Balancing the State Budget

After 1660, Transylvania had to pay an annual tribute of 40,000 gold pieces to the Porte, four times as much as in Gabriel Bethlen's time, when it was a larger and wealthier country. In addition, the principality owed 300,000 thalers in war reparations and was expected to send gifts to Constantinople. There were also special demands, notably for several hundred cartloads of food at the time of the Turks' Polish campaign, in 1672–74. In 1683, Transylvania paid 27,000 'lion' thalers to the grand vizier in lieu of food deliveries. {2-294.} Between 1664 and 1686, Transylvania's contribution to the Porte's treasury added up to an annual 190,000–200,000 forints. In 1687, instead of the tribute to the Porte, Transylvania had to begin paying for the maintenance of German soldiers. This sum was set by the Balázsfalva agreement at 1,951,355 forints for the winter of 1687–88, not including deperdita and discretio payments. The Habsburg commander, Count Rabutin de Bussy, would subsequently demand an annual discretio of 42,000 forints.

The growing costs of government came on top of these external obligations. State budgets were rising rapidly throughout Europe, but only rough estimates can be made, for the central management of state finances made only slow progress even in the more developed countries. The expenses of the central government and of the prince's family continued to be handled separately; the former was in the order of 7,000–8,000 forints, the latter, 4,000–5,000 forints, totalling some 12,000–14,000 forints a year. That did not include the cost of state administration beyond the capital, such as the emoluments of local councillors, officials, and civil servants.

The permanent core of Transylvania's army was made up of the regiments at court and the castle garrisons. The troops stationed at Fogaras Castle cost an annual 672 forints. The captain of Huszt Castle was paid 400 forints per year, and his second-in-command 300 forints, along with considerable benefits in kind. The total military expenditure is not known, but, allowing for the cost of equipment, clothing, provisions, and services, it must have been the largest single item in the domestic budget, as was the case in other countries at the time. Although Transylvania did not have to engage in war during these twenty-five years, it nevertheless had to bear the heavy cost of military preparedness. A new line of frontier forts had to be constructed. From 1670 onwards, the country had to preserve a state of military preparedness on its borders while welcoming Hungarian exiles; after 1672, aid, overt and covert, was offered {2-295.} to Hungarian rebels. Domestic struggles for power and the ongoing preparations for a campaign in Hungary made for a continuing state of imminent war. When, in 1683, the Porte compelled Transylvania to participate in a military campaign, the cost of paying and provisioning the troops added up to 16,228 forints and 85 dinars.

The conduct of external relations required not only the maintenance of embassies but sundry expenditures on the always indispensable bribes, gifts, and secret agents. The accounts presented for 1671 by the principality's ambassador to the Porte, Zsigmond Boér, included 'a hundred and fifty ten-gold pieces for the grand vizier', 'five hundred pieces of gold to the chancellor', 'two hundred pieces of gold to a man who must remain anonymous', and 'two thalers at the gate to be admitted before the grand vizier'.[56]56. OL, Agy, Box No. 2.

Finally, the Transylvanian state expended large sums for purposes that, at the time, came under the rubric of public education, such as schools, the Churches, printing presses, and books.

The principality's expenses reached a historic high in the last quarter century of its existence. What revenues were at the disposal of the state, and how was the burden divided among the various classes and strata of society?

The Treasury's carefully kept financial account books and the work of the prefectures, which had been set up by György Rákóczi, reflected a trend, present in other countries as well, towards the departmentalization of state administration. In the more advanced states and empires, financial records were kept by the 'court chambers', which were the precursors of modern finance ministries. In Transylvania, the financial records and other documents for 1667–90 testify to a similarly centralized and orderly conduct of the state's economic affairs. However, it is still difficult to advance a realistic estimate of the principality's revenues and expenditures. In Transylvania, as in the Habsburg empire and other countries, the conduct of state finances was marked by a variety of direct transfers. Thus, for example, a specified amount of the revenue from salt {2-296.} was assigned to the funding of schools and foundations. In 1670, the prince ordered that the income of the Sófalva salt mine be applied to the construction and maintenance of a college at Udvarhely. Wage labourers at the iron foundries, salt mines, and mercury mines were often remunerated in kind by the Treasury, as were the 'paid carters'. To some extent, the management of state finances remained marked by conservative, medieval methods, but there were also signs of breaking away from the constraints of feudalism. An effort was made to record accurately all revenues and expenditures. Estimates were made of anticipated revenues, and strict economies were imposed. The notions of probity and accountability with regard to the management of public finances had not yet gained wide currency, but Apafi's administration was marked by a sustained effort to impose effective budgetary supervision and controls.

No doubt many people's sensibilities were hurt by the demands for strict account-keeping. The auditor checking records of the thirtieths tax at Törcsvár for the period 1 May 1669–30 April 1670 found that out of a total of 15,780.94 forints, 973.16 forints were not properly accounted for. He complained that the collector of the thirtieths had claimed 1000 forints as payment for three Moldavian saddle-horses, when the latter had cost only 600 forints, and that there was no receipt for the 60 forints supposedly expended on construction of the thirtieths house at Tömös. Clearly, Transylvania's critical financial problems were impelling the princely court to exercise strict economy measures. In this, Apafi and his advisers built on the experience of their predecessors as well as on the knowledge they had acquired of modern administrative practices in western countries.

The fiscal revenues grew between 1660 and 1687. The total annual income from the salt, gold, and silver mines, the iron foundries, mercury, the thirtieths, and the treasury estates can be estimated at around 250,000 forints until 1670, and 300,000 forints in the period 1678–80.

{2-297.} In the 1660s and 1670s, the average annual cash income from taxes amounted to some 150,000 forints a year. After 1684, tax revenues rose to over 300,000 forints, and, within a few years, reached as much as two million forints. The tax-rate per gate (porta) rose steadily, from 10 forints in 1664 to 15 in 1665, 16 in 1669, and 18 in 1670. After 1686, it reached 20, 30, 50, and, in some years, as much as 200 forints. However, it is difficult to assess the real significance of these changes, for the 'gate' represented a varying number of people and plots, while the number of 'gates' decreased as a consequence of various exemptions and reassessments. The princely court was driven by necessity to modernize the fiscal system, and it did so by trying to extend the tax to economic sectors and social strata that previously had been exempt. In 1663, a heavy sales tax was introduced; if a man, 'whatever his social order', sold something for more than 20 forints, he had to pay five percent to the Treasury. The tax was evidently aimed at the comparatively well-to-do. Apafi justified the sales tax by noting that 'we did not invent it, we followed the example of other Christian countries'.[57]57. EOE 13, p. 257. Although the sales tax was later withdrawn, the initiative is noteworthy in that it anticipated a modern fiscal system. The Greek, Oriental, and other trading groups discharged their tax obligations in a lump sum.

By the early 1660s, attempts were being made to redistribute the 'common' burdens. On occasion, when the Turkish threat appeared imminent, even aristocrats and landowners were willing to pay taxes. But only the lower nobility and the previously exempt middle strata could be made to pay taxes with any regularity. Civil servants, soldiers, artisans, lesser nobles, marshals and bailiffs all paid different rates of tax. The Székely districts and towns paid their tax in a lump sum. Peasants who ran farms on noblemen's estates lost their exemption in 1674 and had to pay one thaler in tax; that rate also applied to church dignitaries and people who 'did not have registered taxpaying villeins'.

{2-298.} At the same time, districts and villages that suffered unduly from the ravages of war were often granted concessions. Thus, in 1671, Brassó's tax was reduced by 200 thalers. The districts (széks) of Medgyes and Beszterce saw their tax obligations reduced by 900 thalers in 1672, and 1000 thalers in 1673–74, on condition that this saving be used 'not to serve your private interests but to relieve the general poverty'. The prince's disposition to tailor fiscal policy to social needs was even more evident when, due to pressing circumstances, a special levy was imposed in 1671; this tax was to be raised 'exclusively from the well-to-do [dominus terrestris], and should in no way aggravate poverty in the counties'.[58]58. EOE 15, pp. 189, 190-91, 319, 472, and EOE 20, pp. 164-65. Since the need was urgent, and normal methods of collection laborious, twenty-five wealthy people voluntarily advanced some considerable sums; Dénes Bánffy, János Bethlen, and Pál Béldi each gave 500, István Alvinczi 300, and Mihály Teleki 150 imperial thalers. Twenty-three others were obliged to contribute a total of 3300 imperial thalers; Zsigmond Bánffy, for example, subscribed 500, and János Páter 300 thalers.

The case of tobacco is an example of the adaptation of fiscal policy to prevailing conditions. In 1670, the government prohibited the importation, growing, sale, and use of tobacco. When it became evident that prohibition was ineffective, the government imposed a heavy tax. In order to indulge in his habit, a senior official would have to pay a tax of 200 forints, a regalist 50, a nobleman with villeins 30, a church dignitary 12, and peasants and soldiers, 6 forints. This tobacco tax fed the Treasury while imposing a differentiated burden on society.

However, the attempts at fiscal reform were tentative at best. The nobility remained fiercely attached to its traditional privileges. In Transylvania, as elsewhere, the collection of tax was fraught with difficulty; there were many abuses, and the arrears mounted year by year. A law, passed in 1672, called for putting the tax system 'in good order'. As in other countries, the poorer strata bore a disproportionate share of the burden.

{2-299.} In the last quarter century of the principality's existence, the government exploited its limited options to restore a certain equilibrium in the state's finances. It increased revenues not by adding to the burdens of agriculture and of the villeins, but by tapping the most dynamic economic sector, commerce, and by taxing the more affluent social strata. The principality did not incur significant debt abroad; the government borrowed from domestic sources, from towns, landowners, and Greek entrepreneurs. Thus even with its reduced territory and obligations to pay substantial tribute, Transylvania remained a fully-functioning state. But the effort to contend with external pressures was depleting the country's reserves of wealth and human energy. The accumulation of new burdens after 1687 soon drove Transylvania to terminal exhaustion.