There was a moment in the history of the Hohenzollerns when it seemed possible that they might anticipate the idea of William II: “Our future lies upon the water.” If the Great Elector (1640-1688) had secured the Pomeranian coast of the Baltic or kept even Stettin, he might have realized the plans he held to turn Prussia into a sea power, with fleet, colonies, and transmarine commerce. Fortune fixed the interests of the state on land, however, and when a good Baltic harbor was secured later it was too late to change. Frederick the Great was urged, a century afterward, to direct his policy to the sea, and actually founded some companies for trade with the East, but the time had passed, or had not yet come, for the success of Prussia in oceanic trade.

300. Reforms in Prussia favoring economic development.—In regard to their internal conditions, however, the territories of the Prussian state enjoyed a great advantage over others in Germany. The obstacles to trade in the form of tolls and staples were removed when political interests did not require their maintenance. The tariff systems, enormously complicated and cumbrous, were revised. The growth of manufactures was furthered by attracting skilled artisans from other countries; and the city of Berlin received a great stimulus from the Huguenots who found a refuge there. Some of the worst abuses of the gilds were reformed, and manufactures were protected, as in France, by customs duties and by royal privileges. New methods were applied in agriculture, and new land was opened to settlement and cultivation; a large number of the laborers, however, still remained unfree. It would be easy to add many details, but in closing this section on Germany the reader is again advised that the important side of Prussian history in this period was political, not economic. Prussia was preparing herself for the work of unifying Germany, and to accomplish that work a strong government was needed rather than a rich people. The riches have come to Germany in our own time.

301. Contrast of Prussia and Austria.—Prussia was a state which started in the heart of Germany (near Berlin), and remained almost entirely German as it spread. Austria, on the other hand, was originally a territory on the southern border of the German people, the rulers of which managed by skill and luck to extend their power over fragments of adjoining peoples of a different stock, over Bohemians and other Slavs (relatives of the Russians), and over the Magyars or Hungarians (relatives of the Turks). These other peoples were behind the Germans in their industrial development; they had come into Europe later, had been less subject to civilizing influences and more exposed to internal quarrels and wars. Furthermore, the Austrian Germans were behind the other Germans, on whom they were industrially dependent in the sixteenth century. Germans from the North took their manufactures into Austria for sale, carried on the trade of Austria and controlled the mines of Austria.

302. Political factors hindering development of the lands subject to Austria.—The territories subject to the ruling family of Austria, the Hapsburgs, began the period, therefore, in a backward condition, and they had no opportunity throughout the period to catch up. Internal trade was hindered not only by the national diversity of German, Slav, and Magyar, but also by the persistence of provincial tariffs, which underwent no important reform until nearly 1800, and which were not abolished even then. Austria did not suffer so much as Germany from civil war, but like Germany went through the crisis of the religious wars, which nearly ruined Bohemia; and had a plague of its own in resisting the advance of the Turks from the Balkan Peninsula. Austria suffered like France, moreover, from an absolute government which too often used the national resources in the interests of the royal family and not in the interests of the people as a whole.

303. Slow progress of industry and commerce.—It is, therefore, not surprising that in 1700 Austria stood commercially in about the same position it had occupied two centuries before. The country exported the raw products of industry, wool, flax, linen, hides, copper, etc., and received them again after they had been manufactured by other peoples. An economist of the time said that the total manufactures of Austria were not equal to those of a single Dutch city like Leyden. Even this small amount of manufacture was controlled by gilds, and suffered from the characteristic faults of the gild system.

In the eighteenth century, however, the government began to appreciate the importance of national commercial development. It fought the claims to monopoly put forward by the gilds, and encouraged manufacturers to extend their business, by premiums and privileges, as in France and Prussia. Austrian iron and steel wares made a place for themselves in commerce; the cloth industry of Bohemia, once ruined by war, revived again under the factory system; stockings, glass, porcelain, etc., were produced in increasing quantities.

304. Attempts of the government to stimulate development.—The government stimulated the development of manufacture by its customs tariffs as well as by its internal policy. The duties on articles which the government thought could be made at home were raised rapidly, especially after 1700, and became in many cases prohibitory. Undoubtedly the growth of manufactures was furthered by this policy, though many industries betrayed the weakness of their origin by failing after a short period of apparent prosperity. The tariff gave rise, however, to much smuggling and corruption, and injured greatly some parts of the country: the Tyrol, which lies between Italy and Germany and had prospered on the transit trade; and sections like Hungary which produced only raw materials.

To atone in some measure for these necessary results of a protective system, the government attempted also to extend aid to foreign commerce. Triest and Fiume were made free-ports, i.e., they were put on the outside of the tariff frontier to attract trade. Venice was forced to renounce her claim to the exclusive right to navigate the Adriatic, and commercial treaties were made with Turkey, Russia, and states in northern Africa. Consuls were sent out to represent Austrian interests in foreign countries, and attempts were made to secure a share even in the trade with India.

305. Austrian commerce still backward in 1800.—Still Austrian trade attained no great development. The government which gave with one hand took with the other. Special privileges did not make up for the general weakness of the productive organization. Rulers complained that in spite of all their efforts commerce languished. Most of the foreign trade was absorbed by five companies, which divided the field. Two of them were limited locally, trading with Turkey and with Asia Minor respectively; while the other three traded in special wares with various countries. One imported colonial wares like sugar; another exported linens; while the third exported various raw materials to Italy, France, and Spain. During the wars beginning in 1776 Austrian merchants attempted to build up a trade with North America, and an agent of the government was installed at Philadelphia in 1783, but during the following years of peace Austria had no chance of success in competition with trade rivals.

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