Mr. Motley to Mr.
Seward
No. 111.]
Legation of the United States,
Vienna,
June 27,1865.
Sir: I have no startling events to record since
my last writing. Nevertheless it cannot be denied that the attention of
the Austrian statesmen is absorbed by very grave matters. Whether the
position of the administration or of any members of it is seriously
compromised or not I am not prepared to decide; but it is certain that
defeats have been sustained by the government on vital questions, which,
in a regularly organized parliamentary system on the English model,
would necessarily lead to a resignation or to a dissolution. A few days
ago there was a warm debate upon the question whether, according to a
certain article (No. 13) in the February constitution, ministers were
not bound to obtain the sanction of the Reichsrath to measures taken
during its recess. A resolution to the effect that such measures were
unconstitutional and void unless subsequently confirmed by the
representative body was carried against the ministers by a majority of
two-thirds. I have not learned that there are to be any steps taken in
consequence of this vote.
This week the minister of finance has announced that a loan of 117
millions of florins will be necessary to cover the estimated deficit for
the years 1865 and 1866. The house of deputies refused to sanction at
present a loan of more than 13 millions, or one-ninth of the whole
amount, a sum immediately required for the protection of the July
coupons on the existing debt, and reserves the further authorization of
the loan demanded until the finance laws for 1865 and 1866 shall have
been constitutionally passed.
The effect of these sentiments and discussions has been very perceptible
on the exchange and in the public feeling. There is a sentiment,
amounting almost to conviction in some quarters, that the empire is on
the high road to national bankruptcy; that it is impossible to raise any
more revenue from taxation, as the people are not able to bear the
existing burden, and that some means must be discovered without delay
for reducing the expenses at least to an equilibrium with the present
revenue, and for putting an end to the annual deficit which has assumed
a frightful regularity.
Those means have not yet been found, and I refer you to extracts appended
to this despatch from remarkable speeches just made in the house of
peers, by some distinguished members of that body, as proofs that very
great alarm is felt, and that the alarm is not without cause.
In previous despatches I have given you sufficient details as to the
annual budgets of the empire, and as to the amount of the national
debt.
In round numbers, for general purposes, it may be said that Austria owes
today about as many florins as the United States government owes
dollars.
The annual interest, exclusive of that upon the “Grund Entlastung,” (a
debt of about 500 millions, contracted for the emancipation of the
peasants,) is not far from 120 millions of florins. The market price of
the Austrian loans, bearing 5 per cent. interest in specie, is quoted
to-day in Frankfort at 66⅞, and that of the United States six per cent.
five-twenties at 75.
Thus, at this moment of our emerging from a terrible civil war of four
years’ duration, which has cost 3,000 millions of dollars, our credit is
about equal to that of the Austrian government, although our actual
indebtedness is about double theirs, (a florin being nearly half a
dollar,) while the population, respectively, of the empire and of the
republic is almost exactly the same.
As United States stocks have been sold as low as 36 in Frankfort, or at
less than half their present market value, you perceive how rapid has
been the advance, in the belief that the American government is not
rushing very rapidly [Page 29] upon that
national bankruptcy which our excellent friends in England have so
steadily predicted.
After all, it is felt that a nation which has a vested capital of at
least 21,000 millions of dollars, or seven times its debt, whose
population doubles every quarter of a century, whose wealth doubles
every ten years, and whose annual production may be fairly stated at
4,000 millions, or considerably more than that of any other country, is
not in danger of insolvency unless the character of its people, both for
industry and good faith, should suffer some astounding
metamorphosis.
The instant disbanding of a large part of those armies and navies, (as
soon as the last shot in the civil war was fired,) with which it was
considered so certain abroad that we were at once to attack England and
France, and the world in general, in order to find occupation for our
warriors, and to slake the persistent thirst for blood which the war
against the slave power was supposed to have engendered, has astounded
Europe—for Europe always knows that we are going to do exactly the
reverse of what we really do—but it has benefited our credit.
The rapid disappearance of those tremendous forces seems as prodigious to
the European mind as their sudden apparition when required to save our
national life, while the vanishing into space of the “nation” created by
Jefferson Davis, and so warmly welcomed by the haters of our republic,
without leaving one solid fragment of itself in existence, ought to
furnish a lesson to politicians in future in the art of distinguishing
exhalations from organized bodies.
But it is hardly possible for the Austrian empire, or for any of the
great or little powers of the continent, to effect such sweeping
retrenchments as our geographical position and our democratic
institutions allow. Of the four millions of soldiers always kept on foot
in Europe, this empire has from 320,000 to 613,000, the latter figure
being that of its army on a war footing, while the total number (active
and reserve) of the army of Hesse Cassel, with its population of
740,000, is 15,000, or two thousand more than the whole United States
army—officers, musicians, and privates—in 1860.
It is true that the expense of the imperial army has just been reduced,
as was well put by Minister von Schmesling in his speech to the peers,
from 135 million florins to 95 millions, being a saving of 40 millions;
but the exposed condition of the empire, the troops of enemies ever
ready to take advantage of any momentary weakness, and the constant
possibility of external wars, great or little, or of disturbances in
some portion of its very heterogeneous population, render it doubtful
whether such a diminution can be sustained, and almost certain that it
could be carried no further.
That the exigency of diminishing the imperial expenditure is very great,
and that there is a frank determination, both of the ministry and of the
opposition, to effect such retrenchments, seem to be certain, but the
road to them does not seem so clear.
It was wittily observed by Count Rechberg, ex-minister of foreign
affairs, that the opposition was very loud in shouting fire, but they
did not come forward with the engines to put it out; and it was quite as
wittily replied, by Count Auersperg, that the key of the engine-house
was not in their hands, but in that of the authorities.
Thus far I have not seen any very promising indications of large
economies to be effected in the future; and, after all, a great empire
in Europe must, under the universal system which now prevails in this
hemisphere, look rather to increased national production than to very
great savings of expenditure to relieve its embarrassments.
I suppose it to be as well established a fact as any in human history,
that the largest individual liberty of action consistent with due
security to life and property will give the largest national production,
other things being equal.
[Page 30]
It is for this reason that in the United States the same amount of
capital, land, and labor yields more wealth than can be expected in any
European country.
No doubt the resources of Austria are great, almost inexhaustible; but
this, after all, is but a phrase. The resources of Mexico are boundless,
so are those of Turkey, while the national resources of Holland are
almost null; yet Holland has been at times one of the richest and most
productive states in the world.
The more Austrian industry is freed from its fetters; the sooner the
emancipated serf finds himself able to earn more than twenty kreuzers,
or ten or twelve cents per diem, which is about the daily wages of the
laborer in many of the most populous and important provinces, the sooner
will the deficit which now perpetually stares the country in the face,
suggesting horrid visions for the future, begin to withdraw his
disagreeable visage.
Certainly democratic institutions are not possible, scarcely conceivable;
or desirable in Austria; but so long as protection, legislation, class
privileges and general administrative interference with the individual
prevent the mass of the people, by whom the resources of a state must be
worked, from having any better prospect in life than that of earning, by
twelve hours of daily toil, about one-tenth of what can be earned by an
American laborer of the lowest class in the same time, certainly a very
largely increased productiveness of the empire cannot be expected.
To perpetually look upward to government for assistance, direction,
instruction, advice, and commands in daily affairs is not a habit which
inspires a people with the spirit of self-confidence and of self-help,
out of which is born national wealth, and which gives the deathblow to
deficits. But I am not Writing an essay on political economy.
I have the honor to be, sir, your obedient servant,
Hon. W. Hunter,
Acting Secretary of State.
[Extracts.]
Session of the House of
Lords,
June 23, 1865.
Count Anton Auersperg.* * ** It would be
before all things desirable to expect that the official upholders of
the constitutional principle should be those who would feel bound to
work most earnestly for the removal of those financial troubles. * *
* * At the beginning of the so-called new era
the old figures were retained asa result of the old system remaining
unaltered. I know that thorough and lasting reforms cannot be
effected in a moment’s time, but in these five years there has
certainly been too little upward movement, and even an impulse
towards a spring has not been given. * * * * Louder and louder
riseto us voices from the provinces, partially from the
over-burdened provinces—voices of taxpayers crying for relief from
taxes hardly longer to be borne. In Hungary, owing to exceptional
circumstances, a payment of taxes in natural products has been
granted and an attempt made in this direction. Out of Styria, a
country which, under its regular conditions, enjoys a quiet and
secure prosperity, a wish for similar favors reaches us through
official organs, I will not even speak of my poor home, Krain
(Carniola,) where it has been allowed as a favor that executions
should not be proceeded with, after the object for the execution has
ceased to exist, * * * * I should call attention to the fact that
from these circumstances results a certain amount of demoralization.
If any one succeeds in spite of these melancholy circumstances in
laying up a fortune by dint of industry and economy, does he know
what he possesses? What can he really call his own? If the father of
a family invests his aquired capital in real estate, he receives
from it either no revenue at all, or a comparatively small one. If
he invests it in stocks, he does not know what would remain to his
heirs to-morrow if he were to close his eyes to-day. He allows that
the fruits of his earnings should be squandered in the enjoyment of
life, even if he does not share in them. The phantasmagoria of an
almost exaggerated enjoyment of life and pleasure must not blind us
to what lurks behind; there is in them the sting of resignation, if
not of despair. This is certainly a position of things far removed
from that which we had in view, and on which we placed our hopes,
when the [Page 31] celebrated circular
of the minister of state opened a vista to us into a new future when
we were informed that “Austria would find in the constitution the
means to rise to that height of power which is the necessary
foundation of material prosperity and intellectual aspiration.” But
I look vainly around for this prosperity, for this increase of
elasticity. The conditions in which we live, and the causes which
have brought them about, were prophetically indicated to a certain
extent by another Austrian statesman when he said, “I consider it a
destructive measure, the exclusive covering of the wants of the
state by a perpetual new increase of the debt; it makes the
cultivation of order in the domestic affairs of the state an
impossibility; it undermines general confidence because every one
loses confidence in himself and gives way to despair.” * ** * * *
*
If I meet the father of a family regularly at a pawnbroker’s door, if
I see a husbandman regularly mortgage his still ungathered harvest,
without laying up these most urgently required means against a day
of want, I know what sort of order I have to expect in the household
of such a man. It is not to be denied, in the channel which has been
entered upon, the ship of state is rushing inevitably into the
whirlpool of a financial catastrophe, and we must try with all our
strength to save her, for we have reached that point when the two
levers which have been used to assist us in the still increasing
need have ceased to perform their service. It is certainly
impossible to go any further in the augmentation of taxes.* *
The loan system, too, has its limits. The eventual creditor is
generally a good reckoner, and if he holds up to himself a domestic
interior of the state, in which the interest of the state debt and
the army budget consumes half the revenues, and of the other half,
twenty-six millions are consumed by arrears of taxes, he will not be
very impatient to place his capital at the service of such a state.*
* * * * I believe that this is understood in the other house. I
believe that it is also understood in this house, under these
conditions the finance budget was laid before the Reichsrath with a
total appropriation of five hundred and forty-eight millions, and
with a deficit which, according to government
figures, must be estimated at thirty millions. A species of
permanent declaration of deficit seems on the point of taking place,
if an energetic opposition is not made. This has already been made
in the other house, and the result has been that the government
itself, at the first serious attack, has reduced its own budget
twenty millions and a fraction. I regret that the government on the
presentation of the first budget has not won for itself these
laurels; that it made these important reductions only after the
pressure of the representatives of the people. In the crown lands
this proceeding has not had a favorable result; the conclusion has
been drawn that the original budget was not put together with that
earnest care which the position and necessity of the state demanded;
it was further concluded—and I hardly believe that this was a
mistaken inference—that if twenty millions could thus be saved, one
could also have saved in a greater or less degree in former
years.
* * * * * * * * *
Count Leo Thun. The detailed reports had
made upon men the impression of an attempt at fine coloring; and
even the principal report was not free from this, for it mentioned,
for instance, that the end could only be reached gradually, and not
by a single effort. The committee indicates that a steady diminution
of the deficit had taken place, but it was not only a diminution—it
was an entire removal of the deficit, that was urgently required. In
this way (the speaker continued) we shall never reach that end. That
no further increase of taxes is possible every one will admit to me,
but I am justified in my question, why, in this increase of taxes, a
sudden impulse was not avoided? If all those last farthings which
are brought in by means of the tax execution are put into
circulation and a deficit still remains, in consequence of which the
weight of interest rises to a sum which is still greater than that
which is brought in by the executions, then those last farthings
have been collected in vain. [Bravo!] What is wanted is not a
gradual change, but an immediate radical cure; for I am firmly
convinced that if the balance is not soon successfully restored,
this task will in a short time become impossible. Our position can
be characterized in a few propositions, the indisputable truth of
which, according to the report of the minister of state, has
received full recognition in government circles. The first
proposition is this; that every household which is so arranged that
the yearly returning expenditure is greater than the receipts, while
the difference has to be covered by new and ever more disastrous
loans, must necessarily come at last to bankruptcy. The second
proposition is this: that our receipts cannot be increased by tax
laws; a tax reform is ever hinted at. The sanguine hopes, however,
which are based upon this, are only that by this means the amount
from taxation as it exists at present, can be made permanent for the
future. A good deal of this is in no event to be expected.
[Applause.] Consequently the equilibrium in the state accounts can
only be obtained by a diminution of the expenditure at least to that
figure at which the receipts are now estimated.[Bravo!]
To the result which the house of deputies, led by this view, have
already reached, I must on one side still oppose the fact that even
the figure at which the House of Deputies has arrived does not seem
to me sufficient.* * * * * * * I cannot think that the first speaker
has painted with too black a pencil, and I should consider it
serious at such a time as this to bring such a reproach against
anybody, for I admit frankly that the state of affairs with regard
to finance is so black that it would be difficult to paint blacker
than the reality.
This fact is so well known that an avowal of it, in this house,
cannot bring about discouragement [Page 32] on the part of the population. [A voice: Quite
right.] Those who have any knowledge of financial affairs know our
situation, and it is not by an open exposition of them that we shall
injure a credit which is only to be helped by the conviction that we
are fully alive to the danger, and by inspiring the conviction that
we mean to seek for a remedy.[Bravo!]
As far as regards the population, it feels through its own interests
the consequences of the position; and certainly what it feels works
more deeply than anything that is said in this house or written in
the newspapers. The tax-payer, whose house is sold over his head,
will not look around him to be told by the newspapers what is the
condition of financial affairs.* * *
The Minister of State, v. Schmerling.* * *
* It is an undoubted fact that we have a deficit in this year of
1865, and we can hardly deny the fact that we shall hardly get
through 1866 without a deficit. This is certainly a serious and
melancholy circumstance, but I must permit myself to throw a little
glance on the past year in order to show that the requisitions of
the present year and of the coming year are very different from
those that existed in former years. Whoever will throw a glance at
the requisitions of a former year, and compare them with those rates
that have their present expression in the state proposition of 1865
and 1866, will not be able to avoid the conclusion that a decided
retrogression has taken place in the requisition,
I shall only point to the one fact that the war budget, which has
been so often drawn into consideration, has experienced a reduction
of more than forty millions. It is certainly said, however, why is
this saving just now? Why not in former years? If the conviction has
been attained that a round sum of 95 millions is sufficient for the
war budget, why were135 millions required in former years? Well,
to-day we enjoy the certainty of a European peace; to-day, in great
and important things, we enjoy security in our interior. That this
was not the case in former years will be clear to all who will throw
a glance into the past.* * * * * * * * * *
I go further into the question. The government of his Majesty, and
certainly not the finance minister alone, but the assembled advisers
of the crown, are penetrated and moved by the conviction that in all
branches of the administration thorough reforms are necessary,
particularly in the direction simplifying the administration, and
therefore necessarily making it less expensive.[Bravo!]
The government will be, however, in the position to lay before the
lesser Reichsrath, as well as before the Diets in the provinces of
the eastern half of the empire, propositions which will give the
desired aid exactly in the right direction.[Bravo!]
But there is another very important question which must be kept in
view, and that for the present is only to be touched upon. It is
necessary to increase the income of the state, not by augmenting
taxes, for the government is as thoroughly convinced as this high
assembly; but, in the present condition of the empire, there can be
no further augmentation of taxes. But we must take into
consideration the maxim repeated so often, that in Austria there are
still many resources which now lie dormant. They must be utilized,
not in augmenting the taxes, but by creating new sources of revenue,
and, as in this way the state will indirectly obtain the means of
imposing taxes which will not be burdensome, for the future we may
look to this as a source of help. That the government of his Majesty
have already turned their attention to this purpose, this high
assembly must believe from one slight indication, that it is
endeavoring in all directions to give every possible assistance to
institutions of credit which have the purpose of animating commerce,
traffic, and industry, as well as to influence those individuals who
are devoted to commerce. When, therefore, through the untiring
activity to which the government is pledged and supported by the
lively participation of this high assembly, and by the high House of
Deputies, we shall have succeeded in working in the double
direction, that on one side a total reform of the administration
shall diminish the requirements, that, on the other, new sources of
national prosperity shall be developed, then we shall have attained
what we all wish to attain, and the deficit will be permanently
covered.[Bravo!]
