Austria-Hungary failed to create transportation networks necessary for the development of industries and markets throughout the empire. Unlike the
German Empire, the Habsburgs were hostile toward the idea of building railway systems in the provinces and remained fixated on their own metropolis. The whole of
Austrian Bohemia was served by only one line throughout the 1860s.
Emperor Francis Joseph I opposed further construction "lest revolution might come into the country." Railways were owned privately in Austria-Hungary before 1881 and only gradually acquired by the state interest until the outbreak of World War I. Viennese banks – wrote
Clive Trebilcock of
Cambridge – were tapping the eastern grain-plains [of Galicia] in fully colonial style. The
new state borders had cut Galicia off from many of its traditional trade routes and markets of the former
Polish Crown, resulting in economic stagnation and the decline of Galician towns.
Lviv lost its status as a significant trade centre. After a short period of limited investments, the Austrian government started the fiscal exploitation of Galicia and drained the region of manpower through conscription to the imperial army. The Austrians decided that Galicia should not develop industrially but remain an agricultural area to serve as a supplier of food products and raw materials to other Habsburg provinces. New taxes were instituted, investments were discouraged and cities and towns were neglected. Education lagged behind, with only 15% or so of the peasants attending any kind of school, meaning that few peasants had the skills to pursue other careers. Even if they did, no major Galician city (
Kraków or Lviv) was a center of significant industry, which gave peasants little alternatives to their profession. The Austrian imperial government showed absolutely no interest in schooling and subsequent reform such as industrialization, which would upset the system in which Galicia was a cheap provider of agricultural products for the Empire, and a market for inferior industrial goods, a situation profitable for both the governments and the landowners. The Austrian government treated Galicia as a colony that could be treated as another country, and overtaxed it rather than invested in it. In what little industry Galicia had, one of the largest local branches (about a third of the total) was
alcohol brewing, further exploiting and impoverishing the peasantry. Alcoholism was a major social problem. The agricultural productivity of Galician peasants was one of the lowest in Europe because of primitive agricultural techniques, many little different from those used in the
Middle Ages.
Overpopulation in Galicia has been so severe that it has been described as the most overpopulated place in Europe and compared to
India and
China. The
emancipation of serfs in 1848 did not improve their situation significantly, as they were given poorly-paid jobs by the local major landowners, who owned 43% of the arable land in 1848, which did little to improve the peasants welfare from the previous feudal relations. Other changes in the law made the peasants also lose access to many forests and pastures, which the large landowners tried to secure for themselves. According to Alison Fleig Frank, the role of Polish landowners should not be overlooked. Six percent of Ukrainian speakers engaged in nonagricultural occupations vs 33% of Polish speakers. She writes: ==Results==