Get Ready to Barter Like it's 1919
Activists of the Occupy Frankfurt movement have set up a fire place near the Euro sculpture in front of the European Central Bank in Frankfurt, Germany, Thursday, Nov.3, 2011. (Michael Probst / AP Photo)
A collapse of the Euro would be dramatic and cataclysmic, but it would not be entirely unprecedented. NPR's Planet Money reports on the last time a currency union broke up: when the Austro-Hungarian Empire collapsed and the newly formed nations began printing their own currencies.
The transition was anything but smooth:
After World War I, the region broke up. All of a sudden there were lots of countries wanting to switch to their own currencies.
At the beginning, they used a simple system: Countries simply stamped existing Austro-Hungarian currency with particular markings to turn it into new, domestic currency. Some countries used ornate samps; Romania's stamp was just a cross.
This quickly led to chaos. Everyone wanted to get their money stamped in the country they thought would have the strongest currency. Countries sealed their borders, but it was no use.
"You had boxcar loads of currency" moving across borders, says Michael Spencer, an economist who has written about this period.
...
Spencer says after the breakup in 1918, it was unclear for a while what the new currencies were even worth. Countries sometimes resorted to bartering. It took years for things to stabilize.
About the Author
David Frum
David Frum is a contributing editor at Newsweek and The Daily Beast and a CNN contributor. He is the author of eight books, including most recently the e-book WHY ROMNEY LOST and his first novel Patriots, published in April 2012.
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