"Watch Austria-Hungary" Says Oscar W. Babson.

New York Times 100 years ago today, January 19, 1913:
Francis Joseph the Key to the Present Situation in Europe, and on Him Depends Largely Whether There Will Be a General War or Not, According to the Well-Known Statistician Now Abroad.By Roger W. Babson.
Naples, Dec. 16.
    WILL the Balkan war be settled and the fruits thereof be plucked and distributed without a general European war? This is the question which I find so many are asking to-day throughout Italy.
    Their desire for the Dalmatian coast (on the opposite side of the Adriatic Sea from Italy) may prevent the Italians from looking at this question in an unprejudiced spirit. This coast, where one still finds prevalent the Italian language, architecture, and commerce, originally belonged to Italy. It now belongs to Austria, and is now held firmly by Austria, much to the vexation of Italy. Moreover, as that part of Austria nearest to Italy is German, and as Germany is to-day giving Austria strong moral support in its aggressive policies, the Italians have no great love for Germany. Thus, I find a certain fear of Germany among the Italians, such as I find among the French, English, and Russians, all of whom feel that Germany is back of Austria in her present moves. For this reason I should not be surprised to see the Triple Alliance break up and Germany and Austria unite against the field, notwithstanding the recently announced renewal thereof.
    In fact, I believe it was only Germany's loyalty to Italy during the recent Italian-Turkish war that has made it possible for Germany to induce Italy to renew this Triple Alliance. In other words, as Germany aided Italy in taking Tripoli, Italy cannot now object to Germany (through Austria) also extending her domains. Moreover, as Italy still has her hands full in quieting Tripoli, she has neither money nor men to unite with the great powers in a war of any other kind. Readers must remember that although Italy has signed peace terms with Turkey, she has not yet signed with Tripoli. She still has those Arabs to conquer.
    When I ask a statesman of one of the above mentioned four nations his opinion of whether or not there will be another European war, he replies, "Ask Germany."
    I, however, cannot ask Germany this question, and so must be content with my own analysis of the situation, which is as follows:
    The Balkan territory can be divided without a European conflict, so long as Emperor Francis Joseph of Austria-Hungary lives and prospers; but upon his death there may be a general European war, and every move suggests it will be a real one, unless Germany backs down, for in the final conflict, I think, Italy will try to remain neutral.
    To understand the make-up of Austria-Hungary and adjacent territory, we must go back many hundreds of years to the time when Europe was being populated from Asia. As the hordes of people from Asia came westward by ship and caravan, most passed through by the Turkey-Balkan-Austrian route. The progressive pushed northward to what is now Germany and westward to what is now France; while the untrained remained in Turkey, if Mohammedans, or in the Balkans, if Christians. But that great middle class, possessing neither the courage to live the life of the south nor the ambition to push further northward or westward, stayed in what is now Austria-Hungary.
    Yesterday while walking out into the country I noticed Italian mothers sifting meal or flour, using that which passed through the sieves and setting aside for another grinding that which did not pass through. As I saw those women with their gay dresses and headgear, I thought of Austria-Hungary as the sieve of Europe, catching that which was not good enough to pass through and holding it for another grinding. Mind you, I did not find the Italian women throwing away the large pieces which did not pass through the meshes, but, rather, they saved them "for another grinding." These larger grains, although too coarse and mixed to assimilate, yet were as wholesome and as precious as those which had already been finely ground.
    In the same way the people of Austria-Hungary and the Balkans are precious and possess great possibilities, but they, nevertheless, consist of the remnants of that great mass of humanity which has been flocking the past 2,000 years from Asia to Europe. These are the remnants which failed to pass through the meshes of progress and were gathered in the great Austro-Hungarian-Balkan sieve. Moreover, like the miscellaneous pieces of grain caught by the Italian women, these people need, and will some day have, another grinding.
    I am not one who believes that war is an economic necessity. Of course the "fittest" must and will survive; but there are far better tests of efficiency than warfare. Not he who destroys the most, but he who produces the most, will survive all others in the end. Nevertheless, until the world's battleships are combined into one navy, under the control of an international court at The Hague, and used to enforce its edicts, will war become extinct, and, through such another grinding of these Slavic races, be avoided.
    Therefore I believe that the "mill" for this grinding will be located in Austria-Hungary, and that all the great powers of Europe will have a hand in the grinding, with a result — who can tell?
    Here are contained all the necessary requisites for starting a great European conflagration, and the main power which prevents it to-day is Emperor Francis Joseph. This man has almost a magic hold upon his people. Whether Germans, Italians, Slavs, or Hungarians, they all seem to respect this wonderful old man. But when he dies, what then? He had a son Rudolf, but, as if preparing for the coming conflict, this son was murdered — or disposed of in some way. He still has a nephew; but no persons with whom I talk over here ever expect to see him Emperor of the great territory now ruled by Francis Joseph.
    Emperor Francis Joseph is about six feet tall, rather slight, but of tough, wiry make-up, which usually means long life. He now is about 85 years old, and has reigned longer than any living sovereign. Although an Emperor in every sense of the word, with a dignity almost equaling that of a Pope, yet he has always combined this dignity with a certain simpleness and kindliness which reminds one of President Lincoln. He has none of the arrogant or spectacular quality so common with some rulers. He is a strong Catholic in faith, a soldier in courage, and a student in the affairs of State. In short, I believe it is purely his unique personality which to-day holds together the two countries of Hungary and Austria.
    Not only are these Austro-Hungarians jealous of one another, but the countries themselves are subdivided by different races and languages. The ancestors of almost every language and religion are represented among these people. Thus, when the grinding takes place other nations are liable to be compelled to help.
    For instance, about one-sixth of the population of Austria-Hungary are Magyars, which inhabit the great central portion and a group on the extreme southeast. The Rumanians also inhabit about one-sixth, being located in the southeastern section adjoining the Balkan States, and would naturally combine therewith, in the case of a European conflict. Another sixth of Austria-Hungary is inhabited by Poles and Slovaks, who are located in the northeast and might be "friendly" to Russia. Bosnia in the southwest makes up another sixth; the Germans in the northwest absorb still another sixth, while the remainder of Austria-Hungary is inhabited by two or three other nations, Italians predominating.
    So long as Emperor Francis Joseph lives respect for the old man will keep these races together; but his death is very liable to be the signal for a conflict with the following possibilities:
    The Germans who now predominate in the north-western portion may be absorbed by Bavaria and deliver Bosnia and the Dalmatian coast to the German Empire, giving it the Mediterranean coast for which it has so long been working, while the Poles and Slovaks of the northeastern portion may be absorbed by Russia, who will then force her way through to the Mediterranean and perhaps capture Constantinople.
    The modern history of Austria-Hungary dates from the days of our civil war. In 1859 Austria was whipped by Italy, which then obtained from Austria Lombardy; in 1860 Francis Joseph inaugurated a system of feudal government, while in 1861 a Constitution was granted, making the Government a constitutional instead of an absolute monarchy. This plan of government was satisfactory to the Austrians, but not to the Hungarians, who refused to send any representatives to the new parliament for four years. In fact, from 1861 to 1865, while our civil war was in progress, Austria and Hungary were having a passive war, which was finally won by Hungary, as Austria in 1866 became involved in the Austro-Prussian war and could not afford to have enemies both north and south.
    Thus, in 1867, Francis Joseph, Emperor of Austria, made a most curious arrangement with Hungary. Although he was crowned King of Hungary, yet both Austria and Hungary were created and are now two distinct and separate countries, each with its own parliament, ministry, and administration without any interference from the other. It is true that they both have the same flag and the same Department of Foreign Affairs and War; but each has its separate tariff and currency system and is entirely independent in every other way.
    But this is not all. Instead of growing more closely together as years have passed, they, actually are becoming even more independent of one another.
    Although the parliaments have used different languages, yet it was originally agreed that the armies of both countries should use the language of Austria, believing that one common language is a necessity in order to avoid confusion on a field of battle. During the past two or three years, however, the Hungarians have been fighting against this, and are to-day desperately striving to have the Hungarian Army use Magyar. Scenes of great violence have occurred over this question within the past few months, and to-day I find the feeling is very bitter.
    The history of the past fifty years shows that Austria-Hungary is preparing for a separation rather than a union, and that this is liable to come upon the death of Emperor Francis Joseph. The great question is whether Austria will peaceably yield and permit Hungary to secede without a struggle or whether the secession will lead to a civil war, such as was witnessed in this country in 1860-64. If the separation is peaceful, a European war may be avoided, but if a civil war between Austria and Hungary is instituted, the other nations of Europe will greatly benefit. Germany, Russia, and Italy will perform the functions of doctor, lawyer, and undertaker, and it will require a large portion of the "estate" to pay their bills.
    Not only will these other nations want portions of Austria-Hungary for strategic purposes, but the latter countries possess some of the finest undeveloped land in Europe. The great fertile valleys along the Danube are the envy of Russia; the ore and coal of the mountain regions are coveted by Germany, while the table lands remind the American traveler of Iowa, Missouri, and Indiana of our own country. The climate of these countries is temperate, the labor conditions ideal, and everything favors development and expansion. Therefore my word to readers is, "Watch Austria-Hungary." I have just been learning of Bosnia and Herzegovina, the two provinces recently taken over by Austria-Hungary. I am told that these provinces possess some of the most productive land in Europe, great virgin forests, and splendid rivers, all of an area equal to Switzerland. And yet the Magyars of Hungary opposed this annexation and would gladly give these provinces up at any time. Why? Because these two provinces are Slavic in make-up, and the Magyars who control Hungary have no use for the Slavs. In short, Hungary wants only one thing, namely, absolute freedom and independence, and is willing to share Austrian territory with Russia, Germany, or Servia for aiding her in the fight.
    American business men and investors should carefully watch Austria-Hungary. Never pass over any news from these countries without reading. A most intimate relation exists to-day between Vienna, the capital of Austria, Budapest, the capital of Hungary, and Wall Street. The spark which will touch off the next European conflagration will be found in Vienna or Budapest. Watch these two cities. Remember the aims and desires of Hungary and the opportunity which such a mix-up will give Germany and Russia.
    When will it come? I cannot answer this question definitely excepting to say it is coming nearer every day. From my recent studies, I should say that the death of Francis Joseph may be the signal for the fray. At least — as soon as he dies — I strongly advise American business men to prepare and be able to quickly reef sail, reduce loans, and be ready for a great European financial and industrial panic. This especially should be done if Francis Joseph should die at a time when so many European nations are over-extended financially as at present, as it is the height of the fall which determines the extent of the injuries.
    This, by the way, is where many of our bankers and merchants make a great economic error.
    We may have panics every year, yet it is only when we are abnormally prosperous and extended that they hurt. Thus, the law of action and reaction is based upon two factors — height and width, which combined form an area. These areas all nations are constantly forming above and below their lines of normal growth. But the shapes of  these areas differ, and it is the tall, peaked areas of which business men should beware.
    Watch the areas which are being developed by the various European nations as well as the area which is being developed by our own country. When political trouble comes, the effect of such trouble upon American business and investments will depend upon how many European countries are overextended or in the high portions of a tall area. If few nations are so overextended, then there will be no European panic at such a time; but if many nations are then over-extended, there surely will be a European panic. And when this European panic comes, its effect upon America will be determined by the American composite plot of business conditions at that time. If we are near our line of normal growth, a European war should help us; but if we are high up in the tenth or twentieth story there certainly will be a smash in New York.