Between Depression, Stagnation and Development

After a century and a half of partition, Poland was reborn in the autumn of 1918, though its geopolitical and economic situ- ation remained precarious. On the one hand, there were armed conflicts during which the new borders of the Republic were being shaped, and on the other hand, the economy of the young state was plagued by an economic depression that undermined the foundations of its existence. It took several years to recover from the crises. The main difficulty that successive governments had to face was the need to integrate the three different fiscal and economic systems and policies that had been inherited from the partitioning states: the German Empire, Austria-Hungary and Czarist Russia. It is noteworthy that in the early 1920s two courses of recovery from economic depression were contemplated. The first (“the German course”) was based on the introduction of a new currency with extensive support for the economy with international loans. The second, called “the Austrian course,” relied solely on bolstering the economy with foreign loans. In the end, the Poles, under the leadership of Prime Minister and Treasury Minister Władysław Grabski, chose a third path: their own. It consisted of, in particular, a rapid collection of property tax, a sweeping currency reform, increasing the profitability of state monopolies, and implementing audits of public spend- ing. All of these measures, which underwent regular modifi- cations, yielded reasonably favorable socio-economic results. Their consequence was a long, arduous but steady recovery of Poland from the post-war economic slump.