Note (Back) — Chapter XXVII

564. Fiscal and Economic Arrangements.—In 1867 it was agreed that the common expenditures of Austria and Hungary should be met, in so far as possible, from the joint revenues, especially the customs, and that all common outlays in excess of these revenues should be borne by the states in a proportion to be fixed at decennial intervals by the Reichsrath and the Hungarian Parliament. Other joint interests of an economic nature—trade, customs, the debt, and railway policy—were left likewise to be readjusted at ten-year intervals. In respect to contributions, the arrangement hit upon originally was that all common deficits should be made up by quotas proportioned to the tax returns of the two countries, namely, Austria 70 per cent and Hungary 30 per cent. As has been pointed out, the periodic overhauling of the economic relationships of the two states has been productive of frequent and disastrous controversy. The task was accomplished successfully in the law of June 27, 1878, and again in that of May 21, 1887. But the readjustment due in 1897 had the curious fortune not to be completed until the year in which another readjustment was due, i.e., 1907. To the parliamentary contests, at both Vienna and Budapest, by which the decade 1897—1907 was filled some allusion has been made.[713] They involved distinctly the most critical test of stability to which the Ausgleich has been subjected since its establishment. During the period various features of the pre-existing arrangements were continued in force by royal decree or by provisional parliamentary vote, but not until October, 1907, were the economic relation of the two states put once more upon a normal basis. Throughout the decade the Emperor-King exercised repeatedly the authority with which he is invested by law of 1867 to fix the ratio of contributions for one year at a time, when action cannot be had on the part of the legislative bodies. The ratio prevailing during the period was Austria 66-46/49 per cent and Hungary 33-3/49 per cent.