G6 



AUSTRIA-HUNGARY. 



developments in that kingdom with regret. Bul- 

 garia, though the domestic situation in the princi- 

 pality left much to be desired, hud always been an 

 element of order in the Balkan peninsula, and would 

 endeavor in the future to justify the sympathy that 

 it had received from Austria-Hungary. 



The Ausgleich. In negotiations for the re- 

 newal of the decennial Ausgleich, the financial 

 arrangement between the Cisleithan and Trans- 

 leithan monarchies, the matter of proportionate 

 contributions to common expenses was complicated 

 with the questions relating to the commercial and 

 customs duty and the adjustment of railroad tariffs. 

 Some extreme Hungarian Nationalists wished to 

 terminate the customs union, deeming the high 

 protective tariff a benefit to Austrian manufac- 

 turers, for which Hungarian consumers had to pay 

 a great part of the cost while deriving no adequate 

 compensating advantages from the 'arrangement. 

 Austrian and Bohemian industrialists, on their part, 

 complained of unfair competition from the rapidly 

 expanding industry of Hungary, which the Govern- 

 ment fosters by granting privileges and immuni- 

 ties, and they wanted to have an agreement re- 

 straining the Hungarian Government from giving 

 advantages to their rivals such as total or partial 

 exemption from taxation, and low freight charges 

 which their own Government refused to allow 

 to themselves. To all Austrians it seemed unjust 

 that Hungary which was growing and prospering 

 in many ways, while their own industries were 

 much depressed should continue to bear no more 

 than 30 per cent, of the joint expenses of the dual 

 monarchy. In the course of the negotiations the 

 Austrian Delegates proposed that Hungary should 

 pay 42 per cent, of the general annual expendi- 

 ture, and Austria 58 per cent. This calculation 

 was based upon a new principle that of com- 

 bining the number of inhabitants with the total 

 amount annually accruing to the state from taxa- 

 tion. Many Hungarians were willing to have their 

 Government assume a somewhat greater share of 

 the imperial expenses; but none would consent to 

 have the new customs and commercial treaty al- 

 tered in any way likely to handicap the commerce 

 or industry of their country, and they were equally 

 disposed to resist all attempts to encumber the de- 

 velopment of Hungarian railroad traffic with harass- 

 ing provisions. In the final conferences held be- 

 tween the Austrian and Hungarian ministers in 

 July, many of the points on which differences ex- 

 isted were settled by concessions on both sides. 

 They agreed to establish identical railway tariffs 

 in Austria and Hungary. The Hungarian Govern- 

 ment promised to withdraw all the privileges that 

 gave Hungarian industrial establishments an ad- 

 vantage over their Austrian competitors. Grounds 

 of complaint in respect of provisions regulating the 

 internal traffic in live stock were removed. It was 

 agreed that hereafter Government contracts will be 

 awarded in each country to the most suitable ap- 

 plicants, whether Austrians or Hungarians. The 

 Austrian Government promises to permit Hun- 

 garian insurance companies in the future to engage 

 in business in Austria on equal terms with domestic 

 corporations ; also to introduce the Hungarian law, 

 passed two years before, which forbids altogether 

 the manufacture of artificial wines. 



Currency Reform. Hopes for a speedy intro- 

 duction of a gold standard were originally enter- 

 tained when monetary reform was undertaken in 

 1892. After the lapse of four years, although the 

 greater part of the gold necessary to redeem the 

 Austro-Hungarian state notes had been procured 

 Hungary having her whole amount, and Austria all 

 but 39,500.000 florins yet the operation was far 

 from completed, and the public suffered much in- 



convenience from the delay. Notes to the amount 

 of 200.000,000 florins had been redeemed previous 

 to July 1, 1896, when 112,000,000 florins still re- 

 mained to be gradually withdrawn from circula- 

 tion and replaced by the new currency. Scarcely 

 any gold coin, however, had as yet been issued. 

 The currency consisted chiefly of bank and state 

 notes of comparatively large denominations, to- 

 gether with bulky 1-florin silver pieces and 

 minor silver, nickel, and bronze coins of the new 

 crown system. The withdrawal of the small bank 

 notes, and the substitution for these of heavy coin, 

 impeded the transaction of commercial business. 

 l/nti! the financial questions connected with the 

 Ausgleich and the conditions of the renewal of the 

 charter of the Austro-Hungarian Bank could be ar- 

 ranged, the Government hesitated about proceeding 

 with the monetary reform. Then the state of trade 

 gave cause for apprehension that, should the gold 

 be put into circulation, it could not be retained in 

 the country for any length of time in consequence 

 of the amount owed abroad. The excess of imports 

 in 1895 was only 26,000,000 florins, lower than any 

 recorded since 1876. It was the intention to re- 

 place the 112,000,000 florins of notes of forced 

 currency, which would be redeemed by the two 

 governments in the proportion of 30 to 70, with 

 80,000,000 florins of 5-florin bank notes and 37,- 

 000,000 florins of 5-crown silver pieces, against 

 which the Government would deposit 20-crown 

 gold pieces with the bank. The governments 

 pledged themselves to take legislative steps for the 

 inauguration of specie payments as soon as the 

 forced currency was out of the way. 



The charter of the Austro-Hungarian Bank ex- 

 pires Dec. 31, 1897. To secure a loan of 80,000,000 

 florins to the state, it received the exclusive right 

 to issue bank notes. Two fifths of the total issue 

 must be covered by a metal reserve, gold or silver, 

 coin or bullion. Of the profits of the bank, after 

 a 5-per-cent. dividend on their stock has been dis- 

 tributed among the shareholders, if there is any re- 

 mainder, 8 per cent, of it must be transferred to the 

 reserve fund and 2 per cent, to the Pension fund, 

 and an additional dividend of 2 per cent, on the 

 capital paid to the stockholders, while all in excess 

 is divided into two parts, one of which goes to the 

 stockholders, and the other is credited to the state 

 70 per cent, to Austria and 30 per cent, to Hun- 

 gary being applied to the reduction of the loan of 

 80,000,000 florins, which must be cleared off by the 

 time that the privilege of the bank expires at the 

 end of 1897. The bank notes in circulation at the 

 close of 1894 amounted to 507,803,160 florins. There 

 were at that time 303,305,866 florins of state notes 

 in circulation. The coinage of 20-crown and 10- 

 crown gold pieces amounted to 24,322,360 florins 

 in 1892, 135.042,480 florins in 1893, and 97,323,530 

 florins in 1894, while of silver crowns 57,420,000 

 florins' worth were issued during the three years. 

 The law to reform the monetary system on a gold 

 basis was enacted on Aug. 2, 1892. The silver 

 crown, of the value of half a gulden, or florin, of 

 the old coinage, is not legal tender in sums over 

 50 crowns, but the notes of the Austro-Hungarian 

 Bank are legal tender to any amount. The prin- 

 cipal gold coin is the 20-crown piece, containing 

 6'775 grammes, nine tenths fine, worth $4.05. The 

 representatives of the Austro-Hungarian Bank asked 

 for a renewal of the charter for a period of fifteen 

 years. Should it be granted, they were prepared to 

 make several minor concessions to the Government. 

 In the proposals for the renewal of the charter for 

 twelve years, it was suggested that the two halves 

 of the monarchy should participate in the manage- 

 ment of the bank in equal proportions, the Imperial 

 Government to nominate the governor ; while of 



