Free The War of the World: History's Age of Hatred by Niall Ferguson Page A

pools of savings through the bond markets of London, Paris and Berlin. But the mortgaging or hypothecation of specific revenue streams like customs duties meant that these passed into foreign control in the event of a default. And defaults tended to happen in the wake of military setbacks like those suffered by Turkey in the 1870s and China in the 1890s; it turned out that simply buying Western hardware did not suffice to win wars.
    It is therefore not surprising that by 1901 so many Westerners expected both these venerable empires to go the way of the Safavid and Mughal empires, which had disintegrated in the eighteenth century, with European economic influence as the fatal solvent. Yet this was not what happened. Instead, both in China and in Turkey, a new generation of political modernizers came to power, inspired by nationalism and intent on avoiding the fate that had befallen earlier Eastern empires. The challenge for the Young Turks who came to power in Istanbul in 1908 was the same as that which faced the Chinese republicans who overthrew the last Qing Emperor three years later: how to transform sprawling, enfeebled empires into strong nation states.
    Somewhat similar processes were already at work in the Austrian and Russian empires, though this was much less obvious in 1901. Although similar to their Asian counterparts in their social foundations, both empires had modernized their revenue-gathering and war-making capabilities in the eighteenth century. Yet both were already struggling to cope with the technological and political challenges of industrialized warfare. The smaller Central European realm of the Habsburgs was primarily weakened by its ethnic diversity. There were at least eighteen nationalities dispersed across five distinct kingdoms, two grand duchies, one principality, six duchies and six other miscellaneous territorial units. German-speakers accounted for less than aquarter of the population. Because of its institutional decentralization, Austria-Hungary struggled to match the military expenditures of the other great powers. It was stable, but weak. The Carinthian-born novelist Robert Musil nicely captured the contemporary sense of retarded imperial development:
There was no ambition to have world markets or have world power. Here one was in the centre of Europe, at the focal point of the world’s old axes; the words ‘colony’ and ‘overseas’ had the ring of something as yet utterly untried and remote… One spent enormous sums on the army; but only just enough to assure one of remaining the second weakest among the great powers.
    There were, to be sure, periodic debates about internal reform. The ‘dualism’ that since 1867 had divided most power between a pluralistic Austria and a Magyar-dominated Hungary produced endless anomalies, like the arcane distinction between
kaiserlich-königlich
(imperial-royal) (k.k.) and
kaiserlich und königlich
(k.u.k.), which inspired Musil to nickname the country ‘Kakania’:
On paper it called itself the Austro-Hungarian monarchy; in speaking, however, one referred to it as Austria; that is to say, it was known by a name that it had, as a State, solemnly renounced by oath, while preserving it in all matters of sentiment, as a sign that feelings are just as important as constitutional law and that regulations are not the really serious thing in life. By its constitution it was liberal, but its system of government was clerical. The system of government was clerical, but the general attitude to life was liberal. Before the law all citizens were equal, but not everyone, of course, was a citizen. There was a parliament, which made such vigorous use of its liberty that it was usually kept shut; but there was also an emergency powers act by means of which it was possible to manage without parliament, and every time everyone was just beginning to rejoice in absolutism, the Crown decreed that there must now again be a return to parliamentary government. [N]ational