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AUSTRIA-HUNGARY

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protective duties; the tariff was completely revised, protective duties were introduced on all articles of home production, and high finance duties on other articles such as coffee and petroleum. At the same time special privileges were granted to articles imported by sea, so as to foster the trade of Trieste and Fiume ; as in Germany, a subvention was granted to the great shipping companies, the Austrian Lloyd and Adria; the area of the Customs Union was enlarged so as to include Trieste, Istria, and Dalmatia, as well as Bosnia and Herzegovina. In 1887 a further increase of duties was laid on corn (this was at the desire of Hungary as against Rumania, for a vigorous customs war was being carried on at this time) and on woollen and textile goods. Austria therefore during these years completely gave up the principle of free trade, and adopted a nationalist policy similar to that which prevailed in Germany. A peculiar feature of these treaties was that the Government was empowered to impose an additional duty (Retorsion Zoll) on goods imported from countries in which Austria - Hungary received unfavourable treatment. In 1881 this was fixed at 10 per cent. (5 per cent, for some articles), but in 1887 it was raised to 30 and 15 per cent, respectively. In 1892 Austria-Hungary joined with Germany, Italy, Belgium, and Switzerland in commercial treaties to last for twelve years, the object being to secure to the states of Central Europe a stable and extended market; for the introduction of high tariffs in Russia and America had crippled industry. Two years later Austria-Hungary also arranged with Russia a treaty similar to that already made between Russia and Germany; the reductions in the tariff secured in these treaties were applicable also to Great Britain, with which there still was a most favoured nation treaty. The system thus introduced gave commercial security till the year 1903. The result of these and other laws was an improvement in financial conditions, which enabled the Government at last to take in hand the long-delayed task of reforming the currency. Hitherto the currency had been partly in Reform silver (gulden), the “Austrian Currency ” which had of the been introduced in 1857, partly in paper money, which currency. took the form of notes issued by the Austro-Hungarian Bank. This institution had, in 1867, belonged entirely to Austria ; it had branches in Hungary, and its notes were current throughout the monarchy, but the direction was entirely Austrian. The Hungarians had not sufficient credit to establish a national bank of their own, and at the settlement of 1877 they procured, as a concession to themselves, that it should be converted into an Austro-Hungarian bank, with a head office at Pest as well as at Vienna, and with the management divided between the two countries. This arrangement was renewed in 1887. In 1848 the Government had been obliged to authorize the bank to suspend cash payments, and the wars of 1859 and 1866 had rendered abortive all attempts to renew them. The notes therefore formed an inconvertible paper currency. The bank by its charter had the sole right of issuing notes, but during the war of 1866 the Government, in order to raise money, had itself issued notes {siaatsnoteri) to the value of 312 million gulden, thereby violating the charter of the bank. The operation begun in 1892 was therefore threefold : (1) the substitution of a gold for a silver currency ; (2) the redemption of the staatsnoten; (3) the resumption of cash payments by the bank. In 1867 Austria-Hungary had taken part in the monetary conference which led to the formation of the Latin Union ; it was intended to join the Union, but this was not done. A first step, however, had been taken in this direction by the issue of gold coins of the value of eight and four guldens. No attempt was made, however, to regulate the relations of these coins to the ‘ ‘ Austrian ” silver coinage ; the two issues were not brought into connexion, and every payment was made in silver, unless it was definitely agreed that it should be paid in gold. In 1879, owing to the continued depreciation of silver, the free coinage of silver was suspended. In 1892 laws introducing a completely new coinage were carried in both parliaments, in accordance with agreements 1 Matlekovits. Die Zollpolitik des Oesterreichish- Ungarischen made by the ministers. The unit in the new issue was to be the Monarchie, Leipzig, 1891, gives the Hungarian point of view.— krone, divided into 100 heller; the krone being almost ol the Bazant. Die Handelspolitik Oesterreich- (Jiigarns, 1875-92. Leipzig, same value as the franc. (The twenty-krone piece in gold weighs 6'775 gr., the twenty-franc piece 6 ASS.) The gold krone was equal 1894.

army. In 1886 a law was carried in either parliament creating a Landsturm, and providing for the arming and organization of the whole male population up to the age of forty-twp in case of emergency, and in 1887 a small increase was made in the annual number of recruits. A further increase was made in 1892-93. In contrast, however, with the military history of other continental powers, that of Austria shows a small increase in the army establishment. Of recent years there have been signs of an attempt to tamper with the use of German as the common language for the whole army. This, which is now the principal remnant of the old ascendency of German, and the one point of unity for the whole empire, is a matter on which the Government and the emperor allow no concession, but in the Hungarian parliament protests against it have been raised, and in 1899 and 1900 it was necessary to punish recruits from Bohemia, who answered the roll call in the Czechish “ zde ” instead of the German “ hier.” In those matters which belong to the periodical and terminable agreement, the most important is the Customs Union, which was established in 1867, and it is The convenient to treat separately the commercial LJaion”3 policy °f the dual state.1 At first the customs tariff in Austria-Hungary, as in most other countries, was based on a number of commercial treaties with Germany, France, Italy, Great Britain, &c., each of which specified the maximum duties that could be levied on certain articles, and all of which contained a “most favoured nation ” clause. The practical result was a system very nearly approaching to the absence of any customs duties, and for the period for which these treaties lasted a revision of the tariff could not be carried out by means of legislation. After the year 1873, a strong movement in favour of protective duties made itself felt among the Austrian manufacturers who were affected by the competition of German, 'English, and Belgian goods, and Austria was influenced by the general movement in economic thought which about this time caused the reaction against the doctrines of free trade. Hungary, on the other hand, was still in favour of free trade, for there were no important manufacturing industries in that country, and it required a secure market for agricultural produce. After 1875 the commercial treaties expired; Hungary thereupon also gave notice to terminate the commercial union with Austria, and negotiations began as to the principle on which it was to be renewed. This was done during the year 1877, and in the new treaty, while raw material was still imported free of duty, a low duty was placed on textile goods as well as on corn, and the excise on sugar and brandy was raised. All duties, moreover, were to be paid in gold—-this at once involving a considerable increase. The tariff treaties with Great Britain and France were not renewed, and all attempts to come to some agreement with Germany broke down, owing to the change of policy which Bismarck was adopting at this period. The result was that the system of commercial treaties ceased, and AustriaHungary was free to introduce a fresh tariff depending simply on legislation, an “autonomous tariff” as it is called. With Great Britain, France, and Germany, there was now only a “most favoured nation ” agreement; fresh commercial treaties were made with Italy (1879), Switzerland, and Servia (1881). During 1881-82 Hungary, desiring means of retaliation against the duties on corn and the impediments to the importation of cattle recently introduced into Germany, withdrew her opposition to