Page - 44 - in THE FIRST WORLD WAR - and the End of the Habsburg Monarchy, 1914 – 1918

44 On the Eve an annual income exceeding 1,200 kronen, and at a maximum of three per cent. The state obtained its money through consumer taxes, which were repeatedly increased, including in 1912 and 1913. The same applied to dues and stamps. Iron consumption and iron production stagnated, while foreign trade suffered a downward trend.81 The Balkan Wars brought about the ruin of entire sectors of the economy that were solely export-oriented and that had worked for the Balkans. The textile and paper industries suffered severely.82 The last active trade balance had been in 1906 ; since then, deficits had increased steadily, already totalling 823 million kronen by 1912, corresponding to around a third of non-military state expenditure.83 Among the middle classes, the opin- ion was therefore increasingly voiced that the recession and the apparent hopelessness of the situation at times could only be overcome by a war. Newspapers asked : ‘Is Aus- tria-Hungary not on the threshold of complete economic and financial collapse ?’ Spe- cialists such as the Hungarian economist Pál Szende entitled their essays ‘Collapse or War’.84 The economic crisis resulted in rising unemployment levels and dramatic price increases. Since 1911, the increase in living costs had led to repeated cases of rioting. The largest demonstration of this kind took place in Vienna on 17 September 1911.85 There were violent clashes on a scale never seen before, and a state of emergency was imposed in parts of the city. A feeling of desperation spread. The provisional measures and emergency decrees issued by the governments of both halves of the Empire found their equivalent in the crown lands, most of which could no longer produce an orderly state budget. In many communities, the financial economy collapsed entirely. The overall economic figures only showed a slight recovery in 1914, although there were also further downturns. For example, it proved impossible to take out a loan in Paris. France, or so it claimed, was apparently not willing to finance Austro-Hungarian armament measures. In this instance, Austria-Hungary would anyway have been inca- pable of claiming particularly favourable conditions, since with a loan interest rate of 6 percent, it was already in the upper range. Other developments also stood out. Germany classified the Danube Monarchy in the same way for the economic sector as it did in the political sphere : it was a necessary trade partner and as an ally naturally enjoyed a special position, and yet at the same time, the Habsburg Monarchy occasionally had a dampening effect on a soaring German success, and time and again by necessity re- vealed itself to be a competitor. 50 percent of foreign investments in Austria were made by German companies, and 40 percent of foreign trade by the Habsburg Monarchy went to the German Empire.86 While the overall economic figures in Austria-Hungary were not that rosy, therefore, and crises blew up in all corners of the Empire, there was one area in which the economy was buoyant, indeed booming : the armaments industry. It was concentrated in several regions that were particularly well-developed in economic and industrial terms : the Bohemian armaments industry was situated around Pilsen and Kladno (Klattau), the