The Economic Policy of Joseph II

The second decade of enlightened absolutism is generally associated with the name of Joseph II, although it is a moot question whether the dominant factor was the monarch himself or his government apparatus. This is not the place to evaluate the widely divergent appraisals that have been made of Joseph II, in his lifetime and by more recent historians, nor indeed the judgments passed by Transylvanians. Among the latter, Heydendorf branded the monarch a 'despot', while the younger Wesselényi gave a more liberal, nuanced opinion. As a moral individual, Wesselényi lauded the emperor for abolishing perpetual villeinage; as a citizen, he was grateful to the monarch for having preserved the country from another peasant rising like the one led by György Dózsa; but as a patriot, Wesselényi cursed Joseph II for having imposed the proper policy by autocratic means.

With some simplification, it may be said that those who, from varying socio-political perspectives, favoured independence had a negative image of Joseph II, for they construed all actions of the monarch and his government as being directed against the autonomy and interests of Hungarians; while, at the other extreme, Joseph II was viewed as a reformer, indeed, a revolutionary who was prevented {2-705.} by conservatives from instituting a new and admirable order in his empire. There were, of course many variations on these two perspectives; and there were other nationally-based factors apart from the Hungarians' yearning for independence. Sailing between Scylla and Charybdis, modern historians have depicted Joseph II with greater balance and realism, and it may be hoped that this account of Josephinism in a small and backward corner of the Habsburg empire will point in the same direction.

Josephinist economic policies may be characterized by two key features: first, acknowledgement of the principle of free competition and hostility to the system of privileged industries, and second, an autarkic tendency with regard to foreign trade. The central government qualified its support for free competition by maintaining protective tariffs. The authorities were not of one mind about the extent to which autarky should be pursued. Joseph II's preference for total isolation from foreign competition was supported, in the Staatsrat, only by Izdenczy; Kaunitz and Martini favoured trade based on reciprocity. The fundamental goal of autarky led Joseph II to seek economic unity within the empire, and he and the Staatsrat agreed on the necessity of maintaining a customs union between Austria and Hungary.

In 1781, the Transylvanian court chancellery submitted to the monarch a report that recycled many of the proposals that had been generated in the Commissio Commercialis, or had formed part of its initial mandate, as well as earlier recommendations of the estates. These included breed improvements of Transylvanian livestock; the development of the textile, leather, fur, glass, and iron industries; the regulation of guilds; the local procurement of uniforms and horses for the troops stationed in Transylvania; the lifting of the customs barrier between Transylvania and Hungary; the alleviation of quarantine regulations to facilitate trade with the Ottoman provinces; and the appointment of consuls to the Romanian principalities. The Staatsrat endorsed the proposals to promote domestic {2-706.} economic development, and agreed to lighten the quarantine restrictions. However, it refused to alter the long-established pattern of military procurement, and it waited until Russia had appointed consuls to the principalities before taking a similar step.

Opinions were divided in the Staatsrat regarding the customs border between Hungary and Transylvania. Oddly enough, two generally progressive and enlightened councillors, Löhr and Gebler, favoured preservation of the trade barrier; the former opined that this had no harmful effect on Transylvania, while the latter argued that the Treasury could not afford to lose the tariff revenues. It was a conservative, Hatzfeld, who endorsed abolition of the tariff barrier, proposing that the loss of some 40,000 forints in customs revenue be compensated by a modest increase in the price of salt. Joseph II gave approval in principle to the lifting of the customs border; on the other questions, he endorsed only the negative recommendations of the Staatsrat.

The customs barrier was lifted in two stages. With regard to one of Transylvania's major marketable commodities, the chancellery proposed that the tariff on cattle exports to Hungary be abolished. With the emperor's assent, the tariff was duly lifted in May 1782. In 1784, the remaining tariffs were eliminated. The administrative integration of Transylvania and Hungary had already occurred, and now the two countries were unified in economic terms as well. However, the Austrian hereditary provinces and the Czech lands continued to benefit from tariff protection, and the intensification of autarkic tendencies scarcely attenuated the economic disparities between different regions of the empire.

Joseph II's government had no comprehensive plan for Transylvanian industry, but it did little to implement the discriminatory recommendations made in 1770 by the Kommerzhofrat. Gallarati's silkworm-breeding enterprise was actively supported by the government, which was also instrumental in the development of the iron industry in the Vajdahunyad district. Although it was {2-707.} marked by contradictory tendencies, Josephine economic policy did bring some positive results.