9S4 AUSTRIA-HUNGARY 



28,111,544 in 1910), of which over 30 per cent represented extraordinary military and 

 naval expenditure. Large sums were required to cover the cost of the annexation, arid 

 the budget of 191 1 provided for a further increase of expenditure on armaments. The 

 estimates of expenditure for 1911 and 1912 were: (1911) 22,533,000, (1912) 24,000,000. 

 As in 1911 the net revenue from the customs amounted to 7, 153,000, 15,380,000 had to 

 be raised by the proportional contributions, which, according to the agreement of 1907, 

 were 63.6 per cent for Austria and 34.6 per cent for Hungary. The principal items of 

 expenditure were: Army (1911) 16,510,000, (1912) 17,100,000; Navy (1911) 5,136,- 

 ooo, (1912) 6,220,000; Foreign Ministry (1911 and 1912) 680,000. 



Debt. At the end of 1910 the common debt amounted to 216,661,843. The annual 

 charge amounted to 8,755,788, of which Hungary contributed 2,525,805. 



Army. The new army bill, which met with strenuous opposition both in the Austrian 

 and the Hungarian parliament, became law in July 1912. By its provisions the annual 

 contingent for the common army was increased from 103,100 to 159,500 men, of which 

 Austria would provide 91,313 and Hungary 68,187 men. The term of active service 

 was reduced from 3 to 2 years except for cavalry and horse artillery, so that of the 

 yearly recruits 134,500 would be enrolled for two years, 19,000 for three years, and 

 6000, who would serve in the navy, for four years. The peace strength of the common 

 army therefore was raised from 295,000 men (in 1911) to 350,000, and the war strength 

 from 900,000 to 1,500,000 men. The yearly contingents for the Austrian Landwehr 

 and for the Hungarian Honved were also increased, and the latter thoroughly reorgan- 

 ized. In 1911 the Austrian Landwehr numbered 43,178 men and 4877 officers and staff, 

 and the Hungarian Honved 28,443 men an( i 43 2 7 officers and staff. These changes 

 were calculated to raise the number of recruits for the whole army from 135,750 to 212,- 

 500 men, or an annual increase of 76,930. The duration cf this act is for 12 years, and 

 the additional cost of the army during that period was calculated at 35,625,000. The 

 non-recurring expenditure to introduce these changes amounted to 3,125,000, of which 

 Austria would contribute 2,000,000 and Hungary 1,125,000, and the permanent 

 expenditure was raised by 3,100,000 yearly. Serajevo, the capital of Bosnia, was to 

 be strongly fortified. In October 1912 the Minister of War asked for an extraordinary 

 credit of 10,000,000 for war material and the rearmament of the artillery. 



Navy. In 1911 a new shipbuilding programme was adopted, which included the 

 building of 4 " Dreadnoughts " of about 20,000. tons displacement each (to be ready at 

 the end of 1914); 3 cruisers of about 3500 tons; 6 torpedo destroyers of about 800 tons; 

 12 torpedo boats, and 6 submarines. The cost was estimated at 13,016,666, to be 

 spread in instalments over the six years 1911-16. The instalment spent in 1911 was 

 2,291,667, and that in 1912 was 2,800,000. 



At the end of 1912 the effective navy consisted of i " Dreadnought;" 12 battleships, 

 of which the three newest have a displacement of 14,268 tons each; 3 armoured cruisers; 

 6 cruisers; 7 torpedo gunboats; 12 destroyers; 69 torpedo boats; and 7 submarines. In 

 the autumn of 1912 the Admiralty obtained an additional credit in order to replace 

 the three oldest battleships, laid down in 1893, by three " Dreadnoughts " (to be 

 ready for use in 1915), and for the immediate building of three fast destroyers. This 

 was an addition to the programme adopted in 1911, and the naval estimates for 1913 

 showed a further increase. The active personnel amounted to 17,500 men, and it was 

 intended to bring up the non-commissioned rank to a total of 20,000 within a year. A 

 new fortified naval base is being prepared at Selenico, on the Dalmatian coast. 



Trade. The outstanding feature of the foreign trade has been the growing excess 

 of imports over exports. This so-called " unfavourable balance of trade " which began 

 in 1007 had grown steadily until in 1911 it amounted to over 32,000,000. Austro-Hun- 

 garian economists have come to consider this state of affairs as a normal condition of 

 the existing economic development of the country, which is going through the transition 

 from a mainly agricultural to an industrial state. Elsewhere the excess of imports 

 is mainly due to the large importation of foodstuffs and raw materials, while the export 

 of manufactured goods grows faster than the imports of similar character from abroad. 



