Papers Relating to the Foreign Relations of the United States, The Paris Peace Conference, 1919, Volume XII

Paris Peace Conf. 184.01102/67

Captain Frederick Dellschaft to Professor A. C. Coolidge ⁵

Vienna , February 4, 1919.

Subject: General economic situation in German Austria.

In response to your request for a statement on the general economic situation in German Austria, I beg to submit the following remarks, with the suggestion that they be considered subject to the circumstances under which they are prepared. The extensive nature of the subject demands for its proper treatment not only a thorough knowledge of economic conditions before and during the war but also training in the systematic and theoretic study of economic subjects. This knowledge and training is to a great extent foreign to me. The subject is further obscured by the unsatisfactory political relations between the several states sprung from the old empire and the uncertainty as to the future, so that statistics to illustrate the matter properly are not only unavailable but also difficult to approximate.

The economic situation of German Austria is discussed below under the following headings:

(a) Industry and Labor

(b) Agriculture and Forestry

(c) Commerce

(d) Means of Communication and Transportation

(e) City of Vienna

(f) Political and Economic Outlook.

It should be mentioned that the supply of food and coal does not come within the scope of these remarks, as I understand it is being dealt with by a separate mission.

Population.

According to the 1910 census, the population of Austria comprised:

Male	13,787,029
Female	14,537,912
Together	28,324,941

Of this number only 34.30 or 9,715,017 were German, distributed as follows:

German Austria (Alpenländer)	6,505,398
Bohemia, Moravia & Silesia	3,209,619

This distribution is made on the territorial basis outlined in the German-Austrian Act of November 22, 1918 and proclamations of November 22, 1918 and January 3, 1919.

No figures are procurable of the actual number of workers available. It is possible that an estimate may be procurable in the next weeks. The war has caused such great migrations of working-people from one section of the former empire to another and between trades and employments, that it is impossible at present to form a trustworthy estimate. Vienna, the only city with a population of over 100,000 in undisputed German Austria, has over 2 million people and, for this reason, will be discussed in a separate paragraph. Available statistics have been based almost entirely on a classification separating German and Non-German districts without respect to provincial boundaries, and as a large part of the former are now claimed by the Czechs, Slovaks and others, considerable analysis is necessary before absolute figures can be obtained.

Industry and Labor.

The main industries left to German-Austria are textiles, paper, mining and sugar, which at present, are almost inactive on account of the lack of coal and raw material. The labor that is being employed is largely for maintenance of plants and salvage. The enormous overhead expense is rapidly reducing what financial surplus existed.

Textiles—

The latest figures of the number of workmen employed in the various branches of the textile industry are as follows:

	No. of Workpeople
Cotton:
Spinners	9,820	1,167,920 spindles
Weavers	7,963	13,486 looms
Printers	1,690	47 presses
Other branches	13,955
Together	33,428
Wool:
Spinners	749
Weavers	1,480
Together	2,229
Linen:
Spinners	632
Weavers (Machine)	334
do. (Hand)	80
Together	1,046
Hemp & Jute:
Spinners (Jute)	1,299
do. (Hemp)	1,088
Weavers	285
Ropemakers	208
Together	2,880
Silk:
Weavers, etc.	2,398	1,652 looms
Other factories	1,650
Together	4,048
Total workpeople in Textile industry	43,631

This figure is probably much below the actual number and only serves as an index to the importance of the industry.

The German districts in the Sudeten Lands employ about 150,000 hands and these would be lost to German Austrian industry if the Czecho-Slovaks are allowed control over Bohemia to the extent of her conventional frontiers.

It should be pointed out that the textile factories in Austria are not specialized as in the United States and England, so that the cost of production is high and the industry is not in a condition to take up competitive export trade with success.

During the war many new textile processes, principally in the use of paper and rags, were introduced. Paper, particularly in combination with cotton, is used for the manufacture of material of remarkable durability. Bags are shredded and rewoven as often as eight times to supply the needs of the population. It is not certain that either paper or rags will continue in the manufacture of textiles as it is doubtful whether their use will pay. There are, however, no cotton stocks at present, nor is there any coal.

Paper—

The average monthly production of the paper industry during the year 1913 was the following:

Paper		7,830	tons
Pasteboard		2,520	do.
Cellulose		4,850	do.
Wood-pulp		1,275	do.
		16,475	do. per month
	or	197,700	do. annually.

This industry is capable of great development on account of the great resources of German Austria in timber and water-power. Its production per workman employed is less than German, and still more behind the American, which is over three times as great, on account of better machinery.

Mining—

Iron ore is the most valuable mineral product of German Austria but the necessary coal for reduction and foundry work must be imported. As a result, iron-works are at a standstill. In 1913, over 2 million tons of iron ore were mined.

The lignite and coal production is normally between 2½ to 3 million tons. The mines are still working to some extent but the general agitation and lack of desire for work has affected the Austrian miners also, as they keep in close touch with the Silesian workers.

Sugar—

German Austria produced only 67, 900 tons of raw sugar as compared with a total production of 1,677,000 tons for all Austria in 1912/13. It should be pointed out, however, that the German districts of Bohemia, Moravia and Silesia produced 425,000 tons in the same period. The production season ends in January. Very little has so far come into the market and the consumption is under careful control.

Power—

The main source of power in the past has been coal. German Austria in peace times required about 14 million tons, of which only about 3 million were produced within inner Austrian territory, leaving a deficit of about 11 million tons. In order to make this deficit good it is proposed, in addition to making the necessary importations, to develop the large resources in water power. The latter measure, however, cannot supply immediate needs nor even approach them for at least 5 to 10 years, as the works to be constructed are extensive.

It is estimated, on the basis of government surveys which have been very thorough, that German Austria has about 1.4 million H. P. water power capable of development, of which not more than about 7% is in use. This resource constitutes one of the country’s most valuable assets and it is hoped, in certain financial circles, to interest foreign capital in its further development. In the meanwhile, coal must be imported, and it is urgent that an arrangement be arrived at with the Czecho-Slovaks not only for the supply of coal from Bohemian mines but also for the transit of coal from the Silesian fields.

Labor—

As previously stated, a clear statement of the number of unemployed in German-Austria is not available. In Vienna alone, it is estimated at over 100,000 men; for the entire country it is variously estimated at between 200,000 and 300,000. This figure does not, however, convey a correct idea of the labor situation. The German Austrian is generally admitted to be an orderly citizen, easy to govern and not readily convertible to bolshevism. It cannot be ignored, however, that after making allowance for the natural reaction to the cessation of hostilities, a point will come when the population will demand food and work with considerably greater insistence than it has done so far. This point will be reached in several weeks or months, depending on what outside influences are active.

Agriculture and Forestry.

The 1913 crops of the 4 principal cereals in German Austria were the following:

	Acres	Bushels	Bu. per Acre
Wheat	487,900	10,783,900	22.1
Rye	1,012,300	24,604,300	24.3
Barley	328,400	8,418,800	25.6
Oats	848,600	32,389,800	38.1

It is evident, therefore, that in cereals German Austria with a population of only 6½ million is fairly well supplied. The production of potatoes and sugar-beet in 1913 were as follows:

	Acres	Tons	Tons per Acre
Potatoes	453,100	1,716,000	3.79
Sugar-beet	44,300	403,600	9.11

These agricultural crops all require fertilizer, for which the cheapest source will probably be Germany, until it is successfully manufactured at home by modern methods.

In meat stuffs German Austria is comparatively poorer than in cereals, etc., but this branch of farm produce as well as dairy products are capable of considerable development on account of the large areas of meadow-land and pasture in the state.

Forest land is the largest single item in the classification of German-Austria’s cultivated area and amounts to about 8 million acres. Its value from an industrial point of view cannot be overestimated.

From these agricultural statistics it is evident that while in some branches not quite self-supporting, German Austria could be made practically so when normal conditions return, provided that a capable food administration is established. It will also have considerable values in paper and dairy produce available for export.

Commerce.

Commerce is reduced to little more than trade in the daily requirements of the population.

Future conditions depend on the delimitation of frontiers and other matters in the hands of the Paris Conference. In the meantime, the lack of transportation and the difficulty if not total impossibility of producing manufactured goods, put commerce almost at a standstill.

Means of Communication and Transportation.

German-Austria is well-provided with railroads but is unable to use them satisfactorily owing to lack of coal. Passenger traffic is, therefore, crowded into a small number of trains, which are unlighted at night, unheated and in many cases, without glass in the windows. What little freight traffic there is, is unsatisfactory and thefts are very frequent.

Traffic on the Danube is closed on account of the winter-season.

City of Vienna.

The situation of Vienna as the capital of a state is extraordinary on account of the fact that its inhabitants comprise roughly speaking about one-third of the entire population of German-Austria. The civil official and higher military classes, as a result of the dismemberment of the empire, are numerically out of all proportion to the productive and commercial classes. The question of employment and pensions, which affect the older officials and officers most seriously, has not yet been solved as the burden is one that should not fall exclusively on the German Austrian state, nor is it one that can be disregarded in justice to the individuals concerned. These individuals are, furthermore, valuable at the present critical time as they represent a conservative and intellectual element as a counter-weight to the unemployed classes.

Of the unemployed working classes, over 100,000 are in receipt of supporting allowances from the government. These men are a dangerous element, and industry will not be able to get use out of them for some time to come. The government’s method of paying them to avoid trouble is spoiling the people as economic producers. In case of serious trouble arising, it is doubtful whether the militia (Volkswehr) would be a useful aid in maintaining order, in fact, it is not unlikely that they might turn against the government. After all, the only means for assuring quiet in town and country are coal and food, the restoration of normal traffic conditions and a well-organized, even if comparatively small, military force.

Vienna and its immediate surroundings have considerable resources in industries for the production of building material, agricultural machinery, automobiles, freight cars, electrical equipment, furniture, leather goods, clothing, chemicals, tobacco, etc. A large part of the product of these industries involves a comparatively large proportion of labor, so that freight on raw material should not be a great detriment to the reconstitution of local industry.

As regards river transportation, the Danube at Vienna is not an easy waterway. The volume of navigable water is liable to great fluctuations, the flow is extremely rapid, and at certain points the river-bed requires constant dredging. It is for this reason that Pressburg (Pozsony) is so vital to German Austria, as it is not until Pressburg is reached that the Danube becomes a steady, unhazardous stream, the drop being only 120 metres to sea-level, in a distance of slightly over 2,000 kilometers.

Political and Economic Outlook.

In the matter of the adjustment of the affairs of German Austria to the new conditions, three questions have arisen, the solution of which, when the terms of peace are known, will tend considerably to putting German Austria in an economically stable position. These questions are:

1. Internationalization of Railway and Steamship Lines.

2. Union with Germany (Anschluss).

3. Danube Confederation.

With regard to the first of these, little discussion has been heard; negotiation between the several new states has not yet taken place as their relative positions are not settled. The two latter questions are also not by any means clear. The bankers and industrials appear not to favor the union, while they do not see how German Austria can stand alone. The only other alternative, the Danube Confederation hardly seems feasible in view of the fact that Hungary, Roumania and Yugo-Slavia are agricultural states with products that for some time to come will find a ready market everywhere and who will certainly not find advantage in assuming a protective tariff merely for the benefit of German Austria or Czecho-Slovak industry.

The population of German Austria, insofar as it is not agrarian, will demand, when it finally recovers from its present partly enforced, partly natural period of indolence, a larger market for its labor. This probably will re-act, as the industrials foresee, to the detriment of German Austrian industry but it is doubtful whether it will be a governing factor in deciding German Austria’s political and economic future. The fears are expressed that Vienna may lose its position as the intellectual and artistic center of the countries formerly constituting the old empire; the union with Germany would tend more than a Danube Confederation to prevent these fears from being realized.

Frederick Dellschaft

5. Transmitted to the Commission by Professor Coolidge under covering letter No. 65, February 5; received February 12.