Volume 7 Issue 2 CONTENTS

The Battle over Information and Transportation: Extra-European Conflicts between the Hungarian State and the Austro-Hungarian Foreign Ministry

James Callaway
New York University
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 Historians have written much about the conflict within Austria-Hungary between the Hungarian state on one side and the Cisleithanian state and/or Austria-Hungary’s joint institutions on the other. Historians have paid far less attention to how these conflicts unfolded beyond Europe, particularly in Africa. This essay examines the conflict between the Hungarian state and the Foreign Ministry over the empire’s trade relations with Morocco and Mexico. It shows that the Hungarian state and the Foreign Ministry perceived trade in different terms. These conflicting understandings of the purpose of trade fueled a battle between the Hungarian state and the Foreign Ministry over the information and transportation on which Austria-Hungary’s trade development was based. The Hungarian state’s success in this battle forced Austria-Hungary to pursue a much less imperialistic approach to global integration than the other great powers.

Keywords: Africa, Austria-Hungary, global, information, Mexico, trade

Introduction

As Emperor Francis Joseph’s envoy extraordinary and minister plenipotentiary to the Sultan of Morocco, Leopold Graf Bolesta-Koziebrodzki endeavored to preserve what he believed to be Austria-Hungary’s interests in northern Africa.1 On May 31, 1908, the dutiful consul informed Foreign Minister Count Alois Lexa von Aehrenthal that the cargo ships of Adria, the Hungarian national shipping company, had unloaded goods from the ports of Trieste and Fiume at Gibraltar, but refused to continue to Tangier. The imposition, Koziebrodzki argued, forced Austro-Hungarian merchants to contract with foreign companies to transport Austro-Hungarian goods to Moroccan markets, which allegedly were expanding. His missive to the minister included a 43-page report (the seventh he had written) entitled “The New Organization of Shipping Service between the Habsburg Monarchy and Morocco.”2 Koziebrodzki claimed to have discussed the issue with Cisleithanian trade and industry councils, concluding that the absence of service by an Austro-Hungarian company to Morocco’s western coast threatened the empire’s trade. On the report’s final page, he urged the Foreign Ministry to compel Adria to extend its lines to Tangier at least and to create a new shipping company with service between Oran and the Spanish colony of Rio de Oro only. Notwithstanding the supposed interest of Cisleithanian businessmen, Koziebrodzki admitted that the proposed cabotage line would require a significant subsidy and would likely be unprofitable. The empire required Adria’s extended lines and the cabotage line, Koziebrodzki stressed, “in order for the Austro-Hungarian flag, which in Tangier is so exceedingly rare and on the western coast never at all seen, to fly constantly in the waters of Morocco.”3

Sándor Paczka saw no such connection between the empire’s trade and its flag. Paczka, a correspondent of the Royal Hungarian Trade Museum stationed in Veracruz, Mexico, had reported in January of the same year on trade possibilities between the Kingdom of Hungary and the Mexican Republic after he had returned from Budapest, where he had consulted with over thirty Hungarian companies (including Adria) to determine import and export possibilities. To accommodate new trade, such as the export of Hungarian beer and mailboxes and the import of coffee and vanilla, he proposed that the Hungarian state commission the Spanish company Transatlantic Espanola to operate the longest section of the proposed shipping route between Fiume and Veracruz. Adria would ship goods from Fiume to Genoa, then Transatlantic Espanola would transport Hungary’s goods from Genoa across the Atlantic to Veracruz, stopping at Barcelona, Cadiz, New York, and Havana. Hungary required this arrangement, Paczka argued, to ensure that Hungarian merchants “prefer Fiume and neglect Hamburg,” which was the nexus between Hungarian factories and Mexican markets at the time.4 Unlike the consular officer in Morocco, Paczka was willing to name the companies. Without the names and details of the companies, the report would have had little value for him and the Hungarian Ministry of Commerce, which requested data to justify suggestions to increase exports and imports. It had to be clear that an established market existed in Mexico for current Hungarian exports. Paczka mentioned neither the Austro-Hungarian nor the Hungarian flag.

This essay examines how tensions between the Foreign Ministry and the Hungarian state played out on the global stage, particularly over Austria-Hungary’s trade relationships with Morocco and Mexico. It shows how many imperial bureaucrats and supporters of imperialist global policies based their expectations of trade with Morocco and Mexico on the presumption that Austria-Hungary had the right to an undefined and dormant trade which would materialize with a combination of sufficient “can-do spirit,” the development of “virgin land,” and connections to exclusive markets. The politics of dualism regulated much of Austria-Hungary’s national shipping in the western Mediterranean and South and Central America to Hungary’s national shipping company, Adria, which proved unwilling to make the financial sacrifices that this “can-do spirit” required, provoking over a decade of conflict with the Foreign Ministry. Hungary’s trade relationship with Mexico in the early twentieth century highlights the Hungarian state’s use of Hungarian trade museums to work around the empire’s consular offices. The paper concludes by highlighting how our understanding of Austria-Hungary’s global history changes if we look at it through the lens of the Hungarian state rather than the Foreign Ministry.

The Foreign Ministry and the Networks of Trade Museums

The conflict between Koziebrodzki’s and Paczka’s understandings of the role of national shipping companies in connecting Austria-Hungary to overseas markets represents a larger struggle between the Hungarian state and the Foreign Ministry over the strategy and the purpose of the empire’s global integration. Scholarship over the past two decades on Austria-Hungary’s relationships with the world beyond Europe and North America has revolved predominantly around Cisleithania and the Austrian State Archives.5 In the late imperial age, “Austrians,” Alison Frank explains, “thought of their empire as a Great Power and aspired to belong to the club of imperial powers that exported their goods, their culture, and their civilization to the rest of the world.”6 This aspiration helped foster within the empire, particularly within the Foreign Ministry, an ideology of imperialism which in many ways defined the five decades before World War I. The definition of imperialism used here is the late nineteenth-century battle royal on the global stage among the great powers for economic, political, military, and cultural advantages.7 The claim to extra-European territories to which the European powers could export goods, culture, and civilization featured prominently in late-nineteenth century imperialist ideologies. The governments of Europe began to view territory (its possession, as well as its accessibility) as “a source of resources, livelihood, output, and energy.”8 Koziebrodzki viewed Adria as a vital weapon in the great power competition for protected relationships with these vital sources because it offered Austria-Hungary the opportunity to stake a claim to Moroccan territory.9

Since before the end of the empire, many contemporaries considered Hungarians apathetic about the extra-European world. A notable few felt that Hungary required a global or at least a regional empire.10 Among these imperial enthusiasts, there was a general feeling that Hungarians possessed a dangerous lack of curiosity about the world beyond the kingdom’s borders.11 During the interwar period, conservative politician Count Kunó Klebelsberg decried the fact that before World War I, the state “carried on with politics as if we had been living on an island in the middle of the Pacific Ocean. Very few people could see beyond Vienna. There was a great deal of incredible naïveté in our judgment of foreign affairs.”12 The notion of Hungarian disinterest in the world beyond Europe appears to have captured the historical imagination.13

It is true that great-power status, civilizing missions, and claims to exclusive markets meant far less to Budapest than to Vienna and the Foreign Ministry.14 The argument that the empire required direct, national shipping lines to Morocco and Mexico to establish secure markets for the empire failed to persuade the Hungarian state to pressure Adria to establish these shipping lines. But Budapest had a global strategy. The Hungarian state’s approach to greater economic integration beyond the borders of the empire focused on connecting the Hungarian economy via Fiume, Hungary’s sole port, to established global markets. This strategy consisted of three areas: the direction of domestic and Balkan goods to Fiume, the assurance of a hospitable social and political environment within Fiume, and the export of goods from Fiume. The final area focused on shipping to complete the supply chain. An important part of the state’s plan to encourage shipping through Fiume was simply to allow foreign companies to operate shipping routes throughout the Mediterranean. The largest foreign company to service Fiume was the Austrian Lloyd. Adria served to entice Hungarian exporters when market forces and foreign companies alone could not redirect Hungarian trade to Fiume.

The Hungarian state established a subsidy in 1880 for Adria to ensure regular service to the United Kingdom, Belgium, Holland, France, and Brazil to make it more financially beneficial for Hungarian companies to ship goods through Fiume rather than by rail and through northern European ports.15 An 1892 agreement between Adria and the Austrian Lloyd (Austria-Hungary’s two largest shipping companies) which was backed by the governments in Budapest and Vienna, divided the empire’s global shipping route.16 Adria monopolized the empire’s routes to Western Europe, and the western Mediterranean. The Austrian Lloyd dominated routes to the eastern Mediterranean, India, and East Asia. Both companies could go to the Black Sea, but only Lloyd had the right to the Constantinople-Batumi and Constantinople-Odessa lines. Lloyd had the Levant, Egypt, and Indo-China. Adria maintained lines to Brazil, but the companies shared routes to other South American ports.17 The critical part of the deal for this story is Adria’s right (but not obligation) to maintain trade routes between Austria-Hungary and Morocco, as well as the possibility for the company to establish routes to Mexico.

Since Adria was a Hungarian national company subsidized by the Hungarian state, the Foreign Ministry proved incapable of pressuring it to establish unprofitable routes to Morocco and Mexico. But the ministry, through its control of the consular offices, had significant influence over the information that Adria required to determine the most efficient routes. The late nineteenth-century expansion of global shipping networks all over the globe required networks of merchants, agents, and officials to facilitate the flow of trade to, from, through, and between ports.18 These networks also provided data and impressions about the economic potential of new markets. Austro-Hungarian consuls were central pillars in the networks which underpinned most of the empire’s business networks. But as Koziebrodzki’s proposed trade strategy shows, the consuls could not separate foreign policy and commercial policy. Consular commercial reports reflected the Foreign Ministry’s preoccupation with secure and dormant markets, civilizational status, and prestige, complicating the Hungarian state’s and Adria’s explorations of profitable trade ventures. To focus on trade development, the Hungarian state had to find a way around the consuls’ monopoly on information.

The Hungarian state found the answer in trade museums. After the 1885 National Exhibition in Budapest, the Hungarian national industry councils wanted an institute that would assist producers in shifting from domestic to international markets. In response, in 1889 the Ministry of Agriculture, Industry, and Commerce founded the first trade museum in Budapest to exhibit Hungarian products and establish libraries of sources on international markets. In 1890, the museum established on office to report on the credit worthiness of companies in international markets, as well as the various fees associated with international exports. In 1899, the museum handed over the operation of foreign centers to the Hungarian Stock Exchange.19 The museum’s library contained all major business listings, trade statistics, and a list of services available to merchants abroad, including over 160 up-to-date domestic and foreign journals and the current Foreign Trade Booklets. These materials were open to the public. The museums endeavored to notify the Hungarian public of all pertinent developments in global and Hungarian commerce.20 The museum staff analyzed sources from all over the globe, including all Austro-Hungarian consulate reports, and it produced a report about the political and economic situations of target countries. In addition, the museum maintained a list of domestic and foreign rail and shipping rates, provided free information by phone to merchants, and translated business letters up to two pages long for free and longer materials at moderate rates.

To help explore potential markets and stimulate exports, the state established museums all over the world. The first museums outside Budapest, listed here in chronological order, were established in Belgrade, Sarajevo, Sofia, Fiume, Philippopolis (Plovdiv), Thessaloniki, Istanbul, Malta, Bucharest, Mostar, Banja Luka, Ruse, Venice, Bombay, Surabaya, Alexandria, New York, and Monastir (Bitola).21 By 1902, museum correspondents were stationed throughout the Ottoman Empire, including in the cities of Aleppo, Tripoli, Beirut, Jaffa, and Baghdad.22 In 1903, the museums stationed a correspondent in Khartoum for the first time.23 Four years later, the museums had expanded to Johannesburg, Harar, Shanghai, Montreal, Rio de Janeiro, Chicago, Buenos Aries, and Lima.24 The museums offered the first museum correspondent position in Mexico to Sándor Paczka. The global network of trade museums provided Budapest with information about economic possibilities and promoted Hungarian goods abroad. The main museum in Budapest published Les Fabricants Exportateurs du Royaume de Hongrie, which listed 1,223 companies that exported Hungarian goods, in eight languages. Through its global system of museums, the Hungarian state circulated over ten thousand copies of the publication a year around the globe.25 With the information provided by Paczka and his trade museum colleagues across the globe, the Hungarian state outflanked the Foreign Ministry on the global stage.

Scholarly neglect of the Hungarian state’s role in Austria-Hungary’s global trading network has fostered a narrative of a backwards empire struggling to maintain great power status through competition in global commerce and feeble imperialist ventures.26 It is true that the Foreign Ministry envisioned a global competition over diminishing opportunities for economic expansion that required aggressive political and military maneuvering. The Hungarian state, however, forwent the battle over overseas territorial possessions and focused instead on maintaining an amicable global environment in which it could more easily direct freight and human traffic through Fiume. Much has been written about how this struggle played out within Austria-Hungary. The Hungarian state infiltrated the Foreign Ministry, fought in decennial budget debates, and vetoed colonial ventures.27 Few have questioned how the two halves of the monarchy interacted beyond the borders of the empire to form foreign policy. As Koziebrodzki’s enthusiasm shows, the Austro-Hungarian Foreign Ministry channeled imperialist aspirations through the empire’s global consular network. Koziebrodzki’s belief in the importance of the cabotage line along the Moroccan coast to his empire’s trade reveals the place of prestige and status in the Foreign Ministry’s global commercial strategy. The contrast between Paczka’s detailed statistical report and Koziebrodzki’s generalized account of import and export possibilities epitomizes the dialectic of Austro-Hungarian foreign policy formation taking place outside the Ballhausplatz, indeed outside the empire.

“Virgin Land”: Africa

On December 25, 1901, Graf von Crenneville, the empire’s main consular official in Tangier reported to Gołuchowski that the court of Moroccan Sultan Mulai Abd al-Aziz IV had divided the representatives of the great powers into two groups. The first group included Spain, Portugal, Italy, France, and Germany, each of which was striving to assert some political influence. Great Britain, Russia, Belgium, and Austria-Hungary constituted the second group, which commanded greater respect because its members desired only economic cooperation and mutual progress. The sultan, Crenneville suggested, sought to extend economic relations with Austria-Hungary because he looked favorably on the empire’s supposedly apolitical motives.28 Crenneville likely failed to mention to members of the court that two years earlier Gołuchowski had condoned the Austro-Hungarian Colonial Society’s attempted negatiations for the acquisition of Río de Oro, the Spanish colony directly to the south of Morocco, and that the Hungarian state had stepped in to veto any attempted purchase.29 Similarly, it was the Hungarian state and Adria that had fought the Foreign Ministry over the course of four decades to prevent Austro-Hungarian imperialist ventures in Morocco.

On October 20, 1902, the imperial consular in Tangier reported that the recently “[lost markets] could be easily recovered with a prompt intervention. If, on the other hand, they are lost, it will later require twice the effort to regain the lost territory.”30 The connection between markets and territory was clear. Austria-Hungary’s trade with Morocco remained dismal between 1867 and 1914. In terms of exports and imports, Morocco was usually dead last in official reports published by the Cisleithanian and Hungarian states. Even when Adria maintained routes between Fiume and Moroccan ports, trade barely budged. But rather than view the absence of market exchange as a sign that the two economies had little to offer each other, many imperial officials attributed the weak trade flows to the absence of overseas territory and the laziness of the empire’s own subjects. Without a territorial presence and sufficient effort from the empire’s merchant marine, one official account lamented, the empire’s trade with northern Africa “will never take the place that belongs to us as a Mediterranean power.”31 As one of the few parcels of Africa that Europe had not yet colonized by the early years of the twentieth century, Morocco offered Austria-Hungary its sole chance for what Koziebrodzki referred to as “virgin land” that offered the “fertility” of nascent markets.32 To prevent other great powers from closing the territory off to the empire, imperial officers engaged in a cold war to ensure Austria-Hungary’s territorial claim.

Austro-Hungarian efforts to prevent the expansion of the other great powers into the region met with little success. In 1908, Koziebrodzki warned the Foreign Ministry that “the competition unfolding all over the world among Europe’s seafaring powers to secure ‘their place in the sun’ becomes [...] more and more apparent in northwestern Africa.” In 1902, Crenneville feared that “the German East Africa and Wörmann lines will soon be allowed to win ground in northern Africa as they have done in the south and the east.”33 Germany was not the only threat. Crenneville warned about growing competition from France, America, Spain, and the Netherlands. In one 1909 report, he argued that the empire had to establish a commercial presence quickly because beginning July 31, the ships of the Dutch society “Neederland” would stop at Tangier, Algiers, and Genoa during their trips to Batavia. Attached to the same report was a newspaper article about increasing maritime traffic and communication between Spain and northern Africa.34 It was clear to the empire’s consular officials that the looming threat of foreign shipping companies required that Austria-Hungary act to secure its claim to the territory.

But a claim to land was not sufficient to secure trade. El Dorado was not “Virgin Land.” Profit required labor. There was a sense that trade (enough trade to sustain a self-sufficient empire) lay dormant in the Mediterranean and in Africa. But, in the words of Koziebrodzki, the fruits of the region would only “open themselves to the can-do spirit.” Until the cold war which the imperial bureaucrats imagined they were fighting turned hot, the merchant marine rather than the navy was the empire’s frontline combatant. One writer argued that the great importance of the merchant marine in the lives of the people requires that the development of the merchant fleet be maintained at the same pace as the corresponding development of the naval fleet, “what the merchant marine accomplishes and conquers in the competition of peaceful work, the navy constantly receives through the respect that it instills.”35 As another writer put it, “the trident of Neptune is the scepter of the world.”36 This understanding of maritime commerce placed considerable pressure on national merchant fleets. Not all leaders of the empire’s shipping companies, however, could easily square the concept of “can-do spirit” with the traditional performance metric, profit.

In consular reports to the Foreign Ministry there was an underlying belief that dormant trade between northern Africa and the empire would awaken if Adria were only to put in the effort. It was not clear what that trade was precisely. Koziebrodzki argued that the extra cost incurred because of delays and extra damages when Adria unloaded in Gibraltar prevented Austro-Hungarian petroleum from competing with American petroleum.37 It is hard to believe that Adria was the reason Austro-Hungarian petroleum could not compete with American petroleum. Vienna never managed to increase the global competitiveness of Galician oil by reducing the cost of rail transportation from Galicia to Trieste.38 There is also no record that the Hungarian state attempted to capture a market beyond the empire for petroleum products refined in Fiume. Koziebrodzki mentions neither Vienna’s nor Budapest’s failure to promote the export of petroleum. In his eyes, the sole obstacle to Austria-Hungary’s global petroleum trade was Adria’s inadequate service. This was a recurring theme throughout the decades preceding World War I. The clash between imperial officials, who blamed Adria for dismal trade performance, and Adria’s leadership, which claimed that there was no market for Austro-Hungarian goods in Morocco or the Spanish Sahara, dominated debates about the empire’s economic interests in northern Africa.

There were Hungarians who supported the Foreign Ministry’s position on the empire’s global interests. In 1888, the Budapest Chamber of Commerce and Industry and Adria funded a research expedition in northern Africa led by János Jankó. Working with local Austria-Hungarian consuls in Port Said, Cairo, Alexandria, Benghazi, Tripoli, and Tunis, as well as their trade reports, Jankó’s task was to determine whether Hungary had economic interests in Africa.39 His conclusions, unsurprisingly, resembled those of the consular offices with which Adria would do battle over the coming decades. He argued that the establishment of national shipping lines to ports along the northern African were indispensable if Hungary sought to stimulate its inadequate trade in the region.40 A strong maritime presence coupled with naval authority would allow Hungary to claim the economic market that it was geographically predisposed to command.41 Jankó based his vision of Hungary’s needs on an understanding of Hungary’s position in the world as one of competition with the other great powers and world civilizations. Hungarian businesses could only operate, he argued, where “civilization” existed and where no other European power maintained a presence.42 Adria declined Jankó’s proposal. But the empire’s consuls continued to influence perceptions within Hungary of economic opportunities in Africa. In 1908, the Economic Bulletin, citing consul reports, argued that if Adria could not or would not sail along the Moroccan coast, the Hungarian state would have to find a Hungarian company to establish a cabatoge line from Oran to Mogador (Essaouira).43 The Foreign Ministry could not convince the Hungarian state that the empire required Adria’s presence in Morocco. But the ministry, through the consuls, could influence the information that the Hungarian public received.

Even the Hungarian state was not always opposed to the Foreign Ministry’s approach to African trade. In January 1900, the Hungarian Trade Ministry began to debate the creation of routes between Fiume and northern Africa.44 The Foreign Ministry announced proudly in November of the following year that Adria’s new contract required that, beginning January 1902, it maintain routes with “the most important Northern African ports” and establish routes to Casablanca, Mazagan, and Mogador.45 Count Gołuchowski, the head of the Foreign Ministry, was a dedicated supporter of Austria-Hungary’s naval branch, not least because it could carry the Austro-Hungarian flag across the world, and he believed that Austro-Hungarian control over Morocco could be a stepping stone to a greater naval presence in the South Atlantic.

Not everyone shared Gołuchowski’s vision. On September 12, 1902, Adria’s directors reported that trade experiments with ports on the western coast of Morocco did not have the intended results and that Adria’s captains had feared the western coast’s unpredictable weather.46 The following day, Adria, claiming that trade with the western ports would not materialize, announced that the route’s terminus would be Tangier.47 The Hungarian state probably supported Adria’s decision not to establish new routes because the arrangement at the time served Hungary’s global interests. Many within Hungary believed that the empire’s exports with Morocco originated in Cisleithania, ruling out the possibility of directing trade through Fiume.48 There were almost no Moroccan imports to Hungary. And almost all Hungarian exports to Morocco traveled through Fiume.49 The Foreign Ministry and consular officials in Morocco may have bemoaned what they believed to be the empire’s failure in northern Africa, but the Hungarian state’s global strategy was successful without regular lines to Morocco.

The Foreign Ministry appears to have misunderstood the specifics of the contractual language. The official arrangement between Adria and the Hungarian state provided Adria’s leadership considerable room to decide where, when, and how frequently their ships would stop in northern Africa. The establishment of routes to Casablanca, Mazagan, and Mogador, furthermore, was a right the state contract guaranteed to the company, not an obligation. Adria’s arrangement with Budapest stated concrete objectives. The agreement established the minimum number of yearly routes and their destinations. There was room to maneuver. Many requirements provided options, such as “at least six times a year,” without providing exact dates, and the contract listed various ports from which Adria’s leadership could choose. This proved a powerful tool for Adria’s leadership and the Hungarian state against pressure from Austro-Hungarian bureaucrats and business leaders who sought to extend Adria’s routes. When someone in 1905 complained to the Hungarian trade minister that Adria had reduced its routes to northern Africa, the minister’s office offered the following response: “Due to the fact that these scheduled services are maintained by the company on a contractual basis, I cannot comment on the notified change.”50 Adria’s contract and the support of Budapest helped the company defend itself against the empire’s diplomatic officials in Africa, who supported the creation of new routes to Morocco.

The debate did not end in 1902. Imperial bureaucrats refused to sacrifice what they considered the empire’s economic security because of a shipping company’s risk aversion. The Foreign Ministry coerced the Hungarian Trade Ministry to renegotiate Adria’s contract. In November 1902, the trade ministry notified Adria that it was debating requiring the company to reextend lines to Morocco based on consular reports. The underlying assumptions of the Foreign Ministry saturated the reports: despite the lack of any evidence, conditions were characterized as positive for an extension; a significant new market allegedly would generate exports; and a delay in expansion would transfer the empire’s rightful trade to foreign rivals.51 Adria’s official response to the trade ministry’s notice cited statistical data according to which, since 1892, trade had not been adequate to support the establishment of a direct line. Adria’s response stated unequivocally that the company’s leadership believed the establishment of direct (and profitable) lines between Fiume and Morocco was impossible.52

Imperial officials blamed Adria for the precarious sailing conditions and poor trade between the two monarchies. Crenneville argued in December 1902 that Adria’s rates were too high and that the company’s frequent accidents were consequences of its use of cheap and poor-quality ships. According to him, Adria’s “hired ships on rotating routes are junk, and the petty number of crew are poorly paid and overburdened.”53 He said that the empire’s sugar exports to the region had recently increased and that he hoped to increase other exports, such as candles. Success required only skillful merchants and able travelers, i.e. the “can-do spirit.”54 To provide these merchants and travelers with opportunities to trade, Adria would have to purchase new ships, reduce its freight rates, and, of course, establish regular lines to Morocco’s ports.

Crenneville failed to mention how the company would finance capital investments and increased production while cutting revenue from fares, which was often more than double the subsidy the company received from the state.55 The company’s leadership refused to lower fares and increase voyages without assurance that the increased cost would be made up in increased volume. Crenneville insisted that there would be a future payoff, but he failed to provide a time frame or offer specific details about that payoff. For the time being, he expected Adria to take a profit cut for the sake of the empire’s supposed interests. Adria’s refusal to decrease its rates, replace its supposedly old ships, and increase its services assured that there would be further conflict between the company and the Foreign Ministry.56

In the early twentieth century, Morocco was the only country which offered the Foreign Ministry the opportunity to realize its imperial ambitions. Adria focused on developing Hungary’s trade through Fiume to and from European countries and colonies. These unaligned priorities fueled debates over what the empire could export and what import markets existed in Morocco. In 1904, Crenneville complained that the empire’s lumber exports had decreased because Adria had refused to stop at Algiers and Oran more than once a month. The consular officer complained that most wood imported from Fiume and Trieste to these ports arrived via Italian ships, and he demanded that Adria be bound to deliver to ports in Algeria on account of the state subsidy the company received. He cited competition from America and Norway and argued that Adria’s freight rates should be reduced to a level below the rates for the German and Italian lines to generate trade. He then listed the ships that had transported lumber to Algiers since the beginning of the year (the past ten days) according to the flag under which the ship had sailed, making sure to note that only two of the more than thirty ships had sailed under the Austro-Hungarian flag.57 He never questioned whether Cisleithanian or Hungarian lumber arrived via foreign ships or whether there existed a market for the empire’s lumber at all. The empire’s lumber exports to Morocco continued to decline, but the decreasing price of Norwegian timber was most likely the reason for this, not the dearth of Cisleithanian and Hungarian ships.58

For some, Morocco’s supposedly dormant market offered greater fruits than the markets of Western Europe. In 1909, the new Chief of Mission Ludwig von Callenberg complained that local sugar importers on the western coast of Africa refused to continue to import Austro-Hungarian sugar because of the lack of a reliable shipping service.59 He offered a list of products that were being shipped to Western European countries which, in his mind, would find new markets in Morocco. He emphasized sugar. He went so far as to claim that Austria-Hungary required Morocco as a market because of the amount of sugar Moroccans could import. This was in the future, of course. When he wrote the report, the empire’s sugar exports to Morocco were almost non-existent.60 He also failed to explain why it was more economically beneficial to export sugar to Morocco instead of Western Europe. The United Kingdom was a significant market for Hungarian sugar. France was also a strong market. To many, the potential economic losses caused by a trade war over Moroccan markets far outweighed any possibility for gains. But when a new line opened between Morocco and Spain, the consul in Tangier stated: “It is well known that sugar makes up most of our exports to Morocco and our importers are very troubled over this competition.”61

In contrast, Adria’s report insisted it was a well-known fact that sugar exporters did not consider Morocco’s market adequate and stressed that it should be these exporters, not bureaucrats, who determine the empire’s sugar trade.62 The company also found the rates that the Cisleithanian state enforced for sugar transportation from Trieste to ports on the Western Moroccan coast too low to be made up by volume.63 Adria’s freight rates for the main trade goods which went through Fiume to Western Europe were lower than Trieste’s, but Adria made up the difference in volume.64 Because trade between Trieste and Morocco was so dismal and Vienna refused to raise the rate limit, Adria refused to divert its ships from profitable Western European trade routes.

Koziebrodzki claimed in 1908 that Adria’s ventures to Morocco in 1902 had been “untimely and too short.”65 Between 1902 and 1908, Foreign Ministry officials and consular representatives in Morocco agreed that Adria only had to expand its shipping network, decrease freight rates, and increase the number of trips made to make new profits. Adria’s leadership continually retorted that this reasoning was fallacious. In 1904, the company’s leadership reminded the Hungarian Royal Maritime Authority that Hungary’s trade with Morocco might have increased between 1902 and 1903, but in 1901 there had been no exports to Morocco.66 And between 1903 and 1904, Hungary’s trade with Morocco decreased, reportedly due to France’s and Belgium’s low prices.67 In response to complaints in 1907 about its service to Algeria, Adria’s leadership emphasized that trade with northwestern Africa was dismal, complaining that their twelve ships combined carried only 929 tons of exports to Tangier, and imports were almost nonexistent. Adria stated firmly that “the maintenance of the monthly route demands considerable material sacrifices,” which it refused to make.68 When Count Gołuchowski contacted Adria’s leadership directly about the possibility of extending lines to Morocco, Adria’s director Leó Lánczy responded: “Your desires could not in good faith be met; … in the future a remedy would only be possible if the esteemed government could elect to provide a special subsidy for the line.”69 Due to the politics of dualism, however, the Foreign Ministry could not subsidize a Hungarian national company.

Mexico

Similar tensions between the Hungarian state, the Foreign Ministry, Adria, and imperial enthusiasts influenced Austria-Hungary’s relationship with Mexico. In 1900, Habsburg-Mexican relations had had a troubled history. Between 1861 and 1867, Archduke and Prince Ferdinand Maximilian of Austria had ruled the Second Mexican Empire by invitation from Napoleon III. When the French withdrew their forces, Maximilian refused to abandon his imperialist supporters and remained in Mexico, only to be executed by the forces of republican leader Benito Juarez on 19 June 1867.70 In January 1868, Franz Josef dispatched Admiral Tegetthoff to recover Maximilian’s corpse on the frigate Novara, the same ship that had carried Maximilian to Mexico to become emperor.71 Beneto Juarez had hoped to use the release of Maximilian’s remains as a bargaining tool to achieve diplomatic recognition from Austria-Hungary. His gambit failed. Austria-Hungary and the Mexican Republic’s severance of relations curtailed the nascent connections between the two economies that Maximilian’s reign had fostered.72

Despite the diplomatic setback, many envisioned a positive future for Austro-Hungarian economic activity in Mexico. Jenő Bánó, who had lived in Mexico for eleven years, wrote to Budapesti Hírlap in 1898 to garner support for trade development between Hungary and Mexico. He said that he discussed the possibility of establishing economic relations between Hungary and Mexico with the Governor of Fiume, Count Lajos Batthyány and the Secretary of Foreign Affairs for Mexico, Ignacio Mariscal. He said that both men gave favorable responses, but that he had not discussed the matter with them in four years. He also said that he had talked to the director of Adria, who had been supportive of the idea. He argued that Mexico should replace the American market because McKinley’s tariffs closed the American market off to the world, and he recommended that Adria begin to serve Mexico instead of Argentina and Brazil, whose economies, he claimed, were in decline.73 He argued that Mexico would provide a “new and excellent market” for Hungarian flour, wine, plums, furniture, glassware, and porcelainware, as well as a source of tobacco, though he did not explain why the import of Mexican tobacco would be more cost-effective than the import of Turkish tobacco.

After Austria-Hungary and Mexico restored relations in 1901, Bánó began to write more frequently about Hungary’s supposed Mexican interests, calling on the Habsburg aristocracy to invest in Central America. This time, he argued that Adria should redirect its route from Argentina and Brazil, because Mexico was closer.74 In 1904, Bánó reasoned that the redirection of Hungarian emigrants from the United States to Mexico would produce a significant market for Hungarian industry because Mexico’s industrial sector was undeveloped and Hungarian immigrants in Mexico would choose to purchase Hungarian industrial and agricultural products. The desire to buy Hungarian, however, was unlikely to overcome competition from American and Western European companies in Mexico. It was well known that German industrial companies were trying to penetrate the Mexican market and that Hungarian companies could do little to make themselves competitive.75 Bánó was quite optimistic about the number of immigrants from Hungary in Mexico, and he was also optimistic about who would come to Mexico if Adria established a direct route to Mexico and the capacity of these immigrants to purchase Hungarian-produced products. But he acknowledged that the supposed demand among Hungarian immigrants would not be enough to entice Hungarian exports. To stimulate Hungarian-Mexican trade, Adria would again be expected to reduce its rates and sacrifice profit to establish a direct line from Fiume to Mexico.76

Bánó knew that the Hungarian state’s concerns lay in the development of Fiume. He emphasized that ships for a new line between Hungary and Mexico could be built in Fiume.77 He then turned to the argument that a subsidized shipping line would induce Hungarian exporters to ship through Fiume rather than northern European ports. He claimed that the statistics about Hungarian trade to Mexico only included Hungarian goods shipped from Fiume or Trieste and not goods transported to other European ports and then shipped to Mexico. He argued that these goods were recorded as exports from the country to which the ports belonged, not from Hungary. This form of record keeping, he claimed, underreported Hungarian exports to Mexico, which were five to six times higher than recorded, but were shipped from Hamburg, Antwerp, Southampton, Saint-Nazaire, and Barcelona. But the fact that he made such an argument underscores the Hungarian state’s prioritization of Fiume’s development.78

Bánó was not alone. In October 1901, another opinion piece in Budapesti Hírlap stated that “Hungarian interests seriously require direct trade” with Mexico. Here too, the author failed to identify what those interests were.79 In 1908, Lázár Pál, who believed that Hungary could “count only on a permanent and secure market where the stronger competitors still have not set foot,” argued that Adria had failed in its duty to secure a market like the market in Morocco, proclaiming, “as if the creation of secure new markets were something that occurs overnight!” The Minister of Commerce, Pál argued, should use the state’s approaching contract renewal with Adria to force the company to establish lines with Mexico, stating “we are not able to find a more suitable market for Hungary than Mexico, where they will receive us with open arms.” Pál based his argument on the fact that the privately funded Hungarian East Shipping Company already had a route that stopped at Mexico. Adria, of course, would need to maintain routes to Mexico for at least three years, despite financial losses, before signs of market development would emerge.80

Though Bánó never provided a source to support his claims that Hungarian exports traveled through non-Hungarian ports, he was correct. He erred, however, when he believed that the Hungarian state misunderstood the situation. The Hungarian state recorded export statistics, including exit points, every year, and it realized that the few Hungarian goods that made it to Mexico traveled via rail to non-Hungarian ports before crossing the Atlantic.81 But the Hungarian state also understood the precarious state of the Mexican economy and political system.82 Hungarians were advised to be extremely cautious in the Mexican credit market.83 In 1911, the Austro-Hungarian consul in London, in a report entitled “What do they want in Mexico?” said that the most sought-after goods were hand guns, rifles, and ammunition.84 Discussions of creating a secure market in Mexico during the Porfiriato era were delusional by many accounts. To establish subsidized lines between Fiume and Mexico in the years before World War I would have created a liability for the Hungarian state and would have risked drawing Austria-Hungary into Mexico’s troubled affairs.

The disinterest of both the company and the Hungarian state helped Hungary avoid possible misadventures in Mexico. After the settlement of trade negotiations between Austria-Hungary and Mexico, the Spanish shipping company La Compañía Transatlántica de Barcelona inquired whether it could provide service once a month between Trieste and Fiume and Mexico. The Foreign Ministry, of course, argued that Adria should launch a line between Fiume and Mexico.85 But the Hungarian Royal Maritime Authority in Fiume was skeptical that such an extension of shipping was even necessary. The Authority reported to Lajos Láng, an advisor to the Hungarian Minister of Commerce, that Adria had the first opportunity to establish such a line if it desired to do so. The Hungarian ministry was confident that Adria’ leadership possessed the judgment required to make the decision. No consular officers were involved in the discussion. If Adria chose to forego the opportunity to establish a new route, the Maritime Authority indicated that the Hungarian Ministry of Commerce would have no problem with La Compañía Transatlántica establishing a route.86 The Trade Ministry took the advice of the Maritime Authority and reported to the office of Prime Minister Kálmán Széll in August of 1902 that La Compañía Transatlántica should be allowed to establish a shipping route between Fiume and Mexico.87

In 1907, the Hungarian state again inquired as to whether Adria would be able and willing to establish a line between Fiume and Mexico. Adria responded that the Austro Americana society had already established a line between Trieste and Veracruz in 1905 and the combined subsidies between the Cisleithanian and Mexican governments were not enough to cover the company’s losses. Adria also pointed out the dangers to the ships and noted that it would need at least a one-million-crown yearly subsidy to operate twelve voyages yearly.88 Rather than establish its own route, Adria agreed to a state proposed transshipment arrangement with La Compañía Transatlántica to connect Fiume and Mexico.89 The introduction of the connection between Fiume and Mexico and the agreement with La Compañía Transatlántica were requested by the Hungarian state. Adria requested more information, but it questioned only the chain of exchange and the cost involved, not the use of another country’s shipping line.90 Neither the company nor the Hungarian state required that only Hungarian ships transport Hungarian goods or that Hungary maintain a presence in Central America.

Adria and the Global Economy

That the assumed reason for the empire’s supposedly inadequate trade with Africa and the Americas was Adria’s lackluster resolve is evident from the company’s complaint file held in the Austrian State Archives. Of course, all shipping companies received complaints; ships and weather were unreliable, as were the workers who loaded and unloaded cargo ships at each stop. One complaint from the main consular in Algiers noted that it would have the same grievances with all the Cisleithanian and Italian shipping companies.91 Most grievances directed towards Adria concerned the company’s service to northern Africa, especially to Morocco, and they revolved around disagreements concerning the importance of shipping destinations and means. It should be clear that the empire’s diplomatic corps and many of its subjects considered Adria unreliable. This was especially the case in northern Africa. Numerous reports detailing shipwrecks after storms support the claims of Adria’s captains that African’s coast was dangerous.92 But the company’s organizational structure amplified the effects of these storms on shipments between the empire and Morocco. Despite repeated demands from Cisleithanian companies and the Foreign Ministry, the Hungarian state never required Adria to maintain lines to Moroccan ports.93 When a ship could not complete a route agreed to in the contract, it was replaced with a ship from a non-contract line. Numerous reports detail storms that delayed ships along the northern African routes that Adria was contractually obligated to maintain.94 Because Larache, Casablanca, and Mazagan were contractually optional destinations, these ports received greater cancellations than those to the east of Tangiers.95

One case shows that Cisleithanian businessmen who wanted their products shipped at reduced rates knew how to speak to the consular officers. Koziebrodzki was referring to the complaint of a Cisleithanian oil company when he reported that the empire required a direct line to Morocco. The company cited the threat of American competition and highlighted the “ground” that Austro-Hungarian trade was losing due to Adria’s obstinacy. 96 The oil company was not alone. In a separate instance, a Cisleithanian automobile manufacturer claimed that it was unable to compete with French automobiles in northern Africa because Adria’s freight rates were too high.97 The company insisted that all else was equal and Cisleithanian automobiles were of equal or better quality than French automobiles. The problem, the company claimed, lay with Adria. The company used the threat of French trade overtaking Austro-Hungarian trade in northern Africa as a threat to urge the state to force Adria to reduce its shipping rates. Complaints against Adria were less a sign that the Hungarian company failed to achieve its goals and more an indication that deep conflicts existed within Austria-Hungary over what those goals should have been.

These complaints, however, should not form the basis of an analysis of how Austria-Hungary integrated into the global economy. By many measures, Adria fulfilled the Hungarian state’s goals. Thanks largely to Budapest’s redirection of the railway to Fiume and subsidization of shipping companies, Fiume became the tenth most trafficked port in Europe. Principle overseas imports consisted mostly of raw commodities such as rice, cotton, and tobacco. Overseas exports included refined sugar, flour, wood products, and paraffin. In 1867, imports totaled 423,721 quintals, and they rose to 9,299,592 quintals by 1913. Exports in 1867 reached 604,734 quintals and increased to 11,738,827 quintals by 1913. In 1913, the total value of imports was 213,410,000 crowns, while exports were valued at 264,594,000.98 In total, between 1867 and 1913, 40.4 percent of Fiume’s overseas trade traffic consisted of imports and 59.6 percent consisted of exports.99 Every year between 1893 and 1913, Adria accounted for the highest percentage of export shipments (over thirty percent yearly except for 1913).100

This success allowed the Hungarian state and Adria to remain steadfast in the face of pressure from the Foreign Ministry. Neither the complaints of Cisleithanian businesses nor imperial bureaucrats could force Adria to alter its routes. When Adria was asked to stop at a new port in Brazil to break into the rubber market, it refused out of fear that it would endanger coffee trade.101 Over the course of its history, the framework of Adria’s shipping network changed little.102 Adria would add and remove stops along its main routes. But unlike the Austrian Lloyd, the final destinations remained the same for the most part until the outbreak of World War I. But while Hungarian businesses forged trade and finance relations with India, South America, China, Japan, and Australia over the course of five decades, Africa, with no significant market for Hungarian commodities, never attracted much attention. Hungarian and Austrian colonial enthusiasts, which included a significant portion of the public, imperial bureaucrats, and Emperor Franz Josef, never outweighed the Hungarian state’s perception that Africa offered little economic opportunity and numerous risks.

* * *

Adria’s story serves as a warning against forming a narrative of Austria-Hungary’s global history based predominantly on the Foreign Ministry’s interpretation of an empire in decline.103 Historians often condemn the Hungarian state’s obstructionist approach to negotiations with the Cisleithanian state and the empire’s joint institutions.104 But this essay has shown that Budapest’s obstructionism played a significant role in Austria-Hungary’s relatively benign extra-European engagements. The inclusion of the Hungarian state complicates the notion of an Austro-Hungarian foreign policy because Budapest not only influenced the decisions of the joint Foreign Ministry but also engaged the world beyond Europe on its own terms. Rather than fear of or indifference to overseas activity, a strategy of internal development guided the Hungarian state’s approach to global trade. This strategy exacerbated internal tensions within the empire. Though officially united behind a common foreign policy, the Cisleithanian and Hungarian states and the empire’s joint institutions often had divergent, competing international interests. But the Hungarian state’s strategy was largely successful, and this success should be as prominent an element of understandings of Austria-Hungary’s global history, if not an even more prominent element, than the Foreign Ministry’s lament over its failure to maintain the empire’s great-power status.

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