The Habsburg Empire (1790-1918)

by C A Macartney

  Yet this did not mean that the political power had passed to the non-Germans; it has passed away from the people’s representatives altogether, back into the hands of the Emperor and of his civil servants, through whom the Government was conducted; the Reichsrat had become in fact little more than it was in name, an advisory body to the Crown.

  This, of course, is putting the position with some exaggeration. Francis Joseph still left the representatives of the people considerable elbow-room, so long as they did not touch fundamentals, and, within those limits, the rules of genuine Parliamentary government were applied: votes were taken, and a Minister President regarded himself as bound (under normal conditions) to get for his decisions the affirmative support of a Parliamentary majority. Where, however, fundamentals were at issue, the Monarch’s will was enforced, if necessary, over Parliament’s head.3 The system was a purely Austrian one, an adaptation to the facts of Austrian life of the general theories on which the enthusiasts of 1867 had built up the corpus of laws; and one, moreover, which adjusted itself constantly as those facts changed. No analysis can reach the heart of it: all that the historian can do is to record the facts as they occurred.

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  In 1871 Auersperg and his team regarded themselves as constituting a genuine Parliamentary government, and as entitled to express and realize the wishes of the element to which most of them belonged – although to secure this they had first to dissolve several of the Federalist Landtage and carry through new elections, which gave them a safe majority in the Reichsrat,4 and, after this, to carry through two of the structural modifications of which we have spoken. One was openly designed to strengthen the centralist element in the structure of Cis-Leithania. This was a new Franchise Act, which became law on 2 April 1873. The franchise was not extended (the Liberals were strongly against any reform in this direction), so that as before, only 5·9% of the population enjoyed the vote. The system of voting by Curias was retained also, on the insistence of the Constitutional Great Landlords, as was the provision for emergency elections when a Deputy refused to exercise his mandate,5 but each Curia of each Land now elected its own representatives to the Reichsrat direct. At the same time, the number of Reichsrat Deputies was raised to 353. The proportion of Deputies from the different Lands was left substantially unaltered, but the numbers allotted to the different Curias were changed to the advantage of the towns and the disadvantage of the Great Landlords. These now sent, in all, eighty-five Deputies to the Reichsrat, the Chambers of Commerce, twenty-one, the urban communes, 116, and the rural, 131. Certain further manipulations gave the German element a little further weight still.

  The second operation was, in form, a concession to decentralization, although the purpose of it was to strengthen the Germans’ position within the narrower field into which they now withdrew. The Hohenwart experiment had shown the Germans that they would not be strong enough to retain the power if all the Slavs combined against them, while the Poles, for their part, awoke to the financial advantages of retaining the constitutional link with the rest of Cis-Leithania. Agreement was reached in 1873. The Poles withdrew their demand for autonomy (the Bill for which had become stuck in Committee); instead, a Minister for Galicia (in this case, Dr Ziemalkowski) was again taken into the Government, as from 21 September 1873, with unwritten powers which, as they developed, gave the Poles almost complete control over Galicia.6 To mark the reconciliation, Goluchowski became for the third time, Statthalter of Galicia.

  This was an event of extraordinary importance for the whole subsequent domestic political history of Cis-Leithania. As their side of the bargain, the Poles stopped fighting for more concessions, and thereafter, until 1917, regularly supported whatever Government was in power, and helped, so far as they could, to get the essential legislation through the Reichsrat; the assurance of this was really the single stable factor in Austria’s Parliamentary life. The position was exceedingly favourable for the Poles, to whom it gave the best of both worlds, enabling them as it did to intervene at their pleasure in the affairs of the rest of Cis-Leithania without risk of retaliation. It proved ultimately far less advantageous to the Germans, for it was all Governments that the Poles supported thereafter, not German ones only. When, a few years later, the Poles joined a coalition Government which relegated the Liberals to the Opposition, the latter then awoke with a shock to this truth, but they were never able to undo their work, although they were trying to do so as late as 1918.

  In 1873, however, the agreement served their purpose, and the tolerance of the Poles and continued absence of the Czechs7 gave the Adolph Auersperg Government a very free hand. It had begun by adding various finishing touches to its constitutional programme: the extension of trial by jury to almost all serious offences and the establishment of the Administrative Court. But it had not got far before the Liberals’ prestige was shaken and their own internal unity greatly weakened by an extraordinary turn for the worse in the economic situation.

  After the Prussian war, the Monarchy had enjoyed a spell of unexampled prosperity, which had been triggered off, strangely enough, by the very speed and completeness of its defeat. The extra currency issued to finance the war which hardly took place had, as one expert writes, ‘come as a real release to the whole economy:8 it eased the financial stringency to an extraordinary degree, and such was the confidence engendered by the apparent ending of the struggle in Germany, the establishment of constitutional conditions in Austria and the settlement with Hungary, that the currency suffered no depreciation. On the contrary, the word went round that Austria was the place where fortunes were to be made, and there was a great influx of foreign money, including ‘refugee funds’ from North America during the Civil War, and later, a considerable proportion of the indemnity paid by France to Germany in 1870. Much of this money was deposited with one or another of the foreign banks which now took advantage of the 1865 Law to open branches in Vienna.

  Money came into the country in other ways also. There were two bumper harvests in Hungary, the biggest on record, and by singular good fortune for the Monarchy, the harvests in West Europe were bad. The whole surplus could be exported, and that at high prices, which were paid in silver.9

  The first effect of all this was a big new expansion of railway construction. This had, indeed, been carried on fairly steadily, even during the years of financial stringency, owing to its obvious importance for the national economy: railway mileage had risen by 1860 to 2,927 km. in Austria, 1,614 in Hungary, and 525 in Lombardy-Venetia.10 Then, in 1864, the Government had (largely with an eye to the expected conflict with Prussia) worked out an extensive programme, and had promised prospective investors exemption from taxation, subsidies, and/or a guarantee of five per cent on their invested capital. Licences to construct the projected lines had been granted to a number of ‘consortiums’, almost all of which were composed, on paper, of members of the highest Austrian aristocracy, who figured, as Kolmer, who gives a list of them, writes, ‘as stool-pigeons to attract foreign capital’.11 The new construction had been on a considerable scale even before the onset of the boom; the mileage had reached 3,965 km. in Austria and 2,158 in Hungary. Now it was accelerated to an extraordinary extent, partly in direct connection with the bumper harvests, for in many parts of the Hungarian Plain lines were hurriedly thrown down to carry away the contents of the groaning barns. By 1873 the mileage had risen by 250% in Austria and by 300% in Hungary.12

  Danubian shipping, too, had record years. The railway companies bought new rolling-stock, thus further stimulating the iron and steel industries and coal-mining,13 and extending the boom into industry. The banks took over the flotation of joint-stock companies (the fashionable form of the day). A great Gründungsfieber swept over the Monarchy. New banks and industrial enterprises sprang up like mushrooms;14 many of them were bucket-shops, and not a few of the enterprises in which the guileless public was induced to invest existed only on paper. The shares even of solid enterprises were driven up to ridiculous heights.
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  ‘When,’ wrote a visiting American statesman, ‘we look at the vigorous and varied agriculture, and the stupendous works of material improvement, we might fancy ourselves at home in the United States.’15

  Almost every class of the Monarchy enjoyed, for a few years, great prosperity, in which even the State shared, for the yield of taxation rose, and as military expenditure had been cut back, the budgets for 1869–72 inclusive actually closed with surpluses16 and the Ministry of Finance was able to consolidate the miscellaneous State debt of which there were then no less than 32 different headings, into a 5% rente which, as it was subject to a tax of 16%, cost the State only 4·2%.17

  Then, however, the harvest was poor again, and the clouds gathered. By the end of 1872 the big banks, including most of the foreigners, were beginning to extricate themselves. But most of the native speculators, large and small, held on, confident that the boom would last at least to the end of the great World Exhibition, which had been billed for May 1873, to advertise Austria’s ‘economic miracle’, and organized on the most lavish scale. In fact, some of the royal guests invited for the occasion, including the German Crown Prince and the Prince of Wales, had arrived, and Francis Joseph had already opened the Exhibition, when, on 7 May 1873, the bubble began to leak. It burst two days later, on that ‘Black Friday’ which Austria remembered long after, coupling its memory with that of the great ‘State bankruptcy’ of 1811. The inflated values collapsed in one day (the losses totalled over seven hundred million gulden), ruining many thousands of small speculators. By the end of the year eight banks, two insurance companies, one railway and seven industrial companies had gone bankrupt; and forty banks, six insurance companies, one railway, eighteen building and thirty-four industrial enterprises had gone into liquidation. Several railway companies left their lines unfinished.

  It was politically relevant that nearly all the enterprises carried away by the storm were mushroom foundations of the boom years. All six of the Viennese banks founded before 1868 survived the crisis, but only eight of the seventy founded in or after that year. Only one of the seven older provincial banks failed, but forty-four of the sixty-five new ones.

  We shall return later to the long-term economic effects of Black Friday, which was made more dismal still by natural disasters later in the year: an outbreak of cholera, a bad cereals harvest, phylloxera in the vineyards, while bark-boring beetle and black arches destroyed large tracts of forest. Its immediate political effect was to deal a shattering blow to popular faith in the blessings of economic Liberalism, and also, in the personal integrity of a number of its practitioners in high places. Herbst and Brestl seem to have kept their hands clean, but according to one writer18 few others among the Liberal leaders did so. Giskra and Banhals were especially badly compromised, and a remarkably high proportion of the Deputies had business interests, in the service of which they used their political influence quite openly.19 The outcry against the scandals, the call for ‘a party with clean hands’, was not the least loud among the younger generation of the Germans themselves, whose dissatisfaction was aggravated by their resentment against their Party leader, Herbst, a man of ability and courage, and also of financial probity, but dogmatic and dictatorial, compelling obedience through his choleric temper and bitter tongue, but unable to evoke affection.

  When the scandals came, the threads snapped, and a number of malcontents formed themselves into a new fraction of ‘Progressives’ (these were largely identical with the old Autonomists), and a few, whose revulsions had been still stronger, into a group calling themselves ‘Viennese Radicals’.

  Elections were due in the autumn, and as these three groups still formed a single ‘Club’, the Left still emerged as much the strongest single party, with 150 Deputies (eighty-eight ‘Old Liberals’, fifty-seven ‘Progressives’ and five ‘Viennese Radicals’). Of the other mandates, fifty-four went to the ‘Constitutional Great Landlords’, led by Carlos Auersperg. Hohenwart had brought together the German Clericals, Slovene Clericals and Moravian Czechs in a ‘Party of the Right’ which secured forty-three mandates. Forty-nine went to the Poles, thirty-three to the Bohemian Czechs, fourteen to Ruthenes, three to Slovene Liberals and ten to smaller parties and independents. As the Bohemian Czechs still refused to attend the Reichsrat, the Left (to which the Ruthenes attached themselves) still had a clear majority, and the Emperor reappointed Auersperg, who made only a few changes in his Government.

  The second Auersperg Government concentrated on filling in those gaps in its anti-clerical programme which had had to be left open until the Concordat was out of the way, and succeeded in passing laws providing that the appointment and dismissal of priests lay with the Government, levying the ‘Religious Fund’ on ecclesiastical property and conferring legal status on the non-Catholic confessions. But all these measures had rough passages, and the Emperor refused his sanction to a Bill for putting monasteries (the membership of which had doubled again since the Concordat) under State control, while another, for facilitating mixed marriages, failed to pass the Herrenhaus.

  And the fight against the Church seemed to have exhausted the energies of the Liberals. They had put through the bulk of their demands in this field, although at the cost of making many implacable enemies – among them the Emperor – and they had also realized practically all the rest of their positive political programme, this again at a cost to themselves: for many of their reforms had inevitably gone to strengthen classes and forces fundamentally hostile to them. Now little remained for them to do but to exercise a financial-economic domination which had shown its feet of clay. The virtue had gone out of them, and their last two or three years of office were practically barren. They incurred a good deal of unpopularity for their handling of the negotiations with Hungary on the economic clauses of the Compromise, which came up for revision in 1877 – this rather unfairly, for the results were not unfavourable to Cis-Leithania; its quota towards the common expenses was reduced by 1·4%, leaving the respective figures of 68·6% and 31·4%; the Hungarians accepted a quota of 70:30 for the amortization of the debt to the National Bank, and agreed on a reorganization of the Bank (now called the ‘Austro-Hungarian Bank’) which gave them a somewhat larger voice in its operations.

  But all Austrians always thought that they were being overreached by the Hungarians in any transactions between the two (the Hungarians reciprocated the belief quite as fixedly) and the Liberals were abused for not having done better still. Their end came with the outbreak of the Eastern Crisis described in another section of this chapter. As soon as the possibility of Austria’s either annexing or occupying Bosnia began to be canvassed, either course was vigorously opposed by a section of the Liberals, headed by their official leader, Herbst, who disliked either, partly on grounds of economy, and partly because they did not want to see the number of Slavs in the Monarchy increased. Moreover, they claimed, as a point of principle, that Parliament had a right to a voice in foreign policy; at least, that foreign political enterprises involving expenditure (as either annexation or occupation must do) could not constitutionally be undertaken without the consent of the Reichsrat. When Andrássy, who had been something less than candid about his intentions when addressing the Delegations, after all begged for and received a European mandate for the occupation, the resentment of the Liberals ran very high. They protested vehemently against the fait accompli, asserting the constitutional claim described above, and threatened to refuse to vote either the occupation, the credits for it, or the army estimates, which had now come up for their decennial renewal, even demanding that the war strength of the defence forces be reduced from 800,000 to 600,000. They were in a strong position because the Minister of Defence wanted a new Army Law, for which a two-thirds majority was needed.

  Herbst’s constitutional claim was entirely justified by the wording of the Constitution, but it seems clear that Francis Joseph had never understood that document as capable of such an interpretation, and the cup of his resentment against the L
iberals was filled. He had never liked them, but he had stuck to them in default of an alternative, and partly, perhaps, on Andrássy’s advice. When on 5 July, the defection of his own followers caused Auersperg to offer his resignation again (he had already offered it once, over the negotiations with Hungary), it was not refused.

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  This was the first great conflict which had occurred between the Crown and the Reichsrat over the fundamental point of their respective competences, and the fact that the Crown got its way was probably the turning-point in the political development, in this respect, of Austria. The defeat, over it, of the German Liberals also marked the real end of their political hegemony. The change to the new era did not, however, come abruptly. Auersperg had to remain in office for a long six months more, during which enough German Liberals more pliable than Herbst were found to enable the Reichsrat to vote acceptance of the Treaty of Berlin, and to vote the army a year’s credit and a ‘provisional’ quota of recruits.20 In February 1879, a new Government was formed under Dr Stremayr, but this was admittedly only a stop-gap until the Emperor’s old henchman, Count Taaffe, should have collected enough followers to form a stable administration.

  Even now, Francis Joseph did not want a complete change of course; he had put aside the idea of Austro-Slavism for good and all, and his quarrel with the German Liberals was by no means with their Germandom, nor even with their internal policy; but only over their attitude towards those questions which he regarded as falling within his own sphere of prerogative. He would have let them continue in office if they had met him on this point, and Taaffe even hoped at first to form another administration composed purely of Liberals.21 But they remained obstinate, and also disunited. They could, or would, give Taaffe none of the assurances which Francis Joseph regarded as essential, and the Emperor felt it impossible to rely on a Party which was capable of disavowing its leader at a crucial moment, or one which could not be trusted to support the Emperor in his foreign policy.22