Csaba Lentner - East of Europe, west of Asia

2.2 Economic aspects and effects of the Austro-Hungarian Compromise of 1867 | 39
gary and is able to influence competition to the fullest extent.” 148 The most
effective means of the state to support industry was the mandatory provision
of public transport (procurements by the state, other authorities and
state-supervised facilities like railways and shipping, and the purchases of
the beneficiary industrial companies) for the domestic industry. The value
of public transport in the early 1890s was 50 to 60 million and in 1913 it was
404.2 million krones. Hungarian industrial purchases by transport companies
amounted to 308.3 million krones, acquisitions of the government and
other authorities 64.9 million, and the Hungarian quota for the joint military
and naval industry purchases was 31.0 million krones. “Public consumption
in proportion to the volume of industrial production is not as important in
any country of Western Europe as it is in our country.” 149
However, economic policy based on state intervention has more subtle
assessments. Lajos Leopold calls the form of capitalist transformation that
has emerged in the monarchy in Hungary a fake capitalism. In his view,
capitalism is “where, wherever possible, in concentrated plants, they produce
to the market with the best possible division of labour. The means of
production are in the hands of capitalists, who give their confidence in the
production to be made when the required stock is advanced. Confidence is
based on speculation and calculation. Elements of the real capitalist order:
concentration, division of labour and production to the market.” 150 According
to Leopold, only the legal system of capitalism exists in Hungary, which
although promotes, but does not fully allow the development of true capitalism;
it is only pretence held in a politically protected envelope hiding the
appearance of real internal problems. “The tense character of the Hungarian
capitalist development is evidenced by the data following each other more
frequently, “writes Endre Nagy 151 , who says that “the industrial development
did not spread proportionally over the entire period of the Monarchy, but
concentrated mostly to the period from the second half of the 1890s to the
outbreak of the World War.” 152
Iván T. Berend, György Ránki 153 and Miklós Szuhay 154 also refer to the
low level of the Hungarian industrial performance compared to Western
and Central European countries and their modest internal demand. They
highlight: “…the number of cotton-spinning reels in Hungary at the turn
of the century was 110,000, while in Austria more than 4.5 million, and in
Germany nearly 10 million […]; the textile industry only covered 30% of
domestic needs”. Thus, the economic policy aimed at boosting agricultural
production also had many discrepancies that had an impact on the activities
of other sectors, such as the banking sector. “Agriculture, precisely because
it was backward from technical aspect, and it did not have sufficient own
resources for the development, increased the bank operations”. 155 Therefore,
when lending their resources, an agricultural focus was prevailing
in the banks’ activity. The industrial sector itself has adjusted itself to the
dominant role of agriculture in the structure of the economy; while “large-