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324 A 4% bank-rate had been uninterruptedly in force from May 8 1908 to Oct. 23 1910. From Oct. 24 1910 to Feb. 3 191 1 it was 5 %; on Feb. 4 191 1 it was reduced to 4j %, and on Feb. 23 191 1 further to 4 %. From Sept. 22 1911 to Oct. 25 1912 the bank-rate was again 5%; on Oct. 25 1912 it was increased to 5j%; and on Nov. 16 1912 a rate of 6% came into force and so remained until Nov. 27 1913, when it was lowered to 5 j %, falling on Jan. 20 1914 to 5 %, on Feb. 3 1914 to 4i%, and finally on March 12 1914 to 4%.

These changes in the bank-rate show that Austria passed through a financial crisis and credit difficulties in 1912-3, from the conse- quences of which she had only just recovered at the outbreak of the war. The stringency of the money market and the crisis had their commencement as early as the spring of 1912. The Balkan War, which broke out in the autumn of 1912, did not occasion the crisis, but it made it more acute. The number of trade insolvencies in Austria- Hungary had reached its height in 1912. The Vienna Creditors' Association for the protection of claims in bankruptcies had in 1909- II fresh failures with liabilities of 45, 40 and 43 millions of kronen respectively. In 1912 the value of fresh claims involved rose to 112 millions of kronen; in 1913 it still amounted to 73 millions. One obvious sign of a crisis was the demand for loans against security from the Austro-Hungarian Bank, which was the result of the un- favourable position of investments on the bourse. In each of the five years, ending Dec. 31, from 1909 to 1913 the loans granted by the Austro-Hungarian Bank against securities amounted to 90, 149, '87, 355 and 311 millions of kronen successively. The bank-note circulation rose in proportion. Notwithstanding the fact that the banking law raised the tax-free note issue in 1911 from 400 to 600 millions of kronen, in 1913 the bank was unable to avoid incurring tax payments for notes issued in excess of the amount allowed free of tax, a state of affairs which had no parallel in the bank's history. From Aug. 23 1912 to Jan. 23 1914 the bank return showed no tax- free reserve of notes.

On July 23 1914 the gold reserve of the Austro-Hungarian Bank amounted to 1,238 millions of kronen, its silver to 291 millions. In its portfolio were discounted bills to the amount of 768 millions of kronen. It had loans on security outstanding to the amount of 186 millions, and the bank-notes in circulation amounted to 2,130 millions of kronen.

The outbreak of the World War compelled the bank to raise its rate on July 27 1914 from 4 to 5 %, on July 31 to 6% and on Aug. 2 to 8 %. The public rushed to the bank to obtain advances by pledg- ing securities. On Aug. 4 1914 the Bank Act was suspended by imperial ordinance having the force of law. In this manner the bank was converted into an institution which could supply the Govern- ment, by fresh issues of notes, with loans to an unlimited extent. The legal forms under which this source of credit was assured were various, but the actual result was in every case the same. The bank- rate was reduced to 6 % as early as Aug. 20 1914, and the granting of credit on depositing securities was facilitated by extending the limits of the securities accepted.

The note issue was as follows:

Dec. 31 1914 " 1915

1916 1917 1918

5,137 mill ons of kronen

7,162 10,889 18,440 35,589

In proportion to the increase of the notes in circulation prices and wages rose, and the krone depreciated on the foreign exchanges. The Government tried to oppose the rise in prices by penal measures, and in public attributed the rise of foreign rates to speculation. A Central Securities Board (Devisenzentrale) was set up on Feb. 24 1916; and regulations were issued on Dec. 19 1916 and June 18 1918, attaching a series of conditions to dealings in foreign money, bills and securities, which amounted actually to a monopolizing of all such operations by the Devisenzentrale. These measures had no success. The value of the American dollar, in terms of Austro- Hungarian paper kronen with legally fixed value, varied in fact, as shown by the Swiss exchange market, as follows :

End of Aug. 1914

Dec. 1914

1915 1916

" 1917 Oct. 1918 Dec. 1918

5-12 5-76 785 9-56 8-40 11-83 15-77

State Finances. The revenue from taxation rose year by year, partly owing to the increased profits of industry, partly to fresh in- creases in taxation. From the year 1902 to the financial year 1914-5 the State revenues doubled, rising from 1,730 millions of kronen to 3,460 millions of kronen, but this increase in revenue could only be achieved by placing an extraordinary strain on the taxable capacity of the country. In the financial year 1913 the amount of estimated expenditure rose to 3,461 millions of kronen. Of the estimated net revenue of 2,102 millions of kronen, 432 millions (20-5 %) came under the head of receipts from direct taxation, 905 millions (43%) under the head of receipts from indirect taxation and taxes on commerce, while 294 millions (14%) were the proceeds of State property and

State institutions. Of the direct taxes the land tax produced 52 millions, the house taxes 127 millions, the taxes on industry 127 millions and the income tax 102 millions. Of the taxes on consump- tion the spirit tax produced 95 millions, the beer duty 85 millions, and the sugar duty 176 millions. The State debt amounted to 11,340 millions of kronen. On the outbreak of the war it was at first impossible to contemplate meeting the cost of the war by raising existing taxes or by imposing fresh taxation. The costs of the war were in the first place met by loans and the assistance of the note- printing press. The means of carrying on the war were obtained by the State becoming the debtor of the Austro-Hungarian Bank, in so far as credit was concerned.

The debt of the Austrian State to the Austro-Hungarian Bank in direct loans made by the bank to the State amounted at the end of 1919 to 25,088 millions of kronen. But, besides this, the bank had also afforded credits to the State in other forms. In return for bonds given by the Austrian and Hungarian State they issued Treasury bills, and transferred the proceeds from them to the two finance departments. The total amount of such Treasury bills in circulation at the end of 1918 was roughly 7,400 millions of kronen.

The Post Office Savings Bank was also made to serve the financial needs of the State. Whenever a war loan was impending it accepted advances from the members of the Banking Consortium, which had to place the war loans, and as soon as the subscription was closed they were compensated for the underwriting. At the end of June 1919 these advances still amounted to 2,605 millions of kronen.

Foreign credit also was laid under contribution by the Austrian State. On Oct. 31 1918 the amounts of outstanding debts incurred abroad during the war were as follows:

2,696 millions of German Reichsmarks 42-9 " ' Dutch florins 2O'6 ' Danish kroner

7-9 ' Swedish kroner

3-6 " " Bulgarian levas.

The home money market was approached by the Government through the issue of war loans. The total number of such war loans was eight. They bore interest at 5j %. The first issue took place on Nov. I 1914, and from that time onwards a fresh war loan was issued about every six months. In this way a State debt of 35,069 millions of kronen was accumulated.

Up to Sept. 1915 no increases in taxation were introduced in Aus- tria, except a slight increase in the duty on beer; neither were any new taxes created. Even the reform of taxation carried out in the autumn of 1915 (modification of the inheritance and donations duty and the taxation on insurance policies and legal charges) cannot be regarded strictly as war taxes, as they had been planned a consider- able time before the outbreak of the war and had only been delayed by the inability of Parliament to continue its work. It was not until 1916 that increases took place in every field of taxation. The price of tobacco and the tariff of the State railways were considerably increased, special war increases were introduced in the direct taxes, and in April 1916 an entirely new tax was imposed the " war profits tax," the name of which was subsequently altered to " war tax." But all these taxes and increases of taxation were quite inadequate to meet the enormous expense of conducting the war. War finance was not able to dispense with the printing of notes. (L. v. M.)

ART AND LITERATURE, 1010-21

Art. All the Austrian artists who had been most character- istic of the age of Francis Joseph died about the year 1890. They had built a new Vienna and transformed the large pro- vincial towns. The keynote of their style might be described as Austrian imperial sentiment. This common quality was also true of the decadent period of this style, which reached its height in 1890; and even after the World War it still had its representa- tives. Notable in this class were, among architects, Karl Konig (1841-1915); among sculptors, Karl Kundemann (1838-1910) and Kasper Zumbusch (1830-1915) in Vienna, and Josef Myslbek (b. 1848) in Prague; among painters the Czech Brozik (1851- 1899), the Pole Jan Matejko (1838-1893), and the Viennese portrait-painters L. Horowitz (1843-1917) and Heinrich von Angeli (b. 1840). Others, such as the painter Adalbert Hynais (b. 1854) of Prague, and the Viennese sculptor Eduard Hellmer (b. 1850), or the Viennese engraver Ferdinand Schmutzer (b. 1870), displayed symptoms of a transitional style, dominated by an international influence. Austrian artists now sought every kind of contact abroad; many studied and lived in Munich, Berlin and Paris. As examples may be cited the Czech painters Antonin Slavifek (1870-1910) and Max Svabinsky (b. 1873), the Pole Jacek Malczewski (b. 1855), and the artists who in 1897 founded the Viennese Independents (Wiener Sezession). Evidence of their success in bringing new life to a dead tradi- tion was given by the painter Rudolf Alt (1812-1905), who in