The Long First World War and the survival of business elites in East-Central Europe: Transylvania’s industrial boom and the enrichment of economic elites

Abstract

This article explores one often-overlooked consequence and paradox of the First World War: the prosperity of business elites and bankers in service of the war effort, despite the destruction of capital and wealth by belligerent armies. Wartime destruction and the birth of “war millionaires” were two sides of the same coin. Through following the rapid wartime expansion of the Renner tannery in Kolozsvár/Cluj-Napoca in Transylvania, the article explores the repercussions of wartime prosperity, including the takeover of the family business by large corporations and increasing dependence on army commissions. Whereas 1918 is often portrayed as a radical break in the history of East-Central Europe, this article explores why the Renner corporation, owned by ethnic Germans and Magyars, managed to remain prosperous even after Romania annexed Transylvania in December 1918. The increasing ethnic mobilization and hostilities between Magyar and Romanian nationalist elites did not directly impact Transylvania’s business life during and after the First World War. The author investigates why Magyar, Hungarian Jewish and German bankers and industrialists were successful at cementing their pre-war and wartime social positions and economic influence in Greater Romania.

Keywords:

• First World War
• Romania
• Transylvania
• Hungary
• business history
• ethnic discrimination
• modernization
• economic elites
• home front
• history of capitalism
• empire
• Austria-Hungary
• 1918

Notes

1. Piketty, Capital in the Twenty-First Century, 241.

2. Maier, Recasting Bourgeois Europe, 1–75; Landes, Dynasties, 261–89; Hau, La Maison De Dietrich; Cassis, “Business History in France,” 192–214.

3. Hull, Absolute Destruction, 119–262.

4. Kozma, Hadimilliomosok, 1–114; Feldman, Army, Industry, Labor in Germany 1914–1918, 59–61.

5. Katona, Magyarország közgazdasága 1914, 183–235; As Schulze has demonstrated, shortages affected all industries by the end of the war (“Austria-Hungary’s Economy in World War I,” 86–91).

6. Katona, Magyarország közgazdasága 1914, 183–235.

7. On the afterlife of Austria-Hungary, through constitutional debates, after the fall of the empire, see Wheatley, "Law, Time, and Sovereignty in Central Europe,” 1–25, 183–270; on the continuity of Magyar political elites and local elites in Transylvania, see Egry, Etnicitás, identitás, politika, 105–26, 146–56.

8. On the war in Transylvania, see Torrey, The Romanian Battlefront, 45–109.

9. Hostilities between Magyar and Romanian nationalists had a long history by the time the First World War broke out: Romanian political elites faced a series of electoral hurdles in the Dual Monarchy that limited Romanian representation in the Budapest Parliament, along with cultural and educational disadvantages that Romanians encountered in Dualist Hungary. Livezeanu, Cultural Politics, 143–55; Popovici, Studies on the Romanian Political Elite, 9–70; Onojescu et al., “Parliamentary Representation,” 211–24; Pölöskei, “István Tisza’s Policy toward the Romanian Nationalities,” 267–70.

10. I expand more on the prosperity of minority economic elites in the interwar period in “Imperial Elites after the Fall of Empires.”

11. Ibid.

12. Jones et al., “Introduction: Untold War,” 1–4; Ther, “Pre-Negotiated Violence,” 259.

13. The region’s per capita production was less than two-thirds that of the central areas of Hungary. Fellner, Die Verteilung des Volksvermögens; Schulze, “Regional Income Dispersion and Market Potential in the Late Nineteenth Century Hapsburg Empire,” 5–28.

14. Including most of the territory of the Crișana region, as well as territories around the cities of Debrecen, Szeged and Békéscsaba.

15. Fellner, Die Verteilung Des Volksvermögens, 81.

16. Fellner, A magyar szent korona országai nemzeti vagyonának megsoszlása, 22.

17. Jelentés a magyar békeküldöttség működéséről, vol. III/a, 71–3.

18. Hitchins, Rumania: 1866–1947, 202–50.

19. Jelentés a magyar békeküldöttség működéséről, vol. III/a, 117.

20. Ibid., 117, 119–22.

21. Katona, Magyarország közgazdasága 1914, 13.

22. Quoted in Bizony, A keleti határról, 122.

23. Egry, Nemzeti védgát, 5–30; Drecin and Trifoiu, “Institutul de credit și economii “Economul” din Cluj,” 81–116; Pintea and Ruscanu, Băncile în economia românească, 69–83.

24. After poring over documents in German-occupied Bucharest in 1917, the Budapest government’s commissioner Sándor Pietsch exposed that the economic elites in the Old Kingdom of Romania regarded Transylvanian Romanian bankers as rivals. He discovered that the major bank the Budapest government suspected of bankrolling Transylvanian Romanians, the Banca Carpaților, was “poorely managed” and did not provide significant support for the Romanian national movement. Memorandum of Counselor of Border Police Pietsch to the Hungarian Minister of Interior on 9 June 1917. Romanian National Archives, DJAN Cluj, 1426/1172, Primul Război Mondial, III/23 “Rapoarte ale poliției politice;” Egry, Nemzeti védgát, 316–44.

25. Egry, Nemzeti védgát, 5–30; Komlos, The Habsburg Monarchy as a Customs Union, 112–213.

26. Magyar statisztikai évkönyv, vol. XXIII, 149.

27. Egry, Nemzeti védgát, 5–30; Komlos, The Habsburg Monarchy as a Customs Union, 112–213.

28. Egry, “Keresztező párhuzamosok,” 282–302. Hostilities between Magyar and Romanian nationalists were also rampant in dualist Hungary; the discrimination of the Hungarian administration against Romanian political elites, however, did not prevent the accommodation of Transylvania’s Romanian and Magyar bourgeoisie. Onojescu et al., “Parliamentary Representation in Eastern Hungary (1861–1918),” 211–24; Popovici, Studies on the Romanian Political Elite from Transylvania and Hungary, 9–32.

29. Scott, “Economic Policy and Economic Development in Austria-Hungary, 1867–1913,” 823.

30. Jelentés a magyar békeküldöttség működéséről, vol. III/a, 122; Köpeczi et al., ed. Erdély története, 3: 1698.

31. The pre-war arrangement also provided protection for Hungarian grain producers from foreign competition. Berend and Ránki, Economic Development in East-Central Europe.

32. Ujlaki, Hazai ipar, 1908.

33. “Renner Testvérek és Társai R.T. Cluj: Monographiája.” Fond Clujana.

34. Magyar Statisztikai Közlemények, vol. 48., 52.

35. In 1910, the city of Kolozsvár employed 78 tanners, while Kolozs county around it 34. Magyar Statisztikai Közlemények, vol. 48, p. 52.

36. Magyar Statisztikai Közlemények, vol. 48., 52; A magyar béketárgyalások, vol. III/A, 5.

37. Magyar Statisztikai Közlemények, vol. 48, 52.

38. Magyar Statisztikai Közlemények, vol. 65.

39. Bornemissza owned a token amount of shares, amounting to 6% of all shares in 1914. Tomka, “Interlocking Directorates between Banks and Industrial Companies,” 25; Ciepley, “Beyond Public and Private: Toward a Political Theory of the Corporation,” 139.

40. Laczó, “Jewish Questions and the Contested Nation,” 422–41; Karády, Allogén elitek, 49–58.

41. Osváth, Erdélyi Lexikon, 88.

42. Lőwy, A Kálváriától a tragédiáig, 431.

43. Keszi and Kohn, Exploatarea la “Dermata,” 9–13.

44. Katona, Magyarország közgazdasága. 1913, 11–14.

45. Ibid.

46. “Jegyzőkönyv 1913, 1914.” Clujana 1/1914, RNA Cluj-Napoca.

47. Minutes of the assembly of the Renner Brothers’ and Partners’ Tannery. April 11, 1915. DJAN, Clujana, 1915/1.

48. Becker, Die Wirtschaftliche Entwickelung der Deutschen Lederindustrie, 71–5.

49. Clujana, 1/1917, 1/1919, DJAN Cluj.

50. Popovics, Das Geldwesen im Kriege, 24–7; Schulze, “Austria-Hungary’s Economy in World War I,” 100–7; For the crown/$ conversion I used Rodney Edvinsson’s “Portal for Historical Statistics” database, at http://www.historicalstatistics.org/Currencyconverter.html

51. Popovics, Das Geldwesen im Kriege, 28–33; Schulze, “Austria-Hungary’s Economy in World War I,” 107.

52. Erdélyi Közgazdaság, September 27 (1917): 261.

53. Haggard, “Import Substitution Industrialization,” 385.

54. Lengyel, “A külkereskedelmi forgalom mai szabályozása,” Közgazdasági Szemle 1920, 587.

55. The request of the management of the Jádvölgy Aluminum Mines Company and Károly Kornis to Hungarian Minister of Commerce and Industry János Harkányi, c. 1917. Hungarian National Archives (MNL-OL) Z 323/2 t. 12, 52); “A Német Birodalomhoz való gazdasági közeledés iránti tárgyalások ismertetése,” MNL-OL K 69, 16. cs.

56. Katona, Magyarország közgazdasága 1917, 377.

57. Gratz and Schüller, The Economic Policy of Austria-Hungary during the War, 91–102.

58. Katona, Magyarország közgazdasága, 1917, 69.

59. Katona, Magyarország közgazdasága 1917, 377; Székely, Háborús gazdasági törvények, vols. 2–3, 5–6.

60. Ibid.

61. Ibid.

62. The Leather Supply Company often decreed that the price of shoes, belts, coats and other leather products destined for civilian population be reduced, resulting in discontent among industrialists. Katona, Magyarország közgazdasága, 1917, 70.

63. The paper industry was a case in point. While it had to radically reduce both the quality and quantity of its products, and limit production to a select few kind of papers, it still managed to achieve extraordinary profits due to high demand for paper. Katona, Magyarország közgazdasága, 1917, 379.

64. “Transylvanian Hungarian National Bank,” Erdélyi Közgazdaság, 2 August 1917.

65. Feldman, Army, Industry, and Labor, 45–8, 61–3.

66. No wonder that the Renner tannery and other companies frequently raised their capital during the war. See Law XXIX of 1916 in Székely, Háborus gazdasági törvények és rendeletek, 1916, 382–96.

67. Feldman, Army, Industry, and Labor, 45–8; Kozma, Hadimilliomosok; Borsszem Jankó, 8 October 1916; Bihari, “A Forgotten Home Front.”

68. Hanebrink, “Transnational Culture War,” 68–74; Gyurgyák, A zsidókérdés Magyarországon; Bihari, Lövészárkok a hátországban, 88–98.

69. There was a Budapest-based firm that received a token amount of shares in the Renner company in exchange for assuring deliveries of raw materials for the Renner tannery.

70. Löbl’s firm had become an established cattle slaughterer in the Hungarian capital by the time the war broke out. Budapest székesfőváros költségvétése, 388.

71. DJAN Cluj, Clujana 1/1914

72. Magyar Statisztikai Közlemények, vol. 65.

73. Katona, Magyarország közgazdasága 1917, 69–70.

74. Katona, Magyarország közgazdasága 1914, 378.

75. Ibid., 378.

76. Katona, Magyarország közgazdasága 1917, 69–70.

77. Păcăţian, Jertfele românilor din Ardeal, 25; Marin, “World War I and Internal Repression,” 195–208; Bárdi, “Az Erdélyi Szövetség,” 100; Bárdi, Otthon és haza, 103–5; Köpeczi, et al., Erdély története, 3: 1698; Torrey, The Romanian Battlefront in World War I; Egry, Regionalizmus, erdélyiség, szupremácia, 3–6.

78. Krausz, Életem, 1–19.

79. The Magyar Bank established the Erdélyrészi Áruraktárak Rt. To centralize provisioning from Transylvania. Erdélyi Közgazdaság, 3 January 1918.

80. “A Magyar Bank erdélyi tervei,” Erdélyi Közgazdaság, 31 May 1917. Paradoxically, at the height of Hungarian imperialist rhetoric, Transylvania itself became subject to a German economic expansion as Hungarian capital even fell short of financing the war effort, not to mention domestic industrialization projects. One manifestation of increasing economic dependency from Germany was that the Deutsche Bank received exclusive rights of exploitation of the recently discovered natural gas fields in the vicinity of Kolozsvár. A Bánya-Das Bergwerk 10, no. 48 (1915): 1. Képviselőházi Napló, 21 January 1916, 350–77. Retrieved from http://mpgy.ogyk.hu/ on 16 October 2013; Romsics, “A magyar birodalmi gondolat,” 121–49.

81. See the minutes of the Center of Hungarian Investors in Romania within the Budapest Chamber of Commerce (Romániában érdekeltek Központja a Budapesti Kereskedelmi és Iparkamarában) in Österreichisches Staatsarchiv (ÖeStA), 136 F 36 Krieg 1914-1918 Dep. 16. Abt. 57, folder 7, and ÖeStA, Kriegsarchiv, Feldakten, (FA) (1323 - 1918), Armeeoberkommando (AOK), Quartiermeisterabteilung (QuAbt) (1914–1918), 2583/ Rumänien; Mayerhofer, “Making Friends and Foes,” 119–50.

82. Ther, “Pre-negotiated Violence,” 259.

83. Leuștean, România, 31.

84. Zahra, “The “Minority Problem,”” 137–65.

85. Bundesarchiv, Berlin. “Statistik der aus Elsass-Lotharingen Vertriebenen” R 901/35566; Strasbourg, Archive Départemental du Bas-Rhin, 157 AL 117.

86. Gyárfás, “Az erdélyi Bankszindikátus megalakulása, helyzete és törekvései,” MNL-OL, K 610, 25 cs.

87. Gyárfás, “Az erdélyi Bankszindikátus.”

88. Hungarian authorities even liquidated 47 smaller, Magyar-owned banks between 1940 and 1944. They also liquidated 19 Romanian banks. MNL-OL, Z 12 40. Cs, 360. t.; A Romániához csatolt magyar területek gazdasági élete, 225–50.

89. The Belgrade Convention between the Budapest government of Mihály Károlyi and the commanding generals of the French and Serbian armies on 13 November 1918 stipulated that Transylvania’s population, administration and economic life was to be unaffected by the Entente occupation of the territory. Bevans, Treaties and Other International Agreements of the United States, 20–2.

90. Leuștean, România, Ungaria și tratatul de la Trianon, 16–24.

91. Monitorul Oficial, No. 16, du 6 Mai 1919, p. 902; AAE 110CPCOM/98 P/17444 – Roumanie, Commerce, 42; Wandycz, France and Her Eastern Allies, 1919–1925, 3–23.

92. It was the UK that first enabled the liquidation of enemy companies with the Amendment Act of 27 January 1916. In an ineffective retaliatory gesture, the German Reich’s government ordered the liquidation of British companies on 31 July 1916. Orders followed to liquidate French possessions, mostly located in Alsace-Lorraine. Economic problems that Germany and Austria-Hungary faced gave rise to conceptions, popular in the interwar period, too, according to which the First World War was nothing less than an economic Vernichtungskrieg, or war of extermination against Austria-Hungary and Germany. Such an interpretation of the war undergirded discriminatory policies against minority economic elites in both Germany and Hungary.

93. Treaty of Trianon. Art. 250.

94. Murgescu, România şi Europa, 253; Zeletin, Burghezia română.

95. Revista Economică, 25 June 1921, 234; Suciu, Probleme Ardelene.

96. Rozen, “Jews in Romanian Industry,” 84.

97. Treaty of Trianon. Art. 191.

98. Article 199 of the Treaty of Trianon stipulated that the “Hungarian Government shall be under no liability in respect of civil or military pensions granted to nationals of the former Kingdom of Hungary.”

99. There are no reliable estimates on the number of immigrants from Transylvania to Hungary, as many people never formally acquired citizenship at either of the countries, or moved in-between Hungary and Romania in the interwar period. The numbers provided by Emil Petrichevich Horváth, the contemporary director of the National Refugee Office of Hungary, were inflated. Petrichevich Horváth estimated that as many as 197,000 people left from Transylvania to rump Hungary between 1918 and 1924; Petrichevich Horváth, Jelentés az Országos Menekültügyi Hivatal négy évi működéséről, 1–6; Bárdi, Otthon és haza, 322–3.

100. Treaty of Trianon, Art 61; Spector, Rumania, 201–18. Fink, Defending the Rights of Others: The Great Powers, the Jews, and International Minority Protection, 1878–1938; “Legii privind dobândirea și pierderea naționalității române;” Motta, Less than Nations, vol. 1: 161–209; Gidó, Úton, 33–62; “Gidó, Két évtized,” 93–115.

101. Livezeanu, Cultural Politics in Greater Romania, 129–88.

102. Magyar Kisebbség, 1–2, 15 September 1922: 51–3; Egry, National Economy vs. Economic Efficiency, 1–8.

103. DJAN Cluj, Camera de Comerț, 196, I/248.

104. DJAN Cluj, Clujana, 6/1924, “Gyártörténet.”

105. Riport Újság, 17 July 1919.

106. DJAN Cluj, Clujana, 6/1924.

107. Angelesco, The Increase of Production and Its Influence on the National Currency of Roumania, 54–5; Gyárfás, Románia hitelszervezetei, 24–36.

108. Memorandum of Pál Engel, director of the Austro-Hungarian Bank, 23 August 1919. DJAN Cluj, Fond Clujana 1/1919.

109. Bárdi, Otthon és haza, 106.

110. On the new generation of interwar Romanian elites, see Livezeanu, Cultural Politics, 15.

111. Grandpierre, A rosta.

112. Grandpierre, A rosta, 64.

113. Grandpierre, A rosta, 12.

114. Egry, “Keresztező párhuzamosok,” 282–9.

115. Judson, The Habsburg Empire, 442–6; Wheatley, “Law, Time, and Sovereignty,” 1–25.

116. Kirițescu, Sistemul bănesc al leului, 2: 282–9; Murgescu, România și Europa, 223.

117. As was the case of the Transylvanian Romanian politician Nicolae Firu of Oradea-Mare (Nagyvárad) who was ordered by the Bucharest administration to explain why he favoured the appointment of the Hungarian-Jewish Klein and not the Romanian Stupariu as the new pharmacist of the city; Romanian National Archive, Bucharest, Fond Consiliul Dirigent, 3/1921, vol. 1; Egry, Etnicitás, identitás, politika, 329–343.