THE AUSTRO-HUNGARIAN NAVAL INDUSTRY

Over the long period between 1850 and 1904 the Habsburg Empire gradually developed a capable naval industry which was able to build ships and machinery and to manufacture armor plates and naval ordnance of any caliber. Th e last surface vessels of the Austro-Hungarian Navy built in a foreign country were the prototypes of the Huszár class destroyers and the Kaiman class torpedo boats built in 1904 in Britain.

Between 1798 and 1848, every Austrian warship was built in the Arsenal of Venice. After 1850, Trieste became the center of the Austrian naval shipbuilding. Th e fi rst Trieste built warships were constructed in the Navale Adriatico San Marco shipyard. Wilhelm Strudhoff , the owner of the Stabi li mento Tecnico Triestino (STT) machine factory founded the San Rocco shipyard in 1857. Th is yard later would become the main subcontractor of the Navy, but did not receive naval orders until 1869. Th e fi rst Austrian built steam frigate was launched in 1856 and the fi rst and only ship of the line in 1858. Th eir steam engines were imported from Britain.

From the 1860s, the Austrian industry could produce steam engines, but with the advent of the ironclads and the rifl ed guns the Navy was constrained to import again. In Austria only the Zeltweg Ironworks could produce armor plates but its capacity was far behind the needs of the Navy. Th e Austrian industry could produce only smaller rifl ed guns so the Navy relied on import in the fi eld of large and medium caliber guns until the end of the century. In 1868, Tegetthoff modernized the fl eet’s armament with Armstrong guns imported from Britain but in a short time the German Krupp became the main gun supplier of the Austro-Hungarian Navy.

Th e STT San Rocco shipyard received its fi rst naval order in 1869 for the casemate ship Custoza, the fi rst iron hulled ship of the Navy. Th e Custoza was built with British armor and carried Krupp guns. Due to the concurrency of the STT and the economic crisis of 1873, the San Marco shipyard closed in 1875. From 1875 to the fi rst decade of the 20th century there were two shipyards in the Monarchy which could build warships: the Navy’s own shipyard in the Arsenal of Pola and the privately owned STT. Th e shipbuilding, maintenance and modernization and the provision of naval ordnance (chapters VI and VII of the Navy’s budget) consisted 63-64 percent of the naval budget between 1870 and 1900, and 73 percent between 1900 and 1914.35 In the 1870s and 1880s 26 percent of this sum went to foreign fi rms.36

Until the 1890s, the Austrian industry was incapable to produce many strategic items needed for the Navy: armor plates and large and medium caliber guns were the most important of them. Th e 1890s brought important changes in this fi eld too. Th e changing political climate in Austria and the lobby of the representatives of the rapidly growing Austrian heavy industry brought an important turn in the Navy’s policy. Th e Navy adopted a pro-domestic industry policy which meant that the Navy ordered every possible item from domestic (Austrian) fi rms even when the domestic prices were higher. Th is policy in turn helped the rapid development of the Austrian naval industry because more capital was invested in this industry in hope of lucrative future contracts.

Th e fi rst ship built with armor plates made by an Austrian fi rm was the Navy’s fi rst armored cruiser the Kaiserin und Königin Maria Th eresia. Th e Navy ordered her armor plates in 1891 from the Witko witz Ironworks in Moravia founded by the Rothschilds. Th is fi rm had a virtual monopoly on the armor orders until the dissolution of the Austro-Hungarian Monarchy. Th e Škoda Works founded by Emil Ritter von Škoda in Pilsen made a cooperation agreement with the Krupp in 1890. Th e Škoda adopted the breech system of the Krupp. Th e coastal defense ships of the Monarch class were the fi rst ships which carried medium and small caliber Škoda guns. Th e Škoda manufactured its fi rst heavy gun (24 cm) in Pilsen in 1901. Th e fi rst Austro-Hungarian capital ship which carried an all-Škoda armament was the third unit of the Habsburg class the Babenberg. In 1902 the Škoda denounced the cooperation agreement with the Krupp.

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11 30.5 cm/45 twin turrets for the Radetzky class battleships during assembly at the Škoda Works, Pilsen

In 1898, the Österreichische Industrieverband (Austrian Industry League) for the fi rst time formally asked the delegations to support the development of the Navy.37 As the naval shipbuilding became a lucrative business, the Rothschilds via their bank the Creditanstalt became in 1897 the major shareholders of the STT. Th is capital injection enabled the STT to buy the long time closed San Marco yard.38 From 1899 every warship ordered from the STT was built in the San Marco yard. A few years later the Rothschilds became the major shareholders of the Škoda Works too. Th us the Rothschilds gained controlling interest in the three “fl agships” of the Austrian naval industry.

In the fi rst decade of the 20th century new competitors emerged in the naval industry. Th e virtual monopoly of the STT was broken fi rst when the Hungarian Danubius of Fiume received its fi rst order for seagoing warships from the Navy in 1906.39 Th e special political system of the Dual Monarchy, the need for the support of the Hungarian government for the development contributed signifi cantly, if not solely, to the rapid growth of the value of the orders from the Hungarian shipyard after 1911. A new shipyard, the Cantiere Navale Triestino (CNT) of Monfalcone entered the scene in 1911, causing fears both in Trieste and Fiume. From 1913, Škoda was the major shareholder of the CNT. In fact this shipyard received only minor orders compared to STT and Danubius. On the eve of the First World War, only the Witkowitz Ironwork’s monopoly seemed stable because there were no other armor manufacturers in the Dual Monarchy. In 1913, a great gun factory, the Magyar Ágyúgyár Rt. (Hungarian Gun Factory Ltd) was established in Hungary in Győr, with the intention that this factory would be able to manufacture even the heaviest naval ordnance and complete gun turrets from 1920. In fact, it was less threatening to the positions of Škoda, because the Czech gun factory held 6/13 of the shares of the new factory.40

With the development of technology and as the battleships become larger and larger the prices were steeply rising. Th e price of a 10,600 ton Erz herzog Karl class battleship was 26 million Kronen (2450 Kronen per ton), that of a Radetzky class battleship was 39 million Kronen (2680 Kronen per ton), that of a Tegetthoff class battleship was 60 million Kronen (3000 Kronen per ton) and that of a projected Improved Tegetthoff class battleship was 82 million Kronen (3350 Kronen per ton). In little more than

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a decade the specifi c (per ton) costs of battleships rose by 37 percent, while the prices of battleship classes rose from 78 million Kronen to 328 million Kronen (420 percent).

Th e prices of the Austro-Hungarian naval industry were higher than that of Britain or of Germany. Usually an Austro-Hungarian warship was 20 percent more expensive than a similar British or German warship. Th is was the price that the Navy had to pay for the political support of the fl eet development by the industrialist. In the Dual Monarchy participating in the naval buildup was a very good business, while the prices were higher workers’ wages were lower than in Western Europe, so higher profi t rates could be achieved. Th e Navy was well aware of this phenomenon but they could do little about it. Th e emergence of the Danubius shipyard in Fiume did not help in breaking down prices because the Hungarian shipyard tried to ask for even higher prices. Th e Austrian steel cartel was also very eff ective in averting the Navy’s attempts to break down the prices.

Th e following numbers illustrate well the acceleration of the pace of the Navy’s development after the turn of the century. Th e Austro-Hungarian Navy spent on new construction, repair and naval artillery 297.6 million Kronen between 1874 and 1899. Th is sum was tripled between 1900 and 1914 reaching 891.6 million Kronen.41 Th e largest part of the latter sum ended up in three fi rms: the STT, the Škoda Works and the Witkowitz Ironworks.

It is worth examining the eff ects of the growth of the capacity of the Austro-Hungarian naval industry in the second decade of the 20th century on the battleship construction and on the prospects of the naval arms race between the Dual Monarchy and Italy. Th e investments and the developments in the fi rst years of the 1910s created a signifi cant growth of the capacity on such territories of the naval industry which were crucial for the battleship construction. With the two new, large slipways (called “battleship slipways”) erected at Danubius in Fiume, it became possible from 1914 to lay down four battleships simultaneously instead of two. In the preceding years only the STT possessed slipways large enough to build battleships,42 two in number. A third battleship could be laid down only after the launch of one of the fi rst two battleships. With the establishment of the Hungarian gun factory theoretically the capacity of the gun turret production would have been increased at least by fi fty percent at the end of the decade. Armor manufacturing was the only fi eld where no new factory was established, but during the construction of the Tegetthoff class it was demonstrated that the Witkowitz Ironworks was able to increase signifi cantly its manufacturing capacity with ease. Th e rapid growth of the capacity of the Austro-Hungarian naval industry and the forthcoming accession to throne of the pro-navy Franz Ferdinand foreshadowed that one day the Italian naval superiority over Austria-Hungary would be no longer maintainable. Certainly, there were roadblocks to a future battleship building boom, beside the fi nancial limitations from the technical point of view the bottleneck was the limited pool of skilled workers. Nevertheless, the outbreak of the war ended the development of the Austro-Hungarian Navy once for all; the largest new warships laid down during the war were 800 ton destroyers

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