The Rothschild Consortium and the State Debt
of the Austro-Hungarian Monarchy

György Kövér
Eötvös Loránd University, Budapest
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The state debts of the Austro-Hungarian Monarchy after 1867 consisted of three parts: loans acquired before 1867; loans acquired by the Cisleithanian half of the empire after the Compromise of 1867; and, finally, new state debt generated by the Kingdom of Hungary also after 1867. Between 1873 and 1910, with some exceptions, it was the Rothschild–Creditanstalt–Disconto-Gesellschaft consortium that acted in the role of the state banker in both halves of the dualistic state. The decision in favor of the Rothschilds was based not only on their extensive international network, rapid communications, immense prestige, an enormous amount of capital and a high degree of competitiveness but on the fact that they had long been heavily involved in Austrian financial affairs and in their quasi-monopoly position were able to assess relatively favorable costs. While the international market treated Hungary’s state bonds as the public debt of a sovereign state, it still considered Austria and Hungary to be economically interdependent parts of the same, albeit politically dual, monarchy even as the threat of the dualist state’s dissolution emerged more and more frequently from the turn of the century onwards. After initial hardships, yields on Hungary’s state debt with some lag were able to keep up with the profitability on the again gradually increasing Austrian state debt.

Keywords: Austro-Hungarian Monarchy, State debt, Rothschild–Creditanstalt–Disconto-Gesellschaft consortium, reputation, “empire effect”, “Rothschild effect”

State-Building, Imperial Science, and Bourgeois Careers in the Habsburg Monarchy in the 1848 Generation: The Cases of Karl Czoernig (1804–1889) and Carl Alexander von Hügel (1795/96–1870)

Wolfgang Göderle
University of Graz
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The article situates itself in the broader context of the transition between the Ancien Régime and the revolutionary year 1848 by exploring the new social spaces opening up for a middle-class in the making from the 1820s onward. It focuses on two representatives of this new class, Karl von Czoernig and Carl Alexander von Hügel, both of whom managed to climb the social ladder between c. 1820 and 1870. Men like Czoernig and Hügel were involved with the events of 1848 in manifold ways. Czoernig, for instance, was a member of the Frankfurt Parliament, while Hügel helped Metternich escape the country and flee to England. Yet in the wider perspective, it was not a few turbulent days in 1848 that made a difference in the lives of the members of the larger emerging middle-class to which these two men belonged. The revolution(s) had another effect on both men’s lives: Hügel made a reappearance as an imperial diplomat and started a second career with a distinctly conservative flavor. The top-ranking civil servant Czoernig, in contrast, ruined his professional career in the long run, although the consequences of his participation in the events of 1848 were not felt until the early 1860s, when dusk fell on neo-absolutist liberalism. This article examines a panorama of new options and opportunities for members of the well-educated bourgeois in an era of transition, and it suggests some conclusions concerning the strategies put to use by the emerging middle-class.

Keywords: Habsburg Monarchy, civil service, middle-class, bourgeoisie, social history, nineteenth century

Zsombor Bódy

Enthralled by Size Business History or the History of Technocracy in the Study of a Hungarian Socialist Factory*

In this essay, I examine the extent to which the terms and concepts of business history are useful in furthering an understanding of the development of a socialist enterprise, the Hungarian Ikarus bus factory. I come to the conclusion that the factory, which manufactured buses for all of the member states of COMECON (Council for Mutual Economic Assistance, 1949–1991), was not really able to take advantage of and turn a profit off of the economies of scale that the enormous market offered. The reason for this was that the socialist enterprise was not able to bring technological advancement in line with the need to make profit. The large investment in the bus factory rested on a technocratic vision which mechanically linked technical development with the solution to economic problems. This technocratic vision, which was found both in the West and in the countries of the Eastern Bloc, fit particularly well into the system of state socialism.

Judit Klement

How to Adapt to a Changing Market?

The Budapest Flour Mill Companies at the Turn of the Nineteenth and Twentieth Centuries

The focus of this article is the steam mill enterprises in Budapest at the end of the nineteenth century, a time when these companies were no longer enjoying their most profitable years. While earlier their high-quality flour had been sold for good profits on the markets of Western Europe, they found themselves slowly pushed from the marketplace by increasingly intense price competition, which was in part a consequence of the crisis in agriculture and, quite simply, the globalization of agriculture. While they were still able to produce for the undeniably important markets within the Austro-Hungarian Monarchy and ever higher customs duties on agricultural products helped strengthen their production for these markets, the demand for expensive flour on the domestic market was significantly smaller than in Western Europe. Confronted with the changes that had occurred in the marketplace, the mills in Budapest tried to adapt in a variety of different ways. In this article, I examine these strategies, focusing in particular on the very distinctive expansion of one of the mill companies.

Ágnes Pogány

Crisis Management Strategies after World War I

The Case of the Budapest Flour Mills*

The history of the big Budapest flour mills reached its finale in the second half of the 1920s. By then, it had been clear to all players that the Hungarian flour mill industry could not return to the prosperity of the nineteenth century and indeed had become one of the many crisis branches of the Trianon economy. The grave problems of the branch were not without antecedents. The big mills in Hungary had begun to lose ground in the global market in the last decades of the nineteenth century. Their declining competitiveness manifested itself in reduced exports, drops in price, and increasing domestic rivalry. The big Hungarian commercial mills sought solutions to overcome their problems that were similar to the solutions adopted by other foreign companies at the time. They strove to cut production costs and increase profits by establishing economies of scale and scope with horizontal and vertical integrations. Companies used basically two means to limit competition between firms: they organized cartels or they merged with their rivals to control their economic environment. In this article, I analyze how these crisis management practices were applied to meet corporate needs in the interwar period. I investigate these questions mainly as a case study of the biggest Hungarian flour milling company, the Első Budapesti Gőzmalom Rt. (First Budapest Steam Mill Co. later: FBSM), based on its archival documents and articles that were printed in the contemporary economic press.

Petr Popelka

Business Strategies and Adaptation Mechanisms in Family Businesses during the Era of the Industrial Revolution The Example of the Klein Family from Moravia

Family businesses are a central topic in the history of business, especially in the early phases of the industrialization process. This case study attempts to identify the business strategies and the adaptation mechanisms used by a family business during the era of the Industrial Revolution. The main aim of the study is to explore which adaptation mechanisms and strategies were used during the Industrial Revolution by large family firms in the Lands of the Bohemian Crown. The study focuses on a model example, the Klein family, which ranked among the foremost entrepreneurial families in the Bohemian Crown Lands. The Kleins initially rose to prominence through their road construction business. They later built private and state railways and also diversified into heavy industry. I delineate the main stages in the development of the family firm, discuss a number of key microeconomic factors which influenced the Kleins’ business activities, and describe the factors which ultimately led to the downfall of this once-successful firm.