Lost Momentum: Austrian Economic Development 1750 - 1830

In the ninety years here examined Austria`s economy enjoyed rapid development until about 1811 and entered a period of retardation thereafter. A comparison with German development serves as background since in many respects the Habsburg monarchy was during this time in a position to accomplish an economic growth not necessarily far different from that of Germany. Chronologically, a great momentum was created by Maria Theresia from about 1750, after the first wars with the Prussian king Frederick II had ended. This momentum was elaborated by Joseph II and continued to a lesser degree by Franz. Legal institutions beneficial to business activity were enacted and were in effect well beyond the period with which this study concerns itself. The Austrian economy was, however, subjected to a severe shock in 1811 with the state bankruptcy, which inaugurated a period of retardation. The 1830s, it is posited, represented a marked change from the preceding period. The decade was typified by several major events that included the French and Belgian revolutions in 1830, the creation of the Zollverein in Germany in 1834 and the death of Emperor Franz in 1835. At the same time the evidence for a quickening of the economy can also be observed. In substance the study is divided into three major sections. The first two Chapters concern themselves with a statement and some elaboration of the theme, and with the central fact that the Austrian empire was an agricultural country until its dissolution after Wold War I. Engaging into a counterfactual exercise one could assert that the empire reduced to its western components, especially today`s Austrian and Czech republics, represented aviable and vibrant economic entity that could have competed successfully with Germany and other west European countries. The other parts of the monarchy may well have proved to be considerable hindrances to rapid development. This investigation restricts itself largely to the Austrian and Bohemian- Moravian parts of the empire. The second section is devoted to the government`s role in Austrian economic development. At base is the proposition that government is an inescapable element in all modern economies. During the great momentum of the second half of the eighteenth century government intervened strongly in the economy and in general advanced it significantly. Even though in the following decades its direct role diminished, the Habsburg monarchy was still plagued by over-regulation (zuvielregieren). Nevertheless it provided an institutional foundation on which further development was possible. The third section concerns itself primarily with entrepreneurial activity. Here more than before the human factor and the private sector are emphasized. To be sure, government was also involved in direct entrepreneurial activity but it was private actors that created the conditions for a great economy. For this purpose the study investigates three main types of industrialists: 1) Classical cases, originating with pursuits as merchants and artisans; 2) Outsiders like Protestants, Jews, and Greek Orthodox; and 3) Aristocratic landowners. All three groups contributed considerably to Austria`s economic development, but the participation of the Protestant contingent and of the aristocrats decreased markedly by the 1830s.