Academic journal article East European Quarterly

The Economic Collapse of Austro-Hungarian Dualism, 1914-1918

Academic journal article East European Quarterly

The Economic Collapse of Austro-Hungarian Dualism, 1914-1918

Article excerpt

That pioneer of Austro-Hungarian studies, Oscar Jaszi, described the economic unity of the Habsburg provinces as "one of the most outstanding centripetal forces" that helped to maintain the multinational state against rising centrifugal tendencies such as nationalism, at least until 1918.(1) Indeed, the various provinces and peoples of the Austro-Hungarian Empire, whatever their national and political differences, formed an effective economic community. The agricultural districts of Galicia and the Hungarian plain, the coal mines of Silesia and Moravia, and the heavy industries of Upper and Lower Austria provided the Monarchy with its basic requirements of food, fuel, and manufactured goods in peacetime. Economic interdependence in turn gave cohesion and a basic unity to the motley assortment of ethnic groups and political entities that made up the Habsburg state. Together with the dynasty and the army, the implacable logic of economics provided an essential pillar upholding governmental authority.

This interdependence, however, was delicately balanced both in political and material terms. Though a free-trade customs union for the entire Habsburg state was in place by 1850, the settlement with the Magyars in 1867 fundamentally altered not only the political but also the economic relationships in the new Dual Monarchy. By the terms of the Ausgleich, the Austrian provinces and the Kingdom of Hungary constituted separate economic spheres within the overarching context of the Habsburg Empire. The precise terms of the two spheres' commercial and financial relationship were regulated by treaty, negotiated at ten-year intervals. These periodic renewals of the Ausgleich economic union inevitably involved the Austrian and Magyar statesmen in protracted disputes over its specific terms. The Magyar negotiators skillfully used the Austrian--and particularly the Imperial capital's--dependence on Hungarian foodstuffs to obtain generous terms of trade. The Austrians perceived in the developing economic imbalance the gradual erosion of Habsburg authority in the Hungarian sphere of the Monarchy. The last Ausgleich had been concluded in 1907. It was thus due for renewal in 1917.(2)

The outbreak of war in 1914 placed extraordinary demands on all sectors of the Austro-Hungarian economy, complicating immensely the interrelationship of the various productive sectors and regions. Given the geographical isolation of the Central Powers, the supply of foodstuffs assumed particularly critical importance during the war years. Austria-Hungary produced an average of nearly 105 million quintals of wheat and rye annually between 1909 and 1913, sufficient to satisfy domestic demand in these categories, which averaged around 100 million quintals. The war, however, introduced a deficit between the supply of grain and the demands of the population. In 1914, this deficit totaled only around 9.8 million quintals. In 1915, it more than doubled to 20.6 million quintals, and in 1916 nearly doubled again to 37.1 million quintals. By 1917, it stood at 37.8 million quintals. With the supply of domestic grain failing to provide for close to 40 percent of need, Austria-Hungary had effectively lost the capacity to feed itself.(3)

The reasons behind this disastrous agricultural situation were numerous, and most were hardly unique to Austria-Hungary during the war years. Diminished harvests reflected the wide range of waste and hardship produced by wartime conditions. As a result of the Entente's blockade of the Adriatic ports and the demands of the Austro-Hungarian Army, supplies of fertilizer, machinery, and particularly draught animals were lacking on Austrian and Hungarian farms. One estimate from July 1915 placed the total number of farm horses lost to requisitioning by the army, to German buyers, or to enemy destruction in provinces like Galicia at 1,930,000.(4) As early as the autumn of 1915, the Hungarian Prime Minister estimated that the number of draught animals on Hungarian farms had fallen to just 60 to 70 percent of the peacetime total. …

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