THE GREAT DEPRESSION: CREDIT-ANSTALT CRISIS 1931

FINANCE AND ECONOMY IN CEE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , , ,

Former Österreichische Creditanstalt building, architects Gotthilf and Neumann (built 1916-1921)

The Credit-Anstalt crisis played a crucial role in the dramatic economic developments of the 1930s in Europe as the collapse of the Credit-Anstalt affected the largest bank of Austria and at that time also the largest bank east of Germany. The collapse of the Credit-Anstalt in Vienna started the spread of the crisis in Europe and forced most countries off the Gold Standard within a few months. A feeling of financial distrust and insecurity spread from Vienna and led to runs on other banks in Hungary, Czechoslovakia, Romania, Poland and Germany. The collapse in May 1931 set off a chain reaction that led from the run on German banks to withdrawals in London and the devaluation of the pound to large-scale withdrawals from New York and another series of bank failures in the United States. So in brief the news of the crisis of the Credit-Anstalt, the most important bank in Central Europe, shook the whole economic structure of Europe and sent shock waves through the rest of the world.…

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INTERNATIONAL INVESTMENT

FINANCE AND ECONOMY IN CEE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , ,

Palais Ephrussi, family of Austrian bankers (Vienna – the bank opposite the Palais was destroyed in the 2nd World war), architect Theophil Hansen

The Austro-Hungarian Monarchy generally had an export surplus of securities, which means it was a net importer of long-term capital, except during the period 1903-1908. While in 1868 the majority of loans was taken by Amsterdam, Brussels, Frankfurt and Paris, in 1914 Berlin was the most important foreign creditor. Government securities and railway priority bonds constituted the largest categories. In terms of state debts, the Austro-Hungarian Empire was a debtor towards Western and Central Europe and a creditor towards the Balkans together with Germany. Yet compared to Germany and France, the Austrian banks in Serbia and Romania were insignificant, only in Bulgaria were they of importance. After 1878, most of the debts of the Balkan states financed railway construction. While lending for the infrastructural development of backward countries, the empire constructed its own railway network with the help of foreign capital. After 1855, when the railways were sold to private enterprise and the system of guaranteed interest was introduced, foreign capital penetrated the empire’s economy. The mobilier banks provided the needed capital for the railway construction. In Hungary 85 per cent of the railway system was owned and run by the state by 1891, while in the Austrian half of the empire only 55 per cent was run by the state and it owned only 43 per cent in 1897. More than 70 per cent of the railway priority bonds were still in the possession of foreign investors at the beginning of the 20th century.…

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INDUSTRIALISATION IN THE HABSBURG EMPIRE

FINANCE AND ECONOMY IN CEE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , , , , , , , , , ,

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.…

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CENTRAL EUROPEAN INTERCULTURAL RELATIONSHIPS: “K & K KAKANIEN”

CENTRAL AND EASTERN EUROPE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , , , , , , ,

Central European architecture: Prague, Czech Republic

A question to be asked is whether the historical and cultural entity of the Austro-Hungarian Empire in the Danube basin and special cultural relationships of the past in any way promoted the expansion of Austrian banks, insurances and other businesses in Central, Eastern and South Eastern Europe after 1989.
Robert Musil sarcastically describes in his famous novel “The Man Without Qualities“ the disintegration of Austrian hierarchical society and liberal-rational culture: “Kakania”. “Kakania was the first country at the present stage of development, from which God had withdrawn all credit, all love of life, all belief in itself and the capacity of all cultural nations to spread the useful imagination that they had a task to fullfill.” This Kakania is at the same time a model of an intellectual concept of Central Europe – more imaginary than a real geographically and historically defined area – today. Again Robert Musil: “…after having taken stock of the bulk of Central European ideas, he found out, not only to his regret, that it consisted only of contradictions, but to his astonishment he also realised that these contradictions are melting into each other when you look at them carefully.” “People who were not born then,” wrote Musil about the Austrian fin-de-siècle , “ will find it difficult to believe, but the fact is that even then time was moving faster than a cavalry camel…. But in those days, no one knew what it was moving towards; nor could anyone quite distinguish between what was above and what was below, between what was moving forward and what backward.”…

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