Industry in Austria

By Daniel Goff

            The Austro-Hungarian Empire, at its height, encompassed a huge land area, including modern day Austria, Hungary, Bohemia, the Balkans, the Czech Republic, and parts of Northern Italy.  It encompassed over 250,000 square miles, and was inhabited by over 50,000,000 people in 1914[1].  Though Hapsburg Vienna was an important political and cultural center in the early-modern period, it did not achieve great importance economically. Austria was very late to industrialize, especially in comparison to the more advanced capitalist economies of Western Europe and the United States. Vienna itself supported almost no industry, instead, its economy was more based upon supporting the huge weight of the empire, both bureaucratically and financially. Austria industrialized later than Western Europe for a variety of reasons, both internal and external.  Firstly, with its tremendous size, Austria contained a large amount of natural resources, which put little pressure on Austria to industrialize.  Secondly, Austria itself was a very traditional country, run by a very conservative ruling class, less open to experimentation.  For these and other reasons, Austria became industrialized later than Germany and Western Europe.

            The Austro-Hungarian Empire was, to a great extent, economically self sufficient, causing Austria not to require a shift to an industrial, colonial economy comparable to that of England or France within the Empire.  Austria had all the resources it could use internally, and Vienna, with its ideal spot on the Danube, was at the center of it all.  Vienna served as the financial and commercial center of the whole empire; all people under the Hapsburgs were dependent upon Vienna’s banks and its marketplaces.  Each region of the empire produced its own goods: mountainous Austria proper was perfect for raising livestock, as well as mining ore[2], and also served as the industrial center, to the extent that there was one.  Bohemia, Hungary and Rumania were all used for farmland.  An (big surprise) efficient railway system, as well as the Danube, promoted commerce throughout the empire.  But the efficiency of this system also gave Austria no impetus to change, no reason for Austria to enter the developing world economy. Unlike the English, who virtually ran out of natural resources in the 18^th and 19^th centuries, Austrians didn’t need to look outward for a new source of income.  Austria didn’t need colonies in Africa, the Americas or Asia to supply raw materials.  Furthermore, because Austria was self-sufficient, mercantilist principles, which provided the spark for much of Western Europe’s industrialization, never took hold to the same extent; it was not necessary to produce manufactured goods to export to colonies when there were no colonies to export to.  Also, the Austro-Hungarian Empire remained mostly farmland throughout the 18^th and 19^th centuries, and almost all industrialization occurred in cities. Partially the lack of industry is due to Austria’s strong agricultural tradition, and its efficient use of land.  In the 19^th century, Rumania and Hungary became pivotally important farmlands for all of Europe, with Hungary becoming the 3^rd largest wheat exporter by 1900[3].  Because Austria had a booming farm system, it again didn’t see the need for industrialization.  Only Vienna and Prague were large enough to encourage industrialization.  Vienna’s growth was checked by the necessity of maintaining massive city walls to defend against the Turks.  This meant that Vienna, in 1840, had a population of about 400,000, in comparison to 959,000 in London and 584,000 in Paris forty years earlier[4].  Vienna also had an inadequate water system, further checking population and industrial growth.

            Austria also was late to industrialize for a series of political reasons.  The rise of industry occurred in Europe much because of a rise in the power of the bourgeoisie, both economically and politically.  As the bourgeoisie gained power economically, they began to demand more and more power politically.  This rise in political power caused governments to institute policies more likely to support the interests of the bourgeoisie, such as laws to promote industry and mercantilism, as well as expansionism and colonialism.  But Austria, unlike England or France, maintained a strong monarchy until World War I, inhibiting the growth of a consumer, bourgeoisie economy.  Furthermore, the disunity of the empire meant that a sizable portion of government resources needed to be devoted to simply holding it together, instead of developing the economy.  The conservative bent of the government also checked the growth of Vienna.  Even though Napoleon’s occupation of the city in 1805 showed just how ineffective the walls surrounding the city were, it wasn’t until 1857 that the walls were finally torn down. The city’s small population provided very little reason to industrialize, as there were fewer people to fill industrial jobs.

            Well into the 19^th century, Austria maintained an agricultural economy, and while industry did begin to take hold, it did not evolve as quickly as in Western Europe or in the United States. Partially this is due to the self-sufficiency of the Austrian economy.  Partially this is due to the conservative nature of the Austrian Empire, which did little to encourage industrialization through tariffs, subsidies, or other mercantilist principles.  This conservatism trickled down to the people, who were less likely than their English or German counterparts to try something new, to try a radical new business idea. Because Austria lagged behind Western Europe economically, it was pushed aside by Western Europe both politically and culturally.  More and more of the empire began to fall apart under the call for nationalism, and as the empire shrunk, the Austrian marketplace and economy shrank also.  Without a manufacturing base for export, Austria couldn’t keep up with Western Europe in the new global economy that began to develop.