Following the upheavals of the First World War, Liechtenstein had to reinvent itself in various ways. The Principality turned away from Austria in order to enter into a customs union with Switzerland. In an interview, the Liechtenstein historian Rupert Quaderer-Vogt explains that by signing the Customs Treaty of 1923, Liechtenstein laid the foundations for its economic boom in the following decades.

Mr Quaderer-Vogt, what was the situation like for Liechtenstein before the First World War?

Liechtenstein was a bitterly impoverished country, a simple agrarian state, until the economy gradually began to improve after the year 1852 following the customs union with the then Austrian Empire. A number of Swiss textile enterprises then moved to Liechtenstein, in order to be able to export from here to the huge Austro-Hungarian economic region. This created new jobs, and brought the first industrialisation.

How close were relations with the northern neighbour?

In overall terms, Liechtenstein looked very closely to Austria, for example in its legislation. In addition, the Austrian crown was the official legal tender. The close links were also a consequence of the Princely House. Prince Johann II was based in Vienna, and visited Liechtenstein only sporadically.

What side did Liechtenstein take when the Austro-Hungarian Empire entered the First World War in 1914?

Of course, the country took the side of its most important partner, the Austro-Hungarian Empire, although Liechtenstein did not actively take part in combat. At this time, Liechtenstein no longer actually had an army. Instead, donations were collected. And newspapers celebrated the successes of the Central Powers.

When did the mood shift?

It soon became apparent that it had been a big mistake not to declare neutrality from the outset. Of course, the Allies posed the question of where the small state bordering Austria stood. Because it was feared that goods from Switzerland could pass through Liechtenstein to Austria, the Allies decided that Switzerland had to close the borders. This meant the textile factories were forced to stop operating, because supplies of cotton dried up. Food shortages also developed, and inflation set in. The longer the war continued, the greater the negative impact of the war on the Liechtenstein population. The enthusiasm that was tangible at the outbreak of war soon faded.

As the war progressed, Liechtenstein then declared itself neutral.

But this only happened once it became apparent that the war would not last just a few weeks, as had been anticipated, and the negative effects were increasingly being felt. Even following the declaration of neutrality, however, Liechtenstein continued to be seen by the Allies as an Austrian satellite. Liechtenstein was extremely suspect, not least because the head of state, Prince Johann II, resided in Vienna, in enemy country.

How did Liechtenstein's estrangement from Austria finally come about?

Economic difficulties became increasingly problematic as the value of the Austrian crown continued to plummet. "The crown has kicked the bucket" became a popular saying. The Austrian currency became practically worthless. The population must have sensed that it would be necessary to separate from Austria, particularly after the war had been lost. For Liechtenstein, its very existence was at stake, and the voices calling for a new strategy became ever louder.

The strategy ultimately led to Switzerland. How did the Swiss respond to Liechtenstein's request to become part of Swiss customs territory?

Politicians in Switzerland were essentially open to discussions. But questions soon arose about what provisions should be included in a customs union treaty, and what consequences this might have. The result of the negotiations was that Liechtenstein had to adopt around 150 laws with no ifs and buts, in order to enter into a customs union with Switzerland.

Were there opponents in Switzerland to a customs union treaty of this nature?

People did ask what benefits Switzerland could expect from admitting Liechtenstein. The prevailing view in many places was that this would cause only problems. Towards the end of the First World War, as well as thereafter, huge volumes of goods were being smuggled in Liechtenstein, and this did not go unnoticed in Switzerland. Liechtenstein had a reputation for being an eldorado for smuggling. The need to monitor a shared customs border did not appear to be a favourable option for some Swiss commentators. Particularly vehement opposition to the customs union with Liechtenstein came from the Werdenberg region. There were fears that it would bring economic disadvantages to the border railway station in Buchs.

What finally prompted Switzerland to approve the treaty?

Firstly, there was the position taken by Federal Councillor Giuseppe Motta, that this presented a unique opportunity for little Switzerland to be generous towards an even smaller country, and to save it from bankruptcy. This also reflected the majority view in Switzerland. In addition, there were those who argued that a customs union treaty would enable Switzerland to exercise control over Liechtenstein. The key issue at stake here was gambling. At the time in question, Switzerland had introduced a ban on casinos, while a foreign company was proposing to open a casino in Liechtenstein, which would have generated urgently needed new revenues for the country. In Switzerland, the customs union treaty was seen as one way to block this development.

Shortly after the Customs Union Treaty was signed in 1924, the Swiss franc was also introduced in Liechtenstein as the official currency. Yet by this time the population had already become accustomed to paying with Swiss francs. What was the reason for this delay?

In this case, the government did indeed find itself lagging behind day-to-day practice. It goes without saying that those who handle cash on a daily basis also respond most quickly to turmoil on the currency market. While the Austrian crown remained the statutory currency up to 1924, even in the year 1920 ads were appearing in newspapers containing statements such as: "Goods delivered only upon payment in Swiss francs." This means the new currency had effectively been introduced by the population before the state was able to respond.

Personal information

In his three-volume work "Bewegte Zeiten in Liechtenstein bis 1914 bis 1926" ["Eventful Times in Liechtenstein 1914 to 1926"], Rupert Quaderer-Vogt (born 1942) documented Liechtenstein's paths and detours during a decisive phase in its history. The author studied history and literature in Fribourg and in Vienna. From 1969 to 2002 Quaderer-Vogt taught history at the Liechtenstein Grammar School, and from 1990 to 2014 was Research Fellow for History at the Liechtenstein Institute.

Interview: Stefan Lenherr