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14

AU STPvIA-HUN GARY

[dual monarchy

from 1876, when the negotiations began, to June 1878, when at last all the Bills were carried successfully through the two parliaments; and it was necessary to prolong the previous arrangements (which expired at the end of 1877) till the middle of 1878. First the two ministries had to agree on the drafts of all the Bills; then the Bills had to be laid before the two parliaments. Each parliament elected a committee to consider them, and the two committees carried on long negotiations by notes supplemented by verbal discussions. Then followed the debates in the two parliaments; there was a ministerial crisis in Austria, because the House refused to accept the tax on coffee and petroleum which was recommended by the ministers; and finally a great council of all the ministers, with the emperor presiding, determined the compromise that was at last accepted. In 1887 things went better; there was some difficulty about the tariff, especially about the tax on petroleum, but Count Taaffe had a stronger position than the Austrian ministers of 1877. Ten years later, on the third renewal, the difficulties were still greater. They sprang from a double cause. First the Austrians were determined to get a more favourable division of the common expenses; that of 1867 still continued, although [ Hungary had grown relatively in wealth.1 Moreover a proposed alteration in the taxes on sugar would be of considerable advantage to Hungary; the Austrians thereJ fore demanded that henceforth the proportion .should be j j not 68‘6 : 31’4 but 58 : 42. On this there was a deadlock ; | all through 1897 and 1898 the Quota Deputations failed to come to an agreement. This, however, was not the worst. Parliamentary Government in Austria had broken down; the opposition had recourse to obstruction, and no business could be done. Their object was to drive out the Badeni Government, and for that reason the obstruction was chiefly directed against the renewal of the Ausgleich; for, as this was the first necessity of state, no Government could remain in office which failed to carry it through. The extreme parties of the Germans and the anti-Semites were also, for national reasons, opposed to the whole system. When, therefore, the Government at the end of 1897 introduced the necessary measures for prolonging the existEach of the financial and economic reforms described ing arrangements provisionally till the differences with above was, of course, the subject of a separate law, but, so Hungary had been settled, scenes of great disorder ensued far as they are determined at the general settle- (see section Austria, pages 26, 27), and at the end of the The ment which takes place between Austria and year the financial arrangements had not been prolonged, and neither the Bank Charter nor the Customs Union had w‘ithleiCh Hungary every ten years, they are comprised 'Hungary, under the expression “ Ausgleich,” which been renewed. The Government, therefore (Badeni having includes especially the determination of the resigned), had to proclaim the necessary measures by Quota, and to this extent they are all dealt with imperial warrant. Next year it was even worse, for there together as part of a general settlement and bargain. was obstruction in Hungary as well as in Austria; the In this settlement a concession on commercial policy Quota Deputations again came to no agreement, and the would be set off against a gain on the financial agree- proposals for the renewal of the Bank Charter, the reform ment • e.g., in 1877 Austria gave Hungary a share in the of the currency, the renewal of the Customs Union, and management of the bank, while the arrangement for the new taxes on beer and brandy, which were laid before paying the bonus on exported sugar was favourable to parliament both at Vienna and Pest, were not carried in Austria; on the other hand, since the increased duty on either country; this time, therefore, the existing arrangecoffee and petroleum would fall more heavily on Austria, ments had to be prolonged provisionally by imperial and the Austrians wished to persuade the Hungarians to pay a royal warrant both in Austria and Hungary. During larger quota of the common expenses, and there was also 1899 parliamentary peace was restored in Hungary by the a dispute whether Hungary was partly responsible for a resignation of Banffy; in Austria, however, though there debt of 80 M. gulden to the bank. Each measure had was again a change of ministry the only result was that therefore to be considered not only on its own merits, but the Czechs imitated the example of the Germans and in relation to the general balance of advantage, and an resorted to obstruction so that still no business could be amendment in one might bring about the rejection of all. done. The Austrian ministry, therefore, came to an agreeThe whole series of Acts had to be carried in two parlia- ment with the Hungarians that the terms of the new ments, each open to the influence of national jealousy and Ausgleich should be finally proclaimed in Austria by 1 race hatred in its most extreme form, so that the negotiaThe only change was that as the military frontier had been given tions have been conducted under serious difficulties, and over to Hungary, Hungary in consequence of this addition of territory the periodical settlement has always been a time of great had to pay 2 per cent., the remaining 98 per cent, being divided a» anxiety. The first settlement occupied two full years, ' before, so that the real proportion was 31’4 and 68‘6.

to -42 of the gold gulden, and it was declared equal to ‘5 of the silver gulden, so much allowance being made for the depreciation of silver. The first step towards putting this Act into practice was the issue of one-krone pieces (silver), which circulated as half guldens, and of nickel coins ; all the copper coins and other silver coins were recalled, the silver gulden alone being left in circulation. The coinage of the gold four- and eight-gulden was suspended. Nothing more could be done till the supply of gold had been increased. The bank was required to buy gold (during 1892 it bought over forty M. gulden), and was obliged to coin into twentyor ten-krone pieces all gold brought to it for that purpose. Then a loan of 150 M. gulden at 4 per cent, was made, and from the gold (chiefly bar gold and sovereigns) which Rothschild, who undertook the loan, paid in, coins of the new issue were struck to the value of over 34 million krone. This was, however, not put into circulation ; it was used first for paying off the staatsnoten. By 1894 the state was able to redeem them to the amount of 200 million gulden, including all those for one gulden. It paid them, however, not in gold, but in silver (one - krone pieces and gulden) and in bank notes, the coin and notes being provided by the bank, and in exchange the newly-coined gold was paid to the bank to be kept as a reserve to cover the issue of notes. At the same time arrangements were made between Austria and Hungary to pay off about 80 million of exchequer bills which had been issued on the security of the Government salt-works, and were therefore called ‘ ‘ salinenscheinen.” In 1899 the remainder of the staatsnoten (112 million gulden) were redeemed in a similar manner. The bank had in this way acquired a large reserve of gold, and in the new charter which was (after long delay) passed in 1899, a clause was introduced requiring the resumption of cash payments, though this was not to come into operation immediately. Then from 1st January 1900 the old reckoning by gulden was superseded, that by krone being introduced in all Government accounts, the new silver being made a legal tender only for a limited amount. For the time, however, the old guldens were left in circulation, payments made in them, at the rate of two krone to one gulden, being legal up to any amount. This important reform has thereby been brought to a satisfactory conclusion, and at a time when the political difficulties had reached a most acute stage. It is indeed remarkable that notwithstanding the complicated machinery of the dual monarchy, and the numerous obstacles which have to be overcome before a reform affecting both countries can be carried out, the financial, the commercial, and the foreign policy has been conducted since 1870 with success. The credit of the state has risen, the chronic deficit has disappeared, the currency has been put on a sound basis, and part of the unfunded debt has been paid off. Universal military service has been introduced, and all this has been done in the presence of difficulties greater than existed in any other civilized country.