Category Archives: economics

From From Peoples into Nations: A History of Eastern Europe, by John Connelly (Princeton University Press, 2020), Kindle pp. 257-259:

Rather than getting involved in risky commercial activity and taking on the role of a middle class as their liberalism demanded, for the most part Hungary’s nobles turned to Jews, many from Galicia, who within a generation formed the backbone of the entrepreneurial and professional classes. In the process, they acculturated. If in 1880, 58.5 percent of Hungary’s Jews claimed Magyar as their mother tongue, by 1910 that number had risen to 77.8 percent. Enjoying full legal equality, young Jews advanced through Hungarian educational and professional institutions and then excelled in urban pursuits in commerce, finance, and industry. They also took an important place in the agricultural economy, as landowning farmers, but also as tenants and salaried employees of large landowners, who valued Jews as efficient and rational producers.

By World War I, Hungary’s elite seemed to be opening up to Jews as well. In 1914, one-fifth of the large landholders were Jews, and over one-fifth of the deputies in parliament were of Jewish parentage. Tens of thousands of upwardly mobile Jews also excelled in patriotism, and as teachers, journalists, and professionals went into Slovak and Romanian areas spreading Magyar culture. Numerically, Magyarized Jews made the culturally Magyar population just over half of the Hungarian kingdom. At the same time, the lower class Magyar Christian population, unable to adapt as quickly to the challenges of modernization, looked on the advance of Jews with skepticism and jealousy, becoming further alienated from the gentry elite.

In contrast to the Czech national elite, Hungary’s gentry thus failed to provide perspectives for social and economic advancement for the land’s village dwellers. Instead, it endeavored to use state resources to slowly Magyarize ethnic others. Because of the property limitations on the electorate, and multiple forms of administrative chicanery, the spaces for opposition politics in Hungary, whether social or national, were severely constrained. A Hungarian Social Democratic party emerged but not a significant movement for Christian Socialism or agrarianism. The elite’s suppression and neglect of the interests and rights of the local ethnicity virtually ensured a full outburst of radical nationalism when economic circumstances reached a nadir in the early 1930s.

The relations between elite and common folk were similar in Romania, but the extremes were greater. In 1912, 82 percent of Romanians still lived in the countryside. Some 2,000 families had owned 38 percent of arable land in 1864, and that percentage worsened: in 1905, some 5,000 families controlled 50 percent of all arable land. The share of medium-sized properties was negligible (10 percent), while 40 percent of all lands consisted of tiny plots between five and ten hectares. By 1905, there was probably no country in Europe where the disparity was so great between large- and smallholdings: a few thousand families held as much land as more than a million. Like its Hungarian counterpart, the elite was quasi-aristocratic, and through control of the local administrative apparatus, they became a law unto themselves, with little concern for the welfare of peasants.

As in Hungary, professional bureaucrats of gentry (boyar) background dominated the state apparatus and acted as nationalist modernizers, focusing on development in a few large cities, but stopping short at the countryside, where grain and cereal were grown on huge estates, and asymmetrical social relations remained untouched. Also similar to Hungary was the low level of overall development, with industrial output not exceeding 15 percent of national income before World War I.

Jews likewise had particular roles in the economy and society in Romania, but as we have seen, Romania’s elite stalled on granting them citizenship rights—in defiance of the stipulations of the Congress of Berlin. Jews could not own land and therefore lived in cities, becoming artisans, traders, administrators, bankers, peddlers, tailors, and craftspeople. In 1900, less than 5 percent of Romania’s population was Jewish, but it was almost entirely urban, constituting 50 percent of the inhabitants of Iaşi and one-third those of Bucharest. Jews were employed in the advanced sectors of economy, as in Hungary, and though enjoying far less official support, they still managed to develop the economy.

The ethnic Romanian elite preferred city life and as a rule left the administration of their huge estates to middlemen, usually Greek, Armenian, Jewish, or German, who pressed as much from the peasants as possible in seasonal contracts. In Moldavia, the percentage of Jewish leaseholders approached 40 percent, and therefore in the eyes of peasants, Jews became identified as the outstretched hand of an exploitative system that extended from the remote and alien cities into their own rural homelands.

The peasants either had no land or too little to make ends meet and tended to sharecrop on the large estates. As their numbers increased, so did their misery, and many fell victim to poor diets and pellagra (a disease caused by a chronic lack of niacin, often among people heavily dependent on maize for sustenance, reported cases of which rose between 1888 and 1906 from 10,626 to more than 100,000). A particular index of peasant poverty was the high mortality rate among children. Meanwhile, the government did little to protect peasants from exploitation by landowners and their middlemen, against whom the peasants had almost no bargaining power. In tough times, desperate need for money forced peasants to sell grain to speculators at below-market value. The loans on offer were extortionate, and state taxes could amount to 80 percent of the peasants’ annual production.