Where did the Habsburg economic empire disappear?
Gábor Egry, Director General of the Institute of Political History and Principal Investigator of the NEPOSTRANS Project continues to explain the intricacies of the Habsburg Empire
Nowhere. The Habsburg Empire did not have an economic empire comparable to the British or the French who linked the colonies to a metropolitan core, often partitioned off by tariffs and dependent on an unequal relationship that facilitated the flow of wealth and capital to the center. Austria-Hungary was a customs union of two equal states whose economic policies (taxes, investments, monopolies, etc.) were independent, and the customs and monetary union (the common currency and the central bank) had to be renewed all ten years.
Despite the legal equality between Austria and Hungary, relations between Vienna and Budapest were – in economic terms – asymmetrical. Viennese banks, businesses and capitalists could use their capital to invest in capital-stricken Hungary, and the predominantly agrarian Hungarian economy was the main market for Czech and Austrian industrial products. It was not until the turn of the century that more egalitarian relations began to develop in this area, which also contributed to an effort to establish a form of economic empire different from the classic colonial type.
Stephen Gross in his book “Export Empire” called similar German practices liberal imperialism. Based on technological superiority, knowledge of local circumstances and capital, German companies of all sizes have established networks in southeastern Europe to create export markets. This was not, however, an apolitical effort, but rather an alternative to outright imperialism, combining political influence with economic presence. In areas where power escaped the Ottoman Empire, Austria-Hungary made similar attempts. Viennese, Budapest and Prague banks and industrial companies lent, invested and affiliated companies in the Balkans, with the aim of bringing the new states into the orbit of the Hapsburg Empire, or at least counteracting the influence of imperial rivals like Russia and France. Since 1878, Austria-Hungary was also present in Bosnia and Herzegovina, which offered links with the Muslims of the Balkans.
Until 1914, at least the outlines of an Austro-Hungarian liberal imperial economic space were ready. In Romania, Bulgaria, the banks of the Ottoman Empire acquired industrial enterprises, railway concessions, state monopolies and lent to governments. They did so with the help of local partners, whose knowledge was indispensable, even though the relationship was asymmetric. The capital of the Habsburg Empire was everywhere, active in textiles, sugar, forestry, petroleum, agribusiness and port services, and its local partners could grow and successfully challenge their national competitors.
After 1918, the successor states also repudiated this economic legacy of the empire – at least verbally. State-building programs promised strengthening of domestic capitalists, the creation of a national industrial base, and legislation soon targeted foreign owners. The so-called nationalization – the setting of a mandatory quota for national shareholders and members of the board of directors, more than 50% everywhere – aimed to quickly bring these companies still based in Vienna or Budapest under Romanian, Czechoslovakian control. , Yugoslav. Given the fanfares and the apparent resolve of the new national elites, the business empires once ruled from Budapest and Vienna seemed doomed to failure.
But the reality was – much like with laws, administration, culture, etc. – different. The logic of business networks often runs counter to the logic of state building, and proven relationships have often remained resilient in the face of political pressures. Cunning lawyers and seasoned managers came up with elaborate ownership regimes that succeeded in disguising the continued influence of the original owners, and subsidiaries and affiliates in successor states were used to move money into them. Successor states, making it impossible to decide which owner was national, of a friendly state and of Austria and Hungary defeated.
The key companies within the networks, residing in Budapest and Vienna, always remained important for their extensive contacts around the world and their ability to attract capital from the West. They were ready to change the terms of cooperation, giving more voice to their local partners, while especially in countries like Romania, they even felt new opportunities. In this case, the Old Kingdom lacked a large, heavy industrial base, but the national government wanted to build one quickly, especially in strategic industries like mining, steel, and machinery.
So the owners in Budapest and Vienna have teamed up with their well-known Romanian partners to provide one to the government: Based on co-ownership of existing factories. Romanian partners facilitated political acceptance of the plans by governments, fostered contacts with some key Romanian companies, and in these sectors huge conglomerates, monopolies or oligopolies quickly emerged – with the original owners still holding the majority. actions or veto rights over key decisions, and contractually assured cooperation of Romanian and non-Romanian capitalist groups in business management.
Such cooperation has lasted a surprisingly long time. Throughout the 1920s, these arrangements were not changed in financial terms until the Romanians realized: they had taken on a responsibility they could not afford. But they never tried to go back on their promises, nor to expropriate their non-Romanian partners. It wasn’t until after the Great Depression that larger ownership changes occurred (though far from global) – and its reason was not the intention to wipe out the economic empire for good. of the Habsburgs as such.
Monument to the King of the Austro-Hungarian Empire and Emperor Franz Joseph on horseback, at Joseph Square near the Hofburg Palace, Vienna, Austria
NEPOSTRANS received funding from the European Union’s HORIZON 2020 research program under grant agreement no. 772264.
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