Mr. Motley to Mr. Seward.

No. 141.]

Sir: I have the honor to acknowledge the receipt of your despatches Nos. 159 and 160, of dates November 4th and 6th, 1865.

I have nothing further to state to-day concerning the affairs of Hungary, as the diet of that kingdom was adjourned for the Christmas holidays and has not yet reassembled.

It is understood that the Emperor and Empress, with the whole court, will proceed to Pesth on the 20th.

The most important incident relating to Austrian affairs since my last despatch [Page 633] is the promulgation, in accordance with the September manifesto, of the finance law for 1866 by the Emperor.

During the suspension of any general legislative body, the monarchy is of course governed absolutely.

The finance edict or budget is accompanied by an elaborate report of the finance minister, Count Larisch, addressed to the Emperor.

The sum total of expenditures for the year 1866 is fixed at 531,273,881 florins, Austrian currency.

The sum total of receipts is estimated at 491,134,735 florins.

Deficit for the year 40,139,146 florins, to be covered by a loan.

The report of the minister is characterized by a courageous frankness; a determination being evident on his part to tell the whole truth concerning the financial condition of the empire, even although that truth cannot be considered cheerful.

The most striking general features in the report are the statements that it is entirely out of the question to increase the income of the empire by an increase of taxation; that there is a deficit of this year of forty millions; and that there is an additional deficit for the two past years of seventy millions over and above what had been hitherto announced by the former minister of the treasury.

As the best illustration of this impossibility to increase the taxes, the proposition is made for a reduction in some of the most oppressive ones, namely, the land and house taxes, now more than 33⅓ per cent, of the rent, making a diminution of the treasury receipts for the year of 4,600,000 florins.

“This loss,” says the minister, “will be richly compensated by the moral impression produced by a measure which constitutes a practical pledge of the earnest intention of lightening as far as possible the burdens imposed upon your Majesty’s faithful peoples.”

As an explanation of the revelations as to the results of the years 1864 and 1865, (including the two last months of 1863,) it is stated that the expenditures for that period were almost exactly in accordance with the published estimates of M. de Plener, but that his estimates of receipts fell short in round numbers about seventy millions.

The finance law of 1865 announced a nominal deficit of nearly eight millions. It really amounted to a sum but little short of eighty millions. The details as to these discrepancies will hardly interest you. It may be as well to state, however, that thirty millions had been relied upon by the former minister from the sale of public property, but that it had been found impracticable to effect these sales.

A loan of ninety millions specie has very recently been negotiated. This has been mainly employed in covering the deficiency just indicated. There remains in the treasury for the use of the present year a sum of twelve million florins.

As the deficit for the fourteen financial months of 1864 actually amounted to one hundred and fourteen millions, and the deficit of 1865 to eighty millions, it is considered by the present minister a subject of congratulation that the estimated deficit for the current year is only one-half that for the last year.

“Chronic, deeply rooted evils,” says Count Larisch, “cannot be got rid of at once; one must be content if the cure of them is gradual but constant.”

It is also important to state that the deficit for this year is caused almost entirely by the necessity of providing for the last instalment of the debt to the National Bank, amounting to 35,600,000 florins, which falls due on the last day of December, 1866.

Another encouraging symptom indicated by the minister is the approaching resumption of specie payments by the bank, to take place after this liquidation of the imperial debt has been duly made.

The agio on gold has already fallen to less than five per cent., and no doubt is at present entertained of a return to a metallic currency with the beginning [Page 634] of next year. The National Bank is described by Count Larisch as one of the most solid and healthy institutions of credit in Europe, and he observes that “the providing for the necessities of the state by making use of a bank-note printing press is now reduced by legal measures to an impossibility.”

While the minister modestly refrains from any hope that the actual receipts for the current year may exceed his estimates, he ventures an expectation that those of 1867 may, with the preservation of peace and the return of public confidence and public prosperity, show an improvement.

As during the two past years every source of income, with scarcely any exception, ordinary and extraordinary, direct and indirect, is proved to have been largely overestimated, to the gross amount already mentioned, it is hoped by the minister that his own estimates, already subjected to an incisive criticism by experts, may prove more satisfactory.

The rough estimate of the budget for 1867, taking the expenditures at the same figures as in 1866, with the deduction of the payment to the bank, is as follows:

Expenditures 485,621,243 florins.
Income 457,134,735 florins.
Deficit. 28,486,508 florins.

This is certainly an improvement on the past, but very far, of course, from healthy housekeeping, especially to an empire always from geographical and historical causes exposed to war.

Having thus given you a general view of the finance minister’s annual report, I think it may possibly interest you if I very briefly indicate a few of the leading items of Austrian expenditure and revenue, making use of round sums, as close as possible to the actual ones, in order to avoid the confusion of long strings of figures, not necessary for the purpose of this despatch. The accounts are in Austrian currency, which now varies very little from specie. The Austrian florin is equal to a little less than half a dollar.

Expenditures.—The Emperor’s household, 7½ millions; foreign office, over 2 millions; state department, including police and education, about 30 millions; chancery of Hungary, 11½ millions; ditto Transylvania, over 3 millions; finance ministry, 350½ millions, including 124,636,662 interest on the debt, and 65,834,998 of debts falling due; ministry of justice, nearly 10 millions; ministry of war: army, 88,763,000; navy, 7,825,981—96½ millions. Total, 511 millions.

The chief sources of revenue are direct taxes. Land tax, nearly 65 millions; house tax, 23 millions; trade and business taxes, 11 millions; income tax, (7 per cent.,) 20½ millions. Total, 119½ millions.

Indirect taxes.—Brandy, 14 millions; wine, 6 millions; beer, 17 millions; sugar, 9 millions; cattle, to be killed, 5½ millions; Pachtungon leases, 5 millions; salt, (monopoly,) net receipts, about 33 millions; tobacco, net, 25 millions; stamps, 16½ millions; taxes on legal business, 26½ millions; lottery, 20 millions; customs, less 1,674,614 for collection, net almost exactly 12½ millions. Total, 190 millions.

About three-fifths of the national revenue is made up of these items.

I have given the net income of the two monopolies—salt and tobacco—as, of course, if deductions were not made from the gross receipts (stated in the report at over thirty-nine millons and over fifty-six millions respectively) of the expenses of the business, my statement would be valueless. You will be struck with the trifling amount of the trade of Austria, as shown by the traffic receipts, which in gross were only 14,172,684 florins.

Whether the reduction next year of the tariff according to the Anglo-Austrian treaty just concluded and described in one of my last despatches, and [Page 635] according to the French-Austrian treaty soon to be negotiated, will produce a larger sum than the present very insignificant amount, time will show.

I shall make but one more quotation from the minister’s report. After stating that the interest on the national debt has been growing steadily year by year, from 106,719,800 florins in the year 1861, to 124,636,663 florins in 1866, he observes that “this is a progression in which an earnest warning lies to make every exertion to restore as soon as possible the equilibrium of the national accounts.”

I have the honor to remain, sir, very respectfully, your obedient servant,


Hon. William H. Seward, Secretary of State, Washington, D. C.