advantage to the detriment of another, but rather a collaboration between the two companies, with the issuing department of the Société Générale finally serving as a kind of screen for the activities of the National Bank. The latter continues, through loans and debt guarantees, to support the State administrations, the cities and communities, public institutions (such as the Crédit communal or the Caisse générale d’Epargne et de Retraite), companies, charitable establishments and charities providing aid to the population, etc. In particular, the National Bank finances the "war contributions" required from the provinces by the Germans. Indeed, on 10 December 1914, the German authorities impose an initial "tribute" of 480 million francs payable in 12 instalments, an astronomical amount since it corresponds with virtually the entire annual sum of the State's fiscal proceeds! At the end of the conflict, the provinces were in debt by nearly 2.5 billion francs.
Thanks to the Société Générale bank notes, the monetary situation could finally have stabilised, but no such luck: the lack of liquidity is followed by excessive liquidity. The primary cause is the introduction of the Deutschmark as a legal means of payment in Belgium, at the rate of 1 mark for 1.25 francs, imposed by a German order dated 3 October 1914. This exchange rate is obviously very advantageous for the occupier, that buys large quantities of Belgian products using Deutschmarks. In theory, like other foreign currencies, Deutschmark banknotes are guaranteed by the gold held within their original central bank, the Reichsbank ; in reality, this coverage is fictitious and the introduction of Deutschmarks is yet another way of compelling Belgium to participate in the German war effort. Consequently, the Belgian population is mistrustful of these paper Deutschmarks but, paradoxically, this mistrust accelerates their circulation since everyone, banking institutions as well as individuals, attempts to get rid of any German currency by paying debts and for merchandise with it. In the end, the National Bank and the Société Générale find themselves amassing a considerable reserve of Deutschmarks that they cannot return to circulation and are forced, starting in September 1916, to deposit them in an interest-bearing account at the Reichsbank… A small consolation for this "hold-up" is that the Germans have to look after the transportation from Brussels to Berlin themselves.
In reality, this coverage is fictitious and the introduction of Deutschmarks is yet another way of compelling Belgium to participate in the German war effort
A parallel monetary circuit initiated by the communities
In addition to this monetary instability there is not only counterfeiting, but also the difficulty routing banknotes to the occupied provinces, where the liquidity shortage is more glaring than in Brussels, in particular for small transactions and the payment of wages. To remedy this, more than 600 communities, companies and charities (such as the National Relief and Food Committee) decide to issue their own new currency, the "currencies or banknotes of necessity". The first community vouchers, valid only within the territory of the community or in certain stores, make their appearance in Aiseau (in Hainaut province), on 7 August 1914 ; they multiply almost everywhere within the occupied territory, primarily in 1914 and 1915, and until the end of the war, since Stekene (in Western Flanders) seems to have been the last community to produce any, on 28 September 1918. Still, not all Belgian communities use "banknotes of necessity", and those that do, issue them on one or more occasions, as needed: first to pay for supplies and the wages of the community personnel, then to help the families of mobilised soldiers, the unemployed, the needy and refugees. These famous "currencies of necessity" most often take the form of notes printed in various colours, rarely illustrated, and sometimes small metallic coins, the value of which ranges from one centime to a maximum of five francs; in certain communities, as well as in most associations and companies, they take the form of a "good for".
Indeed, the many plants and companies that can no longer, or only with difficulty, access their bank assets also make use of salary and purchase vouchers. It's a simple matter of deferring the problem to the future… and even of protesting against the banks, along the lines of this cooperative in Lodelinsart (in Hainaut) which prints on the back of its notes: "The gentleman retailers who accept this note will demonstrate their full sympathy for the glass workers, and more patriotism than Messrs the bankers (…) We have been forced to adopt this means because of their systematic refusal of our requests for cash advances(...)" Printing of purchase vouchers also by charitable associations, for which this practical system makes it possible to avoid abuse; indeed, many vouchers include a warning, such as in Laeken (near Brussels) : "Anyone making improper usage of this voucher (sale in exchange for money, exchange for beer and liquor, etc.) will be immediately deprived of all aid and will be subject to legal pursuit." One association in Charleroi goes even further, by prohibiting the usage of its vouchers in tobacco shops and cabarets. The objective is clear, the aid for the population is intended for food and the purchase of basic necessities such as coal or clothing.
Finally, we note that the circulation of "currencies of necessity" is not an initiative that is specific to Belgium, nor even to the First World War. Indeed, we find this type of paper money (in other words, the usage of which is based on the confidence that one has in the issuer) both in northern France at the same period and, in general, everywhere where, over the course of years, the economic and monetary situation has been in upheaval. This parallel circuit initiated by the communities will reappear during the Second World War.
The "currency of necessity" is firstly used to pay for supplies and the wages of the community personnel, then to help the families of mobilised soldiers, the unemployed, the needy and refugees