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The new institution was registered as a trader and was to be con- ducted on commercial principles, its expenses being covered by its receipts, and the State only guaranteeing it against eventual loss in order to secure the credit of the company. The principle of balancing expenditure and receipts was, indeed, soon abandoned, the State making advances to the institution in order that bread-stuffs might be sold under cost price. This institution, in the conduct of which officials and experts appointed by the Government took part, had complete control of all grain, flour, mills and bakeries. Its activities in fixing the price and quality of bread, etc., and in rationing, closely resembled those of the food controller in Great Britain (see FOOD SUPPLY and RATIONING).

This system of State control prevented industries which used grain as their raw material from buying in an open market, and in their case too it was found necessary to regulate supplies by means of an organization analogous to that of the economic associations already mentioned. In many cases these boards were established in connexion with the already existing trade associations (e.g. the Central Brewery Board in connexion with the Central Association of the Austrian Brewery Association), which set up their own distributing-stations and divided the raw material among producers according to a scale fixed by the Government, charging the producers a commission, in addition to the cost price, in order to cover costs. These boards also under- took other functions, such as introducing new methods of manu- facture and supplying the workers in the munition factories with beer. Sugar and alcohol were also placed under the control of central boards, in connexion with existing organizations but with a certain independence: for instance, the Sugar Kartel ceased to exist, while the Central Sugar Board continued. The latter also managed the export of sugar, in return for which certain wares were imported.

Of particular interest were the purchasing associations formed during the war. In the autumn of 1915 the Ministry of the Interior established the "Vom Ministerium des Innern legiti- micrte Einkaufsstelle m. C. H." (Purchasing station with limited liability licensed by the Ministry of the Interior), known as the "Miles," which was charged with the buying of goods in neutral countries. At first this organization acted as agent of the newly- established approvisionment departments; it was only later that it received the monopoly of the right to import certain articles, the Government at the same time placing at its disposal cer- tain wares with which to pay for them. The prices fixed by the Miles for the sale of its wares were not at first interfered with; it was only later that its dividends were limited to 6%. It wa? then transformed into the " Oczeg " (Oesterreichische Zentral- Einkaufsgesellschaft: Austrian Central Purchasing Company), which was the very type of an " altruistic company." In addition to the dividend 5% was allowed for commission, office expenses and risk. By agreement with the Ministry of the Interior, as soon as the reserve exceeded by 10% the working capital (which was partly in shares, partly in bank advances) the company was to sell food under cost price; and this actually happened.

The system of regulation by central boards was severely criticised for incompetence and even for corruption, and some- times justly; but on the whole it was amply justified by the urgent necessities of the times and by its results. Many other measures had also to be resorted to in order to maintain the industry of the country. Briefly, the duty of maintaining industries was made obligatory, and in the last resort the military authorities were empowered to take them over, though this was not likely to happen as long as the high prices continued and the Government supplied raw materials. Tillage was also made compulsory, but this had little effect on production owing to the shortage of labour, draft animals, manures and agricultural implements, together with the oppressive restrictions caused by the fixing of maximum prices.

All these measures could not alter the fact that the national economy became less and less equal to the tasks imposed upon it by the war. So soon as State control was applied to any article it could be taken as a sign that the supplies would soon come to an

end, or at any rate were very restricted; and thus it was impossi- ble to prevent the equipment of the army from becoming gradu- ally more inadequate, and the provision both of the army and of the population behind the lines with all kinds of necessaries from being altogether insufficient; only wholly unsatisfactory sub- stitutes could be provided, and the available provisions could hardly be made to go round. When the war came to an end Austria was almost completely stripped of many important commodities.

No better picture can be obtained of its overwhelming eco- nomic impoverishment than by studying the figures which show the decline in the crop returns for Austria, and taking into account the fact that imports from Hungary and the territories under military occupation naturally fell far below the proportion of foodstuffs formerly imported. Table X. gives the returns of the principal crops for Lower Austria according to the statistics of the Ministry of Agriculture.

TABLE X. -Crop Statistics. (Thousands of tons.)

1906-15*

1915

1916

1918

Wheat .... Rye. ..

118

3O3

80

212

53

54

Barley .... Leguminous Crops. Potatoes ....

95

8

639

^ 636

65

5 344

47 4 307


 * Average.

In the other Crown lands the crops declined in the same proportion. The production of fodder also declined steadily, the number of cattle fell, and the army horses were insufficiently fed.

To these purely economic difficulties was added the growing opposition of the population to the measures of compulsion. This in part depended on national factors, which became more clearly visible as the situation of the Central Powers became more and more unfavourable, but it was in part due simply to the ex- haustion due to economic need. Thus the spirit of the labouring classes became more and more inflamed, and at the beginning of 1918 the Government had the greatest difficulty in suppressing an anti-war agitation among the working classes, which assumed a threatening form. Movements were now unchained which were bound after the end of the war to leave their impress upon the political events and internal economy of the young Austrian republic (see AUSTRIA, REPUBLIC OF). (K. P.; R. SIR.)

Finance and Banking. The third licence granted to the Austro- Hungarian Bank expired on Dec. 31 1910. It was at first extended provisionally, as it was impossible to reach a settlement between Austria and Hungary regarding the continuance of common currency and banking arrangements. In Hungary a strong majority, which the Government could not afford to ignore, insisted on the forma- tion of an independent Hungarian bank; on the other hand the advantages accruing to Hungary through the community of the financial and banking organization were quite obvious. There was an important divergence of opinion between Austria and Hungary concerning the constitution of the bank. Since the closing years of the igth century the Austro-Hungarian Bank had pursued a policy which had in the main the object of making the Austrian krone a gold exchange standard. It was decided, however, by the Austrian financial authorities that the obligation of the Austro-Hungarian Bank to convert its notes into gold on demand should remain sus- pended as hitherto, owing to fear lest the renewal of the obligation of the bank to cash its notes in gold should lead to a rise in the rate of interest. Hungary, on the other hand, striving for access to the money markets of the West, desired that the obligation of the Aus- tro-Hungarian Bank to cash its notes should be explicitly mentioned in the law, in order to make the public loans rank as easily negotiable securities on foreign bourses. In the banking law of Aug. 8 1911 a compromise was formed on the following lines. The suspension of cash payment by the Austro-Hungarian Bank was continued, but the bank was bound to provide, by every means at its disposal, that the value of its notes as quoted on foreign bourses should be per- manently secured in proportion to the parity of the legal mint standard of the krone currency. Hungary's wishes were met by the introduction of a specially prompt procedure for the eventual future abolition of the suspension of the bank's obligation to cash its notes. By the same law, besides other less important provisions, the amount of the bank's tax-free issue of notes was raised from 400 to 600 millions of kronen, and the conditions formerly attached to the issue of 10 and 20 kronen notes were sensibly relaxed.