MITTEL-EUROPA

Southland Times, Issue 21419, 13 June 1931, Page 11

MITTEL-EUROPA

AN OLD DOCUMENT

(By

Aedile.)

The efforts to secure an Austro-German Customs Union carry the mind back to the earlier effort of the two countries to create a Mittel-Europa in the dying months of the War, a scheme which involved an economic union extending beyond the limits of Austria. In that agreement signed in Salzburg—on October 11, 1918 can be found the reasons for France’s nervousness today. Conferences between Germany and Austria began in the first week in July while the armies of the Central Powers were still pressing the Allies victoriously on the Western Front, but within a few weeks the situation changed. The Allied last counterstroke was launched, on August 8. but the negotiations went on, and even when the Hapsburg empire was crumbling, tho discussions proceeded. Finally on October 11, a month before the Armistice, the document was signed, and the economic union was created. It was never effective.

It goes without saying that much of the story of these negotiations has only a historical interest. There was, for example, the problem of how to erect a new Poland which should be under Austro-German tutelage and how to arrange its tariffs so that both empires would have a fair share in its trade. The treaties of Brest-Litovsk with the Soviet and of Bucharest with Rumania were all a part of the story, for their frontiers would adjoin the great Middle European territory. It is perhaps unfair to compare the completed document of 1918 with that which has recently been published as embodying the programme of a treaty still to be realized, but the general principles of the 1931 plan have been stated both in the document and in the comments of the two governments. It looks to the creation of a freetrade union between Germany and Austria. Now this was just the point which AustriaHungary refused to yield in the wartime negotiations. Then the initiative came from Germany. Incidentally, the roles have now been reversed, but while that is not without its political significance the important point is that Austria now advocates the kind of economic union which it formerly refused. The Salzburg plan not only maintained an internal customs barrier between the two empires but it based its whole apparatus of external tariffs upon the rates to be charged on goods crossing the Austro-German frontier. The arrangements was based on the idea of protection as definitely as the present proposal envisages free trade within the union. The Salzburg formula was simple if ingenious. It was that of a preferential tariff between Germany ' and Austria-Hungary which in general should be lower than their outside tariffs by the difference between the latter. For instance, if Germany had a customs rate of 200 marks on a certain foreign article and Austria-Hungary 100 marks, then there would be a tax of 100 marks on its importation from Austria-Hungary so as to prevent importers from using the Hapsburg frontiers as a breach in the German tariff wall. On the other hand, the same article would go from Germany to Austria-Hun-gary duty free because both countries already had been safe-guarded from foreign competition by the high German duty. There was, therefore, a fairly large amount of free trade within this protective tariff plan. But each empire was left free to plan independently of the other for its own protection against external competition. In theory, at least, the weaker partner kept its full freedom and independence. The advantages to Austria from such an arrangement can best be seen by a comparison of the situation in which it -would find itself under a free-trade union, as outlined in some detail by Dr. Schuller. The weaker partner in a free-trade union, he says, not only must follow the lead of the stronger, because both must maintain the same customs rate against outsiders, but it must accept common policies of peace and war, because it will not be economically selfcontained and therefore will be dependent upon its partner for part of its defence. The free-trade union is therefore almost like another form of a millitary alliance, a peacetime form, so to speak. Then again, a free-trade union affects the budgets of the member States in ways that may be favourable only to one of them, and since so largo a part of the budgets comes from customs dues there is at once a loss of financial independence. Add to these objections the further one that the administration of a uniform system calls for uniform oversight and one sees how near to a political Anschluss the present proposal is in the eyes of an Austrian expert. These arguments against the free-trade union seem a little overdrawn. But they are, nevertheless, interesting when one recalls that their proponent is the chief inventor of the Salzburg formula, and that as he is still the economic head of the Vienna Foreign Office he has undoubtedly had something to do with framing the present proposals. Tho question naturally arises, therefore, why has Austria shifted its ground and given up its Salzburg formula. The explanation is that Austria is set upon doing the very thing it avoided in the past, giving up its independence —piecemeal, it is true, but in pretty large pieces. It was necessary to avoid awaking hostility in the neighbouring countries and the free trade formula was adopted because it was hoped it would cause less apprehension, but the fierce objections of France and Czecho-Slovakia are aroused because the creation of a new Mittel-Europa is envisaged. That is why the old Salzburg document is of special interest to-day, after being regarded as dead and buried.