AUSTRIA-HUNGARY FACED BY REVOLUTION OR WAR--THE FINANCIAL FACTOR
Austria and Hungary strike the casual visitor as very like any other
European country, and so long as he remains on the beaten path he
finds no reason to revise his judgment. Vienna, Budapesth, Prague, are
very like Milan or Berlin. There is plenty of ready money, and every
indication of a somewhat too advanced civilisation. In fact, decadence
is suggested rather than under-cultivation. The ease with which the
city people have adopted every new invention, and the facility with
which they adapt themselves to modern appliances and conveniences,
quite deceives the stranger. He naturally supposes that people who
made constant and excellent use of the telephone at a time when it
was just being introduced into the western countries of Europe are
necessarily advanced in other matters. Everything looks very up to
date. The fashionable watering-places, like Karlsbad and Marienbad,
are the essence of modernity. Everything is carefully arranged for the
comfort of the traveller, and for the man who can afford the utmost
refinement of comfort it is perfection. If he takes a long walk out
from his splendidly appointed hotel, and spends a day or two up country
in Bohemia, he will soon discover a different state of things.
The first shock is the knowledge that the forest is not safe for anyone
who rashly wanders away from carefully tended paths and marked trees
that show the direction. These immense woods are not merely unsafe,
but any stranger to the district who strays among the denser parts
will probably not return, for the peasants are inclined to be savage.
If a German falls into the hands of Czechs in a small Bohemian town
he usually gets badly mauled before the police, who are really in
sympathy with the towns-people and do not hurry unduly, can interfere.
This kind of outrage, which may be found chronicled without any
excuse or explanation in the small local papers, goes on within a few
miles of the ultra-civilised Marienbad, where urbane and polished
politicians conferred with King Edward, and spoke of their land as one
of the civilised countries of Europe. No one ever thought of pushing
inquiries as to what the native peasant was like. Horrible crimes are
frequently reported from Bohemia, but they attract little attention.
The foreigners do not read the kind of paper that delights in horrible
detail, while the Viennese know too well how very backward much of the
country population is, and naturally wish to keep the knowledge from
the world. The various races that live within the confines of Austria
proper are of mild and somewhat timid disposition, but the Hungarians
are fierce and cruel.
Many peasants, who own considerable wealth in the shape of land, that
has come down to them from their fathers, have never seen a gold coin,
nor even possessed a 15s. banknote in their lives. Very little gold
circulates in Austria or Hungary at any time, the people preferring
notes. Apart from this, however, many peasants never handle money.
Their whole business is carried on by barter. A peculiar method
of trading is known as “pauschal.” It is extremely simple in its
operation. A dairy-farmer undertakes to supply one of his neighbours
with butter, milk and eggs all the year round. The neighbour supplies
him with pork, vegetables, or some other commodity that he has at his
disposal. The same method of barter is applied to the shoemaker and
to the weaver of linen. If one party suffers a slight disadvantage
through the arrangement it is considered that it will be made up
another season, when his requirements will be larger. This system
obviates any keeping of accounts, and is of great convenience, as
it enables the parties concerned to forecast their expenses for the
coming year with certainty. In some districts, where there is less
mutual dependence, and therefore less mutual trust and confidence,
the accounts are chalked up behind the door, and one supply of goods
rendered against another. But no money passes from hand to hand. The
peasant has a lively distrust of banks, born of experience; and he
considers that the natural end of a bank is failure. He therefore
invests his money in stock, in enriching the land, if he is the
absolute proprietor, and always locks up a certain sum for emergencies,
turning it into jewellery, which is worn by the women. In times of
terror the peasant girl conceals her necklace--usually made of coins
which are out of circulation--and always has the wherewithal to procure
herself temporary shelter. The peasant women, too, wear belts of
solid silver, which can be converted into cash at a moment’s notice,
should necessity arise. The peasant never interferes with his wife’s
jewellery, whatever may be his need; it is her dowry for herself and
her children in times of dire distress.
These circumstances and habits account for the curious phenomenon of a
population rich in property, but having no ready money. This explains,
too, the remarkable fact that only about 4 per cent. of the population
of Austria pay income-tax. The tax is imposed upon everyone earning
over £50 per annum. Moving about among the peasant proprietors, among
the large population engaged in cottage industries, it is impossible to
believe that these people are living on incomes below £50 per annum.
It is true that they have no money, or only rare coins, but they are
living at a high standard of comfort, and many who earn £20 per annum
in actual coins, consume products got upon the exchange and barter
system worth several hundreds of pounds.
The small fraction of the population which is taxed for income for
carrying on a trade or profession, and in a dozen other vexatious ways,
is heavily hampered. A man must even pay a heavy tax for the upkeep
of his religion if he is a non-Catholic. Indeed, it is difficult to
see how any business can be made to pay with the heavy taxation that
hampers trade on every hand, and practically prevents Austrian traders
from being able to compete with German firms, which instead of being
hampered are assisted by their Government.
In the days of quiet and calm before Austria-Hungary was led to think
of world-empire by her ambitious ally, the Minister of Finance actually
turned out budgets without a deficit; some years there was even a
surplus. It was, of course, impossible to ascertain how far these
figures corresponded with actual facts, for “double book-keeping” was
not peculiar to private persons in Austria-Hungary. It was a matter of
common knowledge that Government statistics were manipulated to suit
the requirements of the political situation.
When the country embarked upon her new military and naval policy,
large sums of money were needed. There were meetings between leading
financiers to consider how best it could be collected from a country
that possessed no liquid wealth. Taxes were clapped on imports.
This brought but little revenue, as the country people fed on the
products of their own growing. The various State monopolies, such as
tobacco, brought in large revenues. The attempt to get money from
the agricultural population, however, failed. This meant that the
capitals and large manufacturing districts must find the necessary
funds for reckless expenditure on armaments. Great hardships resulted.
The working-classes were forced to pay heavy taxes upon all goods
entering the city. They already bore heavy import duties, and the
cost of many articles of necessity was almost prohibitive. Sugar,
which was made from beetroot in the country, and sold to England
at less than cost price, in order to gain a foreign market, cost
5d. a pound in Austria-Hungary. The taxation became heavier every
year, and the authorities failed to see that the burden was falling
exclusively upon the middle-classes and the working-classes dwelling
in the large cities. Austria-Hungary tried to float loans in France.
The political situation was so strained that, although France was
willing to lend money to Russia, she refused, point-blank, to lend
to Austria or to Hungary on any terms. The loans had to be taken up
in Germany. Germany needed money herself; she had been spending all
her available capital upon raw material for the forging of cannon. At
every meeting of the Austrian Parliament members protested against
the laying down of Dreadnoughts when the financial situation of the
country was so precarious. There were constant riots in the towns,
the Austro-Hungarian system of reckless suppression of disorders
applied to quell the disorders only increased the mass of discontent
and disaffection. There came a time when politicians began to see
that only a successful war could save the position. The Hungarians
were threatening to break loose from Austria. They considered that
the finances were mismanaged. Too much of the money voted for the
Dual Monarchy, and administered by the Common Minister of Finance,
was devoted to Austrian needs, to the disadvantage and detriment
of her less powerful neighbour, Hungary. Such suspicions were very
well founded, especially as regards the sums secretly devoted to war
material. If education were defective in Austria, it was still more
neglected in Hungary.
Vienna had become the real capital, Budapesth being neglected through
the ill-health and advancing age of the Emperor. It was clear that the
Emperor could not travel to Budapesth without risk to his health, since
the climate did not suit him.
Hungary said that she would prefer to administer her own finances. She
could very well provide for her own military and naval requirements.
She wished to take a part of the executive power into her own hands.
This would have weakened Austria considerably. Instead of ranking as
a first-class Power she would fall to the rank of a secondary one.
Bohemia, too, wished for separation. She felt that her prosperous
factories, her ironworks, were contributing a very large share of
wealth to the country, and that while the Bohemians were heavily taxed,
they got no compensation for the extra money that they poured into the
State chest.
The leading statesmen realised towards the year 1912 that they were
faced by the choice of war or revolution in Austria-Hungary. The
huge sums needed to pay off the debts already incurred by the costs
connected with two mobilisations, and the ever-increasing military and
naval needs were landing the country in an _impasse_ from which there
were only two roads of escape. If the House of Habsburg wished to
maintain its proud position some action must be taken. The politicians
round the throne thought that a successful war with Italy would be
the most desirable event. They dared not moot this question in the
presence of the aged Emperor. He was firm for peace. This conviction,
that was deeply rooted in his mind, was strengthened by his growing
parsimoniousness. Very generous as a young man, he had grown almost
miserly as old age crept upon him. When he was ill he regretted that
there should be speculation upon the Stock Exchange, and that the “poor
people should lose their money,” to use his own words. This economy,
which he wished to see exercised, not only in his own private affairs,
but throughout the State, would alone have made him abhor the thought
of war, which he knew meant expenditure. The military party hoped that
he might either die, or be brought to see that his remaining at the
head of affairs any longer was a mistake from every point of view.
They realised that something must be done. If the Emperor would only
abdicate, they could act.
Prices of ordinary necessities rose 30 per cent. during the three years
preceding the war. The small clerk, the officer, and everyone with a
limited income and a certain position to keep up, was reduced to going
without many articles of prime necessity, or to getting into debt. Many
chose this last alternative; especially was this the case with the
officers, who were thus the more anxious for war, as they had nothing
to lose and much to gain by being on active service.
If the middle classes in Austria-Hungary had possessed large sums
invested in stocks and shares, like the French or the Swiss, the large
class representing this interest would have objected to war. This was
not the case, as all speculation and almost all liquid capital was in
the hands of the Jews. They were firm for peace. They completely failed
to see where the policy of the country was leading. Their lack of
influence, and the barrier that kept them from being able to exchange
views and opinions freely and as man to man with the aristocrats,
prevented them from seeing what was about to happen. They believed
that the country might go on in its peaceful way, even after the death
of the Emperor, which was the date commonly fixed in the country for
the disruption of the Empire. Perhaps the Jews and the financial
section would have been right in their estimate had it not been for the
ambitions of the German Kaiser. They did not appreciate the mentality
of the Austrian Imperial family, in whom the power of decision was
really vested, and could not understand that it would prefer to allow
itself to become the cats-paw of Germany, rather than see its power
diminished by the loss of part of its lands.