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# {3-511.} The Modernization of Mining and Industry

The growth of industry in Transylvania bore virtually all the characteristics of capitalistic development in backward regions. Twenty years past the revolution, there was still no railway system or significant source of credit, while agricultural production and trade, which are the foundations of capitalistic development, showed little vitality. Industrial progress depended to a growing extent on economic stimulus and demand from Hungary and the monarchy. The common customs area created in 1850 shaped commercial relations and thus set the parameters for industrialization. The integration of the empire's markets sharpened the asymmetry between urban and industrials centres and the periphery, revealed the limits of organic development, and underscored the need for both native entrepreneurship and imported capital and experts. The development of Transylvanian industry thus required external capital, but it was domestic entrepreneurs who through their pioneering efforts created conditions propitious for foreign investment. Old-fashioned enterprises, inherited from the earlier period, together with newer ventures, provided the minimal industrial-mining base which, with the state's industrial policies, would eventually arouse the interest of foreign entrepreneurs and investors.

Leaving aside a few early experiments in the textile sector, the transformation Transylvania's industry began in two long-established branches, mining and metallurgy, and in food processing.

Transylvania's long-exploited natural resource, salt, was mined in five different places. In the mid-nineteenth century, half of the monarchy's salt came from the province. In 1850, 662,930 Viennese quintals (66,293 metric tons) were mined, and in 1858, nearly 1.2 million quintals, which constituted about half of the salt yielded in Máramaros. For a long time, salt was the major and most reliable source of income in the region, contributing on average 5 million forints a year to the treasury. The measures taken between {3-512.} 1867 and 1870 to shield salt deposits at Marosújvár from the infiltration of river waters were successful. With the opening of a new pit, and with the aid, first, of steam power, then, beginning in the 1880s, of electrical power, production was stabilized at around 600,000 quintals. The output of the less mechanized Parajd, Vizakna, and Torda mines, which operated intermittently, amounted to 100,000 quintals in 1900; the best quality of salt was found at Désakna mine, which grew in importance to yield 160,000 quintals. Eventually the mines' output was raised to meet growing demand. Private interests became involved in the industry at the turn of the century, and considerable investments were made in huge salt mills and hydraulic presses for cattle-salt briquettes, which further stimulated production. Transylvania's first major plant for the chemical processing of salt residue was established at Marosújvár.

Another of the province's traditional industries, gold-mining, gradually declined in importance, although even after 1848 Transylvania provided over 60 percent of the empire's gold; its annual output had a value of about 1.3 million forints.

Europe's richest gold deposits were in and around Transylvania's Érc Mountains. The area, which covered almost 800 square kilometres of the contiguous counties of Hunyad and Alsó-Fehér, was dotted with hundreds of mines, although the majority of them were scarcely operating, for over the centuries the richest deposits had been exhausted. The owners of mines, or of shares in mines, included landowners, burghers, and ordinary peasants, as well as the state. The abolition of socage in 1848 reduced the supply of labour, and for a long time the shortage could not be remedied. As a result, many mines were shut down in and after 1850, and many others were kept in operation only at the minimum level required by the mining license. Some owners leased their mines to private contractors and peasant tenants, who took their share of the ore, and thus gold became an alternative currency, ending up in the pocket of merchants and doctors. The disadvantage of this simple, local {3-513.} leasing system was that it did not facilitate technical improvement. The prospect for such development was greater in cases where the descendants of old mining families, merchants, or prosperous tenants formed associations and pooled their resources, or where some more energetic landowner decided to modernize his mine. At the end of the absolutist period, a company was created by Imre Mikó, Farkas Bethlen, Sámuel Kemény, and Károly Apor for the exploitation of their mine at Zdraholc, called 'John the Evangelist.' A similar company managed the mine at Vulkoj after 1855. The most important of the mines owned by landlords was the '12 Apostles at Ruda'; in 1858, the Tholdalagi, Teleki, and Bruckenthal families formed an association for its management, and by 1864 the mine's four hundred workers were extracting 46.3 kilograms of gold.

In 1867, the state-owned mines at Nagyág and Verespatak accounted for close to 30 percent of the gold produced in the Érc Mountains. In the process of developing the mines, several smaller pits were closed, although the discovery in 1861, at Verespatak, of a vein that yielded 89 kilos indicated that investment in further exploration might be warranted. A few mines and smelters, such as Offenbánya, were reopened after the Compromise simply to provide employment. Although some of these were soon shut again, there were other unprofitable enterprises, mainly smelters, that the state chose to keep in operation for political and social reasons throughout this period. Up to 1890, the only major operation in the Verespatak district was the state mine at Orla, which after its extension in 1871 employed 368 miners; the other 172 mining companies in the district had an aggregate workforce of 3,000. The most famous mine of the period was the 'royal and private mining company at Nagyága,' in which shares were held by the treasury, the royal family, and private individuals. This mine became profitable again when in 1874 it was extended to over 160 tunnels on fifteen levels, and it produced other metallic ore apart from gold. In 1888, it employed 882 workers and produced revenues of 210,632 forints, {3-514.} nearly 50 percent higher than the pre-1867 level, and it continued to produce on roughly the same scale. In contrast to the state mines, private mining was barely profitable.

In the 1880s, foreign investors became more interested in Transylvania's natural resources, and especially in gold. Stimulus came from the government, which in 1885 suspended its requirement that all the gold extracted be sold to the state, and from the discovery of a rich lode in 1892. Although the mountains of Transylvania were not witness to the kind of gold rush that had been unleashed in California or Australia, they were awakened from their torpor by a wave of new investments. Private mines began to be modernized. German, English, Belgian, and French banks, including the Deutsche Bank and the Crédit Lyonnais, backed various production enterprises, some of which lacked expert management and went bankrupt. The biggest German investor, Harcort AG of Gotha, acquired mines in Hunyad County; in 1889–90, their 1100 workers produced 688 kg of gold, which was a third of the country's annual production and two-thirds of the total output of state and private mines that came under the authority of the directorate of mines at Zalatna. At the turn of the century, the '12 Apostles at Rudna' mine was also purchased by Harcort AG and became a flourishing enterprise. In 1889, the company built Europe's biggest ore-processing plant, which made profitable the mining of low-grade ore; it brought into service a cable-railway, a power station, and electric locomotives. At one time, the company employed more security guards than miners, the better to protect the vast amounts of raw gold; by 1889, it produced 1,390 kg of gold, which was close to half of all the gold produced in Hungary. The mines at Tekerő and Hondol were owned by English firms, and those at Sztanizsa and Upper Lunkoj by German ones. In the 1880s, the 'Peter-Paul' gold mine at Vulkoj was managed by László Lukács, who became the leading shareholder (and later prime minister); it subsequently came under French management. Most foreign {3-515.} companies acted as leaseholders, and chance played a great part in their success. On a single day in 1884, the French-managed mine at Bucsum yielded a profit of 7,000 forints for the owners, the Lukács family. Another mine at Bucsum, owned by a miners' association, also showed good results: some 107,000 forints were invested between 1867 and 1890, but the mine returned an annual net profit of 100,000 forints. The boom in mining at the end of the 1880s brought a doubling of wages.

The first major domestic investment came in the form of the First Transylvanian Gold-mining Company, founded in 1889 by merchants in Vienna and Pest; the firm was acquired after the turn of the century by J.F. Zeibig, the president of the German-financed Banking Consortium at Nagyszeben. Romanian notables also began to set up smaller mining enterprises.

At the turn of the century, gold-mining in Transylvania was modernized thanks to foreign investment and the active involvement of the state. (The mines in nearby Nagybánya, which held lead and metallic by-products as well as gold, were also modernized by the state.) The inflow of capital investment accelerated the decline the old, smaller enterprises, thus altering profoundly the life of the region. English and German technical staff, many of whom had gained experience in the gold mines of America and Australia, settled in and introduced modern machines, although, wherever it was feasible, water power continued to be used along with the new steam-engines. Wooden ore-crushers gradually gave way to new technology; the first iron crushers, from California, were installed in 1885, the first ball and tube mill in 1887, the first ore-dust condenser in 1889. The László-type amalgam mill, introduced in 1884 and used for over a decade, assured an 20–40 percent increase in gold yield; an even more efficient process, cyanide leaching, was introduced only at Nagybánya, after the turn of the century. Modern explosives came into use, as did heavy boring equipment in the 1870s, and more reliable drills as well as electric water-pumps after {3-516.} 1900. By then, the search for new ore deposits was conducted on a professional and systematic basis.

The directorate of mines was located in Transylvania's old gold-mining centre, Zalatna. The smelter at Zlatna had been destroyed in 1848–49, rebuilt in 1851, and modernized in 1877. It processed 10,000–22,000 tons of ore each year, and its output included such byproducts as sulphuric acid, iron sulphate, and carbon bisulphite. After the closure of the mint at Gyulafehérvár, the gold and silver produced by the smelter was shipped to Körmöcbánya for coinage. (The production of silver, of which there was relatively little in Transylvania, had to be subsidized from 1894 onwards to compensate for a fall in European market prices and the decline in demand induced by the currency reform in 1892.) Zalatna was the principal centre where small producers — who continued to operate in the shadow of large enterprises — would exchange their gold. Although traditional 'wash' gold faded in importance, it still accounted for a quarter of the gold output even after 1900. Along the river from Abrudbánya to Topánfalva, ore brought on horseback, in wheelbarrows, and in carts was fed into wooden crushers. Alternatively, gold was laboriously panned from the sandy waters of the Aranyos and Abrud rivers, and sifted on grooved boards or tables covered with white cloth. The 'flour' (gold dust) was then brought in small bags to the treasury's exchange office. The independent miner, who also worked part-time as a farmer, earned little more than a day-labourer's wage; but the activity brought him a little ready cash and kept alive his hopes of sudden wealth and escape from the oppressiveness of routine labour.

Although there was an occasional surge in gold and silver production, the dominant pattern, lasting for decades, was one of stagnation. This pattern was even more striking in the case of that once-prized, non-ferrous metal, copper. Its production, in small quantities but good quality, was confined to a plant at Csíkszentdomokos-Balánbánya. This private firm was acquired in 1858 by Brassó's {3-517.} Mine and Foundry Company, a recently established and dynamic enterprise, which raised the annual output of copper to 500 tons. In 1873, it passed into the hands of a company owned by aristocrats and burghers, and, fifteen years later, its 141 workers still only managed to produce 645 tons. A fall in European prices for metals later led to the mine's closure. The mine was reopened in 1904 with the aid of French capital, went bankrupt again in 1910, and only resumed operations thanks to wartime demand for copper. The fortunes of the smaller copper-mine at Déva were similarly uneven.

Lead was obtained mainly as a byproduct of gold and silver production. Lead ore itself was only produced near Óradna, at a mine of which the principal shareholder, with 75 percent, was the state. Less valuable minerals were also processed here; after crushing, the ore was dressed by friction rollers, roasted, and then smelted. At the end of the 1880s, the mine had 282 workers and produced 1445 tons of lead.

World trends in prices did not encourage the production of non-ferrous metals. However, at the end of the century, production was stimulated by the growing chemical industry, which developed new techniques for extracting and making use of most of the elements contained in minerals. New opportunities materialized for profitable production. Non-ferrous metals, and particularly their compounds, began to gain importance.

In the early stages of industrialization and economic modernization, the coal industry usually flourished, but, in Transylvania, circumstances complicated its development. As the railways spread their tentacles eastward from Vienna, coal from Czech and Austrian mines flooded into Hungary. At first, the rich coalfields of Transylvania attracted little interest, and the low level of local demand failed to spur production. Meanwhile, over the border from Transylvania at Krassó, the French-owned Austrian State Railway Company (STEG) began in 1855 to develop the black coal beds and iron deposits, and to build smelters. The resulting industrial complex, {3-518.} Hungary's biggest, was a deterrent to other mining and industrial ventures in the vicinity. By 1860, the enterprise produced 100,000 tons of coal a year, and by 1875 it accounted for a third of Hungary's coal output, a level that it sustained for some time. To be sure, the mining of the excellent coking coal was not free of risk. Gas and coal-dust explosions decimated the workforce, which included miners from Styria, until conditions were made more secure by repeated reconstruction. The population of the mining community of Anina grew from 2,050 in 1854 to 10,000 in 1877; by then, the mine had twenty-one steam engines, with a capacity of 2,180 horsepower.

The Zsil Valley was known for its rich deposits of excellent brown coal, and, in the Reform Era, plans were drawn up for a horse-drawn railway in the district by the brothers Hoffmann and Maderspach, producers of iron at Ruszkabánya. Further surveying was conducted after 1854 by the West Transylvanian Mining Association; the surveyed lands were acquired in 1857 by the Brassó Mining and Smelter Company. The state had also staked a claim in the area, but to less promising parcels of land. In 1870, shortly after coal production got under way, a railway-line was built between Petrozsény and Piski. While Vilmos Zsigmondy was conducting a comprehensive survey, the state treasury committed the considerable sum of 4 million forints to start production in the state-owned coalfields; in 1872, the output reached 95,755 tons. Marketing proved to be problem, because of competition, and because of the low quality of the coal; in the end, the state had no recourse but to compel the railways to buy the output of its mines. After the economic slump of 1873, the mines were leased to the rival Mining and Smelter Company of Brassó. The new owners brought in additional production machinery, laid tracks to the Petrozsény railway station, and built a housing estate for skilled workers. In 1888, the 1300 miners produced 192,736 tons of coal, which constituted a tenth of the national output. In 1895, Viennese {3-519.} and Pest banks, backed the purchase of these assets by the Salgótarján Coal-Mine Company, which thereby became Hungary's the biggest coal producer. Within a decade, the Zsil Valley ranked as one of the country's largest sources of brown coal, second only to Salgótarján. When leases expired in the early 1900s, the state took over the management of some mines; it pressed ahead with the extraction of the 5,800–7,000 calorie coal, which was found in seams as thick as 35 metres, by opening three new pits in 1912.

The Hungarian syndicate that had built the Petrozsény–Lupény railway line leased pits previously worked by tiny enterprises employing 10–12 people; then, in 1891, it merged with a large French firm to found the Urikány–Zsil Valley Coal-Mining Company, with a capital of 4 million forints. This initiative led to the rapid development of the western Zsil Valley. The company developed an innovative technology for coking brown coal, and in 1899 it built a plant at Lupény to process coal residue into coke. The Lupény firm was also at the forefront of coal-mining technology; it pioneered the use of coal-cutters, boring implements, cable cars, and electricity. The first Ganz electric power station was built at Petrozsény in 1894, and the second, a larger one, at Lupény in 1897. In 1902, the first Hungarian turbo-generator plant was installed at Lupény, by which time an electrically-powered mine railway was operating on the site. In 1914, the country's most up-to-date shaft equipment was found there and at Anina. The firm diversified; the coking plant was expanded in 1906, and by 1914 it had become a versatile chemical factory. Pit locomotives were manufactured in one of the company's modern branch plants. At the turn of the century, the mine employed 1,033 workers and produced 290,000 tons of coal.

When demand declined after 1896, Hungary's four major coal mining companies formed themselves into a cartel. This measure, along with rising exports, led to a big jump in the domestic price of coal over the next few years and raised the operating costs of factories {3-520.} that relied on coal. The Zsil basin, which had produced 2,000 tons of coal in 1868, reached an output of 2.5 million tons in 1913, and this despite competition from the recently opened coal mines at Tatabánya (Central Hungary).

Mining of the less extensive coal deposits at Egeres, on the Nagyvárad–Kolozsvár line, was developed once again by a mixture of Hungarian and foreign capital investment. Here, the typical Hungarian pattern of industrial development was personified by the Sigmond brothers, who had begun their career in the food-industry at Kolozsvár in the early 1850s. Eventually, they put their money in the lignite mines at Egeres (as well as in iron mines at Hunyad), which were brought up to date in 1880 and produced coal for the railway and neighbouring factories. The next stage came in 1892, when a Belgian–Hungarian company was formed to exploit the region's brown coal, as well as the small deposits of black coal at Keresztényfalva, where the mines were owned by Saxons. This was the typical outcome of independent initiatives by local industrial entrepreneurs. The Egeres mine was absorbed by major capital interests; the Keresztényfalva mine, on the other had, only supplied a single local enterprise, and no amount of effort could develop it into a more successful operation.

The involvement of the landowners in mining is illustrated by the production of lignite in the woodlands of the Székelyföld. As early as the 1850s, Domokos Teleki had called for a mining survey of the entire territory of Transylvania, and he later promoted this project in association with his fellow aristocrats, who, like him, were shareholders in the Transylvanian Trade and Credit Bank of Marosvásárhely. The survey led to the opening of a coal mine at Köpec in 1872. The following year, the bank established an enterprise, later known as the Woodland Mining Company, with a capital of half a million forints. It remained throughout this period the sole major mining operation in the Székelyföld, with an annual production rising from 24,000 tons in 1877 to some 50,000 tons after {3-521.} the turn of the century. The Székely region, though rich in wood, had little industry, and thus could not absorb the output. Initially, some of the lignite was exported to Romania; finally, the Hungarian Railway Company was persuaded to contract for half of the output (falling to a quarter after 1900), although the lignite had to be mixed with coal from the Zsil Valley before it could be used in the steam engines. By the 1880s, the mine was equipped with telephones and its own narrow-gauge railway, and a cable-railway was installed in 1913. The miners' productivity reached the average prevailing in the Zsil Valley, although their wages were lower.

Two lines of industrial development are apparent in the story of the Zsil and Köpec coal mines. The landed aristocracy, helped by banks, made an early start at mining, but it was hampered in its efforts by nature, the lack of capital, and competition from distant mines. The enterprises, even if they did not go bankrupt, had little potential for growth. The village of Köpec did not grow into an industrial community; its population slowly increased, but no more than 100–200 people worked in the mines, and even they continued to lead a double life. By contrast, in the Zsil Valley, the landowners who opened the first mines, were soon squeezed out. The magnates lent their names to the boards of major companies, which drew on foreign capital to exploit the basin's natural riches and expand production. Unlike mining sites in the Székelyföld, this bucolic, sparsely-settled region underwent rapid change. Petrozsény, once a small Romanian village, by 1910 had grown into a town of over 12,000 inhabitants, the majority of them Hungarian. Between 1890 and 1910, Petrilla's population grew threefold, and that of Vulkán and Lupény, tenfold. The newly-settled skilled workers were Czech, Polish, and German, as well as Hungarian, and even Italians arrived in quest of secure employment. By 1914, some 14,000 people worked in the Zsil Valley's mines. The employers built sizeable housing settlements for the miners, and established a health service as well as company stores selling food and other necessities; in {3-522.} cooperation with the state, they built and maintained schools. The companies thereby ensured that workers would stay put and remain committed to the enterprise. Thus coal mining not only served and promoted the country's industrialization; it also generated a working class that was geographically concentrated, possessed of skills, and conscious of its status. At the time, this class fully accepted the prevailing liberal order, but it also embodied the potential for major social change.

Iron smelters were scattered according to the ore's location and applied diverse techniques to produce iron for a variety of uses. In the Torockó district, the so-called furnaces for iron lumps operated much as in medieval times, using charcoal to melt the ore into porous blocks, which were then turned by water-driven forges into ploughshares, hoops, and other widely-used products. The systematic production of agricultural implements from this type of iron began at Szászsebes in the 1850s. Apart from private foundries, there were also sizeable ironworks owned by the state; these had some mechanical equipment — if only water-powered bellows — and produced molten crude iron. Both private and state foundries were often shut down for longer periods. Transylvania's production of crude iron amounted in 1850 to around 4,000 tons, which according to contemporary estimates met 20 percent of the local demand; in addition, some 150 tons of refined iron were produced. In the wake of the 1848–49 conflicts, some ironworks had to be repaired or even rebuilt, notably those at Füle and Szentkeresztbánya, where the installations had been wrecked in 1849. By now, eight ironworks were in operation, along with some small plants of negligible capacity.

The modernization of iron smelting began just over the border from Transylvania. In 1855, the newly-founded Austrian State Railway Company (the STEG, which had a start-up capital of 77 million forints provided by Austrian and French banks) acquired the state's assets, including coal and iron mines, in Krassó County, {3-523.} as well as the comparatively up-to-date smelters at Resica and Bogsán. The company, which owned Czech, Moravian, and Hungarian railways, became an economic giant; it mined coal for its plants and locomotives and produced all the cast iron and steel used in the construction and operation of its railways. In the first eleven years of operation, the STEG, staffed initially by French managers and engineers, built at Resica eleven smelters, rolling mills, machine factories, and coal coking works; meanwhile, it continued work on the Szeged–Temesvár railway and extended the lines to Resica. The output at Resica was increased threefold between 1855 and 1867, when 1,260 workers produced 17,000 tons of crude iron with the aid of 32 steam-powered machines; for ten years, this was Hungary's sole producer of steel. The first use of coke in place of charcoal for smelting took place at Anina, in 1862; Hungary's first Bessemer converter was assembled at Resica, in 1868, and production of Martin-steel began eight years later. By introducing the latest methods for making steel, the STEG gained a ten-year lead over its domestic competitors.

In Transylvania itself, such progress came much later, and development was interrupted by economic slowdowns in 1857 and 1863–66. The main source of development capital was the Brassó Mine and Foundry Company (Kronstädter Bergbau und Hütten Aktien Verein), owned by Austrian and Czech aristocrats and by the Rothschilds, and one of its subsidiaries. The company had been established with the purpose of exploiting the iron ore near Brassó. Beginning in 1856, it acquired several old smelters, such as those at Füle and Szentkeresztbánya, which were repaired and modernized. The company owned sites near Resica as well, and with its 13,000 hectares of real estate it counted among the country's major landowners. Hoping that it could play a key role in the forthcoming construction of railways in Transylvania, the company drew up plans for expansion. Thus the Brassó Company became a smaller-scale replica of the Austrian State Railway Company. Although it {3-524.} acquired scattered ironworks and coal mines and sought out new ore deposits, its efforts brought little reward, for it encountered serious problems in marketing and shipping its products. At a meeting, held in Szászváros at the beginning of 1858, representatives of the iron and mining industry blamed their troubles on the shortage of capital and of qualified manpower as well as on the absence of railways. By then, the Brassó Company was considering the construction of a railway to the Bukovina to help market its products. The company's initial successes led László Kőváry to exult that it 'would soon grow into one of our largest enterprises.'[11]11. Kolozsvári Közlöny, 10 February 1859, quoted in L. Vajda, 'A szent-keresztbányai vasgyár első évtizedei,' Tanulmányok a romániai együttlakó nemzetiségek történetéből és testvéri együttműködéséről a román nemzettel I. A magyar nemzetiség, ed. by L. Bányai (Bucharest, 1976), p. 331. However, the great hopes of confident, self-interested businessmen, which were shared by a more selflessly enthusiastic intelligentsia, remained unfulfilled. To be sure, the price of iron was high in Transylvania, there was a demand for iron products in the Romanian principalities, and thus the market could have absorbed a higher output, but in the absence of railways these advantages could not be fructified. And these 'favourable circumstances' prevailed only because the competition was equally constrained by the lack of railways.

In 1858, the production of crude iron in Transylvania reached some 8,500 tons, three quarters of which came from the state's ironworks at Govasdia and Rójahida. Within the limits set by demand and competition, the enterprises were able to secure a share of the market by trimming profit margins, and by improving their production techniques.

The Brassó Mining and Smelter Company launched a modernization program, introducing steam engines at seven smelters, and by 1867, production capacity had risen to 8,000 tons. However, Transylvania's iron industry suffered serious setbacks in the 1860s. The brooks that fed water to smelters and mines ran dry in the drought that lasted from 1860 to 1863, and the demand for manufactured goods suffered from the recession in 1863. Production of crude iron fell to the 1858 level, then began to climb again until, in {3-525.} 1866, the industry found itself in a 'crisis of overproduction.' One victim of this crisis was the plant at Füle, which had just begun to turn a profit; it had employed over 400 skilled workers (including 241 Germans, 95 Hungarians, 33 Slovaks, 22 Ruthenians, 14 Czechs, 11 Romanians, and 7 Poles) as well as wood-cutters and carters. The economy began to recover in 1867, mainly thanks to the long-awaited, railway construction boom, although initially the benefits to Transylvania were only marginal. When the railway reached Hunyad County, the Brassó Company hired Belgian engineers and paid triple wages to Belgian skilled workers in order to complete two modern blast-furnaces and a machine shop at Kalán. However, the new plant — designed to use brown as well as black coal — did not meet expectations; for a time, they were used as shaft furnaces for secondary smelting, but eventually the earlier technology had to be retrieved. In 1881, as the economy recovered from another recession, the Brassó Company built a rolling mill and put into operation several steam-hammers. At the time, with a pig-iron output of 21,000 tons, it ranked as the country's fourth-largest iron producer. Its output was converted into refined cast iron at Szentkeresztbánya, Nándorhegy and Ruszkabánya. In 1880, the company's smelters were manned by 853 workers, and its labour force, including those who worked in the coal mines, totalled 2,327. More setbacks were to come: technical problems with the blast-furnaces, the explosion of a boiler in 1885, a fall in the price of iron. First Szentkeresztbánya was sold, then the holdings in the Zsil Valley. The company, in which Hungarians had become half-owners, was overcome by financial problems and went into liquidation. In 1898, its former owners reopened the plant with financial backing from Austrian, German, and Hungarian sources, and the renamed Kalán Mining and Smelter Company flourished again.

At the time of the Compromise, the state operated five old blast-furnaces in Transylvania, but none of them were profitable. In the state enterprises, production evolved more evenly than in the {3-526.} private sector, but their development was constrained by lack of funds, and some of them were just ticking over. An outstanding metallurgist of the period, Antal Kerpely, reported that 'in and around [the Hunyad County ironworks], everything is so dilapidated and awful that we can hardly believe these are royal works.'[12]12. Quoted in V. Sándor, Nagyipari fejlődés Magyarországon 1867-1900 (Budapest, 1954), p. 173. Although the government had plans to modernize this industrial plant after the Compromise, parliament objected on grounds of economy. Thereupon, the state, with the participation of French, English, and Austrian banks, created a joint company to manage the works, but this experiment fell victim to the economic crisis of 1873. The works were finally modernized by the state in the 1880s, during the second phase of domestic industrialization. By then, the state had developed an active economic policy, one that was designed to make its enterprises profitable and to foster industrial growth by means of import substitution and an assured domestic supply of iron. Two new blast-furnaces were constructed at Hunyad County in 1884, and yet another in 1890; they were still fuelled by charcoal, which was considered safer and more economical, although the state no longer disposed of cheap sources for wood, and the charcoal had to brought in from as far as Ungvár. The new installations included an open-hearth furnace, a power station, and a housing settlement. In addition to the traditional mines, there was an open-pit at Gyalár where the rich ore was extracted by 300 miners, then shipped by rail to Govasdia. At Vajdahunyad, two cable-railways, installed in 1882, carried 1,500 buckets of ore and charcoal each day over sixty ridges and sixty-two valleys. The fourth state-owned smelter was built by domestic firms at Vajdahunyad in 1895; fuelled by coke, it was Hungary's biggest blast-furnace, with an annual capacity of 40,000 tons. Shipping problems disappeared with the completion in 1900 of the so-called Transylvanian Mine Railway. The fifth blast-furnace was built in 1902; at first, its high-quality crude iron was sold mainly to private steelmakers, but later some of it was processed at the state's metallurgical plants, notably the one in central Hungary, at Diósgyőr.

{3-527.} The state's iron and steel works were located at Kudzsir, in proximity to the smelters of Hunyad County. Beginning in the 1880s, they were equipped with modern furnaces, heavy and cold rolling mills, and steam-hammers. The broad range of products included commercial crucible steel and tool steel; the annual output of scythes reached 60,000 in 1900, but the manufacture of agricultural implements in Transylvania never reached a significant level, and eventually even scythe production ceased.

For a long time, small ironworks survived alongside the increasingly massive smelters. The state's ironworks at Rójahida, in Szolnok-Doboka County, ranked second in Transylvania during the 1850s, and it remained in operation until the end of the century; its annual output of 3,000–4,000 tons was refined in Láposbánya. The viability of medium-sized plants was exemplified by that of Szentkeresztbánya. Founded in the Reform Era by a venturesome mining engineer, it was sold first to a merchant, then in 1856 to the Brassó Company. The latter turned it into the third largest producer of iron in Transylvania, but poor management and the company's growing financial problems led to its closure in 1875. In 1878, it was acquired and reactivated by a landowner, Sándor Lántszky, who was also active in politics, and for the rest of the period it remained in the family's hands. The plant employed 140–150 workers, who with the aid of water power and steam-engines, produced commercial iron for ordinary use and agricultural tools; the annual turnover did not reach 100,000 forints. The company exported many of its products to Romania, including threshing-machines, ship's galleys, spades, and hoes, but after 1883 it was driven out of the market by German competition. Many workers acquired their skills at the Szentkeresztbánya plant before moving on to Kalánbánya, Petrozsény, Hunyadtelek, or Resica.

The boom in iron metallurgy coincided in time with significant consolidation in this industrial sector. The state's ironworks at Vajdahunyad and the Kalán Mining and Smelter Company accounted {3-528.} for virtually all of Transylvania's iron output at the turn of the century. The state encouraged the sector's development with direct investment as well as by requiring its own enterprises to utilize Hungarian products. Oligopolistic measures also played a part: In 1886, Austrian and Hungarian iron producers tired of competing and formed a cartel that brought stability to prices and production levels, although it was not able to forestall the deep slump that beset the industry in 1901–5.

The engineering workshops that produced machines and tools rarely evolved into major enterprises. An instructive example is that of Péter Rajka, a talented engineer whose entrepreneurial activities after 1848 spanned three decades. In the 1850s, he produced excellent agricultural implements, his ploughs won prizes in international contests, and he enjoyed the moral support of Transylvanian politicians and intellectuals. And yet, few orders came his way. Acquired by a merchant, the firm became the first Transylvanian builder of a steam engine, in 1874, but it still failed to become a sizeable enterprise. The Rieger machine works at Nagyszeben had greater success at the end of the century; it produced its best tools at the Feketehalom plant, which had been established in 1879, and simpler agricultural implements in a number of other locations. On the periphery of the machine industry, the Fabritius brass and metal works, at Orlát, specialized in equipment for distilleries in Transylvania and Romania. Finally, the large plants of the Hungarian Railway Company at Kolozsvár and Piskitelep must also be counted among Transylvanian enterprises in this industrial sector.

The industrial-scale production of machinery was first introduced by the STEG, at the time of absolutist rule. Its plant in Resica made threshing machines, steam engines, bridge components, and railway equipment; in 1872, it became the first maker of locomotives in Hungary, and in the early 1900s it also produced huge castings for ocean-going vessels. Another enterprise just beyond the {3-529.} boundaries of Transylvania, the Weitzer carriage and wagon works at Arad, grew to substantial size at the turn of the century; it made passenger coaches for the Hungarian Railway Company and, beginning in 1909, self-propelled cars for local railways, as well as machinery for factories and mines. A Hungarian–French motor vehicle factory, Hungary's first, was established in 1909, also at Arad; it made Westinghouse-type trucks and buses for the cities of Arad and Budapest as well as the postal service, and engines for railways. In 1912, the company expanded its production to passenger cars; the MARTA cars were commonly used as taxis in the capital. During the war, the company collaborated with German enterprises to produce military trucks and aero engines.

The milling industry was bound to play a key role in economic development, for it was organically linked to grain, and grain production boomed after 1850. Moreover, it was untouched by competition from the monarchy's more developed industrial regions, while the demand from the latter only stimulated production. For centuries, the water mill (along with blacksmiths) was a distinctive feature of rural Transylvania; in many villages, it was the only 'industry,' and commonly featured such additional equipment as an oil-press, a grinder, and machines to wash and full wool. The milling industry was revolutionized by the appearance at mid-century of the steam-engine, which not only supplanted water wheels but also imposed changes in the mill's mechanism.

The first large mills were installed at Pest and on the perimeter of the Great Plain, and generally financed out of profits from the grain trade. By the 1860s, historic Transylvania was ringed by steam-powered mills that stretched from Nagyvárad through Arad to Temesvár and exported much of their flour. Fewer large mills were built in Transylvania, for it produced less grain, and the old equipment sufficed to meet local demand for flour. Elek Sigmond, a distiller at Kolozsvár, built a steam mill in 1853. Another distiller, Jeremias Baruch, built a mill at Marosvásárhely that was modern in {3-530.} design, though still powered by water; the Calvinist church also had a large water mill in the locality. In southern Transylvania, mills were built by Saxon merchants and craftsmen. In 1863, thirty steam-powered mills were operating in the towns of Arad, Bihar, and Szatmár counties, whereas only four are known to have existed in Transylvania. The number of water mills grew until the end of the century: 871 were built between 1850–1867, and 654 between 1867–1890. After 1867, during the great agricultural boom, when Pest became the biggest milling centre on the continent, many new mills were built by joint-stock companies in the Banat and around Arad. Of the 5,236 mills registered in Transylvania in 1895, few belonged to joint-stock companies, but 88 were steam-powered, and 13 were in the large mill category; the mills were variously owned by individuals, municipalities, the churches, and the state.

In the 1870s, the big commercial mills at Brassó and Kolozsvár shipped their flour as far afield as Vienna. Taking advantage of the provision (valid until 1900) that grain could be imported duty-free from the Balkans as long as the flour produced from it was re-exported, the mills shipped each year five to six hundred tons of flour to Romania. Of course, these volumes paled in significance next to the amount of grain ground in the huge mills of the Banat and Pest. In the early 1900s, the modernization of the milling industry was completed in Transylvania as well. Forty-nine steam mills were built between 1881 and 1900, and another sixty between 1901 and 1906. After 1891, a growing number of 'motor mills,' powered by internal-combustion engines, were built, as well as a few powered by electric motors. In 1906, Transylvania's milling industry led in the utilization of gasoline-powered motors. The technical quality of its larger mills, drawing on Hungarian innovations in the 1870s, was among the best in the world. To be sure, the technical diversity that prevailed among the small mills of yore was lost in the new world of huge commercial mills, and the latter {3-531.} offered little stimulation for innovation by the machine industry. At the same time, the high degree of mechanization greatly reduced the demand for manpower. The medium-sized mills, which processed two to three carloads of grain per day, show a more varied picture. They were commonly linked up with producers of dough, with oil presses and distillers, and especially with lumber mills. A few eventually geared up to supply villages with electricity.

As the market economy matured, the milling industry acquired a dual aspect at the turn of the century. The huge mills of the Banat processed between four and thirty carloads of wheat a day. The bulk of the flour was destined for the monarchy's market, but some of it was exported to Germany and Switzerland; and since these markets demanded flour of high quality, they influenced the grain growers' choice of wheat strains and methods of cultivation. At the other end of the scale, the grain produced by the mass of the peasantry was ground in mills that had a daily capacity of four tons or less; they were constructed of wood, powered by water, and commonly operated for only a few months each year. In 1906, of the 5,928 mills in Transylvania, 3,340 ground mostly corn, including 1,031 in Hunyad County alone; thus small quantities of corn did not have to be carted to distant mills. Other small mills resorted to so-called peasant grinding of wheat and rye, and produced a rougher, unbolted flour that was better suited to the need of village households. By virtue of their large numbers, the small mills employed a great many people — in 1906, close to 9,000. The construction and repair of their simple equipment provided work for carpenters, joiners, and blacksmiths; the carving of millstones was a flourishing village industry in Csík County, as well as at Csicsóváralja, near Dés.

The distilling industry retained its traditional place as one of the principal processors of agricultural products, and also as an agent of capital accumulation. Here again, the largest distilleries were found just beyond Transylvania's western boundaries, from Lugos through Temesvár to Nagyvárad. In Transylvania, commercial {3-532.} distilleries were established one after the other from 1849 onwards. Elek Sigmond opened a distillery at Kolozsvár in 1851. Jeremiás Baruch's plant in Marosvásárhely was perhaps the first modern industrial distillery in Transylvania; in 1857, it had 80 employees. The enterprise was so profitable that he built a mill and a second distillery; the first steam engine produced in Transylvania, by the Rajka–Dietrich firm, was installed in his distillery in 1874. Landowners and entrepreneurs made their money from distilling before branching out into milling and other industrial activities. A process of consolidation got under way in 1872, at a time when the Hungarian market was in a slump, but by 1878 there were 125 commercial-scale distilleries in Transylvania; the larger ones used mainly corn, especially the maize variety, which was shipped in by rail from Romania. In the mid-1880s, Kézdivásárhely alone had twelve 'alcohol factories,' which were regarded as the lifeblood of the town. At century's end, the biggest distilleries were those of the Saxon Czell family at Keresztényfalva-Derestye and of the Sigmond brothers in Kolozsvár; the others were much smaller than the great distilleries found in the Banat. The distilleries' output was strictly regulated by the state; product in excess of a set quota incurred a higher tax. The distilling industry also became involved in stock-breeding. Distillers bought up cheap Transylvanian cattle, fattened them on the residue of distillation, and shipped them to Vienna and other national markets. They favoured foreign breeds and thus encouraged the adoption of the latter, especially in the southern and southeastern regions. Villages continued to rely on the numerous small distilleries, which turned local fruit into brandies of varying strength to suit local tastes.

The brewing industry developed unevenly, in part because of the competition from Austrian and Czech breweries, and in part because of low domestic demand. There were many small brewers, and a few of them grew into major breweries, like the one founded at Vásárhely in 1830, and another at Nagyszeben. The industry suffered {3-533.} a slump in the 1870s, and at the end of the decade, the Nagyszeben plant was the only one among 32 major breweries to produce more than 10,000 hectolitres a year. In the late 1880s, Hungary's brewing industry entered an expansionary phase, and production in Transylvania grew steadily until World War I. The breweries at Torda and Marosvásárhely each had an annual output of 120,000 hectolitres, and several small breweries produced a cheaper beer. After 1900, increasing amounts of beer were shipped in refrigerated cars from Budapest, to be consumed almost exclusively by a growing urban population.

After 1848, the sugar industry in Transylvania, like that in Hungary proper, went into temporary decline; the province's three refineries reduced production or shut down. In most years, local producers were overwhelmed by competition from Austrian refineries, and only state intervention could improve their prospects. Help for domestic sugar producers came in 1888, in the form of a new consumption tax and preferential rates for shipping. These measures prompted the creation in 1889 of the Hungarian Sugar Company at Botfalu, near Brassó; the Credit Bank was a shareholder. The company employed 910 workers in 1910, and 1218 in 1912; over the same period, its output (produced with Czech-made equipment) rose from 8,734 tons to 14,462 tons.

The sugar refinery at Marosvásárhely, founded in 1893 by aristocrats, was distinguished by its unusual form of ownership: Taking advantage of the government's industrial development policy, the founders obtained a 600,000-forint loan from the state, then distributed the majority of shares among landowners and farmers, who paid for them in kind, by supplying sugar beet to the refinery. The plant was much smaller than the refinery at Brassó, and its production was seasonal; still, it was Marosvásárhely's sole large-scale industrial enterprise. Equipped with Hungarian- and German-made machinery, it employed 367 workers and produced 3,565 tons of sugar in 1900; by 1912, the workforce had grown to 405, and output {3-534.} to 4,667 tons. The refined sugar produced by the plant from 1897 onwards was shipped as far afield as England, Italy, and Egypt. The production of sugar beet expanded to meet the demand from these two large refineries, notably in the counties of Maros-Torda and Háromszék; on a national scale, Brassó County stood out in terms of the proportion land devoted to sugar beet and of the yield's quality.

The tobacco industry was a state monopoly. There was a cigarette factory at Temesvár, and plants were built in 1851 at Kolozsvár and in 1897 at Sepsiszentgyörgy. After 1900, the two new cigarette factories were processing between 2,000 and 4,000 tons of tobacco a year; the work — mainly manual, with the aid of a few machines — was accomplished (in 1912) by some two thousand workers, most of whom were women.

The development of other branches of the food industry occurred mainly in Saxon towns. Nagyszeben's famous salami factory was founded in 1850. Its meat supplies came from all over the country, and from Romania as well; in 1885, it shipped by rail alone over thirty tons of salami. Other salami factories operated in Brassó, Beszterce, and, from 1894, at Medgyes, where the activities also included pig-fattening; in Szentágota, the salami plant was operated by a cooperative. These plants produced a variety of cooked meats, such as hams and sausages, and the one at Dés also made canned food. A fruit canning plant was established in 1900 at Déva. Small dairies functioned here and there, but they could not supplant peasants who sold their products in town markets. Larger dairies, producing cheese, cottage cheese, and butter, were established at Nagyszeben in 1872, and at Barót in 1887. A butter factory was in operation at Brassó in 1900, and Transylvania's biggest dairy was established in 1902 at Nagyszeben.

Transylvania's vast forests were potentially the base for a major woodworking industry, but development was delayed by the difficulties in transportation. In the 1860s, newspapers would complain {3-535.} about the anomalous situation created by the dearth of roads adequate for the transport of wood: in some places, century-old oak could be obtained for less than half a forint, yet a few miles away, where the local forests were depleted, peasants had to use dried manure for fuel. Before the railways came, timber was floated down the Maros River to Szeged, where the country's biggest mills dressed pine — the most popular wood at the time — into lumber for construction. Timber could be rafted down to Romania duty free until 1886, a trade that provided employment for thousands in places such as Csík and Gyergyó. The development of techniques and facilities for rafting timber continued until the end of the century; the northern region of Máramaros, rich in spruce, had a highly-developed water transport system. Marosvásárhely was an important junction in the timber-rafting network; in 1865, a major logging and rafting enterprise was established nearby, at Szászrégen. All of these early enterprises were founded by aristocrats and Viennese bankers. The railway, with its vast demand for sleepers, was everywhere the prime customer.

In earlier times, the forests had served mainly the production of potash and the needs of nearby mines and smelters. Industrial-scale logging only came with the beginning of railway construction. Coal mines also became big consumers of lumber; the mines at Petrozsény required 100,000 cubic metres of wooden props each year. By the end of the century, good oak and pine forests could be found only at some distance from the roads; the owners would cut an access road only after they had sold the standing wood. The contractors would build a lumber mill as quickly and as cheaply as possible, for they would have to move on when the 10–15 year lease expired. The 'lumber factories' of small-scale operators spread like mushrooms. Their impact was described by a knowledgeable chronicler of Csík County: 'When they acquired small strips of woodland, they set the stage for the devastation of the district's entire forest. Their business was based not so much on the lumber {3-536.} obtained from their new property, but on the vast amounts of timber that the local people would steal from the neighbouring woods and sell for a song at the lumber mill. The people simply do not believe that there is anything wrong with stealing wood. If they are punished, they will take it as their due, but lend it no moral significance.'[13]13. I.T. Nagy, Csík vármegye közgazdasági állapotáról II (Csíkszereda, 1911), p. 34.

By 1900, several saw mills as well as a woodwork factory were operating in the Maros Valley. A wooden toy factory was established at Marosvásárhely in 1887, followed nine years later by a furniture factory. Mendel Farkas, a prosperous distiller in Marosvásárhely, extended his business activities to timber rafting, then to lumber milling, and, in the 1890s, to woodworking. First Arad, then Brassó, Marosvásárhely, and Kolozsvár became centres of the furniture industry, although, throughout this period, most of the furniture was made by craftsmen. Some of the woodworking enterprises were owned by Romanians or Saxons. Deák's factory at Sepsiszentgyörgy was typical of such enterprises in the Székelyföld; in the 1880s, it had around a hundred employees and produced 10,000 wheelbarrows a year.

The lumber and woodworking industry's development was bedeviled by the fluctuation in market conditions. Germany imposed duties in 1885–92, and again from 1906, to constrain the importation of manufactured wood products. In 1886, Romania imposed a heavy duty on rafted timber. These protectionist measures could only be compensated by higher sales on the domestic market. However, when, in the early 1900s, the construction industry went into a slump, domestic demand for timber fell, bringing the prices down. Demand and prices started to rise again in 1908, and Transylvania's lumber enterprises, which in 1910 formed themselves into a cartel, won control of the market. Since they supplied the best-quality pinewood, they determined the whole industry's price structure. By then, the market value of beech had also risen. The demand for charcoal, which was made from beech, remained {3-537.} strong, and the major charcoal producers at Marosszlatina and Gurahonc also made distilled byproducts — such as tar, wood vinegar, and wood alcohol — that had a good export market.

Wood emerged in this period as an important raw material for the production of paper, although for a long time rags remained an essential ingredient. In 1851, Transylvania had fourteen paper mills; some disappeared, others were reinvigorated by their Saxon owners. During that decade, sizeable paper mills were established at Péterfalva and Zernyest; the Credit Bank built a wood-pulp mill, also at Zernyest, in 1889. By 1914, wood pulp and various types of paper were produced with up-to-date equipment at Borgóprund, Zernyest, and Torda.

A vast range of wood-based products were made in Transylvania. Wood was used to build factories, and, in many regions, by peasant craftsmen who made buckets, troughs, barrels, shingles, and tools for sale in markets as far away as Bosnia. There were villages of woodcraftsmen at the foot of the mountains, in the Székelyföld and Mócföld, and in the alpine region of Gyalu. Numerous sawmills were operated by peasants, and Orlát, Resinár, Zágon, Felek and Körösfő were all traditional woodcrafting centres that produced for the urban markets as well. In Kolozs and Torda-Aranyos counties alone, 5,500 people were employed in the production of construction materials, boards, laths, and shingles. The planks hewn by carpenters at places such as Remete, in Gyergyó County, and Zetelaka, in Hargita County, were prized as far afield as Germany and Holland. In the Romanian-inhabited village of Bedecs, near Kolozsvár, wooden house-frames were constructed and then carted to the customer's village for assembly. In the early 1900s, after a devastating fire in some distant community, dozens of wooden frames for houses and outbuildings would be crafted at Bedecs, ready for delivery.

Of the eight glassworks that were in operation before the revolution, three survived. The state's plant at Alsóporumbák, which {3-538.} employed thirty people, was leased out; much of its output went to the Romanian market, and then to the Hungarian Railway Company. The Mikes factory at Bükszád was also small, with barely fifty workers, but if was the lifeblood of this village of 1,500 souls. The glass products were taken on credit and sold by the villagers from carts.

The chemical sector — normally central to early industrialization — developed slowly in Hungary. After 1849, it consisted in Transylvania of two soap factories, a sizeable candle-making plant at Nagyszeben, and two small match factories. Large-scale production was introduced not in Transylvania but in the Banat, at Resica, where after 1857 a plant owned by the STEG produced paraffin oil and sulphuric acid. The industry's development was stimulated by growing demand for Romania's oil, found just beyond the Carpathians. In accordance with general practice, the crude oil was refined not at the wellhead but near its market. The refining of oil began at Brassó in 1858, and at Marosvásárhely in 1861; Oravica and Orsova became important refining centres even before the arrival of the railways. In the 1880s, Hungary's oil industry was bigger than Austria's, and some of its product was exported. In 1880, at Brassó alone, the refineries processed 5,000 tons of imported crude. By the end of the century, Romanian crude was supplemented by petroleum from Russia, and, after 1895, from Galicia, but the latter's recently discovered deposits were of lower quality. On the eve of World War I, the refineries located on Transylvania's periphery were processing 1,200–2,000 carloads of crude oil a year.

The processing of non-ferrous metals generated some chemical byproducts, such as sulphates and sulphuric acid at Zalatna, which was also the only producer of carbonic bisulphide. There was a sulphuric acid factory in Brassó. The economic boom at century's end stimulated the large-scale production of sodium carbonate. The Solvay factory, founded at Marosújvár in 1894, and another {3-539.} plant at Torda produced sodium carbonate from salty water and argillaceous salt, and shipped 1,000–2,000 carloads a year, which essentially satisfied Hungary's needs. After 1900, the coking operation at Lupény was expanded into a chemical factory, which produced tar, ammonia, synthetic fertilizer, and, during World War I, gasoline substitutes. American competition at the end of the century retarded the development of fertilizer production, as did low domestic demand. A joint stock company for the production of plaster and fertilizer was founded in 1901, with operations at Torda and Egeres. The further development of this branch had to await the discovery of natural gas.

Natural gas fields were found in the course of a government-directed exploration of the Mezőség for potassium salt; pockets of 9,600-calorie methane were discovered in 1909. At first, the gas was used mainly by the Hungarian Railway Company. Twenty wells were drilled on six fields, and, in 1912, plans for the utilization of gas were drawn up at a national conference in Kolozsvár. The planners counted on foreign investment in production facilities, and on domestic finance for the development of a domestic industry that utilized gas, as well as for reviving the 'moribund mining industry in the Érc Mountains.' However, American and English investment failed to materialize, and capital markets were in a slump; after much delay, in 1915 the German-financed Hungarian National Gas Corporation was founded and received a concession to exploit some of the gas fields. Pipelines were laid to Torda, Marosújvár, and later to Medgyes, and additional pipelines were planned to reach Marosvásárhely, Kolozsvár, and Arad. The number of wells reached thirty-eight in 1918. During the war, Transylvania's largest chemical plant was built at Dicsőszentmárton; it drew on the gas to produce cyanamide, ammonia, synthetic fertilizer, and — for a time — explosives as well.

In the 1850s, the manufacture of leather goods was largely the preserve of Saxon craftsmen, who used traditional tanning agents to {3-540.} produce quality goods. Some of the hides were imported from the Romanian principalities; in 1850, 48,500 hides were obtained from that source, and 2,150 pairs of boots and shoes were sold there. Between 1867 and 1871, the export of leather goods to Romania nearly doubled in volume, but hide imports fell. Factories in Brassó were the sole suppliers of the Romanian army until 1886, and they were also major suppliers to the imperial army and to the Bärenfeld company, which equipped the Hungarian territorial guard. There were chronic problems with the supply of raw material; not enough hides could be obtained locally, and hides from the Great Plain were considered to be too expensive. The periodic dip in Romanian supplies was followed by a reduction in the number of craftsmen in both Szászföld and Székelyföld, although the industry tried to make up for the shortfall with imports of Russian hides. The modernization of this industry began at the end of the century, when leather goods came to be produced on a larger scale at Szentágota, Medgyes, and Nagyszeben. In the early 1900s, state subsidies helped the expansion of a leather manufacture at Kolozsvár, which added shoes to its product line, thereby following the example of the large factories at Temesvár and Nagyvárad.

The regional distribution of the textile industry differed from that of most other industrial branches, for the larger textile mills had been implanted not in the Banat, but in the Saxon districts of Transylvania. By 1850, in Brassó alone, there were several dozen craftsmen who produced broadcloth, along with others who made waterproof canvas, blankets, and flannel; frieze and broadcloth were also produced in villages around Brassó. Development was stimulated in 1885 by the Crimean war; a start was made at mechanization, particularly in the production of yarn, and at working with cotton imported from the west. A hosewear factory was established at Segesvár in 1861. The renowned Brassó cloths were designed to meet traditional peasant needs; as tastes and consumption patterns changed, they were driven out by Czech products, first {3-541.} from the regions east of the Tisza River in Hungary proper, and then from Transylvania, leaving them with their old markets in the Romanian principalities. However, beginning in the 1880s, the Transylvanian textile industry came under pressure from Romania's policy of industrial development and then from the tariff war. In 1886, Saxon clothiers from Brassó established a large factory at the Romanian town of Azuga, and many craftsmen, from hat-makers to rope-makers, moved south of the Carpathian mountains. Those who stayed survived the industry's crisis with the help of subsidies and purchases by the state. Some firms, such as those of Leonhardt and Lang, emerged stronger than ever; they compensated for the loss of Romanian markets by producing finer goods for domestic consumers, and also by exporting to the Bulgarian and Serbian markets. The Scherg cloth factory at Brassó also put state aid to good use; by 1896, it employed some 100 workers and made carded wool and loden cloth as well as other products. Production of a wide range of textiles was sustained at Nagyszeben and Segesvár as well. At Nagydisznód, several hundred family-operated looms were linked in a large cooperative enterprise that exported waterproofed canvas to Galicia and Hercegovina. At the Székely Textile Mill, founded at Sepsiszentgyörgy in 1880, manual and mechanical production methods were combined to process flax. In 1883, Dezső Bánffy established a textile mill at Dés. Industrialization facilitated a dual pattern of production that prevailed until World War I: rough cloth was made for exportation to Turkey, and even to Persia, and standard cloth for the markets of the monarchy and of Romania.

The thick woollen blankets from Udvarhely remained a common sight at Transylvanian markets, as did peasant cloths made by the Csángó [Hungarian-speakers indigenous to a Moldavian district across the border from the Székelyföld] and at Kovászna and Bereck. Although customs varied by region, most peasants stuck to their traditional folk dress; by the 1870s, some of the coloured {3-542.} thread they used was imported, but only much later did they adopt factory-produced textiles. Thus domestic weavers survived in large numbers at a time when the demand for industrial textiles was still low.