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Published by: Institute of History, Research Centre for the Humanities, Hungarian Academy of Sciences

2024_4_Horvath

A Unique Path to Monopoly:pdf
The Case of the Hungarian Insurance Sector, 1945–1952

Gyula Horváth

Eötvös Loránd University, Corvinus University of Budapest

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Hungarian Historical Review Volume 13 Issue 4 (2024): 575-595 DOI 10.38145/2024.4.575

This paper presents the nationalization and monopolization of the private insurance industry in Hungary after World War II. In all the socialist countries save one private insurance was prohibited. In the insurance sector, only one (or technically sometimes two) state-owned insurance companies handled the insurance business with an essentially monopolistic position after the process of nationalization had ended. This uniformity, however, masks the fact that these countries took differing paths towards this end. This was particularly true of the events in Hungary. This article suggests possible explanations for these differences.

Keywords: private insurance industry, nationalization, Central and Eastern Europe, post-World War II, monopoly

One of the greatest turning points in the history of the insurance industry in Hungary and Central and Eastern Europe occurred between 1945 and 1952. The nationalization and monopolization efforts that were characteristic of the region as a whole at the time unsurprisingly also affected this sector of the economy. Although there is a relatively extensive historiography of the period, including the process of nationalization, the insurance industry has been almost totally neglected by historians. The lack of primary sources has also been an encumbrance, since the archives of the relevant companies are incomplete due to damages sustained during the war.

By fortuitous accident, I happened to get access to documents collected by a former insurance executive of the State Insurer company (Állami Biztosító).1 The man in question, Endre Boross, had served as a lawyer for the insurance industry from the 1930s until 1970s. At the peak of his carrier, he was Head of Legal Department for the company. These documents helped me better understand the process of nationalization, and I found that it was somewhat different from the process of nationalization in other industries in Hungary and also from the process of nationalization in this branch of industry in the other countries of the region, even if the final result, a monopolistic state insurance system, was the same. Regarding the nationalization of the insurance industry, there were at least four different methods in Central and Eastern Europe:

  • The nationalization of the private companies, typically relatively soon after the end of the war, followed by the step-by-step merger of the companies into one (this was the path taken in almost all the countries of the region).
  • Not formally nationalizing the private companies but rather “suffocating” them and, after they had been made insolvent, transferring their portfolios to companies that were close to the state and then establishing a state insurer from scratch and transferring the portfolios of the remaining companies to it (this was the path taken in Hungary).
  • Banning all private insurance companies and establishing companies owned by local governments, which were later merged into one (this was the path taken in the German Democratic Republic).
  • Banning the whole insurance industry (this was the path taken in Albania).

The section below on Central and Eastern Europe presents the processes by which the insurance industry was nationalized in the countries of the region other than Hungary. The Hungarian case is discussed in the section “The Insurance Industry: A New, Short Beginning.” In this discussion, I offer answers to the following question: was the path taken in Hungary with regards to the nationalization of the insurance industry unique in the region compared to other countries and to the path taken to nationalization in other sectors of the Hungarian economy?

Nationalization in Hungary after World War II

Given the deeply politicized nature of the issue, interpretations of postwar nationalization in Hungary differed meaningfully depending on the political climate of the given historical moment. From the perspective of the discussion below, the era can be divided into five periods.

The first period covers the years from the end of World War II to the “turnaround year” (1948). From the viewpoint of the history of privatization, it would make sense to put the end of this period at 1949 rather than 1948, but by 1949, there were no longer any opportunities or even possibilities for substantive debate or dissent in Hungary.

Due to the lack of historical perspective, naturally, only the economic press covered the subject in these years. Most of the articles were about what was happening abroad. As Czechoslovakia had already undergone major nationalization in 1945 under the so-called Košice Program (which included the nationalization of heavy industry, banks, insurance companies, and all companies employing more than 300 people), several articles dealt with the processes underway there.2 Articles in the economic press regularly reported on nationalization campaigns abroad, mostly without giving the names of the authors of the articles and without providing any commentary. In an article published in January 1948, József Büky examined the nationalization of central banks and, in particular, the post-nationalization management systems.3 According to Büky, the nationalization of the central banks was a necessary consequence and part of the general postwar nationalization process.

The first comprehensive analysis of the postwar situation appeared in the first issue of Közgazdasági Szemle (Economic Review) in 1948, in the form of a book review.4 Vilmos Nemény analyzed the expected transformation of society and the economy from capitalism to socialism on the basis of Joseph Schumpeter’s5 classic 1947 work Capitalism, Socialism and Democracy, perhaps the most interesting idea being that socialism would be established by “the state taking over the large corporate units.” If this were to happen in a “mature” society, then the leadership of the emerging large bureaucratic machine would be taken over by managers and the transformation could be democratic and democracy could be maintained. Otherwise, Schumpeter claims, socialism will be dominated by struggle and society will not be democratic. Whatever the case, the last two sentences of Nemény’s article are not optimistic, or rather, in retrospect, they were realistic: “After reading Schumpeter’s book, it seems likely that the world he describes as coming is not the world he himself would like to live in. But sympathies or antipathies cannot change the inexorable logic of social events.”6

The second period lasted until 1956. This period was characterized by an endorsement of the decisions of the party leadership and a portrayal of the Communist Party as the only positive political actor. The first time nationalization was discussed, albeit briefly, was in 1952. The author was Mátyás Rákosi himself,7 whose sixtieth birthday was the occasion for the lecture “The road of our people’s democracy,” given at the Party School of the Hungarian Working People’s Party (Magyar Dolgozók Pártja), which was the ruling party in 1949–1956. According to Rákosi, gradual nationalization in four or five stages would be a prudent strategy with which to avoid prompting a concerted counterattack by the enemy.8 The articles published in the period basically presented two (not contradictory) rationalizations of nationalization, sometimes in the same article. According to the first, nationalization was part of the class struggle, albeit a relatively peaceful way of engaging in this struggle. As such, the steps in the process were linked to political developments.9 This concept was supported by some articles translated from Russian, which of course quoted extensively from the “brilliant” works by Comrade Stalin, notably The Economic Problems of Socialism in the Soviet Union, which was published in 1952. They described the people’s democracies as transitional societies where the remnants of capitalism were still present, but where nationalization had brought the “command posts of the economy” under the control of the proletarian state. The other view is mainly based on economic and planning arguments. According to this view, capitalist enterprises were wasteful and inefficient (there were occasional accusations of sabotage), and without nationalization, it would have been impossible to introduce planned management.

The third period, which was something of a prelude to the more dramatic decade of an increasingly intense push for regime change, ended sometime in the late 1970s. Iván T. Berend and György Ránki, the leading authors of these years, emphasized the use of so-called “dry” methods of capital expropriation by the state in the brief period between 1945 and 1947. These “dry” methods were based on the experience of the Soviet NEP (New Economic Policy – Novaya ekonomicheskaya politika). The government exerted strict control over private enterprises, which included for instance the loans that were given, wages, prices, and even quantities of raw materials available for use.10 The government was thus able to “suffocate” the target company and force the owners to offer the ownership to the state without formally nationalizing the company. Politicians and historians referred to this method as “dry” nationalization.11 In some cases, it was combined with brutal pressure from the police and state security forces.

In articles published in the 1960s in the journals Századok12 and Acta Historica,13 György Ránki argued that state capitalism had existed before nationalization, since the state already determined the control of companies through the credit, pricing, and the tax system, even if capitalist private property formally still existed. The inclusion of companies in the National Bank’s single account system also contributed to state control. The appointment of workers’ directors was no longer seen by Ránki as a clear success, as many of these directors lacked the necessary skills and knowledge. Interestingly, this latter idea appeared only in his article published in English.

In 1962, Iván T. Berend analyzed the aforementioned “dry” state capitalist mode of capital appropriation in his article. According to Berend, stabilization required the strictest measures of a controlled economy, with appropriate credit, monetary, and price policies, but all this in turn gave the opportunity to limit the power of capital through state capitalist means.14 In 1965, in a speech at the Karl Marx University of Economic Sciences (Budapest) given on the twentieth anniversary of the liberation of the country,15 and in 1967, in an article on economic policy between 1945 and 1965,16 he presented the state intervention after 1945 as having had historical antecedents (World War I, the Great Depression, preparations for war, and World War II). On the other hand, he claimed, this policy was a response not simply to economic collapse but also to Soviet and other war reparations claims. According to Berend, it was not only about the introduction and maintenance of a command economy, but also about the question of who benefited from these measures. In his view, they served both the long-term goals of socialism and attempted also to respond to the economic conditions of the time. All this, he wrote, “marks the transition from capitalism to socialism on the broad road of state capitalism.”

In essence, these interpretative frameworks remained valid in the 1970s. Some more critical approach also appeared. In his 1973 academic inaugural address,17 Berend himself analyzed the reorganizations that immediately followed the nationalizations, pointing out that the large state enterprises such as the Heavy Industry Centre were almost beyond central control. Even later, large companies and trusts were still created, at least until the introduction of the New Economic Mechanism in 1968.

In the fourth period, which began in 1980 and lasted until the fall of the socialist regime, the growing intellectual freedom of historians allowed for the emergence of more critical, sometimes non-Marxist views. Tibor Kovácsy’s 1981 article18 deviated strikingly from the earlier interpretative frameworks. In his view, the changes that took place between 1946 and 1950 were not the results of organic social developments but were rather consequences of an anticipated mode of social functioning. Accordingly, he characterized the nationalizations as “drastic,” and disagreed with the earlier consensus that these nationalizations had led to the emergence of social or public property, since “nationalization places the right of disposal in the hands of a specific organisation, i.e. a closed group of people, whereas the concept of social property excludes such a monopoly on disposal.”19 Charles Gáti described the discussion between Imre Nagy and others in the Hungarian Communist Party leadership about the acceleration of nationalization following the Cominform’s20 decisions in Szklarska Poręba.21 In 1985, Sándor Balogh analyzed the events of 1944–1948 and offered an objective description of the process of nationalization.22 Perhaps his only evaluative remark was that the nationalization of March 25, 1948 had constituted a break with earlier practice, since it had been carried out not by law but by degree, i.e. by taking advantage of the power situation.

The fifth period covers the years from the regime change in 1989 to the present. During this period, there was a noticeable decline in interest in the subject, which is partly understandable, as the era was more about privatization than nationalization.

A new approach has also emerged. Historians have begun to analyze the impact of nationalization on Hungarian foreign relations. In several works, including an article written in 1993, László Borhi examined the American response to the post-1945 Soviet takeover of a big part of the Hungarian economy.23 Borhi described the debates between the American and Hungarian governments about the nationalization of American companies in Hungary. Zoltán Vas24 had declared in 1948 that American companies would not be nationalized, but this proved not to be true. In 2009, János Honvári analyzed Hungarian-American negotiations on financial and property issues, where one of the most important questions was the compensation to be paid for nationalized US assets.25 These issues were only settled in 1973 within the framework of a comprehensive agreement. The dispute over the nationalization of the Swedish-owned match monopoly had been settled much earlier, in 1951.26 In 2017, historian Antal András Kováts studied the seizure of Swiss assets.27 Éva Voszka’s 2018 summary work on the history of nationalization and privatization also analyzed nationalization after 1945, but she focused on Western European and US experiences.28 Unfortunately, the nationalization and monopolisation of the insurance industry was not even mentioned in these works. In Dezső Csabay’s summary of general insurance theory, a single paragraph dealt with the subject without offering any evaluation.29

The State and the Insurance Industry

The role of the state in the insurance industry has been a matter of debate for the past two centuries. From time to time, authors, politicians, and professionals have argued that the state should own insurance companies for a number of ethical, political, and practical reasons. Some of them have also suggested that the state insurance companies should have a monopolistic role in different segments of the market.

We know of some historic examples when these suggestions were adopted (e.g. Brand-Assecuranz and Feuer-Sociätat mutuals in some entities within the Holy Roman Empire).30 In the Holy Roman Empire, the first ideas arose as early as the beginning of the seventeenth century (Oldenburg, 1609). As the population of the German states considered the introduction of compulsory fire insurance merely another tax, the first attempts failed, including those of Elector Friedrich Wilhelm of Brandenburg (1640–1688). According to many citizens, the insurance even went against God’s will, as it sought to offer a safeguard against an act of God.31 Despite this resistance, state insurance companies were established in Hamburg (1676) and later in other states as well, in some cases with mandatory membership.

In Hungary, local authorities pioneered the establishment of local mono­polistic fire insurance companies in the eighteenth and nineteenth centuries.32

In 1912, the Italian Government established the so-called Istituto Nazionale delle Assicurazioni, INA. The INA had a monopoly on the acquisition of life insurance policies, while the other companies continued to manage their existing portfolios. This system remained in place until 1923, when the Government abolished the monopoly. An interesting political fact is that the INA was created by the left-liberal Gilotti government and was abolished by the Fascists as an early action of the Mussolini cabinet.33

After World War II, nationalization efforts intensified in many European countries. In 1946, 34 insurance companies were nationalized and a state-owned reinsurance company was created in France. However, no attempt was made to establish a state monopoly on (re)insurance.34 These measures were proposed to the parliament by the three-party Gouin government of Socialists, Communists, and Christian Democrats.

As is perhaps not surprising given the size of the country, the largest nationalization program outside of Europe took place in India. The Life Insurance Corporation Act of 1956 nationalized all life insurance companies operating in the country and established a single monopolistic company.35 This was in line with the mixed-economy policy of the Nehru cabinet. In 1972, all non-life companies became state-owned. More than 100 insurers ceased to exist, and the General Insurance Corporation of India was founded.36

Central and Eastern Europe

In the Central and Eastern European region, in the so-called people’s de­mocracies, Soviet practice set the model for the insurance industry, like in many other sectors of economic and political life.

After the October Revolution, the local Soviets took control of the mutual associations in the zemstvos37 and cities in Soviet Russia.38 At the time, private insurance companies were still allowed to continue operating. On March 23, 1918, the Council of Insurance Affairs was set up with the task of overseeing “the overall management, coordination, and proper control”39 of all insurance organizations. The council, which consisted of 40 members, included representatives of the state and trade unions as well as representatives of the joint-stock insurance companies. On September 17, 1918, the Council decided that dividends of joint stock companies were to be paid into the Treasury. On November 28, 1918, the state monopoly on insurance was declared and private insurance companies were liquidated. (Only insurance cooperatives which insured movables and goods on a mutual basis were allowed to survive.) Interestingly, insurance and fire services were placed under joint management, although these activities were separated in 1920. During the civil war and “war communism,” insurance became irrelevant. State-owned companies had to give up insurance, and private capitalist ownership either ceased or became illegal. This left only private individuals as a market, who in turn were hit by inflation and impoverishment. On November 18, 1919, life insurance was abolished, and the reserves were transferred to the State Treasury. In October 1921, the General Directorate of State Insurance was set up under the People’s Commissariat of Finance. The 1936 Constitution of the the Union of Soviet Socialist Republics, USSR (the so-called Stalin Constitution) in Article 14 (o) placed insurance under federal jurisdiction. The further history of the Directorate and its successor, the insurance monopoly company Gosudarstvennoe Strakhovanie (Государственное Cтрахование, State Insurer), is beyond the scope of this article.

Since the establishment of the Ingosstrakh (Главное управление иностранного страхования СССР, Chief Directorate of International Insurance of the USSR) in 1947 there was a duopoly in the USSR, but each company had a monopoly in its respective market (Gosstrakh in the internal market and Ingosstrakh in the international direct and reinsurance business).

The process of the nationalization of the insurance sector differed in:

  • the victorious countries (Czechoslovakia, Poland), which were brought under Soviet influence,
  • Yugoslavia and Albania, which were also on the victorious side but which did not have the Soviet army on their territories,
  • Hungary, Romania, and Bulgaria, which had lost the war but formally remained independent,
  • East Germany, later the GDR, which was under Soviet occupation.

In Czechoslovakia, all private insurers were nationalized by Presidential Decree 103/1945 of October 24, 1945 (one of the so-called Beneš Decrees).40 Expropriation was in principle carried out by means of compensation, but owners who were German or Hungarian by nationality as well as alleged collaborators and their companies were excluded from compensation (§ 19). The only company not nationalized was the First Czech Reinsurance Bank (První českou zajišťovací banka) (§ 17). In January 1947, the nationalized joint stock companies, mutuals, and branches were merged into five state-owned insurance companies. In 1948, the nationalized companies were merged into the Československa pojišťovná (Czechoslovak Insurer).41 In 1969, with the transformation of Czechoslovakia into a federal state, two entities were established, the Česká státní pojišťovna (Czech State Insurer) and the Slovenská štátna poisťovňa (Slovak State Insurer), each with a monopoly in its respective market.42

Poland also nationalized its insurance industry in 1946. At the beginning of 1947, the government established the General Mutual Insurance Company (Powszechny Zakład Ubezpieczeń Wzajemnyh, PZU) by decree.43 This was a state-owned insurance company, and it became the basis of the monopolization of the market. The process of monopolization was completed only in 1952, when the PZU became the only insurer in the country.

In Yugoslavia, all insurance companies were nationalized in March 1945, and their portfolios were merged into the National Insurance and Reinsurance Institute. It enjoyed a monopoly until 1961.44

During the communist era, there was no insurance company in Albania. The first state-owned one was established in 1991 as a monopoly, and the state opened the market only in 1999.45

Romania nationalized its insurers and the banks in June 1948. However, within a year, the portfolios of the insurance companies were transferred to the Sovrom Asigurare (Sovrom Insurer), a Soviet-Romanian joint venture.46 The company ceased to exist in 1953, when the ADAC, a Romanian state insurer, was established.

In June 1948 all Bulgarian insurance enterprises were nationalized by an Act of the National Assembly.47 The portfolios of the companies were merged into the National Insurance Institute (DZI), which had a monopoly in the insurance business.

In the GDR, the Soviet Military Authority banned all private insurance companies48 and the state established separate insurance firms in five different Ländern (territorial units) and one for East Berlin. These firms were later merged into a single company in two steps. The process was completed in 1969 with the establishment of the Staatliche Versicherungen der DDR (State Insurer of the GDR).49

As this brief summary shows, in all the so-called people’s democracies except the GDR, the process of the creation of state-owned insurance monopolies was similar: the government nationalized the insurance industry and eventually merged the companies. The Hungarian case was somewhat different and, therefore, merits study.

The Nationalization Process of Other Economic Sectors in Hungary

Nationalization in Hungary was the result of a relatively long process that lasted from 1946 to 1952. It started with the nationalization of the coal mines and ended with the nationalization of the tenement houses. The Communist Party, in many cases together with the left-wing social-democrats and the National Peasant Party, used a step-by-step process. In the first period, they forced the nationalization of the natural monopolies, such as the coal mines, and they asserted exclusive state control over the biggest heavy-industry companies. Until the end of 1947, they used the aforementioned “dry” methods, based (as explained earlier) on the experience of the Soviet NEP.

At the end of 1947 and the beginning of 1948, the government adopted a new strategy, the direct nationalization of almost all the companies in the banking sector and in the sectors of industry. This more direct process might not have been independent of overall political developments in Central and Eastern Europe. The communist parties started to accelerate the takeover process of power in every Central and Eastern European country. They established the Komintern, a common platform to coordinate their efforts. The Czechoslovak party made a coup-d’état in February 1948. In every country, the communist parties eliminated the social democratic parties in the name of the “unity of the working classes.” This process began in East-Germany in 1946 and continued in every country of the region in 1948.

The long transition period originally envisaged was replaced by almost immediate action, and as I show in the next chapter, this change had an effect on the insurance sector as well, although at a slower pace.

The Insurance Industry:
A New Beginning for a Short Period after World War II

In 1938, there were 43 insurance companies and local branches in the Hungarian insurance market. A further company from Sudetenland was established in 1942. During the war, three smaller insurers merged with larger companies so that by the end of the war there were 41 companies.

The war had an enormous impact on the insurance companies. In addition to the loss of employees, many companies had substantial investments in properties in the city of Budapest, which had suffered a 51-day-long siege (much longer than Vienna or Berlin, where the sieges lasted nine and sixteen days respectively). Because of the intense street fights, 15 percent of the buildings were destroyed and 59 percent were damaged,50 including the tenement houses of the companies. Some companies lost their archives as well.51

After the war, the eight local branches of UK companies (which as enemy properties had had to transfer their portfolios to Hungarian firms during the war) decided to discontinue operations in Hungary.

The remaining 33 insurers tried to restart operation after the war, but hyperinflation made it almost impossible. The real developments started after the introduction of a relatively stable currency, the forint, in the middle of 1946.

Based on the Potsdam declaration and the Hungarian Peace Treaty of Paris, all German assets in Hungary became the property of the Soviet Union as part of the war reparation claims against Germany. As a consequence, the Soviet Union became the owner of two insurance companies and nine branches of German, Austrian, and Sudeten-German origins operating in Hungary. The Soviets merged most of them into one company, the so-called Central-European Insurance Company (KEBIR). One specialized baggage insurer remained independent.

The state had dominant ownership in three groups of companies. In total, nine different legal entities belonged to these conglomerates. One of them was an agriculture-based mutual insurer (Gazdák Biztosító Egyesülete, the Farmers Insurance Association). The state owned the majority of its shares even before the war. The two others, including the biggest Hungarian insurer, were partly owned by banks. Due to the nationalization of the banks and the firms belonging to their spheres of interest in 1947, these companies were not nationalized directly, but the state gained a considerable stake in them. These companies were called “state-interested” insurers (állami érdekeltségű biztosítók). They started to cooperate vigorously in the market, including product harmonization and the establishment of a common commission system. The Ministry of Finance established the Central Insurance board (CIB), which worked as a common board for these companies. Despite their close ties to the state, they were not nationalized, which is one distinct feature of the Hungarian process of monopolization.

In 1948, the government decided to establish only one (or two, the second for reinsurance purposes) state insurers. It set up a so-called “committee of six members” to organize the process. The committee members represented the General Council for Economic Affairs (the apex body for economic governance), the Ministry of Finance, and the General Council of the Trade Unions.52 The committee also dealt with issues of other insurance companies. Based on the notes of the committee meetings (which are part of the document collection I mentioned at the beginning of this article), it is clear that their goal was to force all the companies not related to the state (apart from those owned by the Soviets and Italians) to cease operations and transfer their portfolios to one of the state-interested insurers. In the process, the government used the method of “dry” nationalization effectively.

It is worth presenting some typical cases. The Astra Insurer was Italian owned. Its main shareholder was the INA (Istituto Nazionale delle Assecurazioni), a state-owned insurer. In October 1946, INA sold its shares to the Helvetia Feuerversicherung AG, a Swiss firm.53 This could be interpreted as the Swiss trusting that private insurance could be a good business in Hungary in the long term. The company had also used this Swiss connection in its marketing. According to an article written by the CEO Lajos Bokor:

The private insurance companies… ask only for ideological, moral, and legislative support from the government, because the private insurance institutions are not expected to play a capital-demanding role in the reconstruction but a capital-producing role, and they intend to play this role to the full.54

The demands of Bokor and the private insurers were not heard, so after a year, the owners gave up, and in October 1948, a liquidation proposal was submitted to the General Assembly.55 The parent company moved Bokor to the Belgian Congo, and the company’s portfolio was transferred to one of the state-interested insurers, the Farmers Insurance Association. The last information I have about Bokor is from an advertisement in the Dél Keresztje (The Southern Cross), a Hungarian-language newspaper published in Sydney, Australia in 1952. He offered his brokerage services as “former CEO of Astra.”56 Another Swiss entity, the branch of the Baseler Versicherung gegen Feuerschaden (Basler), also merits discussion. As was the case with many other insurers, the government appointed a caretaker to run the branch in 1945.57 The caretaker was the previous representative in Hungary, so this was not a hostile move. Rather, it was justified by the communication difficulties at the time.58 Later, the caretaker became a representative again.59 The branch restarted operations, and in 1947, it was also authorized to enter the burglary insurance market.60 While the available sources reveal little about the details, the branch asked for permission to transfer its portfolio to the Farmers Insurance Association two years later.61

By 1948–1949, all seven independent companies had ceased to exist and had transferred their portfolios to one of the state-interested companies. Finally, the state established the state-owned company (legally from scratch) called Állami Biztosító (State Insurer) on May 5, 1949 and transferred the portfolios of the state-interested insurers to it. At the time, there were still eight companies in the Hungarian market, five Italian and two Soviet, in addition to the State Insurance Company.

Before the war, an important part of the market had been dominated by Italian companies (Generali, Foncière and Riunione Adriatica). As a possible part of Italian war reparations for the Soviet Union,62 they came under Soviet supervision and could continue their operations until 1950–1951. The history of their liquidation will be the subject of further research.

The heritage of the Soviet companies, especially the portfolios and agent networks of the Anker Group (Vienna), the Victoria Insurers (Berlin), and the Duna-Concordia, was significant. Out of the two companies, the KEBIR was far more important, so I focus on its history. The company was owned by three Soviet entities: Soviet State Insurer (Gosstrakh), which owned 70 percent, the Foreign Trade Bank of the USSR, which owned 15 percent, and the Institute of Transport of the USSR, which also owned 15 percent. The sources do not explain the rationale for this structure.

The Soviets held the first assembly under their control on November 28, 1946. A new board of directors and a supervisory board were elected. There was only one Hungarian member on the board of directors: Imre Váradi, the CEO, and the supervisory board consisted exclusively of Soviet citizens.

It is interesting to note that some vestiges of the rule of law continued to function under Soviet occupation even under increasing communist political influence. The Commercial Court required the election of at least one Hungarian citizen to the board of directors of the KEBIR. The registration of the company’s new name did not go smoothly either. The Ministerial Commissioner in charge of the registration of commercial companies objected to the fact that the company was using the name “Keleteurópa” (Eastern Europe), though its activities were limited to Hungary. He made registration conditional on the company proving its commercial links with Eastern Europe. In its reply, the company argued that one of its owners and its sole reinsurer was the “Russian (sic!) State Insurance Institute” and that it planned in cooperation with the parent company to enter the Eastern European markets after the conclusion of the peace treaty. In a later letter, it also referred to the fact that some members of the Soviet Union were themselves considered independent states. To some extent, this argument may have been supported by the fact that not only the Soviet Union but also Belarus and Ukraine became members of the United Nations when it was founded.

The lifecycle of the company can be divided into two phases. Between 1947 and 1950, the company experienced dynamic development, with a compound annual growth rate of 32 percent, and became an important player in the Hungarian market. In 1951, however, there was a significant decline, mainly due to the loss of active reinsurance.

The Soviet authorities used their power to avoid Hungarian regulations. As the company’s activities generated solid profits throughout 1947–1949, profit repatriation became an important issue. There was a regulation for the Hungarian companies according to which they were permitted to pay dividends on their profits only up to four percent of the share capital. However, the two Soviet companies were allowed to pay a much higher dividend based on their 1947 results. In the case of KEBIR, this was 1,550,000 forint, or 52 percent of the share capital.

Their presence in the market after 1949 constitutes another distinct feature of the Hungarian situation. They and the Hungarian State Insurer were competitors. The agent networks in particular fought against each other. The six-member committee and later the Ministry of Finance had to discuss the conflicts and the Soviet claims in many cases. This happened in a period of strict central planning. I am not aware of this type of competition taking place in other industries in the same period. This question offers an interesting path for further research.

The Hungarian Government wanted to establish a monopoly, but it was not easy to drive out the Soviet companies, as Soviet influence remained very significant in Hungary even after the Paris Peace Treaty.

The Soviets probably found the Hungarian idea of creating an insurance monopoly promising. They could get rid of a declining business where the Hungarian state stood behind the competitor firm, the Hungarian State Insurer. As the state became the owner of almost all Hungarian industries, it could easily deprive KEBIR of most of its businesses. During the negotiations, the Soviets tried to take advantage of the situation, always using data from an earlier period when estimating the value of portfolio and ignoring the fact that the portfolios were in decline.

Finally, the Hungarian government bought the Soviet-owned insurers at the end of 1952, together with many other Soviet companies. Only then did it manage to establish a monopoly. The agreement was reached after long and sometimes heated discussions. These debates and the activities of Soviet insurers in Hungary in general will be the subject of a separate article.

One main question remains open: why were the processes of nationalization so different in the Hungarian insurance sector compared to the nationalization of this sector in other socialist countries and also to the processes of nationalization in other branches of industry in Hungary? In the current phase of research, there is no clear answer to this question, and there is probably no single answer either. One explanation could be that an important part of the Hungarian insurance industry was owned by foreign investors, which made the government cautious. Second, the strong Soviet presence also complicated the situation. A third factor may simply have been the fact that in Hungary the insurance industry was never as important as the banking sector, and therefore, it was not important for the political leadership to resolve such a relatively complicated issue.

Archival Sources

Endre Boross bequest. (Privately owned.)

Bibliography

Primary Sources

103. Dekret presidenta republiky ze dne 24. října 1945 o znárodnění soukromých pojišťoven [Decree of the President of the Republic of October 24, 1945 on the nationalisation of private insurance companies]. 103/1945 Sb. Dekret presidenta republiky o znárodnění soukromých pojišťoven. Last accessed August 21, 2024. (Czechoslovakia)

Dekret z dnia 3 stycznia 1947 r. o Powszechnym Zakładzie Ubezpieczeń Wzajemnych [Decree of January 3, 1947 on the Universal Mutual Insurance Company].

The General Insurance Business (Nationalisation) Act, 1972 (India)

The Life Insurance Corporation Act, 1956 (India)

Loi no 46-835 du 25 avril 1946 relative à la nationalisation de certaines sociétés d’assurances et à l’industrie des assurances en France

Magyar Közlöny [Hungarian Official Gazette], 1945, 1947, 1949

Zakon za nacionalizacia na zastrakhovatelnite druzhestva i za dherzhavnia monopol v zastrakhovaneto = Закон за национализация на застрахователните дружества и за държавния монопол в застраховането [Act on nationalisation of insurance companies and state monopoly in insurance]. June 27, 1946. Bulgaria

Zákon ze dne 19. prosince 1968, kterým se mění zákon č. 82/1966 Sb., o pojišťovnictví [Act of December 19, 1968 amending Act No 82/1966 Coll., on Insurance]. Last accessed August 21, 2024. https://www.zakonyprolidi.cz/cs/1968–162

Secondary Literature

“25 éve államosították a biztosítót” [The insurance company was nationalized 25 years ago]. Új szó, Bratislava, October 16, 1970. 2.

“25 Jahre Mauerfall, das Ende der Staatlichen Versicherung der DDR.” Versicherungsbote, November 9, 2014. Last accessed October 30, 2024. https://www.versicherungsbote.de/id/4807250/Mauerfall-Staatliche-Versicherung-DDR-25-Jahre/

Balogh, Sándor. “Népi demokratikus örökségünk: Parlamentáris és közvetlen demokrácia Magyarországon 1944–1948” [Our peoples’ democratic heritage: Parliamentary and direct democracy in Hungary, 1944–1948]. Századok 119, no. 2 (1985): 385–420.

Bejtja, Merita. “Albanian Insurance Market Analyses and their Business Model.” Academic Journal of Interdisciplinary Studies 7, no. 3 (2018): 157–77. doi: 10.2478/ajis-2018-0067

Berend, T. Iván. “A stabilizáció megvédése és a tőkekisajátítás ‘száraz’ államkapitalista útja Magyarországon (1946–1947)” [Defending stabilization and the “dry” state-capitalist path of capital appropriation in Hungary (1946–1947)]. Századok 96, no. 1–2 (1962): 98–149.

Berend, T. Iván. Újjáépítés és a nagytőke elleni harc Magyarországon 1945–1948 [Reconstruction and the fight against big capital in Hungary, 1945–1948]. Budapest: KJK, 1962.

Berend T. Iván. “A gazdaságpolitika két évtizedének történetéhez” [The history of two decades of economic policy]. Századok 99, no. 4–5. (1965): 805–32.

Berend, T. Iván. “Contribution to the History of Hungarian Economic Policy in the Two Decades Following the Second World War.” Acta Historica, no. 1–2. (1967): 3–47.

Berend, T. Iván. “Székfoglaló” [Inauguration speech]. Az MTA Filozófiai és Történet­tudományok Osztályának Közleményei [Publications of the Department of Philosophy and History of the Hungarian Academy of Sciences], no 1. (1974): 27–47.

Berend, T. Iván. A szocialista gazdaság fejlődése Magyarországon 1945–1975 [Development of the socialist economy in Hungary, 1945–1975]. Budapest: KJK, 1979.

“Bokor Insurance Broker.” Dél Keresztje, Sydney, November 1, 1952.

Borhi, László. “Az amerikai diplomácia és a szovjet politikai-gazdasági térnyerés Magyar­országon” [American diplomacy and Soviet political-economic expansion in Hungary]. Történelmi Szemle 35, no. 3–4 (1993): 339–60.

Büky, József. “A jegybankok államosítása” [Nationalization of the central banks]. Magyar–­Szovjet Közgazdasági Szemle 11, no. 1 (1948): 13–17.

Csabay, Dezső. Általános biztosítástan [General insurance theory]. Budapest: KJK, 1971.

Csury, Jenő, and Imre Marosi. A magyar biztosításügy története [History of the Hungarian insurance industry]. Budapest: Gyarmati Ferenc, 1931.

Dobossy, Imre. “A csehszlovák tervgazdálkodás eredményei és az új ötéves terv” [The results of Czechoslovak planned economy and the new Five-Year Plan]. Magyar-Szovjet Közgazdasági Szemle 10, no 6. (1947): 35–38.

Gáti, Charles. “Demokratikus átmenet a háború utáni Magyarországon” [Democratic transition in postwar Hungary]. Történelmi Szemle 29, no. 1 (1986): 125–39.

“Gazdasági hírek – Astra Biztosító RT.” [Economic News – Astra Ins. Co.]. Magyar Nemzet, October 2, 1948. 2.

“History of Triglav Insurance Company.” Triglav. Last accessed September 20, 2024. https://www.triglav.eu/en/about-us/history

Honvári, János. “Pénzügyi és vagyonjogi tárgyalások és egyezmények Magyarország és az Egyesült Államok között, 1945–1978” [Financial and property negotiations and treaties between Hungary and the United States, 1945–1978]. Századok 143, no. 1 (2009): 37–82.

“Infiinţarea societ de ‘Sovromasigurare’” [Establishment of the “Sovromasigurare”]. Adevěrul, July 30, 1949. 3.

Karczag, Imre. “Tervgazdaság és ipar: A népi demokrácia nemzetgazdaságának döntő tényezői” [Planned economy and industry: The decisive factors of the national economy of people’s democracy]. Magyar–Szovjet Közgazdasági Szemle 3, no. 1–6 (1949): 111–24.

Kováts, Antal András. “Svájciak a magyar történelem sodrában 1867–1990” [The Swiss in the maelstrom of Hungarian history 1867–1990]. Történelmi Szemle 59, no. 4 (2017): 563–67.

Kovácsy, Tibor. “Az utasításos gazdaságról” [On the command economy]. Történelmi Szemle 24, no. 2 (1981): 191–202.

“A magánbiztosítás és a hároméves terv” [Private insurance and the three-years plan]. Képes Figyelő, September 6, 1947. 41.

Nemény, Vilmos Béla. “Gondolatok korunk társadalmi átalakulásának kérdéséhez” [Reflections on the social transformation of our time]. Közgazdasági Szemle 71, no. 1–4 (1948): 115–28.

Pásztory, Levente. “A ‘Kreuger birodalom’ Magyarországon” [The Krueger empire in Hungary]. Századok 150, no. 1 (2016): 47–83.

Potito, Serena. “The Italian State Monopoly in Life Insurance: The Organisational and Management Model of the INA (1912–1923).” Review of Economics and Institutions 13, no. 1–2 (2022). doi: 10.5281/zenodo.7550802

Rákosi, Mátyás. “Népi demokráciánk útja” [The road of our peoples’ democracy]. Századok 86, no. 1 (1952): 24–55.

Ránki, György. “Küzdelem a tervgazdaságért” [Fight for the planned economy]. Századok 97, no. 1 (1963): 68–104.

Ránki, György. “The Socialist Reorganisation of the National Economy and the Five-Month Plan.” Acta Historica 10, no. 3–4 (1964): 273–305.

Raykher, V. K. Gosudarstvennoe strakhovanie v SSSR = Райхер, В. К. Государственное страхование в СССР [State Insurance in the USSR]. Leningrad–Moscow: Gosfin­izdat, 1938.

Rockenbauer, Zoltán. “Egy gyűjtemény élete” [The life of a collection]. Európai Utas 14, no. 1 (2003): 37–43.

“Staatliche Versicherung der DDR.” Last accessed October 30, 2024. https://www.reve24.de/versicherungen/staatliche-versicherung-ddr/

“Svájci érdekeltség Magyarországon” [Swiss interest in Hungary]. Közgazdaság, October 13, 1946. 12.

Tamás, Gábor Zoltán. “Az Első Magyar Biztosító Társaság története 1858–1949” [History of the First Hungarian Insurance Company]. PhD thesis, EötvösLoránd University, Budapest: 2023.

Voszka, Éva. Az állami tulajdon pillanatai [Moments of the state ownership]. Budapest: KJK, 2018.

Weber, S. Zipser Geschichts- und Zeitbilder: Ein Beitrag zur vaterländischen Geschichte. Leutschau, 1880.


  1. 1 The State Insurer (Állami Biztosító) was a state-owned insurance company in Hungary between 1949 and 1992. It had a monopolistic position during 1952–1985. I refer to this collection of documents as the “Boross bequest.” Electronic copies of these documents are available from me. I have also done the numbering of the documents. The collection contains different internal and external documents, insurance policies, drafts of articles, etc.

  2. 2 Dobossy, “A csehszlovák tervgazdálkodás eredményei.”

  3. 3 Büky, “A jegybankok államosítása.”

  4. 4 Nemény, “Gondolatok.”

  5. 5 Joseph Alois Schumpeter (1883–1950) was an Austrian-American economist and served as minister of finance in Austria in 1919. In 1932, he became a professor at Harvard University. He emphasized the role of innovation in economics and is associated with the twentieth-century formulation of “creative destruction,” partly inspired by Marx and Werner Sombart.

  6. 6 Nemény, “Gondolatok,” 128.

  7. 7 Mátyás Rákosi (1892–1971) was a prominent Hungarian communist politician in 1945–1948 and served as General Secretary of the Hungarian Communist Party. In 1948–1956, he was general and later first secretary of the Hungarian Working People’s Party.

  8. 8 Rákosi, “Népi demokráciánk útja.”

  9. 9 Karczag, “Tervgazdaság és ipar.”

  10. 10 For details, see Berend, Újjáépítés.

  11. 11 Berend, “A stabilzáció megvédése.”

  12. 12 Ránki, “Küzdelem a tervgazdaságért.”

  13. 13 Ránki, “The Socialist Reorganisation of the National Economy.”

  14. 14 Berend, “A stabilizáció megvédése.”

  15. 15 Berend, “A gazdaságpolitika két évtizedének történetéhez.”

  16. 16 Berend, “Contribution to the History of Hungarian Economic Policy.”

  17. 17 Berend, “Székfoglaló.”

  18. 18 Kovácsy, “Az utasításos gazdaságról.”

  19. 19 Ibid., 195.

  20. 20 Kominform: Information Bureau of the Communist and Workers’ Parties, a body of Marxist-Leninist parties (1947–1956). They held their first meeting on September 22–23, 1947 in Poland.

  21. 21 Gáti, “Demokratikus átmenet,” 138.

  22. 22 Balogh, “Népi demokratikus örökségünk.”

  23. 23 Borhi, “Az amerikai diplomácia.”

  24. 24 Zoltán Vas (1903–1983) communist politician, general secretary of the General Council of Economic Affairs (1945–1949)

  25. 25 Honvári, “Pénzügyi és vagyonjogi tárgyalások.”

  26. 26 Pásztory, “A Krueger birodalom.”

  27. 27 Kováts, “Svájciak a magyar történelem sodrában.”

  28. 28 Voszka, Az állami tulajdon pillanatai, 75–93.

  29. 29 Csabay, Általános biztosítástan, 60–61.

  30. 30 Csury and Marosi, “A magyar biztosításügy története,” 19.

  31. 31 It is interesting that this debate is still going on in some Christian denominations.

  32. 32 For the first case, see Weber, Zipser Geschichts- und Zeitbilde, 287.

  33. 33 Potito, “The Italian State Monopoly in Life Insurance.”

  34. 34 Loi no 46-835 du 25 avril 1946 relative à la nationalisation de certaines sociétés d’assurances.

  35. 35 The Life Insurance Corporation Act, 1956. (India)

  36. 36 The General Insurance Business (Nationalization) Act, 1972. (India)

  37. 37 Local self-governance bodies in the late Czarist period.

  38. 38 I describe the development of the Russian monopoly according to Raykher, Gosudarstvennoe strakhovanie, 33–36.

  39. 39 Ibid., 33.

  40. 40 103. Dekret presidenta republiky ze dne 24. října 1945 o znárodnění soukromých pojišťoven.

  41. 41 “25 éve államosították a biztosítót.”

  42. 42 Zákon ze dne 19. prosince 1968, kterým se mění zákon č. 82/1966 Sb., o pojišťovnictví.

  43. 43 Dekret z dnia 3 stycznia 1947 r. o Powszechnym Zakładzie Ubezpieczeń Wzajemnych.

  44. 44 History of Triglav. Chapter “Central Governance.”

  45. 45 Bejtja, “Albanian Insurance Market,” 161.

  46. 46 “Înfiinţ area societ de “Sovromasigurare.”

  47. 47 Zakon za nacionalizacia na zastrakhovatelnite druzhestva.

  48. 48 “25 Jahre Mauerfall.”

  49. 49 “Staatliche Versicherung der DDR.”

  50. 50 Berend, A szocialista gazdaság fejlődése, 13.

  51. 51 Tamás, “Az Első Magyar Biztosító Társaság,” 192.

  52. 52 Boross bequest, no. 227, March 12, 1948. Minutes of the inaugural meeting of 6-member committee.

  53. 53 “Svájci érdekeltség Magyaroszágon.”

  54. 54 “A magánbiztosítás és a hároméves terv.”

  55. 55 “Gazdasági hírek – Astra Biztosító RT.”

  56. 56 “Bokor Insurance Boker.”

  57. 57 Lajos Fruchter (1882–1953). See Rockenbauer, “Egy gyűjtemény élete.”

  58. 58 Magyar Közlöny, July 1, 1945. 1.

  59. 59 Magyar Közlöny, November 4, 1945. 3.

  60. 60 Magyar Közlöny, June 5, 1947. 1.

  61. 61 Magyar Közlöny, April 20, 1949. 2.

  62. 62 Boross bequest, no. 171, June 23, 1948. Minutes of the meeting of 6-member committee.

2024_4_Smiljanic

The Politics of Business: (Failed) Economic Initiatives ofpdf
Slovene Liberals in the First Decades of the Twentieth Century

Ivan Smiljanić

Institute of Contemporary History, Ljubljana

This email address is being protected from spambots. You need JavaScript enabled to view it.

Hungarian Historical Review Volume 13 Issue 4 (2024): 559-574 DOI 10.38145/2024.4.559

Slovenian politics in the late nineteenth and early twentieth century was strongly divided along ideological lines, with the conservative and liberal camps in particular engaging in never-ending cultural struggles through their various outlets. This was also evident in the economic sphere, where the conservative camp held a strong position with a network of cooperatives across the predominantly agricultural areas of Slovenia. The liberal camp tried to gain greater influence and also founded a number of cooperatives in order to exert greater economic and thus also political influence. For reasons such as rashness, inexperience, negligence, and outright corruption, these projects were mostly unsuccessful and ended in a series of bankruptcies or financial scandals.

Keywords: economic nationalism, Slovenia, liberals, Kulturkampf, bankruptcy.

The economy is often understood as an area that moves, changes, fluctuates, and morphs according to its own internal laws, which can only be understood rationally to a certain extent and over which other areas have only a marginal influence. However, there are unquestionably some external forces that can be of great importance to the state of the economy, politics being one of the most important. Political decisions can have a short-term or long-term impact on the state of the economy. One of the most important factors that can arise from this direction is the concept of economic nationalism, which aims to protect the interests of a particular national group as opposed to other groups, which are usually seen as competitors if not outright enemies.1 This approach may run counter to some basic axioms of economics, but it was and still is a strong doctrine in many regions. A similar situation, which can perhaps be considered a subset of economic nationalism (although its name and status are not yet clearly defined in the relevant literature), is the case of economic competition within the same nationality when political and ideological differences exist.

While the Slovenian territory, which belonged to Austria-Hungary until 1918 and was then largely part of the Kingdom of Serbs, Croats and Slovenes, was characterised by strong nationalist Slovenian-German struggles until the collapse of Austria-Hungary, divisions also emerged within the Slovenian group, and these divisions became increasingly pronounced over time. In the second half of the nineteenth century, there was a political and ideological stratification among Slovenian politicians. Although attempts had been made in previous years to stand shoulder to shoulder and face the common enemy (German liberalism) together, the differences proved too great. In 1892, a Catholic party was officially founded with the name Catholic National Party, which has been known as the Slovenian People’s Party since 1905. The Liberals also founded their own party in 1894, the National Progressive Party, followed by a socialist party (the Yugoslav Social Democratic Party) in 1896. The newly founded parties proved divided. They sharply criticised the views and actions of each other. As in other parts of Austria-Hungary and in many other European countries, a veritable Kulturkampf ensued, in which not only the political representatives but also the general public were divided into political camps. The most important Slovenian newspapers, each closely associated with one of the parties, published foul-mouthed articles about their political opponents, harsh condemnations of the opinions and actions of others, and sharply satirical, if not insulting, texts. It was not uncommon for public debates, whether in the newspapers, in the general public or in the Carniolan regional assembly, to become extremely offensive on a personal level. This political reckoning in extremis was an important feature of the (not only) Slovenian political landscape of the fin de siècle.

The party leaders realised that political influence could be strengthened by a strong position in the economy, and every party did its best to establish its dominance in the economic field. They had to take into account the strongly agrarian character of the Slovenian economy. The vast majority of Slovenians, up to 90 percent, belonged to the peasantry. The small percentage of the local economy that did not fall under the agricultural umbrella was mainly based on small family businesses and craft enterprises. Therefore, any group that wanted to increase its political power had to appeal primarily to the peasantry. An important part of the Slovenian peasant economy was the cooperative system, in which peasants, craftsmen, and workers contributed their savings to local cooperatives, which helped them with cheap loans, the purchase of tools and crops, and so on. At the beginning of the twentieth century, the cooperative network spread throughout Slovenia, but it was mainly under the influence of the Catholic conservative party, despite its earliest beginnings being overseen by liberal politicians.2 The liberal party, unable to come to terms with the strong influence of the Catholic Church in the rural parts of Slovenia, tried to establish its own parallel economic institutions in order to increase its own influence, even though its ideology was certainly closer to a (comparatively small) group of the Slovenian bourgeoisie.3 Therefore, in many towns it was not uncommon for there to be two Slovenian cooperatives with different political orientations. The Liberals founded the Association of Slovenian Cooperatives (Zveza slovenskih zadrug), which in a short time included around 130 new member cooperatives. Most of these cooperatives were newly founded, but about a third were taken over from the existing conservative cooperatives. The projects with which the Liberals wanted to achieve increased influence were ambitious, but in their quest for quick success and due to management errors, they often collapsed on themselves.

The Old Liberals’ First Attempt: The Glavna Loan Company

There were two factions within the Liberal Party, the more conservative Old Liberals and the more radical Young Liberals. The two groups differed both in their political-ideological and economic views. At the beginning of the twentieth century, both tried to prove their competence in the economic field by founding two large cooperatives, both of which came to an unfortunate end.

The Old Liberals were the first to try their luck. They founded the Glavna loan company (Glavna posojilnica) in Ljubljana in 1899, although they were generally opposed to the establishment of cooperatives,4 which Glavna officially was. Glavna was intended to be a serious competitor to the Catholic cooperatives, as its name indicates (“Glavna” means “the main one”), but throughout its existence it exerted only a limited influence.5 The institution was plagued by financial problems early on, as several of its main debtors failed and were unable to repay their debts. The director of Glavna, the lawyer Matija Hudnik, got involved in speculative transactions to earn the money he needed and then, in desperation, made an agreement with the auditor of the Cooperative Association in Celje. The auditor touted the strength of the Glavna loan company to the members of the association so that the cooperatives would invest more money in the company, and the auditor then received a commission from this money.6 The scam could not and did not last long.

As soon as the financial problems became known to the public, German agitators allegedly appeared and called on investors to withdraw their money from the collapsing Slovenian savings banks and deposit it in the Carniolan savings bank,7 an old, respected institution that was publicly associated with the German camp. The Catholic camp also allegedly spread disturbing rumors about the state of the Glavna. The liberal press was initially calm and said that there was no need to panic, but the tides soon changed and even the liberal press began to warn that everyone, whether liberal, Catholic, or German, had savings accounts and thus shares in the loan fund and should therefore contribute to its reorganization.8 But it was too late. Glavna had losses of several million crowns (later sources speak of 3.6 million crowns),9 and in February 1911, it went bankrupt.

The news landed on the front pages of Slovenian newspapers10 and caused public outcry. The bankruptcy was a catastrophe for around 500 investors who, mostly without realizing the true significance and extent of their commitment, had pledged the credit company all their assets in case disaster struck. There were hundreds of other investors who had wisely avoided this type of guarantee. “The common good demands that an institution that relies on an unlimited commitment fulfils every penny of its obligations,” the Catholic press insisted.11 The liberal press, on the other hand, was more cautious:

According to the strict wording of the law on cooperatives with unlimited commitments, they would have to cover the entire loss of the institution, which was borne by the members of the cooperative, the vast majority of whom did nothing other than borrow small amounts from this cooperative at a clearly usurious interest rate at the time and, if necessary, return them soon.12

The collapse of the credit society frightened savers in Carniola and Styria and led to a decline in lending in both regions. The Catholic newspaper Slovenec gave the following warning:

The collapse of the Glavna loan company in Ljubljana has affected many loan offices in southern Styria; the Cooperative Association in Celje is writhing in agony; private individuals who are investors in Glavna are cursing this institution and its leaders.13

Many cooperatives and credit companies had to publish reassuring announce­ments in the newspapers that they were not doing business with Glavna and that they would not lose a penny as a result of its collapse. The possible reorganization of the credit institution was discussed at the regional summit chaired by regional governor Fran Šuklje,14 and the delegation of the loan company was also to meet with the Austrian prime minister and finance minister in Vienna.15

In a heated exchange that lasted for weeks, the liberal and conservative political camps accused each other of being responsible for the bankruptcy of the loan company. The Catholic press reported extensively on the disaster and blamed the incompetent and deceitful leadership of the Liberals. It emphasized that the event, which was caused specifically by the Liberal leadership of the loan company, was extremely unpleasant for the Liberals, as it clearly proved their corruption and incompetence, which they are trying to hide as much as possible in anticipation of the upcoming elections. According to Slovenec, this did not mean that the Conservatives were happy about the disaster, as hundreds of innocent investors had lost their money.16 However, they vehemently rejected any claim that Glavna was in any way connected to the conservative camp. The liberal press, on the other hand, was convinced that the declaration of bankruptcy had been a quick procedure due to the involvement of the Catholic camp,17 which had sought to blame it on the Liberals. The Liberals repeatedly warned that the merchant Tomaž Pavšlar, whose large unpaid debts were fatal to the collapse of the loan company, was also a conservative, and information began to spread that Matija Hudnik was also secretly a conservative sympathizer who had been expelled from the liberal party.18 The Old Liberals defended themselves by claiming that Glavna had been sunk by conservative debtors who had not repaid their debts on time. The discussions were interrupted, albeit rather late, by the liquidation committee, which claimed that it was not “one political party or another” that had been responsible for the disaster, but the board of directors and the supervisors, who had been “reckless and unscrupulous” in their handling of the cooperative’s assets.19

The entire press agreed, however, that the bankruptcy was “one of the saddest facts in the history of our country’s economic independence.”20 There was also clear consensus that it would have serious consequences:

On the Slovenian money market, this bankruptcy is one of the worst blows that has directly affected our trade, our crafts, our private companies and even reaches deep into the conditions of private life. […] It is true that the catastrophe of the Glavna loan company has also caused much hardship and misery in private life and many economic disasters on Slovenian soil.21

The former director Hudnik and the auditor with whom he had committed fraud were arrested and sentenced to several years’ imprisonment at the court hearing in June 1911.22 The bankruptcy proceedings dragged on for several years until a reorganization cooperative was founded in 1914 to help the investors settle their debts.23 The proceedings were halted by World War I, as the bankruptcy trustee was drafted into the army. The proceedings were not officially concluded until 1926,24 so they lasted 15 years and are one of the longest documented Slovenian bankruptcy proceedings. The debtors received 52 percent of the amounts they had claimed.25

The Attempt by the Young Liberals: Agro-Merkur Cooperative in Ljubljana

Thus, the attempt by the Old Liberals to found their own cooperative ended ingloriously. The Young Liberals, who also wished to take over the influence in the Slovenian cooperative system from the Catholics, tried their luck at practically the same time. In autumn 1908, the Agro-Merkur cooperative was opened in Ljubljana, which traded in agricultural products26 and was to become the central trading office of the Association of Slovenian Cooperatives.27 Just over a year after it was founded, Agro-Merkur ran into difficulties. Dr. Gregor Žerjav, its unofficial manager and also a prominent figure of the Liberal group, had no experience running a business,28 and many machinations took place in the cooperative under his management. Agro-Merkur’s debts were far in excess of the officially authorized 50,000 crowns, and Žerjav tried to hide this fact. He did not convene any board meetings and merely noted in Agro-Merkur’s accounts that the debt had been repaid by other loan companies.29 The final sum of Agro-Merkur’s debts, most of which had been accumulated at the Association of Slovenian Cooperatives, exceeded half a million crowns.30 By October 1910, Žerjav’s inexperience and dishonesty had driven Agro-Merkur into bankruptcy.

The reaction of the press was once again stormy. Reporters agreed that Žerjav had wanted to turn the cooperative into an economic giant or that he had wanted “immediately to pin the cooperative to the sky.”31 There was also controversy in the exchange of blows between the young-liberal daily Jutro and the old-liberal Slovenski narod. The Old Liberals were annoyed by the serious consequences of the cooperative experiment and tried to distance themselves from Agro-Merkur by claiming that it had been Žerjav’s private company. Jutro defended Žerjav and blamed Žerjav’s Old Liberal colleagues, who allegedly had had a bad influence on him.32 Either way, in the following months the term “Agro-Merkur” was used in the Slovenian press as a synonym for the economic failure and greed of the (Young) Liberals. Žerjav had to retreat from Ljubljana to Gorizia for a while because of his tarnished public reputation. The press offered the more dramatic report that he had fled to Egypt.33 The conservative newspaper Slovenec commented, “Agro-Merkur is a huge cautionary tale, bitter but extremely instructive.”34

Similarly to the Glavna loan company, the cooperatives in Agro-Merkur were divided into members and other investors. Here too, the members who guaranteed the company with all their assets were threatened. It was alleged in the Catholic press that even when the cooperative was aware of its impending bankruptcy, it forced new members to join by selling them produce or wine so that they could cover their losses.35

There were many other lawsuits in which Agro-Merkur usually lost against the plaintiffs. Slovenski narod tried to relativize the defeats:

Busts are a natural consequence of bankruptcies. What is now being done in Ljubljana is now also being done in Klagenfurt. As is well known, the priests’ cooperative there went bankrupt, and the result was a legal dispute. But there is a big difference. ‘Glavna’ and ‘Agro Merkur’ went bankrupt due to unfortunate speculation. Mishaps in speculation can happen to anyone. Right now, there is talk of a large loss of the church ‘Volksanleihe’ in Styria, which was caused by unfortunate speculation. So ‘Glavna’ and ‘Agro-Merkur’ were destined for disaster because of unfortunate speculation, and the clerical cooperative in Klagenfurt suffered because the Catholic prelates stole millions.36

The criminal investigations following the Agro-Merkur bankruptcy proceedings attracted a great deal of public interest. Those responsible were sentenced to several months in prison, including Žerjav, who was not sent to prison due to his poor health and the outbreak of World War I. The court issued the following statement:

The reasons for the bankruptcy of Agro-Merkur lie primarily in the fact that the loans from the Slovenian Cooperative Association were used in an illegal and irregular manner. The management was not up to the tasks assigned to it, and it deployed staff who were not up to their tasks either. The events that were labelled an accident are of minor

importance, as this accident was related to the overstepping of the client’s scope of work. They were aware of the passivity even before they announced the bankruptcy.37

The bankruptcy proceedings were interrupted by World War I and only continued after 1918. In the new Yugoslav country, where he was also a minister, Žerjav had to deal with old accusations of embezzlement and prison sentences, which were brought up in anti-liberal newspapers. Jutro responded to the accusations with a reinterpretation of past events, namely that Žerjav had been sentenced to prison primarily because of his political and economic activities against the Germans.38 Slovenec saw through Jutro’s revisionist tactics and wrote that the liberal newspaper was using a well-known argument, according to which every act of a Slovene convicted in a court under Austria-Hungary should be understood as an act of “national merit,” and the person convicted should be seen as graced with the halo of martyrdom.39 The proceedings were summarily discontinued around 1928 (without being officially recognized by a public final declaration), with creditors receiving just over six percent of their claims.

Banking Experiments in the New State: Jadranska and Slavenska Banks

Despite these setbacks, the Slovenian Liberals remained influential in the economy even after the collapse of Austria-Hungary and the founding of the Kingdom of Serbs, Croats and Slovenes in 1918. While their cooperative experiments largely faded into the background following the dramatic and costly bankruptcies of two of their supposed flagships, they were still active in the economic sector, but they gradually turned more towards their original bourgeois roots, as reflected in their newfound interest in banking. The spread of influence, whether official or unofficial, was also characterized by exploitation. One of the first scandals to rock the young Yugoslav economy was related to the Jadranska bank (Jadranska banka), the director of which was the influential yet controversial banker, industrialist, and liberal Avgust Praprotnik.40 Praprotnik began his banking career at Jadranska bank, where he quickly rose to leading positions and was appointed general director in 1920. Two years later, when Praprotnik had already left the bank, it turned out that during his time as director, he had secretly transferred around three million crowns intended for political propaganda in Carinthia and the founding of the University of Ljubljana to his political friends, in particular Gregor Žerjav.41 Because he had left the bank in time, Praprotnik, who claimed that he was innocent,42 was not held responsible for the affair in front of the court, but he did gain notoriety. In a later public letter to his successor as the head of Jadranska bank, Praprotnik did almost outright admit to having committed fraud:

But what does my opponent accuse me of? Of having transferred large sums from the profits of Jadranska bank to the Yugoslav Democratic Party? Should I be ashamed of this offence? Have I really committed a crime against the country and the homeland by supporting the cultural, social, national economic, and political actions of the YDP? All banks support political and cultural endeavors with their profits.43

The affair was one of the first major economic disappointments in the newly founded kingdom, but it did not prevent Praprotnik from being appointed director of the Maribor escompte bank.

Soon Praprotnik was involved in the next sensational story. In 1918, Slavenska bank (Slavenska banka) was founded in Zagreb. It quickly developed into one of the largest Yugoslav banks.44 It took over the property of other banks, opened branches at home and abroad, and attracted many customers who were lured by the high interest rates.45 The influence of Slovenian businessmen and bankers, especially the Liberals, on Slavenska bank was great, if not decisive, as they owned the majority of shares and capital.46 Praprotnik was appointed vice-president of the bank in 1923. The largest shareholders wanted to control the bank’s work closely and therefore formed special interest groups from 1922, which influenced the bank’s activities from the background. Žerjav was one of the members.47

In 1924, the bank showed the first signs of difficulties. An inconsistent business policy, excessive lending, and extensive debt cancellation led to a deficit. Žerjav left the interest group and sold his stake in the bank for a large sum, while Praprotnik resigned from his position as vice-president.48 Investors became suspicious and withdrew their deposits en masse. In September 1926, the bank had to stop paying out deposits, and in May 1927 it went bankrupt.49 The bank’s collapse caused a great stir. It was one of the biggest financial upheavals in the country’s history, and the investors, 3,210 in total, ultimately only received 22 percent of their claims back after the bankruptcy proceedings,50 even though the liquidation process dragged on until 1947. Due to his another timely exit, Praprotnik did not have to answer for his actions in the bankruptcy proceedings, though he was identified by the majority of the Slovenian press as one of the main culprits in the bankruptcy. Newspapers that were not favorable to the Liberals wrote that the influence of Žerjav’s group on Praprotnik had merely shifted from Jadranska bank to Slavenska. Jutro tried to deny any connection between Žerjav and Slavenska, but this did not help much.51 Praprotnik was never brought to justice for his role in the affair, but in 1942, he was shot dead on a street in Ljubljana by members of the Partisan Security Service.

A Local Crash: The Kajfež Company in Kočevje

The shadow of the collapse of the liberal economic institutions haunted Žerjav until his death in 1929. The Catholic press always pointed out when a member of the liberal party experienced an economic collapse. The biggest scandal occurred in 1928, when a large timber and catering company owned by Anton Kajfež in Kočevje went bankrupt.52 Kajfež established himself as the richest and most influential Slovenian entrepreneur in Kočevje, which was predominantly inhabited by Gottscheers of German descent. From the Austro-Hungarian period onwards, Kajfež systematically promoted the economic development of the Slovenes and tried to limit German influence. He invested his money in the establishment of Slovenian economic and cultural institutions in the region, employed Slovenian workers, and tried to overcome the strong German influence in the region. As he personally, together with his family, had great influence on these institutions, he began to exploit this influence and accumulated considerable debts to the local bank he had helped to found. When the Kajfež company finally went bankrupt in 1928 due to unwise management53 (although the owner tried to hide the true extent of his debts through false accounting54), its considerable influence on the local economy had a noticeably negative impact on the Slovenian economy in the entire region. The Gottscheer community took the initiative again and remained there until the outbreak of World War II.

What About the Catholic Camp?

The focus of this paper has been on the Slovenian liberal camp, and it might seem that their fiercest ideological enemies in the Catholic camp were flawless by comparison. In fact, the Catholic group did not need to try to boost the economy because they already had the advantage when it came to exerting influence in the Slovenian economic sphere, especially in the agricultural sector. The Catholics’ pride and joy, the well-developed network of cooperatives, was based on the logic that the members controlled one another and focused on supporting the peasants rather than making profits. As a result, financial misdeeds and scandals or cooperative failures were a rare sight, but that doesn’t mean they never happened. When they did occur, the liberal camp, for a change, had a field day in the press.

It is worth considering two such cases from the early twentieth century. In Poljane nad Škofjo Loko, the local Catholic elite founded a cooperative called the Associated Peasants’ Society, which at the same time established a local savings bank which gave generous loans. The people who guaranteed the debts of the savings bank were recruited from Poljane and the neighboring valley and mountain villages, and apparently many of them did not know what they were getting into. The unsustainable cooperative model finally collapsed in 1903 and the company went bankrupt, much to the chagrin of the local peasantry.55 The liberal camp, which had insisted for years that the widespread network of Catholic cooperatives was rotten from within and only served to ensure that the exploitative local clergy received money from the peasants, immediately began to write about the incident:

So another church cooperative has died, while the Catholics of Poljane claimed from the beginning that the association was flourishing and spreading the fame of the parish of Poljane for miles! But now this marvelous growth is showing! In the last nine months, these misguided poor people have lost 4,500 crowns!56

Slovenec was more reserved than usual this time and vaguely blamed an undefined, unhealthy state of the cooperative for the financial collapse.57 It seems that despite the liberal press emphasizing the guilt of the Catholic representatives, the official view was similar, because a court case was organized in which seven of the peasants who had (presumably unwittingly) guaranteed the bank’s liquidity were charged, but they were sentenced to very light prison terms because the court decided that they had not understood what they had signed or what they had been offering a pledge to guarantee.58

The second major Catholic affair took place at a similar time and not far from Poljane. This time it was connected with the peasant society in Dolenja Dobrava, a small village near Gorenja vas. This society was founded in 1899 by local landowners, but mainly by those who had no experience in trade or bookkeeping and many of whom were not entirely literate. They succeeded in recruiting a number of members, but there were disruptions in the society’s operations from the outset.59 The first president therefore resigned, and his successor began to support the liberals. It is hard to say what followed, but apparently his conversion was so unwelcome that he was framed for fraud for allegedly having stolen from the cooperative. He was arrested, but the court proceedings revealed that he was most likely not guilty, and he was released. Due to his tarnished reputation, he left Dolenja Dobrava and went to the United States.60 Despite his departure, the unrest in the cooperative did not stop, and it seemed to have fewer and fewer resources. The disheartened and disappointed peasant members of the cooperative demanded the closure of the cooperative and bankruptcy, but the leadership only supported liquidation and was unwilling to recognize the debt. Tensions were high, and although liquidation was initially declared, bankruptcy was finally declared in 1909.61 Slovenski narod printed the following victorious declaration: “So this is the famous clerical economy. One bankruptcy after another!”62 The bankruptcy proceedings lasted until 1913, and the liberal regional newspaper Gorenjec summarized the affair in the following words:

One thing remains clear: the clerics wanted to use the agricultural association in Dolenja Dobrava to build their fortress against the progressives, especially the progressive merchants, but they failed. With their reckless economics, they plunged many people into misfortune.63

Some of the high-profile affairs presented above show that the Slovenian liberal camp was prepared to go to great lengths to secure economic influence, which they saw as a means of gaining support for their political activities and strengthening their position vis-à-vis the Slovenian Conservatives. To achieve this, their leading members often acted boldly, unwisely, or even illegally. The Liberals therefore experienced a series of successes and failures, with the latter often becoming notorious public scandals due to their scale and the number of victims. The situation can be summarized as follows: the Catholic camp operated with smaller institutions and more modest sums of money, and it invested cautiously and in fairly safe investments which did not bring it great wealth but contributed to its firm anchoring among the Slovenes. The liberal camp, on the other hand, tried to catch up with the established Catholic influence in the economy with bold economic projects that promised immediate high profits. In this sense, the liberal project was not successful, as the conservative party always remained the most influential Slovenian party in the interwar period. Economic influence, at least in the rural parts of the country, remained firmly in the hands of the Conservatives up until the political changes during the war and postwar times.

Archival Sources

Arhiv Republike Slovenije [Archives of the Republic of Slovenia], Ljubljana

SI AS 307, Deželno sodišče v Ljubljani [Regional Court in Ljubljana]

S 11/10, Agro-Merkur.

Bibliography

Primary sources

Gorenjec, 1909, 1910.

Jutro, 1910, 1911, 1926.

Kramer, Albert. “Resnica o Agro-Merkurju” [The truth about ‘Agro-Merkur’]. Jutro, March 25, 1925.

Narodne novine, 1927.

Praprotnik, Avgust. “Poslano. Odgovor na poziv” [Sent. Response to invitation]. Jugoslavija, June 7, 1922.

Praprotnik, Avgust. “Zoper klevete” [Against defamation]. Tabor, June 1, 1922.

Slovenec, 1903, 1910, 1911, 1914, 1925, 1927, 1929, 1932.

Slovenski narod, 1902, 1904, 1910, 1911, 1912, 1923.

Secondary literature

Koch, Natalie. “The Political Geography of Economic Nationalism.” In Handbook of Economic Nationalism, edited by Andreas Pickel, 14–28. Cheltenham, Northampton: Edward Elgar Publishing, 2022.

Kofman, Jan. Economic Nationalism and Development: Central and Eastern Europe Between the Two World Wars. Oxford: Westview, 1997.

Lazarević, Žarko. “Economic Concepts of Slovene Liberalism before WW II.” Slovene Studies 31, no. 1 (2009): 21–30.

Lazarević, Žarko. “Economy and Nationalism in Yugoslavia.” In History and Culture of Economic Nationalism in East Central Europe, edited by Helga Schultz, and Eduard Kubů, 265–77. Berlin: Berliner Wissenschafts-Verlag, 2006.

Lazarević, Žarko. “National and Economic Features of Slovene Cooperatives.” In Cooperatives in Ethnic Conflicts: Eastern Europe in the 19th and Early 20th Century, edited by Torsten Lorenz, 251–62. Berlin: Berliner Wissenschafts-Verlag, 2006.

Lazarević, Žarko, and Jože Prinčič. Bančniki v ogledalu časa [Bankers in the mirror of time]. Ljubljana: Združenje bank Slovenije, 2005.

Lazarević, Žarko, and Jože Prinčič. Zgodovina slovenskega bančništva [History of Slovenian banking]. Ljubljana: Združenje bank Slovenije, 2000.

Lazarević, Žarko, Marta Rendla, and Janja Sedlaček. Zgodovina zadružništva v Sloveniji (1856–1992) [History of cooperatives in Slovenia (1856–1992)]. Ljubljana: Zadružna zveza Slovenije, 2023.

Mohorič, Jakob. O zgodovini slovenske krščanske demokracije: spominski zapisi dr. Jakoba Mohoriča (1888–1976) [On the history of Slovenian Christian democracy: memoirs of Dr. Jakob Mohorič (1888–1976)]. Ljubljana: Založba ZRC, ZRC SAZU, 2019.

Perovšek, Jurij. “Afera Jadranska banka” [The Jadranska Bank Affair]. In Slovenska kronika XX. stoletja: 1900–1941 [Slovenian chronicle of the 20th century: 1900–1941], edited by Marjan Drnovšek, and Drago Bajt, 272. Ljubljana: Nova revija, 1995.

Schultz, Helga. “Introduction: the Double-Edged Sword of Economic Nationalism.” In History and Culture of Economic Nationalism in East Central Europe, edited by Helga Schultz, and Eduard Kubů, 9–25. Berlin: Berliner Wissenschafts-Verlag, 2006.

Smiljanić, Ivan. “ ‘Erased from the Face of God’: Slovene Economic Nationalism in Press Reports on A. Kajfež & Co. in Kočevje.” Historical Studies on Central Europe 3, no. 1 (2023): 122–43.

Tršan, Lojz. “Propad Slavenske banke – največji finančni šok med obema vojnama v Sloveniji” [The collapse of Slavenska bank – the biggest financial shock in Slovenia between the two world wars]. Borec: revija za zgodovino, literaturo in antropologijo 46, no. 529–31 (1994): 368–74.


  1. 1 For more on economic nationalism see e.g. Koch, “The Political Geography”; Schultz, “Introduction”; Kofman, Economic Nationalism. On this topic on the territory of Yugoslavia, see Lazarević, “Economy and Nationalism.”

  2. 2 Lazarević, “National and Economic Features.” Lazarević et al., Zgodovina zadružništva, 14–42, 66–77.

  3. 3 For an overview of the economic thought of Slovene liberals see Lazarević, “Economic Concepts.”

  4. 4 Mohorič, O zgodovini, 113.

  5. 5 “ ’Glavna posojilnica’.” Slovenec, December 24, 1910.

  6. 6 “Glavna posojilnica pred poroto (2)” [‘Glavna’ before the jury]. Jutro, June 6, 1911.

  7. 7 “Agitatorji ‘Kranjske šparkase’” [Agitators of the “Kranjske šparkase”]. Jutro, January 20, 1911.

  8. 8 “Timeo Danaos et dona ferentes.” Jutro, January 24, 1911.

  9. 9 “Glavna posojilnica.” Slovenski narod, October 25, 1923.

  10. 10 “ ‘Glavna posojilnica’ v Ljubljani v konkurzu!“ [‘Glavna’ in Ljubljana in bankruptcy]. Slovenski narod, February 14, 1911.

  11. 11 “ ’Glavna’ posojilnica.” Slovenec, January 5, 1911.

  12. 12 “Glavna posojilnica.” Slovenski narod, December 24, 1910.

  13. 13 “Gosp. Ivan Hribar v brezdelju” [Mr. Ivan Hribar in idleness]. Slovenec, July 12, 1911.

  14. 14 “O ‘Agro-Merkurju’.” Slovenski narod, June 22, 1911.

  15. 15 “Deputacija ‘Glavne posojilnice’ na Dunaju” [Deputation of ‘Glavna’ in Vienna]. Slovenec, March 10, 1911.

  16. 16 “Polom liberalne ‘Glavne posojilnice’” [The collapse of liberal ‘Glavna’]. Slovenec, January 21, 1911.

  17. 17 “Kako delajo klerikalci za Glavno posojilnico v Zvezdi” [How do clerics work for ‘Glavna’ in Zvezda]. Jutro, February 11, 1911.

  18. 18 “Klerikalni značaji” [Clerical characters]. Jutro, February 12, 1911.

  19. 19 Likvidacijski odbor ‘Glavne posojilnice’ [Liquidation Committee of ‘Glavna’], “Poslano” [Sent]. Slovenec, January 30, 1914.

  20. 20 “ ‘Slovenčeva’ infamija javno obsojena” [“Slovenec’s” infamy publicly condemned]. Jutro, June 8, 1911.

  21. 21 “Glavna posojilnica pred poroto (1)” [‘Glavna’ before the jury]. Jutro, June 4, 1911.

  22. 22 “Glavna posojilnica pred poroto (3)” [‘Glavna’ before the jury]. Jutro, June 12, 1911.

  23. 23 “Iz seje kranjskega deželnega odbora dne 27. junija 1914” [From the session of the Carniolan Provincial Committee on June 27, 1914]. Slovenec, June 30, 1914.

  24. 24 “Konkurz Glavne posojilnice končan” [Bankruptcy of ‘Glavna’ completed]. Jutro, September 30, 1926.

  25. 25 “Glavna posojilnica.” Slovenski narod, October 25, 1923.

  26. 26 “Agro-Mercurjeve manipulacije pred sodiščem (1)” [The manipulations of ‘Agro-Mercur’ before the court]. Slovenec, March 30, 1914.

  27. 27 Lazarević et al., Zgodovina zadružništva, 111–17.

  28. 28 Mohorič, O zgodovini, 113.

  29. 29 Archiv Republike Slovenije SI AS 307, S 11/10, no. 45. Agro-Merkur.

  30. 30 “Agro-Mercurjeve manipulacije pred sodiščem (2)” [The manipulations of ‘Agro-Mercur’ before the court]. Slovenec, April 6, 1914.

  31. 31 “Nekaj za mladine” [Something for the youth]. Slovenec, July 14, 1910.

  32. 32 “Agro-Merkur.” Jutro, November 10, 1910.

  33. 33 “Agro-Merkur.” Slovenski narod, November 9, 1910.

  34. 34 “Agro-Mercurjeve manipulacije pred sodiščem (1)” [The manipulations of Agro-Mercur before the court]. Slovenec, March 30, 1914.

  35. 35 “Iz liberalnega zadružnega delovanja” [From liberal cooperative action]. Slovenec, April 6, 1911.

  36. 36 “Klerikalna škodoželjnost” [Clerical malice]. Slovenski narod, March 16, 1912.

  37. 37 “Agro-Mercurjeve manipulacije pred sodiščem (1)” [The manipulations of ‘Agro-Mercur’ before the court]. Slovenec, March 30, 1914.

  38. 38 Kramer, “Resnica o Agro-Merkurju.”

  39. 39 “ ‘Agro-Merkur’ – narodno herojstvo” [‘Agro-Merkur’ – national heroism]. Slovenec, March 28, 1925.

  40. 40 Lazarević and Prinčič, Bančniki, 80–85.

  41. 41 Perovšek, “Afera Jadranska banka.”

  42. 42 Praprotnik, “Zoper klevete.”

  43. 43 Praprotnik, “Poslano. Odgovor na poziv.”

  44. 44 Tršan, “Propad Slavenske banke,” 368.

  45. 45 Lazarević and Prinčič, Zgodovina slovenskega bančništva, 49–50.

  46. 46 Tršan, “Propad Slavenske banke,” 371.

  47. 47 Ibid., 368–69.

  48. 48 Ibid., 369–70.

  49. 49 “Stečaj” [Bankruptcy]. Narodne novine, May 20, 1927.

  50. 50 “100 Din = 22 Din.” Slovenec, November 29, 1929.

  51. 51 “SDS – odločilni faktor v ‘Slavenski banki’” [SDS – the decisive factor in ‘Slavenska Bank’]. Slovenec, January 22, 1927.

  52. 52 For a more detailed overview of this case see Smiljanić, “ ‘Erased from the Face of God’.”

  53. 53 “Odmevi Kajfeževega konkurza” [Echoes of Kajfež’s bankrupcy]. Slovenec, October 26, 1929.

  54. 54 “Proces o Kajfeževi imovini” [The assets of Kajfež]. Slovenec, March 15, 1932.

  55. 55 “Sadovi klerikalne gospodarske organizacije” [The fruits of clerical economic organization]. Slovenski narod, July 27, 1904.

  56. 56 “Kmetijsko društvo v Poljanah nad Škofjo Loko” [Agricultural Society in Poljane nad Škofjo Loko]. Slovenski narod, September 25, 1902.

  57. 57 “Zvezno kmetijsko društvo v Poljanah” [Federal Agricultural Society in Poljane]. Slovenec, July 27, 1903.

  58. 58 “Sadovi klerikalne gospodarske organizacije” [The fruits of clerical economic organization]. Slovenski narod, July 27, 1904.

  59. 59 “Kmetijsko društvo na Dolenji Dobravi v Poljanski dolini nad Šk. Loko (1)” [Agricultural Society on Dolenja Dobrava in the Poljanska Valley above Šk. Loka]. Slovenski narod, April 22, 1910.

  60. 60 “Kmetijsko društvo na Dolenji Dobravi v Poljanski dolini nad Šk. Loko (2)” [Agricultural Society on Dolenja Dobrava in the Poljanska Valley above Šk. Loka]. Slovenski narod, April 25, 1910.

  61. 61 “Kmetijsko društvo na Dolenji Dobravi v Poljanski dolini nad Šk. Loko” (3) [Agricultural Society on Dolenja Dobrava in the Poljanska Valley above Šk. Loka]. Slovenski narod, April 26, 1910.

  62. 62 “Škandalov še ni konec” [The scandals are not over yet]. Gorenjec, June 26, 1909.

  63. 63 “Iz Poljanske doline” [From the Poljanska Valley]. Gorenjec, February 19, 1910.

2024_4_Kubu_Stolleova

Živnostenská Banka (Trades Bank) and Its Participation in the Banking pdfConsortia/Syndicates of Interwar Czechoslovakia*

Eduard Kubů and Barbora Štolleová

Charles University

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Hungarian Historical Review Volume 13 Issue 4 (2024): 533-558 DOI 10.38145/2024.4.533

One of the characteristic features of the development of the Czechoslovak economy in the interwar period was its progressive concentration and increasing organization, whether initiated from above (the persistence of a higher degree of state interventionism) or from below in the sense of voluntary cooperation and clustering across the business environment. In addition to the traditional associations for carrying out business, such as joint-stock companies, public companies, limited liability companies, and others, which were legal entities and were usually established for an unlimited period of time, new instruments of cooperation were becoming more and more common. These were networks of cartels, conventions, gentlemen’s agreements, and syndicates which restricted the free market. The study sheds light on characteristic forms of bank-to-bank cooperation, namely consortia/syndicates, using the example of the largest and most important Czechoslovak bank of the interwar period, Živnostenská Banka pro Čechy a Moravu v Praze (the Trades Bank for Bohemia and Moravia in Prague). It points out the relatively large number of consortia and offers a typology derived from their functions.

Keywords: banking consortium/syndicate, Czechoslovakia, interwar period, Živnostenská Banka (Trades Bank)

Until the end of World War I, the economies of the Bohemian lands and Upper Hungary were firmly embedded in the Danube monarchy. Their development and modernization were closely linked to economic, social, cultural, and, last but not least, political developments. A key milestone was the abolition of serfdom in 1848 and the gradual opening of space for the formation of civil society and entrepreneurial activity. A further impetus to the dynamics of development in the Bohemian lands was given by the Austrian defeat in 1859, which meant the loss of the advanced northern Italian provinces and accelerated the transfer of the industrial core of the monarchy to the Bohemian lands. Hand in hand with this was the move towards the adoption of the February Constitution (1861) and the strengthening of the development of representative institutions of the legal order, both in the field of civil law and the legal regulation of the business environment. Viewed from the perspective of big business, economic modernization was a matter for the national German and, hence, Jewish-German elites. At the end of the nineteenth century, the Czech elites were only just beginning to play a more prominent role.1

The predominance of the German-speaking business milieu in the Bohemian lands was not only marked in traditional industries but also in industries characterized which were part of the so-called Second Industrial Revolution (the second wave of industrialization). The basis of the capital market in its large business segment developed in the same way. It was characterized both by the establishment of branches of big Viennese banks and by the formation of joint-stock financial institutions linked to private banking. A smaller but later nevertheless extremely important stream of financial institutions in the Bohemian lands was represented by the concentration of the national Czech capital. Its key source was the Schulze-Delitzsch type credit cooperative movement, which gained strength in the 1860s. In 1868, Živnostenská Banka was founded as their central financial institution. In the first decade of the twentieth century, although it still retained its provincial character and headquarters, it was one of the six largest Austrian big banks. In contrast to the Viennese institutions (and this was also true of other Czech national banking institutions), Živnostenská Banka (Trades Bank), despite its generally high turnover, financed mainly medium-sized and smaller businesses. Before the fall of the monarchy, even the nascent Czech national business was, for the most part, dependent for its financing on the Viennese big banks, which had a dense network in the Bohemian lands and were able to offer bigger loans on more favorable terms.

The establishment of the Czechoslovak Republic in 1918 dramatically changed the nature of the capital market in the Bohemian lands. Rapidly increasing inflation in Austria and Hungary, together with monetary reform in Czechoslovakia which pushed towards deflation, effectively cut domestic large firms off from their traditional financial connections in Vienna and Budapest. At the same time, the domestic capital market was insufficiently linked to the foreign capital markets of Western Europe or markets overseas. The significance of the various types of financial institutions and, above all, the significance of the individual national segments changed dramatically. The national Czech segment, led by Živnostenská Banka, gained the upper hand. The national German segment and the Viennese segment, in particular, were significantly weakened. The latter was partly dissolved in the national Czech environment through the nostrification of companies,2 which were partly “transformed” into commercially interesting and relatively strong segment of multinational financial institutions, both mixed (i.e. Czech-German) and financial institutions with foreign participation (mainly British and French capital).3

The redefinition of the capital market in the new republic had major consequences for its functioning. It reduced the power of the financial institutions. The Czechoslovak big banks were incomparably weaker and less experienced than their Viennese predecessors in terms of their potential and also in terms of their management skills. Moreover, in the early years of the republic, they concentrated on building and developing their industrial concerns by making large-scale investments in stock portfolios on their own account, which subsequently limited or even ruined their ability to offer companies credit. A new situation arose for the Czechoslovak industry in the sense that large-scale credit was more difficult to obtain and more expensive. The weakness and undercapitalization of the market became a characteristic attribute of the interwar period, undermining the modernization of industry and business in general.

The Capital Market and the Term Consortium

The transformation of the capital market also led to changes in the business strategies used by banks and the firms they financed. The new conditions generated new problems and in many ways changed the nature of cooperation. On the one hand, the efforts of large financial institutions to build their concerns as an exclusive sphere of influence of the banking institution and to define sharply themselves against the competition were strengthened. On the other hand, the limited amount of capital on the market created conditions for the expansion of existing and the formation of new or until then only infrequently used manners of cooperation, even of a relatively long-term nature. The tendency to establish closer cooperation was also supported by the development of the economic cycle, especially its protracted periods of depression, which was characteristic of most of the interwar period.

A signal of a higher or even new stage of cooperation among banks in the Bohemian lands and then Czechoslovakia was the establishment in 1917 of the Association of Czech Banks, which later became the exclusive professional association of the large joint-stock commercial banks in Czechoslovakia, including the domestic German banks. It was on the basis of this association that coordinated banking procedures concerning credit and other matters were developed, in particular the creation of a Czech and then Czechoslovak banking cartel (analogous to the Austrian cartel of 1907), which determined the conditions of capital and money trade, employment issues, and last but not least consultations on cooperation with the state (internal loans, nostrification of companies, etc.).4

One important form of cooperation was the so-called banking consortia. These associations were formed for a “temporary period” to carry out one or more transactions on a “joint account.” The legal regulations varied largely from country to country. In Cisleithania, they were based on the General Commercial Code of December 17, 1862,5 which was later incorporated into the legal system of the Czechoslovak Republic. The term “consortium” referred to a non-commercial company governed by commercial law, which wasn’t a legal entity, was not entered in the commercial register and did not necessarily require a written agreement (contract). The established terminology of the time referred to “occasional companies” or partnerships and “a metà” company. The term “syndicate” was also used in the literature of the time.6 The reason for entering into consortium agreements was usually the considerable size of the planned transaction and the possibility of distributing the risks associated with a particular deal among several parties.7 Consortium deals were often associated with the banking business. The expression “banking cooperative”8 or “association of banks”9 was also used at the time to describe the function of a banking consortium.

The number of consortium/syndicate-type agreements, which had been common in the Austro-Hungarian Monarchy before World War I, grew in Czechoslovakia in the 1920s and especially in the 1930s to such an extent that special units were set up in the large banks to manage them and keep separate accounts for these transactions.10 These units were referred to as consortium/syndicate departments. There were several reasons for their establishment, including perhaps most importantly the sheer number of contracts but also the specifics and complexity of keeping the agenda. This type of business was classified in contemporary manuals and textbooks as “more difficult” from the accounting point of view,11 and it was also demanding in terms of the actual negotiation and conclusion of deals and the calculation of profits and benefits achieved. Moreover, the data on consortium transactions were considered very “sensitive.”12 Essentially, they were to remain hidden from the staff of other departments of the bank.

Consortia of banks are subjects touched on only marginally in the older and contemporary literature as well.13 The discussion below outlines the mechanisms of these agreements and their economic impacts in the specific case of Živnostenská Banka as the most important financial institution in Czechoslovakia in the interwar period. It offers a typology of consortia according to the purposes and functions for which they were established as a starting point for further research. Specifically, it focuses on consortia that were founded (1) with the purpose of establishing a company or taking over and selling off shares, (2) to guarantee and place public loans and bonds of public corporations or the state, (3) to intervene in some fashion in market affairs, (4) to ensure the influence of the group of shareholders in the company (so-called blocking consortia), and (5) to secure business and credit connections of companies (credit). Last but not least, the discussion below also considers the roles of the consortium of banks for state credit operations as a specific consortium of this type. Some questions fall outside the scope of the study, including the banks’ arrangements arising from ordinary banking transactions (i.e. agreements on foreign currency transfers, etc.), as well as “syndicates” in the sense of a higher organizational level of the cartel, which were legal entities (e.g. import and export syndicates, cartel sales offices), and the forced syndication of smaller firms in the 1930s for the purpose of their rational state-directed concentration.

A Typology of Consortia with Participation of Živnostenská Banka
(According to Their Functions and Purpose)

As already indicated, Živnostenská Banka was the leading actor in the Czecho­slo­vak financial sector in the interwar period. In 1919, its share capital amounted to 200 million Czechoslovak crowns (by 1937, it had risen to 240 million), and its reserves amounted to 97 million crowns. The bank formed a concern that included a wide range of diverse Czech/Czechoslovak enterprises, including agriculture, sugar, engineering, textile, chemical, electrotechnical, commercial, and other companies. In principle, the bank aimed for proportional representation of all major sectors of the national economy. Živnostenská Banka benefited from its close ties to the state apparatus, to which many of its senior executives as well as middle-ranking officials moved. In the 1920s, its exponents repeatedly held the post of Czechoslovak economic minister, most often the post of finance minister. At a critical time in the birth of the state, the bank provided financial backing for its administration, direct loans and underwriting/arranging long-term public loans (see below). The extraordinary influence of Živnostenská Banka on state economic policy derived from these facts.

Type 1. Among the most frequent consortium agreements with bank participation in the period under review were consortia to establish a company or to take over and sell off an issue of company shares.14 The “textbook” examples, manuals, and dictionaries of the time are based on this type of consortium agreement. A 1913 handbook of bank accounting gives the hypothetical example of Živnostenská Banka initiating the formation of a consortium to sell shares of an unnamed company.15 Two other credit institutions, namely the Česká průmyslová banka (Bohemian Industrial Bank) and Pozemková banka (Land Bank), joined as members of the consortium. Each of the members of the newly formed consortium participated in the project with one-third, with Živnostenská Banka managing the project. The consortium took over the shares of the unnamed company at a predetermined price (216 crowns per share) and subsequently provided for subscription at a price above the acceptance price (230 crowns per share). The project was settled in a joint consortium account held by the gerent (bank in charge), in this case Živnostenská Banka, which included expenses, interest, and commissions. Once the transaction was closed, the profit shares were transferred to the individual consortium members.16

The importance of consortium agreements in the context of the founding activities of banks before World War I was captured by Czech historian Ctibor Nečas, who analyzed the activities of Czech banks in southeastern Europe. Živnostenská Banka, like some other domestic banks, apparently participated in several agreements established outside the Bohemian lands. It participated, for example, in the consortium for the increase of the share capital of the Trieste steamship company, in the arrangement for the transformation of the Split marble mining company into a joint-stock company, in the consortium for the establishment of the Herceg-Bosna joint-stock insurance company, and in particular in the consortium for the establishment of sugar factories (Osijek, Vrbas, Szolnok).17 When issuing, buying, or selling shares, the consortium agreements did not always have to be large-scale funding projects. An example of a smaller consortium with the participation of Živnostenská Banka in the Czechoslovak environment (its other members were the Spolek pro chemickou a hutní výrobu or United Chemical and Metallurgical Works Ltd. and “Solo” Czechoslovak United Match and Chemical Works) include the sale consortium of “Solo” shares (“Solo” was both an object and a member of the consortium), which was established in the autumn of 1937 to place only 10,075 Solo shares on the market (i.e. approximately three percent of the company’s capital).18

In practice, the simple examples presented in the manuals took on different variations, sometimes highly sophisticated, and the agreements could display various asymmetries and specificities. During its existence, the consortium typically had a gerent, either permanent or it was administered on a parity basis, meaning that the participants rotated in leadership positions at set intervals (usually after a year). The shares of securities taken over were not always equal. Each of the participating banking institutions could participate with a predetermined quota. The circumstances of the issue, purchase, or sale of corporate shares could be (and in practice were) linked to other organizational actions of the bank (such as shareholding and financing).

Type 2. Another type of consortium agreement involving banks was consortia to guarantee and place public loans and bonds of public corporations or the state. For example, a consortium of banks could be formed to underwrite municipal loan bonds.19 An example of wide-ranging cooperation is the agreement of 13 national Czech joint-stock commercial banks (including Živnostenská Banka), four public financial institutions, and one Slovak bank with the Czechoslovak National Committee of November 8, 1918, i.e. only five days after the establishment of the Czechoslovak state. The subject of the arrangement was a state loan of “National Freedom” in the amount of one billion crowns. Based on this loan, debentures were issued bearing interest at four percent and maturing within four years. The loan was of great symbolic significance and the banks waived their usual remuneration and only claimed reimbursement of the costs of securing the loan, in addition to providing the state with an advance of 100 million crowns.20

Type 3. Consortia of banks could be set up to support the price of certain securities on the stock exchange. An example of an intervention consortium is the consortium referred to as “B” in the internal documentation of Živno­stenská Banka. Five leading Czechoslovak joint-stock commercial banks and one private bank agreed to form it in 1920, namely on December 24, 1920. These were the Agrární banka československá (the Czechoslovak Agrarian Bank, or simply the Agrarian Bank), the Česká průmyslová banka (Bohemian Industrial Bank), the Böhmische Eskompte-Bank und Credit-Anstalt (BEBCA), the Pražská úvěrní banka (Prague Credit Bank), and Živnostenská Banka, which were supplemented by the private banking house of Bedřich Fuchs.21 The purpose of the consortium was to carry out intervention purchases and sales of securities on the Prague Stock Exchange. For this purpose, each bank deposited three million crowns in the syndicate account and the firm of B. Fuchs deposited two million crowns. A total of 17 million crowns was to be used for the intervention purchases and sales of the thirty companies defined in the agreement. These were companies in which the participating banks had a special interest and which were included in their concerns. Purchases of shares were to be made for shares with a quotation value of up to 1,000 crowns if they had fallen by ten percent, for shares with a quotation value of up to 2,000 crowns if they had fallen by seven percent, and for shares with a quotation value of over 2,000 crowns if they had fallen by five percent compared with the last exchange rate. Other provisions of the consortium agreement specified the aforementioned basic key. The consortium was managed by Prague Credit Bank and the account was held by Živnostenská Banka. The agreement was not limited in time. The members agreed later to terminate it on June 8, 1926. The account had a passive balance of 7.3 million crowns at that time. However, the securities depot in whose favor the intervention was made showed a lot of shares of 13 companies with an exchange rate value of 13.4 million crowns. The result of the consortium was therefore positive.22

Type 4. In terms of consequences, shareholder consortia or blocking consortia were among the most important. František Špička, the procurer of the Bohemian Industrial Bank and author of a comprehensive manual on bank organization and the technique of bank transactions from 1926, paid considerable attention to consortium agreements in the context of the interpretation of the tasks and activities of the industrial departments of banks, which “were intended to ensure that groups which individually do not have a majority in the company have a decisive influence on the company.”23 A characteristic attribute of this type of consortium agreement was that it was backed by the holding of an inalienable block of shares by the consortium members. The shares tied by the agreement served as a guarantee of the functionality of the consortium (the principle of exercising voting rights at general meetings of the companies was included in the consortium agreement). The consortium with the participation of banks and also often industrial or commercial capital (mixed consortium) served to ensure medium-term or even long-term influence on the company and was usually signed for five to ten years with an automatic renewal clause. It was also commonly referred to as a “blocking” consortium.24 Its primary function was to create a controlling block of shares, thereby “blocking” the influence of other minority shareholders. It often created its own specific institutional structure, consisting of a negotiating board the function of which was to decide on the course of action within the respective firm. In essence, this was a structure analogous to the organizational structures of individual firms. The consortium was an expression of the concentration of industrial and commercial capital and the concentration of banking power. Groups of banks could seek to influence or control a key group of producers in a particular branch, or in other words, to gain a monopoly or oligopoly advantage.

One example of a blocking consortium with the participation of Živnostenská Banka is the consortium of shareholders of the Akciová společnost pro průmysl mléčný (Dairy Produce Company or simply Radlice Dairy). The agreement was concluded on June 28, 1935 on the basis of 27,587 shares of the company, which at that time represented over 78 percent of its share capital.25 Participating in the agreement were Cukrovary Schoeller a spol, a.s. (Schoeller Sugar Factories and Co., Ltd., with 4,200 shares), the Bohemian Sugar Industry Company (with 4,800 shares), BEBCA (with 5,000 shares), the Ústřední jednota hospodářských družstev (Central Union of Agricultural Cooperatives, or ÚJHD, with 12,587 shares), and Živnostenská Banka (with 1,000 shares). The management of the consortium consisted of seven representatives, with each member-entity sending one representative and the ÚJHD (given the number of shares contributed) sending three representatives. The most important position within the consortium was held by Živnostenská Banka, despite the fact that it had the lowest stake. It asserted its influence through sugar companies and also through BEBCA. The consortium shares were placed in the custody and administration of Živnostenská Banka and the members committed not to sell or otherwise transfer their ownership rights during the term of the agreement without the express consent of the other members. Ownership transfers “within the consortium” were the exception. The purpose of the consortium was “to secure for its members a permanent influence over the management and administration of the Radlice Dairy, as well as to secure for its members proper representation in all the statutory bodies of the company and to secure the joint action of the members of the syndicate in all matters concerning the Radlice Dairy.”26

The representation of the members of the consortium on the Board of Directors, the Executive Committee, and the Board of Auditors of Radlice Dairy was in proportion to the shares bound by agreement, with the position of chair­man belonging to the “group” of Živnostenská Banka and the position of vice-chairman to the ÚJHD. The consortium agreement included a specific arrangement regarding the appointment of the top management of Radlice Dairy. The deliberations within the consortium were conducted by voting in proportion to the shares bound by agreement (with one share being equal to one vote). This was done by majority vote, with matters requiring unanimous approval being explicitly named (pricing strategy, payment of dividends, amendments to the consortium agreement, including the purchase of shares for the consortium, entering into cartel agreements, reducing or increasing share capital). Externally, the members of the consortium committed to exercising voting rights in the statutory bodies of Radlice Dairy in accordance with the consortium’s resolutions. The agreement was non-terminable for five years and was to be automatically renewed for one year each time thereafter unless terminated by a member.27

The blocking consortium could be formed with the participation of domestic and foreign interest groups. This was the case with the Pražská železážská společnost (Prague Ironworks Company, PŽS), which had its main plant in Kladno. The consortium agreement concluded in the 1930s between Živnostenská Banka and the Mannesmann concern, represented by its plants in Chomutov (Mannesmannröhren-Werke), expressed the cooperation between the Reich-German capital group, which primarily sought to secure some influence on the company’s production profile and the supply of materials (ingots) for the Chomutov plant, and Živnostenská Banka group, which expressed the growing share of national Czech capital in the company and, above all, its interest in financing the company. The agreement, backed by 45.6 percent of the capital of PŽS (Mannesmannröhren-Werke providing 25.6 percent and Živnostenská Banka providing 20.21 percent), gave its participants a comfortable voting majority at the general meetings of PŽS.28

The consortium agreement was also adopted as a tool for coordination to regulate relations in the Prague company Philips Ltd. The agreement concluded on February 3, 1937 between the Dutch Philips (N. V. Philips Gloei­lampenfabrieken in Eindhoven), Ringhoffer-Tatra, and Živnostenská Banka bound all the shares of the company (in the ratio 40:35:25) for ten years.29 The shares with a total nominal value of three million c­rowns were deposited in Živnostenská Bank’s depot. The agreement explicitly defined the motivations of the parties involved. The Dutch company was interested in “ensuring that the management of the Prague company bearing its name is in line with the Group’s business and technical principles.”30 Živnostenská Banka pursued the objective of maintaining a banking relationship with the company (specifically, the agreement stipulated a minimum scope of 80 percent financing on the relevant terms of the major banks in Prague). Ringhoffer-Tatra wanted to develop technical cooperation with Philips, and the agreement stipulated that “this effort should be taken into account to the maximum extent possible without disadvantaging Philips.”31 Živnostenská Banka and Ringhoffer-Tatra were guaranteed in writing a minimum yield on the shares tied up by the consortium (a net dividend of six percent). The Dutch company or a third party appointed by it was given the option of buying the shares belonging to the other members of the syndicate (within four weeks). A further agreement stipulated, within the same time frame, that the Dutch company would be obliged to take over the shares of Philips Ltd. from Živnostenská Banka and Ringhoffer-Tatra if they were offered to it.

Consortia of shareholders involving banks could in some cases bind blocks of shares in several different companies at the same time. This was true in the case of the shareholders’ agreements of Czechoslovak distilleries signed in the wake of the completion of the process of the so-called repatriation of Austrian capital following the financial collapse of the Österreichische Creditanstalt für Handel und Gewerbe (1931). In 1932, with the participation of the Agrarian Bank, the Družstvo hospodářských lihovarů pro prodej lihu v Praze (Cooperative of Agricultural Distilleries for the Sale of Spirit in Prague), the ÚJHD, and Živnostenská Banka, the Czech distillery consortium was established, the purpose of which was to “ensure a permanent influence on the management and administration” of the six explicitly named Czechoslovak distillery companies and to “ensure a uniform approach by the members of this consortium in all matters.”32 Later, the consortium was extended and included another banking institution (BEBCA) and, temporarily, the Vienna-based A. G. für Spiritusindustrie.33 The agreement provided for the establishment of a special “consortium leadership” to secure the agreement, to which the consortium members sent two representatives each. Later, detailed rules were drawn up specifying the roles of the “consortium leadership” and the “board of directors” and other mechanisms for the functioning of the syndicate.34

Type 5. Agreements to secure commercial and credit links of companies were also made in the form of consortia. These agreements involved the exclusive provision of the firm’s banking operations, including the direct financing by the consortium banks of capital-intensive operations that were beyond the realistic capacity of a single credit institution, either because of insufficient funds or because the amount of funds committed was so large that it created an increased risk of loss. The agreements on the provisioning of the commercial and credit link were separate contracts, and in cases of the formation of a “blocking consortium,” they could also be a direct part of the agreement.35 An example of banks acting jointly in the provision of credit can be seen in the draft credit agreement between Živnostenská Banka with BEBCA and the Kolin spirit potash factory and refinery from 1937. The banks established a credit framework of four million crowns. The first half could be drawn down without further conditions, while guarantees were required for the second half. For the duration of the agreement (five years), the company was obliged to concentrate all its credit and banking transactions exclusively with the participating financial institutions. The banks were to rotate in charge every year. They also stipulated that they would be the place for the deposit of shares for general meetings and the payout point for dividend coupons, for which they charged a quarter percent commission on the amount paid out. The agreement specified the loan guarantees (insurance). On request, the company was obliged to provide information on the employment of the company and the running of its business, as well as a balance sheet and an account of profits and losses.36

The Consortium Department at Živnostenská Banka had been in existence since January 14, 1921, and on that date, the credit affairs of 17 companies had fallen under it. The number of firms subsequently fluctuated. The department dealt with dozens of firms continuously,37 and in 1938, according to a uniquely preserved inventory, there were 32 firms. The size of credits ranged from hundreds of thousands of crowns to millions of crowns, mainly. Most of the organizational schemes of Živnostenská Banka were preserved after the war, but all indications suggest that the Consortium Department of Živnostenská Banka was organized directly under the General Secretariat of the Bank.38

There were essentially two techniques according to which consortium transactions were conducted. The first is of the type indicated above. The firm’s/subject’s overdraft account was held with only one bank, which handled all the firm’s transactions and at the same time set up share accounts for the other participating banks. “Turnover settlement” was carried out at regular intervals according to agreed quotas. The management of the account could belong to one of the banks for the entire duration of the agreement, or it could be rotated at agreed times. The second way of carrying out credit consortium transactions was for the firm to set up overdraft accounts with all the participating banks, which had the advantage of enabling it to carry out transactions with several institutions and thus benefit from the flexibility of one bank for certain operations. At fixed dates, the banks would then settle the balances between the accounts, bringing the account totals into balance with the agreed quotas. There were also cases when fixed quotas were set for particular types of operations and transactions (foreign exchange operations, etc.).39

If we focus on the specific banks with which Živnostenská Banka cooperated in the area of securing financing between the wars, we can say that the range varied and evolved over time. The preserved records of the consortium department show that Viennese banks were still frequent partners for Živnostenská Banka in the interwar period, especially in the early 1920s. Živnostenská Banka shared its clients in particular with the Österreichische Creditanstalt für Handel und Gewerbe, Bodencreditanstalt, and the Niederösterreichische Escompte Gesellschaft. The counterbalance to these gradually fading links was cooperation between Živnostenská Banka and domestic Czechoslovak banks. The most frequent were the alliances of traditional national Czech banks (Živnostenská Banka, the Agrarian Bank, the Bohemian Industrial Bank, and the Prague Credit Bank) and, less frequently, the cooperation of Živnostenská Banka with domestic German institutions, such as Böhmische Union-Bank and Böhmische Escompte-Bank. Cooperation with the latter German bank grew significantly only after its transformation into BEBCA, when Živnostenská Banka became directly involved in its capital.

KUBU FIG1

Figure 1. Banking consortia providing business and credit connections between companies with the participation of Živnostenská Banka as of 1938 (in percent)
Explanatory note: ŽB = Živnostenská Banka
Source: AČNB, fund ŽB, sign. ŽB/3959/1, list of consortium companies (undated).

The post-1945 record of how consortium accounts were settled back to 1938 provides evidence of the nature of the cooperation between Živnostenská Banka and other financial institutions at the end of the First Czechoslovak Republic.40 For this year, as mentioned above, 32 companies are listed, which may seem like a low number, but the volume of transactions behind it is undeniably large. In most cases, these were profiling entities in their field of business with many dependent companies: PŽS, Explosia, Synthesia, the distillery complex, Poldina huť (Poldihütte/Poldi steel factory), Ringhoffer-Tatra, Vítkovické horní a hutní těžířstvo (Vítkovice Mining and Metallurgical Mining), Králodvorská cementárna (Königshofer Cement Factory), etc. In terms of the technique according to which consortium transactions were made, 17 companies were represented on the principle of a single account with an additional settlement between the participants (in nine cases Živnostenská Banka had the leadership position and in eight cases the leadership rotated). For 11 companies, parallel accounts were held with the participating banks, and the balances were settled according to quotas. For four companies, quotas were specified according to the type of transactions. The consortia in which Živnostenská Banka par­ticipated consisted of two to five banks. In 15 cases, Živnostenská Banka pro­vided services in cooperation with one other banking institution, in 11 cases with two, in four cases with three, and in two cases with four other banking institutions (see Fig. 1). The most frequent partner of Živnostenská Banka in the provision of consortium loans was BEBCA (in 14 cases), in eight cases it was an alliance between Živnostenská Banka, BEBCA, and the Agrarian Bank (e.g. in the financing of distillery enterprises), in four cases Živnostenská Banka participated alongside the Agrarian Bank, the Prague Credit Bank, and the Bohemian Industrial Bank, and in two cases Živnostenská Banka coordinated with BEBCA and the Böhmische Union-Bank. The broad-based coalitions were rather unique and were based on the needs of the specific project. The specific configurations applied are shown in Figure 2.

KUBU FIG2

Figure 2. Formations under banking consortium agreements providing business and credit connections between companies with the participation of Živnostenská Banka as of 1938 (in percent)
Explanatory notes: ŽB = Živnostenská Banka; BEBCA = Böhmische Eskompte-Bank and Credit-Anstalt; AGB = Agrarian Bank; BUB = Böhmische Union-Bank; Anglo-PÚB = Anglo-československá a Pražská úvěrní banka (Anglo-Czechoslovak and Prague Credit Bank);
ČPB = Bohemian Industrial Bank; VDB = Všeobecná družstevní banka (General Cooperative Bank); ÚJHD = Central Union of Agricultural Cooperatives
Source: AČNB, fund ŽB, sign. ŽB/3959/1, list of consortium companies (undated).

A variation in the context of credit consortia was also a consortium that did not directly provide the funds but served as an intermediary and guaranteed credit from third-party entities (including another consortium of banks) with its assets.

Type 6. The consortium of banks for state credit operations was a unique type of banking consortium in interwar Czechoslovakia. This consortium was to act as an advisory body to the Czechoslovak government in financial policy, especially in its lending, either by banks directly or by intermediating loans and purchases on foreign markets. These roles were later supplemented by other roles, such as guaranteeing domestic and foreign loans and providing advances to the state, for example, for the purchase of grain. The consortium operated on the principle of quotas. In the autumn of 1919, the Czechoslovak Minister of Finance and the directors of nine Czechoslovak banks, six banks with Czech-language administration (the Agrarian Bank, the Bohemian Industrial Bank, the Moravian Agrarian and Industrial Bank, the Prague Credit Bank, the Central Bank of Czech Savings Banks, and Živnostenská Banka), two banks with German-language administration (the Böhmische Escompte-Bank and Böhmische Union-Bank), and one bank with Slovak administration (the Slovak Bank in Ružomberok/Rózsahegy), took part in the preparatory work for the establishment of the consortium.41 The consortium was thus the result of cooperation among a very broad spectrum of Czechoslovak financial institutions which were highly divergent in terms of their objectives and national profiles and fiercely competitive on the capital and money markets. The number of banks in the consortium was increasing, thus the quota of individual institutions decreased. The quota of Živnostenská Banka, which was set at 27.06 percent in the first year of the consortium’s operation, had fallen to 15.9 percent by the mid-1930s. Even so, the role of this banking institution remained exceptional, with by far the highest quota in the group of joint-stock commercial banks (other banks had a quota in the range of 0.4 to 6.6 percent). The most significant increase in the period under review was recorded by the public-law institutions, which negotiated fixed quotas (the highest was Postal Savings Bank with a quota of 20 percent, followed by Land Bank with a quota of 6 percent).42

The Consortium/Syndicate Transactions in the Balance Sheets of Banks and Živnostenská Banka in Particular

Published balance sheets of banks in interwar Czechoslovakia give only an idea of the importance of consortium deals in the context of their other business activities. On the asset side of the balance sheet, there was a separate column/item for “Participation” or “Consortium/Syndicate Participation,” which, according to contemporary interpretations of banking, was supposed to be a cumulative expression of the bank’s consortium/syndicate participations as well as participations in the basic capital of non-joint-stock companies,43 or a column summarizing all “financial participations in companies with which [banks] are linked by granting them credit, reserving influence on management.”44 According to data from 1922, this item cumulatively amounted to only 395.7 million crowns for all joint-stock banks in the Bohemian lands and 1.29 percent of their balance sheet total.45 In 1929, the item is represented by the amount of 1,054.2 million crowns (see Table 1). This indicates the growing importance of consortium transactions, though compared to other asset items, their share in the bank’s business activities still appears to have been relatively low. The dominant item on the side of officially reported assets for banks in the Bohemian lands was clearly the item “debtors” (65.86 percent of the balance sheet in 1929), followed by the items “bills of exchange” (8.70 percent) and “securities” (8.69 percent).46 The latter item also indicated the increasing involvement of banks in industrial and commercial business.

Table 1. Consortium and syndicate participation in the balance sheets of joint-stock banks in the Bohemian lands (Bohemia, Moravia, and Silesia) in 1929 (in thousands of crowns)

 

Banks with national Czech administration  

Banks with national German administration  

Banks with national mixed administration  

Banks in the Bohemian lands  

Consortium/syndicate participation

445,560

158,165

450,437

1,054,162

Total assets

13,930,371

6,276,616

11,138,301

31,345,288

Share of consortium/syndicate participation in total assets

3.20 percent

2.52 percent

4.04 percent

3.36 percent

Source: Statistická příručka republiky Československé. vol. 4, 260.

As mentioned above, consortium agreements were among the types of deals that were considered highly sensitive (even classified). Antonín Pimper, an expert on the development of Czech banking at the time, drew attention to the fact that banks’ shares in industrial and commercial businesses often tend to be weighed differently in accounting and “usually represent secret reserves for the institutions in question.”47 In some banks, it has become common for these shares to be balanced at the nominal share value and not at the current rate. The current rate could have been several times higher, but the nominal share value was given instead to reduce the figure shown in the final balance sheet. As a specific case of a bank that proceeded in this manner, he chose Živnostenská Banka, on which we have focused in this study. Under the item of consortium participations in 1928, Živnostenská Banka only showed a round figure of 160 million crowns, and Pimper noted in this context that “it is known to insider circles that the actual figure of Živnostenská Banka’s participation must be disproportionately larger.”48 It is archivally documented that Živnostenská Banka maintained double balance sheet, an official one for the public and for review bodies, and a real one (which gave more accurate figures concerning the values of its assets) for internal use.

Table 2. Consortium/syndicate participation in the balance sheet of Živnostenská Banka by year (1921–1937), rounded to the nearest thousand crowns

 

Consortium/syndicate participation  

Total balance sheet assets  

Share of consortium/syndicate

participation in total assets

1921   

21,790

5,269,744

0.41 percent

1922

26,790

4,845,008

0.55 percent

1923

51,745

4,907,020

1.05 percent

1924

51,758

4,588,810

1.13 percent

1925

50,025

4,597,858

1.09 percent

1926

150,000

4,888,009

3.07 percent

1927

160,000

5,040,327

3.17 percent

1928

190,000

5,296,753

3.59 percent

1929

217,000

5,675,660

3.82 percent

1930

217,000

5,690,956

3.81 percent

1931

217,000

5,174,312

4.19 percent

1932

217,000

4,923,228

4.41 percent

1933

217,000

4,904,853

4.42 percent

1934

217,000

5,039,139

4.31 percent

1935

217,000

5,206,099

4.17 percent

1936

217,000

5,250,292

4.13 percent

1937

217,000

5,362,328

4.05 percent

Source: Compass. Finanzielles Jahrbuch Tschechoslowakei, vol. 1922–1940.

In this sense, the information on consortium/syndicate business in the balance sheet of Živnostenská Banka should be understood as indicative only, or as a “minimum figure.” However, the development trend is indisputable. In the year of establishment of the consortium department (1921), the amount of 21.79 million crowns (i.e. 0.41 percent of the balance sheet total) is stated, which gradually increased in the 1920s. In 1925, consortium/syndicate transactions amounted to 50.03 million crowns. Starting in 1926, the bank began to present a rounded figure, and from 1929, it was a fixed sum of 217 million crowns. In relation to the balance sheet total, this was approximately four percent each year (see Table 2). What the actual share of consortium transactions in the balance sheet was, however, is beyond the scope of this study and requires further research, including a detailed analysis of the bank’s books.

Conclusion

The capital market of interwar Czechoslovakia had weak links to the world market, and it would not be an exaggeration to claim that it was almost entirely isolated. At the same time, it was fragmented and very complicated, both in the segments determined by the typologies of financial institutions and in the segments of big business, where there were necessarily many conflicts of interest between firms and especially between financial institutions. The intense competition in a relatively small market reached a critical stage where competitive tensions in predefined areas were declining in favor of a significant new type of cooperation. This brought cost reductions and greater efficiency. Thus, the crowded market of individual financial institutions led to another specific characteristic phenomenon, a paradox characteristic of Czechoslovakia, namely the formation of an unusually dense network of consortia.

In interwar Czechoslovakia, banking consortia formed one of the organiza­tional components in the network of links and relationships in business. Consortium agreements were used to launch interest groups/partnerships, which were initially related to the issuing activities of banks but were subsequently applied in new contexts, especially in connection with the implementation of projects with large credit frameworks and also with efforts to coordinate the actions of interest groups within a firm or company. This was a win-win instrument for both banks and companies. Consortia allowed banks to participate in operations and transactions that would have been unaffordable or too risky for an individual bank. They were, thus, a tool to bridge market fragmentation. Consortia supported existing close links in the capital market (coalitions of friendly banks) and sometimes acted as a catalyst, opening up possibilities for otherwise unthinkable links (cooperation among domestic German and domestic Czech banks).

In relation to the company, which was the subject of the consortium agreement, the consortium represented a tool for a stronger anchoring or multiplication of banking influence. In exchange for increased bank influence or reduced freedom of strategic decision-making, the firm increased the prospects for placing its shares on the market, gained stability in terms of financing, and, in the case of a consortial credit, achieved the necessary framework for operations and investments. Moreover, the consortium’s recovery of debts was often reported to have been more benevolent than in a bilateral relationship.49 The economic scope of consortium agreements in interwar Czechoslovakia, especially from the 1930s onwards, grew to such an extent that it can be said to have been an important market instrument which regulated and sometimes even monopolized entire industries. Each individual consortium agreement was to a large extent specific in its motivations, parameters, and consequences and must therefore be examined on its own. There can be no doubt, however, that the significance of bank consortium agreements cannot be measured by their statistical share in the transactions of each bank alone but rather must be assessed in the context of the growth of its influence in the cartelized sectors of the economy, the increase in trade guarantees, the increase in the volume of transactions, the tighter binding of companies, etc. Consortium transactions were an expression of the gradual modernization of the capital market, including its concentration, unification, and tendencies towards monopolization.

Archival Sources

Archiv České národní banky [Archive of Czech National Bank] Prague (AČNB)

Fund Živnostenská banka [Trades Bank] (ŽB)

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  • 1 Jančík and Kubů, Nacionalismus zvaný hospodářský, continuously in the text.

2 The so-called Nostrification Act No. 12/1920 of the Sbírka zákonů a nařízení republiky Československé [Collection of Laws and Regulations of the Czechoslovak Republic] authorized the Ministry of Industry and Trades to order companies with production plants in the Czechoslovak Republic but with their seats outside the Czechoslovak Republic to transfer their seats to the territory of the new republic. The main objective was to avoid tax losses (companies officially registered outside Czechoslovakia paid a share of their taxes to the countries in which they had their seats). However, other motives were also important. First and foremost, the act was intended to ensure the state’s influence on strategic enterprises. Nostrification was seen as one of the means of strengthening the economic independence of the new state. The nostrification process became a welcome opportunity to increase the economic influence of Czechoslovak banks, especially the national Czech banks, which took over the lending of nostrified companies. In total, over 200 large companies were nostrified with state assistance.

3 Kubů and Šouša, “Die Nostrifizierung von Industrie- und Handelsfirmen.”

4 Kubů, “Za sjednocenou nacionálně českou bankovní frontu.”

5 Všeobecný zákonník obchodní, 117–18.

6 Ottův obchodní slovník, vol. 2, 1045; Slovník obchodně-technický, účetní a daňový, vol. 9, 1402–4; Heyd, Repetitorium obchodních bank, 16–17, 127. See also Eichlerová, “Konsorcium.”

7 Pospíšil, “Emisní obchody bank,” 50–51; Růžička, Organisace bank, 100.

8 Ottův slovník naučný, vol. 24, 25.

9 Koloušek, Národní hospodářství, vol. 3, 40.

10 Kunert, “Průmysl a banky,” 137–44.

11 Rosík, Bankovní účetnictví, 248–69. For variations of accounting methods, see in detail Slovník obchodně-technický, účetní a daňový, vol. 9, 522–64. 

12 Rosík, Bankovní účetnictví, 183.

13 Novotný and Šouša, “Změny v bankovním systému,” 245–46.

14 On consortia in the context of banks’ emission operations, see Pospíšil, “Emisní obchody bank,” 50–54; Rosík, Bankovní účetnictví, 263–68; Gruber, Hospodářská organisace úvěru, 26; Fousek, Příručka ku čtení bursovních a obchodních zpráv v denním tisku, 27.

15 Šikýř, Bankovní účetnictví, 58–59.

16 Ibid.

17 Nečas, “Organizační síť a obchodní činnost českých bank”; Tóth, “K počátkům a vývoji cuk­ro­varnického průmyslu.” 

18 AČNB, fund ŽB, sign. ŽB/154/1, Sale consortium of Solo shares, contract dated October 25.

19 Rosík, Bankovní účetnictví, 263–68; Slovník obchodně-technický, účetní a daňový, vol. 9, 554–64.

20 Kunert, “Cesta ke koruně.”

21 When the consortium agreement was signed, Bedřich Fuchs was the owner of a private banking house and a speculator who had significant influence in the informal background of the Prague Stock Exchange (trading also in less frequently traded stocks), and from this point of view, he was a welcome partner who could help influence the exchange rate. The press of the time referred to him as “the master of the Prague Stock Exchange.” Bull, “O slávě bankéřské.”

22 These included shares in Škoda Works, Česká společnost pro průmysl cukerní (Bohemian Sugar Industry Company), Česká obchodní společnost (Bohemian Trading Company), Rakovnické a poštorenské keramické závody a.s. (ceramic factories in Rakovník and Unter-Themenau, Ltd.), Západočeské továrny kaolinové a šamotové a.s. (West-Bohemian Kaolin and Chamotte Factories, Co. Ltd.), Breitfeld-Daněk (engineering works Breitfeld-Daněk), Českomoravské elektrotechnické závody Fr. Křižík, a. s. (Bohemian-Moravian Electrotechnical Works), Spojené továrny hospodářských strojů Fr. Melichar-Umrath a spol., a.s. (United Factories of Agricultural Machinery Fr. Melichar-Umrath and Co., Ltd.), etc. For detailed documentation on the consortium, see AČNB, fund ŽB, sign. ŽB/183/2, folder Syndicate “B”.

23 Špička, Organisace bank, 377–79.

24 Karásek et al., Obchodník ve styku s bankou, 89–90; Špička, Organisace bank, 377–78; Preiss, Průmysl a banky, 9–10.

25 AČNB, fund ŽB, sign. ŽB/178/1, convolut of documents – Radlická mlékárna syndicate.

26 Ibid., syndicate agreement of June 28, 1935.

27 Ibid.

28 Balcar, Tanky pro Hitlera, 38–39; Teichová, Mezinárodní kapitál a Československo, 89.

29 AČNB, fund ŽB, sign. ŽB/ 49-10, convolut of documents (Philips syndicate).

30 Ibid., Gedenkprotokoll aufgenommen am 3. Februar 1937 in den Lokalitäten der Živnostenská Banka in Prag über den Abschluss eines Syndikatsvertrages. 

31 Ibid.

32 For a transcript of the agreement, see AČNB, fund ŽB, sign. ŽB/665/2, syndicate agreement “Czech Distillery Syndicate” of December 15, 1932 with amendments of October 23, 1936. 

33 Pátek, “Československo-rakouské kapitálové a kartelové vztahy,” 137–40; Novotný et al., “Úsilí českého finančního kapitálu.”

34 For a collection of documents on the activities of the distillery consortium, see AČNB, fund ŽB, sign. ŽB/32/1, Rules of Procedure for Companies Included in the Action Distillery Syndicate; Organizational Rules for Companies Controlled by the Action Distillery Syndicate.

35 In the case of the aforementioned Radlice consortium, previously concluded parameters regarding the business and credit connections were addressed in the agreement. AČNB, fund ŽB, sign. ŽB/178/1, syndicate agreement of June 28, 1935. 

36 AČNB, fund ŽB, sign. ŽB/150/1, draft agreement (1937).

37 Ibid., sign. ŽB/3959/1, list of consortium companies (undated).

38 Ibid., sign. ŽB/398/1, undated scheme of the structure of Živnostenská Banka.

39 For a detailed explanation, see ibid., sign. ŽB/3959/1, Technique of conducting consortium transactions (undated typescript). 

40 Ibid., list of consortium companies (undated). 

41 AČNB, fund ŽB, sign. ŽB/103/1, minutes of the meeting on November 7, 1919.

42 For a detailed overview of the participation key, see Novotný and Šouša, “Změny v bankovním systému,” 248. 

43 Rosík, Bankovní účetnictví, 206–9, 213, 218.

44 Klier, Veřejné peněžnictví, 218–19. 

45 Československé banky v roce 1922, 94.

46 Statistická příručka republiky Československé, vol. 4, 260. 

47 Pimper, České obchodní banky, 459–60.

48 Ibid., 460.

49 Novotný and Šouša, “Změny v bankovním systému,” 245–46.

* The study was carried out under the Cooperatio program, provided by Charles University, History, at the Faculty of Arts. The text is a revised version of the chapter “V napětí konkurence a spolupráce. Bankovní konsorcia/syndikáty v meziválečném Československu (angažmá Živnostenské banky)” [In the tension of competition and cooperation. Banking consortia/syndicates in interwar Czechoslovakia (Engagement of Živnostenská Banka)] published in the collective monograph Miloš Hořejš, Eduard Kubů, Barbora Štolleová, eds., Podnikatel versus kapitál – kapitál versus podnikatel. Dvě tváře jednoho vztahu ve střední Evropě 19. a 20. století [Entrepreneur versus capital – Capital versus entrepreneur. In the tensions of competition and cooperation], Prague: NTM, 2023, 100–14.

2024_3_Bagdi

The Incomes and Expenditures of Agrarian Family Enterprises in Interwar Hungary*pdf

Róbert Bagdi
University of Debrecen
This email address is being protected from spambots. You need JavaScript enabled to view it.

Hungarian Historical Review Volume 13 Issue 3 (2024): 471-508 DOI 10.38145/2024.3.471

Hungarian statistics in the era of the Dualism and the Interwar period did not go below the settlement level and did not provide any information on the number of livestock and the income from them. Therefore, we do not have exact data on the main problem of the period – whether the large estates or the smallholding showed better yield/ha values, and on the minimum viable size of small farms. Although the movement of ethnographic writers has depicted a dark overview of many settlements, in most cases these do not provide quantifiable data. The surveys organised by the OMGE or the agricultural schools provided statistically relevant quantitative data on certain layers of the peasantry, but the poorest, daily wage-earners remained under-represented in the studies. Therefore, sources that record the incomes and expenditures of these strata in detail (which is the focus of agricultural economists), together with their living conditions (which is the focus of the village researchers’ movement), is particularly valuable. At the University of Debrecen, under the supervision of Rezső Milleker, professor of geography, dozens of theses were written on this topic - though not all of them were conducted according to the professors’ pre-written guidance. In this paper, we try to shed light on the distribution of income and expenditure of the smallholder-peasant class, which was also hit by the recession of the Great Depression, by analysing one of the best, but unpublished work. Beside revenue sources, strategies of survival, techniques of tax-evasion, the profits compared to loan interests are also discussed.

Keywords: smallholders, farm profitability, tax, loans, peasant account books, Interwar Hungary, demographic conditions

Introduction

The events of 1848 can be considered milestones in the development of the Hungarian economy and Hungarian society. Though the war of independence had failed, but dramatic transformations in the legal environment and social relations could no longer be hindered. In the Dualist Era after the Compromise of 1867, the process of modernization accelerated. The transformations also affected the circumstances of those living off agriculture. Serfdom had been abolished, which was a progressive development, but at the same time, the tenants lost most of their leased lands and resources shared with the landlord (common pastures, forests), which fell into the hands of old landlords according to the new laws. The implementation of land redemption in 1848 allowed peasants to become the owners only of their urbarial plots. As a result of this, the multitude of peasants, including those who had not necessarily been poor before, were threatened by impoverishment. Meanwhile, despite general modernization, those who made their living in agriculture continued to live according to the traditional way of life, in some cases even until the mid-twentieth century. As sociologist and former Hungarian Minister of Interior Erdei Ferenc put it, “the peasant social forms remained intact even when the overall structure of society was built on a different principle.”1 According to Erdei, peasants did not adapt to the new market economy in Hungary, because “a peasant farm is not at all a business enterprise designed with commercial rationality, but rather a traditional household farm that operates within traditional frameworks and produces goods. Ultimately, it is incapable of providing surplus for the producer to be sold at the market.”2 This was generally true, though there were exceptions. In the second part of the discussion below, I offer examples of farmers who took the challenges of the new era into account and tried to adapt to a modern (marked-oriented) economy.

On the eve of World War I, most people in Hungary still worked in agriculture. According to István Szabó, based on the data from the 1910 census (recalculated to the postwar area of Hungary), 56 percent were engaged in small-scale farming, including landless agrarian wage laborers and peasants who owned plots of land.3 Due to the polarized estate structure, i.e. the dominance of large estates, the majority of Hungarian society had hardly any land. This threatened the self-subsistence of agrarian families, which had to face the challenge caused by further estate fragmentation.4 These difficulties had accumulated over the decades, and social tensions had intensified. The agrarian movements at the turn of the century, emigration to the United States, and the very limited land reform after World War I were (unsuccessful) responses to these challenges.

The land issue was not resolved between in the interwar period, leaving many questions unanswered. The censuses done by the state and the data gathered in 1941 clearly illustrate the situation of the impoverished who made their living off agriculture. The proportion of those living off agriculture decreased slowly during the interwar period. In 1920, it constituted 55.7 percent of the population. It was still 50 percent in 1940,5 but in absolute terms, the number people working in agriculture had increased.6 In 1930, Hungary’s population density was 93.4 people per km,² making it the eighth most densely populated country in the world at the time.7

According to the censuses, in 1920, 1,212,000 people8 in Hungary lived off agricultural wage labor (meaning that they did not own their own land), and two decades later, their number was still nearly one million (979,000). Considering the general decrease in the number of those living off agriculture, their number as a proportion of the agrarian population did not decrease significantly. Including family members and dependents, this group accounted for nearly two million people. Those with a few hectares of land (a maximum of five hectares, which was the minimum necessary for self-subsistence) were not in a much better position either, and they accounted for nearly one million people.

Another sharp dividing line was drawn between those who owned some amount of land but not enough to subsist on, thus compelling them to search for extra income. In the second half of the twentieth century, historians tried to determine how much land was needed for a family to subsist (this in fact was a key question with political consequences after 1945, when land reforms were initiated to provide plots of a minimum size but still adequate to ensure self-subsistence. Based on Péter Gunst’s work, 9 Gábor Gyáni concluded that a family estate capable of self-sufficiency typically ranged from a minimum of five to ten cadastral acres, depending on the region, crops, and the role of husbandry, and could extend to a maximum of ten to 20 cadastral acres.10 In censuses, however, tracking and defining this thin line between self-subsistence and wage labor is difficult. In the census of 1920, for example, those with ten or fewer cadastral acres were all classified as agricultural laborers, while by 1930, they were referred to as smallholders (likely indicating that they could sustain themselves off their land).11

The work organization of the self-sufficient peasant families fundamentally differed from “wage labor-based capitalist enterprises,”12 as the former’s primary goal was simply to ensure a livelihood. According to Chayanov’s theory of labor-consumption balance,13 the value of the work done by the “self-employed” in self-subsisting peasant economies cannot be expressed in monetary terms, as the results of their productive labor do not enter the market. The peasants only undertook more work when their economic conditions worsened, thus increasing their “self-exploitation” to make a living.14

If we look at the macroeconomic environment, during the interwar period, agriculture accounted for about 40 percent of the national income in Hungary.15 At the same time, the difficulties following World War I are well illustrated by the fact that the domestic market consumed only 50–60 percent of agricultural production.16 The rest had to be marketed to foreign countries, which were adopting protectionist tariff policies after the collapse of the Austro-Hungarian common market. In the early 1920s, the agricultural sector ran a debt of 1.3 billion Golden Crowns, which could be estimated at 15 percent of the capital stock. This debt was eliminated with the introduction of the pengő, but in the following years, it reemerged because “the market adaptability of Hungarian agriculture was minimal.”17 The interest rates on loans available to the agricultural sector were around 10 percent, but since “here, the profitability of agriculture only reaches five percent of the invested capital in very exceptional cases, under such circumstances, taking out loans for agriculture can only be unprofitable.”18 The structure of production had hardly changed, as evidenced by the fact that in Hungary, the average yield of wheat had stagnated around 13.8 quintals per hectare even at the outbreak of World War II, while in Germany, there was a 55 percent increase over the course of these two decades.19

Engagement with the “agricultural issue” among experts as well as engage­ment with marketing problems affecting agriculture began in 1927, when Lajos Juhos20 emphasized in a presentation at the beginning of the year that there was a need for statistical data to formulate future development plans. From December 12, 1927, the National Hungarian Economic Association (Országos Mezőgazdasági Egyesület, OMGE) organized “Farmers’ Days,” when several issues affecting the agricultural sector, generally referred to as the “agricultural crisis,”21 were identified. The decision was made to involve, alongside the Hungarian Royal Central Statistical Office (Központi Statisztikai Hivatal, KSH), the National Hungarian Economic Association and the National Agricultural Business Institute in the collection of agricultural-related data.22 Simultaneously, the examination of peasant farming began along several paths.

At the end of 1927, the OMGE Economic Section was asked to organize data collection. The representative research resulted in a dataset collected from 392 agricultural enterprises, the aggregated results of which were published under the title “The Crisis of Our Agriculture” in 1929 and then reissued in 1930.23 In the 1930s, data collection24 continued, although due to the Great Economic Crisis, the findings were not published for some years.25 I do not provide a detailed overview of the information published by the OMGE regarding the operation of peasant farms. As a single example, let me note that in 1932, the national economic income per cadastral acre on the Hungarian Great Plain for small farms was 85.85 pengő. After deducting labor costs and public charges, a net yield of 9.11 pengő per cadastral acre remained, based on the data from the enterprises examined.26

In 1929, the Keszthely Economic Academy was established. The Department of Business Studies of this academy also collected data on “small enterprises.” Of the 126 farms they examined, 60 percent were unprofitable during the crisis years 1931–1932. They could not even cover their operating costs.27 At the Deb­re­cen Economic Academy, Lajos Kesztyűs Sarkadi (1890–1957) prepared detailed statistics concerning the economic results of 100 mainly landowners from the Trans-Tisza region. In in 1931, data from 15 farms (with a size of 50–200 cadastral acres) were processed, while in 1932, data from eight farms were analyzed. In 1931, the focus was on farms with sizes between 50 and 100 cadastral acres, where the rounded net income of 40 pengős corresponded to an interest rate of 3.13 percent. Compared to a bank interest rate of five percent, the interest loss was 1.87 percent. In 1932, typically half of the estates between 100 and 200 cadastral acres ended the year with a net loss based on their operational costs.28 He also noted regarding the farming of smallholders that their average yield of cereals was about two quintals per hectare lower compared to those with 100-200 acres, because they lacked expertise and their soil preparation was weaker. The small landowners were usually mentioned only from a statistical perspective (instead of offering solutions to help them raise yields), which simply meant that those with one or two cadastral acres had very low average yields which negatively impacted the averages of those with less than 100 cadastral acres.29

As a result of the emerging economic crisis, the market positions of agriculture deteriorated. If we consider the price index in 1929 as 100, by 1933, it had decreased to 62.30 In the case of wheat, which was the most important cereal crop, the price index fell from 100 units in 1913 to 77 in 1932, and by 1934, it had dropped to 41 units.31 By 1932, 49 percent of farms and 36 percent of land was indebted, with a debt service consuming 60 percent of revenue.32 In 1931, for properties up to five cadastral acres, the value of debt per acre was 45 pengő.33 Thus, the costs of servicing consumed 88 percent of the profits.34

Ultimately, in the interwar period, the standard of living of the agrarian population stagnated compared to 1913, while during the years of the economic crisis, it declined.35

Research Objectives, Sources, and the Framework of the Investigation

The aim of this study is to illustrate, based on the examples of small farms on the outskirts of Törökszentmiklós during the crisis years of the 1930s, how the economies of smallholder families developed, with particular attention to their financial situation. Relevant sources are scarce, as the census data from the Dualist era did no go below settlement-level to inquire into the financial circumstances of families.36 The aforementioned István Szabó was referring to the decades preceding World War I when he wrote that “based on written sources, it is easier to follow and understand the economic management of a serf from the fifteenth and sixteenth centuries than, for example, that of a peasant landowner from the 1860s–80s.”37 We can consider his findings valid for the poor peasant layer in interwar Hungary too, as research focusing on the circumstances of the history of the peasants has hardly dealt with quantitative data at a finer resolution than the settlement level.38 The peasant way of living usually did not include a detailed family “account book” over the course of a year, and statistical data were still not available below settlement level (however, the categorization of land size became more sophisticated).

In the country of “three million beggars” (as interwar Hungary has been called), beside the official statistics and abovementioned institutions and as­sociations, the so-called village research movement also tried to portray the everyday lives of the common people in their numerous publications, but the active members of this movement did so in a qualitative rather than a quantitative way. The ethnographer Edit Fél attempted to use such sources to illustrate the everyday life of an extended family consisting of 14 people in Marcelháza (now in Slovakia), but incomes were not expressed in strictly financial terms.39 None of the village researchers relied on detailed income data or expenditures in their published works when mentioning the problems of village life.

Alongside the well-known works of Géza Féja, Zoltán Szabó, and Imre Kovács, a special yet largely unevaluated series of investigations was initiated by Professor Rezső Milleker (1887–1945),40 the founder of the Geography Institute at the University of Debrecen.41 He encouraged his students “to go into the field” (usually to their birthplaces) to record the circumstances of “typical” families, including financial data and material aspects. For the students’ benefit, a questionnaire was even created, yet despite this, the essays written by the students to complete their degrees had very heterogeneous structures.42 Several of them did not provide any numerical data at all, while others focused on ethnographic or physical and geographical descriptions or merely presented descriptions of the circumstances and lifestyle of a single family. Among the remaining essays, the one that most closely followed Milleker’s written instructions was the work titled “The Types of Economic Farms of Pusztaszakállas” by Károly Molnár, who completed his university studies in 1933.43 After graduation, Molnár taught for a few years (1936–1939) in his native village at the local boys’ school.44 In 1937, a printed version of his speech titled “The Good Student and the Good Pupil” was published in the local school bulletin.

Pusztaszakállas lies on the outskirts of Törökszentmiklós. In 1930, the town had an area of 53,000 cadastral acres, including several outlying inhabited areas (so-called “tanyák” or farmsteads),45 including Pusztaszakállas. The population of Törökszentmiklós in 1930 was 28,503, 12,371 of whom lived on the outskirts, accounting for 43.4 percent of the town’s population.46 According to Molnár, around 1930, Pusztaszakállas47 had a population of only 250 and covered a total area of 3,000 cadastral acres, but half of this was marshlands and swamps along the Tisza River, while the other half consisted of fertile black soil where only potatoes did not thrive.48 In the early 1930s, the settlement consisted of 42 houses (plus a school and a community center) in which 52 families lived.49 The area of the settlement given in cadastral acres was distributed among only 19 landowner families who owned 17 acres, 3.5 acres, 5 acres, 20 acres, 4 acres, 2 acres, 14 acres, 8 acres, 1.5 acres, 4 acres, 2 acres, 13 acres, 30 acres, 6 acres, 1 acres, 5 acres, 1.5 acres, 23 acres, and 180 acres.50 Nine families made a living off fishing, and one person lived in the village as a retired gendarme. A blacksmith, two masons, and three cobblers also lived there, but they too could not make a living solely from their work, so, during the harvest season, they had to take on agricultural wage work.

Land consolidation was not executed in the area. There were no vineyards or orchards at all, and the 750 cadastral acres of pasture was private property and not communal land. In terms of landownership, there was one estate exceeding 500 cadastral acres in Pusztaszakállas, while an additional four individuals owned between 100 and 500 cadastral acres, four individuals had between 50 and 100 cadastral acres, 35 individuals owned between ten and 50 cadastral acres, and 21 individuals had land holdings of less than ten cadastral acres.51

In Törökszentmiklós as a whole, five-sixths of the land was in the hands of large landowners, while “medium and small landowners52 made up a significant portion of the population, but it was rare to find a farmer with 100 acres. The number of veterans’ new plots was five, with 20 acres of land per person.”53 The leader­ship of Törökszentmiklós consisted of a “representative body made up of 20 large landowners, as well as affluent middle and small landowners and wealthy intellectuals.”54 It is also important to note that Törökszentmiklós had a debt of 1.1 million pengő in the mid-1930s, which significantly affected both sides of the budget.55 In order to balance the municipality’s budget, a 21 percent municipal surtax56 and a three percent emergency surtax were imposed in 1932, and by 1933, the rate of the municipal surtax had risen to 49 percent.57

According to Zsolt Szilágyi’s calculations, Törökszentmiklós was considered a “market sub-center” in the interwar period, as it remained in the “shadow” of Szolnok. In practice, this meant that the town was unable to attract residents from other settlements beyond its own population.58 Lajos Tímár defined the settlement as a “rural market town.”59

Family Types in Pusztaszakállas

1932, the year in which Molnár pursued his research year, represented the economic low point of the ten years between 1929 and 1938.60 In his unpublished thesis, Molnár identified six different family types in Pusztaszakállas, but he did not clarify the criteria he used to select the families presented, thus depriving future generations of the opportunity to determine through further research whether the selected six families represent the local society correctly. It seems that the size of the family, the amount of land they owned (even if only a small amount), their ages, and their farming practices all played a significant role in his classifications.

The families from Pusztaszakállas included by Molnár in his discussion owned a certain amount of land. The average size of the lands owned by the 19 families was 17.9 cadastral acres. If one excludes the landowner with the ‘extreme’ 180 ca­das­tral acres (none of the six different types presented could have owned this much land), the average size decreases to 8.9 cadastral acres. Based on Molnár’s descriptions, we do not need to consider anyone with a landholding larger than ten cadastral acres (when they owned more land than this, farmers tended to employ agricultural labor, at least during the agricultural “high season,” but there is no indication of this in the descriptions). This leaves us with only twelve small landowners, whose average property size was merely 3.6 cadastral acres. The six families under discussion constituted 50 percent of them and thus represent this subgroup.

Demographers evaluate the “developmental cycle” of a family as a process of continuous change, since along with advancing age, births, deaths, and migrations also modify the structure of the family.61 A key factor in Chayanov’s theory regarding peasant economies is the number and composition of the members of a household. He calculated that in the case of marriages, a child reaching adulthood was born every three years, resulting in increasingly deteriorating living conditions during the first 14 years. From the age of 15, the firstborn child could be considered an asset as someone who could be part of the household workforce. Thus, the ratio of dependents began to decrease.62 Molnár very was probably not familiar with this theory, but he did take age into consideration, as he introduced, for example, “young married couples” who were just starting their careers, as well as couples over 70 years of age.

If children who had reached adulthood married but remained on the same property as their father, then multiple generations lived together. It was possible to increase the amount and intensity of labor without employing servants, while young people, on the other hand, did not immediately have to face the full burden of independent life.63 If we consider the long-term changes in household structure, there was a national trend indicating that in the nineteenth century, household sizes increased, followed by a rapid decline starting in the early twentieth century.64 Molnár’s research also confirms Faragó’s general statistical observation that large families were also disappearing in Pusztaszakállas.

A Large Family with a Small Estate (Type I)

Molnár did not provide any supporting points or other references regarding the family he referred to as Type I, nor did he clarify the basis for its classification. Based on the narrative description, it seems that (using Laslett’s typology) the two-generation extended family was the decisive factor here. The 54-year-old farmer had seven children, three of whom were already married when the data was collected. Among them, his 28-year-old son lived with his wife in the same household as his father. Their house had a thatched roof and two rooms and a kitchen, but Molnár was unable to provide the exact floor area of the house. One of the rooms was 6 × 4.5 × 3 meters in size. Five people slept in this room. During the summer, the farmer and his two younger sons slept in the barn. With regards to the buildings used for farm work, there was a stable, a pigsty, a barn, and a beehive. According to Molnár, however, the farmer did not understand beekeeping.65

The family had six cadastral acres of land and one cadastral acre of meadow. The most complex “budget” was provided in this case, so I have organized the data in tables. Molnár paid attention in his essay to high taxes in the case of each family type examined. In the case of the first type, however, even the taxes levied under different titles were given in detail (Table 3).

The family had 46 fruit trees (which bore apples, plums, and walnuts), and they consumed the fruit themselves. Their meals were not regular. They ate what they could produce, typically potatoes. One of their winter dinners, for example, consisted of bread and onions, which they salted or dipped in vinegar. They didn’t engage much with culture. Their “library” consisted of a psalm-book and a calendar, while the source of information (even concerning public affairs) was not newspapers, but rather their neighbor.66

Table 1. Annual incomes of a large family with small holdings in 1932 pengő

I. Growth

Crop

Amount

Unit price (P)

Total (P)

wheat

15 quintals (q)

18

270

barley

6 q

11

66

cob of corn

15 q

767

105

straw

32 q

0,45

14,4

crushed straw

20 q

0,5

10

scene

29 q

6,5

188,5

carrot

50 q

1

50

potato

4 q

8

32

Total

   

735,9

 

II. Vegetables

common bean

15 kg

0,3

4,5

 

pea

5 kg

0,32

1,6

ground sweet peppers

4 kg

3,1

12,4

vegetable (cabbage)

10 kg

0,15

1,5

cucumber

10 kg

0,2

3

onion

104 kg

0,28

29,12

garlic

2,5 kg

0,5

1,25

poppy seeds

3 kg

0,8

2,4

white cabbage

40 heads

0,01

0,4

Total

   

56,17

 

III. Livestock

Animal

Individuals

Unit price (P)

Total

 

pork

2

40

80

goose

17

7

119

chicken

48

1,8

76,8

Total

 

275,8

 

IV. Wage

Work-related

Subject

Unit price (P)

Total

 

harvest

9,8 q wheat

18

176,4

harvest

0,85 q barley

11

9,35

harvest

2 carts of straw

6

12

Total

   

197,75

 

V. Casual work 

Work-related

Person

Occasion

Total

 

harvesting potatoes

3

12 days

36

harvesting onions

3

5 days

12

fish transportation

3

12 times

96

Total

144

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

The family could not make ends meet solely by cultivating their own land, so the head of the family, along with his two oldest sons, took on day labor jobs, which included assisting in the harvesting of onions and potatoes. In total, they earned 144 pengő from the harvest, receiving a daily income of one pengő for potato68 picking, while for onion picking, they were paid only 80 fillér (one-hundredth of a pengő) per person for one day (Table 1). Based on the data, fish transportation was the most profitable, as it provided a daily allowance of three pengő per person. The published data, however, do not indicate what the weight of the fish that had to be carried was. During the harvest, members of the family also took on work for other farmers, but they were paid in kind,69 receiving nearly ten quintals of grain and two carts of straw, which Molnár valued at a total of 197.5 pengő.70 The value of the crops they produced themselves, from wheat to potatoes, amounted to a total of 735.9 pengő, while the garden vegetables represented only 56.17 pengő. The family gained significant income from the livestock, as they were able to sell geese, chickens, and pigs for a total value of 275.8 pengő71 (Table 1). Geese were the most economically viable animals to raise, as they were able to find food in the wet habitats around them. (Half of the territory of Pusztaszakállas was wetland.) According to the figures pro­vided by Molnár, the family’s total income was 1409.62 pengő in the year under consideration, of which 29.8 percent was made in cash (419.8 P), while the rest was in kind.

The goods necessary for the family’s livelihood could be valued at 713.75 pengő, although this was not all spent as cash because they consumed items that they themselves produced (the data are therefore estimates). The amount spent on animal fodder was practically produced by them, but to reach the 300 bundles of corn stalks, it was necessary to purchase 100 bundles.

Table 2. Daily consumption of a large family with smallholdings and expenses necessary for the operation of a farm in 1932 (in pengő)

I. Consumption  

Product

Amount

Unit price

Total (P)

 

flour

1,050 kg

0.4

420

meat

60 kg

1.3

78

bacon

20 kg

1.8

36

fat

25 kg

1.8

45

sausage

5 kg

1.8

9

white sausage

5 kg

1

5

chicken

30 pieces

1.6

48

fish

10 kg

0.8

8

egg

100 units

0.08

8

kitchen garden produce

56.17

Total

 

713.17

 

II. Livestock

Product

Amount

Unit price  

Total

 

scene

29 q

6.5

188.5

corn

15 q

7

105

carrot

50 q

1

50

miller’s bran

3.45 q

13

44.85

crushed straw

20 q

0.5

10

corn stalk

300 bundles

0.06

18

Total

416.35

 

III. Economic expenditures

Value

 

blacksmith work

25

bogging work

15

2 large ropes

8

1 chain of links

2

chimney sweeping

6

40 kg of slaked lime

4

pasture rent

46

40 kg of wheat for the herdsman

7.2

to the shepherd

3.5

Food for the shepherd for 15 days

15

vaccination

2

Total

133.7

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

Their animals were let out to the village’s herd and pigsty, so the herdsman and the swineherd looking after them had to be paid (a total of 25.7 pengő) (Table 2). Several items appeared as expenses for which cash had to be paid, such as sugar, salt, coffee, etc. The salt (Table 3) was not only for meals but also for preserving meat and supplying the livestock’s salt demands. A total of 300 pengő was paid for clothing and footwear. The total amount due for the entire year was 279.58 pengő. The largest item was the tax and loan arrears from the previous year, amounting to 116.56 pengő (41.7 percent), which indicates that tax payments had not been made even in the previous year, and it can be assumed that the figures increased year by year (at least considering the rate of the aforementioned surtax). The land and house tax amounted to 85.39 pengő in 1932 (30.5 percent), while the church tax and the value of public works were both reported as 24 pengő each. This last tax was imposed by the municipality of Törökszentmiklós to finance public works.72

Table 3. Family expenses of a large family with smallholdings in 1932 (in pengő)

At Grocer’s  

Product

Quantity  

Unit price  

Amount

 

sugar

10 kg

1.4

14

coffee

2 kg

7

14

salt

63 kg

0.4

25.2

pepper

1.5 kg

9

4.5

acetic acid

10 liter

0.4

4

lamp glass

4 pieces

0.25

1

shoe polish

4 pieces

0.48

1.92

comb

1 piece

0.7

0.7

kerosene

26 liter

0.36

9.36

matches

52 boxes

0.06

3.12

Total

77.8

 

Clothes

Product

Total

 

1 men clothing

32

2 pairs men boot

54

3 pairs women clothing

30

5 pairs women shoes

75

2 hats

12

1 winter hat

7

6 pair men underwear

36

6 pair women underwear

12

 

Clothes

Product

Total

 

4 pair silk stockings

12

4 nightgowns

7.2

6 ? scarf?

15

12 textile handkerchiefs

6

shoes repairs

2.5

Total

300.7

 

Taxes

Type of taxes

Amount

 

land and property tax

85.39

disability tax

0.45

income tax

19

road tax

3.1

local tax

2.1

healthcare tax

4.98

public work

24

last year’s arrears

116.56

church tax

24

Total

279.58

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

Despite the apparent abundance of data, the information available is probably not complete, making it impossible to determine the balance between revenue and expenses accurately. We can assume that the cash actually earned for daily labor and some marketable goods could be used to cover the expenses that had to be paid in cash (e.g. taxes). From the sale of sheep, there was an income of 144 pengő, and the sale of pigs, chickens, and geese generated 275.8 pengő income for the family, totaling 419.8 pengő (Table 1). On the expenditure side, the amount left at the spice shop was 77.8 pengő, and the total spent on clothing was 300.7 pengő, making a combined total of 377.7 pengő. Taxes had to be paid in cash, but their total amount (279.58 pengő) was much higher than the difference between revenues and expenditures, which was just over 40 pengő. This contradiction cannot be definitively resolved based on the available data. The list of agricultural goods produced cannot be considered complete either. The family kept a cow and its calf, but it doesn’t seem likely that they were not able to consume any dairy products over the course of the entire year. The value of the chickens appears in our tables with two different amounts. Those sold were successfully sold at a price of 1.6 pengő each, while for personal consumption their value was determined to be 1.8 pengő. From a consumption perspective, the more than one ton of (reported) flour used annually for baking bread came to less than a half a kilogram of bread per person per day for the eight-member family. This is not much. A hundred eggs per year (i.e. two eggs per family per week), the annual 20 kg of bacon rounded to 7 grams per day, and 8.5 grams of fat were allocated daily per person. Meanwhile, the men spent the summer harvesting and doing other physical work, which required a high daily calory intake. Finally, 63 kg of salt seems excessive for preserving 60 kg of meat. Indeed, it would have been too much for salting the meat, bacon, or the five kg of sausage in the pantry preserved for later consumption. No matter how modest the circumstances of the family were, these low values still seem contradictory or simply implausible.

A Couple without Land (Type II)

It is worth beginning with the summary assessment written by Molnár about an individual classified as Type II: “He does not care much about the past: he did not enjoy better times before, nor will he in the future.” This individual, Molnár implies, lives only for today, and for him, the most important thing is spirits [meaning not holy water but brandy]. He had, at least according to Molnár, neither principles nor culture: “They are the most extreme people in the village and the most uncultured people.”73

A 64-year-old fisherman lived with his wife in their own house, which measured 10 × 3.5 × 2 meters and consisted of three rooms (a living room, a kitchen, and a pantry). The man used a fur coat as a blanket. He did not have an outbuilding for his livestock, so he kept his pig in his room, along with the trough. According to Molnár, the “hygiene was primitive,” as they never bathed and practically never washed themselves and changed their underwear only once a month. Their income situation could be summarized with the simple principle that “[only] God knows what you will live off today and tomorrow,”74 so they ate irregularly and ate whatever they happened to receive or find in the natural world around them. They had few work opportunities. In winter, for example, they sometimes patched socks and repaired shoes for others. Of the labor they performed over the course of the year, only the work they did during the harvest seasons could be quantified, as the man worked 252 hours alongside the threshing machine. However, the time spent on fishing could not be precisely determined. In light of the this, their cash income was low. The largest amount, 128 pengő, came from fishing, but half of the revenue from this had to be paid as a fishing fee. In a year, the man consumed food worth 108 pengő, but this can only be considered a theoretical, calculated value, as he received, exchanged, or “found” most of the products listed here. For food, over the course of the year,75 he paid cash (1.8 pengő) for three kg of mutton. At the spice shop, he spent 11.92 pengő in a year, for example, 3.2 pengő for eight kg of salt, 0.27 pengő a lampshade, and 7.04 pengő for 22 liters of kerosene. He also paid 1.44 pengő for 24 boxes of matches. He carried a debt to the shop of a few pengő all year round. He only spent money on clothing when a given garment was completely worn out. He replaced his shoes every six to seven years, and even then, he only wore them in winter. Thus, over the course of the year, he spent only 10.5 pengő on a total of four pieces of clothing.76

His total income was 123.9 pengő, which he earned from the slaughter and sale of pigs (47.4 P), the sale of 15 chickens (7.5 pengő), patching (5 pengő), and fishing (64 pengő). In total, 116.76 pengő was spent over the year, including rye at 20.9 pengő (17.9 percent), tobacco at 8.84 pengő (7.6 percent), and pálinka (fruit brandy) at 72.8 pengő (62.4 percent), in addition to the items mentioned in the previous paragraph.77

According to the balance published by Molnár, there should have been some pengő left in the farmer’s pocket, but this was not the case in practice, because if he earned any income from patching (which amounted to a total of 5 pengő per year), he immediately bought a larger quantity of fruit brandy. His tax liability amounted to 27.3 pengő, which he tried to manage by paying a third of his annual tax, but he never intended to pay the remaining two-thirds. He did this simply to avoid being harassed by the authorities.

If we want to determine the balance of the revenues and expenditures with scientific rigor, we also encounter contradictions. For example, Molnár did not specify how much the farmer earned from his 252 hours of work next to the threshing machine. We must also assume a lack of information regarding the pig slaughter, as the text mentions an animal weighting 110 kilograms. In the case of pigs, it is necessary to consider that slightly less than half of the live weight should be accounted for as meat. If the owner sold nine kg of bacon, ten kg of fat, and 15 kg of meat, then there must have been at least 30 kg of meat left, which he probably consumed himself with his wife. Thus, he ate not only what he claimed to have found, exchanged, etc. We must assume that the use of eight kg of salt bought from the shop was necessary for the preservation of this amount of meat.

Molnár finally noted that “there are five or six such families with the difference that they are young and have one or two children.”78 The number of children and their ages were not considered decisive factors in determining this type based on this remark. In this context, while the activities of the landowner were listed, the size of the landholding was not mentioned, which is why I consider this couple a possible representative of the class of landless day laborers, even though they were no longer active in the labor market due to their age.

A Couple with a Small Landholding (Type III)

The third type was represented by a 76-year-old farmer regarding whom Molnár remarked that “there are seven families of this type in the village, with the exception that they have children who have already left home.”79 The presence and number of children were therefore not primary factors in the identification of this type. This farmer had five acres of farmland, but he rented them out to someone for half of the harvests, probably due to his age. (The average price of such a smallholding was 853 pengő in the 1930s.)80

The couple lived in a house that was 18 meters long and four meters wide with a ceiling four meters in height. It was built half of stone and half of adobe, with a tiled roof. Several of the surrounding farming buildings were also covered with tiles. Molnár referred to their bathing habits as “rural,” which meant that they washed themselves in cold water every day, while on Sundays they used warm water.81 In terms of their meals, Molnár highlighted caraway seed soup as a frequent item during the day and bread with bacon for dinner. Between 15 and 20 liters of wine were consumed annually, along with an additional five liters of brandy, while tobacco was consumed at a rate of one pack per day, valued at 0.11 pengő per package.

The farmer’s 65-year-old wife cultivated some corn and also kept a vegetable garden measuring a square rod. Molnár was unable to determine the necessary work hours afterwards, but the couple worked on some land for 310 days of the year (but not all day).

Since they did not have children,82 they did not want to adopt a new lifestyle. In terms of their income, the goods obtained from the natural world around them played a significant role.

Table 4. The annual income in pengő in 1932 of a 76-year-old smallholder with five cadastral acres who was no longer actively working

Land leased for the half of the products

      

Land leased for the third of the products

Crop  

Amount  

Unit price (pengő)  

Value (pengő)  

 

Crop

Amount  

Unit price (pengő) 

Value (pengő)

wheat

8.1 q

15

121.5

 

corn

8 q

4.0

32

barley

4.8 q

7

33.6

 

pumpkin 

24 q

0.5

12

straw

30.0 q

1

30.0

 

Total

44

Total

 

185.1

         

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

The couple kept poultry (20 hens and 3 roosters) and managed to sell some of the brood and the eggs they produced: 100 chicks for 50 pengő, 70 larger chickens for 74 pengő, and 100 eggs for 28 pengő, for a total of 152 pengő.83 The vegetables grown in the garden were valued at 12.66 pengő, of which only the red onions were sold (two quintals for a total of nine pengő). The cash income was further increased by a calf which the farmer bought and sold on the same day, which generated a profit of 45 pengő.

During the year, items produced by and consumed within the household as internal consumption (flour, meat, bacon, fat, sausage, chicken, eggs) amounted to a total of 352.66 pengő, while at the grocery store, a total of 52.12 pengő was spent on spices, sugar, coffee, salt, pepper, kerosene, etc. Molnár reported a total of 72.2 pengő for clothing expenses, but noted in his list that certain items, such as suits, boots, and hats, were purchased only every two years.84 The clothes were worn until they became unusable, so some pieces of clothing were six or seven years old. For the maintenance of the house, the farmer spent ten pengő in the year examined (three pengő for chimney sweeping, five pengő for plastering and whitewashing, and two pengő for 20 kg of lime)85 (Table 5).

The farmer’s tax book was not available when Molnár visited the community, so the tax amount listed as 20.6 pengő was written into the “accounting records” from memory, but Molnár found the estimated amount to be low. The total cost of pig farming for the entire year was 83.68 pengő for two piglets (their purchase price was 20 pengő, and the rest was spent on feeding them, such as five quintals of barley for 33.6 pengő). Both animals were slaughtered, and their total value was determined to be 140 pengő, although it was not revealed how many kilograms they weighed.86 For the poultry, a cost of 20 pengő was calculated for feeding, while the total value of the day-old chicks, larger chickens, and eggs that were sold was 152 pengő. For personal use, a value of 53 pengő was accounted for from the poultry yard. From the harvested fruit, the farmer was able to sell one and a half hundredweight of apples and plums, which brought in revenue of twelve pengő.

On the income side of the annual revenue, we find 222.76 pengő earned from cultivating the land (185.1 pengő from the farmer’s own land, 34 pengő from a third of the corn, and 3.66 pengő from the vegetable garden). In cash, the actual revenue amounted to 370 pengős (152 pengő from poultry sales; the price of the cow was 140 pengő, “trading” brought in 45 pengő, and the sale of onions, pumpkins, and fruits brought in a total of 33 pengő), which represented 62.4 percent of the total annual revenue.

On the expenditure side, 225.07 pengő were recorded, of which clothing accounted for 72.2 pengő, the total amount spent on purchased tobacco and wine was 46.15 pengő, and taxes were listed as 20.6 pengő87 (Table 5).

Table 5. The balance of annual cash flow in 1932 in pengő for a 76-year-old smallholder with five cadastral acres who was no longer actively working

Income

Value

(pengő)

Rate (percent)

      

Expenses

Value

(pengő)

Rate ( percent)

Animal husbandry 

292

78.9

 

Clothing

72.20

32.1

Crop production

33

8.9

 

Spices

56.12

24.9

Trade

45

12.2

 

Beverages, for amusement 

46.15

20.5

Total

370

100

 

Taxes

20.6

9.2

       

Animal purchase

20.0

8.9

       

Economic expenditures

10.0

4.4

       

Total

225.07

100

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

Considering the balance, 144.93 pengő constituted the “remainder.” Behind the seemingly positive balance was the fact that the farmer was saving the money he had brought in by selling the cow because he wanted to buy a new one. Regarding the profit generated by “being the middleman” in the sale of the calf, Molnár noted that the farmer could not make such profits in an average year.

Older Members of Cohabiting Couples from two Generations (“Grandparents”) (Type IV)

Molnár classified a small landowner with four cadastral acres and seven grown children as a member of the fourth type of family. This landowner lived with his wife, and according to “tradition,” the youngest son and his wife lived with him in the same household.88 Molnár provided no textual references that would allow for the identification of other classification criteria. The family members described as type IV lived in a house with a tiled roof measuring 14 × 8 × 3 meters, and they had several outbuildings on their property. We cannot determine the age of the farmer from Molnár’s essay. He probably belonged to an older age group, as his sons were the ones who cultivated the fields.89 He consumed 25 liters of wine at home each year, and he drank about four liters in the pub annually.

The value of the goods produced on their land amounted to a total of 314 pengő. Of the crops, wheat was produced in the largest quantity, 15 quintals valued at 17 pengő each, amounting to a total value of 225 pengő (71.7 percent), of which six quintals were sold (104 pengő). In comparison, the garden vegetables represented a low amount, with the total for vegetables such as green beans, dry beans, peas, cucumbers, red onions, and garlic amounting to 6.05 pengő, and this produce was used by the landowner in the household.

The landowner was only engaged in fishing on a piecework basis. According to Molnár, he devoted 864 hours a year to fishing, which Molnár valued at 140 pengő, calculating it based on 70 days at a rate of 2 pengő per day.90 The family’s total income was 586 pengő, of which 53.6 percent was the value of goods produced in kind, and 46.4 percent was the amount received in cash.

Food items produced and consumed within the household (wheat, corn, fish, potatoes, chicken, eggs and pork) amounted to a value of 297.65 pengő, of which wheat accounted for 119 pengő (40 percent). The landowner spent 27.27 pengő at the spice shop over the course of the year, for example, 4.2 pengő for sugar and twelve pengő for 30 kg of salt. In the list of expenses, Molnár noted that the farmer did not allocate much for clothing, which amounted to the purchase of only two new garments per year: a shirt worth 3.5 pengő and a winter coat worth 70 pengő.91 Among the other costs, taxes were also highlighted, but only the church tax was specifically mentioned, valued at 8.2 pengő, while all other taxes amounted to a total of 80 pengő.92 The landlord owed 150 pengő to the local savings cooperative, which required him to pay 18 pengő annually as “interest.”

In the end, regarding the revenues received in cash, it was possible to report 272 pengő (144 pengő from fishing; 104 pengő from wheat; 24 pengő from poultry), while on the expenditure side, the final amount was similar, 276.44 pengő. Among the cash expenses, the two largest items were taxes, amounting to 95.7 pengő altogether (34.6 percent), and the aforementioned money spent on clothing, which totaled 73.5 pengő (26.6 percent)93 (Table 6).

Table 6. The balance of household cash flow of the older members (“grandparents”) of two-generation cohabiting couples in 1932

Revenues

Value

(pengő)

Rate (percent)

    

 

 

Expenses

Value

(pengő)

Rate (percent)

Income from fishing 

144

52.9

 

Clothing

73.50

29.8

Plant cultivation

104

38.3

 

Taxes

95.70

38.9

Animal husbandry

24

8.8

 

Spice shop

24.24

9.8

Total

272

100

 

Buying a pig

23.00

9.3

       

Interest on debt 

180

7.3

       

Radio fee

120

4.9

       

Total

246.44

100

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

Nuclear Families Formed by Young Married Couples (Type V)

Type V was represented by a 20-year-old farmer who had two daughters. The farmer was the son of a man described as belonging to the type IV family. Molnár referred to the young age of the farmer twice, so we may assume this was the main aspect of classification.94 He lived with his family in a room measuring 5 × 4 × 2.5 meters, where there was a bed, a mess, and a sofa, but there was no room left for a chair. Molnár noted that their way of life was characterized by “satisfactory hygiene,” as they bathed every day, and in the summer, they swam in the Tisza River. Molnár noted that “they change their underwear weekly.”95 In summer, they ate three times a day, in winter, twice, having some kind of cooked food at noon and bread with bacon in the evening for dinner. They rarely ate fruit. If they did so, it was watermelon that made its way to the table in the summer. The farmer consumed 22 liters of wine in the tavern over the course of the year, along with two liters of brandy. He smoked two packs (at a cost of 0.11 pengő per pack) of tobacco a week. Culture was absent from their lives because “they did not read books or newspapers.”96

In terms of the annual number of hours spent working, the farmer spent 183 hours harvesting, 1200 hours fishing, and 370 hours pressing straw, totaling 1,753 hours of work.97 Molnár specifically noted that from November to March, he engaged in fishing for 112 days and in straw threshing for 42 days, from which he earned 132.8 pengő and 25.2 pengő, respectively. For the work done during the harvest, payment was made in kind, amounting to 5.3 quintals of wheat (valued at 90.1 pengő), 0.24 quintals of barley (3.84 pengő), eight quintals of corn (112 pengő), and 1.5 quintals of potatoes (27 pengő), totaling 232.94 pengő in cash.98 The quantity of cereals was not sufficient for the family, as the farmer had to ask his father-in-law for an additional 270 kilograms of wheat before the harvest. Molnár distinguished the “revenue from livestock” section, where he recorded 30 chickens valued at 60 pengő. Although two lines earlier he noted that some 80–90 chicks had hatched, he only recorded the value in cash for 30. (The remainder were probably consumed by the household). The price was listed as 215 eggs (17.2 pengő), and an additional 300 eggs were used in the household.

The cash income from animal husbandry was 77.2 pengő (the total from selling 215 eggs and 30 chickens at a price of two pengő each). From the garden vegetables (from beans to lettuce), a total value of 23.03 pengő was produced, of which the largest item was one and a half quintals of potatoes, worth 12 pengő.99 A value of 407.83 pengő (for food, such as flour, fat, eggs, bacon, etc.) was consumed (everything was produced on the farm, and he received only 12 kg of fish as a gift). The cost of the feed for the livestock was assessed at 68.88 pengő. In the case of the data provided by Molnár, I would like to point out that the difference between the value of the harvesting wage (232.94 pengő) received in kind and the value of items produced and consumed within the household (407.83 pengő) is represented by the vegetables produced in the garden worth 23.03 pengő, as well as the chicken and eggs consumed, which were worth 141.44 pengő.

In the end, there was a cash income of 248.4 pengő (77.2 pengő from poultry farming; 13.2 pengő from two carts of pumpkins; 132.8 pengő from fishing; and 25.2 pengő from straw pressing). On the expenditure side, a total of 239.2 pengő was spent on spices, clothing, tobacco (13.52 pengő), wine, brandy, and the purchase of a pig (Table 7). At the spice shop, 65.64 pengő was spent, the largest item of which was 30 liters of kerosene, valued at 10.86 pengő.100 The clothing cost a total of 110 pengő in 1931.

Table 7. Annual cash flow of a young married couple (pengő).

Revenues

Value

(pengő)

Rate (percent)

     

Expenses

Value (pengő)

Rate (percent)

Daily wage

158.0

63.6

 

Clothing

110.0.

45.9

Animal husbandry 

77.2

31.1

 

Spice shop

65.64

27.4

Plant cultivation

13.2

5.3

 

Buying a pig 

31.00

13.0

Total

248.4

100

 

Other

32.72

13.7

       

Total

239.36

100

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

The apparent positive balance is overshadowed by the fact that the farmer owed money to the church (because of the church tax), the amount of which was not even specified. It can be suspected that this amount was higher than the difference between the expenditure and revenue sides of the balance sheet. Despite this, the biggest burden for him was the borrowed wheat he had requested from his father-in-law. As Molnár wrote, “he would want to work more, but job opportunities are quite scarce. … He is generally in a better position than the other poor people in the village, because he knows about fishing and earns quite a bit with it!”101 But Molnár still included the following sobering observation: “They live on a tight budget and rely on parental support.”102

Modern Nuclear Family, Produce Made for the Market (Type VI)

We do not know the age of the farmer described as type VI, only that he participated in World War I and that his son was 18 years old. Molnár stated that he “follows the modern trend,” meaning his goal was to “produce as much as possible in a small space.”103 He began his gardening activities by renting a three-acre floodplain, which he intended to use to grow melons, while planting red onions along the roadside. In the end, it was the onions that brought him profit, which is why he turned to gardening. He was able to start his horticultural business in 1929 by renting eight cadastral acres, and by 1932, he was growing peppers, winter radishes, cabbage, vegetables, and spring onions in hotbeds, where he also implemented motorized irrigation. The family lived a dual life, with the father and son on the land rented on the banks of the Tisza River (in a building they themselves had constructed from clay with a thatched roof), while the female members of the family lived six kilometers away in the village. In Pusztaszakállas, they were essentially the only smallholder family making a profit from farming. According to Molnár, they managed their annual budget data related to horticulture almost perfectly, and this data indicate that they were able to achieve a profit of nearly 2,000 pengő104 (Table 8).

Table 8. The budget of a vegetable producer in Pusztaszakállas in 1932 (pengő)

Expenses

     

Income

Item

Unit price

Amount

 

Item

Unit price

Amount

8 cad. acres lease

68

544

 

80 q onion

5.3

424

irrigation machine

 

800

 

10 carts of cabbage 

15.0

150

glass jars (hotbeds)

 

154

 

1 cart of radishes

 

80

100 litters of gasoline 

0.24

42

 

1 cart of vegetables

 

35

8 allocations

6

48

 

85 carts of peppers

45.0

3,825

80 kg onion

0.5

40

 

Total

 

4,514

seedlings

 

22

       

105 transportation

3

315

       

700 casual work

0.8

560

       

Total

 

2,525

       

Source: Molnár, “Pusztaszakállas gazdaság-formái.”

Reviewing the cash flow of the family farm, Molnár noted the costs of transportation (which he estimates to be nearly 400 pengő) and found them high based on the farmer’s account. The irrigation machine represented a greater financial burden, but it was noted that he had three years to pay back the 2,400 pengő expense; and it is likely that this amount had already been paid in the months preceding the data collection. The lease of the land (544 pengő) and the wages of the day laborers also represented significant costs. As a fee, the family paid 0.8 pengő per day. Molnár described this work an easy task that even young girls could handle.105

They made transportation cost-effective by purchasing two horses and transporting their goods to the train station by cart, from where the paprika was sent to Budapest. The vehicle used for transportation was impossible to modify, so they could not even measure how much a shipment weighed. Molnár put it at roughly ten quintals. The family’s success in gardening inspired others in the village, so three people started growing red onions, even though among the vegetable products mentioned so far, onions were the most problematic (for example, harvesting them was considered slow).

The gardener involved in the investigation did not believe that he had to fulfil all his tax obligations, even though he had an annual profit of 2,000 pengő. He chose to declare his activity as arable farming instead of gardening to lower the tax rate.

Summary

How accurate were the data presented by Molnár in his essay? In the 1930s, sociologist Mihály Kerék also dealt with the living conditions of the Hungarian agrarian population. Based on the 96 families living in twelve predominantly lowland working communities he examined in 1932, he found that it was very difficult to make precise determinations concerning their financial situations. The debts were mostly kept track of by the housewives, who were ashamed to declare everything, especially the smaller debts, such as the claims from the grocers. Generally, in the case of occasional jobs as well as for the purchase or sale of smaller items (such as eggs), by the end of the year, they no longer remembered the exact quantities that had been spent.106

Molnár mentions numerous goods (and their monetary values), of which only the price of salt was the same for every family (0.4 pengő per kg). For certain agricultural produce, such as wheat, nearly identical values have been reported (15–18 pengő per quintal). However, there were a few crops or produce items for which the price differences were greater. Barley was valued at 11 pengő per quintal for the Type I family, 7 pengő per quintal for the Type III family, and 16 pengő per quintal for the Type V family. These values were likely determined based on the memories/assessments of the affected families, or there may have been other factors unknown to us. We cannot prove the reasons, but in the case of the mentioned figures, it seems that if someone received half or a third of the crop, its price appears to be low (the mentioned price of barley is 7 pengő per quintal), while the price of the crop received for labour during the harvest seems higher (16 pengő per quintal for barley). For the head of the Type V family, every crop was considered at a high price when he received his payment in kind for his harvesting work: the ear corn was charged at a price of 14 pengő per quintal, and the potatoes at 18 pengő per quintal (the latter, for example, should have cost between five and ten pengő). So there was a great discrepancy between nominal prices and real prices. The difference in the price of red onions is striking: the Type VI family, which produced for the market, received just over 0.05 pengő for each kilogram (this was the wholesale market price, as they were able to sell 80 quintals), while in the case of the Type I family, the more than one quintal produced for personal use was valued at 0.28 pengő per kg (estimated price).

BAGDI_DIAGRAMS1.jpg

Figure 1. Incomes of different family types in Pusztaszakállas in 1932, as a percentage

In the case of Type I–V families, according to the data, a significant portion of the goods produced was consumed, essentially serving as an example of the independent peasant economy described by Chayanov. If the family’s financial situation required it, they also took on day labor for wages or for a share of the harvest. In the case of the vegetable gardener presented as a Type VI family, there was no mention of the garden vegetables that might have been grown by the family within the area of the settlement, nor was there any mention of what animals they might have kept. For a farm or farmstead producing for the markets, the value of bacon or fat consumed is likely irrelevant. Accordingly, only the costs necessary for the production of vegetables sold at the market have been included on the expenditure side too. The revenue mentioned also included the income made from the sale of vegetables. It is also true that they did not calculate the depreciation of machines and equipment when they calculated profits.

BAGDI_2.jpg

Figure 2. Expenses of different family types in Pusztaszakállas in 1932, as a percentage (in kind and in cash expenditures merged)

The families presented differed not only according to Laslett’s typology but also according to the sources of income, despite the similarity in field size. Two families earned wages as the main source of income, but there were also differences between them, whether in-kind or cash revenues dominated. In two other types of families (one multi-generational, the other with an elderly head of household), the work outside the farm played a subordinate role. Here, income from livestock or revenues from public goods (fishing) accounted for 30 percent of total income, indicating a major deficit in Hungarian statistics (the general lack of livestock censuses at the settlement level before 1930). The share of income from arable land (whether cash or in-kind) varied between 20 and 60 percent.

The expenditure side (both monetary expenditure and consumption in kind) showed less diversity. Despite the obvious tax evasion (and the significant tax arrears), taxes fluctuated between twelve and 20 percent of expenditures (and income), clothing accounted for a stable ten to 15 percent, while expenditure in grocery shops remained below ten percent, as did economic investments (building maintenance, livestock or land purchase). Self-catering accounted for half of expenditures. This, together with livestock, reached 60 percent for all four families (with complete data sets). Cash income (i.e. the value of products sold) did not exceed 33 percent of the income, and cash expenditure (items bought in addition to consumption produced by the peasant economy) accounted for 38 percent of expenditures. In general, the cash needs of self-sustaining farms not producing for the markets were higher than the annual cash income actually available, often due to rolling tax arrears or loan repayments.

The description of demographic aspects and characteristics in Molnár’s unpublished thesis, which proved significant factors in defining different types of families, has somewhat taken a back seat (unlike in the writings by other villager researchers). The descriptions of the financial circumstances of the families, although not discussed with the depth of public economics (finance-accounting), sought to avoid omitting even a single item (income, expenses, consumption goods produced within the framework of self-sufficiency, and even gifts), assigning a monetary value to each of them. If we look at his work through the lens of economics, then in comparison, the economist-statistician Mátyás Matolcsy considered the same factors as Molnár when determining Hungary’s national income in the 1930s, with one exception: Matolcsy tried to express the value of household work as well, ultimately calculating a total of 350 million workdays nationwide per year.107

The families introduced lived in modest, simple circumstances. Even the expenses of the sixth family presented did not reflect the high annual profit of 2,000 pengő. It is likely that the families presented by Molnár were in a better situation than the 96 families of the lowland working-class community examined by Kerék. The families presented by Kerék had an average of one or two cadastral acres of smallholdings, but Kerék considered the declining presence of pig farming as a sign of material “deterioration,” as only about one-fifth of the households were involved in raising pigs.108 In Pusztaszakállas, however, every family was engaged in pig farming.

Molnár dealt with taxes in the case of each family, whether as their highest expense to cover in cash or an amount they owed in arrears. Among the taxes, the church tax was a matter of customary law (there was no written law regarding it), but the local population accepted it. In Törökszentmiklós, the church and the local leadership agreed that the local apparatus would collect this tax for a five percent commission, but this amount was left in the hands of the church as a donation.109

In the interwar period, taxes had to be paid based on numerous bases. There were about nine types of state direct taxes (such as the land tax and the house tax), which, on country average, could have accounted for approximately 60 percent of the total tax burden, while local taxes and surtaxes made up the remaining 40 percent.110 According to calculations done at the end of the 1930s, out of the annual direct tax burden of 513 million pengő, approximately 192.5 million pengő (37.5 percent) was allocated to agriculture, which amounted to roughly twelve pengő per cadastral acre.111 However, local conditions could have significantly altered this value. The payable taxes increased further if a municipality raised the burden with an additional surtax in order to increase its revenues for the sake of budgetary balance. We previously mentioned that Törökszentmiklós had a debt of more than a year’s revenue in the 1930s (debt was over one million pengő), so it is no coincidence that supplementary taxes began to rise as well.

Table 9. The theoretical tax burden of smallholders with five cadastral acres in the 1930s (pengő)

 

Type of tax

Above five cadastral acres

Average landowner net income (gold crown/landowner acre)

13.5

Total net income of all categories (gold crown)

67.5

Total net income (pengő)

78.3

1

Land tax (20 percent)

15.66

2

Householder tax (14 percent)

10.00

3

Income tax (1–1,2 percent)

0.00

4

Wealth tax (1‰)

0.00

5

Extra allowance

0.00

6

Disability support tax

0.51

7

Public sick leave and childcare allowance supplementary tax

4.11

8

Road tax (10 percent)

2.57

9

Public work redemption

3.70

10  

Agricultural Chamber fee

1.03

11

Water regulation fee

2.00

12

County supplementary tax (32 percent)

8.21

13

Municipal supplementary tax (75 percent)

19.25

14

Dog tax

2.00

15

Mix tax

6.06

16

Church tax (10 percent)

2.57

 

Total

77.67

Land tax reimbursement

-15.66

Net tax burden

62.01

A gross tax per cadastal acre (pengő)

15.53

Net tax burden as a percentage of the net income of the cadastral acres ( percent)

79.20

Source: My compilation of data provided by Béla Bojkó.112

Béla Bojkó calculated his data on the share of tax from total incomes for several estate sizes, but he noted that he considered minimum values. If we compare the theoretical values of smallholders who owned five hectares of land (Table 9) with the tax burdens of families classified in Type I by Molnár (Table 3), it can be stated that the actual tax burden was higher in Törökszentmiklós.113 The land tax and house tax together amounted to 85 pengő, rounded off, while Bojkó’s calculations only came to roughly 25 pengő. The church tax was also much higher than the theoretical value in the case of the family in Pusztaszakállas (2.5 pengő versus 24 pengő), which may have been due to the higher number of children. In the case of the family in Pusztaszakállas, the amount to be paid for the exemption from public work was also higher. (3.7 pengő versus 24 pengő). The income tax indicated by Molnár for the Type I family in Pusztaszakállas was 19 pengő, while Bojkó did not take such an item into account at all.

If the result of a “sampling” is that five out of six families had trouble paying their taxes and the sixth, although it was in a much more favorable situation than the others, intentionally reported an incorrect tax base for the sake of more favorable taxation, then this can hardly been seen as a coincidence. According to Lajos Juhos, the problem with agriculture in the interwar period was that a farmer received loans at an interest rate of around ten percent, while the maximum profit that could be made in agriculture was about five percent. The outcome was indebtedness.114 The simplest method of compensating for this was tax evasion. If the farmer did not take out a loan, then an opportunity for modernization was missed, and the farm was self-sufficient at best. In the existing financial condition, it was not obvious for the average farmer that it was worth investing or even possible to invest in modernization.

Archival Sources

Magyar Nemzeti Levéltár Jász-Nagykun-Szolnok Vármegyei Levéltár [Hungarian National Archives Jász-Nagykun-Szolnok County Archives] (MNL JNSZVML)

IV.407. Jász-Nagykun-Szolnok Vármegye alispánjának iratai

Kéziratok gyűjteménye Sz./25.

Szakál, Károlyné. “Törökszentmiklós története 1932-től 1938-ig.” MA thesis, n.d.

Debreceni Egyetem [University of Debrecen], Faculty of Humanities, Dean’s Office

Hallgatói anyakönyvek [Student registers of the Faculty of Humanities, Languages, and History of István Tisza University from 1914 to 1949]

Molnár, Károly. “Pusztaszakállas gazdaság-formái” [The economic forms of Puszta­szakállas]. Geography Thesis, University of Debrecen, 1933.

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  1. 1 Erdei, A magyar paraszttársadalom, 34–35.

  2. 2 Ibid., 55.

  3. 3 Szabó, Jobbágyok, parasztok, 364.

  4. 4 At the time of the land tenure reform in 1767, two-thirds of the peasantry were landholders with an average landholding of 0.41 units (sessio), but by the time of the peasant emancipation in 1848, only one-third remained, and the average plot size had decreased to less than 0.35. Glósz, “Zsellérek és töredéktelkes jobbágyok,” 176.

  5. 5 Gunst, “A mezőgazdaság fejlődésének megrekedése,” 286.

  6. 6 Tóth T., A magyar mezőgazdaság struktúrája az 1930-as években, 19.

  7. 7 Gunst, “A mezőgazdaság fejlődésének megrekedése,” 286.

  8. 8 Gyáni, “Magyarország társadalomtörténete a Horthy-korban,” 321.

  9. 9 Gunst, A paraszti társadalom Magyarországon a két világháború között, 17–18.

  10. 10 Gyáni, “Magyarország társadalomtörténete a Horthy-korban,” 307.

  11. 11 Ibid., 306.

  12. 12 Pozsgai, “Paraszti háztartás és munkaszervezet,” 344.

  13. 13 Chayanov, On the Theory of Non-Capitalist Economic Systems, 5. Regarding the historical backdrop against which this theory emerged and receptiveness to it in Russia, see Kövér, “A. V. Csajanov orosz gyökerei,” 89–92.

  14. 14 Pozsgai, “Paraszti háztartás és munkaszervezet,” 346–47.

  15. 15 Wheat contributed to the agrarian income by 11.3 percent in 1931–1932, while the most significant sector was livestock slaughtering, at 17.5 percent. Matolcsy and Varga, Magyarország nemzeti jövedelme, 65 and 71; Gunst, “A mezőgazdaság fejlődésének megrekedése,” 379.

  16. 16 Tóth T., A Magyar mezőgazdaság struktúrája az 1930-as években, 32.

  17. 17 Ibid., 47.

  18. 18 Bernát, “A mezőgazdasági termelés jövedelmezőségéhez,” 373.

  19. 19 Tóth T., A Magyar mezőgazdaság struktúrája az 1930-as években, 33.

  20. 20 Lajos Juhos (1879–1940) was an agricultural vocational educator in Debrecen, Mosonmagyaróvár, and Keszthely. He introduced the German Laurer system of agricultural smallholder bookkeeping in Hungary. Between 1935 and1937, he was the director of the Economic Academy in Debrecen-Pallag. Mudrák, “Egyetemi és kari vezetői névsorok,” 554.

  21. 21 For the text of the resolution formulated by the participants in the conference, see OMGE, Mezőgazdaságunk válsága számokban, 8–9.

  22. 22 Sipos, “A termelői és fogyasztói árak vizsgálata Magyarországon,” 10.

  23. 23 Tóth T., A Magyar mezőgazdaság struktúrája az 1930-as években, 18.

  24. 24 From the collected data, several derived figures were also calculated, such as total raw yield, net income, and efficiency. Five decades later, Tibor Tóth sought deeper connections through factor analysis from the data. Tóth T., A dunántúli kisüzemek termelése és gazdálkodása az 1930-as években, 52 and 55–137.

  25. 25 Contemporaries also used these raw data for scientific research. There was generally a positive correlation between livestock, capital, labor costs, and profitability based on various aspects. Éber, “A föld­árak és földhaszonbérek alakulása tíz év alatt,” 799–804.

  26. 26 Mezőgazdaságunk üzemi eredményei 1933. évben, 67.

  27. 27 Juhos, “Dunántúli kisgazdaságok jövedelmi helyzete,” 289.

  28. 28 Sarkadi Kesztyűs, “A vagyonleltár értékelése,” 225.

  29. 29 Sarkadi Kesztyűs, A magyar mezőgazdasági politika feladatai, 10.

  30. 30 Tóth T., A magyar mezőgazdaság struktúrája az 1930-as években, 33.

  31. 31 Ibid., 37.

  32. 32 Ibid., 47.

  33. 33 Ibid., 49.

  34. 34 Ibid.

  35. 35 Gunst, “A mezőgazdaság fejlődésének megrekedése,” 391.

  36. 36 István Szabó summarized the obstacles to historical research on peasant life. Szabó, Jobbágyok, parasztok, 351–61. Source of the quote, ibid., 359.

  37. 37 Ibid.,358.

  38. 38 Ibid.

  39. 39 The result of Edit Fél’s research was first published in Érsekújvár in 1944. Her data collection included quantifications of annual consumption, but wherever possible, she combined human and animal consumption; for example, in a large family, 50 to 60 quintals of potatoes were consumed. No monetary values were assigned to these items. Fél, “Egy kisalföldi nagycsalád társadalom-gazdasági vázlata.”

  40. 40 Bagdi, “Statisztikai módszerekkel mért fejlettség és szociográfiai valóság,” 199–227.

  41. 41 Süli-Zakar, Milleker Rezső professzor élete és debreceni munkássága, 2–4.

  42. 42 Some papers have also been published in print, and even Mihály Kerék referred to the thesis work of Károly Szalánczi published in 1932. Kerék, “A mezőgazdasági munkás anyagi helyzete,” 24.

  43. 43 According to the university records, Károly Molnár attended from the first semester of the 1929/30 academic year until the end of the 1932/33 academic year. Hallgatói anyakönyvek.

  44. 44 Deák, Polgári iskolai író-tanárok élete és munkái, 318. As a history and geography teacher, he taught German, history, agriculture, and practical farming to his students. A Törökszentmiklósi, 1937, 6–7, A Törökszentmiklósi, 1939, 12.

  45. 45 In 1926, there were six state rural elementary schools operating with six classrooms and nine teachers. Botka, Adatok Szolnok megye történetéből. 767.

  46. 46 Az 1930. évi népszámlálás, 416–17.

  47. 47 According to the official census of 1930, 640 people lived in Pusztaszakállas. Az 1930. évi népszámlálás, 416–17.

  48. 48 Molnár, “Pusztaszakállas gazdaság-formái,” 2.

  49. 49 On average, five individuals made up a family.

  50. 50 Molnár, “Pusztaszakállas gazdaság-formái,” 4.

  51. 51 MNL JNSZML IV.407. Jász-Nagykun-Szolnok Vármegye alispánjának iratai. 14530/1939. tanyai iratok. Adatgyűjtő-ív [é.n.] (1930?) 4.

  52. 52 The redistribution of land was completed in 1929. The number of people who acquired plots was 2,000. However, during the Great Economic Crisis, 700 beneficiaries of the land reform lost their lands because of indebtedness, and their arrears had be collected from the remainder community of beneficiaries. Szakál, “Törökszentmiklós története 1932-től 1938-ig,” 9.

  53. 53 Ibid., 7.

  54. 54 Ibid., 14.

  55. 55 The annual revenue of Törökszentmiklós was around 700,000 pengő. This debt was incurred due to the implementation of various construction projects, thus loans had to be taken for the district court (320,000 P), the boys’ civil school (340,000 P), the public slaughterhouse (140,000 P), and the establishment of the water supply system and the organization of the market (416,000 P). The annual interest exceeded 100,000 pengő (15 percent of the yearly budget). MNL JNSZML IV.407. Jász-Nagykun-Szolnok Vármegye alispánjának iratai. 14530/1939. tanyai iratok Kivonat Törökszentmiklós község képviselő testületének 1930. évi december hó 19. napján tartott rendes közgyűlés jegyzőkönyvéből. 4–5; Kivonat Szajol község képviselőtestületének 1930. október 18-án megtartott közgyűlésén készült jegyzőkönyvből, 1–2.

  56. 56 This means an additional 21 percent, considering the state taxes levied to the city as 100 percent, and this surtax was collected and used by the municipal government directly.

  57. 57 The municipal surtax rate kept increasing in the following years, finally reaching 63 percent in 1937. Szakál, “Törökszentmiklós története 1932-től 1938-ig,” 7.

  58. 58 Several towns near Törökszentmiklós attracted the people of the town to their markets. Szilágyi, Ismeretlen Alföld, 151.

  59. 59 The basis for the qualification was that in Törökszentmiklós, the proportion of earners working in public service and self-employed individuals in the field of commerce and credit was 9.4 percent altogether. Timár, “A szociológia és geográfia pörlekedésének egy lezártalan fejezete,” 91–92.

  60. 60 Éber, “A földárak és földhaszonbérek alakulása tíz év alatt,” 298.

  61. 61 For more details, see Faragó, “Nemek, nemzedék, rokonság,” 467.

  62. 62 A firstborn child was regarded as suitable for work once he had turned 15. Thus, the number of dependents began to decrease. Pozsgai, “Paraszti háztartás és munkaszervezet,” 348.

  63. 63 Heilig, “Háztartások és gazdaságok,” 214.

  64. 64 Faragó, “Nemek, nemzedék, rokonság,” 466–69.

  65. 65 Molnár, “Pusztaszakállas gazdaság-formái,” 6.

  66. 66 Ibid., 7.

  67. 67 In 1932, the average price of corn was 11.49 pengő per quintal, and the price of an ear of corn had to be lower than that. Sipos, “A termelői és fogyasztói árak vizsgálata Magyarországon,” 16.

  68. 68 Molnár calculated the price of potatoes at 8 pengő per hundredweight. The numbers he provided may not have been entirely accurate. According to Sándor Sipos’s data, the producer price of potatoes in 1932 was 5.28 pengő per quintal, while the consumer price was 17.6 pengő. On the other hand, Matolcsy provided the data for the “winter semester,” thus giving the price of potatoes for 1931/1932, which he categorized according to five varieties. The most expensive variety was the “Korai rózsa” [Early Rose] at 9.33 pengő per quintal, while the cheapest was the Wohltmann at 4.85 pengő per quintal. Ultimately, the type, size, quality of the potatoes, and the timing of the sale may have influenced the prices, so we cannot verify Molnár’s data. Sipos, “A termelői és fogyasztói árak vizsgálata Magyarországon,” 12; Matolcsy and Varga, Magyarország nemzeti jövedelme, 25.

  69. 69 In a contemporary study, Kerék determined the wages of harvesters to be one-tenth or one-eleventh of the actual amount of grain harvested, which was supplemented only by flour and bacon as food. Kerék, “Adatok a magyar mezőgazdasági munkáscsaládok,” 596.

  70. 70 In 1932, the producer price of wheat was 17.95 pengő per quintal, so it can be assumed that the family in question fared better than they would have if they had received their dues in cash, but the essay did not reveal how many days the two boys worked for the nearly ten quintals of wheat. Sipos, “A termelői és fogyasztói árak vizsgálata Magyarországon,” 12.

  71. 71 Molnár, “Pusztaszakállas gazdaság-formái,” 10.

  72. 72 In 1931, the government made it mandatory for municipalities to take care of the poor living in the settlement. For more details, see Gyáni, “Közmunka a Horthy-korban,” 30–33.

  73. 73 They could only write down their names. Molnár, “Pusztaszakállas gazdaság-formái,” 19 and 25.

  74. 74 Ibid., 19.

  75. 75 He had 150 kg of corn throughout the year, but it can also be classified as laborer’s wages, because the farmers allowed him to collect the smaller cobs that were not gathered after the corn was harvested.

  76. 76 Molnár, “Pusztaszakállas gazdaság-formái,” 23.

  77. 77 Ibid., 24.

  78. 78 Ibid., 25.

  79. 79 Ibid., 33.

  80. 80 Éber, “A földárak és földhaszonbérek alakulása tíz év alatt,” 304.

  81. 81 Molnár, “Pusztaszakállas gazdaság-formái,” 26.

  82. 82 They had an adopted daughter, but it was not revealed how old she was, when they started raising her or until what age they did so. She had married by 1932 and lived in a separate household.

  83. 83 Molnár, “Pusztaszakállas gazdaság-formái,” 28.

  84. 84 Ibid., 30.

  85. 85 Ibid., 31.

  86. 86 Ibid., 31.

  87. 87 Ibid., 32.

  88. 88 In the discussion of the next group, it did become clear that the younger couple had two children. Molnár, “Pusztaszakállas gazdaság-formái,” 40.

  89. 89 Ibid., 35.

  90. 90 Ibid., 36.

  91. 91 Ibid., 37.

  92. 92 They also calculated the house insurance at 4.5 pengő and the chimney sweeping fee at a value of three pengő.

  93. 93 Molnár, “Pusztaszakállas gazdaság-formái,” 38.

  94. 94 “This almost child-like person type is the most common in the village.” Molnár, “Pusztaszakállas gazdaság-formái,” 45.

  95. 95 Ibid., 40.

  96. 96 Ibid., 41.

  97. 97 Ibid.

  98. 98 Ibid.

  99. 99 Ibid., 42.

  100. 100 Ibid., 43.

  101. 101 Ibid., 45.

  102. 102 Ibid.

  103. 103 Ibid., 46.

  104. 104 The data were collected in January 1933.

  105. 105 Molnár, “Pusztaszakállas gazdaság-formái,” 49.

  106. 106 Kerék, “Adatok a magyar mezőgazdasági munkáscsaládok,”593–94.

  107. 107 In the case of dependent married women, half a day was considered daily, for employed married women, at most a quarter of a day, while for household employees, a full day was taken into account. Household work accounted for 5.49 percent of the national income. Among modern economic indicators, GDP is similar to Károly Molnár’s method of calculation, as it does not take into account household work. Matolcsy and Varga, Magyarország nemzeti jövedelme, 52–53 and 64.

  108. 108 Kerék, “Adatok a magyar mezőgazdasági munkáscsaládok,”609.

  109. 109 Szakál, “Törökszentmiklós története 1932-től 1938-ig,” 17.

  110. 110 Bojkó, Magyar adórendszer és adópolitika, 26–27.

  111. 111 Ibid., 27.

  112. 112 Ibid., 45.

  113. 113 The Type I family owned six cadastral acres of land.

  114. 114 Juhos, “Dunántúli kisgazdaságok jövedelmi helyzete,” 285.

* This study was supported by and realized within the frames of the HAS RCH Lendület "Ten Genera­tions" research project.

2024_3_Schlett

The Export Potential of Hungarian Agriculture and the Issue of Added Value betweenpdf the two World Wars

András Schlett
Pázmány Péter Catholic University
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Hungarian Historical Review Volume 13 Issue 3 (2024): 446-470 DOI 10.38145/2024.3.446

This study presents developments concerning Hungarian agricultural exports during a period when the production structure changed significantly and the international agricultural market changed fundamentally. As a result of the Treaty of Trianon, the market and logistic networks developed over the previous centuries had changed significantly, and new actors came to play increasingly prominent roles in trade relations in the Danubian Basin. Hungary, with its small consumer market but significant agricultural potential, had been fundamentally dependent on the value of its agriculture produce on foreign markets. However, the reorganization of the international market quickly brought to the surface the contradictions and structural imbalances of Hungary’s massive agricultural production. Analyses of the agricultural history of the past century repeatedly revealed the problematic nature of the low value-added production of Hungarian agriculture.

Keywords: Hungary, agriculture, trade, export potential, added value

Introduction

The evolution of a country’s export activity is mainly determined by two broad sets of factors. The first is the country’s internal economic conditions, and the second is the country’s interactions with the world around it. By analyzing developments involving Hungarian agricultural exports between 1929 and 1937, Miklós Siegescu shows in detail how domestic economic factors, such as production surpluses and price levels, and international economic conditions influenced Hungarian agricultural exports. His study also discusses the development of Hungarian foreign trade relations, especially with Austria, Germany, Italy, and Czechoslovakia and the effects of trade policy measures. It also provides detailed statistical data on the evolution of Hungarian foreign trade and agricultural exports, with emphasis on the role of the world market and international trade policy in the economic outcomes.1The interwar period bore witness to major changes in both areas.

Based on these considerations, the present study examines the challenges faced by Hungary in its trade policy and the results of its attempts to respond to these challenges. The situation in Hungary was aggravated by the fact that nearby East European countries also produced massive agricultural exports, and West European industrial states granted significant advantages to overseas agricultural products compared to Hungarian goods. These factors made Hungary’s export markets unstable and difficult to predict.

Against a backdrop of restructuring and a fundamental lack of confidence in Hungary among its trade partners (in part since Hungary had been an enemy country for many of them during the war), the country had to seize every opportunity to find external markets for its agricultural products. Thus, the interwar period bore witness to an intensive search for foreign markets from the postwar crisis through an economic boom (peaking in 1929) and the Great Depression (1930–1934) to a new phase of prosperity (from 1935) marked by an economic policy of continuously increasingly military investments.

Hungary needed to increase its exports and achieve a positive trade balance to secure enough gold standard currencies to finance its massive prewar and postwar foreign debts. However, the demand for Hungarian export goods (mainly low added-value products which were easily found elsewhere) was volatile, and the prices of agricultural produce were generally going down. This resulted in a usually passive balance of trade and increasing financial (and political) indebtedness.

In the discussion below, I examine the evolution of the structure of Hungarian agricultural exports, with particular emphasis on the proportions of lower and higher value-added products and attempts at diversification.

Agriculture after the Treaty of Trianon

Agricultural lands in Trianon Hungary were put to various uses in proportions that differed significantly from the ways in which they had been used when the country had been part of the Austro-Hungarian Empire. While the share (but not net amount) of arable land significantly expanded (from 43.9 percent to 60.3 percent), the forested area drastically decreased, from 27 percent to 12 percent. Only a fraction of the gardens (25.2 percent), meadows (25.2 percent), and pastures (30.6 percent) and a larger share of vineyards (68.9 percent) that had been within the borders of the country when it had been part of the Dual Monarchy remained within the new borders.2

In the new national territory, the distribution of land ownership showed a different structure compared to the pre-Trianon situation. Due to the land reforms, the imbalance in land distribution slightly decreased. The proportion of small and large estates changed, reflecting the distinct characteristics of the areas which had been made part of the neighboring states and the territory which remained to Hungary, rather than a worsening of the overall imbalance.

The proportion of small farms decreased, and many peasants found it increasingly difficult to live off their land. While 70.1 percent of farms over 1,000 cadastral yokes (1 yoke equals 0.58 hectares) remained within the new boundaries, the country lost 70 percent of small farms under 10 yokes. Additionally, Hungary retained 40.1 percent of farms between 10 and 50 yokes, 46.1 percent of those between 50 and 100 yokes, 46.7 percent of farms between 100 and 200 yokes, and 57.8 percent of farms between 200 and 500 yokes.3

The proportion of large landholdings did not change drastically. In terms of land ownership, before Trianon, 30 percent of the arable land was owned by large landholders with more than 1,000 cadastral yokes. In the new borders, this figure increased to 44 percent. However, it is important to distinguish between landholdings and landholders when analyzing these figures.

As a result of the territorial changes, the structure of the agricultural labor force differed in post-Trianon Hungary. The ratio of agricultural wage laborers to smallholders increased.If we consider smallholders with less than five cadastral holds of land as part of the agrarian proletariat, the proportion of the population involved was significant. However, these proportions depend on how ownership is defined. Different approaches to measuring land ownership, either through occupational classification or cadastral records, lead to varying results. For example, some agricultural laborers owned small plots of land, while others, who leased land, did not appear as owners in the statistics. The labor market situation was somewhat alleviated by the loss of regions such as Upper Hungary, which traditionally employed large numbers of seasonal workers, thus reducing the pressure on Hungary’s agricultural workforce.4

Table 1. Different types of agricultural producers (as a percentage)

 

Before Trianon  

After Trianon

Owner and tenant

35.2

31.4

Other independent

0.5

0.7

Family worker (unpaid)

31.1

21.9

Administrative manager (gazdasági tisztviselő)  

0.2

0.3

Farm hand (cseléd)

9.9

14.7

Agricultural laborer

23.1

31

Source: “A háború előtti Magyarország,” 292–93.

Exposure to External Markets

As a consequence of the Treaty of Trianon, Hungary became heavily dependent on foreign trade. The country lost the secure markets it had had access to under the Monarchy. The former single market was replaced by countries with independent economic policies, new customs borders, tariffs, and independent currency zones. Distrust among the successor states contributed to the strengthening of exclusionary policies, as many of the newly emerging states interpreted the post-Trianon situation as requiring a restructuring of old economic relations and a partial or complete reorganization of traditional market and capital relations.5 However, the economic interdependence of the countries in the region is well illustrated by the fact some 20 years later, the Little Entente had not been able to eliminate export-import trade with Hungary. In fact, a significant share of the trade in goods among the states of the Little Entente was routed through Hungary by rail and water. Almost only arms shipments avoided Hungary.

Before 1918, most of Hungary’s agricultural exports did not go beyond the borders of the Monarchy, i.e. agricultural produce was exported to a protected market of 52 million people, where prices were significantly higher than on the global market. Hungary had been in a customs and monetary union with the Austrian hereditary provinces for centuries and with Bosnia and Herzegovina for decades. Austria was able to absorb Hungarian agricultural produce, thus protecting the prices. With the breakup of the Monarchy, Hungary lost this advantage. The limited domestic market made agricultural exports especially vital, but the opportunities to sell products and produce became increasingly limited.6 The country could only sell its surpluses at world market prices and was vulnerable to external market and political changes.7 Moreover, this happened at a time when Hungarian agriculture, which had high costs, could only achieve low export prices. Whereas before 1918 Hungarian agriculture had benefited from the protection of high tariffs, it now faced open competition on the world market.8

In 1920, many of the territories that were ceded were heavily dependent on agricultural imports, as their own agricultural production had not been sufficient to meet the needs of their population even before 1919. Since the remaining territory had already produced the largest share of agricultural surpluses, the relative surplus of agricultural production increased significantly after the signing of the Treaty of Trianon. There was no demand within the country for a significant portion of the agricultural produce, so this surplus had to be sold on foreign markets. Between 1924 and 1938, 55–70 percent of the agricultural produce brought to market was sold abroad, as was 55 percent of cereals, 38–40 percent of sugar and sugar beet production, 25–30 percent of tobacco, and 20 percent of the potato crops. And this list includes only the items that were exported in large quantities during the period in question. One could add to it to include items that were only occasionally exported in large quantities.9

The division of labor that had developed over the course of centuries in the Carpathian Basin and the forms of cooperation among specialized areas of production and consumption that had been consolidated under the Austro-Hungarian Monarchy were greatly hindered by the new postwar frontiers, and this was only aggravated by the political rivalry and nation-building programs initiated by the successor states, including the creation of unified, protected national markets. No state in the region was an exception. Hungary, Romania, and the Kingdom of Serbs, Croats and Slovenes all focused on industrial development, while Austria and Czechoslovakia strove for agricultural self-sufficiency. These tendencies put the theory and practice of comparative advantage into a kind of parenthesis, and, in a spirit of mutual mistrust, the states of the region strove to build complex national economies, i.e. economies that provided strategic security. All this created an economic structure in the Danube basin in which several parallel capacities operated at an unnecessarily high cost but which, in the event of war, was less economically vulnerable to the need to import items of strategic importance. Economic cooperation among the nations of the former Monarchy was thus hampered not only by higher tariffs but increasingly by politically motivated economic policies, leading in the longer term to a decline in foreign trade relations. In the years following the war, however, autarchic ambitions were less prevalent for a time, and traditional specialization and cooperation continued for a while.10

This economic cooperation was encouraged by Article 205 of the Treaty of Trianon (identical to article 222 of the Austrian peace treaty), which called for a regional customs agreement among Austria, Hungary, and Czechoslovakia within five years of the signing of the treaty. However, these states were unable to conclude such a treaty and instead maintained the obsolete tariff system inherited from the Monarchy, supplemented by special provisions and import restrictions. Hungary, however, paid considerable attention to promoting foreign trade relations through bilateral and multilateral trade treaties and the application of the so-called most-favored-nation principle. Hungary needed these advantages because its relatively costly agricultural sector and less developed industry were the only way to compete on export markets.

In the early 1920s, in the absence of a general customs agreement, the region’s foreign trade relations were facilitated by bilateral treaties. An important consideration in the setting of tariffs was to blunt the differences between the producer groups involved in agricultural exports and the industrialists wishing to protect domestic industry. Agricultural import tariffs were therefore set at low levels, since they posed little threat to domestic sales, while the high import tariffs on industrial products were used both to protect the nascent industrial sector in Hungary and to provide indirect support for the marketing of agricultural produce, in so far as promises to reduce industrial import duties could be used to obtain more favorable terms in trade agreements.

These tariffs and agreements alone could hardly have affected the structure of Hungarian exports and imports. In Trianon Hungary, agricultural surplus production was a fundamental characteristic due to the higher proportion of land suitable for cereal production. After 1920, the country was dependent on the income brought in through agricultural exports, mainly of grain and flour. Whereas immediately before the war, in years of particularly poor harvests, Hungary had had hardly any surpluses crossing customs borders, after the war, economic prosperity depended mainly on these agricultural exports.

Austria and Czechoslovakia remained important partners, but the Hungarian agricultural sector faced unprecedented difficulties in the face of general international oversupply and competition in transport and tariffs, as well as world market prices. Its low productivity and relatively high production costs made sales difficult, even though Hungary had a vital need for export earnings. It had to meet its international payment obligations, make up for an increasingly pressing shortage of capital, and cover the large costs of imports of raw materials and consumer goods by Hungarian industry. Hungarian agriculture was unable to meet these demands as part of the new international constellation, and the trade balance showed a significant deficit until the end of the 1920s.11

Gyula Balkányi paints a vivid picture of the loss of markets and its effects in Közgazdasági Szemle (Economic Review):

Today’s generation grew up in a nursery, used to an economic milieu where the “market” was the internal consumption of a large economic area in a customs union with our country. “Our market,” as we remember it, is an area to which producers from competing countries do not have equal access. The market for Hungarian grain, flour, cattle, pigs, fat, bacon, fruit, and wine was, as we remember it, Austria. Not in the way that we were allowed to export goods there. But in the way that others were not allowed to export there. The market, in this exclusive sense, was lost to us. (…) While we were in Greater Hungary and in a customs union with Austria, we did not have to worry about competition from overseas countries. Our goods were known in Austria, our production was adapted to this market. And if there was a threat to our markets—competition by Italian or Spanish wines, frozen meat from Argentina—we could always help by raising customs duties or banning imports. (…) Now, however, we are on a market where our competitors also operate, where we must strictly align our prices with the pricing demands of our rivals, and where we must strive to offer the quality that consumers’ desire. If we provide a better product than our competitors, we must use the most extensive promotion to convince buyers of the superiority and excellence of our prices. The notion that even such a market can be ours must become deeply ingrained in the mindset of today’s generation.12

The Collapse of Agro-Vertical Integration

Following the Treaty of Trianon, there was a serious imbalance between agri­cultural raw material resources and processing capacity. It soon became apparent that the highly productive milling, sugar, beer, and leather industries which had previously been designed to supply the Monarchy were unable to utilize their existing capacities. While a significant proportion of the raw material base, including the most important grain-producing areas (South Bačka, Banat, Grosse Schütt), was detached from Hungary, the processing capacities of the Budapest mills were concentrated in the remaining territory of the country.13

The situation in the timber industry was similar after Hungary’s loss of most of its forestlands to the neighboring countries. The redundancies were soon followed by factory closures: mills became warehouses and breweries became chocolate and sugar factories and textile mills.

The milling industry was hit hardest, losing a significant proportion of its natural raw material base and a significant part of its upstream markets along the River Danube. Budapest mills also lost Serbian and Romanian wheat as the milling trade ceased.14 Previously, the milling industry in Budapest sourced 50–60 per­cent of its raw materials from the detached territories. The mills were able to grind 64.5 million quintals of grain, whereas the country’s grain production in the early 1920s averaged 24.2 million quintals. In 1913, 13 mills were working in Budapest, compared with only 9 in 1921. The rest were idle. The mills were also operating at a reduced capacity.15

The situation was made critical by the customs policy pursued by Austria and Czechoslovakia, the only countries of the one-time Monarchy which still imported substantial quantities of Hungarian flour in the 1920s. Both countries were keen to support their own milling industries and therefore preferred grain imports to flour imports. The autonomous Austrian agricultural tariffs of 1925 and the Czechoslovak agricultural tariffs of 1926 greatly reduced Hungarian flour exports and increased grain exports. As a result, Hungarian mills were able to use only 20-25 percent of their capacity, and thus the production costs were far higher than the costs incurred by their competitors. This led to a crisis in the milling industry.16

By the end of the decade, the circumstances had improved, and the domestic milling industry was functioning at about 40 percent of its prewar capacity. This improvement was due to the increased demand for Hungarian flour, which can be partly explained by the stabilization of the international economic situation and the restoration of trade relations. Still, the importance of the milling industry after Trianon is shown by the fact that it accounted for 13–15 percent of the total industrial output in the 1930s, topping all other branches/categories except for textiles and the iron and metal industries.

As a result of the Treaty of Trianon, twelve of the 30 sugar factories in operation at that time remained in Hungary, accounting for 41 percent of the beet processing capacity in 1914. The neighboring countries acquired 48.1 percent of the territories which had been used for sugar beet production.

The remaining factories represented 43 percent of the beet processing capacity in 1912. The industry had to cope with serious external and internal problems. As with the milling industry, it had lost part of its natural raw material base (especially to Czechoslovakia) and a significant part of its upstream markets. The decline in sugar exports is illustrated by the fact that, whereas in 1913 they amounted to 68.9 million gold crowns, in 1926 they were only 23.9 million. Underutilization of capacity and low production volumes due to low domestic consumption resulted in higher unit costs.17

By 1923, sugar production was already covering domestic consumption, and exports also began. By 1928–29, production reached 82 percent of the prewar (proportional to territory) production level. As a result of the 1929 crisis, production significantly declined, and at the lowest point of the crisis in 1932–33, it fell to 42 percent of the pre-crisis level. The 60 percent share of exports in 1929 had fallen to 4 percent by 1938 as a result of the fall in international sugar prices. Even with cheap exports at dumped prices of eight to ten pengős (1.4–1.75 dollars) per quintal, sugar factories were still making minimal profits, but they were threatened by financial collapse. They asked the Government to reduce the high taxes on sugar (sugar tax, treasury share, sales tax), amounting to 52 percent of the 1.27 pengő (0.22 dollar) retail price, but in vain.18

The New Customs System

With the dissolution of the Austro-Hungarian Monarchy, the previous customs system became obsolete, and establishing the country’s economic independence became a pressing task. The creation of a new customs tariff system was an essential means with which to strengthen the Hungarian economy. However, the rapid introduction of the new tariffs was made more difficult both by certain clauses of the peace treaty (which required most-favored-nation concessions for the Allied and Associated Powers) and by the conflicting interests of the domestic industrial and agricultural lobbies. According to the those working in agriculture, the reestablishment of free trade within the former Monarchy would be the ideal solution when building new regional trade relations, while those in industry favored the creation of a strong system of protective tariffs. The former did not reckon with the fact that Austria and the Czech Republic how already begun to pursue policies designed to protect and support the farms created by the postwar land distribution and that autarkic agricultural policies were being strengthened on the former export markets. This made it impossible for a reciprocal trade policy to develop, and the surplus production of cereals in the early 1920s also provided these industrialized countries with cheaper import opportunities. Contemporaries realized that the war had shattered the quasi-equilibrium on the agricultural market of the previous decades. The increase in demand for food and raw materials and the drastic drop in production in some areas (or the drop in exports due to the war) encouraged the United States and other countries less affected by the war (e.g. South American countries) to increase their output in agriculture and food products. During the postwar economic recovery, when production began to reach prewar levels anyway, these surpluses resulted in a significant oversupply and caused a drop in world prices (Fig. 1). Austria bought one-third of its cereals from the United States, and Czechoslovakia bought half of its flour from the United States.19 This was an awkward consequence of the foreign trade struggles and regional “self-isolation” policies among the small states of Central Europe.

 Figure_1.jpg

Figure 1. The average annual price of wheat between 1914 and 1934 (Pengő per 100 kilograms). The low prices from 1915 to 1921 for all grains (wheat, rye, barley, oats, corn) were government-regulated maximum prices aimed at curbing speculation and inflation.

Source: Rege, “Magyarország búzatermelésének,” 463, 471, 474; Szőnyi, “Gabonaárak,” 204.

Customs policy debates were most heated over the 1923 tariff bill, which was strongly protective of industry and was intended to further rapid and far-reaching industrialization. Critics emphasized that Hungary, as an agricultural country, should be cautious when offering strong protections to industry as a means of developing the national economy. The new tariffs would foster industrial development only if they did not endanger the interests of the agricultural sector and consumers.20

Finally, the new customs regime introduced in January 1925 included more and higher import tariffs (30 percent on average). While tariffs on light industry products reached 50 percent, certain agricultural equipment and major raw materials were allowed to enter the domestic market duty-free. The new system also fueled the hope that a reduction in certain tariffs based on reciprocity could serve as a basis for negotiating easier placement of Hungarian agricultural exports.

Foreign Trade Agreements

In the interwar period, every small Central European country sought to protect its domestic market from foreign competition while also aiming to secure export opportunities for its domestic producers. However, this dual objective posed significant challenges during international trade negotiations, as protectionist tariff policies and efforts to promote exports often represented conflicting interests. As a result, the formation of customs and trade agreements between various countries was often prolonged and required compromises.

In the period between 1925 and 1929, the main objective of Hungarian trade policy was the negotiation and adoption of bilateral agreements. The principal aim was to secure favorable conditions, especially low tariffs, for Hungarian agricultural and food exports. The strategic importance of this is also shown by the fact that agriculture provided 60 to 65 percent of Hungary’s total exports throughout the period. In order to minimize the deficit in the foreign trade balance, every effort had to be made to ensure that agricultural products could reach the markets of potential importing countries.

The most important trade partner, of course, was Austria. Its share of Hungary’s exports declined significantly in the 1920s, from 60 percent before the war to 34 percent by the end of the decade, but it still remained Hungary’s most important trade partner. The central issue of the Austro-Hungarian negotiations was the level of Austrian tariffs on Hungarian agricultural goods and Hungarian tariffs on Austrian industrial goods. After lengthy negotiations lasting some 14 months, the treaty regulating trade between the two countries and the supplementary tariff agreement were concluded on May 9, 1926.

Significantly, the reduction of import duties on wine and flour was the most contentious issue in the Hungarian proposals and the one on which the Austrians were least willing to make concessions. In the end, the agreement was concluded, which was regarded in economic circles as the first significant step toward boosting foreign trade. However, the protectionist spirit that prevailed was illustrated by the fact that in December 1926, a Christian Socialist representative, speaking for the agricultural representatives, called for a review of the recent agreement and an increase in the tariff rate for agricultural products.

In the end, the agreement was concluded. In economic circles, it was regarded as the first significant step towards boosting foreign trade.

In the spring of 1927, a similar treaty was concluded between Hungary and Czechoslovakia after difficult diplomatic negotiations. This treaty was all the more important, because a previous agreement between the two countries, reached in 1923, had not contained a tariff section and had not specified the meaning of the “particularly favorable treatment” that the two parties had pledged to accord each other. Thus, the 1923 agreement did not substantially further the expansion of Hungarian agricultural exports to Czechoslovakia, and it also did not prevent Czechoslovak agricultural protectionist measures. From time to time, the Prague Government issued bans on the import of Hungarian flour and increased tariffs on certain agricultural products.

Thus, following the political disintegration of the Austro-Hungarian Monarchy, previous trade relations also began to deteriorate. Although Czechoslovak industrialists and Hungarian landowners would have been interested in establishing relations, both had lost political influence in their respective domestic contexts.

In Hungary, the lobbying power of industrial capitalists increased, while in Czechoslovakia, those involved in agriculture gained influence, and they were op­posed to any compromise. Although negotiations for a trade treaty were under­way, they progressed very slowly and the establishment of relations on a new basis was hampered by political differences. Finally, the introduction of new Hungarian tariffs made it imperative to normalize trade relations. A trade agree­ment was concluded on May 5, 1927, based on the principles of most-favored-nation treatment and parity.

The agreement reflected stronger agricultural protectionism in Hungary and industrial protectionism in Czechoslovakia. When the agreement was reached, trade between the two countries was already in decline, and the decrease was particularly marked in exports from Czechoslovakia to Hungary. Imports of raw materials from Czechoslovakia continued to increase, but textile imports fell, very much in line with the intentions of Hungarian industrial policy. While in 1924 textiles still accounted for half of Czechoslovak exports to Hungary, in 1929 they accounted for just over a third. The Czechoslovak government, however, welcomed the decline in Hungarian agricultural exports and intensified its trade relations, if only for political reasons, with the two other Little Entente states.21

The Great Depression

The global economic crisis immediately disrupted the slowly developing trade relations and significantly worsened the sales position of Hungarian agriculture. In addition to the decline in export volume, the price drop of export goods also had a detrimental effect on Hungary’s foreign trade balance. The fall of agricultural prices alone between 1929 and 1931 caused a 100 million pengő (17.4 million dollars) drop in Hungary’s trade balance. The dramatic fall of the ratio of agricultural prices to industrial prices dealt a particularly strong blow to the trade balance, since Hungary exported mainly agricultural produce and imported mainly industrial goods. As a result, in 1932 imports fell by 39.1 percent and exports by 41.4 percent.22

Figure_2.jpg

Figure 2. Changes in exports between 1920 and 1939 (thousand pengő)

Source: Based on the data from the MSK, New Series, vols. 75, 77, 78, 80, 81, 82, 84, 85, 95, 98, 101, 106, 109, 111.

As countries sought to balance their trade, they responded to the crisis by strengthening their protectionism. The culmination of this process was Czecho­slovakia’s withdrawal from the trade agreement with Hungary in 1930. Czecho­slovakia intended to strengthen its economic ties with the other two Little Entente states by significantly reducing trade with Hungary. In the non-treaty situation, as of 1930, Hungary’s exports to Czechoslovakia fell from 16.8 percent of total exports to 4.2 percent the following year. Between 1929 and 1931, Hungary’s total exports fell by 45.1, while exports to Czechoslovakia fell by 86 percent. As a result of the crisis, Hungarian agricultural exports fell sharply both in volume and especially in price. The maximum agricultural export of 626 million pengős in 1929 fell to a minimum of 195 million pengős in 1932.23

Hungarian agricultural policy reacted with the introduction of the boletta system (July 1930) and the price premium system (July 1931) as an immediacy measure for the sale of agricultural produce, as well as intervention buying. Long-term solutions also had to be introduced without sacrificing the farmers’ free choice of production. Károly Ihrig, a prominent agricultural economist of the era, saw the key to expanding sales opportunities in improving the marketability of products and establishing cooperatives that would ensure greater organization and profitability for small farms.24 Kálmán Ruffy-Varga was of a similar opinion, stressing the need for official certificates issued by the state for each type of Hungarian wheat in response to the quality requirements of foreign countries, which allowed only the highest quality wheat to be exported.25

Foreign Trade Agreements in the 1930s

For Hungary, finding the way out of the struggles it faced with agricultural exports was facilitated by the opening of the German, Italian, and Austrian markets. In the 1930s, the agreements made with these countries became the foundation of Hungary’s foreign trade. Under an agreement concluded in Rome in May 1934, Italy and Austria undertook to purchase Hungary’s surplus wheat at a profitable price. By this time, Germany had also realized that it was a mistake to use agricultural tariffs to hinder agricultural imports from countries in which Germany also sought to sell its industrial products.

From the onset of the economic crisis, German foreign trade policy increasingly reflected the effort to make concessions to the agricultural exports of the countries in Central and Southeastern Europe to secure markets for German industrial goods. Through bilateral trade agreements, Germany committed to purchasing agricultural products from Hungary.26

This was influenced by the realization that the Südostraum, “abandoned” by the Western powers, could easily be tied to Germany by bilateral trade agreements which would serve long-term German geopolitical aims. However, there was also a simple economic and financial reason to open towards the markets to the east. Germany had lost its previous overseas sources of raw materials due to currency difficulties. Furthermore, the German agricultural market could provide a solution to the most serious problems faced by the countries of this region, especially Hungary, after the breakup of the Monarchy: the permanent crisis of overproduction caused by the loss of agricultural export markets. In 1934, a bilateral agreement was reached between the two countries, a supplement to the 1931 trade treaty, allowing Hungary to sell substantial quantities of grain, livestock, fat, meat, and bacon in Germany. Within one year (in 1934), Germany’s share in Hungary’s exports doubled (from 11.2 to 22.2 percent) and then continued to increase until 1938, when, because of the Anschluss, Hungarian exports to Germany nearly doubled again (from 24.0 to 45.7 percent). Meanwhile, Hungarian imports from Germany rose from 14.9 percent (in 1933) to 24.9 percent (in 1937) and then to 43.9 percent in the year of the Anschluss. By the mid-1930’s Germany had become Hungary’s most important foreign trade partner, and by the end of the decade, half of Hungary’s foreign trade was directed to and received from Germany.

Figure_3.jpg

Figure 3. Changes in export between 1930 and 1939

Source: Based on the data from the MSK, New Series, vols. 81, 82, 84, 85, 95, 98, 101, 106, 109, and 111.

One of the consequences of the boom in exports to Germany, however, was that the Hungarian agricultural sector became a major creditor to the German economy due to the surplus in foreign trade caused by Germany’s reluctance to balance the clearing bill and, in fact, to pay its debts. The clearing imbalance was due to the fact that Germany significantly limited its exports of raw materials, as domestic demand increased in preparation for the war. While its share of Hungarian imports of raw materials and semi-finished goods averaged 26 percent between 1927 and 1933, it was only 12.9 percent in 1937.27

Figure_4.jpg

Figure 4. Changes in import between 1930 and 1939

Source: Based on the data from the MSK, New Series, vols. 81, 82, 84, 85, 95, 98, 101,
106, 109, and 111.

Figure_5_jav.jpg

Figure 5. Distribution of agricultural exports to the most important countries between 1925 and 1937 as a percentage)

Source: Buzás, “Magyarország külkereskedelme,” 148.

The “missing” German products had to be imported from countries with freely transferrable currencies. This prevented exports to countries that would not have paid with hard currency. The Hungarian Governmentordered export companies to sell their products amounting to at least 20 percent of the value of their exports towards Germany in countries which made their payments in gold or hard, freely transferrable currencies. In order to achieve this aim, the government also provided proportional export subsidies to these companies. Export earnings had to be transferred to the Hungarian National Bank, which paid the companies the equivalent in pengős at the official exchange rate, while the Treasury added different premiums (according to each country and product), thus providing a considerable incentive for exporting companies. In 1935, premiums were set at 38 percent for “franc” exports (Belgium, France, Switzerland) and 50 percent for exports in a convertible foreign currency, irrespective of the nature of the products.

In 1936, the Price Compensation Fund (Árkiegyenlítő Alap) was created to support agricultural exports, and in its first year, 1.75 million pengős (306 thousand dollars) were allocated from the state budget and a further 1.228.315 pengős (215 thousand dollars) were made available thanks to the extra revenues from the high prices of exports to Germany. This enabled foreign exchange earnings of 10,891,504 pengős (1.9 million dollars) in 1936. This scheme also helped increase Hungarian exports to Great Britain and the United States in the second half of the 1930s.28 Exports to the United States increased in both 1936 and 1937 but then declined, while exports to Great Britain only rose until 1936, after which they started to decrease, with a dramatic drop by 1939.29

In the case of Hungary, the importance of agricultural exports in exchange for hard currency stemmed from the desire to reach an equilibrium in the balance of trade but even more so from the indebted country’s need to produce enough hard currency to finance the regular repayments of capital and interest. It is hardly a mere coincidence that the intentions of creditor countries began to appear behind the increase of sterling and dollar-based Hungarian exports. Thus, from the beginning of the Great Depression until the outbreak of World War II, important agricultural trade relations were established with countries that had previously functioned not as agricultural markets but as creditors for the Hungarian economy. Thus, Hungarian agricultural products with low added value could also help improve the country’s unstable financial situation (Fig. 6).30

Figure_6.jpg

Figure 6. Agricultural exports to Switzerland, France, and Great Britain (as a percentage).

Source: Gunst, “A magyar mezőgazdaság piacviszonyai,” 529.

Figure_7_FF.jpg

Figure 7. Hungary’s foreign trade with the Little Entente countries (in millions of pengő)

Source: Statisztikai Tudósító, March 29, 1939. 4.

When analyzing the changes in agricultural exports, one should note that after the sharp decline during the economic crisis, the country was able to increase its agricultural exports significantly, but there was a significant concentration of the markets, which led to increased dependence on the German Empire.

The decreasing diversification of the destination of Hungarian agricultural exports is reflected in the drastic decline of trade with the Little Ententecountries. In addition, the balance of Hungarian foreign trade with these countries ran deficits almost every year.

The Issue of Added Value

Another key explanation for the specificities of Hungarian exports lies in the product structure. If we look at the distribution of external trade by economic sector and by the degree of processing of goods,31 it is striking that between 1935 and 1939 the share of raw materials in Hungarian imports declined significantly (from 47.7 to 35.5 percent), while the share of finished goods continued to rise (from 25.5 to 35.4 percent).32

In the second half of the 1930s, the proportion of raw agricultural products in agricultural exports continued to rise from an already high level, while the share of processed food products declined (see Fig. 9). Exports of cereals and livestock increased, whereas higher value-added products, such as meat and meat products, as well as dairy products, experienced stagnation or decline.33

The changes in agricultural trade are even more noticeable when we break down the volume of exports by product group according to the degree of processing. The most important products in total exports were wheat and wheat flour.

One of the most striking changes in the 1930s was the sharp downward trend in flour exports. It also shows the profound changes that had taken place in international agricultural trade. These adverse changes cannot be attributed solely to the failings of Hungarian agricultural policy, as they also reflected the aspirations of the traditionally agricultural importing countries of the period. Namely, in an uncertain international environment, importing countries, motivated by growing protectionism, sought to reduce absolute exposure to strategic commodities by limiting their imports to the most profitable form possible. Thus, of course, they also secured the economic benefits of processing for their own country.

Figure_8_FF.jpg

Figure 8. The distribution of foreign trade according to the degree of processing of the products (as a percentage)

Source: Based on Kereskedelmünk és iparunk az 1939. évben, 34.

Figure_9.jpg

Figure 9. Ratio of agricultural raw materials and manufactured goods in exports (as a percentage)

Source: MSK, New Series, vol. 81, 417; 82, MSK, New Series, vol. 81, 417; vol. 82, 406; vol. 84, 376; vol. 85, 374; vol. 95, 377; vol. 98, 371; vol. 101, 360; vol. 106, 305; vol. 109, 301; vol. 111, 291.

Figure_10.jpg

Figure 10. Development of wheat and wheat flour exports (in thousands of quintals)

Source: Own compilation based on Siegescu, “A magyar mezőgazdasági kiviteli tevékenység,” 551.

Summary

With the dissolution of the Austro-Hungarian Monarchy, the traditional markets for Hungarian agricultural produce became less accessible. This in turn triggered a transformation in Hungarian trade policy. The disintegration of the single customs area, the lack of competitiveness, and the political tensions among the countries of the Danube Basin created permanent difficulties for Hungary in its efforts to bring its agricultural produce to international markets. Meanwhile, Hungary’s more industrialized neighbors, Austria and Czechoslovakia, fulfilled their import demands with lower-cost goods from overseas. In this period, the Hungarian milling industry, which in 1910 was still the second largest supplier of flour to the world market after the United States, had to dismantle much of its infrastructure because of market losses and underutilization.

These structural problems did not end until Germany, which had previously satisfied its immense demand for agricultural and food products with cheaper American goods, opened its vastly expanding markets to Hungarian agricultural products for economic and geopolitical reasons. However, due to clearing settlements, Germany’s increasing military preparedness, and the dominant party’s ability to assert its interests, Hungary, with its agricultural trade surplus, increasingly became a financial backer of the German Reich. Meanwhile, the financial pressure of repaying and servicing loans taken out in the 1920s, primarily from sources in Great Britain and the United States made agricultural exports to creditor countries necessary due to the lack of foreign currency. As a result, the role of agricultural exports in this trade relationship also became more significant, as creditors were eager to recover the funds they had previously lent their debtors. The government was ready to pay export premiums, which also contributed to maintaining the balance of Hungary’s payment situation.

The most important lesson of the period is that export-driven agriculture faced increasingly shifting and unpredictable demands. After the Great Depression this led to the realization that foreign market expansion could only be achieved within “imperial” relationships. It was the (geo)political (imperial) rationality of Germany on one hand and the financial rationality of Hungary’s creditors on the other which were able to provide an adequate market for Hungarian agricultural produce.

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1 Siegescu, “A magyar mezőgazdasági kiviteli,” 538.

2 Buday, Magyarország küzdelmes évei, 12.

3 Based on the data from MSK, New Series, vol. 56.

4 Zeidler, “Társadalom és gazdaság,” 11; Gunst, Magyarország gazdaságtörténete, 40.

5 Mózes, Agrárfejlődés, 185.

6 Föglein, “Tradíció és modernizáció,” 259.

7 Schlett, “Agrár-közgazdaságtan,” 18–19.

8 Orosz, “A modernizációs kísérletek,” 248.

9 Gunst, “A magyar mezőgazdaság piacviszonyai,” 517–18.

10 Zeidler, “Társadalom és gazdaság,” 13–14.

11 Ibid.

12 Balkányi, “Magyarország mezőgazdasági kivitele,” 138–39.

13 See Klement, “Budapest és a malmok.”

14 The milling trade in the milling industry refers to the practice where mills process foreign raw materials, such as grain imported from abroad, and then export the resulting flour or other processed products. This process was common in Central Europe, particularly in countries like Hungary, where the milling industry played a significant role in the economy. One of the main advantages of the milling trade is that it allows the country to export processed products with greater added value instead of raw grain. This practice previously contributed to the development of the milling industry, and also played an important role in international trade.

15 Közgazdasági Értesítő, March 7, 1929, 2–3.

16 Eckhart, A magyar közgazdaság száz éve, 274.

17 Szegő, “A magyar cukoripar,” 31; Vajda, “Cukoripar,” 667.

18 Pál and Salánki, “A cukoripar fejlődése,” 328.

19 Buzás, “Magyarország külkereskedelme,” 148.

20 Matlekovits, Vámpolitika és vámtarifa, 51.

21 “A Magyar–Csehszlovák Vegyesbizottság,” 1107.

22 MSK, New Series, vol. 84, 21.

23 MSK, New Series, vol. 82, 51.

24 Ihrig, A szövetkezetek, part 4, chapter 4.

25 Schlett, “Megkésettség,” 219.

26 Fejes, “A magyar–német gazdasági,” 370–71.

27 Bende, Magyar Külkereskedelmi Zsebkönyv, 1938, 72.

28 Szuhay, Állami beavatkozás.

29 Based on the data from MSK, New Series, vols. 85, 95, 98, 101, 106, 109, and 111.

30 Siegescu, “A magyar mezőgazdasági kiviteli,” 548.

31 It is important to note that the Hungarian Central Statistical Office (KSH) applies two different approaches in classifying raw materials, semi-finished products, and finished goods: one based on production and the other on usage. In this article, I follow the production-based approach and categorize the products accordingly.

32 Kereskedelmünk és iparunk az 1939. évben, 34.

33 Bede, Magyar Külkereskedelmi Zsebkönyv, 1938, 26, 32–33.

2024_3_Kwiatkowski

Agricultural Productivity in the Western Borderlands of the Grand Duchy of pdf
Lithuania (Second Half of the Sixteenth Century)

Maciej Kwiatkowski

University of Bialystok

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ORCID: 0000–0001–8889–8086

Hungarian Historical Review Volume 13 Issue 3 (2024): 431-445 DOI 10.38145/2024.3.431

The purpose of this article is to determine the grain yields in the royal manors of the Grand Duchy of Lithuania in the 16th and 17th centuries. The manorial system in the Grand Duchy of Lithuania appeared with the land reform in the mid-16th century (Volok Reform), when the three-field system was introduced here. However, there were far fewer manor farms in Lithuania than in Poland, but they were very large. Most of them produced grain for export based on peasant labor force. The inventories of the royal estates give account on the seed demand and yields of the most important cereals: rye, oats and wheat. The analysis of more than a dozen manors showed varying yields in Lithuanian estates (Grodno Starosty, Brest Ekonomy and Kobrin Ekonomy), which were due to natural environmental conditions, as well as elemental disasters or human activity.

Keywords: grain yield, productivity, 16–17th-century Lithuania, volok reform, manors

Introduction: State of Research

Studies on crop yields in the Polish–Lithuanian Commonwealth have a deep tradition. The most extensive analysis of the productivity of peasant and manorial farms was done by Alina Wawrzyńczyk1 and Leonid Żytkowicz2 over 50 years ago, focusing mainly on royal and church estates in early modern Poland. Other prominent scholars of the economy of early modern Poland have also paid attention to agricultural productivity, including Jerzy Topolski, Andrzej Wyczański, and Stefan Cackowski.3 Piotr Guzowski and Monika Kozłowska-Szyc are also currently pursuing research on the subject.4 The conditions of the agricultural economy in the Grand Duchy of Lithuania have also long remained at the center of research by historians. Most of the scholarship has been devoted to the period of the Volok Reform5 in the second half of the sixteenth century, in particular to the layout of manors and the lists of the duties of serfs.6 Several works also dealt with the efficiency of agriculture in medieval Lithuania. The economics of the Roch demesne (Novogrudok province) and the Trotsinski estate (Brest–Lithuanian province) were analyzed by Rożycka-Glassowa.7 Jozef Ochmanski wrote about the efficiency of the grand ducal economy in the Kobrin ducal estate.8 Also, Stanislaw Kosciałkowski examined the significance of Lithuanian yields, supported by yield estimates made by Antoni Żabko-Potopowicz in selected grand ducal estates in the eighteenth century.9 Thus, the scholarship on the agricultural economy of the Grand Duchy of Lithuania and its efficiency are for the most part several decades old. A recent summary of the research was presented by Alina Czapiuk in the 1990s,10 but this research and the various works of secondary literature mentioned by Czapiuk are in need of an update, urging for some comparative focus on similar questions in other regions.

Case Studies: Selection of the Analyzed Area

Though numerous shorter works of secondary literature have been published on the subject, there is still a lack of a more complete work focused on the study of the functioning of the agricultural economy in the second half of the sixteenth century. I neither intend nor claim, in the discussion below, to discuss all aspects of the productivity of Lithuanian agriculture in the Renaissance. I present my findings primarily with the aim of furthering a more nuanced interpretation of the findings of research focusing on regions to the east of the (quite thoroughly studied) Kingdom of Poland. This will make it possible to include further areas in the analysis of the manorial system.

In order to discuss agricultural production in the Grand Duchy of Lithuania from the perspectives of total yield and quality, I focused on three estates as case studies: the Grodno royal estates (1578),11 the Brest royal estates(1588), and the Kobrin royal estates(1597). This selection was not random. In accordance with the 1588 Privilege of Counties on the Table of His Majesty the King, some of the Lithuanian royal (state) properties were transformed into ekonomias, or in other words, they put under the control of the monarch and generated a significant share of the income of the court treasury.12 The existence of Lithuanian ekonomias was confirmed in 1589, and in 1590, in accordance with legislation passed by the parliament the royal table estates in Poland were also separated.13 Ekonomias were usually large estates which included several towns, several manors, and dozens or even hundreds of villages. Sejm acts mention 11 ekonomias. Five of them (Tczew, Malbork, Rogozin, Sandomierz, and Sambor) belonged to Poland, as did the Cracow grand-government and a number of regalia. Another six ekonomias (Brest, Grodno, Kobrin, Mogilev, Olitsa, and Šiauliai) were within Lithuania. Our goal, therefore, was to select relatively extensive areas for the study of relationships on the landlords’ estates.

Map1.jpg

Map 1. Location of farms in the Grodno Starosty (1578), Brest ekonomia (1588),
and Kobrin 
ekonomia (1597)

Source: Own compilation based on, AGAD, AK, sign. I/10, pp. 23, 97, 127, 171, 194, 238, 266, 296–297; AGAD, ASK LVI, sign. 11, k. 16, 21v, 24–24v, 28v, 32v–35v; AGAD,
The so-called Lithuanian Metryka, sign. 29, pp. 28, 34–36, 51–52, 71–73, 89–90, 101.

Characteristics of the Sources

Most of the court estates have well-preserved treasury sources from the second half of the sixteenth century. The documents which were drawn up during the period of the Volok Reform, are widely known among scholars.14 The documents offer detailed descriptions of the land, the boundaries of the manors, towns, and villages, and the duties of the serfs, but they reveal little concerning the extent of production on the grand ducal farms. Only inventories from the 1570s and 1590s make it possible to analyze the productivity of manorial farms, in addition to examining a number of duties of the populations living on the estates. The inventories of the Brest and Grodno estates were compiled after the deaths of the previous possessors.15 This is not true in the case of the source on Kobrin’s ekonomia, which was created at the express order of King Sigismund III Vasa, who did not give any specific reason for his command.16 The estates included in this study were found in the western stretches of Lithuania, in Grodno and Brest-Litovsk Counties.

The Crop Yields

There are two basic methods for examining a farmer’s harvest. The first method involves taking the number of threshed crops and dividing the harvest by the size of the previously sown crop (which gives the yield ratio). Thus, we talk about the ratio of one seed sown to one grain harvested. The methodology requires following rules:

1. The study of the proportion of seeds sown to grain harvested must be limited to individual crop species. Thus, we do not deal with the combined yields of rye and wheat unless, for example, we are interested in the yield of winter cereals, which, however, requires appropriate separation of the data.

2. Analysis must be based on standardized units of bulk measures. If a source only offers information concerning seeds sown counted in threescores17 and information about the harvest as measured in barrels, we are not able to give the yield of a particular crop. However, if we were to break this data down (for instance, to arrive at an approximation of the number of grains in a barrel), then the source might contain useful information concerning the yield per threescore.

The above method has been widely used in historical and contemporary scholarship on agriculture in the Polish and Lithuanian lands. Certainly, one of the great advantages of this methodology is its comparative simplicity, assuming we have reliable data in consistent units of measurement.

Another strategy is to indicate crop yields by presenting yield efficiencies in terms of the number of quintals per hectare. This method forces the historian to calculate older units of bulk and area measurements into modern ones. It is thus more time-consuming, as it requires knowledge of several conversion factors. Unfortunately, it is sometimes completely unreliable if the sources do not indicate the size of a given farm. The aforementioned method is used by scientists analyzing agriculture in Western Europe (for instance), but Polish researchers also do not shy away from using the method of estimating yields in quintals per single hectare.18 Due to the difficulty of determining the acreage of old manor farms, we chose the first method of analysis, showing the yields as a ration of seeds down to grains harvested.

For the analysis, we chose all the manors on each estate: ten on the Grodno Starosty, five on the Brest estate, and six on the Kobrin ekonomia. In the sources provided precise data on crops sown, harvests counted in threescores, and threescore efficiency rates. In accordance with the Volok Law regulating relations on the grand ducal estates, all estates used the system of a barrel of brine, equal to four Cracow bushels.19

Table 1. Average crop values on the Grodno Starosty, Brest and Kobrin ekonomias (1578–97) (yield measured to sown seed)

Property

Winter rye

Spring rye

Winter wheat

Spring wheat

Barley

Oats

Peas

Buckwheat

Grodno Starosty

2.7

1.2

2.5

4.6

2.8

1.9

2.6

2.0

Brest Ekonomia

3.9

2.6

4.6

2.9

2.8

2.5

3

1.8

Kobrin Ekonomia

2.5

1.6

1.2

0.3

2.7

2.1

2.6

2.5

Source: Own compilation based on, AGAD, AK, sign. I/10, pp. 23, 97, 127, 171, 194, 238, 266, 296–297; AGAD, ASK LVI, sign. 11, k. 16, 21v, 24–24v, 28v, 32v–35v; AGAD,
The so-called Lithuanian Metryka, sign. 29, pp. 28, 34–36, 51–52, 71–73, 89–90, 101.

The Table 1 shows the arithmetic average yield on the Grodno Starosty and the manors on the Brest and Kobrin estates in the second half of the sixteenth century. The data suggests that spring wheat was one of the most successful crops on the Grodno estate. In practice, however, this crop was grown on only one grange of the Grodno estate, which in principle excludes the sense of including data on average yields. The data for winter wheat on the Brest estate were identical, although this crop was only grown the farms belonging to three landlords. Quite good values were generated by winter rye on the Brest ekonomia, which usually boasted the best indicators of manor management efficiency. The weakest yield parameters were obtained by spring rye and oats, the average figures for which, as a ratio of grains harvested to seeds sown, ranged from 1.2 to 2.6 and from 1.9 to 2.5, respectively. A comparison of average yield values on these estates to average yields shows that in most cases the Lithuanian estates were not nearly as productive or efficient as the estates in Poland, for example, where the corresponding figures were 3.2–5 for rye, 4.3–7.6 for wheat, 4.5–8 for barley and 1.8–7 for oat.. The averages for the harvests on the grand ducal estates better resemble the yields obtained in Ducal Prussia (rye: 3.5; wheat: 5; barley: 4; oats: 2.8). 20 In comparison with Poland and Prussia, wheat did not fare nearly as well, achieving a similar average only on the Brest economy. Yields were much lower on the other estates, reaching just over one to about 2.5 grains per seed sown.

 

Chart_1_Rye.jpgChart 1 WheatChart 1 BarleyChart 1 Oat

Figure 1. Variability of yields of winter rye, winter wheat, barley, and oats on the Grodno Starosty, Brest ekonomia and Kobrin ekonomia (1578–97)

Source: Own compilation based on, AGAD, AK, sign. I/10, pp. 23, 97, 127, 171, 194, 238, 266, 296–297; AGAD, ASK LVI, sign. 11, k. 16, 21v, 24–24v, 28v, 32v–35v; AGAD,
The so-called Lithuanian Metryka, sign. 29, pp. 28, 34–36, 51–52, 71–73, 89–90, 101.

In addition to indicating the average yield, it would be worth considering the variety of parameters obtained. To this end, one could approach the issue from a comparative discussion of data concerning the yields of four of the most important crops: winter rye, winter wheat, barley, and oats. The focus on these four crops is dictated by two factors: they achieved the highest yields among grains and these regularly appeared in the farm accounts.

Chart 2

Figure 2. Productivity of crops on the farms of Grodno Starosty and the Brest and Kobrin ekonomias (1578–97) in barrels/threescore. Average values are indicated by a solid line, and the standard deviation by a dashed line.

Source: Own compilation based on, AGAD, AK, sign. I/10, pp. 23, 97, 127, 171, 194, 238, 266, 296–297; AGAD, ASK LVI, sign. 11, k. 16, 21v, 24–24v, 28v, 32v–35v; AGAD,
The so-called Lithuanian Metryka, sign. 29, pp. 28, 34–36, 51–52, 71–73, 89–90, 101.

Fluctuations in yields are evident throughout the study of any selected crops. Only some manors achieved similar yield values, which clearly escape us when focusing only on average grain yields. We see the greatest differences in yields in the case of the manors of Grodno Starosty, which could be due to the larger number of farms owned by lords and not the king. The condition of crops on some of the grand ducal farms presents a remarkably unfavorable picture. This is evident in the case of particularly poor yields of spring and winter wheat, where the yields sometimes approached the lower limit of profitability.

The reasons for the unevenness of the harvest are quite well explained by an analysis of the treasury sources. In 1578, the Grodno Starosty was plagued by hailstorms and fires in selected villages. It is likely that the recorded drought was indirectly responsible for the fires, such under such circumstances, a moment of carelessness with fire would have been enough for buildings to start burning quite quickly.21 The mention in the records of uprooted garden crops also suggest drought conditions (though it is not known whether these crops were uprooted as a result of human activity), but there are other direct references to the disastrous yields too. Usually, lower yields occurred on manors where the records also indicate unfavourable weather events (Horodnica, Mosty).22

Let us take a look at how the efficiency of a single, threshed threescore of crops presented itself. As with the first chart, the target of the analysis will be winter varieties of rye, wheat, barley, and oats.

As the survey of the west-Lithuanian estates indicates, the maximum results were obtained for winter rye and oat crops. If we look at the average yield of a single mound of individual crops, it becomes clear that the highest yields were obtained on the Grodno estate. Simultaneously, the Grodno estate had the most varied crop threshing parameters. The average threshing rates per threescore oscillated around one barrel of brine. The crop yields were smaller on the Brest and Kobrin ekonomias. Barley and oat yields were similar. On average, barley and oat yields were noticeably better ion the Grodno estates and worse on the other estates. The threescore yield on the Brest ekonomia showed variation only in the case of oats. The poor values of threescore of wheat are confirmed in the source dedicated to the Kobrin property, where a very bad wheat yield is mentioned.23 The accounts of the Kobrin ekonomia were also inaccurately kept, since in the case of the Horodec manor we have no data at all on the threshing or yields of rye or oats.24

The agricultural conditions on the estates under discussion were certainly also influenced by the number of livestock. Livestock breeding made it possible not only to obtain meat, hides, and dairy products. Livestock were also used in the fields, for instance in ploughing. In addition, livestock produced a certain amount of fertilizer, which made it possible to achieve higher yields of grain crops. As the sources do not always give a precise record of all the animals on a given manor, I consider only the presence of cows, as the records concerning cows on the estates are more precise.

Table 2. Number of milking cows and heifers on the farms of Grodno Starosty and the Brest and Kobrin ekonomias (1578–96)

Estate

Manor farm

Number of cows

Number of cows per
Lithuanian volok of the farm
25

Grodno Starosty

Horodnica

6

0.6

Nowy Dwór

12

0.3

Kotra

11

2.7

Odelsk

0

0.0

Skidel

0

0.0

Łabno

6

0.2

Jeziory

4

0.3

Sałaty

0

0.0

Mosty

5

0.3

Wiercieliszki

18

1.5

Milkowszczyzna

0

0.0

Krynki

0

0.0

Świsłocz

16

1.7

Brestekonomia

Woin (Wohyń)

0

026

Kodeniec

0

027

Połowce

–

–

Kijowiec

11

0.9

Rzeczyca

–

–

Kobrinekonomia

Kobryń

5

1.0

Czerwaczyce

13

2.3

Wieżece (Wieżki)

6

0.2

Prużany

16

0.5

Czachec

–

–

Horodec

5

1.6

Source: Own work on the basis of AGAD, AK, sygn. I/10, 22, 51, 94, 170, 193, 237, 264, 294, 297; AGAD, ASK LVI, sign. 11, 16, 27; AGAD, Metryka Litewska, sign. 29, 28, 33–36, 50–53, 70, 73, 89–90, 101.

The recommendations of the Volok Law of 1557, which regulated relations on the estates surveyed, said that each manor should have at least 20 cows. If a lord’s farm did not have that many animals, he was ordered to obtain more by purchase.28 The sources indicate that already by the late 1570s the Grand Duke of Lithuania’s instructions were not being followed. A survey of estates with a certain number of cattle shows that the Grodno estate had an average of 8.5, the Brest ekonomia 3.6, and the Kobrin ekonomia 9 mature cows per farm (Table 2). We should approach the above data with a great deal of caution. The Milkovshchyna, Odelsk, and Skidel manors, which were on the Grodno estate and were leased by the widow of the late Grodno starost and the Vilna voivode, were not included in the survey.29 This certainly contributed to lower average numbers of livestock in the records. Similarly, we should not trust the information from the Brest ekonomia, where we know the number of livestock for only one lord’s farm. However, the number of livestock on the Lithuanian estates was much lower than, for example, on the estates in the neighboring Knyszyn Starosty (Podlasie), where there was an average of 41 cows (milking and barren) per single manor.30 Recalculation of the number of milking and barren cows per Lithuanian volok shows considerable diversity in cattle. Values varied the most on the Grodno Starosty, but because of the single census of the cowshed in the Brest ekonomia, we cannot make a full comparison of livestock on the estates under study.

Conclusion

The above observations call attention to the differences in the crop yields on the farms of the Grodno Starosty and the Brest and Kobrin ekonomias. The best yields were generated by the crops of the Brest property, which usually had better agricultural conditions. Typically, Kobrin’s ekonomia had the least productive harvests. This was probably related to the generally inferior conditions of the estate, as evidenced by the few mentions of wheat fertility or the poor condition of agriculture in 1597. The Grodno Starosty was also plagued by unfavorable natural events that reduced the quality of manor crops. However, there is no need to overestimate the negative effects of weather phenomena that periodically afflicted societies in modern Europe. In the case of some estates, it is likely that crop yields were only recorded in the wake of adverse weather events. However, the results of the study show primarily the inferior efficiency of the manor economy on the estates of Western Lithuania, which clearly differed from the situation in the neighboring Kingdom of Poland. The comparatively low crop yields on the estates discussed above were certainly affected by the low numbers of livestock, resulting not only from robberies suffered by the nobility during the interregnum, but probably also from real shortages in the number of livestock. It would certainly be worthwhile to undertake further research on the efficiency of agriculture on the Grodno Starosty and the Brest and Kobrin ekonomias, as this research would show (at least, the discussion above suggests so) that the farms owned by the landlords continued to produce comparatively poor crop yields.

Archival Sources

Archiwum Główne Akt Dawnych w Warszawie [Central Archives of Historical Records in Warsaw] (AGAD)

Archiwum Kameralne [Chamber Archive] (AK)

Archiwum Skarbu Koronnego [Crown Treasury Archive] (ASK)

Inwentarze starostw [Starost inventories]

Metryka Litewska [Lithuanian Metryka]

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Kozłowska-Szyc, Monika. “Wysokość plonów rolnych w dobrach królewskich dawnej Polski w latach 1564–1665” [The amount of agricultural yields in the royal estates of old Poland in the years 1564–1665]. Studia Geohistorica 7 (2019): 17–29. doi: 10.12775/SG.2019.02.

Łożyński, Krzysztof. “Stan gospodarczy włości wielkoksiążęcych w świetle Писковой книги Гродненской экономики” [The economic condition of the grand duke’s domains in light of the Писковой книги Гродненской экономики]. In Kintančios Lietuvos visuomenė: struktūros, veikėjai, idėjos, edited by Olga Mastianica, Virgilijus Pu­ga­čiauskas, and Vilma Žaltauskaitė, 96–117. Vilnius: Lietuvos istorijos institutas, 2015.

Ochmański, Jerzy. “Gospodarka folwarczna w dobrach hospodarskich na Kobryńsz­czyźnie” [Manor economy in the hospodar’s estates in the Kobrin region]. Kwartalnik Historii Kultury Materialnej 6, no. 3 (1958): 365–94.

Picheta, Uladzimer I. Belorussiia I Litva v 15–16 vv. Issledovana po istorii sotsialno-ekonomicheskaia politicheskaia I kulturnaia razvitiia = Пичета, Уладзімер I. Белоруссия и Литва 15–16 вв. Исследована по истории Социально-экономическая Политическая и культурная развития [Belorussia and Lithuania, 15–16th centuries: Studies on the social and economic history, political and cultural development]. Moscow: Издатилетво Академии наук ССР, 1961.

Rożycka-Glassowa, Maria. Gospodarka rolna wielkiej własności w Polsce XVIII wieku [Agricultural economy of large property in Poland of the 18th century]. Wroclaw: Zakład Narodowy im. Ossolińskich–Wydawnictwo Polskiej Akademii Nauk, 1964.

Santiago-Caballero, Carlos. “Provincial grain yields in Spain, 1750–2009.” Working Papers in Economic History 12, no. 4 (2012): 1–36.

Topolski, Jerzy. Gospodarstwo wiejskie w dobrach arcybiskupstwa gnieźnieńskiego od XVI do XVIII wieku [Rural household in the estates of the Archbishopric of Gniezno from the 16th to the 18th century]. Poznan: Wydawnictwo Naukowe PWN, 1958.

Wawrzyńczyk, Alina. Gospodarstwo chłopskie w dobrach królewskich na Mazowszu w XVI i na początku XVII wieku [Peasant farm in the royal estates of Mazovia in the 16th and early 17th centuries]. Warsaw: Państwowe Wydawnictwo Naukowe, 1962.

Wawrzyńczyk, Alina. “Próba ustalenia wysokości plonu w królewszczyznach województwa sandomierskiego w drugiej połowie XVI i początkach XVII wieku” [An attempt to determine the amount of yield in the royal lands of Sandomierz Province in the second half of the 16th and early 17th centuries]. In Studia z Dziejów Gospodarstwa Wiejskiego, vol. 1, edited by Janina Leskiewicz, 94–178. Wroclaw: Państwowe Wydawnictwo Naukowe, 1957.

Wawrzyńczyk, Alina. Studia nad wydajnością produkcji rolnej dóbr królewskich w drugiej połowie XVI wieku [Studies on the agricultural productivity of the royal estates in the second half of the 16th century]. Wrocław: Państwowe Wydawnictwo Naukowe, 1974.

Wyczański, Andrzej. “O badaniu plonów zbóż w dawnej Polsce” [On the study of cereal yields in old Poland]. Kwartalnik Historii Kultury Materialnej 16, no 2 (1968): 251–71.

Wyczański, Andrzej. Studia nad gospodarką starostwa korczyńskiego 1500–1660 [Studies on the economy of Korczyna starosty 1500–1660]. Warsaw: Państwowe Wydawnictwo Naukowe, 1964.

Żabko-Potopowicz, Antoni. Praca i najemnik w rolnictwie w Wielkim Księstwie Litewskim w wieku osiemnastym na tle ewolucji stosunków w rolnictwie [Labor and mercenary in agriculture in the Grand Duchy of Lithuania in the eighteenth century against the background of the evolution of relations in agriculture]. Warsaw: Dom Książki Polskiej, 1929.

Żytkowicz, Leonid. “Plony zbóż w Polsce, Czechach, Na Węgrzech i Słowacji w XI–XVIII w.” [Cereal yields in Poland, the Czech Republic, Hungary, and Slovakia in the 11th–18th centuries]. Kwartalnik Historii Kultury Materialnej 18 (1970): 227–53.

Żytkowicz, Leonid. Studia nad wydajnością gospodarstwa wiejskiego na Mazowszu w XVII wieku [Studies on rural farm productivity in Mazovia in the 17th century]. Warsaw: Państwowe Wydawnictwo Naukowe, 1969.

  1. 1 Wawrzyńczyk, “Próba”; Wawrzyńczyk, Gospodarstwo chłopskie; Wawrzyńczyk, Studia nad wydajnością;

  2. 2 Żytkowicz, Studia; Żytkowicz, “Plony zbóż.”

  3. 3 Wyczański, Studia nad gospodarką; Wyczański, “O badaniu plonów”; Topolski, Gospodarstwo wiejskie; Cackowski, Gospodarstwo wiejskie.

  4. 4 Guzowski and Kozłowska, “Wysokość plonów”; Kozłowska-Szyc, “Wysokość.”

  5. 5 A 16th-century land reform in parts of the Grand Duchy of Lithuania (Lithuania proper, Duchy of Samogitia and parts of White Ruthenia). The private initiative was copied by other nobles and the Church, because the reform increased effectiveness of agriculture by establishing a strict three-field system for crop rotation. The land was measured, registered in a cadastre, and divided into voloks (21.38 hectares or 52.8 acres). Volok became the measurement of feudal services (like sessio in the Kingdom of Hungary). The reform was a success in terms of the annual state revenue that quadrupled. In social terms, the reform promoted development of manorialism and fully established serfdom in Lithuania, limiting social mobility. (Remark of the editor)

  6. 6 Daunar-Zapolski, Dzyastvennaya gazpadarka; Picheta, Belorussiya i Litva; Jurkiewicz, “Czynsz i pańszczyzna”; Łożyński, “Stan gospodarczy.”

  7. 7 Rożycka-Glassowa, Gospodarka rolna.

  8. 8 Ochmański, “Gospodarka folwarczna.”

  9. 9 Żabko-Potopowicz, Praca i najemnik; Kościałkowski, Antoni Tyzenhauz, vol. 2, 62–68. Primarily it concerns the fact that the sources referring to the grand ducal estates form the 1780s provide just lucrum ziaren do intraty, so only the crops that were sold and not all the crops that were harvested.

  10. 10 Czapiuk, “Uwagi,” 131–37; Czapiuk, “Reformy”; Czapiuk O plonach.”

  11. 11 The ambiguity of the Grodno estate’s name results from the differences in the printed and archival sources, where both names appear, as well as voloshci grodzieńskie. For the purposes of the discussion here, I use the name of Grodno Starosty, which I presume on the basis of several sources to have been in use in 1578. Golovatskiy et al., Pistsovaya kniga Grodnenskoy, vol. 1, III, 3; Golovatskiy et al., Pistsovaya kniga Grodnenskoy, vol. 2, 25–26; AGAD, AK, sign. I/10, p. 1–3.

  12. 12 AGAD, AK, sign. I/7, pp. 1–3.

  13. 13 Volumina Constitutionum, vol. 2,106, 116, 148.

  14. 14 Golovatskiy et al., Pistsovaya kniga byvshago Pinskago starostva; Golovatskiy et al., Pistsovaya kniga Grodnenskoy, vol. 1, III, 588; Golovatskiy et al., Pistsovaya kniga Grodnenskoy, vol. 2, 25–166.

  15. 15 AGAD, AK, sign. I/10; AGAD, ASK, LVI, sign. 11.

  16. 16 AGAD, Metryka Litewska, sign. 29.

  17. 17 A conversion unit of about 60 sheaves of a given crop.

  18. 18 Historia Polski w liczbach, 78, 215, 218; Santiago-Caballero, “Provincial grain yields in Spain”; Cerman, Villagers and lords, 101. There are other methods of presenting data on yields, e.g. in bushels per acre. Campbell and Overton, A New Perspective, 70.

  19. 19 Jaroszewicz, Ustawa na wołoki, 238–39; Encyklopedia Historii Gospodarczej, vol. 1, 344; Boroda, Pojemność miar nasypnych, 24.

  20. 20 Cerman, Villagers and lords, 96. Rye crop yields were also much lower than in the collations referring to the relatively close Knyszyn Starosty in Podlasie. Czapiuk, “Uwagi,” 135–36.

  21. 21 AGAD, AK, sign. I/10, p. 27, 28, 31, 97, 180, 239, 258, 299.

  22. 22 AGAD, AK, sign. I/10, p. 20, 97.

  23. 23 AGAD, Metryka Litewska, sign. 29, 72.

  24. 24 AGAD, Metryka Litewska, sign. 29, 101.

  25. 25 One Lithuanian volok is roughly 21.3 hectares, Ochmański, “Gospodarka folwarczna,” 372.

  26. 26 The cowshed was ravaged and probably emptied by Mielnik Chamberlain Kasper Dembinski during the 1588 interregnum, AGAD, ASK LVI, sign. 11, 27.

  27. 27 This property was also ravaged by the Mielnik Chamberlain. AGAD, ASK LVI, sign. 11, 24

  28. 28 Jaroszewicz, Ustawa na wołoki, 243.

  29. 29 AGAD, AK, sign. I/10, 1.

  30. 30 Czapiuk, “Uwagi,” 136–37.

2024_3_Hegyi

The Share of Tithe Paid to Parish Priests in Sixteenth-Century Transylvania: pdfA Topographical Approach*

Géza Hegyi

Transylvanian Museum Society; HUN-REN Research Centre for the Humanities

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Hungarian Historical Review Volume 13 Issue 3 (2024): 403-430 DOI 10.38145/2024.3.403

The most important source of income for the medieval Latin Church, the tithes paid by lay people from their crops and livestock, was divided between several levels of the ecclesiastical hierarchy. The set of beneficiaries varied from one country or diocese to another, while the proportions essentially from one locality to another. In the Transylvanian diocese, the bishop (or the chapter) got the substantial part of the tithe (half to three quarters), while the archdeacon, as regional magistrate, uniformly received a quarter. Despite the canon law standards, in many cases only a fraction of the quarta remained to supply the parish priest. On the other hand, the parish priests from the deaneries of royal Saxons (i. e. German settlers) could usually keep the full tithe.

The aim of my research is to reconstruct the share of tithe of the Transylvanian parish clergy by locality, to map it and to analyze the spatial inequalities thus revealed. Due to the unilateral source endowments, we have only a few direct data on this, so I calculated indirectly the size and proportion of the priestly share, based on the data of a list from 1589, which only gives the local rents of the bishops and the archdeacons’ share of tithe. According to my results, the inhabitants of 1239 localities paid tithes in mid-sixteenth century Transylvania. For 457 settlements (mostly in the Székely Land) we do not know the share of the priest. In the known cases, the three most common distributions were when the local priest received no tithe (35%), a quarter of the tithe (36%) or the whole tithe (25%). The spatial distribution of the parishes with quarta was not uniform, but rather concentrated in some small areas due to various historical reasons. The level of priestly share correlated with secular and ecclesiastical privileges, the ethnicity of the population that paid the tithe, and the person of the landlord.

These results can provide important aspects for the interpretation of sources based on priestly income, such as the papal tithe register of 1332–1336, fundamental to the history of medieval Transylvania.

Keywords: Transylvania, tithe, parish priest, distribution, quarta, Saxons

Introduction

As any historian of feudal institutions knows, the practice of tithing is rooted in the regulations of the Old Testament.1 Early Christianity was still averse to it, but in the fourth and fifth centuries the idea of tithing began to become increasingly accepted. In Latin-rite territories, from the Carolingian period onwards, the tithe became a compulsory ecclesiastical annuity paid by all members of the fold. This was, of course, achieved with the support of the reigning secular power.2 Theoretically, the tithe should have been paid on all kinds of income, but due to the socio-economic conditions of the Middle Ages and the early modern period, it was collected primarily from the annual wine and grain harvests and secondarily from the reproduction of certain domestic animals (for instance sheep and bees).3 For this reason, the tithe records (documents, accounts, receipts, etc.) are an important source for the study of the rural history of Western and Central Europe.4

According to the Church Fathers (and to the canon law that quotes them), one of the functions of (and thus justifications of) tithing is to acknowledge God’s rule (signum dominii) and one is to provide support for the poor and others in need (tributum egentium animarum). The argument for a fitting tribute to the clergy (as a spiritual elite) emerges rather rarely and relatively late.5 Whatever the reason for this, the Church had always been considered the administrator and thus the actual holder of the tithe. Its exclusive right to this income was confirmed by several papal decrees and synods of the eleventh–thirteenth centuries against secular bodies of power.6 Not without reason: the tithe was by far the most important source of revenues for the Church, accounting for up to three quarters of a bishop’s income.7

The income from the tithe was divided among different actors in the ecclesiastical hierarchy. As the bishoprics were the first rank to be established in the early church and in the newly Christianized areas, the bishops themselves usually received the greater part of the tithes. Over time, tithing rights were granted to the chapters and their members, monastic convents, altar foundations, etc.8 From the outset, however, it was clear that the local priests were also entitled to a share (pars condigna) of the tithe from their parishes. The most commonly used principle in this respect was laid down by Pope Gelasius I (492–496), whose provisions were applied to the matter of tithing from the eighth century onwards. According to him, church revenues were to be divided into four parts, one of which (a quarta) was to go to the diocesan bishop, another to the parish priest, a third to the maintenance of the church (fabrica), and a fourth to charity.9 In practice, however, the set of beneficiaries varied from one diocese to another, and the proportions differed essentially from one locality to another. For example, in the areas that converted to Christianity between the eighth and eleventh centuries, the bishops generally received a much larger slice, and the local clergy received little more than metaphorical crumbs.10 However, the higher magistrates, such as the archbishop or the pope, usually did not receive a share of the tithes of other bishops’ dioceses (only from their own dioceses). The so-called “papal tithe,” which was decreed by the Second Council of Lyon (1274) and then by the Council of Vienne (1311–1312), was a different kind of tax. It obliged all ecclesiastics to pay a tithe of their income to the papal court for six years.11

In order to interpret the sources regarding the tithing, it is essential to map the local distribution of this income among the different ecclesiastical actors, since individual tithe data usually refer only to the share of one of the beneficiaries. A demographic or economic-historical evaluation12 of the papal tithe registers of 1332–1337,13 crucial to any overview of the topography and incomes of the Hungarian Church, is only possible if we know the multipliers that can be applied to the amounts paid by a priest, as this information is essential if we seek to use these amounts to calculate the total production of his parish in a given year. I have recently completed this work on parishes in mid-sixteenth century Transylvania, and I present my findings below. Essentially, I seek to identify the external factors that shaped the observed regional differences.

The Structural Framework of Tithing in Transylvania

Historical Transylvania was the eastern province of the Hungarian Kingdom in the Middle Ages, but in the mid-sixteenth century, it became the core territory of an independent principality. In terms of secular administration, it was divided into three major parts. First, there were the seven counties covering the western, northern, and central areas, which were inhabited by serfs and nobles. The feudal system in these regions differed from the average Hungarian system only in minor details. The so-called King’s Land (Königs­boden, Fundus Regius), which was inhabited by privileged Saxons (i.e. German settlers), was the second area, and the Székely Land in the east was the third. The Saxons formed a comparatively urban, literate society, while the Székelys were a closed ethnic group governed by oral tradition. The Romanian population, which for the most part followed the Orthodox rite, did not have its own administrative units and lived largely in the mountainous parts of the counties and the Saxon territories.14

From the ecclesiastical point of view, most of Transylvania fell under the jurisdiction of the bishop of Transylvania, who had his seat in Gyulafehérvár (Alba Iulia/Weissenburg)15 and whose authority extended north-westwards beyond the Meszes (Meseş) Mountains, and up to the Tisza River.16 The southern part of the King’s Land (the area around Szeben [Sibiu/Her­mannstadt] and Brassó [Braşov/Kronstadt]) was under the direct jurisdiction of the archbishop of Esztergom. A small region, the so-called Kalotaszeg, which is roughly the area surrounding the headwaters of the Sebes-Körös [Crişul Repede] River), belonged to the diocese of Várad (Oradea), while the region of the Lápos Basin (Ţara Lăpuşului) formed a part of the diocese of Eger.17

 Hegyi_1_FF.jpg

Figure 1. The old (Veszprém) and the new (Transylvania) model of distribution of the tithe.

On the question of the distribution of the tithes among the holders in Hungary, the secondary literature is unanimous in stating that three quarters of the tithe went to the diocesan bishop in each settlement, while the remaining quarter (quarta) was shared in various proportions between the cathedral chapter and the local parish priest. The latter’s share is usually estimated at a quarter of a quarta, i.e. one sixteenth of the tithe.18

The model above (see Fig. 1), however, is based solely on a few thirteenth-century papal and royal documents concerning the distribution of the tithe, as well as on a detailed examination of the tithing system of the diocese of Veszprém.19 Although it does seem to be valid for some other dioceses, too (e.g. Győr, and Várad), I believe that the general application of this model to the whole kingdom was done rather hastily in the earlier secondary literature. Based on my study of primary sources, a different system seems to have prevailed in Transylvania and in the dioceses of Eger and Zágráb. In these territories, the bishop (or the chapter) was entitled to the major share of the local tithe, which varied between half and three quarters, depending on the parish priest’s share. The archdeacon, as regional magistrate, uniformly received one quarter in his own district.20 In conclusion, the crucial difference between the previous model and the present one is that here the parish priest did not share a quarter of the tithe with the canons. Rather, he shared three quarters of the tithe with the bishop or with the chapter or, sometimes, with other beneficiaries (such as the abbot of the Kolozsmonostor Convent, altar directors, etc.).21 On the other hand, the parish priests of Saxon deaneries on the so-called King’s Land could usually keep the full tithe (libera decima).22

Sources and Methods

The 447 surviving sources of which I am currently aware on the medieval history of the tithe in Transylvania (up to 1556)23 relate mostly to the tithing affairs of the bishop and the chapter, as well as of the Saxon clergy. There is, at the same time, disappointingly little data on the tithing income of Hungarian priests in the counties.24 With these data alone, it would be impossible to reconstruct the topography of the clergy’s tithe share.

hegyi_jav.jpg

Figure 2. Transylvanian dioceses with the share of priests

However, a somewhat later but comprehensive document allows us to arrive at this reconstruction through an indirect procedure. An inventory from 1589 shows the price for which the episcopal (E) and the archdeaconal (A) tithes were rented out to local landlords in each tithe-paying settlement of the seven counties.25 These parts of the tithes were secularized in 1556, that is, confiscated to provide the material basis for the nascent principality, and from then on, they were administered by the princely treasury.26 We are not so much interested in the specific amounts as in their relative proportions, which remained largely unchanged for decades (if not centuries). A fragment of a similarly structured list from 1563 covering some parts of Küküllő and Fehér Counties, can be used as a reference, and its data are in most cases identical to those from 1589.27

As mentioned above, these two lists do not include the precise wages corresponding to the tithe of the priest (P). We have seen, however, that in most places the archdeacon’s share (A) was a quarter of the total tithe (T), so we can calculate the priest’s share, too, as follows:

T = 4A

P = T–E–A = 4A–E–A = 3A–E

And the share itself is: p = P/T

It is true that, in some cases, this method does not lead to meaningful results, for example because the share of the archdeaconry is missing28 or its quadruple does not reach the sum of the rents.29 But we cannot expect structural regularities to be applied mechanically, especially not in the medieval world. In such cases, other, individual approaches or estimates yield results. Nevertheless, the method outlined above produces acceptable proportions in the vast majority of cases, and this indirectly supports its validity. When the value of the quarta30 is also explicitly referred to in any of the registers of 1563 and 1589 (for 104 localities), there is a direct way of checking the correctness of our calculations, and the result is generally reassuring (see Table 1).

Where possible, I have also used early modern urbaria and ecclesiastical sources, which usually confirm the data of the 1589 register.31

Evaluation of the Findings

I have identified a total of 1239 tithe-paying settlements in the territory of historical Transylvania, where a total of approximately 2150 settlements existed in the mid-sixteenth century. It can therefore be concluded that about 900 settlements did not pay tithes. Typically, these were settlements where the population for a long time (often from the moment they had been founded) had been predominantly Orthodox Romanians. Tithing as a compulsory ecclesiastical tax did not exist in Eastern Christianity, and this custom was respected by the Hungarian ecclesiastical and secular authorities.32 Settlements which had been inhabited by Catholics who were later replaced by Romanians were, in principle, treated differently. In 1408, a decree stipulated that these settlements were still obliged to pay the tithe to the Catholic Church.33 However, despite its repeated renewal, in many cases the decree was not enforced,34 which explains why among the 900 villages without tithe there were several, especially in the Székás area (Podişul Secaş) of Fehér County, that lost their former Catholic Saxon population only after the Turkish invasions of the fifteenth century35 and later became Romanian.36

In addition to the Romanian villages, a few other localities were exempted from tithing. Three of these localities were mining towns in the mountains, which had predominantly Saxon (and partly Hungarian) populations,37 presumably with infertile lands, where grains and grapes, the main base for tithes, were not grown. Some Hungarian villages with Catholic parishes in Hunyad County38 also did not pay the tithe, presumably because their inhabitants were all minor nobles and were not obliged to pay taxes.

For more than a third (457) of the 1239 settlements that did pay the tithe it is not possible to determine (or even to estimate) the amount of the priestly tithe. The vast majority of these settlements (417) were found in the Székely Land, because for this territory (except for the Aranyos Seat), as a consequence of low literacy rates, we have no usable medieval or early modern data on the tithe incomes of the clergy, not only from the Middle Ages but also from the early modern period. There is only some general evidence that this privileged but poor, partly mountain dwelling population did pay the tithe.39 In the case of Kalotaszeg and the Maros (Mureş) Valley between Nagyenyed (Aiud/Engeten) and Gyulafehérvár, the scarcity or even complete lack of sources is also to blame for the holes in our knowledge.40

However, the 771 known cases are still representative of the situation in the counties and the Fundus Regius. The three most common types of distribution were when the local parish priest received no tithe (269.541); a quarter of the tithe (278.5), or the whole tithe (189).

As I have already mentioned, the latter option, which accounts for almost a quarter of all known cases, was almost exclusively linked to the Saxon parishes. However, it was not specific to all Saxon settlements, but only, with a few exceptions, to privileged areas on royal land.42 It was therefore determined primarily (though only in broad terms) by the existence of secular self-government and only secondarily, in the details, by the ecclesiastical administration. The priests of the deaneries of Szeben and Brassó, which were directly under Esztergom’s jurisdiction, enjoyed the same rights in this regard as the free Saxon deaneries under the jurisdiction of the bishop of Transylvania. The main reason for this was that the cornerstone of the Saxon privileges, the Andreanum of 1224, had already guaranteed the priestly libera decima.43 However, this happened at the expense of the former tithe-holders (the bishop and the chapter of Transylvania), and it was necessary to obtain their consent, which always involved the payment of a symbolic annuity (census). Only some of these agreements have survived: those of the Transylvanian chapter with the deaneries of Medgyes (1283, 1289) and Sebes (1303, 1330), and that of the bishop with the deanery of Kozd (c. 1330).44 However, similar arrangements must have been made for all of the deaneries established on the territory of the free (royal) Saxons, i.e. Szászváros (Broos), Kézd, Királya, and Beszterce.

Those parishes of the aforementioned deaneries, which were located on the territory of the counties, also enjoyed the right of “free tithing,” at least until around 1580.45 This was probably because they were originally royal estates, too, and their situation was little different from that of their fellows who later moved on to self-government. Exceptionally, the Saxon parishes of the deanery of Régen, which were entirely on the territory of the counties, were also in possession of the full tithe46 for reasons that are not yet known. Another special case in the western part of the King’s Land were the Romanian villages which were settled in the fifteenth and sixteenth centuries in the neighborhood of certain Saxon villages 47 and paid the full tithe to the parish priests.48 However, two Saxon villages (Petres [Petriş/Petersdorf] from the deanery of Királya and Buzd [Buzd/Bussd] from the deanery of Medgyes) as well as the entire deanery of Selyk (Şeica/Schelk), which also belonged to the King’s Land but probably joined it with a delay, were excluded from the circle of those who kept the whole tithe. I touch on them in the discussion below.

In terms of the distribution of tithes, we find a particular diversity in the ten Hungarian serf villages under the jurisdiction of the deanery of Brassó at the end of the Middle Ages. Those which had previously been in royal hands for a long time as part of the domains of Höltövény (Hălchiu/Heltesdorf) and Törcsvár (Bran/Törzburg) castles, were allowed to retain the full tithe in the fifteenth century (or at least claimed it, as the Saxon clergy did), but later most of them were forced to cede half of it to the castellans for the maintenance of the castle.49 Only Újfalu (Satu Nou/Neudorf), which seceded from the royal estates in 1404 and later became the property of the city of Brassó (1462), was able to preserve successfully the libera decima.50 In contrast, the priests of villages permanently owned by private landlords did not receive any tithe at all.51 This state of affairs was not changed by the fact that they all ended up in the same position in secular terms, becoming parts of the domain of Törcsvár pledged to the city of Brassó in 1498.52

Compared to the three large groups referred to above, the number of parishes where the parish priest received half the tithe is small but significant (23). These parishes were also located in the King’s Land. Apart from Buzd and the abovementioned villages around Brassó, the 13 parishes of the deanery of Selyk belonged here, the Saxon population of which must have arrived sometime around 1300 and which only belatedly became part of the King’s Land, being formerly a noble estate.53 Although between 1322 and 1504 they had continued a lawsuit against the bishop for the same privileges as the other free Saxons, they did not succeed in obtaining the full tithe. They were granted only half of it by acquiring after 1357, in addition to their original quarta, the archdeaconal share of tithe.54 Three villages from the deanery of Sebes55 took a different path. During the Turkish invasions from 1438 and 1442, their populations had shrunk dramatically, and the Transylvanian chapter had gotten its hands on their tithes. When these localities were repopulated by Saxons, the chapter returned only half of the tithes to the parish priests.56

There were only two settlements in which the priest received between half and a quarter of the tithe: in Küküllővár, he received three eighths of the tithe and in Gyalu he received a third.57 None of this was merely a matter of chance. Küküllővár was in royal hands for a long time and functioned as a sub-residence of the voivodes and vice-voivodes, and Gyalu was a sub-residence of bishops.58

The set of localities with a priestly quarta was the most numerous and also the most heterogeneous. Their most significant subgroup (114) was that of Saxon deaneries falling wholly or largely within the territory of the counties, i.e. Sajó, Teke, Székás, Négyfalu (Vierdörfer), Hidegvíz, Lower and Upper Küküllő, and Szentlászló. These deaneries, which had attained only a lower degree of ecclesiastical self-government, also secured a quarter of the tithe from their ecclesiastical and secular superiors.59 Here we have to take into account the aforementioned Saxon village of Petres too, which became a member of the deanery and of the seat of Beszterce after having been a noble estate at the beginning of the fourteenth century.60

The ecclesiastical landowners (the bishop and chapter of Transylvania and the abbot of Kolozsmonostor) also consistently gave the local parish priests the canonically prescribed quarta of their own estates (for the domains of Gyalu, Enyed, and Gyulafehérvár),61 except when the identity of the ecclesiastical landlord and the tithe-holder differed.62 The monarch also set an example by granting a quarter of the tithe to the parish priests of the royal cities, salt-mining towns, and domains.63 He or the later baronial owners were responsible for the priestly quarta of the Hungarian parishes of other domains (Bálványos [Unguraş], and Csicsó [Ciceu]) and estates (Bonchida [Bonţida], and Búza [Buza], as well as the villages of the Bánfi and Dezsőfi families in Upper Valley of the Maros River).64 Some families of the middle nobility (Apafi, Bethleni, Erdélyi de Somkerék) also granted the quarter of the tithe to the priests of their Catholic estates, others only to the parish priest of the central settlement of their estate.65 The remaining dozen or so villages could receive the quarta by occasional donations, for which some documents have survived.66

Contrary to what is widely stated in the secondary literature, the number of clerical benefices, which represented a fraction of a quarter of a tithe, was extremely small in Transylvania. It is even possible that some of them are in fact the result of a calculation error, because the contemporaries rounded off the numbers for the sake of simplicity, and thus these numbers do not accurately reflect the smaller ratios. Mostly, the centers of some manors or estates can be included here (with one sixth or one eighth as the priestly share),67 as well as the Hungarian villages of the Zsuki family, where the priests uniformly received half of the quarta (i.e. one eighth of the tithe).68 The one-sixteenth share, which is considered common in the literature, occurs marginally, only five times, and exclusively in the northern part of the province.69

Almost as numerous as the places with quarta were the tithing villages where the parish priest received nothing from the tithe (more than a third of the known cases). For the most part, these settlements were the Hungarian villages of the small and middle nobles from the western bank of the Kis-Szamos (Şomeşul Mic) River, the Mezőség (Câmpia Transilvaniei), and between the Maros and Kis-Küküllő (Târnava Mică) Rivers, as well as the settlements of the Aranyos Seat (with the exception of Felvinc [Unirea]).70 Their landlords may not have had sufficient lobbying power, or more likely, they would not have looked kindly on the local priest having an income that exceeded their own.

In the late Middle Ages, demographic changes often led to changes in the structure of the local tithe. Exceptions were those villages of the Szászváros Seat, which were formerly inhabited by Saxons and then by Romanians. These villages continued to pay tithes to the parish priest of Szászváros.71 Usually, when a Catholic community in the King’s Land died out and the village was left deserted72 or was repopulated by Romanians,73 the priest’s share ceased to exist, and the full tithe was collected by the secular Saxon authorities or (in the deanery of Sebes) the chapter of Transylvania. The same processes led to similar results on Church estates, too.74 On the other hand, if the Catholic population disappeared in one of the villages lying on the territory of nobles, the result was ambiguous, depending on the attitude of the landlord and the time of the change. In some cases, the tithe continued to be paid (without the priestly part, of course),75 but in most cases, the tithe was completely abolished.76

As a result of the Reformation and the secularization of Church estates and revenues, the medieval ecclesiastical framework was shaken and ecclesiastical immunity and privileges were weakened. Under these circumstances, many communities were not able to resist the increasing pressure of secular elites to expropriate more and more of the tithes, even if their populations remained adherents of Western denominations. From 1580 onwards, the parish priests in the King’s Land had to be content with three-quarters of the tithe, as the princely power expropriated a quarta for the benefit of the treasury, first for a fee, and then from 1612 on, without payment.77 Encouraged by this, the Diet passed a resolution in 1588 stating that if there were places in the counties where the libera decima existed, the priestly share should be reduced to quarta.78 The primary victims of this provision were the parishes of the deanery of Régen, which lost a significant part (even if not always three quarters) of their tithe income from the following year onwards.79 Even more vulnerable were the settlements in which the Saxons had been replaced by Hungarians, and the parish was therefore cut off from the protective framework of the Saxon deaneries.80 Some settlements fared even worse. Some Hungarian villages between the two Küküllő Rivers81 lost the priestly quarta altogether sometime between 1563 and 1589.82

Conclusions

In conclusion, parishes which had the same share of the tithe as their incomes were geographically concentrated. The settlements which retained all or half of the tithe for their priests covered roughly the large southern and small northeastern blocs of the King’s Land. These areas were surrounded to the north, respectively to the west, and south by a wide band of settlements in which the parish had a quarter of the tithe, with addition of the wider area around Kolozsvár and, presumably, the Fehér County section of the right bank of the Maros River. In most of the rest of Catholic villages, the local priest received none of the tithes.

Another important observation is that the level of tithe sharing correlated with secular and ecclesiastical privileges, the ethnicity of the population that paid the tithe, and the person of the landlord. A high level of self-government, the existence of a deanery, the presence of a Saxon population, and ecclesiastical or royal possession were all advantages for the local priest in terms of the degree of his share from the tithe, while Hungarian villages with serf populations, owned by the petty nobility, and in particular villages which had been deserted and then repopulated by Romanian serfs were the least likely for him to enjoy any revenue from this ecclesiastical tax.

Table 1. The priest’s share of tithe in the settlements where the value of the quarta is known83

Name of settlement

Page

E

A

q

T

P

p

Fehér County

Nagylak (Noşlac) and Káp­talan (Căptălan)

21

[60]

20

20

80

0

0

Szentkirály (Sâncrai)

(f. 1r)

21

(36)

40.50

(14)

13.50

13.50

54

0

0

Bagó (Băgău)

21

20

8

7

28

0

0

Lapád (Lopadea Nouă)

(f. 1r)

21

(36)

[40]

(12)

8

12

48

0

0

Háporton (Hopârta) and Ispánlaka (Şpălnaca)

(f. 1r)

21–22

8

(4)

[4]

(4)

[3]

(16)

12

(4)

0

(1/4)

0

Ózd (Ozd)

(f. 1r)

22

30

10

(10)

40

0

0

Herepe (Herepea)

(f. 1r)

22

36

12

12

48

0

0

Csekelaka (Cecălaca)

22

16

6

6

24

2

1/12

Lőrincréve (Leorinţ)

23

4

2

[2]

[8]

q

1/4

Forró (Fărău)

(f. 1v)

23

36

12

12

48

0

0

Szentbenedek (Sânbenedic)

(f. 1v)

23

36

12

12

48

0

0

Hunyad County

Rápolt (Rapoltu Mare)

24

40

10

12.[50]

50

0

0

Arany (Uroi)

26

6

3

2.25

9

0

0

Küküllő County

Hosszúaszó (Valea Lungă)

(f. 2v)

27

50

25

(25)

100

25

1/4

Nagyekemező (Târnava) and Kisekemező (Târnăvioara)

27

120

60

60

240

60

1/4

Bogács (Băgaciu)

27

124

62

62

248

62

1/4

Nagykőrös (Curciu)

27

72

36

36

144

36

1/4

Felsőbajom (Bazna)

27

100

50

50

200

50

1/4

Szénaverős (Senereuş)

(f. 2v)

28

64

32

32

128

32

1/4

Szentiván (Sântioana)

29

32

16

16

64

16

1/4

Balázstelke (Blăjel)

(f. 2v)

30

44

22

22

88

22

1/4

Ádámos (Adămuş)

(f. 3r)

30

18

9

(9)

36

9

1/4

Dombó (Dâmbău)

(f. 3r)

30–31

16

8

8

32

8

1/4

Fületelke (Filitelnic)

(f. 3r)

31

28

14

14

56

14

1/4

Domáld (Viişoara)

(f. 3r)

31

16

8

8

32

8

1/4

Királyfalva (Crăieşti)

(f. 3r)

31

32

16

(16)

64

16

1/4

Ernye (Ernea)

(f. 3v)

32

14

7

(7)

28

7

1/4

Mikeszásza (Micăsasa)

(f. 3v)

32

(13.33)

12

(6.67)

8*

6.67

26.67

6.67

1/4

Désfalva (Deaj)

(f. 4r)

33

14

7

7

28

7

1/4

Sárd (Şoard)

34

2

1

1

4

1

1/4

Gálfalva (Găneşti)

(f. 4r)

34

(20)

30

10

10

40

(10)

0

(1/4)

0

Kissáros (Delenii)

34

36

12

12

48

0

0

Péterfalva (Petrisat) and Pettend (deserted)

35

28

8

9

36

0

0

Kóródszentmárton (Coroi­sân­martin)

(f. 4r)

35

(10)

15

5

(5*)

20

(5)

0

(1/4)

0

Besenyő (Valea Izvoarelor)

(f. 4r)

35

(16)

24

8

8

32

(8)

0

(1/4)

0

Harangláb (Hărănglab)

(f. 4v)

35

(24)

36

12

12

48

(12)

0

(1/4)

0

Csapó (Cipău) and Kisfalud (deserted)

35

18

6

6

24

0

0

Kisszőllős (Seleuş)

(f. 4v)

36

(–)

36

18

(18*)

18

72

18

1/4

Kiskend (Chendu Mic), Nagykend (Chendu Mare) and Balavásár (Bălăuşeri)

36

10

5

5

20

5

1/4

Szancsal (Sâncel)

36

16

8

6

24

0

0

Doboka County

Bádok (Bădeşti)

37

6

2

2

8

0

0

Magyarújfalu (Vultureni)

37

16

8

8

32

8

1/4

Csomafája (Ciumăfaia)

37

6

2

2

8

0

0

Báboc (Băbuţiu)

38

6

2

2

8

0

0

Fodorháza (Fodora)

38

6

2

2

8

0

0

Vajdaháza (Voivodeni)

39

25

8.33

8.33

33.33

0

0

Hídalmás (Hida)

39

20

4

6

24

0

0

Récsekeresztúr (Recea-Cris­tur)

39

13

4.34

4.34

17.34

0

0

Páncélcseh (Panticeu)

40

12

4

4

16

0

0

Köblös (Cubleşu Someşan)

40

18

5.50

6

24

0.50

0

Derzse (Dârja)

40

13

4.33

4.33

17.33

0

0

Felsőtők (Tiocu de Sus)

40

20

6

6.50

26

0

0

Alsótők (Tiocu de Jos)

40

6

2

2

8

0

0

Kecsetszilvás (Pruneni)

40

14

4.66

4.67

18.66

0

0

Szava (Sava)

42

16

5

5.25

21

0

0

Cegőtelke (Ţigău)

42

16

8

8

32

8

1/4

Nagydevecser (Diviciorii Mari), Kisdevecser (Divi­ciorii Mici)

42–43

26

13

13

52

13

1/4

Veresegyház (Strugureni)

43

10

5

5

20

5

1/4

Szentandrás (Şieu-Sfântu) and Kajla (Caila)

44

18

9

9

36

9

1/4

Kisbudak (Buduş)

45

15

–

5

20

5

1/4

Várhely (Orheiu Bistriţei)

45

6

–

1.50

6

0

0

Móric (Moruţ)

46

40

20

20

80

20

1/4

Inner Szolnok County

Dés (Dej)

47

12

6

6

24

6

1/4

Szentmargita (Sânmărghita)

47

20

10

7.50

30

0

0

Somkerék (Şintereag)

48

6

–

[2]

8

q

1/4

Dengeleg (Livada)

49

33

11

11

44

0

0

Iklódszentivány (deserted)

50

6

2

2

8

0

0

Zápróc (Băbdiu)

50

3

1

1

4

0

0

Kozárvár (Cuzdrioara)

51

15

5

5*

20

0

0

Péntek (Pintic)

51

12

4

4

16

0

0

Girolt (Ghirolt)

52

17

5.75

6.08

24.32

1.57

1/16

Kolozs County

Kolozsvár (Cluj-Napoca)

53

500

250

250

1000

250

1/4

Gyeke (Geaca)

53

12

4

4

16

0

0

Novaj (Năoiu)

53

3

1

1

4

0

0

Légen (Legii)

54

8

4

3

12

0

0

Zutor (Sutoru)

54

6

2

2.67

10.67

2.67

1/4

Vásárhely (Dumbrava), Inak­telke (Inucu), Sztána (Stana) and Kiskapus (Căpuşu Mic)

55

18

6

6

24

0

0

Tamásfalva (Tămaşa)

55

13

5

4.50

18

0

0

Mócs (Mociu)

55

10

3.34

3.34

13.34

0

0

Palatka (Pălatca)

56

25

9

8.50

34

0

0

Fejérd (Feiurdeni)

57

40

20

20

80

20

1/4

Méhes (Miheşu de Câmpie)

58

16

6

5.50

22

0

0

Középlak (Cuzăplac)

59

20

–

5

20

0

0

Fűzkút (Sălcuţa)

59

16

8

8

32

8

1/4

Vajola (Uila)

60

12

6

6

24

6

1/4

Torda County

Szind (Sănduleşti)

65

22

7.34

7.34

29.34

0

0

Boldoc (Bolduţ)

65

8.50

2.48

2.75

11

0

0

Egerbegy (Viişoara)

65

18.50

6.68

6.68

25.18

0

0

Gerend (Luncani) and
Szent­márton (Gligoreşti)

66

26

8.68

8.68

34.68

0

0

Csanád (Pădureni)

67

12

4

4

16

0

0

Jára (Iara de Mureş)

69

12

4

4

16

0

0

Archival Sources

Archivio Apostolico Vaticano, Vatican City (AAV)

Registra Lateranensia (RegLat)

Registra Supplicationum (RegSuppl)

Registra Vaticana (RegVat)

Arhivele Naţionale ale României, Serviciul Judeţean Cluj [Romanian National Archives, Cluj County Branch], Cluj-Napoca (SJAN-CJ)

Fond familial Kornis (Fond 378) [Archive of the Kornis Family, in the Archives of the Transylvanian National Museum] (F 378)

Arhivele Naţionale ale României, Serviciul Judeţean Covasna [Romanian National Archives, Covasna County Branch], Sfântu Gheorghe (SJAN-CV)

Fond familial Gyulay [Archive of the Gyulay Family, in the Collection of the Székely National Muzeum] (F 65, 2-4)

Arhivele Naţionale ale României, Serviciul Judeţean Sibiu [Romanian National Archives, Sibiu County Branch], Sibiu (SJAN-SB)

Episcopia Bisericii Evanghelice C. A. din Transilvania (Fond 3) [Archive of the Saxon Lutheran Bishopric of Transylvania] (F 3)

Magistratul oraşului şi scanului Sibiu (Fond 1) [Archive of Saxon Nation and of City of Sibiu] (F 1)

Biblioteca Naţională a României, Biblioteca Batthyaneum [Romanian National Library, Batthyaneum Library], Alba Iulia (Batthyaneum)

Arhiva Capitlului din Transilvania [Private Archives of the Chapter of Transylvania] (ACT)

Erdélyi Református Egyházkerület Levéltára, Kolozsvári Gyűjtőlevéltár [Archives of the Reformed Church of Transylvania, Cluj Branch] (EREK, KvGylt)

Széki Egyházmegye Levéltára [Archives of the Deanery of Sic] (B 2)

Magyar Nemzeti Levéltár Országos Levéltára [National Archives of Hungary], Budapest (MNL OL)

Diplomatikai Fényképgyűjtemény [Diplomatic Photograph Collection] (DF)

Diplomatikai Levéltár [Diplomatic Archive] (DL)

Erdélyi Fejedelmi Kancellária [Chancellery of the Transylvanian Princes] (F 1)

Gyulafehérvári Káptalan Országos Levéltára [Public Archives of the Chapter of Transylvania], Cista comitatuum (F 4)

Hunyad megyei gyűjtemény [Collection from Hunyad County] (R 391)

Sombory család levéltára [Archive of the Sombory Family] (P 1912)

Udvarhelyi Református Egyházmegye Levéltára [Archives of the Reformed Deanery of Odorheiu Secuiesc] (UhEmLt)

Héjjasfalvi egyházközség iratai [Documents of the Parish of Vânători] (B 10)

Mohai egyházközség iratai [Documents of the Parish of Grânari] (B 15)

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KmJkv = Jakó, Zsigmond, ed. A kolozsmonostori konvent jegyzőkönyvei (1289–1556) [Record books of the Kolozsmonostor Convent]. 2 vols. Publicationes Archivi Hungariae Nationalis 2: Fontes 17. Budapest: Akadémiai Kiadó, 1990.

KvOkl = Jakab, Elek, ed. Oklevéltár Kolozsvár történetéhez [Document archive for the fistory of Kolozsvár]. 2 vols. Buda–Budapest, 1870–1888.

MonAntHung = Lukács, Ladislaus, ed. Monumenta Antiquae Hungariae. 4 vols. Monumenta Historica Socetatis Iesu 101, 112, 121, 131. Romae: Institutum Historicum Societatis Iesu, 1969–1987.

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SzOkl = Szabó, Károly, Lajos Szádeczky, and Samu Barabás, eds. Székely oklevéltár [Document archive of the Székelys]. 8 vols. Kolozsvár–Budapest: Székely Tör­té­nel­mi Pályadíj-alap–MTA, 1872–1934.

Ub = Zimmermann, Franz, Carl Werner, Georg Müller, Gustav Gündisch, Herta Gündisch, Konrad G. Gündisch, and Gernot Nussbächer, eds. Urkundenbuch zur Geschichte der Deutschen in Siebenbürgen. 7 vols. Hermannstadt–Bucharest: Verein für Sieben­bürgische Landeskunde–Editura Academiei, 1892–1991.

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ZsOkl = Mályusz, Elemér, Iván Borsa, Norbert C. Tóth, Tibor Neumann, Bálint Lakatos, and Gábor Mikó, eds. Zsigmondkori oklevéltár [Document archive from the era of King Sigismund]. 16 vols. Publicationes Archivi Hungariae Nationalis 2: Fontes 1, 3–4, 22, 25, 27, 32, 37, 39, 41, 43, 49, 52, 55, 59, 61. Budapest: Akadémiai Kiadó–MNL OL, 1951–2022.

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  1. 1 Körting, “Zehnt”; Jagersma, “Tithes in OT”; Eissfeldt et al., “Zehnten,” 1878–79. Cf. Gen. 14:20, 28:22; Lev. 27:30–33; Num. 18:21.24–28; Deut. 12:6.11.17, 14:22–29, 26:12–26; 2 Chron. 31:5–12; Neh. 10:38–40, 12:44, 13:5.12–13; Mal. 3:8–10; Tob. 1:6–8; Matt. 23:23; Luke 11:42.

  2. 2 Zimmermann, “Zehnt,” 495–98; Puza, “Zehnt,” 499–500; Constable, Monastic Tithes, 13–56; Eissfeldt et al., “Zehnten,” 1879; Vischer, “Zehntforderung”; Boyd, Tithes and Parishes, 26–46; Lepointe, “Dîme,” 1231–32; Viard, Dîme, 17–148.

  3. 3 Zimmermann, “Zehnt,” 499–500; Puza, “Zehnt,” 500–501; Constable, Monastic Tithes, 16–19, 34–35; Eissfeldt et al., “Zehnten,” 1879; Lepointe, “Dîme,” 1232–33; Viard, Dîme, 101–5, 150–60.

  4. 4 Dodds, Peasants and Production; Le Roy Ladurie and Goy, Tithe and Agrarian History.

  5. 5 CIC, vol. 1, 784 (C. 16, q. 1, c. 66); ibid., vol. 2, 563–65, 568 (X 3.30, c. 22, 26, 33). Cf. Constable, Monastic Tithes, 10–13, 36, 43–44, 47–52; Vischer, “Zehntforderung,” 210–11, 214–16; Lepointe, “Dîme,” 1236–39; Viard, Dîme, 89–91.

  6. 6 CIC, vol. 1, 417–18 (C. 1, q. 3, c. 13–14), 801 (C. 16, q. 7, c. 3.); ibid., vol. 2, 561–62 (X 3.30, c. 15, 17, 19.), 1048–50 (VI 3.13, c. 2), 1062–64 (VI 3.23, c. 13). Cf. Zimmermann, “Zehnt,” 497, 498; Puza, “Zehnt,” 500; Eissfeldt et al., “Zehnten,” 1879; Lepointe, “Dîme,” 1234–35; Viard, Dîme, 205–17.

  7. 7 Puza, “Zehnt,” 501; Fügedi, “Wirtschaft des Erzbistums,” 258.

  8. 8 Constable, Monastic Tithes, 57–197; Lepointe, “Dîme,” 1234; Kuujo, “Zehentwesen in Hamburg–Bremen,” 218–41; Plöchl, “Zehentwesen in Niederösterreich,” 49–54, 89–92; Viard, Dîme, 173–75, 181–204; Loy, “Zehnt im Bistum Lübeck,” 5–9, 52–54.

  9. 9 Zimmermann, “Zehnt,” 497; Puza, “Zehnt,” 500; Constable, Monastic Tithes, 27–28, 35–42, 49–56; Eissfeldt et al., “Zehnten,” 1879; Boyd, Tithes and Parishes, 75–79; Lepointe, “Dîme,” 1234; Viard, Dîme, 112–24, 175–80.

  10. 10 Zimmermann, “Zehnt,” 497–98; Lindner, “Zehntwesen in Salzburg”; Boyd, Tithes and Parishes, 79–153, 233–34; Kuujo, “Zehentwesen in Hamburg–Bremen,” 168–91; Plöchl, “Zehentwesen in Niederösterreich,” 55–56, 84–89.

  11. 11 Hegyi, “Egyházigazgatási határok,” 9–17; Dudziak, Dziesięcina papieska, 56–100, 180–203; Hennig, Päpstliche Zehnten, 7–26; Samaran and Mollat, Fiscalité pontificale, 12–22; Fejérpataky, “Prolegomena,” xx–xxii, xxv–xlvii.

  12. 12 Cf. F. Romhányi et al., “Regionális különbségek”; F. Romhányi, “Plébániák és adóporták,” 916–27; F. Romhányi,“Középkori magyar plébániák,” 348–51; Engel, “Probleme,” 57–63; Fügedi, “Történeti demográfia,” 25–28; Györffy, “Päpstliche Zehntlisten”; Györffy, Einwohnerzahl, 29–30.

  13. 13 Edited in RatColl, 41–409.

  14. 14 Cf. Chaline and Saudraix-Vajda, “Introduction”; Hegyi, “Transylvanie”; Roth, Kleine Geschichte.

  15. 15 The names of the Transylvanian localities are used in their Hungarian form, as these are the names that appear in the sources. However, in the first occurrence of the place name, the current, official (Romanian) form, and, where appropriate, the historical German variants of the name are given, too, in brackets.

  16. 16 In the discussion below, I ignore this part of the diocese due to the lack of sources and limit my investigation to Transylvania in the secular sense.

  17. 17 Hegyi, “Esperességek,” 359–63; Hegyi, “Relation of Sălaj,” 62–65; Kristó, Early Transylvania, 79–84; Kristó, Vármegyék kialakulása, 426–27, 478, 482–512. Cf. RelColl 49–50, 54, 70, 76, 84, 89, 91–144, 327, 330, 355–56.

  18. 18 F. Romhányi, “Plébániák és adóporták,” 918 (see note 27, too); Solymosi, “Tized,” 66; Rácz, “Magisztrátus-jog,” 151, 159–60; Györffy, “Päpstliche Zehntlisten,” 64; Csizmadia, “Rechtliche Ent­wicklung,” 230–31; Mályusz, “Tizedkizsákmányolás,” 322.

  19. 19 Solymosi, “Kirchliche Mortuarium,” 52–54; Holub, Zala, vol. 1, 383–404.

  20. 20 1298: Ub, vol. 1, 210; 1334: ibid., vol. 1, 465; 1357: ibid., vol. 2, 146–47; 1367: DocRomHist C, vol. 13: 332; 1380: Ub, vol. 2, 528; 1394: ibid., vol. 3, 75; 1428: ibid., vol. 4, 327; 1439: AAV, RegSuppl, 357: 26r and RegLat, 367: 142v; 1451: DL 39579; 1505: DL 65194; 1509: DF 253542; 1510: SJAN-SB, F 1, 1-U5-1226; 1517: DL 82485; 1518: DF 277755; 1526: DF 253624; 1536: EgyhtEml, vol. 3, 75; 1538: ibid., vol. 3, 313; 1541: Batthyaneum, ACT, 5-41; 1550: MNL OL, P 1912, 36-1; 1552: SJAN-CJ, F 378, 1-64; 1554: Batthyaneum, ACT, 5-98.

  21. 21 Hegyi, “Tized intézményrendszere,” 189–94, 197–200.

  22. 22 Ibid., 195–97; Hegyi, “Plébánia fogalma,” 16–19; Müller, Landkapitel, 122–83; Teutsch, Zehntrecht, 18–47.

  23. 23 Cf. Hegyi, “Tized intézményrendszere,” 185–87.

  24. 24 1322: Ub, vol. 1, 368; 1398: DF 257485; 1414: ZsOkl, vol. 4, no. 1632; 1444: KmJkv, 1: no. 522; 1521: KvOkl, vol. 1, 353; 1541: Batthyaneum, ACT, 5-41. Cf. Hegyi, “Tized intézményrendszere,” 194–95; Hegyi, “Plébánia fogalma,” 14.

  25. 25 Edited in Jakó, Dézsma, 20–75.

  26. 26 EOE, vol. 2, 64–65, 74–75, 82, 97; ErdKirKv, vol. 1/1, no. 79, 138; ibid., vol. ½, no. 24, 72; ibid., vol. 1/3, no. 363, 1137. Cf. Vekov, “Hiteleshely és szekularizáció,” 135–37.

  27. 27 SJAN-SB, F 3, 1-173. (I am grateful to Emőke Gálfi for drawing my attention to the document.) The dating of the source is justified by the fact that it mentions the widow of Nikola Cherepovich (who died in June 1562) and notes that Gergely Apafi (who died before September 1563) was still paying the rent for the tithe in person.

  28. 28 FH: Bece (Beţa), Feldiód (Stremţ); KÜ: Boldogfalva (Sântămărie); DO: Kisbudak (Buduş/Budesdorf), Várhely (Orheiu Bistriţei/Burghalle); BSZ: Somkerék (Şintereag); KL: Gyalu (Gilău), Gesztrágy (Straja), Középlak (Cuzăplac). Cf. Jakó, Dézsma, 23, 29, 45, 48, 53, 58, 59. For ease of identification, I have also included the county code before each group of settlements (BSZ = Belső-Szolnok, DO = Doboka, FH = Fehér, HD = Hunyad, KL = Kolozs, KÜ = Küküllő, TD = Torda).

  29. 29 FH: Lapád (Lopadea Nouă); HD: Rápolt (Rapoltu Mare); KÜ: Küküllővár (Cetatea de Baltă/Kokelburg); DO: Kisesküllő (Aşchileu Mic), Mikó (disappeared), Hídalmás (Hida), Esztény (Stoiana), Olnok (Bârlea); BSZ: Monostorszeg (Mănăşturel); TD: Décse (Decea), Szengyel (Sângeru de Pădure). Cf. Jakó, Dézsma, 21, 24, 29, 38–41, 49, 67, 68.

  30. 30 In the register of 1589, the term quarta is always used in the absolute sense, i.e. it refers to a quarter of the total tithe. By contrast, the adjectives integra or medium referred to the portion rented (E+A).

  31. 31 Prodan, Iobăgia, vol. 1, 255–56, vol. 2, 568, 630; Jakó, Gyalui urbárium, 52, 53, 57, 69, 97, 100, 109, 127, 143, etc.; Ursuţiu, Gurghiu, 39, 63, 66, 76, 82–83, 103, etc. – MonAntHung, vol. 2: 99, 101, 249; 4: 284, 290; EREK, KvGylt, B 2, Prot. 1/1, p. 1–14, 519–664; Buzogány et al., Küküllői Egyházmegye, passim; Gudor, Gyulafehérvári Egyházmegye, 369–425.

  32. 32 Hegyi, “Did Romanians,” 694–97, 707–10.

  33. 33 Hegyi, “Terrae Christianorum.”

  34. 34 Hegyi, “Románok tizedfizetése,” 25–29, 31–32, 35–36.

  35. 35 Cf. Gündisch, “Türkenabwehr.”

  36. 36 E.g. Drassó (Draşov/Troschen), Birbó (Ghirbom/Birnbaum), Alamor (Alămor/Mildenburg). Cf. Hegyi, “Románok tizedfizetése,” 26–27, 30–31, 35.

  37. 37 FH: Abrudbánya (Abrud/Grossschlatten); TD: Offenbánya (Baia de Arieş/Offenberg); BSZ: Radna (Rodna/Rodenau).

  38. 38 Hosdát (Hăşdat), Rákosd (Răcăştia), Lozsád (Jeledinţi). For their Catholic parishes, see: 1503: DL 46764; 1524: DL 47548; 1533: MNL OL, R 391, 1-8-4.

  39. 39 1462: SzOkl, vol. 1,192; 1466: ibid., vol. 8, 115; 1496: Barabás, “Tizedlajstromok,” 427; 1503: SzOkl, vol. 3, 155; 1522: ibid., vol. 2, 10; 1535: SJAN-CV, F 65, 2-4-1(6).

  40. 40 The villages of Kalotaszeg district are listed in the tithe register of 1589, but since they were previously part of the bishopric of Várad, the distribution of the tithe was different from that of Transylvania, and therefore the share of the priests cannot be calculated in the same way as described above (cf. Jakó, Dézsma, 61–64). On the tithe-paying settlements from the valley of the Maros River: 1477: Barabás, “Tizedlajstro­mok,” 417; 1496: ibid., 421, 428–29; 1504: DF 277689, fol. 2v–3r, 7v–8r.

  41. 41 The fractional numbers appear due to the fact that the territory of some settlements was divided between two ecclesiastical units, and this might result in differences regarding the distribution of the tithe. The settlements in question are Balázsfalva (Blaj), Medgyes (Mediaş/Medwisch), Segesvár (Sighişoara/Schässburg), Kecset (Aluniş), Gyeke (Geaca), Gyerővásárhely (Dumbrava), Sztána (Stana), Almás (Almaşu), Kispetri (Petrinzel), and Bábony (Băbiu).

  42. 42 Hegyi, “Tized intézményrendszere,” 195–96; Hegyi, “Plébánia fogalma,” 19; Müller, Landkapitel, 123–127.

  43. 43 Ub, vol. 1, 34 = CDTrans, vol. 1, no. 132.

  44. 44 1283: Ub, vol. 1, 145 = CDTrans, vol. 1, no. 399; 1289: Ub, vol. 1, 160 = CDTrans, vol. 1, no. 445; 1303: Ub, vol. 1, 226–27 = CDTrans, vol. 2, no. 21; 1330: Ub, vol. 1, 421–26, 433–36 = CDTrans, vol. 2, nos. 618, 676–77; [c. 1330]: Ub, vol. 1, 440 = CDTrans, vol. 2, no. 688.

  45. 45 1543: Batthyaneum, ACT, 5-59 (Igen [Ighiu/Krapundorf]); 1560: MNL OL, F 4, Alba, 1-5-13 (Kisenyed [Sângătin/Klein-Enyed]); 1614: MNL OL, F 1, 10, p. 154 (Fogaras [Făgăraş]. I am grateful to Tamás Fejér for sending me the transcription of the source.); 1622: Kemény, “Bruchstück,” 394 (Kövesd [Coveş/Käbisch]); 1627, 1637: UhEmLt, 2/15 (Moha [Grânari/Muckendorf]); 1640: ibid., B 10, 10 (Héjjasfalva [Vânători/Diewaldsdorf]); 1642: Bod, Historia ecclesiastica, vol. 1, 280 (Bürkös [Bârghiş/Bürgisch]);1648: Kemény, “Bruchstück,” 396–97 (Réten [Retiş/Rittersdorf]). Cf. Müller, Landkapitel, 125–26, 174–75.

  46. 46 Jakó, Dézsma, 71–72; Müller, Landkapitel, 165–67.

  47. 47 Vajdej (Vaidei), Dál (Deal), Kerpenyes (Cărpiniş), Poján (Poiana Sibiului), Ród (Rod/Rodt), Guraró (Gura Râului/Auendorf).

  48. 48 Müller, “Rechtslage der Rumänen,” 110, 154, 156, 167–68.

  49. 49 Apáca (Apaţa), Krizba (Crizbav), Csernátfalu (Cernatu), perhaps even Bácsfalu (Baciu) and Türkös (Turcheş). See: 1456: Ub, vol. 5, 527, 529–30; 1506: RechnKrsdt, vol. 1, 104; 1544: Brandsch, “Dorfschulen,” 503; 1554: RechnKrsdt, vol. 3, 469. Cf. Barcsay, “Bárcai magyarság,” 1310, 1337. – Previous attempts by the castellans to expropriate a part of the tithe: 1351: CDTrans, vol. 3, nos. 618–620; 1352: ibid., vol. 3, no. 660; 1354: ibid., vol. 3, no. 772; 1355: ibid., vol. 3, no. 800; 1361: ibid., vol. 4, no. 95–96. – On the history of land tenure: 1366: DocRomHist C, vol. 13, 101–2; 1444: DL 29252; 1460: Ub, vol. 6, 85; 1476: Ub, vol. 7, 115–16; 1484: Ub, vol. 7, 369–70.

  50. 50 1404: Ub, vol. 3, 333; 1456: Ub, vol. 5, 528; 1462: Ub, vol. 6, 127–29, 142–43; 1471: Ub, vol. 6, 489, 493–94. Cf. Müller, Landkapitel, 137–38; Barcsay, “Bárcai magyarság,” 1341.

  51. 51 Hosszúfalu (Satulung), Tatrang (Tărlungeni), Zajzon (Zizin), Pürkerec (Purcăreni). See: 1367: DocRomHist C, vol. 13, 299–301; 1373: ibid., vol. 14, 398–401; 1544: Brandsch, “Dorfschulen,” 503–4. Cf. Müller, Landkapitel, 137–38; Barcsay, “Bárcai magyarság,” 1335, 1337–38.

  52. 52 1500: DF 247090; 1548–1555: RechnKrsdt, vol. 3, 469. Cf. W. Kovács, “Participation of the Counties,” 685–86.

  53. 53 In 1305, some of the villages here (Baromlak [Valea Viilor/Wurmloch], Ivánfalva [Ighişu Nou/Eibesdorf]) were still in the hands of private landlords (Ub, vol. 1, 229–30 = CDTrans, vol. 2, no. 44), and in 1322 the area is described as a “novella plantatio” (Ub, vol. 1, 369).

  54. 54 1322: Ub, vol. 1, 369 = CDTrans, vol. 2, no. 444; 1323: Ub, vol. 1, 376 = CDTrans, vol. 2, no. 465; 1357: Ub, vol. 2, 146–47 = CDTrans, vol. 3, no. 959; 1364: AAV, RegVat, 251: 347r-v; 1369: Ub, vol. 2, 323 = CDTrans, 4: no. 732; 1414: Ub, vol. 3, 591–92, 596–97, 600–1; 1415: Ub, vol. 3, 644–51, 662–63; 1416: ZsOkl, vol. 5, no. 1618; 1454: KmJkv, vol. 1, no. 1147; 1504: Teutsch, Zehntrecht, 132–36, DF 246275, SJAN-SB, F 1, 1-U5-1882. Cf. Müller, Landkapitel, 168–70; Teutsch, Zehntrecht, 35–38.

  55. 55 Szászpián (Pianu de Jos/Deutschpien) with Oláhpián (Pianu de Sus/Walachischpien), Lámkerék (Lancrăm/Langendorf), Rehó (Răhău/Reichenau).

  56. 56 1494: DF 245206; 1477: Barabás, “Tizedlajstromok,” 418; 1496: ibid., 420–21, 433; 1504: DF 277689, fol. 2v, 10v; 1513: DF 277731/b, fol. 1v. Cf. Müller, Landkapitel, 160–61.

  57. 57 1589: Jakó, Dézsma, 29 (Küküllővár); 1640: Jakó, Gyalui urbáriumok, 57; 1666: ibid., 148; 1679: ibid., 205 (Gyalu).

  58. 58 The bishops also provided generously for the local priests of their estates beyond Meszes Mountain: they received half the tithe in Zilah (Zalău) and a third in Tasnád (Tăşnad) (Diaconescu, Izvoare, 37, 117). In contrast, the cathedral city of Gyulafehérvár had only a parish with quarta (1754: Gudor, Gyulafehérvári Egyházmegye, 399).

  59. 59 Hegyi, “Plébánia fogalma,” 19; Müller, Landkapitel, 131–32, 134, 145, 151–52, 178–80; Teutsch, Zehntrecht, 32–34.

  60. 60 Cf. [1314?]: Ub, vol. 1, 300 = CDTrans, vol. 2, no. 218.

  61. 61 1414: ZsOkl, vol. 4, no. 1632; 1444: KmJkv, vol. 1, no. 522; 1580: MonAntHung, vol. 2, 99, 101 (estates of the Kolozsmonostor Convent); 1589: Jakó, Dézsma, 52–53 (bishop’s domain of Gyalu). On the chapter estates, the priests’ share of tithes can be more or less deduced from the quartas of the provost and the canons (1477: Barabás, “Tizedlajstromok,” 417–18).

  62. 62 E.g. FH: Kutyfalva (Cuci), Koppánd (Copand), and Nagylak (Noşlac) (cf. Jakó, Dézsma, 21–23). They were the estates of the chapter, but their tithe belonged to the bishop.

  63. 63 Royal city: Kolozsvár (Cluj/Klausenburg). Salt-mining towns: Dés (Dej), Désakna (Ocna Dejului), Szék (Sic), Kolozsakna (Cojocna). Torda (Turda) seems to be an exception in this respect, as the priest here received little or no tithe (cf. Hegyi, “Plébánia fogalma,” 15–16). Royal castles with their domains: Déva (Deva), Küküllővár, Görgény (Gurghiu).

  64. 64 On estates and their landlords see Pál Engel’s digital map of medieval Hungary (available for download here: https://abtk.hu/hirek/1713-megujult-engel-pal-adatbazisa-a-kozepkori-magyarorszag-digitalis-atlasza).

  65. 65 FH: Tövis (Teiuş); TD: Felvinc (Unirea), Gyéres (Câmpia Turzii), Vajdaszentivány (Voivodeni); KL: Szamosfalva (Someşeni), Fejérd (Feiurdeni); DO: Drág (Dragu), Doboka (Dăbâca).

  66. 66 1398: DF 257485 (Szengyel [Sângeru de Pădure, TD]); 1541: Batthyaneum, ACT, 5-41 (Solymos [Şoimuş, HD]).

  67. 67 One sixth: Apanagyfalu (Nuşeni, BSZ). One eighth: Léta (Liteni, KL); Magyaregregy (Românaşi, DO).

  68. 68 KL: Alsózsuk (Jucu de Jos), Felsőzsuk (Jucu de Sus), Kályán (Căianu).

  69. 69 DO: Kisesküllő (Aşchileu Mic), Esztény (Stoiana),Szentegyed (Sântejude); BSZ: Girolt (Ghirolt), Monostorszeg (Mănăşturel). In contrast, it appears that beyond the Meszes the p = 1/16 share was much more common (Diaconescu, Izvoare, 13, 15, 17, 19, 106, 189, 191).

  70. 70 If it were more documentable, we would probably find it in most parts of the Székely Land, too.

  71. 71 Szarkad (Sereca), Berény (Beriu), Kasztó (Căstău), Perkász (Pricaz). Cf. Müller, Landkapitel, 133; Müller, “Rechtslage der Rumänen,” 195, 235.

  72. 72 Szászárkos (near Balomir), Giesshübel (near Szászsebes [Sebeş/Mühlbach]), Fehéregyháza (near Szerdahely [Miercurea Sibiului/Reussmarkt]), Underten (between Alcina [Alţina/Alzen] and Kürpöd [Chirpăr/Kirchberg]). Cf. Jakó, Dézsma, 25; Müller, Landkapitel, 161.

  73. 73 Alkenyér (Şibot/Unterbrotsdorf), Felkenyér (Vinerea/Oberbrotsdorf), Cikendál (Ţichindeal/Ziegenthal), Glimboka (Glâmboaca/Hühnerbach), Hóföld (Fofeldea/Hochfeld), Illenbák (Ilimbav/Eulen­bach), Szászaház (Săsăuş/Sachsenhausen), Kálbor (Calbor/Kaltbrunnen), Boholc (Boholţ/Buchholz), Sona (Şona/Schönau). Cf. Müller, “Rechtslage der Rumänen,” 192, 212, 217, 224–25, 234–37, 240.

  74. 74 FH: Poklos (Pâclişa), Sóspatak (Şeuşa), Táté (Totoi). Cf. Hegyi, “Románok tizedfizetése,” 28, 30–31; Hegyi, “Did Romanians,” 710 (note 73).

  75. 75 E.g. FH: Veresegyháza (Roşia de Secaş/Rothkirch), Meggykerék (Meşcreac); DO: Sajósebes (Ruştior/Nieder­schebesch), Solymos (Şoimuş/Almesch), Radla (Ragla/Radelsdorf), Alsóbalázsfalva (Blăjenii de Jos/Unterblasendorf), Fata (near Nagydemeter [Dumitra/Mettersdorf]). Cf. Jakó, Dézsma, 20, 23, 45, 47.

  76. 76 FH: Váralja (Orlat/Winsberg), Feketevíz (Săcel/Schwarzwasser), Alamor, Hosszútelke (Doştat/Thorstadt), Drassó, Dálya, Kútfalva, Birbó, Henningfalva (Henig). Cf. Hegyi, “Románok tizedfizetése,” 26–28, 30, 34.

  77. 77 1580: EOE, vol. 3, 149–51; Teutsch, Zehntrecht, 164–68; 1612: EOE, vol. 6, 254–55; Teutsch, Zehntrecht, 191–95. Cf. ibid., 55–67.

  78. 78 EOE, vol. 3, 244.

  79. 79 Teutsch, Zehntrecht, 185–86, 188–89. Cf. Müller, Landkapitel, 166.

  80. 80 E.g. 1664: Gudor, Gyulafehérvári Egyházmegye, 378 (Krakkó [Cricău/Krakau], FH), 406–7 (Alvinc [Vinţu de Jos/Winz], FH).

  81. 81 KÜ: Gálfalva (Găneşti), Pócsfalva (Păucişoara), Kissáros (Delenii), Kóródszentmárton (Coroi­sânmartin), Besenyő (Valea Izvoarelor), Mikefalva (Mica), Kápolna (Căpâlna de Sus), Héderfája (Idrifaia), Harangláb (Hărănglab), and probably also Szőkefalva (Seuca).

  82. 82 These findings are based on a comparison of the registers from 1563 and 1589 (SJAN-SB, F 3, 1-173, fol. 4r-v; Jakó, Dézsma, 34, 35, cf. Table 1, too).

  83. 83 Source of data: SJAN-SB, F 3, 1–173 (the values in brackets), Jakó, Dézsma, 20–71 (page numbers refer to this). Abbreviations: E = episcopal share of tithe, A= archdeaconal share of tithe, q = quarta, T = the whole tithe, P = priest’s share of tithe (for all these, the amount of the corresponding wage is indicated in florins), p = the rate of the priestly tithe. The first three are taken directly from the source, the others are calculated using the formulae: T = 4q; P = T – (E+A); p = P/T.

 

* The research on which this article is based was done with the financial support of the HTMKNP FAEK MTA National Program and of the K 145924 funding schemes of the National Research, Development and Innovation Fund of Hungary.

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