Økonomisk historie

Dette er første version af artiklen Wartime and Post-war Economies (Denmark). Den er lidt længere end den publicerede udgave.

Abstract

From 1914 to 1918, moving from peak to trough, Danish GDP per capita dropped by 16 percent However, resources spent on mobilization were modest and the war took only a small toll on Danish citizens’ lives and assets. The major source of economic problems was the disturbance of international trade by blockade warfare and belligerent powers’ pressure on neutrals to scale down business with the other side. Faced with supply shortage and inflation, the Danish government, counselled by a corporative body, to an increasing extent distributed resources on a discretionary basis in order to keep the economy running and prevent social deprivation.

 

Introduction

Three motives shaped the Danish economy during the Great War. Supply shortage due to reduced imports was the root problem. First, it caused direct disturbance of the economic flow. Furthermore, it stimulated inflation, as idle money chased a limited amount of goods. Finally, depleted stocks of real capital and materials reduced productivity, and boosted speculation and cheating. However, while challenges presented themselves already as of August 1914, they took more than two years to develop into a serious economic downturn.

A moderate level of state regulation evolved into a system akin to command economy, with a dwindling role for competitive market forces. The enhanced regulation was at the same time conflict-ridden and – by force majeure – consensus-driven. It was successful under the circumstances. Public intervention showed itself able to redress social imbalances and uphold some degree of equity, thus strengthening the case against pure laissez-faire economy. Nevertheless, by 1918, business was weary of regulation, unemployment high, and worker militancy on the rise. When the war ended, the need for reinstating market forces as the core institution of economic life was widely acknowledged, even if reluctantly by Labour and social-liberals. Over the war years, the latter party formed the government, supported by the former. In spite of the backlash, the experience of these abnormal years became instrumental in shaping economic and social policy and forms of governance, especially in times of crisis but even under prosperity.

The economic history of Denmark under the First World War is reasonably well mapped territory, yet modern monographs on the subject are rare. The most comprehensive account is still Einar Cohn (1928)[1], which in an abridged version is also available in English (Cohn 1930)[2]. Even earlier, Johannes Dalhoff (1921)[3] had summarized and explained events on the labour market. Svend Aage Hansen (1974)[4] in his magisterial work on economic growth in Denmark presented a brief, very much to the point analysis of the most important tendencies at the economic level. The same author, together with Ingrid Henriksen (1980)[5], has also produced a broader survey focusing on social developments depicted on an economic background.  In a collective work on Danish monetary history, published by Denmark’s Central Bank, Erling Olsen (1968)[6] provided a thorough yet accessible discussion of how the often difficult and controversial monetary affairs of the time were handled. A major work of recent years is Kasper Elmquist Jørgensen (2005)[7] who assembles a number of studies with the interplay between state and business as the unifying theme. Steen Andersen & Kurt Jacobsen (2008, 2009)[8] move in the same area, yet with special reference to Alexander Foss (1858-1925), an industrialist who played important roles in both domestic regulation policy and bilateral trade talks. A recommendable short introduction to the overall situation of Denmark during the war, drawing lines to past and future developments, is Carsten Due-Nielsen (1985)[9].

The present survey begins with the impact of the war as such, followed by a short evaluation of economic growth 1910-29. The next two sections deal, respectively, with economic regulation and the labour market. Subsequently, foreign economic relations and their political setting are discussed. Brief mention is made of some important monetary and financial tendencies before the conclusive section on post-war development and the longer-term significance of the regulative and redistributive measures taken 1914-18.

 

Population and territory

An immediate impact of the outbreak of hostilities in 1914 was the convening of former conscripts who were obliged under the law to render national service. More than actual preparation for war, the assembly of this so-called ‘defence force’, which boosted the size of the army to 58,000 men, served to make manifest the willingness of the Danish state to enforce its neutrality and sovereignty in case of a direct assault. This was primarily to be achieved by defending Copenhagen, the capital, in whose fortified periphery most of the soldiers were quartered. Even at low level of alert, the summoning of the force was costly. Its members were drawn on short notice directly from those in active employment. Besides some net loss of production, there were public expenses not only to run the military outfits but also to secure the livelihood of the married men’s families. On the other hand, unemployed or people not currently in the workforce filled many of the positions left vacant. Furthermore, leave was granted for harvest work and the like. Gradually, the force was downsized, as direct Danish involvement in the war became more and more improbable.

In a Danish context, the one single most important economic event resulting from the First World War was the reunion of Northern Schleswig with Denmark. Holstein and Schleswig, a pair of ethnically German duchies, had been removed from the Danish monarch’s possessions in the Second Schleswig War of 1864 and subsequently incorporated into the German Empire. However, most people immediately south of the border were Danish-speaking and Danish minded. Being a minority population within the entire province, they felt alienated; in the Kingdom of Denmark, the idea of an unjust separation was strong as well. The Versailles Treaty provided for a referendum over the issue in 1920. In the same year, 165,000 people – approximately 5 percent of the entire Danish-speaking population – and the territory they inhabited were transferred from the German Reich to the Kingdom of Denmark.

Apart from a couple of random minor incidents and minelaying in inner territorial waters, no military operations took place in Danish national space. However, casualties occurred by the thousands among the Danish-speaking male population of Schleswig who at the time were German citizens. Ex-servicemen of that group, some of them wounded or traumatized, would shortly after the war change their nationality to Danish. Two hundred and seventy-five Danish registered merchant vessels were sunk in international waters, causing the loss of about 700 sailors’ lives.

 

Aggregate economic output

With a 5 % rise in per capita GDP, compared to 1913, 1914 was a remarkably prosperous year for Denmark. The surge in economic activity was export-driven, as demand from belligerent nations shifted upwards, leading to increased sales at higher prices, especially in agricultural produce. Four years dominated by negative growth followed, due to severe shortage of imported input commodities, most notably coal and fertilizers. The year 1919 saw a remarkable recovery, and by 1922 – after a crisis-ridden 1921 ­– GDP/c had definitely risen above the pre-war level.

In a middle-term perspective (1910-1929), an estimated growth rate of 1.46 % p.a. suggests that the delay caused by the war was not very serious (Figure 1). It is equally obvious though, that 1917 and 1918 were bad years, significantly below trend values. Other neutral countries in the region exhibit a similar structural pattern. However, among the Scandinavian nations, the years of recession were milder in Norway. Sweden’s experience over the war years was more similar to that of Denmark, but Sweden as well as Norway enjoyed higher growth 1910-1929, whether stated in actual terms or judged by estimated trends, which take into account the negative impact of the war years on the longer-term growth pattern. Norway and Sweden, on the other hand, were on a lower income level than Denmark, so a catch-up process unconnected with wartime events may have been under way. The Netherlands, however, were on the same income level as Denmark before the war. Its economy both recovered faster and grew more vigorously during the 1920s. Relatively speaking, then, Denmark did no fare too well in economic terms during and after the war.

 

Economic regulation  

A central issue in August 1914 was steady supply of household staples and other products essential to the economy. The notion of secure supply included not just availability per se, but even price stability. If prices became significantly higher at the current level of income, it would jeopardize household budgets and thereby basic material welfare. The threat seemed urgent, as demand was likely to shift upwards on the world market when belligerent nations mobilized available resources for their own purposes. Furthermore, the situation gave incentive to stockpiling. Hence, the Danish government set up a special permanent commission of 12 members with ample powers to make inquiries and recommend measures to procure and distribute goods, if necessary by expropriation. The commission was also, when deeming it necessary, entrusted with the task of suggesting export prohibition and/or state-imposed maximum prices. In the matching legislative work the goods in question were defined as “foodstuffs and merchandise that society must by necessity have at its disposal”,[10] so it was a wide mandate.

The commission was made up of leaders from business organizations and labour unions, active businessmen from several fields, an economics professor, the mayor of Copenhagen, the commissary general, and a civil servant of the Ministry of the Interior, under which the commission belonged.[11] By virtue of its broad composition, combining specific expertise with representation of various social interests, the members were successful in getting things done. Based on an extensive network encompassing virtually all economic spheres, information was accessible. Recommendations enjoyed legitimacy in broad circles when carried into effect by the Ministry. Perhaps the members themselves were a bit impressed by the solemn, crisis-inspired confidence vested in them. Nevertheless, while seeking collaboration they at the same time defended the interests of their own group – and probably those of their immediate personal network. Rhetorical appeals to the common good were made and tactical alliances formed.

Even before the commission was established, on August 6, the Government introduced export embargo on feeding stuff, grain and grain products, potatoes and flour; gold and silver; fuels and lubricants; weapons, ammunition and explosives; cables; motor vehicles; wood and steel; instruments, machines and appliances for the manufacture of weapons.[12] Over the next half year, more precautions were taken, including new items on the embargo list and government participation in the funding of marine insurance in order to uphold shipping in and out of Danish ports even under the increased risk of loss due to naval warfare.

Another area of early intervention was bread-prices, a sensitive issue in most economies other than the very rich. Agriculture weighed heavily in the economic composition of the country, yet before the war there was no talk of self-sufficiency in grain. The predominant specialization in production based on livestock required more fodder, of various types, than was available by local cultivation so import of grain took place as well. Diminishing supply from abroad would not stop farmers from feeding with grain types used for bread; on the contrary, with solid international demand for meat and milk products, they were unwilling to guarantee the supply of grain to flourmills. Market prices did not compensate for the opportunity cost of reducing animal husbandry. Thus, the stage was set for controversy. For the remainder of 1914 nothing significant happened apart from some government procurement of grain on the international market and deliberations on how to handle the problem. At the beginning of 1915, however, as inflationary pressure built up, the government introduced maximum prices on rye loaves, together with a mandatory minimum weight of each loaf passed over the counter. Rye, not wheat, was singled out first because rye bread formed the core of Danish lunch habits, especially among the lower income brackets due to its cheapness.

The measures mentioned so far became paradigmatic for the rest of the war period, their coverage becoming only more extensive in line with the sanding up of normal supply channels. With maximum prices came also the obligation to deliver so that suppliers would not circumvent regulation by moving their goods to where competitive market forces still prevailed. Farms, for instance, were obliged to deliver determined minimum amounts of grain based on their size and soil quality. On the other hand, maximum prices were set with a view to maintaining a normal level of sellers’ proceeds, taking due account of rising input prices. Transgressors were liable to a fine, and the authorities counted on members of the public to report irregularities. In less closely monitored lines of merchandise, some manufacturers and merchants took advantage of the free rein by splitting one intermediate transaction up in several, each time entailing phony value-added in order to disguise supernormal profits.

With time, the basic economic conditions imposed by the war seriously reduced the amount of goods available for distribution. State subsidies in cases where real costs ruled out low price ceilings encouraged overconsumption among those with ample purchasing power. With unrestricted German submarine warfare and the American turn in favour of the continental blockade in 1917, it proved necessary to introduce rationing in order to guarantee basic provisions, especially in protection of those of scarce means. The supply situation was never worse than ordinary consumers had access to sufficient quantities of victuals, soap, fuel and the like. However, in spite of all regulation, living costs were getting high and many were unable to compensate by raising their own income. The situation of vulnerable households was somewhat relieved by the targeted handing out of benefits in kind or money transfer. Local authorities were in charge of these precautions and adapted the form to local needs defined by demographic and industrial composition.

 

Labour market

On the surface, the situation had limited effect on the labour market and its institutions, except for the surge in militancy and radical socialist politics towards the end of the war that occurred in many countries. Nonetheless, a thrill was in the air. In the decade and a half before 1914, the Danish labour market had undergone a remarkable development. At the turn of the century, employers’ organisations and labour unions had made a grand compromise at the core of which lay mutual recognition, stable procedures to handle conflicts, and binding commitment to terms laid down in collective agreements. The state ultimately enforced the arrangement by a special labour court. In the same period, workers’ unemployment funds became officially recognized and let themselves regulate, in return for sizeable subsidies. The affiliation of unemployment funds with trade unions provided incentive for more workers than before to join the latter, thus reinforcing their representative power.

1914-1918 became a testing ground for this collaborative system. During the first half of the period, unions and their membership showed restraint in demands under the impression of the fundamental uncertainties of the war. As one would expect, an erosion of real wages took place (Table 1), even though business was quite good. For the time being, unemployment figures remained low (Figure 2).

Things began to change about halfway through the war. As employment opportunities became scarcer without halting inflation, workers’ real income came under increased pressure and the more so because agreed minimum wage rates remained in force longer than it took prices to go significantly up. In the end, the search for a compromise resulted in an indexing system that granted the same rise to all male blue-collar workers regardless of previous hourly earnings,[13] making it somewhat easier for low-income groups with little bargaining power on the local level to keep pace. After the war, this system was retained for some time and later reintroduced, indeed, it was officially acknowledged by means of a particular price index with focus on wage-earners’ expenses, calculated by Statistics Denmark. The system lasted until about 1980, by which time it had become more a trigger of inflation than a way to achieve balance.

The real test of collaborative labour relations came as the war approached its end and economic conditions worsened. Paradoxically, spirits tended to rise in popular circles. Left wing factions within the labour movement began to mobilize based on opposition to the capitalist system that –as they perceived it – had given rise to the war. Against this backdrop, industrial action, anti-militarism and radical politics in general gained a footing in wider circles among urban workers. In several unions Syndicalists and revolutionary Marxists, forerunners of the Communist movement of the inter-war years, either posed a threat to established leadership or did in fact take over. Overall, radicals were a minority, but the increased influence of their views set a new tone for industrial relations. A nervous mood was present among employers. Instead of paying militant workers back in kind, they relied on their counterparts in the reformist labour movement and reaffirmed their loyalty to the system of collaboration. For either side much depended on preserving the corporatist wartime management of society.

Nevertheless, anti-establishment sentiments among rank-and-file, from 1916/17 manifest by a significantly raised level of industrial conflict (Table 1), were strong enough to trigger important changes. As of 1 January 1920, the eight-hour day came into force in the urban industries, dependent not on legislation, but on collective agreement. In addition, the wage boost of that period permanently increased wages’ share of national income.[14] Thus, the immediate post-war situation was a window of opportunity for Labour to shift the socio-economic power balance.

 

International trade and trade diplomacy

The major threat against Denmark on the politico-military level came from Germany, towards whom the Danish government found itself obliged to conduct a policy of accommodation. This course of action was limited by the need to uphold trustworthy neutrality, lest the Allied and especially the British refuse to recognize Denmark’s impartial status. As far as economic cooperation was concerned, the relations with the UK were more troubled during the war than those with Germany. Before the war, these two nations ranked, respectively, as number one and two in total Danish foreign trade volume (Tables 2-3). Britain’s leading place resulted from its massive import of Danish butter and bacon; in fact, Denmark ran a considerable trade surplus. Conversely, German exports to Denmark normally outweighed its imports, although by a lesser margin than the British deficit vis-à-vis Denmark.

During the war, it was in Germany’s best interest to uphold ingoing trade with Denmark, above all in the area of foodstuffs. German dependence on continental suppliers was among the reasons for war in the first place; after it broke out, the severing of all overseas trade links with Germany was an important element in British war plans. However, as long as neutral status was recognized there was no formal obstacle to selling Danish foodstuffs to Germany. The traffic was only seriously disturbed in 1918 as the German economy approached breakdown. The frictions of the war economy gradually limited volumes, but the land border between Denmark and Germany largely prevented the UK from stopping the trade by naval blockade. Nevertheless, the issue was sensitive, for good reasons. One cause of disagreement between Denmark and the UK was possible abuse of goods exported bona fide from the UK by re-export to Germany.

For the Allies, extension of maritime war to the Baltic, including occupation of Danish territory, was not a relevant option. So much the more reason had the British to take advantage of Danish dependence on coal and other vital commodities, delivered in exchange for butter and bacon. The UK preferred not to alienate an old partner completely, possibly pushing the Danes into the arms of the enemy, but was in a position to impose requirements in order to minimize Denmark’s role as a supply base for Germany. Denmark possessed only little room for manoeuvre.

This contradiction of interests played out over several rounds of negotiations, each time aggravating Denmark’s situation until all British supplies – with the important exception of coal – had been stopped by October 1917. In 1915, the Danish Ministry of Foreign Affairs gave up negotiating and managing deals governing private firms’ affairs and mode of conduct. Instead, a few representatives of business organisations, among these the chairman of the Federation of Danish Industries, A. Foss, took it upon themselves to seek an understanding and establish the necessary trade agreements through talks with British diplomats in Copenhagen and London. The British War Office demanded opportunity to monitor and control the compliance of Danish firms with ever tighter rules set up to prevent that merchandise from the UK serve to free other resources for export to Germany.

The daily conduct of business was largely left to the trade organizations, especially Danish Industries, whose individual members were, in fact, more likely than others to try to circumvent rules. Agriculture was, by force of Denmark’s neutrality, more at liberty to continue trade with Germany as they saw fit, even though the Allies towards the end of the war, following the American involvement, put more pressure on the Danes to downsize even the selling of domestic meat, butter and livestock to Germany. Allied officials argued that as long as exports on their part supported the Danish economy in any notable way, Danish trade with Germany constituted a breach of confidence and an affront to the allied nations whose population had to bear the brunt of the war.

It was in the German interest to prevent Danish compliance with allied demands and, on the contrary, make the Danes give priority to the German market. Some pressure arose from the fact that Denmark received products from Germany also, which Denmark’s own industry was unable to provide. Conversely, the Danish side claimed with success that business in general would slow down without inputs from overseas, a prospect harmful to the Danish export ability vis-à-vis Germany. Nevertheless, reassurances had to be made, soothing for instance German preoccupation with growing activism of allied agents in Copenhagen, meddling with the affairs of local industry and retrieving intelligence regarding German affairs.

The task was made easier by the fact that the foreign secretary himself, Erik Scavenius (1877-1962), and other leading diplomats were well attuned to German discourse and lines of procedure. It all came naturally because Germany was, literally, Denmark’s closest neighbour and hegemon of the region. Germany was also an object of resentment in nationalist circles after Danish defeat in the Second Schleswig War 1864. It was so much the more important that official representation and declared policies were not anti-German, but governed by considerations of Realpolitik, dialogue-oriented and formally on the amicable side, all of which was appreciated by the cadre of the Auswärtiges Amt (Foreign Ministry) in Berlin. Even so, neither in relation to Germany, did Danish trade policy 1914-18 reside exclusively within the inter-state framework, but included business organizations functioning as direct counterparts in bilateral agreements.

This so-called business diplomacy has drawn considerable attention, especially as far as the complicated relationship with the British is concerned. Private negotiators acted independently, but not completely on their own as they consulted with the Foreign Ministry and sought approval on a continuous basis. The obvious motive for this setup was making sure that whichever agreements were made did not conflict with the security of the state. The already strong involvement of leading business representatives in the wartime management of society facilitated this objective.

On the other hand, the reasons in the first place for outsourcing the conduct of talks across the North Sea seem overdetermined and open to debate. The official apparatus may not have possessed the knowledge, skills and manpower required to arrange, implement and enforce complicated trade deals that on top were subject to frequent changes. It may also have been a matter of diplomatic convenience, as Germany perhaps felt intense trade dealings with the Allies less offensive when delegated to non-governmental agents. On the other hand, Sweden was, for better or worse, capable of mustering the resources for settling affairs under direct state auspices. From the outset, the Swedes were motivated by a greater eagerness to demand compliance with previously established rights of neutral nations, rules that the scale and scope of the current war successively undermined. However, when they finally yielded and began pragmatic accommodation by unprincipled deals, it still happened under tight political management.[15] By comparison then, the Danish solution did not necessarily reflect particular tactical and logistical ingenuity, but was one among two or more viable options.

Given these premises, the business leaders undoubtedly rendered society a service but were driven, inevitably, by self-interest inasmuch as their objective was to achieve supplies of commodities vital for the running of their companies. They probably considered themselves lucky by being able to keep events under their own direct control.

 

Monetary and financial affairs

A short liquidity crisis accompanied the outbreak of war. A run on the banks was building up because an increasing amount of people preferred cash rather than deposits, and gold or silver rather than notes. Stock exchange listing was briefly suspended. Jointly, the central bank and government took the immediate precautions of rationing bank withdrawals and suspending convertibility to gold. Excess demand of silver was neutralized by issuing notes of smaller denomination than usually. Funds were made available for extraordinary state expenditure. After raising the bank rate in conformity with developments in other Western European countries, the central bank was granted greater discretionary power. Rule-bound limits of cash supply were expanded in order to guarantee a normal level of transactions. A new semi-normal state of affairs followed the initial turbulence. In relation to other currencies, the krone, put in rough terms, remained on its pre-war parity value as long as the war was going on, but then fell drastically;[16] the latter fact came to define the monetary policy of the 1920s. The balance of payments caused no alarm. Figures are incomplete, but after the war, apparently, external debt as percentage of national income was smaller than before.[17] Beneath the tranquil surface, however, financial flows changed their pattern as did terms of trade and relative prices generally. Generous granting of credit supported sale of Danish products to the Central Powers. Opinions on monetary policy and its relationship with national and international politics differed a great deal among bankers and university economists.

The stock market leaned to the bullish side during the first years of the war, especially of course in industries that benefited from wartime demand. [18] In Denmark, the already important shipping trade was highly profitable. Merchant vessels found rich opportunities as belligerent nations’ ships left the free commercial circuit. Customers accepted high freight rates in order to pay for the elevated risk level at sea and in anticipation of rising prices on end markets. The wartime profiteer became an icon of public resentment. It is not quite clear though, to what extent extraordinary profits resulted from either abuse or perhaps from entrepreneurial capacity and a legitimate appetite for risk.

Volatility and relatively high share prices was a symptom of accumulating problems. In objective terms, the economy was in recession; nevertheless, a willingness to invest was present. This is small wonder, seeing that inflation made it less attractive to hold liquid funds, yet banks were loaded with deposits. Possibilities for increased spending were limited, apart from the odd extravagances of the nouveaux riches. Like everything else, the supply of solid consumer goods appealing to the well-to-do was gradually drying out. The building trade was slowing down due to lack of materials.[19] Investment in real capital still took place, but was hampered by the prevalent condition of short supply. With great risk at hand everywhere in economic life, even some who were not by inclination opportunistic rent-seekers must have felt the urge to speculate.

 

The post-war economy

With the end of the war, the worst tensions soon relieved. After most restrictions on trade had been lifted internationally, a short-lived boom set in. Stocks were replenished, lacking reinvestment carried out, and peace and rising wages celebrated by consumers. This compensated the downturn of the previous two years and reset turnover to a normal level. However, it did not imply anything like a complete structural renormalization of the economy.

In Denmark, the payment of debt owed by foreigners contributed to financing the recovery. The positive balance on the nation’s external account – a result of the extraordinary demand directed towards a neutral country – was soon exhausted, and so were other funds. A massive public deficit, having been run in order to prop up the economy and secure adequate living standards across the social spectrum, must now be phased out. In itself, this was no cause for alarm but uncertainty was rife due to supply side problems. A number of firms in which substantial investments had been made were unsuccessful in reorienting their activities towards peacetime conditions with falling prices and changing demand structure. Inevitably, some of these enterprises built on an overly optimistic risk assessment.

Unfortunately, not only private investors lost their stakes. Banks who had ignored the difference between being illiquid and being insolvent incurred irreparable losses as loans turned sour. It happened on such a scale that in 1922 the largest bank in Denmark went bankrupt and had to be reconstructed, being, in modern-day parlance, too big to fail. Many minor banks were reconstructed, taken over by competitors or liquidated during the 1920s. The immediate cause of this long-drawn crisis was professional neglect on the part of bankers, but behind it all lay also the pressure during the war years to recirculate abundant deposits generated by the discrepancy between realized earnings and, in the next phase of the monetary cycle, more and more limited natural outlets for investment and purchasing power. The lack of firm financial regulation was also to blame.[20]

These events contributed to a lack of stability and feeling of uncertainty in the post-war period, despite a reasonable overall growth level. Real wages rose, but on an irregular basis. Unemployment figures too fluctuated a great deal, without any permanent decrease compared to the final war years. Overall, the economic situation was far from satisfactory, but neither was it alarming. Policy-makers were much in doubt regarding what to do even though options were limited within the narrow, pre-Keynesian horizon of those years.

The big question was the exchange rate. Fearing inflation, the ideal was a return to the pre-war par value of the krone, as stipulated by the gold standard. A minority of advisers spoke in favour of a somewhat lower parity, but this was a difference in degree, not in kind. At any rate, in 1923 the government and the central bank jointly decided to pursue a tight monetary policy. A high interest level would attract foreign exchange and facilitate an expansion of the national gold stock. Indeed, in 1926 the krone reacquired its pre-war value and was made redeemable in gold the following year. The dark side of such reassurance was a relatively high level of unemployment. Decision-makers, convinced that the economy was back on a sound footing, were unable to envisage the international breakdown of the gold standard a half-decade later.

In the meantime, the pendulum had swung away from regulation and redistribution but did not again reach the opposite extreme. The public sector’s size measured against national income diminished after the peak year 1918 but remained several percentage points above the pre-war level throughout the liberalizing 1920s and continued its rise after that.[21] Later regulation and redistribution, during the Great Depression as well as the Second World War, drew on the experience of the First, but with direct business interests in a less prominent if still active role. The corporatist approach remained a permanent feature though, as did of course the conviction that market mechanisms could and should be bypassed when required by the public interest.

The origin of this new socio-political setup in the First World War was not the result of random events that triggered a path-dependent chain of other, analogous events, yet might never have happened had the Great War failed to materialize. It was contingent on broader, structural transformation in the spheres of political economy and mass politics. Nevertheless, there is little doubt that 1914-18 was a transformative period in Denmark, shaping the agenda for future social and civil governance.

[1] Einar Cohn: Danmark under den store Krig. En økonomisk Oversigt, Copenhagen 1928.

[2] Einar Cohn: ”Denmark in the Great War”, in: James T. Shotwell (ed.): Sweden, Norway, Denmark and Iceland in the World War, New Haven 1930, pp. 409-558.

[3] Johannes Dalhoff: “Krigsaarenes Lønpolitik. Foredrag i Nationaløkonomisk Forening den 30. November 1920”, Nationaløkonomisk Tidsskrift, 3rd series, Vol. 29, No. 4, 1921, pp. 1-36.

[4] Svend Aage Hansen: Økonomisk vækst i Danmark, Vol. II, 1914-1970, Copenhagen 1974.

[5] Svend Aage Hansen & Ingrid Henriksen: Dansk socialhistorie 1914-39. Sociale brydninger, Copenhagen 1980.

[6] Erling Olsen: ”Perioden 1914-1931”, in: Erling Olsen & Erik Hoffmeyer: Dansk pengehistorie 1914-1960, Danmarks Nationalbank 1968, pp. 11-152.

[7] Kasper Elmquist Jørgensen: Studier i samspillet mellem stat og erhvervsliv i Danmark under 1. verdenskrig, Copenhagen Business School 2005.

[8] Steen Andersen & Kurt Jacobsen: Foss, Copenhagen 2008. Eidem: ”Fra åben til reguleret økonomi: Foss, Rode og Den Overordentlige Kommission”, Økonomi og Politik Vol. 82, No. 3, 2009, pp. 15-28.

[9] Carsten Due-Nielsen: “Denmark and the First World War”, Scandinavian Journal of History , Volume 10, No. 1, 1985, pp. 1-18.

[10] Den overordentlige kommission af 8. august 1914. Virksomheden fra 8. august til 7. november 1914. Beretning – aktstykker, p. 15, http://www.kb.dk/e-mat/ww1/130018363977.pdf (retrieved 15/02 2017).

[11] Ibid., p. 16f.

[12] Ibid., p. 19.

[13] A. Kocik & Henry Grünbaum: ”Organisationens historie”, pp. 115-117, 127, in: Under Samvirkets Flag. DSF 1898-1948, Danish Confederation of Trade Unions 1948, pp. 99-225.

[14] Niels Kærgård: Økonomisk vækst. En økonometrisk analyse af Danmark 1870-1981, Copenhagen 1991, p. 143, especially Figure 6.7.

[15] Kurt Bergendahl: ”Trade and Shipping Policy in the War” [Part II of “Sweden in the World War”], p. 120-24, in: James T. Shotwell (ed.): Sweden, Norway, Denmark and Iceland in the World War, New Haven 1930, pp. 43-124.

[16] Hans Chr. Johansen: Dansk økonomisk statistik 1814-1980 (Danish historical statistics 1814-1980), Copenhagen 1985, Tables 6.4 and 6.5.

[17] Based on Hans Chr. Johansen: Dansk økonomisk statistik 1814-1980 (Danish historical statistics 1814-1980), Copenhagen 1985, Tables 4.8 and 10.1, 1907, 1912, 1923 and subsequent years.

[18] Einar Cohn: Danmark under den store Krig. En økonomisk Oversigt, Copenhagen 1928, p. 314f.

[19] Ibid., pp. 85, 189-91.

[20] Full story in Per H. Hansen: På glidebanen til den bitre ende. Dansk bankvæsen I krise, 1920-1933, Odense 1996.

[21] Rolf Norstrand: De offentlige udgifters vækst i Danmark, University of Copenhagen, Department of Economics (Blue Memo No. 41), 1975.