HUNGARIAN FINANCE.
ON the twenty-seventh of last month there began a debate in the Hungarian Diet which, it is already clear, is destined to exercise an important influence on the future of the country. Parties in Hungary are divided, not according to the opinions they entertain of the policy which the Govern- ment ought to pursue in its administration of the nation's affairs, but by their views of the compromise concluded with Austria in 1867. The Right regards that compromise as a funda- mental law which must not be called in question. The Extreme Left, on the other hand, denounces it as a betrayal of the rights of Hungary. While the Moderate Left, occupying a middle position between these two extremes, has hitherto maintained that the compromise stands in need of important modifications before it can be accepted by patriotic Hungarians as a just settlement of their country's claims. Now the Right is composed of three well-marked parties,—an Absolutist- Clerical, a Constitutional-Conservative, and a Constitu- tional -Liberal party. Between the first two and the last of these parties there is little in common except the resolve to maintain the settlement of 1867; whereas the last, if this question of the compromise were out of the way, is hardly distinguishable from the Moderate Left. But the necessity of maintaining the arrangement with Austria has compelled the three sections of the Right to act together, and has thus stamped a character of compromise, in- decision, and incompleteness on all the measures of the Govern- ment. To escape from this unsatisfactory situation, overtures have from time to time been made without avail to the Moderate Left, and on the last visit of the Emperor to Pesth, the leaders of the several sections of the Right were summoned to his presence, as was also M. Tisza,
the Chief of the Moderate Left, in the hope of consti- tuting a more homogeneous majority. But M. Tisza proved
intractable. The debate, which is still progressing, seems, however, to have removed the obstacles to the formation of a new majority. On the 29th, Baron Sennycy, the leader of the Old Conservative party, delivered an important speech', in which he held out the hand to the Moderate Left. Severely criticising the Budget proposals of M. Ghyczy and the general policy of the Ministry, and shaking himself loose from Abso- lutist and Clerical entanglements, he defined his programme to 'be the maintenance of Dualism and of Parliamentary Government, and the contentment, as far as possible, of the aspirations of the Nationalities. On February 1, M. Lonyay, the successor of Count Andrassy in the Hungarian Premiership, followed in much the same spirit. But the event of the debate was the speech of M. Tisza, the leader of the Moderate Left. After a declaration of war a out ranee against the Bitto-Ghyczy Ministry, M. Tisza virtually renounced the demand for a modification of the compromise. "The question of the compromise," he said, "must, then, be set aside, in order that capable men of every party, whatever may be their opinions regarding the compromise, may tender one another the hand, and work together for the amelioration of the internal situation." The importance of this declaration will be understood when it is recalled to mind that the settlement with Austria is to be revised two years hence, and that the demands hitherto put forward include such important ones as an alteration of the proportions of the common expenditure borne respectively by Austria and Hungary, a modification of the Customs Treaty, and the right of Hungary to charter a Bank of its own, at the same time, of course, rejecting its share of the debt due to the Vienna Bank.
The important character of the debate which has been pro- ceeding at Pesth for more than a fortnight has detained us longer than we had intended from the consideration of the critical financial situation out of which the debate arose. Yet that the situation is grave will be sufficiently obvious from the fact that it has converted Absolutists into Parliamentarians, and
even induced the opponents of the Compromise of 1867 to waive their objections to that measure. The settlement of 1867 imposed upon Hungary, in the first place, an annual expenditure of over £3,000,000 sterling on account of the common Debt of the Empire. This arrangement left undetermined the propor- tion which Hungary was to bear of the floating debt, amounting to about £41,000,000, as also of the debt due to the Vienna Bank, amounting to about £8,000,000. These are points which must be determined in 1877, and the fact that such questions are pending, as we have already said, adds to the signifi- cance of M. Tisza's speech. In addition to the above charge, Hungary is bound to defray 30 per cent, of the common expenditure. The common expenditure, besides the service of the Debt, includes the Army, Navy, and Foreign Affairs ; while the only common revenue is that derived from the Customs, which in 1871 yielded no more than £1,220,000. The charge on account of the common expendi- ture in 1868 was about equal to the charge on account of the common debt, thus making the total burden borne by Hungary on imperial account about £6,000,000 sterling. It was a heavy burden for a population of no more than 15,500,000, inhabit- ing an almost purely agricultural country, without trade manu- factures, or even roads. Had the Hungarians, therefore, been as prudent financially as they had been politically constant in their desperate struggle with Austria, they would have practised the most rigorous economy in their domestic administration. On the contrary, they launched out into extravagance the eountry could not afford. It is necessary, however, to distinguish between the different branches of ex- penditure incurred by the State. There is one item, for example, which, from every point of view, was wise, and which occasions but a slight burden, that will almost immediately be recouped. We allude to the purchase of the feudal rights of the nobles and of the tax imposed on vineyards by the proprietors, by the award of annuities for forty years at the rate of 5 per cent, per annum. But as special im- posts have been laid upon the peasants benefiting by this measure, the State will be fully recouped its outlay on this head. Of a different character is the extravagant expansion of the Civil Service effected within the last • few years, which has encumbered the country with an official staff on the scale of the most advanced nations of Western Europe, and out of all proportion, therefore, to the resources of a poor, agricultural population, consisting almost exclusively of nobles and peasants. But the most ruinous expenditure of all has been that incurred in the con- struction of railways. When the compromise with Austria took place, Hungary possessed altogether no more than 1,500 miles of railways. It was natural that the people should have been anxious to make up for the neglect of the past, and should have earnestly set about supplying their country with the means of rapid communication with the rest of the world. But unfortunately the zeal of successive governments outstripped their knowledge and discretion. The mileage has been trebled since 1867, but not one of the new lines yields a profit. The cost to the State of constructing these lines has amounted to about .£12,000,000, and in addition the State has guaranteed 5 per cent, interest to the private Companies. M. Bailleux de Marisy, in the Revue des _Deux Mondes, tells us that the lines have been injudiciously planned, that they are badly constructed, and that they are worked without regard to the requirements of the country. As an instance, he states that the Zakany-Fiume Railway, belonging to the State, and connecting the Dray with the Adriatic, is interrupted between Agrum and Carlstadt by a private company's line, which is the direct route of the State line, but which the State has neglected to purchase. Lastly, to add to the difficulties of the Government, the habit of refusing to pay the taxes, acquired during the long struggle with Austria, still survives, and it is said that the uncollected taxes amounted nearly a year ago to £10,000,000 sterling, most of those in arrear being rich men.
Owing to the various causes which we have been pointing out, Hungary has found herself obliged to raise loan after loan since 1867, and too often, as was to be ex- pected, on unfavourable terms. Her consolidated debt now amounts to £16,600,000, while the floating debt amounts to £15,200,000, or a total of £31,800,000 contracted in little more than seven years. This money, too, has to be raised heavy interest, so that although from the form of the account– it is difficult to ascertain the exact charge for debt, it must, when the share of the common debt is included, be very large. In 1868 the entire expenditure of every kind was no more than £11,240,000. The total expenditure last year was very nearly £28,000,000, consequently the expenditure has very much more than doubled in six years. This alone would look sufficiently formidable, but it is not the worst. The in- crease of resources has been great, but not nearly great enough. Unfortun.ately the revenue has not kept pace with the expenditure. In 1868 the revenue was £11,200,000, while last year it was £20,400,000. The increase was very great in no more than six years, but it will be remembered that the expenditure in 1874 was nearly £28,000,000. Consequently there was a deficit of over £7,500,000. Nor was this an excep- tional circumstance. On the contrary, every year since 1868 has witnessed a deficit, each succeeding one being larger than its predecessor, the deficit in 1868 having, in fact, been no more than £40,000. In 1870 it was as much as £2,760,000; and in 1874 it attained the magnitude just stated. It was in the hope of remedying this alarming state of things that M. Ghyczy took office ten months ago, and in the budget which he has prepared he proposed a rigid economy in all strictly Hungarian expenditure, measures for insuring the punctual payment of the taxes, an increase of existing taxes five per cent., and various new imposts, which excited such violent opposition that he has withdrawn them, and pro- posed instead a universal Income-tax. These proposals have been rejected by the Budget Committee of the Diet, but as the Committee made no counter-proposals, the Diet decided to take the Minister's scheme into consideration. Thus arose the important debate of which we have spoken above, which has now been going on since last Wednesday fortnight.
Previous page
