LIFE AT THE IRON CURTAIN: ECONOMIC AND SOCIAL CONDITIONS OF THE RURAL POPULATION IN THE “MILL QUARTER” AFTER 1945

LIVING CONDITIONS OF THE PEASANT POPULATION AND RURAL ARTISANS IN THE REMOTE AUSTRIAN "MILL QUARTER" IN THE 19th & 20th CENTURY, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Left: My husband Karl Wurm at the current Austrian-Czech border, where the Iron Curtain ran until 1989 at the border stream Lainsitz / Luznice. Right: The “Schwarzenberg Canal”, a sluiceway for logs built at the time of the Habsburg Monarchy, where the Iron Curtain separated the two regions, the “Mill Quarter” (Mühlviertel) and Southern Bohemia, from 1948 until 1989

Border stones between Austria (Ö) and Czechoslovakia (C) in the “Mill Quarter” today

Left: Part of the Iron Curtain at the borders of Austria, Czechoslovakia, East and West Germany; right: Current map of the Bohemian Forest region: Southern Bohemia and the “Mill Quarter”

Left: Anti-tank barriers at the Iron Curtain in Southern Bohemia; right “Death Strip”, preventing people from leaving Czechoslovakia and entering the country from Austria

Iron Curtain memorial in the “Mill Quarter”

Iron Curtain memorial trail

My husband Karl’s mother Rosa Wurm, née Traxler, was born on 11 July 1927 (second on the left, sitting). Her family had moved from Kaplitz / Kaplice in Southern Bohemia a few kilometres south to Passberg in Austria.  After World War II she trained as a cook.

Left: the family’s farm house in Passberg, “Mill Quarter”; right: Rosa as a young woman

The British Prime Minister described the situation of the Cold War in Europe in 1946 with the words “From Stettin in the Baltic to Trieste in the Adriatic an IRON CURTAIN has descended across the continent.”

The border across the “Bohemian Forest”

For the regions of the “Mill Quarter” and Southern Bohemia this meant that the landscape around the Bohemian Forest, which had been united and disputed along a thousand-year-old border, was since 1948 divided with nearly no communication possible between the two parts. In the area between the Danube and the Moldau many different peoples had found their home over centuries. The Celtic “Bojer” lent their name to “Bohemia” and “Bavaria” and later many different Germanic and Slavic tribes settled in the wooded landscape of the dense Bohemian Forest. The borders which were gradually formed and marginally moved during these centuries were not determined by natural barriers, but by territorial claims to power of various rulers, who traversed the Bohemian Forest north and south.

In the Middle Ages the Bohemian Kings and the Bavarian Dukes were the highest-ranking authorities in the region. Yet the expansive efforts of the local rulers, the “Witigonen” family, in clearing and cultivating the densely-wooded area offered them some independence from the powerful players in the medieval “Holy Roman Empire of the German Nation”. Their territorial claims incorporated possessions which were in the sphere of influence of the Bohemian kings, the Bavarian Dukes, the Austrian Dukes and the mighty diocese of Passau. The”Witigonen’s” chance of uniting the region from southern Bohemia to the Danube was thwarted in the 13th century and since the 14th century today’s border between Bohemia and Austria was consolidated step by step.

When the Kingdom of Bohemia and the Dukedom of Austria were united in 1526 under the Habsburgs and continued to exist as an imperial unity until 1918, in some way the border always remained. Tolls were levied between the provinces of Upper Austria and Bohemia and trade between these parts of the Habsburg Empire was controlled at checkpoints. In 1775 all tariff barriers inside the Habsburg Empire were removed and a common economic zone was established. Just a year earlier, in 1774, the market reeve of Oberplan (now Horni Plan in Czechia) had to settle a dispute over a cow, which was “smuggled” from Ratschin near Oberplan south to Schindlau near Ulrichsberg (now in Austria).

Nevertheless, in 1788 a precise measuring of the border between Bohemia and Austria was initiated, although it was no longer a customs boundary. Yet it was still an administrative boundary, which was relevant with respect to civil and social legal decisions. Who wanted to travel from Bohemia to Austria or vice versa had to have a special pass until 1857, be it for tradesmen or apprentices on the “Walz”, perfecting their skills and completing their apprenticeships, or just for visits of relatives and friends. Only nobility, members of the clergy and civil servants could move freely in the Habsburg Empire.

Left: Customs house between Austria and Bohemia in the Habsburg Monarchy. Right: Former Customs House in St. Oswald, “Mill Quarter”, which was erected in 1920 after the end of the Habsburg Empire and the setting up of the state of Czechoslovakia.

What is important to note is that this border was never a language barrier. As long as the administrative state did not interfere and create multiple political and national dependences, different languages did not cause problems. It is known that many members of the local nobility and citizenry were bilingual, German and Czech. Not only did most people in the Czech area speak German as well, also in towns of the “Mill Quarter”, such as Haslach and Freistadt, not just noblemen, but also citizens spoke Czech and not just German. Christoph von Zelking, who donated the famous gothic altar in the church of Kefermarkt, wrote in his last will that his sons had to know Latin, Italian and Czech apart from German, if they wanted to inherit his property.

In 1855 the first map of the Habsburg Empire was drawn up which showed the different linguistic areas and mixed language zones. Since 1869 the Habsburg census incorporated the language spoken, but it was disputed whether the mother tongue or the language spoken in daily life was to be the basis of these language statistics. At this time of rising nationalism, the political border was competing with the linguistic border. The expansion of the administrative state in the fields of education, law enforcement, the military and public security had drastically changed the importance of language. Nationalist ideology poisoned the atmosphere and when the state demanded that in mixed language areas, civil servants had to speak both languages, for example German and Czech, this caused many animosities, because more Czech speakers spoke German, too, than German-speakers Czech. This consequently led to a preference of Czech civil servants employed in the Habsburg administration of the region of Southern Bohemia.

From an economic point of view, the “Mill Quarter” and Southern Bohemia had always been closely interlinked. The “Schwarzenberg Canal”, a sluiceway, shipped logs from the Moldau region to the Danube and down to Vienna. The fast-expanding capital city of the Habsburg Empire was in urgent need of lumber that could no longer be provided from the Viennese Forest or the forests in the vicinity. So, building a sluiceway for floating logs from the Bohemian Forest to the Danube was a convenient solution. The first plans for this most ambitious and technically complicated project were made in 1775. The challenge for the engineers was how to overcome the European main watershed near Rosenhügel. The canal, when it was completed brought great wealth to the noble Schwarzenberg family, as they owned large stretches of woodland in the Bohemian Forest. The engineering project was praised as the “Eighth World Wonder”.

Left: Spot of the European main water shed between Danube – Black Sea and Elbe – North Sea. Right and below: The restored “Schwarzenberg Canal” sluice way.

The horse-drawn railway between Linz and Budweis / Ceske Budejovice, which transported salt from the salt mines of the “Salzkammergut” to Bohemia, was another innovative technical project crossing the Bohemian Forest, but much less successful economically. The 197 kilometre-track connected Gmunden in the “Salzkammergut”, Linz and Budweis. The first part was opened in 1832 and the line was completed in 1836. The transport of passengers and goods was much more profitable from Southern Bohemia to the south than vice versa. Due to technical problems on the narrow and hilly tracks the change from horse-drawn to steam-driven engines came much too late in 1855/56 and only from Gmunden to Linz, which track was flatter and wider. In the meantime, they had even experimented with oxen-drawn engines, because oxen were cheaper than horses. The railway entrepreneur Franz Anton Gestner, who had initiated the horse-drawn railway, was not innovative and forward-looking enough. From Linz to Budweis the passenger trains took 14 hours, two hours more than the stagecoach and from Linz to Gmunden another six and a half hours and freight transport was just as bad. As the railway line was not profitable, the horse-drawn line Linz – Budweis had to be abandoned in 1872, because it was already outdated when it was opened. In comparison, in England the first steam-driven railway opened in 1825 between Stockton and Darlington. On the contrary, the existence of a horse-drawn railway even hindered a modern infrastructure development of the Bohemian Forest.

Left: Salt transport on the horse-drawn railway to Southern Bohemia; right: Museum horse-drawn railway in Kerschbaum at the border to Bohemia

Left: Tracks of the former horse-drawn railway in the “Mill Quarter”; right: Former railway station in Kerschbaum

The majority German-speaking Bohemian districts Krumau / Cesky Krumlov and Kaplitz / Kaplice, where Karl’s mother’s family came from, were economically oriented to the south towards the Danube region in the 18th and 19th century. In the 19th century an extensive migration from Bohemia to Upper Austria took place. Czech workers were involved in building the horse-drawn railway and in Linz the tobacco factory and other large constructions. They worked in coalmining in the “Hausruckviertel” and in the weapons factory in Steyr. For many Czechs Upper Austria was the first stop on their move to Vienna. They were mostly employed in Linz and Steyr as industrial workers, craftsmen, and in domestic service jobs. While in 1858 2,000 Czechs were registered in Upper Austria, in the second half of the 19th century Czechs from Bohemia made up 10 per cent of the population of Linz and 15 per cent in Steyr.

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VIENNESE JOURNEYS INTO THE COLD WAR. LITERARY AND PERSONAL IMPRESSIONS

LIVES OF THE NON-ÉLITE IN VIENNA FROM THE AUSTRO-HUNGARIAN EMPIRE TO THE NAZI REGIME AND POST-WAR AUSTRIA, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Travel diary entry of my mother, Herta Tautz, on 20 September 1977 in Krakov, Poland. On their 25th wedding anniversary my parents, Herta and Werner Tautz, the creators of travel slide shows to the East Bloc countries, clinked glasses with Russian champagne at the Holiday Inn hotel

“Austria island of the blessed”?

The writer Jörg Mauthe ironically called Austria the “island of the blessed”, because many Austrians considered the country as a kind of “special case” since the early Cold War, which could be kept out of any political and military crisis or conflict and some still believe this today. Unfortunately, this concept has always been imaginary and never realistic and it is just as illusionary today. Since 1945 Austria has always been an “object” in the international arena rather than a “subject”, an actor. Local knowledge about the early incidents of infringement of Austrian territory by foreign conflicts is rare. There were Ukrainian partisans crossing Austria in the spring of 1945, terrorist attacks in the late 1940s, military emergency plans of the Western Allies in case of a Soviet aggression during the early Cold War years and intensified secret service and spy activities of all four Allied occupation armies, the Soviets, the Americans, the British and the French. Furthermore, the Soviets secretly supported the October strikes in Austria in 1950, they militarily suppressed the Hungarian anti-Communist revolution in 1956, when a wave of refugees swept across Austria and there was the Lebanon crisis in 1958 with Western military jets violating the Austrian airspace – to name just a few incidents. In all these and the following foreign conflicts, which affected Austria, the country never played an active part on the international stage that could influence its destiny; except during the 13-year chancellorship of Bruno Kreisky from 1970 until 1983. The State Treaty of 1955 marked the resurgence of Austria as an independent state and the withdrawal of all occupying armies on the condition of Austria’s neutrality. The first test of this neutrality was the crisis in Hungary on the eastern Austrian border in 1956 and the threat of a Soviet invasion, imagined or real. Austria had to be aware that in this East – West confrontation it was well-advised to establish a fair balance between and a safe distance from the Soviets as well as the Americans. While Austria started out with a pronounced pro-American policy, yet in the face of multiple international crises Austria approached the Soviet Union as well and tried to style itself as a hub in the Cold War and a crossroads between East and West. Bruno Kreisky, first as foreign minister and then as chancellor, developed a form of “active neutrality”, different from the Swiss one, and put it into practice as a “policy of the possible”. With the end of the Cold War in 1989 Austria had to re-define its neutral position in Europe, which led to Austria joining the European Union in 1995. The concept of the “island of the blessed”, which had always been just fiction, was consequently obsolete.

Until the coming down of the Iron Curtain, Austria bordered Communist dictatorships along more than 1,000 km. The frontier to Hungary and Czechoslovakia was hermetically sealed off with electric fences, trenches, and guard posts, a true “Iron Curtain”, as the British prime minister Winston Churchill had called it in a speech in 1946 already before the start of the Cold War. Due to the many Cold War crises, such as the building of the Berlin wall in 1961, the Cuban crisis in 1962, the uprising in Prague 1968, the Polish upheavals in 1980/81, Austria had to re-define its neutrality progressively. In 1955 the British predicted that Austria would act “neutralistically” – this negative term was used because Moscow had insisted on Austria’s neutrality, although the Western Allies had been against it – and that Austria would be a “double agent between East and West”.

 

Werner’s contemporary photo impressions of everyday life in Vienna during the early Cold War

The start of the Cold War

After the end of World War II, the process of a formation of two fiercely competitive blocks – East and West – started the Cold War in 1947 in Austria. This was the beginning of the establishment of a bi-polar world and a new international order after the break-down of a European system of states which had been created by the National-Socialist expansion of the “Third Reich”. This culminated in a military power struggle and an ideological confrontation between the United States and the Soviet Union. The two contrasting poles developed their own unique social, political, and economic orders, which they tried to impose on the rest of the world in a competitive manner. The atmosphere between the two power centres was characterised by a constant fear that the opposing side could infringe on the influence sphere they claimed for themselves and by that threaten their security interests. This led to the political division of Germany and Europe and a mentality of permanent siege and fierce competition for spheres of interest and military presence world-wide. In this so-called “Cold War” there was no clearly defined aggressor and no clearly defined defender. The ideological confrontation was characterised by a constantly changing situation that was dictated by the actions and reactions of the other side. Objectively it cannot be stated without doubt who started the Cold War. While immediately after the end of the war, the USA acted in a rather circumspect way towards its former ally, the Soviet Union, Stalin already exercised an aggressive expansionary policy in Eastern Europe. After a phase of permanent mutual mistrust, the United States reacted much more aggressively to the new post-war Soviet “security policy” at the beginning of 1946. Both world powers progressively stepped up their willingness to go into a geopolitical confrontation between 1945 and 1947. Despite its own military and economic capacities, the USA progressively perceived the Soviet Union as a threat to Europe and the rest of the world.

Towards the end of World War II, the British Foreign Office had expressed ideas for a post-war resurrection of the state of Austria as independent from Germany and the British found that this independence could best be guaranteed by an “ultimate association of Austria with some form of Central or South-East European Confederation”. Yet the Soviets were strictly against any confederation of Austria with Hungary, Czechoslovakia, and Poland, which would in their eyes create a Catholic conservative alliance that could threaten the Soviet Union. When Winston Churchill launched his idea of an independent Central European block of states, Stalin rejected this concept categorically, because he feared a resurrection of the Austro-Hungarian Empire as a “Danube Confederation” of Austria, Bavaria and other neighbouring Catholic states under Otto Habsburg, the successor to the throne of the abolished Habsburg Empire, which could as a result form a block with other Catholic European states, such as Spain, Italy, France, and Poland.

The Soviets wanted to exploit the Austrian economic capacities as a compensation for the massive war damage, which had been caused by the German “Wehrmacht” in the Soviet Union. Tens of thousands of Austrians had served in the German “Wehrmacht”. At the conference of the ministers for foreign affairs in Moscow in April 1947, US General Mark W. Clark blocked an agreement for a State Treaty for Austria, because he feared that the huge Soviet reparations demand would politically destabilise Austria. Earlier in spring 1945 the US had shown very little interest in the future political development in Austria and had concentrated on their projects for post-war Germany, but when in October 1945 the Soviets tried to take over the two biggest financial institutions in Austria, the “Creditanstalt-Bankverein” and the “Länderbank”, the US started to be alarmed. The US had already promoted an “Austrification” of the media and had launched the radio broadcasting station “Rot-Weiß-Rot” (RWR) and the newspaper “Wiener Kurier”, both with a rather pronounced anti-Communist tendency. When the first post-war elections in Austria in November 1945 resulted in a devastating defeat of the KPÖ (Austrian Communist Party) with only 5.41 per cent, the Soviet political officers were not amazed because they had never believed in the predicted 20 per cent for the KPÖ, as the Communist party had not achieved more than 10 per cent in the works council elections despite excessive Soviet election campaigning. From now on the Soviet policy in Austria became much more rigid. The Soviets demanded from the newly elected Austrian government a strict persecution of Nazis and the dismissal of all NSDAP members and former Austro-Fascists from official positions. Before the start of the Cold War in Austria the Soviets were prepared to forego the seizure of “German property”, if it had been Jewish business property that had been robbed by the Nazis and if it was economically not too important for Soviet Union. They either tried to return it to the original owners or put it under provisional administration. After the election in November 1945 the Soviets confirmed the importance of the continued stationing of Soviet troops in Austria and blamed the Western Allies for the failure to come to an agreement on the Austrian State Treaty. They hoped that the KPÖ would profit from the negotiations concerning Austrian sovereignty and independence, but to the contrary. The Austrians put the sole blame on the Soviets for the continuing presence of Allied occupational troops in Austria in the end. Access to Russian archives after the coming down of the Iron Curtain in 1989 proved the strong dependence of the KPÖ on the Soviets, but these researches also showed that the Soviets recognised the special geographical position of Austria as a “country between the two blocks”, Surprisingly, the data showed that they did neither favour a Communist coup d’état in Austria nor a separation of the country into an eastern and a western part like Germany.

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CENTRAL EUROPE AND THE FUTURE OF THE EUROPEAN UNION IN THE 21st CENTURY

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

Debrecen, Hungary, University

In 2018 Jaguar Land Rover ((JLR) opened a new plant with 640 robots on a former farmland in Nitra in western Slovakia. The robots together with 2,800 workers can assemble a Land Rover Discovery every two minutes. JLR was just another carmaker to come to Slovakia. VW arrived in 1991, followed by Kia and PSA. These firms together turn out over one million cars annually; more per head of population than any other country. Nitra is close to the motorway and Slovakia has an impressive supply chain with more than 300 factories making car parts. This spoke for Slovakia. The JLR factory gives a fair picture of Slovakia’s, and more broadly Central Europe’s model of economic development. First, it was built with foreign capital and largely by foreign contractors. Membership in the EU has facilitated the flow of capital from the western members to the eastern ones. Second, the economy of Central Europe depends on customers in economies to the west purchasing goods made relatively cheaply in the hinterland. Third, government support was essential for this economic take off. Government subsidies luring foreign companies into the country are common in Central Europe. Investors flock to special economic zones across the region, attracted by tax advantages. Furthermore EU funds have boosted investment in infrastructure that appeals to foreign investors like, road and rail. Even in Poland, the region’s biggest and most diversified economy, these EU funds matter: by 2022 they will make up 22 per cent of public spending each year.

This foreign-led development model has had much success. Countries from the Baltic states in the north to littoral Black Sea states have become considerably richer over the last two decades. GDP per person in the Czech Republic is now close to Spain. Bulgaria and Romania are much poorer in terms of GDP, but managing to win investment and to grow, too. The European Commission tracks the progress of five EU members immediately east of Germany and Austria, namely the Czech Republic, Hungary, Poland, Slovakia and Slovenia, compared with a group of four western frontier EU countries, namely Austria, Denmark, the Netherlands and Sweden. In 1995 the average GDP per person at purchasing power parity was around 55 per cent lower in the five Central European countries than in the western frontier countries. By 2016 the difference had shrunk to 39 per cent. Average incomes in the five countries are now equal to those in Portugal and far above those in Greece, of course also due to the financial crisis and sovereign debt crisis since 2008. Of all the Central European countries Slovakia saw the most dramatic gains.

But the challenge for these countries, as for any hinterland reliant on supplying labour to produce goods for richer neighbours, is to keep closing the income gap. The next step of economic development is going to be harder, requiring more productive firms, more private capital and more skilled labour. The region was not that hit by the financial crisis and is growing strongly once again. The IMF expects these countries to expand nearly twice as fast as Western Europe and this expansion looks more sustainable than the one that ended with the financial crisis in 2008. Back then cheap foreign loans, including Swiss franc mortgages taken out by individual households had boosted consumption but became hard to pay back. Nowadays banks are in better shape and consumption is less supported by debt and more by rising incomes. Despite nationalistic policies by populist governments in some countries foreign companies are not retreating. Corruption and some political instability seem not to deter investors as long as other economic conditions are beneficial. Building firms are doing particularly well. Construction activity in the region has typically grown twice as fast as GDP in recent years. Central Europe accounts for a fifth of Strabag’s – Austria’s biggest construction company – business. Business in Poland has gone so well that Strabag is branching out from EU-funded infrastructure into hotels, shopping centres and office blocks. Wienerberger, an Austrian building-materials supplier, has 64 plants across Central and Eastern Europe (CEE), including the ones in Austria and Turkey. 30 per cent in the region are not connected to a sewer system, compared with 5 per cent in Western Europe, which means big business for the firm. Subsidies for better housing, for instance in Hungary, have meant a boom in brick sales.

Services are playing a bigger part in this expansion in Central Europe than in the pre-crisis boom. This means that also white-collar work is doing well. Western banks are moving back-office jobs east to pleasant and affordable spots such as Krakow. McKinsey has 1,000 analysts in Poznan in central Poland, serving clients world-wide. Brexit is moving some mid-level finance jobs away from London as well. Erste Bank, an Austrian bank with 16 million customers in Poland, the Czech Republic, Slovakia, Croatia, Serbia, Romania and Turkey, expects banking in the region to grow faster than in Western Europe for many years to come. Central Europe has also transformed Vienna Insurance Group, a nearly 200-year old Austrian institution. Its 21 companies across CEE now provide half of all VIG’s premiums and profits because as income rises, spending on insurance increases, too. So it seems that Central European economies are well set for sustainable economic growth. Yet there are still three reasons for worries, namely a lack of innovation in local firms, a coming demographic squeeze and an over-dependence on foreigners, especially Germans, to drive development.

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THE SOVEREIGN DEBT CRISIS AND REFORMS IN EUROPE AFTER THE FINANCIAL CRASH OF 2008

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

Austrian National Bank, Vienna

Is growth normal and are the recessions of the 1970s/80s and since 2008 just the exceptions to the rule? Calls for reform always follow economic crises. Here are two examples of reforms that were introduced in Europe and can certainly not be seen as meaningful: Due to the serious sovereign debt crisis starting in Greece in 2010 the Greek government was obliged to carry out a multitude of reform measures, called “The Long March to Recovery”, among them laws on household insolvency, bankruptcy, foreclosures and pension reform. In how far were those really reforms and how could they benefit the Greek society? The second example is taken from Latvia: When the country emerged from the USSR it was without debt and mortgages. Then mostly Scandinavian banks moved in and gave extensive loans to the Latvians which finally could not be paid back and the Latvians faced the threat of foreclosures. “Reforms” were carried out that the duty to pay back the loans could be extended to family members, which ended in foreclosures anyway. In which way are these two examples meaningful reforms?…

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THE VIENNA STOCK EXCHANGE

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

The Vienna Stock Exchange. Architect: Theophil Hansen, 1874-1877

The Vienna Stock Exchange was founded in 1771 by Empress Maria Theresia as one of the first stock exchanges in the world. Gradually the Vienna Stock Exchange developed into the central capital market of the Habsburg Empire. Originally only government bonds and currencies were traded and the building was open to the public. On some days up to 2,000 people were present. In 1818 The Austrian central bank was the first public limited company that was quoted on the Vienna Stock Exchange. Due to the industrialisation and economic boom in the Habsburg Empire in the course of the 19th century the stock exchange gradually gained international reputation. Consequently a host of companies issued shares there. Due to the empire’s liberal economic policies in the second half of the 19th century unfortunately several unstable businesses were financed via a share issue there, which led to a wave of speculation that culminated in the stock exchange crash of 9th May 1873. In the course of this stock exchange break down nearly half of the public limited companies quoted there disappeared. The recovery took a long time and in the meantime trade was mainly in government bonds. That was the return of the big banks as the main financiers of enterprises. These banks also dominated the capital market and stock exchange trading. Trade on the Vienna Stock Exchange started to pick up once more so that new regulation was needed to. In 1875 the third Stock Exchange Law was passed that guaranteed the complete independence of the Vienna Stock Exchange. Finally in 1877 the new building for the Vienna Stock Exchange was opened, designed by one of the famous architects of the “Ringstrasse”, Theophil Hansen. During this time of consolidation rich financiers dominated the trade in shares there and the bond market was the “playground” of the “privatiers”, the well-to-do upper middle class. During the First World War the Vienna Stock Exchange was closed. At the end of 1919 the trading floors were opened to the public again and immediately experienced a boom which ended in a crash in March 1924. In the following years the shocks of the Great Depression of 1929 greatly hampered trading there. The bankruptcy of banks and the plunge of share prices affected the trade on the Vienna Stock Exchange and the number of visitors declined drastically. Interestingly enough, the New York Stock Exchange crash in October 1929, in fact, had no direct consequences for Vienna.…

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AUSTRIAN BANKS AFTER 1945

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

Vienna, “Golden Quarter”

At the end of the Second World War and after the liberation by the Allied forces the main Austrian banks were nationalised. The assets of Austrian credit institutions including large claims on the Third Reich, loans to the German armed forces and to various official and semi-official institutions had become worthless. The losses incurred had eliminated the equity of many credit institutions. So in 1946 the Austrian government nationalised the three largest banks, the Creditanstalt-Bankverein, Österreichische Länderbank und Österreichisches Credit-Institut AG. The Reconstruction Act of 1955 enabled the banks to draw up balance sheets for the entire period up to the end of the 1954 business year. The banks had been able to offset the losses incurred on account of war and post-war events thanks to their own earning power. The Reconstruction Act was nevertheless most important for formal accounting purposes. It gave the banks the formal basis under trade and company law to make the provisions necessary for the fulfilment of their economic and socio-political tasks. The Act further stipulated that the banks should make annual reconstruction contributions to other areas of the Austrian credit system. In 1956/57 the two largest Austrian banks, Creditanstalt-Bankverein and Länderbank, were partly re-privatised by authorising the Minister of Finance to sell shares up to 40 per cent of their share capital.…

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