This record might have mattered less if there had been marked growth in the commercial and industrial sectors, but here, too, the picture was bleak, even by Balkan standards.
The rural population had poor access to markets and there was not much in the way of starter industries, such as the textiles mills that helped to drive industrial growth in neighbouring Bulgaria.
73 Under these conditions, Serbian economic development depended upon inward investment – the first effort to pack and export plum jam on an industrial basis was launched by employees of a Budapest fruit-processing company; the silk and wine booms of the late nineteenth century were likewise triggered by foreign entrepreneurs. But inward investment remained sluggish, in part because foreign firms were put off by the xenophobia, corrupt officials and underdeveloped business ethics they encountered when they attempted to set up operations in Serbia. Even in areas where it was government policy to encourage investment, the harassment of foreign businesses by local authorities remained a serious problem.
74
Investment in Serbia’s human capital was just as unimpressive: in 1900, there were still only four teaching colleges for all Serbia, half of all elementary-school teachers had no pedagogical training, most school classes were not held in buildings designed for the purpose and only around one third of children actually attended school. All these shortcomings reflected the cultural preferences of a rural population that cared little for education and saw schools as alien institutions imposed by the government. In 1905, pressed to ratify a new revenue source, the peasant-dominated assembly of the Skupština chose to tax school books rather than home distillation. The result was a strikingly low rate of literacy, ranging from 27 per cent in the northern districts of the kingdom to only 12 per cent in the south-east.
75
This grim landscape of ‘growth without development’ bears on our story in a number of ways. It meant that Serbian society remained unusually homogeneous both in socioeconomic and cultural terms. The bond between urban life and the folkways of peasant oral culture, with its powerful mythical narratives, was never severed. Even Belgrade – where the literacy rate in 1900 was only 21 per cent – remained a city of rural immigrants, a world of ‘peasant urbanites’ deeply influenced by the culture and kinship structures of traditional rural society.
76 In this environment, the development of modern consciousness was experienced not as an evolution from a previous way of understanding the world, but rather as a dissonant overlayering of modern attitudes on to a way of being that was still enchanted by traditional beliefs and values.
77
This highly distinctive economic and cultural conjuncture helps to explain several salient features of pre-war Serbia. In an economy so lacking in opportunities for ambitious and talented young men, the army remained the biggest show in town. And this in turn helps to account for the fragility of the civilian authorities in the face of challenges from the military command structure – a crucial factor in the crisis that engulfed Serbia in the summer of 1914. However, it was also true that the partisan warfare of irregular militias and guerrilla bands which was such a central theme in the story of Serbia’s emergence as an independent nation owed its durability to the persistence of a peasant culture that remained wary of the regular army. For a government confronted with an increasingly arrogant military culture and lacking the organic connection with a large and prosperous educated class that underpinned other nineteenth-century parliamentary systems, nationalism represented the single most potent political instrument and cultural force. The almost universal enthusiasm for the annexation of yet unredeemed Serb lands drew not only on the mythical passions embedded in popular culture, but also on the land-hunger of a peasantry whose plots were growing smaller and less productive. Under these conditions, the argument – however dubious – that Serbia’s economic woes were the fault of Vienna’s punitive tariffs and the stranglehold of Austrian and Hungarian capital could not fail to meet with the most enthusiastic approbation. These constraints also fed Belgrade’s obsession with securing an outlet to the sea that would supposedly enable it to break out of backwardness. The relative weakness of commercial and industrial development ensured that Serbia’s rulers remained dependent upon international finance for the military expenditures they required in order to pursue an active foreign policy. And this in turn helps to explain the deepening integration of Serbia into France’s web of alliances after 1905, which was rooted in both financial and geopolitical imperatives.
....
A recurring theme was the economic degradation of their Bosnian countryfolk by the Austrian authorities (
a complaint that overlooked the fact that Bosnia was in fact more industrialized and more prosperous in terms of per capita income than most of the Serbian heartland)
...
Gradualism and continuity’ characterized Austrian rule in all areas of Bosnia-Herzegovina where they encountered traditional institutions.
34 Where possible, the laws and institutions inherited from the Ottoman era were harmonized and clarified, rather than discarded out of hand. But the Habsburg administration did facilitate the emancipation of subject peasants by means of a one-off payment; over 40,000 Bosnian kmets purchased their autonomy in this way between the occupation and the outbreak of war in 1914. In any case, the Serbian kmets who remained within the old estate system on the eve of the First World War were not especially badly off by the standards of early twentieth-century peasant Europe; they were probably more prosperous than their counterparts in Dalmatia or southern Italy.
The Austrian administration also did much to increase the productivity of agriculture and industry in Bosnia-Herzegovina. They set up model farms, including a vineyard and a fish-farm, introduced rudimentary agronomic training for country schoolteachers and even established an agricultural college in Ilidze, at a time when no such institution existed in neighbouring Serbia. If the uptake of new methods was still relatively slow, this had more to do with the resistance of the peasantry to innovation than with Austrian negligence. There was also a massive influx of investment capital. A road and railway network appeared, including some of the best mountain roads in Europe. These infrastructural projects served a partly military purpose, to be sure, but there was also massive investment across a range of sectors, including mining, metallurgy, forestry and chemicals production. The pace of industrialization peaked during the administration of Count Benjamin Kállay (1882–1903) and the consequence was a surge in industrial output (12.4 per cent per annum on average over the period 1881–1913) without precedent elsewhere in the Balkan lands.
35 In short, the Habsburg administration treated the new provinces as a showcase whose purpose was to ‘demonstrate the humanity and efficiency of Habsburg rule’; by 1914, Bosnia-Herzegovina had been developed to a level comparable with the rest of the double monarchy.
36
The worst blemish on the record of the Austrian administration in Bosnia-Herzegovina was the appallingly low rate of literacy and school attendance, which was worse even than Serbia’s.
37 But this was not the consequence of an Austrian policy of mass stultification. The Austrians built primary schools – nearly 200 of them – not to mention three high schools, a teacher training college and a technical institute. It was not a stellar effort, but it was not outright neglect either. The problem lay partly in getting peasants to send their children to school.
38 Only in 1909, after the formal annexation of the provinces, was compulsory primary education introduced.
