Long-term economic and structural consequences
Statistics for the establishment and closing of businesses demonstrate a good deal of activity by small businesses but at the cost of considerable wear on plant and equipment. Large-scale light industries were thus best equipped to survive the war, while other parts of the production sector suffered badly.
Small businesses also suffered significant deterioration in their capital investments. Statistics for 1914 to 1916 indicate an increase in closures and moves. In 1917 and 1918 there was marked growth again, and by the end of the war the number of businesses had increased compared with 1913. The commissioning of engines dropped by one third between 1915 and 1918, indication of the considerable wear and tear on equipment.
The discrepancy between large and small manufacturers as a result of the demands of war production widened in the first half of 1916 as the supply of raw materials became increasingly acute through the blockade by the Entente and Italy’s entrance into the war in 1915. The distribution problem became a central focus. By autumn 1917 the number of raw material depots had gradually increased to ninety-one. In the first phase of the war these depots were organised as private trading companies or corporations under public law. As the war progressed, however, monopoly-like mergers ordered by the Ministry of Trade appeared in addition. With the inauguration of the Hindenburg programme in winter 1916–17 a serious conflict arose between the Ministry of War and the Ministry of Trade. Whereas the former wanted to concentrate military orders – initially textile and leather production – on major manufacturers, the Ministry of Trade feared the collapse of small businesses with attendant social unrest and therefore favoured a fairer distribution. The characteristic state-organised capitalism to protect small businesses which was to mark the corporate development of the Austrian economy in future thus had its beginnings during the war.
Although no business censuses took place in the period under review, statistics from accident insurance companies and the details from the population censuses in 1910 and 1923 give an idea of the structural changes brought about by the war. The number of companies requiring accident insurance increased by 4.6 per cent between 1914 and 1918, with factory insurance rising by as much as 10.6 per cent. Among these larger companies the mechanical engineering, chemical and clothing industries all profited from the war. According to the 1923 profession census, employment in the mechanical engineering, electrical engineering and chemical industries was much higher than before the war. These modern industries survived the post-war years relatively unscathed. Some even profited from the war. These developments had in any case been foreseen before the war as part of the “second industrial revolution” and the rise of light industries.
Translation: Nick Somers
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