FINANCE AND INDUSTRIAL INVESTMENT IN THE HABSBURG EMPIRE

Sparkasse Karlsbad, Bohemia

 

Industrialisation and the industrial boom in Cisleithania, the western part of the “Dual Austro-Hungarian Monarchy”, boosted the confidence of Austrian liberalism, while the crash of 1873 weakened it again considerably. The Gründerzeit (literally: founding time) resulted from a combination of several factors, a mushrooming financial sector willing to invest in the economy, an expanding rail network making demands on the iron industry and technical innovation in various coal-consuming industries, all of this interacting to produce an economic leap forward. As in the 1850s the railway expansion spurred financial innovation, the Gründerzeit was characterised by a blossoming of banking institutions. After the financial crisis of 1857/58 most private bankers experienced a serious downturn, but finance grew again from 1867, the founding of the dual monarchy, via the multiplication of joint stock banks through the established Creditanstalt, associated with Anselm Rothschild, and the Niederösterreichische Escomptegesellschaft. Utilising high profits, the banks helped sponsor the growth of joint stock companies, 1005 of which received charters in the years 1867-73. Vitkovice, controlled by Rothschild, led the way in the adoption of the Bessemer process by the monarchy’s major iron works by 1870, along with puddling, the rolling mill and increasingly the use of coke instead of charcoal. Chief among them was the Bohemian Iron Company, centred at the coal-mining town of Kladno near Prague, which had emerged from the amalgamation of three predecessors in 1857. The coal production received a powerful impetus from technical innovations in a series of industries in the 1860s, like flour milling, sugar refining, paper making and of course the textile industry.…

ECONOMIC DEVELOPMENT IN CENTRAL EUROPE

Prague, Train Station

Central and Eastern Europe was characterised by transition from a collection of agrarian societies under dynastic rule to modern industrialised societies within the European system of nations over the last two centuries. Western Europe achieved modern economic growth with mixed capitalist economic systems and high levels of integration into the world economy while the Russian Empire in the 19th century and its successor, the Soviet Union, in the 20th century experienced delayed economic development with weak or no capitalist institutions and feeble international economic links. As mentioned above the countries of Central Europe form the area “in-between”: Austria and Czechoslovakia before the Second World War followed the Western model, while Bulgaria and Romania stuck to the Russian model, Hungary, Yugoslavia and Poland opted for a mixture of those different ways.…

INDUSTRIALISATION IN THE HABSBURG EMPIRE

Budapest, one of the iron bridges

 

The Austro-Hungarian Empire was one of the latecomers in industrialisation together with Switzerland, the Netherlands and Scandinavia. Its reputation of economic backwardness in the 19th century is largely unjustified as only some portions of the empire were really backward, as can be seen above. To an even greater extent than France or Germany the empire was characterised by regional diversity and disparity. The western provinces – “Cisleithania” -, especially Bohemia, Moravia and Austria proper, were economically far more advanced than the eastern part – “Transleithania”. In the west the first stirrings of modern economic growth could be observed as early as the second half of the 18th century, but the topography made internal and international transport and communication difficult and expensive and the poverty of natural resources, most of all coal hindered economic development.…