The Habsburg Empire (1790-1918)

by C A Macartney

  The reception by the Viennese of the news of the humiliating peace was less edifying. ‘What a crush on the streets’, wrote a contemporary; ‘What joy! What delight! People embraced and kissed one another. Everything proved with what longing the day of deliverance had been awaited.’78

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  When these renewed disasters overtook the Monarchy, Francis changed his advisers once again. Stadion had renounced the conduct of his department when the armistice was signed, and resigned on 8 October, a week before the signature of the Treaty. Charles had been dismissed, in abrupt and ungracious fashion, after Wagram, and thereafter Francis pursued him with dislike and distrust, which seem to have been enhanced by the knowledge that Napoleon had suggested that Charles should take his brother’s place on the throne. There is no evidence that Charles had behaved in the least disloyally, but he was now banished from public affairs, in which he never again played an important part.79 For less apparent reasons, Rainer, too, fell into disfavour and lost his post of consultant on internal affairs. The Archduke John’s positive disgrace came only three years later,80 but meanwhile his influence at Court, too, diminished. Of Francis’s ‘cabinet of brothers’, only Joseph, whose position in Hungary made him indispensable, survived, and he with some difficulty.81

  Since the dismissal of Colloredo, Francis had devoted himself far more closely than before to the conduct of affairs, and had taken far more decisions personally. From 1809 on his rule became a personal one, in the fullest sense.

  In so far as anyone now possessed his ear, this was Metternich, who took Stadion’s place at the Chancellery, and it was only in an indirect sense that even Metternich influenced him, outside his own field of foreign affairs. In later days, when accused of responsibility for the hated ‘system’, Metternich repudiated it. ‘He had often’, he said, ‘governed Europe but never Austria.’ He had not been concerned at all with Austria’s internal affairs. He had not invented the ‘system’, which he had found complete in every detail when he arrived. He had even disapproved of some aspects of it.

  It is certainly true that Metternich was not the author of the system; and true in a sense which is highly unflattering to him. If we examine his so-called philosophy, we find in it certain notions, connected with his own special branch of foreign affairs, which can be traced back to his more general experiences: such, outside the all-dominant dread of the unsleeping menace of revolution, against which eternal vigilance was necessary (although this was then a commonplace of all except the revolutionaries), are perhaps his doctrines of the essential unity of Europe, of the salubrity of diversity within unity, of the virtue of balance. These ideas were at least sensible, if not particularly original; but we may at any rate be grateful to Metternich for their moderation. If he claimed for Austria the hegemony of Europe, at least he did not try to make it into a super-Europe directly ruled by her. But scrutiny of the rest of his ‘political philosophy’, pretentiously represented by himself and reverently expounded by his admirers as a coherent deductive system applying eternal verities to specific conditions, shows it to be nothing of the sort: it is an inductive justification of the Austrian Monarchy, and of the principles on which Francis’s own instincts and his experience had led him to govern it. That the only sure foundation of order lies in the monarchic principle; that the Monarch should normally derive his title from the principle of legitimacy, but that that principle might be over-ridden if other considerations, notably that of balance, made this necessary; that the monarchy must be ‘pure’, bound, indeed, by the higher laws of justice and humanity but politically absolute, since between absolute monarchy and the sovereignty of the people, which is the child of revolution and the mother of anarchy, there is no intermediate stage, a constitutional monarchy being a contradiction in terms and a mask for popular sovereignty; that pseudo-constitutional institutions are nevertheless permissible so long as their functions are confined to discussion and tendering advice, and they are allowed no real power; that a Constitution may be permissible if it is hallowed by antiquity, represents conservative forces and does not embody the idea of popular sovereignty, and that the Hungarian Constitution conformed to these conditions; that there is nothing unnatural in a multi-national State, since common national feeling does not, any more than any other group feeling, give a body of subjects the right to choose their state – phrases such as ‘rights of nationality’ being mere shibboleths and the word ‘nationalism’ a mask for revolution; that a people deserved the name of nation and was entitled to the preservation of its political cohesion if in the past it had shown itself determined and able to preserve it; that this was not the case with the German and Italian peoples; that most ‘subjects’ are in any case uninterested in national questions and only want material prosperity and the efficient application of just laws – it is hard to see how Metternich could have phrased all these pompous dogmas differently by one iota had he deliberately and cynically set himself out to compose a justification of Francis’s Austria and his own Europe.

  Far from putting ideas into Francis’s head, Metternich had in fact simply thought himself into the position to which Francis’s temperament, his early tuition and his experiences had brought him as early as 1794. If, however, he was innocent of authorship of the ‘system’, he was not so guiltless of its extension and perpetuation. It is true that his direct influence on the conduct of Austria’s internal affairs was limited – his enemies, who were numerous and embittered, saw to that. But he determined many issues by his insistence on the priority of considerations of foreign policy over internal, and his indirect influence over the entire conduct of Austrian policy was enormous. His ‘Liberalism’ was a farce. He thought the machinery of government imperfect, but so did everyone else, not least Francis himself. He was educated and personally civilized enough to realize that the system was narrow and obscurantist, and chafed against it when it was applied against himself, but he had no scruples whatever about applying its methods to others. He maintained a special spy service, paid for out of his own secret funds, for watching over developments in Germany, and as we have said, actually had intercepted, and himself read to the Emperor, correspondence between Francis’s own wife and his brother, the Palatine.

  He saw nothing whatever wrong with Austrian conditions82 and details apart, entirely approved of the principle of keeping them just as they were. Thus he made himself the second father of the ‘system’ by his constant approval and endorsement of it. His responsibility is heavy indeed, for during many years he was spending an hour a day, sometimes two, in Francis’s company; and impressionable as Francis still was, could assuredly, with his fluency, wit and polish, so much superior to the Emperor’s, have influenced him in the direction of reform. Instead, he consistently assured him, at least by implication, that no reform, other than one of Governmental machinery, was needed; and Francis did not doubt him.

  In his own field of foreign policy, Metternich undoubtedly called the tune, if only, as he himself put it, by the method of planting his own ideas in Francis’s mind.83 The immediate line was in any case marked out beyond much possibility of dispute. Whether, as he afterwards pretended, Metternich foresaw the speedy downfall of Napoleon and was concerned only to gain a breathing-space, or whether, as many believe, he held France’s hegemony on the Continent to be a firmly established fact to which Austria must at last seriously adapt herself, the situation to which the Treaty of Schönbrunn had reduced her was compulsive: for immediate policy, she had, as he told Francis immediately on his appointment, no choice but to seek France’s, or rather, Napoleon’s, favour, at whatever price it could be bought. Then she must temporize and flatter ‘until perhaps the day of general liberation arrives’. The price, the hand of Francis’s eldest daughter and favourite child, Marie Louise, was Metternich’s own suggestion.84 It was one which her father certainly did not find it easy to pay, still less, the victim herself, but Francis yielded. The marriage was celebrated on 2 April 1810.

  For the rest, very vari
ous judgments have been passed on the value of the foreign policy followed by Metternich between 1809 and 1813. He had hoped to persuade Napoleon to pay for his bride with a number of concessions, including the restoration of the Illyrian provinces. In the less important fields he harvested little or nothing; Napoleon offered him Illyria only in exchange for Galicia, to be incorporated in a new Kingdom of Poland, and an alliance against Russia. It may have been an advantage for Austria that Metternich refused to commit her against Russia, and at the same time frustrated a plan sponsored by his own father for a defensive alliance with Russia against France. The immediate outcome was that Russia gained important territorial advantages at the expense of the Porte, while Austria came out empty handed. Then in 1812 Austria after all allied herself with France against Russia. Her obligations were not heavy: she had only to send an auxiliary corps of 30,000 men, and her promised reward great: she was to have Silesia. Only the war turned out badly, and Silesia remained Prussian.

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  Meanwhile, the Francophile line would itself have imposed the cessation of the appeals to national sentiment; but Francis needed no considerations of foreign political expediency to turn him against what had always been repugnant to his innermost convictions. The policy had proved, not only a failure, but a humiliating one. It had not been the German Princes alone who had shown themselves indifferent to it: Francis’s own favourite Viennese had not behaved very differently. At first, it was true, they had received the conquerors sullenly, but they had consoled themselves quickly when the French not only took efficient measures to secure the capital’s food supplies, but also relaxed the censorship. The patriotic songs and pamphlets had been hurriedly scrapped in favour of effusions of a very different tone. A gay social life had reigned, and when the news arrived of the shameful peace which cost Francis one-third of his dominions, the Viennese had embraced and kissed one another in the streets. It was not surprising that the policy of popular appeal should have been put sharply into reverse. Fortunate were those among the minor figures of the short-lived popular renaissance who scented the changing of the wind in time, for continued profession of the sentiments so popular only a few months earlier now brought with it displeasure and, in some cases, heavy punishment.

  Thus the political and social freeze was re-established, although not, altogether, the economic, for the European situation, in particular, the Continental Blockade, forced the authorities’ hand, and with that and the advent, short-lived as it proved to be, of peace (among the consequences of which was the return to civilian life of a large number of soldiers) some economic life began to stir in Austria, especially in respect of her industries. Not all of these prospered: for the glass-makers, leather-workers and others who had depended largely on the export market, it was a hard time. But there was a big demand for articles required by the army, and for those products, notably woollen and cotton goods, in which England had formerly dominated the market. Many new factories producing these articles (sometimes out of local substitutes for cotton) were established in Bohemia and Moravia, where these years also saw the beginning of the sugar-beet industry, to replace the cane-sugar which was no longer available. Under the pressure of the circles interested, the Hofkammer changed its policy, and decided that in the future, ‘liberalism’ was to be the guiding principle. The distinction between Kommerzialbetriebe, which worked for export, and Polizeibetriebe (working for the local market) was, indeed, maintained, and the old guild restrictions kept in force for enterprises of the latter category; but for those of the former, all restrictions were lifted in 1809–10, and local authorities strictly enjoined ‘in no case to lend an ear to the dangerous effusions of the spirit of monopolies and guilds, but steadfastly to maintain the spirit of free competition, dismissing all secondary considerations’.85 The ban on the importation of machinery was lifted in 1811, as was that on the establishment of new factories in Vienna; it is true that, at the Emperor’s wish, the countryside was still preferred.

  The financial situation, however, was worse than ever. By 1808, when O’Donnell took over, the note circulation was 650 million and the rate 315. An attempt to raise a loan on the security of the Crown property brought in only small sums. The initial costs of the war had to be met again out of the printing press, the circulation rising to 729 million. Napoleon, in this respect as in others ahead of his time, was preparing to make things worse by printing forged Bankozettel for circulation in the occupied territories. Then had come the disastrous Treaty, with the indemnity, and the territorial losses, which brought a further aggravation of the currency situation; for the new masters of the ceded areas fixed dates after which the Bankozettel would cease to be legal currency in them, and the owners of the paper sent it to Vienna for exchange into commodities or small coins. On 19 December 1809, a new Finance Patent called in all silver (except spoons, watches, seals, surgical instruments and antiques) from the extra-Hungarian Lands, paying for it with Bankozettel at the rate of 300, or with tickets in a new State lottery. The proceeds of this collection (which were far less than they should have been, since large quantities were smuggled into Hungary) yielded enough for the indemnity, but little more. A new plan for replacing the Bankozettel by bonds secured on the Church lands had no perceptible effect except to increase the public mistrust of the Bankozettel. The circulation rose to 846 million, the course sank to 469.

  Then O’Donnell died, and in July 1810 Francis appointed in his stead Count Joseph Wallis, Oberstburggraf of Prague, an eccentric of brutal energy but with no recorded expertise in finance. The course of the Bankozettel promptly fell to 800, and at one moment at the beginning of 1811, even reached 1,240, although it then recovered slightly. The circulation was now 1,060 millions.

  On 20 February 1811,86 Wallis produced his remedy in the shape of a Finanzpatent, a measure of the most drastic deflation. All Bankozettel and also all small metal coins, were called in and exchanged for new paper, called ‘redemption bonds’ (Einlösungsscheine) at the rate of one new for five old, of the same face value. The Einlösungsscheine were thereafter to constitute the sole legal tender. All taxation, direct and indirect, was to be paid in the new currency, in which the Government was also to pay its own salaries, pensions, etc. Both taxes and salaries were thus multiplied by five. The rate of interest on State loans was, however, to be cut by half, so that the multiplication here was only by 2½. The Government promised never again to allow the issue of paper money to exceed the new figure of 212 million Einlösungsscheine. The new paper was itself to be gradually amortized as funds became available.

  For private debts contracted in the past since the currency began to fall, a scale (the Wiener Scald) was laid down, converting all such debts, if still outstanding,87 into the new currency at a rate calculated on the average quotation of the Bankozettel in Augsburg in the month in which they had been contracted.

  The necessity of stopping the inflation had been generally admitted, and there were some classes, notably the State employees and pensioners, to whom the Patent brought belated justice; what they retained of their incomes, after paying their taxes, was, provided nominal prices fell by 80% (as most of them did at first), multiplied by five. Some creditors also found their positions improved substantially. But the increased taxation was a very heavy blow to all taxpayers, many of whom were genuinely unable to meet the new demands. A large number of landed properties, big and small (including many eingekauft peasant holdings), were sold up, and the abrupt deflation even did much to nullify the embryonic industrial boom.88 At best, the operation produced extraordinary confusion, and it remained a terrible memory to the people, who persisted (rightly or wrongly) in regarding it as a State bankruptcy for four shillings in the pound.89

  Moreover, the Patent brought the sharpest crisis to date in the Crown’s relations with Hungary.

  The constitutional position in Hungary was that the right of mintage was the King’s unquestioned prerogative, but indirect taxation should have been agreed with the Estates, and Hunga
ry, although she had, of necessity, been using Bankozettel for a decade past, did not recognize any community between her currency and that of the rest of the Monarchy. Francis had at first intended simply to promulgate the Patent in Hungary, as in his other dominions, but on the strong representations of the Palatine he convoked the Diet for August. He still, however, announced in his ‘propositions’ that the Patent was applicable to Hungary; the Diet was to be asked only to consider the means of applying it. It was further to take over the amortization of one hundred million of the Einlösungsscheine and in addition, was asked to raise the contributio by 100%.

  The Diet, when it met, resisted stubbornly. It argued that the issue of uncovered paper money was an abuse of the right of mintage and simply a disguised method of milking the taxpayer. It refused to admit the legality of extending the Patent to Hungary, or to take over the amortization. There were also bitter complaints against the Wiener Scala.90 The argumentation was so long and bitter that the centralist party at the Court again strongly pressed Francis to suspend the Hungarian Constitution. Both Metternich and Wallis, however, warned him against the step, while the Palatine told him that it would provoke revolution, and even Napoleon, when consulted, was discouraging. Again Francis shrank from the irrevocable, but on 30 May 1812, he dissolved the Diet, and on 1 September introduced the Patent ‘provisionally’ into Hungary, pending the convocation of the next Diet. As in fact he did not convoke a Diet for the next thirteen years, this meant that Hungary was ruled, during that period, almost as absolutely as the Austrian Lands. The Counties were, indeed, left unmolested, but where they proved recalcitrant, the Crown enforced its will by putting in Royal Commissioners.