Abolishing Local Tariffs

By 1848, the Czech region had already become one of the industrial hubs of Austria. With the development of industry, the wealth of the capitalists had increased significantly.

The protests that erupted this time were, in essence, a result of the mismatch between the wealth possessed by these capitalists and their political status; they were unwilling to remain without a voice in politics.

Meanwhile, the Austrian government's continuous introduction of new legislation had, to a certain extent, sacrificed the interests of these capitalists, acting as a catalyst for the Prague demonstrations.

In the eyes of Franz, these people had likely grown too accustomed to the carefree days of the Metternich era, forgetting that those who set the rules of the game could also change them at any time.

Now, the Austrian government was signaling that it was done playing this game. Those who followed would prosper, and those who resisted would perish; whoever had an objection would be dealt with.

Of course, everyone was a civilized person, so it was impossible to go too far. The tactic of wielding a stick while offering a carrot was still necessary.

"In view of the current domestic situation, I propose the abolition of local tariffs to alleviate the dissatisfaction of the capitalists!" Finance Minister Karl suggested.

At present, the only place in Austria where local tariffs still existed was the Kingdom of Hungary; tariffs elsewhere had already been abolished one after another.

In reality, placing the entire responsibility for the tariffs between Hungary and Austria on the Vienna government was incorrect. As early as the last century, Austria had prepared to abolish internal local tariffs, only to be met with opposition from Hungarian nobles and capitalists.

Austria's economic development was uneven. In regions with developed industries, capitalists naturally advocated for the abolition of local tariffs, whereas in the industrially backward Hungarian region, capitalists were still counting on local protectionism.

Of course, it was not as if there were no proponents for abolishing local tariffs in Hungary; for instance, capitalists in the grain industry were eager to see them removed.

Hungary's tax revenue had nothing to do with the Vienna government; they collected it themselves and used it for their own purposes.

Undoubtedly, the Hungarian nobility could take a share of the profits from these local tariffs, making them the greatest obstacle to their abolition.

The purpose behind Karl's proposal was clearly not simple. Beyond winning over the hearts of some capitalists, it also served as a warning to the Hungarian nobility.

At this time, the Vienna government still believed that the Kingdom of Hungary was dominated by the nobility, and that the capitalists seen in public were merely their white gloves.

Franz had no intention of correcting this view. The number of Hungarian nobles was far too high, accounting for four percent of the total population; most Hungarian capitalists held a dual identity—that of a noble.

If they were not suppressed, given their penchant for courting disaster, he estimated that the Hungarian question would continue to give him headaches in the future.

History had already proven this point; from Austria to the Austro-Hungarian Empire, everyone had been plagued by the Hungarian question. If it were not for the fact that the Hungarian populace still supported the Habsburg Family, they would have declared independence long ago.

"Very well. Austria is a unified country; the existence of local tariffs goes against the tide of the times!"

Undoubtedly, at this moment, Franz did not mind if the Hungarian rebellion became even more intense.

The interests and demands of the Hungarian workers and peasants had, in fact, already been met by the reforms carried out by the Austrian government.

Playing one faction against another, uniting the majority, and striking at the minority was a strategy that would never be wrong in politics.

Moving forward, he would continue to issue decrees to clear the obstacles to the development of the bourgeois economy, shaking the resolve of the capitalists to rebel.

Abolishing local tariffs only harmed the interests of the high nobility; the lesser nobles had no qualifications to profit from them, and their interests might even be served by the change, as their grain would at least be more competitive without the tariffs.

This alone was not enough to make the Hungarians join the rebellion en masse; at most, it would drag the majority of the nobility into the fray.

"Your Highness, I am afraid this will not do. Abolishing tariffs in Hungary will impact the Austrian grain industry and affect the income of Austrian farmers!" Archduke Louis objected.

Franz suddenly realized that the ones most impacted by the abolition of tariffs with Hungary would not be the farmers, but the nobles who owned vast tracts of land. With an additional competitor, the price of grain would certainly decline.

Franz hesitated. Should he provoke the domestic nobility at this time? He had only just abolished serfdom, and now, by letting in Hungarian grain to drive down prices, would he be touching their bottom line?

At this moment, Prime Minister Felix helped him make the decision.

"Since 1846, the price of grain in Austria has been climbing steadily. For the sake of national stability, it is necessary for us to control grain prices within a reasonable range.

In the long run, the entry of Hungarian grain into Austria is a good thing. Lower grain prices can help us stabilize public sentiment as quickly as possible.

Moreover, after the abolition of tariffs, the competitiveness of Austrian industrial and commercial products entering Hungary will also increase, which is conducive to recovering from the wounds inflicted on the economy!"

Franz felt relieved. If even the Prime Minister, a great landowner himself, did not mind the decline in grain prices, then the bottom line of the nobility was likely much lower than he had feared.

It seemed that in history, Austria had also abolished its tariff system during this period, though Franz was not sure of the exact year.

"The Prime Minister is correct. Abolishing tariffs now can allow the Austrian economy to regain its vitality as quickly as possible, which is crucial for us.

Due to the war, our fiscal revenue this year will likely drop significantly. If it weren't for the confiscation of the rebels' property, the government would likely be bankrupt by now.

The subsequent war to suppress the rebellion will surely be a bottomless pit of expenditure. These funds are merely a drop in the bucket; we must find ways to increase revenue and reduce expenditure.

We still have so many factories in our hands that must be put into operation as soon as possible, and the Hungarian market is indispensable!" Foreign Minister Metternich spoke up.

Very well, Austria was truly short of money. Before the March Revolution, the Vienna government owed 748 million guilders in national debt; now, there was still about 600 to 650 million guilders in debt remaining. (1 guilder is approximately 11.6928 grams of silver.)

Do not misunderstand; this was not because Franz had paid off the debt, but because the creditors were no longer around.

Due to the rebellion, many bonds had been destroyed in the flames of war, and even more creditors had become wanted criminals. The army suppressing the rebellion had also seized a large number of bonds, which Franz had simply tossed into the fire.

The national bonds issued by the Austrian government came in both registered and bearer forms. Wanted criminals would naturally not come to collect on registered bonds, and bearer bonds could still be traded.

Counting on the Hungarian market to restore the Austrian economy was idealistic.

Franz believed that the Hungarian capitalists would not mind doing business with Austria, even if a revolution broke out.

The problem was, once the flames of war were ignited, how could one guarantee the safety of transport? Who would still have the heart to purchase these goods? One could hardly sell arms to the Hungarians, could they?