Without including provincial or municipal indebtedness, for nearly 200,000,000 of which Austria is indorser. The revenue is inadequate to meet the current expenditures, and there are some deficits which are not exactly known, and do not appear in these statements of the indebtedness of either monarchy. The two governments are seeking new sources of revenue or increasing the existing contributions. Many public men are looking especially to the reduction of the army as the chief resort for economy. It embraces nearly three hundred thousand men as the peace establishment, and about eight hundred thousand men as a war footing. With annually recurring deficits, it is evidently necessary to make reductions of expenditures, in order to preserve a semblance of national credit. This year's budget for Hungary showed an actual deficit of 31,000,000 florins. The budget for 1878 acknowledges a probable deficit of over 16,000,000 florins. The actual deficit in the Austrian (Cisleithanian) budget for 1877 was about 37,000,000 florins; the estimated deficit for 1878 is over 20,000,000 florins. The minister expressed the hope that by reduction of expenditures and increased revenue an equilibrium might be established between revenue and disbursements in the year 1880. The common imperial budget for 1878 proposes a total expenditure of 113,731,167 florins, indicating a reduction of over 3,000,000 florins on last year's budget. This expenditure is chiefly apportioned as follows: For the ministry for foreign affairs, 4,496,580 florins (of which 1,125,900 florins is subvention paid to steamers); for the common ministry of finance (including pensions), 1,976,978 florins; for ordinary expenses of the common ministry of war (including marine), 102,558,313 florins. As the two monarchies respectively vote their proportion of this imperial budget, the deficits, if any, occur in the several budgets of the two monarchies, not in that of the empire. Also the consolidated debt is composed of the separate obligations of the two monarchies. Having been misled as to this in my former dispatch (No. 22,) by the form of publication, I beg that a note may be made at the foot of that dispatch referring to this for correction of the statement of the debt. I doubt if the debt statements of any country in Europe are so intricate and complicated as those of this empire. I have, &c., No. 41.] Mr. Kasson to Mr. Erarts. LEGATION OF THE UNITED STATES, Vienna, January 30, 1878. (Received February 16.) SIR: I have on several occasions communicated to the Department the serious embarrassments entailed upon the Austro-Hungarian Government by the dualism and incompleteness of its federal pact. These difficulties have now entered upon a new phase. ་ The separate cabinets of the two dominions had agreed upon certain measures which were to precede the renewal of the pact; one of these involved a new tariff in which the duty upon coffee and petroleum was to be greatly increased. On coffee, which has hitherto paid 16 florins per 100 kilos, 24 florins were demanded. On petroleum, which has hitherto paid only 14 florins per 100 kilos, the extraordinary increase to 4 florins was demanded. The principal consumption of these articles is in Austria, and so the Hungarians demanded this as a condition sine qua non of the adoption of the act. The Austrian cabinet therefore made its adoption by the Reichsrath a cabinet question. Before putting it to vote, however, the development of opinion in the house convinced the cabinet that they could not carry the proposition. They accordingly tendered their resignations to the Emperor. Before his action thereon, Prince Auersperg, the president of the cabinet, called a meeting at his house of the presidents of the several clubs into which the members of the various shades of political opinion are divided, and requested their best judgment of the situation. They gave it, reported their declarations to their respective clubs, which confirmed them, and so settled the point that the house would not go beyond 20 florins on coffee and 3 florins. on petroleum. The Emperor, upon receiving notice of this, accepted the resignations of the ministers, but requested them to remain in discharge of their several ministerial functions until a new cabinet could be formed. After consulting various chiefs of the parties in the house, he has been unable to find a solution of the crisis. No new ministry can be on this question more satisfactory than the old, without abandoning the unacceptable measure. As long as that measure is a sine qua non with Hungary the dead-lock must continue, or the Reichsrath must recede. In the latter case the old ministry would go on. The Austrians complain of Hungarian dictation. The Hungarians manifest a high spirit of independence and strenuously assert their state rights. So dualism bears its bitter fruits of disorganization within and weakness without. I have, &c., No. 23. JOHN A. KASSON. No. 46.] Mr. Kasson to Mr. Evarts. LEGATION OF THE UNITED STATES, Vienna, February 21, 1878. (Received March 12.) SIR: In a previous dispatch (No. 24,) I made allusion to the use of the silver standard in Austria, and to the resulting difficulties of the government in respect to the custom duties, placing it at a great disadvantage in the commercial relations of Austria with countries having the gold standard. Since that time the imperial minister of finance, Baron Von Hofmann, was good enough to give me the opportunity, while dining with me, to discuss the gold and silver question with him. I desired this opportunity because of his reputation as a man of sense, practical, more disposed always to walk than to fly, industrious, and careful in all his studies. Without entering into details, I present to you the substance of his views on the subject in question. Austria, he said, never had the gold standard, but always made silver the basis of her currency and credit. During the disturbances and troubles of 1848, they were obliged to suspend silver payments, and since then have depended on the government paper and the notes of the national bank. Since that time the government debt has largely increased, and the financial condition of the empire has been such that they have never been able to resume silver payments. As I stated in a former dispatch (No. 31,) the government circulating notes (including exchequer bills) amount to 400,000,000 of florins. The bank-note circulation amounts to about 300,000,000 of florins. Against this total paper circulation of 700,000,000 there is in the bank a specie accumulation of about 137,000,000. There is no accumulation of specie in the government treasury. There is no specie in common circulation, except the silver contained in the small pieces of ten cents' value, and under. The only source from which the government derives a silver revenue is that of the customs, which is insufficient for the payment of its silver interest on the public debt. The residue required for that object is purchased in the markets. Nearly all her silver debt is held out of the country, about one hundred millions of it resting in Holland, and as much more of it in Germany, so that there is a continued exhaustion of the supply of silver. The prevailing premium on silver exchanged for paper is from five to six per cent. Under these circumstances, the government has no present intention to resume silver payments. Baron Von Hofmann did not hesitate to say that in his opinion gold must be the future standard among civilized nations. But for the present it could not be exclusively adopted by all countries. He thought there must be a transition period of bi-metallic currency. He admitted the difficulties of the double standard, the mutual relations of the two metals changing so much in the lapse of years, the metal worth the least expelling that worth the most from circulation. This should, if possible, be avoided or remedied, so that there should be everywhere a recognized relation of value between the two metals for the purposes of commerce. He thought this could be best accomplished by an international congress, which should fix this correlation of the two metals for a definite period of time, say ten, twelve, or fifteen years. Such a congress could reassemble when the course of commerce, or of metallic production, should have overcome the influence of the international establishment of the relation of values, and should render a readjustment necessary. Without such international agreement for the common use or common relation of values, the country or countries having exclusively the standard of higher value must inevitably demand and absorb the better money from the others, and so grow rich at their expense. I gathered from the tenor of his excellency's conversation, that in his opinion Austria, though not now in a condition to resume her silver payments, would gladly take part in such an international conference. I am, &c., JOHN A. KASSON. No. 51.]. No. 24. Mr. Kasson to Mr. Evarts. LEGATION OF THE UNITED STATES, Vienna, March 4, 1878. (Received March 22.) SIR: As supplement to my dispatches relating to the tariff legislation of this empire, and to the general movement towards higher customs rates among European nations, I submit the further information following. In my dispatch No. 41 I advised you that the ministry of Prin e Auersperg had made a cabinet question of maintaining the integrity of their bill, including the very high revenue rate of twenty-four florins on coffee and eight florins on petroleum, and had consequently resigned upon ascertaining that the Reichsrath would not adopt these rates. The Emperor, after calling in as advisers the leaders of the parties opposed to these rates, found the formation of a new ministry impracticable. The old ministry was therefore restored, after an interval of ineffectual and perhaps merely formal efforts for a different solution. The tariff bill was again taken up, the duties in question were reduced by the house from the figures proposed to twenty florins and three florins respectively, and progress was made with the bill without other changes of importance. The discussions now approach their termination in the Reichsrath of Austria. Debate has been concluded and the government bill adopted in the Reichstag of Hungary, where the rates of twenty-four and eight florins were, however, adopted for coffee and petroleum respectively, as proposed by the government. The bill pointedly aims at the restoration and future protection of various suffering manufactures and industries of Austria, by increasing the rates of duties on articles competing too successfully with national manufactures. In a former communication I advised you that this was not the tendency of Austria alone. Other continental nations are drifting in the same direction. Many European commercial treaties are expiring. Each government, much more carefully than formerly, is advising with the representatives of its various industries, to avoid any mistakes arising from ignorance of details, and in order to put their interests on such a footing that their home markets cannot be suddenly and ruinously flooded from abroad. Indeed, it seems to me that all Europe is entering upon what may be styled an era of national selfishness, both in its political and commercial relations. Every government in its political relations with others, and especially in connection with the Eastern question, fills the air with the asseveration, not as formerly of maintaining old treaties or the "balance of power," but of the resolution to "protect its own interests." Whether in England, Austria, Italy, France, or Germany, there is the same cry. So it is, also, in respect to commercial interests. There is not a cabinet minister on the Continent, whose déclarations have fallen under my observation, who does not take this ground when speaking of new commercial treaties, or of readjustments of tariffs. In case you have not seen that portion of the forthcoming report, introductory to a tariff bill prepared by the French ministry (but not yet submitted to the Assembly), from which I have just now received the following extract, I beg your attention to it, as completely confirming the statements of European commercial policy which I have heretofore expressed. All such legislation in Europe is not only carefully prestudied and elaborated by responsible officers, and adjusted in all its rela tions, but it is also motived (motivé) with equal care, that all reasons for it may appear with the bill, and like it be subjected to criticism. It is from this "motive" of the French bill that I take the following extract. After alluding to the former bill introduced in 1877, which proposed legislation in the direction of lower duties, "because we at that time supposed the economic doctrines which had prevailed since 1860, in most of the great states, were still in favor," they proceed as follows: "We hoped the commercial treaties to come would show fresh progress in the direction of free trade, would facilitate the extension of our export trade, and in accord with the Conseil Supérieur du Commerce,' which, as regards this rule, only made an exception to the advantage of the cotton industry, we submitted the duties of the conventional tariff as a limit only to be exceeded in the exceptional case provided for by article 5. But the reaction from the crisis from which the commerce of the world is so cruelly suffering, added to the demand for money by most states, has given a new direction to ideas. Recent significant facts give us reason to fear that our hopes will not be realized, and that most states will be drawn into increasing their tariffs. We had to strug gle against this tendency in our recent negotiations with Italy. We shall, perhaps, have to do so again, when we have to treat with Switzerland, which is at this moment occupied with a bill for the increase of her tariff. Other states, large and small, seem to be going in the same direction. In presence of this new situation, just when the commercial treaties are all expiring, it would be imprudent for France to disarm her negotiators by spontaneously according the benefit of the conventional tariff to those who would not reciprocate it, who would make their markets less accessible to her manufactures and natural products, and render, by their demands, the conclusion of a commercial convention impossible." The "motive" then continues with an assertion that the ministry, nevertheless, does not mean to go back to protection, but that their action proceeds from a desire to arm themselves in their intercourse with other nations with the power to put on a higher duty, if such nations shall refuse what France considers a satisfactory commercial treaty. My chief object, however, in transmitting this extract is to confirm by that high authority the statements already made by this legation, of the important change of commercial policy going on in Europe. Its results cannot yet be fully predicted. That a change of opinion and doctrine has already taken place is certain. It appeared to me anomalous, and possibly, in view of our great commerce with Europe, dangerous, that the United States should be in transition from protective legislation toward free trade at the same moment that Europe is in transition from free trade toward protection. With their own national markets secured to national industry against our competition, their surplus might, under such circumstances, be employed to the suppression of some of our industries which may not be equally well guarded. I ought, perhaps, to add as an indication of popular views in France, that the French "general syndicate of textile industries," a few days since urged the government to proceed with this legislation, and "to raise the duties on importation, in order to afford suffering industries. the relief indispensable to them." Since the first part of this dispatch was written, the debate on the tariff bill in the Reichsrath has been finished, and the bill has passed to the third reading. There remain a few points of difference to be adjusted between Austria and Hungary, the former having changed some of the rates in the original bill, which the latter adopted without change. I have, &c., 3 FR JOHN A. KASSON. |