The economic regime of Austria received a strong mercantilist impulse while the house of Hapsburg still normally enjoyed the elective headship of the Holy Roman Empire, and Joseph II, in his active industrial and commercial policy, was not the least arresting of the mercantilist reforming monarchs of the eighteenth century. 1 In this aspect he may be compared with Peter the Great of Russia, Frederic the Great of Prussia, and Charles III of Spain. The mercantilist

spirit persisted, though with no real national basis in the heterogeneous Hapsburg dominions, after the abolition of the Holy Roman Empire, when Austria, after an interval, was left with the presidency of the loose Germanic confederation. As we have seen, Prussia used a comparatively low tariff in the Zollverein as a means to keep protectionist Austria out of the union, and afterwards managed to drive her out of the German system altogether. The Austrian regime was considerably modified during the period of liberalized tariffs in Europe, but Austria entered early and fully into the succeeding protectionist reaction. The development of her alliance with the Hohenzollern German Empire is a subject that cannot be treated here, but more significant for her fortunes than her own protective policy was her subservience, in recent years, to the mittel-Europa scheme whereby German nee-Mercantilism sought to obtain, for political and economic reasons, an effective control over the region from the North Sea to the Persian Gulf. This subordination helped to bring Austria into the greatest of wars, and thus to precipitate the break-up of her empire. 2

Just as a preliminary step to the unification of Germany under the Hohenzollern was the extrusion of Austria from the German State system, so the unification of Italy required the expulsion of Austria from Italy, and this was accomplished by the aid of the power which ousted Austria from Germany. Under the guidance of Cavour, Piedmont had adopted a liberal commercial system. His economic ideas were largely formed in England, under the influence

of the classical economists. 3 He believed that England had prospered in the past not on account of protection but in spite of it and had prospered most where there had been least protection, and part of his policy of making Piedmont a model State which should win the respect of Europe and the confidence of Italians all over the peninsula was to frame her economy on the free trade lines with which England had replaced the Mercantile System. With the union of Italy all local tariffs were abolished, and the comparatively liberal scale of Piedmont became the national one. Later, however, Italy fell in with the current reaction against economic liberalism. One of the consequences was a long tariff war with France which seriously affected the trade between the two countries. It is indeed difficult to see what benefit Italy derived from her protective system, which seems to have rather checked than assisted her economic progress, and the settlement of her quarrel with France and a modification of her tariff led to a definite improvement in her industrial and commercial position. Jealousy of French colonial adventures had caused Italy to combine with Germany and Austria in a Triple Alliance. Feeling against Austria rooted in questions of national frontiers led Italy to enter the Great War against Austria. Since the close of that conflict she has joined in the outburst of apprehensive national protectionism by raising her tariff rates to about double what they were before the war. But it would seem that in so doing she has studied rather immediate security than future progress and expansion.