Desktop version

Home arrow Business & Finance

  • Increase font
  • Decrease font


<<   CONTENTS   >>

Loans and debts as a part of royal finances

Loan transactions in the Kingdom of Hungary up to the end of the 14th century

Loan transactions in the Kingdom of Hungary up to the end of the I 4th century

Boglàrka Weisz

Introduction

The earliest known credit transaction in Hungary was a loan from the church to the king in the 12th century. Borrowing money became common in the 13th century, initially from the church and from landowners. Townsmen only appeared in significant numbers among lenders at the end of the 13th century, although Jews were prominently involved throughout the century. This was the period when coins started to be minted in substantial quantities and there was an upsurge in trade and the circulation of money. Initially, loans were not secured against estates (except loans from Jews, which always required collateral), but the mortgages first appear in the middle of the 13th century. Townsmen established a firmer presence in the credit market during the 14th century, leading to the emergence of a new form, the annuity. All forms of credit used in the Kingdom of Hungary were established by the end of the 14th century, and did not change substantially even in the rapid proliferation and increasing amounts of credit in the 15th century (Lederer 1932). Here, I first concentrate on the loans taken out by Hungarian kings, whom they borrowed from, and how they repaid them, and then I present the types of loans and the social position of the lenders.

Hungarian kings’ borrowings

The first known royal loan in Hungary came from the church. Pannonhalma Abbey, out of money received from the sale of an estate, granted Geza II (1141-1162) a loan of 40 marks of silver, and was later rewarded by a royal grant of land (AUO I, p. 61). Andrew II (1205-1235) took out somewhat larger loans. He needed the money primarily to finance participation in the Fifth Crusade, on which he departed in the summer of 1217, returning only the following year (Veszpremy 2006, p. 101). The lenders were Hungarian churches, clergymen, Hungarian noblemen and Italian merchants. Hungarian monasteries provided the king with valuable jewels which he took to sell on his journey. From the Diocese of Veszprem, he took the crown of Queen

Gisella (HO V, p. 8), wife of Stephen I (996/1000-1038), and from the Benedictines of Tihany, a precious-stone-encrusted chalice, mentioned as a scyphus (PRT X, p. 519). Priests provided large sums to Andrew II for his outward and return journeys (AUO XI, p. 155). Italian merchants lent him silver, which he also used to finance the expedition, and the rent on the ships he hired from Venice, Ancona and Zara may also be interpreted as a loan (Robbert 1985, p. 431, Robbert 1995, p. 21). On his return from the Holy Land, the king borrowed 200 silver marks from Ban Atyus of Slavonia (AUO XI, p. 161), probably to cover the costs of the campaign and to repay previous loans. Andrew repaid the loans in silver, by grants of land, and sometimes by the granting the annual salt tax. Andrew’s son Bela IV (1235-1270) was obliged to take out loans on several occasions, mainly to finance military operations and defensive works during the Mongol Invasion. Like his father, Bela mostly sought financial assistance from churches, settling the loans with grants of estates (PRT II, p. 321), but private individuals were also featured among his lenders (HO VII, p. 83). Another Arpadian king, Ladislaus IV (1272-1290), took valuables from the diocese of Veszprem with the intention of selling them to finance military campaign expenses, granting an estate in return (CD V/2, pp. 265-6). After the extinction of the house of Arpad in 1301, the Angevin kings frequently borrowed from Italian merchants. Charles I (1301-1342) took a loan of 300 ounces of gold from Florentine merchants to settle his affairs in Hungary. In exchange, his grandmother, Queen Mary of Naples, pledged a gem-encrusted crown as collateral (MDE I, p. 174; Huszti 1941, pp. 57-9). Although we have no record of loans from the later stages of his rule, we may be sure that they continued to form part of his finances. Two new types of loan were added to the royal borrowing mechanism during the reign of his son, Louis I (1342-1382). Firstly, burghers of Hungarian towns, and even the towns themselves, appeared among royal creditors (DF 238 959). Secondly, the king started to mortgage royal castles and domains (the earliest was Ovar in the 1350s [today Mosonmagyarovar], Sopron vm I, 354.). These two forms of finance were to provide the backbone of royal loans in the 15th century. For example, in 1363, Louis I mortgaged the castle of Kopcseny (today Kittsee, Austria) to the Wolfurtis for 6000 golden florins, Bishop Stephen of Zagreb standing as guarantor (HO VII, p. 410). The mortgage deed has not survived but later contracts make it clear that the king acted with the agreement of his wife Elizabeth (maybe previously his mother Elizabeth) and the barons (1380: Frangepan I, pp. 89-91), although they did not involve a guarantor (1382: DL 6134). The date of redemption was not specified in the mortgage deeds. Louis I mostly borrowed to finance foreign military expeditions, often experiencing the need in the midst of the campaign when he was not in a position to mortgage anything and the lender had to trust the king’s word. In this case, the lender was not disappointed. On his Neapolitan campaign, for example, Marmonya, a knight of the royal court, gave theking 500 golden florins to pay his soldiers’ bounty. This loan (together with Marmonya’s other services) was repaid by a grant of land (1364: CDCr XIII, pp. 331-5). Louis I also had recourse to foreign loans to finance the campaign and found willing lenders among Italian towns (1380: MDE III, pp. 339-40, 374-86, 402-11, 420-3).

A form of ‘loan’ that emerged in the 13th century and found particular favour among Hungarian kings and queens was the leasing of royal revenues (Weisz 2010, p. 86; Weisz 2013, pp. 207-19) such as minting, tolls, customs duties [thirtieth, Hungarian: harmincad,'We$7. 2018, pp. 259-60], for which the tenant paid rent in instalments. The tenant bore the costs of the operation and kept the revenue. Tenants bore liability for the source of revenue, and were obliged to sell land and other property if they did not pay their dues. The buyer subsequently enjoyed royal protection (1268: MES I, p. 551; 1369: DL 100 189). The lease system may be conceived as a kind of loan provided by the tenant, who was ‘repaid’ within a short time, although from the king’s point of view, the rent payment could be interpreted as a credit to the tenant, necessitating the tenant’s liability to the extent of his own property.

In addition to borrowing money, kings often had purchases made for themselves on domestic or foreign credit and paid for goods after receiving them. This form of purchase was already present in the royal court during the Arpadian age, and one of the most detailed sources on the practice is an account book written by Syr Wulam in the 1260s (Zolnay 1964). This is the documentation of a transaction worth 1500 silver marks, telling us about goods purchased for Stephen, ‘junior king of Hungary’ (1262-1270), and loans taken out by persons close to the king secured against pledges of chattels.

 
<<   CONTENTS   >>

Related topics