CHAPTER XXIIAUSTRIA-HUNGARY FACED BY REVOLUTION OR WAR—THE FINANCIAL FACTOR
Austriaand 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 thenative 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 oflinen. 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 hisneed; 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 tradersfrom 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 districtsmust 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-Hungariansystem 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. Thiswould 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 animpassefrom 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 grownalmost 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 largeclass 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.