Chapter 1482 Rudolph's Reform

The economy of the Austro-Hungarian Empire is inherently fragile among the imperialist countries. In the past, Russia supported the Austro-Hungarian Empire, but unfortunately, Tsarist Russia has gone to see God. As for the Soviet Union's economy, they don't play that game anymore!

The economy of the Austro-Hungarian Empire was only as bad as that of Spain. Of course, this fragility does not mean that the economy of the Austro-Hungarian Empire was not strong.

Rather, the economy of the Austro-Hungarian Empire, like its politics, had a huge sense of division, and resources could not be effectively integrated. In terms of the geography, resources, heritage, etc. of the Austro-Hungarian Empire itself, it was no worse than that of Germany, but the economic conditions of the two countries today are very different.

Geographically, Germany and the Austro-Hungarian Empire each have their own strengths. Both are located in the center of Europe, one backed by the Baltic Sea and the other bordering the Mediterranean Sea. However, Germany also has a little land in the northwest corner adjacent to the Atlantic Ocean.

There is not much difference between the two in terms of area and terrain. Germany now has 600,000 square kilometers, and the Austro-Hungarian Empire has nearly 700,000 square kilometers. Both have mountains and open plains. Moreover, the agricultural conditions in the Hungarian region of the Austro-Hungarian Empire are better than those in Germany. The latitude is lower, and the light and heat conditions are more suitable for the development of grain cultivation. Therefore, the two are evenly matched in geographical conditions.

In terms of resources, although the Austro-Hungarian Empire did not have super-large coal mines like the Ruhr area in Germany, self-sufficiency was not a problem at all. At the same time, the Austro-Hungarian Empire had more diverse types of resources than Germany, including the oil resources that Germany had always dreamed of.

In terms of foundation, the Austrian Empire, the predecessor of the Austro-Hungarian Empire, was much more powerful than the German Empire, which was composed of many countries at that time. Before Germany was unified, it was already one of the chess players on the European continent. Many countries in Germany at that time had to recognize Austria as their big brother.

There is no doubt that the Austro-Hungarian Empire had all the foundations to become a powerful country like Germany today, but the gap between the two was getting bigger and bigger.

On the economic level, before Prussia unified Germany, it had already integrated the market of the Lesser Germany region through the Customs Union, and to this day, the domestic market of the Austro-Hungarian Empire can be divided into two parts, Austria and Hungary.

Before the Hungarian Rebellion, Hungary had its own finances, and even introduced some economic policies that were contrary to Austria in order to oppose Austria. This also led to the fact that agriculture still dominates the Hungarian region today.

The Hungary within the Austro-Hungarian Empire was not the independent Hungary in the previous life. The area of ​​Hungary in the previous life was less than 100,000 square kilometers, while the area of ​​Hungary under the Austro-Hungarian Empire was more than 300,000 square kilometers, almost half of the area of ​​the Austro-Hungarian Empire, not including the Bosnia region previously jointly administered by Austria and Hungary.

This means that half of the Austro-Hungarian Empire is still in an agricultural society, and only the part ruled by Austria is considered an industrial country. In this case, it is abnormal for the Austro-Hungarian Empire to be comparable to Germany in economy and industry!

Since the 20th century, the international grain market has been in a downturn, and the economy of the Austro-Hungarian Empire, a major agricultural economy, naturally did not improve.

At the same time, the gap between Austria and Hungary is actually the uneven industrial and economic development within the empire. This imbalance is not only likely to cause economic problems, but also political crises.

In Schönbrunn Palace.

The new emperor, Rudolf I, is troubled by the above problems.

"Now the stock market in Vienna has collapsed and the economic crisis has completely erupted. The outbreak of this economic crisis fully demonstrates the huge problems and hidden dangers in the economic structure of the empire."

"The first is the lack of regulation in the financial sector. Vienna has long been one of the four largest financial centres in Europe. However, over the years, Vienna's financial sector has always been the first to collapse before London, Paris and Berlin, which shows that the government's regulation of the financial sector is insufficient."

"Companies listed in Vienna and some financial institutions only focus on short-term interests and arbitrage to get rich quickly, rather than really wanting to invest in the empire's industry and economy. However, industrial and economic construction requires a long period of time to develop."

"Therefore, the Vienna Stock Exchange must be rectified immediately, and speculators must be strictly cracked down on. The government must also organize personnel to investigate and rectify all financial institutions, and bring these economic institutions under the unified management of the government..."

Rudolf was ready to completely end the Austro-Hungarian Empire's past loose market management model. Now that the economic crisis was inevitable, the Habsburgs were destined to become scapegoats. After all, the people of the Austro-Hungarian Empire who were unhappy with their lives would only point the finger at their rulers, that is, the government.

As for those capital forces that actually took away their wealth, I'm sorry to say that not only the grassroots people, but even the Austro-Hungarian government had no ability to catch them. At the moment the economic crisis broke out, these capital forces had already taken the money abroad.

Now, the Habsburgs could only bite the bullet and deal with the mess while preventing further capital flight. Therefore, Rudolf said: "At the same time, the government will immediately stop the gold standard system, prohibit the free exchange of gold, and stop private gold transactions immediately to avoid the loss of the empire's gold reserves..."

The Austro-Hungarian Empire was not as wealthy as Britain and the United States. They still had huge gold reserves to cope with the first round of shocks. However, the Austro-Hungarian treasury had not been rich since World War I, so gold had to be controlled by the government. In this way, the currency of the Austro-Hungarian Empire would not completely become waste paper. This also meant that the imperial currency would inevitably depreciate significantly in the future.

Only after deploying the financial industry and monetary policy did Rudolf begin to talk about the issue of the internal market of the empire.

"It is time to completely resolve Hungary's problems. Although we were nominally one country, we were actually two countries, which led to the absurd situation of two markets and economic systems coexisting within one country."

"Therefore, it is imperative to thoroughly integrate the domestic market and thus improve the government's ability to cope with the economic crisis. Coincidentally, with the end of the Hungarian rebellion, local power has been reshaped, and the resistance to promoting economic integration this time is much smaller."

"So, taking advantage of the current economic crisis, the empire must thoroughly resolve the long-standing problems of uneven development and division within the empire. At the same time, in order to cope with the social crisis caused by the economic crisis, the empire's army must be reformed and expanded in a timely manner. On the one hand, this can break down the barriers within the empire's army, and on the other hand, it can alleviate the current industrial problems."

Rudolf's goal was to restore the former Austrian Empire, consolidate military power, especially in Hungary, and prepare for a series of subsequent reforms. For a multi-ethnic country like the Austro-Hungarian Empire, Rudolf knew very well that if he wanted to implement policies, he could only use tough measures to overcome the resistance of local and ethnic forces.

At this point, the only thing the Habsburgs could rely on was the imperial military. In the past, due to the existence of Hungary, the development of the army was greatly suppressed. Now Rudolf relaxed their restrictions and gained the support of the military.

To win over the Austro-Hungarian military was equivalent to winning over the imperial aristocracy, which was also the basis of the Habsburg rule. As for who became the victim, it was naturally the bourgeoisie.

In Rudolf's view, without relying on the bourgeoisie, the empire could be maintained even though it would experience intense turmoil. After all, there was a typical example in the world - the Soviet Union. Therefore, as long as they copied the example and let the aristocracy play a role similar to that of the Labor Party, even if they only learned "three-quarters of the similarity", they might be able to achieve unexpected results.

The aristocracy was not entirely composed of incompetent people. On the contrary, due to better resources and education, there were many people with real talents and knowledge. The Habsburg family was also a member of the aristocracy. Naturally, Rudolf could only rely on these forces to promote his economic and social reforms.

At the same time, it was also an attempt to find a way out for the Austro-Hungarian nobles. After all, if they did not change themselves, the bourgeoisie and the Labor Party would force them to change. Now, due to the outbreak of the economic crisis, the bourgeoisie had also become the rat that everyone wanted to beat. If the Austro-Hungarian nobles could seize the opportunity, they might be able to continue their rule.

…

Not to mention the impact of Rudolf's reforms, the outbreak of the Austro-Hungarian economic crisis, just as the American economic crisis first affected Britain, affected Germany and East Africa at the first time.

Germany and East Africa were the main investors and trading partners of the Austro-Hungarian Empire. Their economic collapse had a drastic impact on the two countries, especially Germany. Two days after the collapse of the financial industry in Vienna, the Frankfurt and Berlin stock markets followed suit.

At this time, among the major industrial countries in the world, only East Africa, France and Japan can still hold on for the time being. Because Japan is too far away, the crisis has not yet spread there.

The special cases of East Africa and France are because their national conditions are very different from those of other countries, and the economic adjustments and preparations taken by the East African governments over the past decade have finally played a role.

As for France, the situation is more complicated. In World War I, France was the biggest loser. The economy was already in recession before the war, and after the war, the French economy fell directly to the bottom.

In other words, France's poor economic situation even directly led to the reshaping of France's economic landscape in the 1920s.

Because of the failure in the war, the French government tended to be more conservative in economic policy than in the past. After all, French industry was not strong to begin with, and the market shrank significantly after the war.

The industry lacked competitiveness and was on the decline, which forced the French government to try every possible means to keep its economy running, such as adopting a tariff protection policy earlier and more strictly than other countries.

This fact caused French industry to be derailed from the international market. After all, tariff barriers are mutual. If France raises tariffs on other countries, other countries will naturally retaliate. However, France, which still has a large number of colonies, obviously has the confidence to do so.

Therefore, when the world economic environment deteriorated sharply, the impact on France was reduced to a relatively low level. As for the lowest, it was the Soviet Union, which was almost completely isolated from the world.

Then there is the economic situation within France. French industry is already in a state of decline, so there is naturally no threat of overcapacity.

At the same time, agriculture also played a stabilizing role in the French economy. Unlike the Austro-Hungarian Empire, the French peasant group had more independent land, which made their income relatively stable. To put it simply, the proportion of small peasant economy in France was relatively high, which in turn delayed the outbreak of the economic crisis.

Farmers are an important political force in French politics. They can influence the decision-making of the French government. In addition, after the war, the French government itself tends to be economically conservative, and there is also the buffer of the French colonial market. Therefore, even if international food prices plummet, French farmers will be relatively less affected. As long as they can convince the government to continue to maintain agricultural protection policies, they will be unlikely to be affected at this stage.

The sound and relatively prudent French financial industry is also an important reason why France has been able to avoid shocks. At least in Europe, the financial industry in Paris is known for being "conservative" and there is relatively little speculative activity, which is exactly the opposite of Vienna.

In addition, post-war reconstruction drove large-scale infrastructure construction, which also had an important impact on the French economy. After all, the main battlefield on the Western Front of World War I was located in France.

Of course, the fact that France has escaped unscathed today is not an advantage for France, but rather a reflection of its economic disadvantages.

If given a choice, how could France not envy the highly developed industries of the United States, Germany, and East Africa? However, because of World War I, France has completely lost the qualifications to compete with these countries.

The European market, in particular, is basically dominated by Germany and the United Kingdom, followed by foreign industrial powers such as the United States and East Africa, and finally it is the turn of other countries to get a piece of the leftovers.

Today, economic crises have already occurred in Europe, Britain, Austria-Hungary, and Germany. Although France has not experienced an economic crisis, it has long been in a half-dead state. The Soviet Union, in contrast to these countries, has been booming, while Spain has always been a "rotten fish". This means that, except for the Soviet Union, all major economies in Europe have fallen.

This corresponds to the beautiful scene of "capitalism is bound to perish" in Soviet foreign propaganda. For a time, the labor parties in European countries seemed to have found their goal, and "victory seemed to be just around the corner."

Of course, the Labour Party’s “competitors”, the extreme nationalist parties, are not willing to lag behind. They have also come up with governing platforms similar to those of the Labour Party, which they are widely spreading in Europe to win over the hearts and minds of the people.

Just like the United States in its past, the wind direction in European countries has changed dramatically today, especially the grassroots people have "awakened" and are either against their class or against other countries and nations. According to their personal inclinations, they choose to join the Labour Party or extreme nationalist parties.

Under such circumstances, the world market that was finally formed at the end of the 19th century also began to show cracks, just like the anti-globalization wave in the previous life. When these European industrial countries could no longer draw nutrients and benefits from the current world market, they turned against the free market with extreme hostility.

The Austro-Hungarian Empire and France have completely abandoned "liberalism" in their economic policies. In addition, the Soviet market has been forced to close. Now only the powerful Germany and the United Kingdom in Europe have not changed their economic policies. Germany is a major exporter of industrial products, while the United Kingdom is extremely dependent on the world market. Therefore, it is difficult for these two countries to change their foreign trade policies even if they want to.

The renewed "division" of Europe also means the renewed intensification of conflicts among countries. The peaceful situation that has lasted for only ten years will once again face severe challenges.

(End of this chapter)