# Economic Development in Denmark Before and During the World War/Economic Changes caused by the War

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Economic Changes caused by the War
The change of economic conditions during the World War will be the chief excuse for this indulgent policy. Evidences of a surprising increase in the incomes of the majority of the population are numerous, statistics of taxation showing them to have trebled between the years 1906 and 1918. ​Before the war incomes had grown rapidly, but nowhere near as rapidly as during the war, when they doubled in the course of three years. Moreover, the capitals of joint-stock companies increased from 854,000,000 kroner in about 1912 to 1,330,000,000 kroner in about 1917. Savings Bank deposits increased from 575,000,000 kroner in 1901 to 858,000,000 kroner on March 31, 1914; but in the next four years the figure mounted to 1,255,000,000 kroner. Still greater was the increase of business in Banks of Deposit; from 395,000,000 kroner at the close of 1901 the sum increased to 906,000,000 kroner in 1913, and again to 2,441,000,000 kroner in 1917, having almost trebled, accordingly, in those four years. Thus we may go on giving proofs of the rate at which the money economy of the country changed.
In considering these circumstances we must bear in mind that the purchasing power of money greatly decreased. During the war the prices rose on an average by 90 per cent., whereas during the previous fourteen years they had risen by one third altogether, consequently in the proportion of 1 to 2.5. This consideration will greatly reduce our estimate of the amount handled by the Savings Banks and Banks of Deposit. The country's increase in wealth, though real, is not nearly so great as it appears to be.
Various economists have attributed the rise of prices to the great increase in the volume of paper money issued in Denmark as in all other countries. In 1910 the note circulation of the Danish National Bank amounted to 92,000,000 kroner; in August 1914 it had reached 147,000,000 kroner—an increase which cannot be looked upon as extraordinary in view of the great development of industry and commerce. But during the next four years it increased to 365,000,000 kroner, i.e. in the proportion of 1 to 2.5. The above explanation is founded on statistics of earlier days. The truth is more likely to be found in the fact that banks are the instruments of the economic community, and not the reverse; in other words, the banks must adapt their issue of notes to ​the requirements of the community, with a change, if necessary, in their foundation regulation.
Proofs of an apparently growing wealth are further furnished by the fluctuation of wages. In 1915 the wages of an agricultural labourer had reached the very modest average of 850 kroner ($228) per annum; in 1918 provisional statistics show an increase to 1,390 kroner ($373). The figures indicate a gain of nearly 64 per cent.; but in reality the purchasing power of the agricultural labourer had rather decreased during the war.
In trade and industry the figures are considerably higher. The average hourly wage of a skilled mason in the capital rose from 87.5 öre ($0.23) in 1913 to 150 öre ($0.40) in 1918; that of an unskilled mason from 61 to 117 öre ($0.31); and that of a male workman in a boot factory from 52.5 ($0.14) to 113 öre ($0.30). These figures seem to indicate that the wages of unskilled labourers have kept pace with the times as regards purchasing power, but that the same scarcely applies to skilled labourers. It is possible, however, that conditions will be more favourable for workmen after the inevitable struggle for higher wages which will be kept up now that the war is over. They will fight to the utmost for the maintenance of the level now reached, even though the price of food, fuel, and clothing decreases. But meanwhile the rise in wages will be neutralized by the rise in prices.
All this reminds one of the old story of Munchausen who pulled himself up by his hair. Prices rise and labourers demand higher prices; increased wages are then followed by increased prices, and increased prices in turn lead to a demand for increased wages, and so on. Only one class of the community loses by this movement, namely, the persons who receive fixed salaries, and who see their capital and income reduced, so to speak, to half what it was. This, too, is a loss sustained by pensioners, annuitants, and officials. Accordingly, officials are agitating for the introduction of a sliding ​scale which will automatically follow the fluctuation of prices.
These conditions are not surprising. At the very start the war afforded Denmark considerable economic advantages. The shipping trade appeared extremely prosperous, in spite of great losses in tonnage, and the agricultural population at once realized large profits, for instance, by the sale of their horses. But in the following periods the production has declined by reason of failing supplies, whereby the country was largely thrown back on its own resources. Thanks to the good cultivation of the soil, however, and to the high position of our agriculture, the result was surprisingly good, everything considered, though not so good but that the population was obliged to practise strict economy.