ates of central Europe a stable and extended
market; for the introduction of high tariffs in Russia and America had
crippled industry. Two years later Austria-Hungary also arranged with
Russia a treaty similar to that already made between Russia and Germany;
the reductions in the tariff secured in these treaties were applicable also
to Great Britain, with which there still was a most favoured nation treaty.
The system thus introduced gave commercial security till the year 1903.

[Sidenote: Reform of the Currency.]

The result of these and other laws was an improvement in financial
conditions, which enabled the government at last to take in hand the
long-delayed task of reforming the currency. Hitherto the currency had been
partly in silver (gulden), the "Austrian currency" which had been
introduced in 1857, partly in paper money, which took the form of notes
issued by the Austro-Hungarian Bank. This institution had, in 1867,
belonged entirely to Austria; it had branches in Hungary, and its notes
were current throughout the monarchy, but the direction was entirely
Austrian. The Hungarians had not sufficient credit to establish a national
bank of their own, and at the settlement of 1877 they procured, as a
concession to themselves, that it should be converted into an
Austro-Hungarian bank, with a head office at Pest as well as at Vienna, and
with the management divided between the two countries. This arrangement was
renewed in 1887. In 1848 the government had been obliged to authorize the
bank to suspend cash payments, and the wars of 1859 and 1866 had rendered
abortive all attempts to renew them. The notes, therefore, formed an
inconvertible paper currency. The bank by its charter had the sole right of
issuing notes, but during the war of 1866 the government, in order to raise
money, had itself issued notes (_Staatsnoten_) to the value of 312 million
gulden, thereby violating the charter of the bank. The operation begun in
1892 was therefore threefold: (1) the substitution of a gold for a silver
standard; (2) the redemption of the _Staatsnoten_; (3) the resumption of
cash payments by the bank.

In 1867 Austria-Hungary had taken part in the monetary conference which led
to the formation of the Latin Union; it was intended to join the Union, but
this was not done. A first step, however, had been taken in this direction
by the issue of gold coins of the value of eight and four gulden. No
attempt was made, however, to regul