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Introduction: Credit in Central European historiography

Theoretical concepts

The study of public finances has received considerable attention during the last decade because of its key role in European state formation by serving as an instrument to extract the capital needed for the realization of political goals from the economic systems that formed the base of all public finances. In this respect, it is worth mentioning the book by David Stasavage (2011) who made a valuable contribution to the debate on the emergence of public credit as a decisive element in the state formation processes that took place in late medieval and early modern Europe. In his work, Stasavage emphasizes the importance of geographic scale of political units and the form of political representation within polities for the access to capital markets and thus the possibility to create funded public debt in order to finance the consolidation or expansion of their relative position within political networks and regions. According to him, the foundation of the public debt was provided by the fiscal revenues originating from direct or indirect taxation.

He argues that intensive forms of representative assemblies facilitated the emergence of such a system. Assemblies did this by both monitoring and modifying expenditures and by helping guard the interests of state creditors. The existence of these credit-friendly assemblies, in turn, was facilitated by two conditions: first, limited geographic size; and, second, the presence of a group of politically influential merchants. Both of these conditions were most common in western European city-states.

Wim Blockmans (1997) pointed out in this debate the importance of scale and timing with respect to local political representative structures. He showed that in the larger Flemish cities such as Ghent or Bruges, the participation of middle classes in town governments and thus control over public finances developed in an earlier stage (the 14th century), whereas these developments in less urbanized regions with smaller urban populations such as Holland and Guelders, which were part of the Holy Roman Empire at that time, did not occur until the 15th century. In this way, it can be stated that the position of urban elites influenced the management of urban finances at large, and urban fiscal systems in particular. The degree to which urban elites were able to monopolize urban government was also determining the room left for other intermediaries to have a say in the financial polities of a town and to function in the management of the fiscal systems that were the basis of most urban finances. The socio-political backgrounds and the interplay between the political elites, urban officials, and tax farmers are thus an important topic for knowledge of the intricate mechanisms which are at the crossing point of the economic, social, political, and financial developments in the late-medieval urban society.

In the 15th century, the importance of urban middle classes as tax-farmers started to grow; they increasingly gained influence on the financial and fiscal regime, both through political emancipation as well as by serving as financial officials. They also demanded more insight in the financial management, both of indirect taxation and the management of urban debt. They were given a central role in the financial reforms necessary to face the growing tension between economic stagnation and the financial demands. In this way, the impact of these socio-political changes on the management of the urban fiscal systems can be displayed.

The concept of a financial crisis has recently been addressed by what is now known as the ‘New fiscal history’. The emergence of public finance, fiscal systems, and the creation of public debt are at the heart of these discussions. In this sense, a financial crisis occurs when expenditure structurally outweighs the normal revenues from taxation and the ability to borrow money in order to meet current financial obligations (Bonney 1995, pp. 5-8). The 15th century is generally seen as a period of structural political and economic crisis (Van Uytven 1975; Smahel 2002). This crisis also had consequences for urban public finance and its management. Each town within the Empire had to pay a fixed percentage of the total tax sum of central direct taxation through a system of repartition and so the increased tax burden had forced several towns to sell annuities on an unprecedented scale because these sums were paid directly through the urban finances (Blockmans 1999, pp. 287, 297-304). Thus, central direct taxation indirectly tapped into the financial resources of the towns which, in turn, led to an ever growing pressure on the urban finances causing an increase of urban indirect taxation to cover the funded debt caused by these annuity sales.

Financial crises and social conflicts directed the aim of restructuring power of the old ruling elites and finally were centred round the wish for a more efficient management of urban financial resources and more intensive control rights for those urban social groups that provided the capital for the realization and protection of ‘common’ urban interests.

But what was the situation in Central Europe? Why the conditions for credit use were not so favourable here like in the West? A passive trade balance within the triangle between North Italy, Flanders, and Central Europe following from the uneven position in West-East trade relationships and a lack of sea are generally considered a reason why this region was behind. The research shows that besides common features, which became evident with delay in the eastern parts of the Empire, there were also differences: while in the West, the tax basis was rather created by indirect taxes, in the East direct taxes prevailed. While in the West trade activities played an important role, rich burghers in the East instead invested in land estates. In the West, the growing incomes of cities led to the establishment of separate cashes, while in the East, a single-entry accounting prevailed (Zaoral 2014, pp. 281-89).

The aim of this book is to show to what extent is the above mentioned concept of credit reflected by historians dealing with the history of Central European countries, the territory covering the eastern part of the Holy Roman Empire (Austria, Bohemia, Moravia, Silesia), Poland, and Hungary. This region is, among others, characterized by smaller political stability. It is necessary to emphasize at the outset that the medieval lands of these states were not identical with their modern counterparts; the territories of medieval Poland and Hungary, especially, differed drastically from their modern equivalents.

The views of the position of this region within the European economic system oscillate between periphery and semi-periphery. As the region characterized by exporting all or mostly raw materials and importing all or mainly finished goods, Central Europe is usually ranked to periphery (Wallerstein 1976, pp. 229-30). A slightly different view has been formulated by N. J. G. Pounds who divides late medieval Europe into developed, developing, and backward areas using five criteria - reliability of political structure, trade, urban areas density, population growth, and agrarian improvements. In this sense, he puts Bohemia, western Poland, and western Hungary among developing areas, together with eastern Germany, the shores of Scandinavia, the Scottish lowlands, Spain, and southern Italy (Pounds 1978, p. 102,112). An indicator of the social and economic wealth of the European regions is for him the evaluation of the dioceses for taxation by the Holy See. This shows that France and Italy were taxed much more heavily than for instance Germany and that Germany was taxed heavier than Poland, for instance (Hroch & Klusakova 1996, p. 39).

Central Europe served primarily as a market for the craft products of West European origin and also as a region providing precious metals for the European financial system. It is well documented that precious metal production expanded significantly in the 14th century, especially in Bohemia and Hungary. The growing yields of silver and gold contributed to an increase in purchasing power and thus created better opportunities for the development of long-distance trade and the use of credit. Although a lot has been done, the specific research issues of Central Europe are still not fully integrated into the general European historiographic tradition, and it is no doubt that the particular role of Central Europe in the wider European economy needs to be revisited.

The presented historiographic overview is primarily intended for scholars who come from a different region and cannot use the local languages. That is why main attention is paid to the works of Polish, Czech, Slovak, and Hungarian historians. The works of German-language authors, which often represent a key basis for study of the history of Central Europe, are for these reasons mentioned only marginally. At the same time, it is necessary to call attention to the fact that most works in this field concern the early modern period, which corresponds to the number of extant historical sources in the Central European archives, among which medieval accounts or ledgers are rather rare.

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