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Trade wars of Austria-Hungary and Serbia at the end of XIX - the beginning of the 20th century and a problem of development of the Serbian export

UDK 339 (436+439) (497.11) "18" "19"


© 2008 of B.Z. Botashev, I.V. Kryuchkov

Stavropol state university, Stavropol State University,

355009, Stavropol, Pushkin St., 1, 355009, Stavropol, Pushkin St., 1,

flleb@mail. ru,

igory5@yandex. ru igory5@yandex. ru

The main directions of development of trade of Austria-Hungary and Serbia at the end of XIX - the beginning of the 20th century are investigated. The special place in material is allocated to the analysis of the reasons which led to trade war between two states. The conclusion is drawn that the system of the political unions did not provide unity of economic actions of the European states.

The main directions of the development of trade between Austria-Hungary and Serbia in the end of XIX - beginning of XX centuries are examined in the article. Special attention is paid to the analysis of the reasons of trade wars between the two states. The authors conclude that the system ofpolitical alliances didn & t secure the unity of economic actions of European states.

At the end of the 19th century the leading foreign trade partner of Serbia was Austria-Hungary. About 60% of all Serbian import and 90% of export were the share of the Danube empire. Austria-Hungary imported into Serbia paper, timber, farm vehicles, products of livestock production, medicines, colonial goods, oils, etc. The prevalence of Austria-Hungary in foreign trade of Serbia speaks not only geographical proximity of two countries that reduced the price of transportation costs in transit of products, but also activity of business. Austro-Hungarian businessmen paid much attention to studying features of the Serbian market and demand of consumers. In Belgrade the Austro-Hungarian firms had the offices and the whole army of direct-sales representatives who drove about over the country and convinced Serbians to buy goods from Austria-Hungary. They gave to Austria-Hungary information on wishes of the Serbian consumer concerning any given goods. Advertizing of Austro-Hungarian goods was very well put.

The Serbian business also was interested in development of trade relations with Austria-Hungary. Between businessmen of both countries close business contacts were come. More than once at the highest level they held consultations on development of the bilateral relations. Even after the revolution of 1903 and the beginning of a complication of the political relations between the Danube empire and Serbia business supported by inertia development of the mutually beneficial economic relations. In 1904 Hungary was visited by the delegation of the Serbian entrepreneurs consisting of 120 people [1, l. 89]. During negotiations in Budapest both parties supported development of trade relations of Hungary and Serbia and increase in the Hungarian export. It was the current problem. Austria-Hungary had negative

balance in trade with Serbia therefore increase in export from the Danube empire became an important point in the bilateral relations. However, during negotiations the thought which caused irritation of Vienna that the Austrian goods with which it is difficult to compete [1, l get in the way of development of the Hungarian export to Serbia constantly sounded. 89]. Both parties at negotiations supported the conclusion of the long-term trade agreement between Serbia and Austria-Hungary.

Agrarian orientation of the national economy of Serbia left a mark and on its export, about 85% it were the share of products of agriculture. Important article of the Serbian export were dried fruits which in 1903 took out for the sum of 15.670 million francs, including discharge - on 5.0 million. Dried fruits and the Serbian fruit pekmez fruit jelly were in great demand abroad, they went to Austria-Hungary, Germany, Belgium, Russia, France, Switzerland. The Danube empire was the main consumer of the Serbian fruit. Export of fruit from Serbia could be increased, but the Serbian entrepreneurs did not pay much attention to quality of products and its packing, besides, the lack of good means of communication in the Western Serbia significantly limited export of fruit from this part of the country. In 1904 it was reduced to 9.3 million francs, then growth began again. In 1905 this rate was 12.7 million francs, including "pekmeza", in 1907 - 20 million [2, page 104; 3, page 71].

The leading article of the Serbian export were deliveries of pigs. In 1903 them it was exported for 12.87 million francs [4, page 153]. In 1904 - 1905 the sales volume was not reduced. The Serbian pork in Europe was in great demand, especially in sausage production. Practically all pigs were delivered to Budapest. In Hungary many firms were earned by you -

soky profits, buying the Serbian pigs and cattle wholesale, and then reselling them in Austria and getting profit on a difference of the prices [5, and 19]. The Serbian pigs and the cattle cost much cheaper Hungarian, not to mention the Austrian. The Hungarian landowners struck a blow to this segment of the Serbian export more than once. Under pressure of Budapest in 1895 the temporary ban on import of the Serbian pigs to the Danube empire is imposed. Serbians had to be reoriented on supply to Austria-Hungary of fat and salty meat, but it could not offset losses of the Serbian exporters completely. In 1896 the ban was lifted, but there was a restriction, the weight of the Serbian pigs should not have exceeded 120 kg that too conducted to losses of the Serbian producers [6, and 103].

Serbia had to find urgently new routes for export of the products. Transportation of pigs by rail to Salonik and on sea vessels was unprofitable further and soon it was necessary to refuse it. Railway tariffs did unprofitable sale of pigs in France and Belgium. This circumstance weakened positions of Serbia in the world market, any political conflict with Austria-Hungary could lead to restriction of the Serbian export and heavy losses of producers. Export of pigs was influenced by both a harvest of corn, and its quality. In case of a crop failure of Serbia it was necessary to buy corn as a forage for pigs in Romania that finally led to rise in price of products and falling of its competitiveness.

The third most important article of the Serbian export was cattle which was also taken out generally to Austria-Hungary. In 1903 the income from its export was 13.788 million francs, in 1904-9.3 million and in 1905 - 9.5 million francs. After restriction with the empire of Gabsburgov of the Serbian export of cattle the Serbian exporters at a boundary of the XIX-XX centuries had to look for new sales markets. An exit consisted in a cattle face in Serbia and export of ready meat to Germany, France and Belgium. So there are several joint-stock companies which were engaged in this type of business. The French banks and individuals [6, and 105] became the main investors in development of the Serbian meat industry. Thus, penetration of the French capital into the Serbian livestock production began long before 1903-1905

The company founded on October 3, 1896 with the authorized capital of 1 million 250 thousand francs became the first joint-stock company created for development of the meat-processing industry of Serbia. The company was exempted from taxes, the state undertook the obligation to construct the railroads to the enterprises of the company. The company constructed the large slaughter equipped state-of-the-art with respect for the European sanitary standards in Belgrade. Meat was in fridges at a constant temperature - 3-4 °C. The frozen meat was packaged in special boxes, and then loaded into cars refrigerators. However the enterprise faced a problem at once, it had 250 Serbian workers low

qualifications that led to non-compliance with all technological norms and decline in quality of meat [5, with. 19]. The new director, the French businessman A. Gasso who managed to achieve improvement of quality of the made products had to correct a situation.

The first batches of the Serbian meat caused good responses of the French consumers. Therefore the French investors allocated to the enterprise in addition of 150 thousand francs for development, but provided that not less than 300 thousands kg of meat will be annually delivered to France and the French will receive 50% of shares of the company. Increase in prices for pork in the USA at the end of the 19th century promoted export growth of the Serbian meat to France, Belgium, Algeria and Tunisia. Progress of the company led to receiving by it from the government of Serbia of the exclusive right to production of meat sausages in Serbia.

"Société anonyme pour l&exploitation des produits serbes" founded on August 19, 1902 became the largest of meat-processing societies of Serbia at the beginning of the 20th century, its authorized capital exceeded 1 million francs [5, with. 19] and soon considerably increased. The joint-stock company belonged to the French chemist Shene who received concession for 50 years. He had monopoly to export of meat of cattle and the pigs slaughtered by means of electric current. Except the French investors the German and Italian investors, but not in considerable scales come to the Serbian meat industry.

Affairs at societies sharply improved at each closure of the serbo-Hungarian border as it occurred once again in 1901. But as soon as the border opened, profits of societies were reduced because export of the cattle and pigs live weight in Hungary was more profitable occupation. Nevertheless by 1905, sale of the slaughtered cattle increased by a third. The Serbian pork had no such quality as pork of the "Yorkshire" breed, and its sale in France and in other countries of Europe was very limited. Therefore the government of Serbia focused attention on selection work in pig-breeding for the purpose of obtaining the "Yorkshire" breed of pigs. After some recession in 1904 the sale volumes in foreign markets of products of livestock production of the country began to grow from 31.680 million francs in 1904 up to 33.843 million in 1905 again [2, with. 103].

Grain crops in 1903 from Serbia it was taken out for 8.2 million francs, including wheat - on 5.7 million [4, with. 153]. The most part of grain export went to Austria-Hungary, some of its part across Danube went to the Romanian port Galatz for the subsequent sending to Belgium, France and the Southern Germany. The good harvest of 1904 and 1905 promoted growth of the Serbian export of grain. In 1904 grain crops it was taken out for 14.8 million francs, and in 1905 - on 16.8 million [2, with. 104]. Some increase in export of flour became a new trend of the Serbian export at the beginning of the 20th century. This type of trade was more profitable, besides it demonstrated gradual development in the country of the flour-grinding industry that was strategically important direction econo-

michesky growth of Serbia. Besides, Serbia took out leather, "raki", silk cocoons, coal, but income from these articles obviously conceded to the previous articles of export.

Changes in distribution with

At a boundary of the XIX-XX centuries basic changes in distribution of the Serbian export are not observed. Still leading positions in it were played by Austria-Hungary (tab. 1) [2, and 101; 4, and 152].

Table 1

esky export, million francs

Country 1899 1903 1904 1905

Austria-Hungary 54.748 51.324 55.351 64.712

Germany 5.922 3.053 2.600 2.116

Ottoman Empire 2.156 2.118 1.707 2.245

Romania 1.311 1.333 0.843 1.097

Bulgaria 1.045 0.779 1.012 1.220

1906 became an important boundary in economic life of Serbia. The relations with Austria-Hungary began to spoil promptly after the revolution of 1903 when the group of conspirators killed the king of Serbia Alexander Obrenovich and the new monarch Pyotr Karadjordjevic who unlike the predecessor had a reputation for the Russophile and the francophile came to the power. All this caused concern in Vienna. Austria-Hungary tried to put pressure upon the obstinate neighbor and imposed tough economic sanctions against Serbia.

In Vienna and Budapest after the revolution of 1903 some political circles really trusted in an opportunity by means of economic pressure to force Serbia to make concessions. At the same time a considerable part of establishment of Austria saw uselessness of such policy because she struck a blow to the economic and political interests of the empire, even more distancing from it Serbia. Actions of Austria-Hungary were condemned even by some German politicians, including T. Betman-Golvega who called trade war of the Danube empire with Serbia the nonsense which pushed Serbia in embraces of Russia [7, page 62].

In the conflict of Austria-Hungary and Serbia there was mixed even Germany. Vienna let know to Berlin and Belgrade that if they conclude the trade agreement before the similar agreement of Austria-Hungary with Serbia, then the Danube empire will take discriminatory actions for the relation of transit of the German goods through the territory of Austria-Hungary to Serbia [8, page 377]. Besides, Vienna warned Berlin about that it did not seek to win positions of the empire of Gabsburgov in economy of Serbia, having used temporary cooling of the avstro-Serbian relations.

At the end of 1905 Vienna learned about the conclusion behind her back of the confidential serbo-Bulgarian customs agreement. Here for Austria-Hungary two threats were. On the one hand, the possibility of creation of the Balkan union what Vienna was always afraid of became a reality, with another - having got access to the ports of Bulgaria, Serbia expanded the economic independence, weakening positions of Austria-Hungary in Serbia and in the Balkans. The Serbian goods got access to the markets of other countries, including Russia through Bulgaria. Almost at the same time Serbian government placed

the order for purchase of artillery not at the Austrian concern "Skoda", and at French of Schneider-Krezo. After that neither Belgrade, nor Vienna were going to make each other concessions, so-called "pork war" (1906-1910) which struck a huge blow to economies of two countries begins, having negatively affected development of the bilateral economic and political relations. During the Bosnian crisis of 1908-1909 Austria-Hungary and Serbia turned out on a war threshold that it seemed unreal 10 years ago.

The policy of economic pressure upon Serbia from Austria-Hungary suffered crash. It was well realized by the Minister of Foreign Affairs of the empire A. Eren-tal who as some compromise achieved input of quotas for deliveries of a livestock from Serbia to Austria-Hungary. However the effect of this policy was insignificant. These vague measures, without arranging Serbia, irritated the Hungarian landowners [9, page 203].

At once used difficulties of Austria-Hungary France and, despite all preventions of Vienna, Germany. In 1906 the French banks grant a considerable loan to Serbia. Paris pursued not so much economic how many political goals. France sought to tear off Serbia from Austria-Hungary. In 1909 the next loan of Serbia at France followed. However, the German capital also took part in crediting of Serbia in 1906 and 1909. Specific weight of the German loans was 25%. Therefore it is not casual that Serbia divided orders for heavy weapon as follows: 75% - Schneider-Krezo and 25% - the Grain concern [10, page 295].

Thus, political addictions and the unions often did not work at the solution of economic problems, and the behavior of Germany in relation to Serbia after 1906 is bright confirmation. Germany was not going to return the won positions in Serbia to Austria-Hungary. When during the Balkan wars the Danube empire suggested Serbia to sign the new trade agreement and even the Customs union, this idea failed not only because of resistance of the anti-Austrian forces in Belgrade, but because of the negative relation to these offers of the German business and the government.

Trade war led to sharp reduction of deliveries of the Serbian cattle, products of livestock production and grain crops to Austria-Hungary after the Danube empire established rigid obstacles on the way of the Serbian export to the country. So, for example, if till 1906 for import of 16 kg of wheat to Austria-Hungary from Serbia the customs duty was paid to 1 krone of 79 hellers, then after the beginning of trade war - already 6 kroner of 30 hellers that did export of wheat of Serbia to the Danube empire just unprofitable [11, l. 214]. Serbia also answered with a number of measures, in particular having forbidden import of Austro-Hungarian sugar that strongly touched the interests of the empire in the conditions of the begun boycott of Austro-Hungarian goods in the Ottoman Empire.

Serbia had to look for urgently since 1906 new sales markets. Cattle herds through the territory of Bulgaria were overtaken to the Bulgarian ports on the Aegean Sea, and the government of Bulgaria in this situation, difficult for Belgrade, made essential concessions in favor of Serbia. Without the aid of Bulgaria Serbia would suffer still heavy losses in export. Through the ports of Bulgaria the cattle, products of livestock production and other goods go to Egypt, Italy and other European states which considerably expanded import of the Serbian products. Besides, for support of the exporters the government of Serbia allocated the credit of 500 thousand francs that had to promote simplification of reorientation of the Serbian exporters to the new markets.

However losses of Serbia did not manage to be avoided. Export of cattle sharply decreases. In 1905 it made 9, 762 million francs, in 1906 - 1.762, in 1907-2 million francs [3, page 172]. From 1905 to 1907 the export of small cattle fell from 619 million francs to 610. Huge losses were suffered by the Serbian breeders as ex-

the port of pigs to Austria-Hungary was reduced from 14.630 million francs in 1905 to 7.9 in 1906 and 1.6 million francs in 1907. The Serbian livestock production it appeared on the verge of crash.

Development of production of canned meat became rescue. By means of the French investors in Serbia five canneries are under construction: on one in Belgrade, Yagodin, Mladenovtsa and two in Great the Plan. New technologies appeared very opportunely for the Serbian industry. Therefore export from Serbia of canned meat and meat products increased from 2.980 million francs in 1905 to 6.290 in 1907. At the same time total exports of products of livestock production from Serbia continued to be reduced. In 1905 it made the record sum of 33.2 million francs, in 1906 - 20.5 and in 1907 - only 16.9 million francs [3, page 172].

Against the background of crisis in the Serbian livestock production agriculture of the country endures the rise period. Export of wheat from 1905 to 1907 increased from 17.843 million francs to 27.774, vegetables and fruit - from 1.988 to 2.492 million francs, "pekmeza" - from 3.526 to 4.257 million francs [3, page 172]. Export of flour from 331 thousand francs increases to 1.161 million francs, etc.

Emergence in the Serbian foreign trade of export of copper ore and other non-ferrous metals turned out to be consequence of development of the mining industry of Serbia. So, if in 1905 this article of export was estimated at 95 thousand francs, then in 1907 it approached 4.296 million. It was connected with activity of the International joint stock company in Maydanpe-ka where since 1906 commercial production of copper and gold began. Besides, export of the wood, coal, etc. increases

The general reduction of volume of foreign trade of Serbia in 1906 was generally connected with losses of Austro-Hungarian exporters and importers (tab. 2) [2, page 106].

Table 2

The volume of foreign trade of Serbia in 1906

The country Export to Serbia, Dynamics Import from Serbia, Dynamics

one million fr. since 1905 one million fr. since 1905

Austria-Hungary 22.206 -11.170 30.032 -34.680

Great Britain 4.562 -0.750 0.065 & #43; 0.065

Germany 9.732 & #43; 3.470 19.053 & #43;16.933

Bulgaria 0.504 -1.820 3.694 & #43;2.474

Belgium 0.382 & #43; 0.030 6.259 & #43;5.940

Italy 0.936 & #43; 0.150 0.572 & #43;0.507

Russia 1.218 & #43; 0.410 0.151 & #43;0.136

Romania 0.769 & #43; 0.150 2.354 & #43;1.260

France 0.819 & #43; 0.323 3.365 & #43;3.330

Ottoman Empire 1.845 -0.875 5.410 & #43;3.165

Serbia could offset considerably in general losses from reduction of trade with Austria-Hungary due to development of trade relations with other countries and first of all with Germany, France, Belgium, Romania and the Ottoman Empire. Despite the developing political connections of Russia with Serbia, their economic relationship remained at a low level. However France as the ally of Russia took a number of measures for development of the trade with Serbia, perfectly understanding that only this way it was possible to tear off completely Belgrade from Austria-Hungary.

The prospects of further economic cooperation of Austria-Hungary and Serbia because of the political opposition of two countries which especially escalated after annexation by Austria-Hungary of Bosnia and Herzegovina were uncertain. The draft of the new trade agreement agreed in 1908 forbade import to Austria-Hungary of the live cattle. Only in the hammered look it was possible to enter from Serbia no more than 35 thousand heads of cattle and 75 thousand pigs [11, l. 213]. It several times reduced import volumes to Austria-Hungary of these types of products from Serbia in comparison with 1905. But even in such look it seemed to many Hungarian politicians of a concession to Belgrade excessive. I. Tis, acting in chamber of magnates of parliament of Hungary, said: "In the trade agreement with Serbia signed several months ago the monarchy reached extreme limits of compliance recently" [12, l. 32].

During negotiations with Serbia were shown a confrontation of opinion of Austria and Hungary. Vienna was interested in fast settlement of the trade conflict with Serbia as Austria needed expansion of import of the Serbian agrarian products and the export to Serbia because restriction of the Serbian import led to rise in price of the Hungarian agrarian products in the Austrian half of the empire. When all disputed issues with Serbia, appear, were eliminated, the Hungarian parliament removed discussions of the new trade agreement with Serbia from the agenda to great irritation of Austria. Hungary depended on trade with Serbia a little, its manufactured goods could not compete with Austrian, and import of the Serbian grain and meat bate down the prices of the Hungarian products in Austria [12, l. 52]. Only in 1911 after ratification by parliaments of Austria and Hungary the new trade agreement of the Danube empire with Serbia came into force.

Here it is important to note reaction of public opinion of Hungary in this occasion. If in 1909 it protested against conclusion of agreement with Serbia, urging to punish Belgrade for its not friendly actions, then in 1911 it urged to ratify the agreement, being already angry that all conflict with Serbia began because of refusal of Belgrade to buy weapon from the Austrian industrialists [13, l. 2].

Therefore, from all Balkan countries and the Middle East Serbia at the end of the 19th century was most attached in an economic pla-

not to Austria-Hungary. The geographical proximity, presence of considerable Serbian diaspora in the empire of Gabsburgov, close political contacts contributed to the development of the foreign trade communications of two states. Serbia acted as provision dealer for the Danube empire, receiving in exchange manufactured goods and other types of products necessary for it.

However even in the period of good neighbourhood between Serbia and Austria-Hungary (the end of the 70th of the 19th century - 1903) trade wars were the frequent phenomenon in the bilateral relations. Generally Hungarian landowners seeking to limit the Serbian export of products of livestock production and grain on the markets of Austria that guaranteed them high profits were an initiator of these conflicts. Therefore it is impossible to agree with statements that only after 1903 trade relationship between Austria-Hungary and Serbia begins to escalate. The policy of economic pressure upon Serbia led to development in the country of the meat-processing industry with active participation of the French capital at the end of the 19th century, i.e. the French capital began to get into Serbia long before the events of 1903-1905

After a political gap and the beginning of "pork war" which became the tool of pressure upon Serbia for the purpose of change of the political policy by it there is a considerable recession of economic relations between Austria-Hungary and Serbia. Nevertheless up to World War I they remain the largest trade partners. Positions of the Danube empire in Serbia are taken by Germany and France. At the same time the political union of Vienna and Berlin did not prevent Germany to work in a section to the interests of the ally. On a number of problems the German and French investors performed with the consolidated position. It once again shows weak dependence of political and economic actions of the European states at the beginning of the 20th century


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12. In the same place, unit hr. 582/2.
13. In the same place, unit hr. 584.

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