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Chapter 5 The Fourth Issuing Right of the Austro-Hungarian Bank The Austrian law of August 8, 1911 (Imperial Law Gazette no. 157), and the Hungarian Article of Law no. XVIII of 1911 (which are substantially the same) brought to a provisional close a disagreement that has continued for several years. They extended the note-issuing right [Privilegium ] of the Austro-Hungarian Bank that had already expired on December 31, 1910, and which had remained in force after that date only through temporary arrangements made between the governments of both halves of the country and the Bank. Also simultaneously extended until December 31, 1917, was the coinage and currency treaty that had existed between the two countries since 1892, and which was supposed to expire at the end of 1910. The banking and monetary union, whose continued existence appeared to be in danger due to the fierce hostility of the Hungarian Independence Party, was assured at least for the short term. The status quo was also maintained in the areas of monetary and banking policy until 1917, the next crucial year when the Ausgleich 1. [This article originally was published in German in the Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. 21 (1912).—Ed.] 2. In addition to the numerous articles in the daily and professional press, see especially the parliamentary materials relating to the government bill, including a report on the reasons for the fourth privilege (No. 1043 of the supplements to the stenographic protocols of the House of Deputies, Session XX, 1910). A representative overview of the reform and a rich bibliographic list are contained in Zuckerkandl’s appendix to “Österreichisch-Ungarische Bank” in the Handwörterbuch der Staatswissenschaften, vol. 8, pp. 1186–91. [Robert Zuckerkandl, “The Austro-Hungarian Bank,” in Banking in Russia, Austria-Hungary, the Netherlands, and Japan (Washington, D.C.: Government Printing Office, 1911), pp. 55–118, but without the accompanying bibliography in the original German.—Ed.] 3. [The Ausgleich, or “Compromise,” of 1867 refers to the agreement under which the Austrian Empire was transformed into the Austro-Hungarian Empire. Hungary was recognized as a selfgoverning nation within the empire, with the two halves sharing a common defense, and a customs and monetary union under the authority of the Habsburg emperor, Francis Joseph. The “Compromise” was to be renewed every ten years.– Ed.] the fourth issuing right of the austro-hungarian bank  105 will come up for renewal. This end to almost five years of conflict over the Bank was predictable, as there was never any doubt that an independent Hungarian central bank would not be founded on January 1, 1911. Such a solution to the Bank question would have been severely harmful for Hungarian interests, and would have been mourned from the Austrian side, as well. It was hardly likely that the governments and parliaments of both nations would have chosen such a course since it would have benefited no one and, indeed, would have resulted in severe disadvantages for the general economic development of the monarchy. The Hungarian opposition to continuing the banking union was based solely and exclusively on political, and not economic, grounds. Hungary (or, more specifically, an influential group of Magyar politicians ) demanded the establishment of an independent Hungarian bank, claiming that the mere existence of a common central bank was inconsistent with the status of the Kingdom of Hungary. Aside from vague national sentiments, even the most fervent advocates for a separate Hungarian Bank could not seriously assert that the banking union impaired Hungary’s economic interests. The advantages that accrue to Hungary through the banking and monetary union with Austria were too obvious to allow for any differences of opinion on this matter. Hungary owes its unhampered access to the Austrian money and capital markets to the Bank, as well as the fact that Austrian resources are widely available to Hungary’s industries and its agricultural sector throughout its provinces. Austrian money supports Hungarian credit banks, and the sums that have flowed from Austria into the Hungarian mortgage market are astronomically high. The common central bank also serves as a primary source to satisfy Hungarian credit demands. Beginning in 1906, the Austro-Hungarian Bank began publishing information about the territorial use of bank credit based on the location of the discount payments on the bills of exchange. Thus, the total of each region in the Bank’s bills of exchange portfolio were: Year Austria Hungary Bosnia and Herzegovina 1906 44.1% 55.9% — 1907 41% 59% — 1908...

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