The Economy and Communications policy of Benjamin Kallay in Bosnia and Herzegovina (Principal features)

Abstract

The modest process of modernization that began in the final decades of Ottoman rule in Bosnia and Herzegovina entered a new stage after 1878 evolving in specific circumstances. The most important period for the economic and social changes that took place in BiH during Austro- Hungarian rule is when Benjamin Kallay headed the territorial administration (1882-1903). It was then that the majority of road and rail communications were built and almost all the country’s industry was set up. As regards the economy, the authorities took the same mercantilist attitude as they had during the absolutist period. They set up and ran companies, and bore most of the liabilities and risk in companies where both state and private capital were invested. The administration endeavored to attract foreign capital by offering extensive privileges and guarantees, though foreign investors were extremely cautious, becoming involved primarily in forestry and to some extent in mining. It was in Austria-Hungary’s interests to encourage, to a degree at least, the development of Bosnia and Herzegovina’s economic potential, since this freed it of concerns that it would find itself in a position of having to pay the costs of administering an occupied country. Kallay’s economic policy was primarily aimed at the exploitation of natural resources, so that the construction of railways and tariff policy were at the forefront of his economic policy. Kallay’s evaluation of the importance of certain railway lines for the economy of Bosnia and Herzegovina was the deciding factor for their construction.