Holy Roman Empire

Chapter 46: Chapter 46: Abolition of Local Tariffs

Translator: Nyoi-Bo Studio Editor: Nyoi-Bo Studio

By 1848, the Czech region had already become one of Austria’s industrial centers, and with the development of industry, the wealth of capitalists had greatly increased.

The demonstrations that erupted were actually due to the capitalists’ wealth and political status not matching up; they were discontent with their lack of political voice.

The continuous introduction of new legislation by the Austrian Government, to a certain extent, sacrificed the interests of the capitalists, catalyzing the Prague demonstrations.

In Franz’s view, these people were probably too accustomed to the carefree days of the Metternich Era and had forgotten that those who set the rules of the game could also change them at any time.

Now the Austrian Government was indicating that they would no longer play this game, proclaiming that those who are with us will prosper, and those who oppose us will perish. Whoever had objections, they would deal with them.

Of course, everyone was civilized and wouldn’t play too rough; the act of beating someone then offering a sweet date still had to be done.

“Considering the current domestic situation, I propose the abolition of local tariffs to alleviate the discontent of the capitalists!” Finance Minister Karl suggested.

Currently, the local tariffs in Austria were primarily present in the Hungarian Region, as other areas had already abolished them successively.

In reality, blaming the Vienna Government entirely for the tariffs between Hungary and Austria wasn’t fair. As early as the last century, Austria was ready to abolish the local tariffs, but faced opposition from the Hungarian Nobility and capitalists.

The economic development in Austria was unbalanced. In industrially advanced regions, capitalists naturally advocated for the abolition of local tariffs, while in the industrially backward Hungarian region, capitalists were still relying on local protection.

Of course, there were also those in Hungary advocating for the abolition of these tariffs, such as the capitalists in the grain industry who wanted them gone.

The taxation in Hungary had nothing to do with the Vienna Government, as it was collected and used by Hungary itself.

Without a doubt, the Hungarian Nobility could take their cut from the local tariffs, and they were the biggest obstacle to abolishing them.

The motive behind Karl’s proposal was clearly not pure; besides winning over some capitalists, it also served as a warning to the Hungarian Nobility.

At this time, the Vienna Government still believed that the Nobility were the main rulers of the Kingdom of Hungary, and the capitalists were just figureheads.

Franz had no intention to correct this; the Hungarian Nobility were too numerous, making up four percent of the total population, and most Hungarian capitalists had a dual identity as Nobility.

If they weren’t suppressed, considering their self-destructive tendencies, he estimated that the Hungarian problem would continue to cause headaches in the future.

History had proved this point, as both Austria and the Austro-Hungarian Empire had struggled with the Hungarian issue. If not for the Hungarian people’s support for the Habsburg Family, they would have gained independence long ago.

“Indeed, Austria is a unified country. The existence of local tariffs goes against the trend!”

Without a doubt, Franz at this time didn’t mind the Hungarian rebellion getting fiercer.

The interests of the Hungarian workers and peasants had already been addressed by the reforms carried out by the Austrian Government.

Uniting the majority and striking a minority is always the right move in politics.

Next, he would continue to introduce legislation to clear the obstacles for the economic advancement of the bourgeoisie and weaken the determination of the capitalists to rebel.

Abolishing local tariffs only harmed the interests of the great Nobility; the lesser nobles didn’t have the privilege to profit from it, and even their interests were hurt. Without the tariffs, at least their grain would be more competitive.

This wouldn’t be enough to get the Hungarians to join the rebellion en masse; it would mostly implicate most of the Nobility.

“Your Highness, I’m afraid this won’t do. Abolishing Hungary’s tariffs will impact the grain industry in Austria and affect the income of Austrian farmers,” Archduke Louis objected.

Franz suddenly realized that the biggest impact of abolishing tariffs with

Hungary wouldn’t be on the farmers but on the Nobility who owned vast lands. The introduction of a new competitor would definitely lead to a fall in grain prices.

Franz hesitated, wondering if it was time to prod the domestic Nobility. Having just abolished serfdom, and now letting in Hungarian grain to impact the grain prices, would it cross their line?

At that moment, Prime Minister Felix made the decision for him.

“Since 1846, the price of grain in Austria has been steadily climbing. For the sake of national stability, it’s necessary to control the grain prices within a reasonable range.

In the long run, the entry of Hungarian grain into Austria is beneficial. The reduction in grain prices can help us stabilize public sentiment more swiftly.

Moreover, after the abolition of tariffs, Austria’s industrial and commercial products will be more competitive in Hungary, aiding in healing the wounds brought by economic recovery!”

Franz was reassured – if the prime minister, a wealthy tycoon, didn’t mind the slide in grain prices, then the Nobility’s threshold was probably much lower.

It seems that historically, Austria also abolished the tariff system around this period, but Franz wasn’t clear on the exact year.

“The prime minister is right. Abolishing tariffs now can help Austria’s economy recover more quickly, which is vital for us.

Due to the war, our fiscal revenue will probably significantly decrease this year. If not for the confiscation of the rebels’ property, the government would likely be bankrupt by now.

The upcoming Rebellion Suppression Army will certainly burn through money like water, and these funds will probably be but a drop in the bucket. We must find ways to increase revenue and reduce expenditure.

Now that we have so many factories in hand, we must get them up and running as soon as possible, and the Hungarian market is indispensable!” Foreign Minister Metternich interjected.

Alright, Austria was truly short of money. Before the March Revolution, the Vienna Government still owed a national debt of 748 million shields; now the debt was roughly between 600 to 650 million shields. (1 Shield equated to approximately 11.6928 grams of silver)

Don’t get me wrong, this isn’t because Franz had already repaid the money, but rather, the creditors were no more.

As a result of the rebellion, many bonds were destroyed in the fires of war, and many creditors became wanted criminals. The Rebellion Suppression Army also seized a large number of bonds, which Franz directly burnt.

The national bonds issued by the Austrian Government came in two types:

registered and bearer bonds. The registered bondholders, now criminals on the run, certainly wouldn’t come to collect, while bearer bonds could still be traded.

Expecting the Hungarian market to restore Austria’s economy was idealistic.

Franz believed the Hungarian capitalists wouldn’t mind doing business with Austria, even if revolution broke out.

But once war broke out, how could they ensure the safety of transportation? Who would still have the mind to buy these goods? Surely they couldn’t be selling arms to the Hungarians, could they?

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