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# {3-382.} Compensation for Landowners

The 1848 laws on the abolition of serfdom evoked 'the shield of national honour' in giving solemn guarantees that former landowners would be compensated. In fact, the landowner was to be compensated not for the land that was transferred to peasants, but for the loss of the latter's services. The loss in services that were previously statutory included 9.7 million days of manual labour, 5 million days of labour with four oxen, and 2.5 million days with two oxen, with an aggregate value of several million forints. As one of the newspapers of the time observed, 'the landlord's wealth in Transylvania was founded on the abundance of statute labour.'[21]21. Kolozsvári Magyar Futár, 17 July 1856. The patent of 1854 (in emulation of the 1848 laws) set the capitalized amount needed for final compensation of the landowners at twenty times the annual value of the serfs' services. Taking into account the quality of lands and its potential net yield (calculated on the basis of a temporary land tax, imposed after 1849, and much criticized for its inaccuracy), the urbarial decree took for reference three levels of annual net profit per cadastral acre (hold) — 1 forint and 10 kreuzers, 1 forint, and 50 kreuzers; on this basis, compensation for one cadastral acre ranged from 10 to 22 forints. (Manual socage or ploughing services were valued at 10–22 kreuzers per day.) Of course, there was a lag of several years before the patent were issued, and the landowners, who had suffered property damage in the turmoil of 1848–49 and lost most feudal services, were financially strapped. In these circumstances, they were scarcely able to develop a more modern, capital-intensive mode of agriculture. Middle-class intellectuals took some malicious pleasure at the sight of once-proud noblewomen scrounging around for loans, or of the odd reputable landlord putting his hand to the plough to sustain output. It was a sign of the times that many landlords linked their hopes for equitable compensation to a new war of national liberation and the victory of the 'revolutionary party,' while, on the other {3-383.} side of the social divide, Hungarian peasants also looked to Kossuth for more favourable terms. These factors also had to be taken into account by the government.

To alleviate the distress of landowners, the régime instituted a moratorium with respect to loans taken up before June 1848: The indebted landowners would have to continue paying interest, but they were not obligated to make any payments on principal until 1861. Then, in early 1851, the state began to disburse advances to former landowners, drawn against its share of the compensation scheme. Payments amounting to 390,317 forints were made in the first year. By the summer of 1854, when the patent were issued, 5 million forints had been disbursed, and by 1861, 30,376,203 forints. These handouts looked impressive but achieved little. The initial advances, in the range of 500–1000 forints, represented the price or two or three pairs of good oxen, and could cover only the most pressing needs for wage-labour. The economical (and rather impecunious) Zsigmond Kemény could not cover the cost of even a short visit to Budapest out of one such advance. Full and final compensation could not be provided without accurate data on the size and yield of land, and the cadastral surveys proceeded at such a slow pace that this stage was reached only in the mid-1860s. And even such tardy and small advances were denied to those who had emigrated or who had been found guilty of offenses committed in 1848–49. There was, apart from delays and political discrimination, another problem: Almost all the disbursement of both principal and accumulated interest was in the form of bonds, and their market value was 20–45 percent below the nominal value at issue, or some 10 percent below the market value of similar bonds issued in Hungary. Moreover, the sixth advance had to be 'voluntarily' lent back to the state for the so-called national loan; it was, in effect, taxed back. The poorer landlords had little choice but to sell their devalued bonds; the wealthier ones tried to use them as security for other loans, which was difficult to do in Transylvania. In any event, {3-384.} much of the compensation was used to repay debts incurred since 1848. The official most knowledgable in compensation matters calculated that out of the 22 million forints of compensation awarded by the courts up to the spring of 1861, close to 10 million forints were paid not to the former landowners, but directly to their creditors.

To be sure, the landowners were not completely defenceless. Complaints about the more blatant shortcomings of the process could be lodged with the governor. Jósika offered some support in Vienna, and, on occasion, even Bach intervened, for the interior minister was disposed to make small concessions in order to improve relations between the Hungarian landowners and the government: 'Although the Hungarians are guilty of grave offenses, the time must come for compromise and reconciliation ... we must win over the Hungarians as well, for we cannot accomplish much just with the Transylvanian Saxons and Romanians.'[22]22. H. Friedjung, Österreich von 1848 bis 1860 I (Stuttgart-Berlin, 19O8), p. 416. The central government was not wholly lacking in sympathy for the Transylvanian landlords who had suffered property losses in 1848–49. But the Hungarian middle landowners, who were regarded as a rebellious class, were subjected to political discrimination until 1856, when the emperor ruled that those who had been pardoned were eligible for compensation.

Another form of compensation, granted to the landlords by the patent of 15 September 1858, covered the loss of parochial tithes. In the past, tithes had been due to the Lutheran, Roman Catholic, and Calvinist churches, occasionally to the two Romanian churches, and on the basis of ancient commitments, to some of the landowners. The landowners, for their part, had attempted to levy the tithe on every serf, irrespective of his religious affiliation, on the basis of a complicated lease system. Saxon pastors were particularly dependent on their tithe, which was abolished in 1848, then reinstated in 1850; that led to problems with the Orthodox Romanians of the Szászföld, who, in an age of religious equality, could not be expected to provide for the Lutheran priesthood as {3-385.} well. In preparation for the abolition of tithing, advance compensation was provided to the Saxon priesthood in the amount of 200,000 forints in 1850; the Catholic clergy received 14,000 forints in 1852, and the Calvinist priesthood 73,000 forints in 1853. Eventually, 263 Saxon Lutheran congregations got 5.2 million forints in compensation, while the other churches and the individual landowners received their share only after the fall of the Bach régime. The compensation due to individual landowners for the loss of tithes was calculated in such a way that they only got half of the compensation's capital amount.

The complex administration of compensation was directed from Nagyszeben by the national committee for the redemption of land, under supervision of the interior minister; it was assisted by local agencies in the work of determining eligibility for compensation. The national committee set to this task in November 1854, and finished it in 1858. From then, and until its dissolution in 1861 (when its remaining functions were taken over by a special committee of the provincial government), it managed the fund for the redemption of land.

Following the original plan for compensation, the government was making payments to the former landlords even as late as the beginning of the 20th century, in the form of bonds allocated by lottery. In the final analysis, the burden of compensation, which totalled some 70 million forints, was borne by the taxpayers. When the bills were drafted in 1848, it was expected that the revenue from state property, notably the salt mines in Transylvania, would suffice to cover the cost of compensating landlords. Instead, the absolutist régime resorted to taxation, and the patent of 1 January 1856 confirmed the imposition of a surcharge on direct and, if necessary, indirect taxes. In fact, the nationwide land-redemption surtax had been in effect since 1853; it amounted to 18 kreuzers for every forint of direct tax in 1856, to 37 kreuzers in 1859, and to even more in the 1860s.

{3-386.} As things turned out, the landowners were never fully compensated, because of lack of funds, and because a fully satisfactory valuation of their loss of services was beyond reach. As one expert put it, 'in practice, the services and obligations were determined by the landlord or by his omnipotent bailiff. As a result of the redemption of land, all the rights accruing from the landlord's status were nullified, the peasants' obligations, taxes, and labour services were lost, other dues were cancelled without any compensation, and the landlord received modest compensation for only a small part of what he had lost.'[23]23. J. Grimm, Das Urbarialwesen in Siebenbürgen (Vienna, 1863), p. 155. To be sure, he was also divested of the feudal lord's obligation to assure local executive functions, which included the heavy expense of maintaining a superintendent, policeman, and a court.

The landlord no longer had an assured source of manpower, and now he had to contend with a tripling of wage-rates. The loss of his fiscal immunity was compensated by the doubling of grain prices between 1850 and 1855, and by an increase in the cost of land and leases. The new circumstances forced him to manage his farm more efficiently, if only because memories of feudal oppression and of the 1848–49 conflicts made the peasants reluctant to perform wage-labour. The primitive financial system could not provide sufficient capital for urgently-needed investment, and the available credit carried high interest rates. The rapidity of the change, and an inability to adapt — due to personal or material factors — played a major role in the swift decline of the middle landowners' class in Transylvania. The years of transition witnessed the decay of big and medium estates, in some cases to a level more primitive than that of the peasant smallholders.