Merchant Enterprise and the Development of

the Phm-Based Trades in Serbia, 1847-191T

B% MICHAEL PALAIRET

OR the smaller and more remote economies of continental Europe the

F economic history of the pre-1914 era should perhaps be seen most con-
structiyely as one pf a commercial revolution on the fringe of the industrial-
izing centre. One of t i e mainsprings of this process must surily have been the
tremendous expansion, within the area which naay be described broadly as
Mediterranean Europe, of the export of specialist and industrial crops, to the
countries of the industrial centre. A case study of this process is afforded by the
development of trade iin the produce of the plum orchards of Serbia, which sup-

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11 should like to thaiA Prof. S. B. Saul and Dr I. S. W. Blanchard for their helpful comments and
criticism.
582
 PLUM-BASED TRADES 583
plied the expanding nineteenth-centur\- world market for prunes. Starting from
virtually nothing in the i86o's, Serbia's prune export became the largest in the
world. In 1903-7, Serbia exported 35,400 tonnes of prunes per annum_, while her
principal rivals on the international market, the U.S.A. and Bosnia-Hercegovina,
exported 22,400 tonnes and 21,800 tonnes a year respectively.^ This development
had profound effects on the small Serbian economy, and it is the object of this
article to quantify- them, to examine the means by which Serbian plums were
placed on the world market, and to assess the impact of the plum-based trades
on the evolution of the country's economic institutions.

At the moment no serviceable and comprehensive economic histor\' of Serbia

exists to which the reader may be referred for background on this subject, so it is
therefore necessary to outline the salient features in the experience of the pre-
1914 Serbian economy.^ Serbia was an almost purely agrarian country through-
out this period. As late as 1910, 81 • 4 per cent of the 2 • 9 million inhabitants lived
in the villages. Mass small-scale landowTiership, provided for in homestead laws
of 1836 and 1873, was regarded as one of the very bases of the state's existence.*
Although a rural proletariat was beginning to emerge, the census of 1905 showed
that the land was still divided remarkably evenly, as there were about 370,000
holdings, whose mean size was about 5 • 3 hectares, and 94 per cent of private
land was in the hands of holders of 50 hectares or less.*
Thin settlement in the early years, and poor communications, resulted in the
predominance of pastoral farming, and as late as 1862, this was refiected in an
export trade at least 80 per cent ofwhose value was composed ofpastoral produce.
The produce of cultivation represented less than 5 per cent.^ Most peasants
cultivated no more of their land than was needed to supply domestic require-
ments. But the inexorably mounting pressure of settlement forced farmers to
cultivate a rising proportion of their lands and to market cultivated rather than
pastoral products. The process was facilitated by the modernization of waterway
and land communications. By 1911, exports from the pastoral sector had fallen
to less than 25 per cent of all farm exports," and even these contained a significant
component of meat which had been fattened on the produce of the arable.
Not only were farm exports profoundly changed in structure, but also their
^ For Serbia, see sources for Table i below, p. 588, for the U.S.A. (1904-7 only). Department of Com-
merce, Aaíiíííca/Jèrireci ofi/is U.S. in igif (Washington, D.C. 1915), p. 419, which also indicates (p. 155)
that California was the preponderant source of supply, and for Bosnia, see Report for theyear igo8 on the
Trade andCommerae ofBosnia and the Herzegovina (Par!. Papers, 1909, xcn), p. 17.
^ However, by the time this appears in print, the gap may well have beenfilledby work of Dr John P>..
Lampe, now nearing completion.
^Jelenko Petrovic, Prelaz Seljaka u Varosi i Radnike (The transfer of peasants to the towns and into
workers) (Belgrade, 1924), pp. 7 if. (Hereafter Belgrade is assumed to be place of publication unless
otherwise indicated.)
* The basis for this calculation is data supplied to the Belgrade Chamber of Industry by the state
statistical direction and printed in Industrijska Komora Kx. Srbije, Izvestaj 0 radu i stanju industrije u igis i
I9'3 godini (Report on the work and condition of industry in 1912 and 1913) (1914), p. 90, as modified
by me in my thesis 'The Influence of Commerce on the Changing Structiire of Serbia's Peasant Economy,
1860-1912' (unpublished Ph.D. thesis, university of Edinburgh, 1976), table i.io and note, pp. 42-3.
* Calculated from 1862 export statistics in Drzavopis Srbije (Statebook of Serbia), i.
6 From export statistics for 1911 in Srpske JVovine (Serbian News) (hereafter, S.JV.), 23 Feb. 1912.
584 MICHAEL PALAIRET

aggregate volume per head of the farm population appears to have risen by
about 55 per cent between 1861-6 and 1902-6, before falling slightly in conse-
quence of Austro-Hungarian trade sanctions in the period 1906-1 o.^ The frailty
of Serbian statistical materials discourages any attempt to estimate the growth of
total farm production before World War I, but farmers' market production was
growing somewhat faster than the export trade, and their purchasing power
was growing significantly faster still. ^
Commercial development imparted a sufficient dynamic stability to the rural
economy to hold the peasantry within the farming sector, and, as tariffs were
low till 1905, stimuli for the development of modern industry (except in respect of
food processing) were rather weak. The gross output of mechanized industr)'- as
late as 1893 has been calculated at only 21 raillion dinars (,¿'840,000) and even
this was largely comprised of mill inputs and the turnover of the state tobacco
monopoly. Nevertheless, industrial output had grown fourfold by 1911, by which
time it represented the estimated equivalent of about 15 per cent of C.N.P.^ But
this exaggerates its significance, for half this output was still of the basic food
industries whose value added was much smaller than gross production.
It is therefore perhaps surprising that the only scholar to have subj ected Serbia's
economic development to a serious and objective modern analysis has concen-
trated on this rather inconsiderable industrial sector and on the modernizing
institutions which affected its emergence. This approach was underpinned by
the declaration that: "Industrialization, after all, lies at the heart of the most
commonly accepted definition of economic development. . ."* The agricultural
sector is treated essentially as a backward backdrop to the industrialization
process. The implicit infiuence underlying this industrialization approach is
that of Gerschenkron's model of extreme backwardness, in which only a policy
of substitutions (with a leading role accorded to the state) is sufficient to initiate
the first industrial "spurt" on which the development process then depends.^
The Balkan states—^particularly Serbia—forbore to exert sufficient pressure
on their farmers to induce a "spurt" strategy. This, at any rate, prevented them
from doing the harm to agriculture which the Russian experience shows to have
been unavoidable. And this perhaps was just as well, for the strategy may
(largely) fail, leaving behind little but an artificially retarded agrarian sector, as
the Bosnian experience under Habsburg rule would seem to demonstrate." So,
unless agriculture had been irredeemably stagnant, the "spurt" strategy could
•*• See Palairet, thesis, table i .8, p. 37. On the commercial war thestandard work is Dimitrije Djordjevic,
Cannsh Rat Austro- Ugarske i Srbije, igo6—i i (The customs war of Austria-Hungary and Serbia, 1906—11 )
(1962).
^ This conclusion, which must, however, be qualified by several caveats, is indicated by calculations
in my thesis, pp. 36—54.
*John R. Lampe, 'Financial Structure and the Economic Development of Serbia, 1878-1912'
(unpublished Ph.D. thesis. University of Wisconsin, 1971), table 1.2, pp. 22—3, and p. i8. See also his
chapter 'Serbia, 1878-1912', in Rondo E. Cameron, ed. Banking and Economic Development (New York,
1973).
* Lampe, thesis, p. 20.
^ The allusion is to A. Gerschenkron. Economic Backwardness m Historical Perspective (New York, 1963)
particularly the title essay and the study of early Bulgarian industrialization, and his restatement in
Europe m the Russian Mirror (Cambridge, 1970), pp. 97-126. Dr Lampe's views are broadened to comprise
an overview of Balkan industrial development, with an emphasis on demand side failure, in 'Varieties of
Unsuccessful Industrialization : The Balkan States before igi^.,'Journal of Economic Histoiy,iiKXV (1973), i.
* See Peter F. Sugar, Industrialisation of Bosnia-Hercegovina, 1878—1918 (Seattle, 1963).
 PLUM-BASED TRADES 585

as well have retarded as accelerated overall development. Now, although un-

deniably ver)' backward by most criteria, Serbia's farm economy was by no
means devoid of dynamism (and the same may be said ofthat of Bulgaria during
the period which Gerschenkron analysed) .^ So a careful examination of the
sources of growth and retardation within the agricultural sector may prove more
illuminating for the dynamics of development than an emphasis, possibly mis-
placed, on industrialization or industrial "failure".
At least until the beginning of the twentieth centur}-, the driving force behind
this growth %vas not to be found in the basic cropping and stockraising systems.
Though the arable surface probably expanded from the i86o's rather faster than
population, on the one hand it is unlikely that yields per hectare improved, and
on the other neither the structure of cultivation, nor the trend in grain prices,
encouraged the application of much in the way of labour-substituting investment.
Only after 1900 did farming systems undergo any perceptible improvement;
then, according to the published state and Austrian consular statistics, cereal
yields per hectare improved at an annual rate for wheat of 3 • i per cent, for maize
of 2 • 9 per cent, and for barley of 4 • 3 per cent.^
This was a very late development, but the Serbian farm economy was by no
means stagnant in the meantime, thanks in part to the introduction of a range of
non-cereal cash crops which are commonly, if erroneously, regarded by historians
as sidelines to the main effort of the farmers, and of which the plum was by far
the most important. The most significant aspect of such cash crops was that they
provided a relatively high money yield in terms of land usage, and therefore an
alternative to, or a shortcut towards, intensification. Their adoption could be
integrated into peasant agriculture more easily than the complex techniques and
organizational changes required for the spread of integrated arable-livestock
husbandry. The experience of the Balkans, of Dalmatia, Bulgaria, and Mace-
donia, as well as of Serbia and Bosnia, suggests that areas which successfully
adopted the cultivation of non-cereal cash crops (especially plums, wine, tobacco,
opium, and olives) were associated v/ith above-average rural prosperity.

II
The spread of the plum was fairly rapid during the period from 1847 to 1908,
though the estimates are necessarily approximate. There were, however, about
13-4 million stands in Serbia in 1847,^ and about 25 • 8 million within the same
^ Bulgarian farm output appears to have grown at 2 per cent p.a. in 1892—1911 and at 4- 2 per cent p.a
in 1924-39.—^A. Iaj-anoff. La Bulgarie Économique (Lausanne, 1919), p. 87; A. Cakalov, Nadonalnijat
Dohod i Razhodna B'lgarija, 1324-43 (Sofia, 1946), p. 117. The sources of output growth are exammed in
P. Tait, 'Bulgarian Agriculture, 1919-39' (typescript. University of Edinburgh, 1976).
^ Tabulated irs Palairet, thesis, p. 214.
3 Based on statistics on 16 out of 17 nahije in Ùca Sreckov' List ' za Srbske ^emljedeke (öica Srecko's broad-
sheet for Serbian agriculturalists) (hereafter C.i'. Lisf), 11 (1848), 7,50; 8, 58:9, 67:10, 74; 11, 87: 12, 90:
13,98; 14,105; i5,132; 17; 19,147; 20, 155; 2Í. 161; 22,171; 83,178; 24, 186. Some include only plums,
some itemize all fruit individually, some give only a total offrait trees. Where full details were given plums
accoiinted for 90 per cent of all fruit trees, and the remaining figure were appropriately adjusted. The
figure was then adjusted upward by 5-59 per cent to take account ofJagodina nahija, on the basis of :ts
5-29 per cent share in the area under plums recorded in the 1867 census of cultivation, for which see
summary in \'ladioir Jaksic, 'Stanje Zemljoradnje u Srbiji' (The condition of agriculture in Serbia),
Glasnik Srpskog Ucenog Drustva (Voice of the Serbian Scientific Society) (hereafter Glasnik S.V.D.),
586 MICHAEL PALAIRET
area in 1897.^ Area statistics are much less reliable, for they are subject to improb-
ably large year-to-year fluctuations, but the whole area under plums appears to
have increased from 98,000 hectares in 1897 to 150,800 in 1906-1 o, or by 53 • 9 per
cent. During the period 1900-8 mean yields were 28 quintals per hectare. Thus on
the assumption that yields per hectare did not change over time (the only possible
assumption in the absence of contrary information), the 1840's crop for the post-
1878 area was about 142,500 tonnes, compared with 530,000 recorded for 1908.^
Plum growing is sensitive to climatic and soil conditions, and where these
were adverse, yields were likely to be poor and too irregular to make it worth-
while. This resulted in such a sharply defined regional concentration of plum
growing that it is possible to speak of a "plum belt", covering about half the
country.^ In 1904, for example, eight out ofthe 17 okruzi, into which the country-
was administratively divided, in which dwelt 46 • 7 per cent of all farm pro-
prietors, produced 86 -5 per cent ofthe crop.* The plum belt extended westward
from beyond the Bosnian frontier (the Bosnian plum-producing region being
contiguous),^ and included the whole ofthe Sumadija, while its eastward limit
was the valley of the Great Morava river, on both sides of which there was
intensive plum cultivation.
The very substantial output ofthe plum orchards even in 1847 sustained only
a trifling export of plum-based produce, and most of it was used for the self-
consumption ofthe producers. Inits raw state very little ofthe crop was saleable,
for it was highly perishable, bulky in relation to its value, and voilnerable to
damage on the rough roads it had to traverse by oxcart. The principal purpose
for which the orchards were harvested was for distilling the frmt to a weak
alcoholic spirit called rakija sljivovica, a task which was usually performed by the
producers themselves with crude distilling equipment of fairly general availa-
bility.^ Though this process, which reduced the bulky, perishable plum to a stable
concentrate, made the product much easier to transport, it did not open the door
to more than a small regional commerce as no world market demand for rakija
existed. There was some internal trade in it,' as well as an export which grew to
a plateau level of 24,000 hectolitres in the late 1850's. Between 90 and 99 per cent
of this was sent to Turkey.^ But neither trade seems to have enabled producers
•"• The 1897figureis the total for Serbia as in Statistika Kr. Srbije, xvi, 366, reduced by 415,000 stands in
the annexed territories (Vranje, Pu'ot, and Toplica okruzi, and Nis and Svrljig srezovi of Nis okrug), which
together account for only i • 6 per cent ofthe total.
^ For comparative reference, orchards in 1905 accounted for 11 • 2 per cent of total crop area. Calcu-
lated from area and yield data in Statistika ... xvi, 92 (for 1897) ; Statistich Godisnjak Kr. Srbije (Statistical
yearbook ofthe kingdom of Serbia) (hereafter 5.G.), 1900, pp. 186-92; iS.G. 1901, pp. 225-30; 1903, pp.
233-8; 1904Î PP- 253-8; 1905» PP- 243-8; 1906, pp. 243-8; 1907-8, pp. 243-54; k.k. Oesterr. Handels-
museum, Serbien. Wirtschaftliches Verhältnisse. .. 1910 (Wien, 191 ï) (hereafter Handelsmuseuni, 1910). p. 13.
^ See map, on p. 582, on which is superimposed the boundary oîvery intense cultivation (upwards of 15
stands per head of farm population) in 1897. However, its limits would be subject to perceptible year-to-
year fluctuation.
* S.G. 1904, pp. 253-8.
^ Cons.-Gen. Freeman, Report on the Trade and Commerce of Bosnia and ihe Herzegovina for IQ03 (P.P. 1905
LXXx\^I), p. 14.
8 There were 20,729 distilling kettles in Serbia in 1867.—Drzavopis Srbije, v, 115.
' Statisticki pregled saobracajmh rezultata Srpskih Drzavnih ^eleznica u igo8 god (Statistical review of the
traffic results ofthe Serbian State Railways in 1908) (1910), table xxx; also see Olga Sa\dc, Krusevac i
Ajegova Uticajna Sfera (Krusevac and its sphere of influence) (^1969), p. 91.
^ S. Dj. Milosevic, I^O/;'K« Trgovitia Srbtje od 1843-^3 godine (Foreign trade of Serbia from 1843 to 1875)
(1902), p. 13.
 PLUM-BASED TRADES 587

substantially to monetize their crop. In the north-west of Serbia, according to a

report of 1848, the consumption ofrakija was enormous, but the entire output was
self-consumed, and in the view of the reporter the effective retiu'n to producers
seemed hardly commensurate with the effort of producing it.^
Apart from liquor, the orchards provided the peasantry with a substantial
source of human food and, particularly when the crop was too large to dispose
of otherwise, an important ancillary source of grazing. ^ As land was still fairly
cheap and abundant at mid-century, and as little care needed to be devoted to
the upkeep of the orchards, there was little pressure on the plum grower to divert
the resources they represented to alternative ends. But so explosive was the growth
in the aggregate export of plum products after about 1865 that it is hard to doubt
that there was a good deal of repressed commercial supply available in the pre-
ceding period. It was not on the basis oí rakija, however, but on two other stable
concentrates with a wide acceptability on the international market, prunes and
subsequently/ig^/ne^ (jam), that the ensuing boom in the export of the plum crop
took place. These new products transformed plum raising from a peripheral non-
money activity, which was maintained only for lack of presstu-e on the resources
it used, to a high-yield, highly commercialized form of production which became
worth expanding energetically despite increasingly severe pressures upon landed
resources.
All these concentrate products had a high ratio of value to weight. The value
of IOO kg. of wheat on Belgrade in 1901 was 13-65 dinars, whereas the same
weight of prunes traded at 32 dinars, pekmez fetched 43, and rakija, 90.* Rail
carriage after 1884 may have facilitated the growth of trade, but the previous
dependence on road transport does not appear to have inhibited it, other than
under exceptional circumstances.* In 1904, 72 per cent of all prune exports left
the country through the non-rail ports of Sabac and Obrenovac,^ much of the
supply ha^dng come up from the deep interior, rather than from the riverain
plain, which was not an area of intense plum production. A'luch of this may have
travelled up to 100 km. by road.®
The course of development of the plum-based export trades is shown in
Table i. Much the most significant element in the impressively expansionary
trend was the export of prunes. In 1904, as shown in Table 2, the prune export
trade yielded 149 dinars (nearly £6) to each of the 66,700 producers within the
plum belt, while the sale of fresh plums to exporters, consumers, and jam manu-
^ C.S. List', 2 March 1848, 67-8.
^ F. Kanitz, Serbien. Historisch-ethnographische Reisestudien aus den Jahren 185g—68 (Leipzig, 1868), p . 594;
R. T. Nikolic, 'Poljanica i Klisiira. Antropogeografska Pi-oucavanja' (Poljanica and Klisura. Anthropo-
Géographie study) ; JVasetja Srpskih Zemalja (The settlements of the Serbian lands) (hereafter JV'.S.,^.), m
(1905), 48; Ljubica Trajkovic, ed. Valjevo i Okolina (Valjevo and environs) (1956), p. 48; 'Susenje Sljiva,
n' (The drying of plums, n), Videlo, iv (1883), 17.3, col. 3.
ä S.G. 1901, pp. 272, 377, 279.
* Such as heavyfloodingin very remote areas, see B. Jela\'ich, 'Serbia in 1897. A report of Sir Charles
yiliot', journal of Centrat European Affairs, :s.\in (1958), 188.
^ Statistika Spoljasne Trgovine Kr. Srbije ... igo^ (Statistic of the external trade of the kingdom of Serbia
...1904), pp. 186-7.
* Obrenovac WEIS regarded as the outport of Valjevo, the main prune-trading centre of this region.
60 km. from the Sava river. The Valjevo—Obrenovac road sustained a very active export trafiSc.—
Belgium. Recudí Consulaire, Lxxv (1892), 60-r. A substantial part of this originated in the Sokol region.
Lj. Pavlovié, 'Sokolska Nahija' (Sokol region), Xaselja i Poreklo Stanovnistva, xxvi (1930), 357.
588 MICHAEL PALAIRET
Table i. Gross Export of Plums and Plum Products, i843¡5i-igo'/jii
Annual export {in ooo tonnes)

• Totalt
{equivalent Value
Period Fresh* Prunes Pekmez Rakijaf infresh plums) {000 dinars) §
1843-51 n.a. 0-1 n.a. 0-5 n.a. n.a.
1852-61 n.a. 0-1 n.a. 1-8 n.a. n.a.
1862-6 0-2 0-5 — '-9 12-3 690
1867-71 0-3 2-2 — 2-0 i8-9 1,230
1872-5 0-3 5-0 — 2-4 31-6 3,210
— VVair period—-no data
1879-81 n.a. 13.7 O-I I - 2-2 - 6 56-7- 63-7 5,160- 6,0I0;¡
1882-6 0-7 25-6 o-i 0-4-2-8 95-7-108-5 7,700— 8,660
1887-91 0-9 26-7 2-0 0-3-2-9 104-1-118-0 7,304- 8,240
1892-6 5-7 22-3 3-7 0-4-3-1 98-1-112-4 6,580- 7,820
1897-1901 '4-3 33-7 7-9 0-6—3 - 6 166-3-182-2 13,170-14,240
1902-6 26-0 34-0 13-1 0-3-5-3 200-8-227-6 13,220-14,780
1907-11 '4-7 31-6 8-9 0-3- 163-I- '5.-520-
Sources ; ( i ) Export statistics. To 1861 : S. Dj. Milosevic, Spoljna Trgovina Srbije od 1843-75 godine ( 1902).
1862-75: Drzavopis Srbije, i, n, m, vi, x. 1879-1910, 1912: Ministarstvo Finansija, Carinsko Odeljenje
(from 1909 Carinska Uprava) Pregled Spoljne Trgovine Kr. Srbije za 1888 and similar titles, with 1884-7
data amplified in Drzavopis Srbije, xiv, xv. For 1911, see Srpske Novine, 23 Dec. 1912. (2) Turnover of
rakijain Cacak and Uzice okruzi, 1898-1908, see table headed 'Kolicina proizvoda premerenih na
opstinskim merilima u 1898 godini, a. Pregled po okruzima', S.G. 1898, pp. 423,/iai«ffl.
* Includes all fresh fruit but is composed predominantly of plums.
f The higher estimate in each case includes an allowance for smuggled exports oîrakija, after the appli-
cation of near prohibitive tariffs on Serbian rakija entering Turkey. Each year for which there are data
(1898-1908) very large amounts oîrakija were sold on the markets in Uzice and Öacak okruzi. Local pro-
duction could not have sufficed to supply these markets on the scale observed, so a large part of what was
sold must have travelled in a south-westerly direction, which can only mean it was on its way to Turkey.
The annual turnover oîrakija in these two okruzi has therefore been xised as an approximate measure of
the smuggling trade, and estimates have been made for the period 1880-97 by interpolation between the
actual pre-1880 rakija export and the estimated illegal export of 1898-1908.
% Calculated by multiplying prune and/leime« export volumes by 3 - 63 and 3 - 36 and those for rakija by
5-29 (1904 figure). See Palairet, thesis, pp. 478, 506.
§ Higher figure in each case takes smuggled rakija at unit price of declared exports.
|: Excluding fresh fruit.

facturers, and the sale of home-produced rakija sljivovica yielded as much again
and more, so that total receipts fi-om plum growing and processing amounted to
307 dinars for each of these farmers. By 1902-6 plum-based products amounted
to at least 19-6 per cent of Serbia's total exports. (Within the plum belt itself this
percentage would nearly double.)
It is nevertheless evident that the growth of export volume so far outpaced the
growth of output that it made significant inroads into the level of per capita
domestic consumption of plum produce. Between 1847 and 1908, domestic con-
sumption, the residual after deducting exports from production, rose from about
140,000 tonnes to 231,000-268,000 tonnes of raw plum equivalent, mainly as
liquor. In the former year, population was about i - 093 million, in the latter,
about 2-841 million, implying that per capita consumption fell from 128 kg. to
81-94 kg. However, more than two-thirds of actual exports could have been
achieved without a fall in consumption, and, as much of the crop had been under-
utilized in the earlier years, to the point that it had been regarded virtually as a
free good, it may be doubted whether the sacrifice of utility from self-consump-
 PLUM-BASED TRADES 589
Table 2. The igo4 Plum Crop, as at Farm Gate
Percentage Value
of crop {m. dinars)
Total crop 468,000 tonnes — —
Prunes sold 47,000 tonnes 36-4 10-9
Rakija sold 173,000 hl. 19-5 8-3
Solàîoi pekmez 51,000 tonnes
Sold fresh 27,000 tonnes 5"9l 3'9
Self-consumed, fresh and rakija 27.3 —
Total 100 23-1

REGIONAL BREAKDOWN
Mimher of producers
Cash income per producer from: As percentage
Prunes Rakija Plums Total of rural
{dinars) Absolute households
N.W. Serbia* 272 74 24 370 22,200 51
W. Sumadijat 139 149 71 359 16,900 33
E. Sumadijat 57 lOI 65 223 27,300 40
Plum belt § 149 104 53 307 66,700 41
Rest of Serbia 24 35 9 68 39,200 21
Serbia 103 78 37 218 105,900 30
Sources: the above was calculated from Serbian state agricultural production and output value, dis-
tilling, export tradej market scales and price statistics for 1904, as well as miscellaneous datafor establishing
parameters and ratios from Miljutin Savic, Sljiva. Gajenje i Upotreba sa Predlozima za Unapredjenje (Plums.
Rearing and utilization with proposals for improvement) (1900), pp. 86, 126, 127, and other contem-
porary sources. Considerations of space preclude setting out source data and calculation procedures,
which may, however, be referred to in my thesis, tables 7.7-8, and in app. to ch. vii, pp. 505—19, where
the data are broken down on an okrug-hy-okrug basis.
* Okruzi of Podrinje and Valjevo.
f Okruzi of Belgrade, Rudnik, and Cacak.
{ Okruzi of Kragujevac, Morava, and Krusevac.
§ North-west Serbia and east and west Sumadija.
Gerarat note: prices and outputs are calculated to exclude any process or value addition other than by
the farmi sector. The year 1904 was selected solely on the grounds of statistical convenience (being the
only year for which both port-of-exit data and rakija statistics are available). In relation to 1902-6, it was
a year of above-average output, but of 5 • 2 per cent worse-than-average export value on account of low
prices.

tion was perceptible ; once the opportunity arose, producers were probably only
too eager to monetize part of their existing crop, and subsequently expanded
cultivation as their cash needs increased. So in addition to their earnings through
the market, plum growers continued to derive a diminished but still substantial
notional income from self-consumption of ra%v fruit and rakija, amounting in
1904 to 27 per cent of the crop.^
This expanding sector of the Serbian economy was observed by many con-
temporaries to give rise to considerable prosperity in the plum-growing \dllages,
though to a precarious dependence on a highly volatile harvest.^ It was also very
usefully located, for the orchards throve in the hill villages rather than in the
1 See Table 2.
^ See, for example, D. Jovanovic, 'U Carstvu Sljiva i Rakije' (In the empire of plums and rakija),
PrivredniPregled, III (1923), 46.3 ; Lj. Pavlovic, 'Kolubara i Podgorina' (Kolubara and Podgorina regions),
jV.5.;^, IV (1907), 420; T. Radivojevic, 'Lepenica. Antropogeografska Ispitivanja' (Lepenica. Anthro-
pogeographic examination), jV.Á'. ^ . vn ( 1911 ), 317 ; Mihailo Avramovic, Mase Seljacko Gazdinstvo (1928),
pp. 24-5.
590 MICHAEL PALAIRET

fertile river valleys,^ and supplemented the product of the arable, instead of com-
peting with it for space. First-class arable (44 per cent of all arable) on the eve of
World War I was valued at 1,980 dinars per hectare, and orchand land (un-
planted) at only i ,200 dinars, the price at which second-class arable was valued.-
Thus the orchards displaced the produce of only relatively unproductive land.
Notwithstanding the inferior land at their disposal, plum-growing peasants in
the plum belt probably earned larger cash incomes than the average peasant who
raised cereal and livestock for the market. Within the eight principal okruzi of
production, in 1904, one farmer in 2 ^4 raised plums commercially from i -63
hectares of land^ and, after setting aside plums and rakija for self-consumption,
earned 307 dinars from the crop. The mean landholding was of 5 • 3 hectares* and
the 5-hectare peasants in 1911 who raised cereals and livestock took 290 dinars
from this produce in cash,^ but this would have realized only about 181 dinars
at 1904 prices.*
The achievement of relatively high cash yields from plum growing, despite the
low basic quality and value of land suitable for orchards, resulted from the
relatively intensive application of capital and labour to this land. To the 1,200
dinars per hectare of unplanted orchard land value should be added 750 dinars
of capital formed by the planting and rearing of the stands upon it. This made the
value of the orchard as a whole about equal to that of the same area of first-class
arable or i -41 times the value of arable land in general.' Moreover, the produc-
tion of plums and their derivatives was probably also more intensive of labour
than was arable farming. This was not because of any great intensity of labour
input in maintaining and harvesting the orchard—indeed, contemporaries
thought the reverse.^ But a significant part of the earnings from the plum came
from processing it on the farm to prunes and rakija, which were normally manu-
facured, not by the trade, but by the producers themselves. In 1904, a tonne of
plums sold as raw material realized 47^9 dinars, but, as prunes, fetched 64
dinars, and as rakija, 91. As a result, on-farm processing earned for the producers
about 6 • 7 million dinars or 29 per cent of their cash receipts.

Ill
The transformation of plum raising through the introduction of the large-scale
export of prunes was by no means a spontaneous reaction on the part of producers

1 Lj. Pavlovic, 'Antropogeografija Valjevske Tamnave' (The anthropo-geography of Valjevska

Tamnava), N.S.^. viii (1912), 443; S. M. Mijatovic, 'Temnic. Antropogeografska Studija' (Temnic. An
anthropo-geographical study), N.S.^- ni (1905), 291; K. Jovanowc, 'Gornje Dragacevo . . .' (Upper
Dragacevo...), N.S.^. v (1908), 335.
2 Srpski Centralni Komitet, Srbija u imovnonipogledu pre, za même, iposle Svetskog Rata, 1Q14-18 (Serbian
Central Committee, Serbia in its property aspect before, during, and after the World War, 1914-18)
(Geneva, 1918), pp. 36-7.
^ The area figure is derived from the 1905 land census, see S.G. 1907-8, p. 238.
* See above p. 583. ^ Avramovic, op. cit. p. 35.
* Adjusted according to index of export prices, 1862-1912, see Palairet, thesis, table 1.8, col. 6, p. 37.
' Srpski Centralni Komitet, op. cit. pp. 36-7. This is in line with the results of the 1905 land survey,
which indicates that m the eight plum-belt okruzi, orchards were worth i • 53 times as much as the same
area of arable. S.G. 1907-8, p. 241.
* 'Sljivarska Trgovina' (The plum trade), Trgovinski Glasnik (hereafter T.G.), v (1895), 219, i, col. i ;
Radivojevic, loc. cit.
 PLUM-BASED TRADES 59I
to the need to monetize the produce of their orchards, or of merchants seeking to
broaden their turnover beyond the constraints which limited the trade in rakija.
This trade was in the hands ofthe wine merchants, and these do not appear to
have diversified their activities;^ indeed, when their trade with Turkey was
hindered after 1879 by the imposition of heavy import duties, their reaction was
to exploit the weakness of enforcement by carrying on in contraband, to the
extent that by the beginning ofthe twentieth century about 2-3 million dinars
a year were being earned from it.^ No attempt was made, however, to promote
the consumption of this beverage in unfamiliar markets, nor, despite the belief
of some contemporaries as to the possibilities of "educating" the German market,
does it seem likely that Germany could have been induced to imbibe about a
hundred million litres of this rather fiery potation.* On the other hand, the
equivalent in prunes or cheap jam could readily be taken up. But it was not the
wine merchants who introduced these trades.
The innovation of prune drying and exporting did not have far to travel, for
the plum orchards of Bosnia had been exploited commercially for prunes long
before the trade crossed the Drina river and penetrated Serbia. In 1858 the Sava
river ports of Brcko and Banja Luka were sending 4,100 tonnes of prunes through
Trieste as far afield as the U.S.A. and Brazil. Yet a mere 47 tonnes left Serbia
that year, and her export was not to exceed a thousand tonnes until 1866.* It is
possible that the relatively early establishment of a trade in prunes from Bosnia
may have been influenced by the need of the dominant Muslim population to
utilize the plurn other than for alcohol. While exporting prunes, Bosnia imported
Serbian rakija (presumably for sale to the Christian element), and within Serbia
itself, one ofthe earliest centres for the diffusion of plum-drying techniques was
the Muslim enclave of Sokol, near the Drina frontier.^ Nevertheless, the trans-
mission of the trade to the Serbian plum belt required the intervention of
merchant activity, and, as the world market was not yet cognizant of Serbia's
potential as a supplier, it was left to indigenous firms to link up the supply with
the demand of consumers abroad. The w^ays in which this was achieved were of
interest, for the undertaking called for resources of capital, credit, organizational
ability, technical knowledge, and foreign market contacts such as few merchants
in the Serbian interior enjoyed. This is clear Brom the circumstances in which
the trade was pioneered.
Diffusion, when it came about, awaited the transference of enterprise and
labour skills from Bosnia, at a time when Serbia's commercial prospects looked
increasingly attractive to the Serbs of Bosnia, while conditions in that territory
'^ Archive du Ministère des Affaires Etrangers (Paris), Correspondance Consulaire et Commerciale,
Belgrade (hereafter A.A.E. C.C.—B.), 17 dispatch, 3 Sept. 1888, fo. 353.
^ A French estimate of 1903 put the contraband in rakija sljivouica at three times the official export.—
Archi\'e Nationale, Paris (hereafter A.N.), F 12.7179, 'Rapport sur le travail de la récolte dès prunes en
Serbie', 19 Oct. 1903. This was almost certainly an underestimate. See Table i, note t. The contraband
in rakija is also mentioned in S. Igiyic, Uzice i Okolina (Uzice and en-sdrons) (Titovo Uzice, 1967), p. 87.
^ See Lj. V(ulovic), 'Jedna Misao—Kako da se Pomognemo?' (A thought—^How can we help oux-
íébífs'í),PodrirgskeXo!iine (Sabac), 26Feb. 1906, 112-13, 116-18.
* Report of Mr Jams .. .in Bosnia on the commerce . . . of that province (P.P. 1859, Sess. 2, xxx), pp. 457-9;
Milosevic, op. cit. p. 10.
^ B. Milojevic, 'Radjevinaijadar. Antropogeografska Ispitivanja' (Radjevina andjadar. An anthropo-
geographic examination), X 5 . ^ . ix (1913), 665, 731, 740, 758, 766, 768.
592 MICHAEL PALAIRET
deteriorated. The beginnings of the Serbian prune export are associated strongly
with the firm of Krsmanovic-Paranos, and with Rista Páranos, its most dynamic
member. He was a native of one of the Trebinje villages in the barren Herce-
govinian karst and, like many of these peasants, the want of fertile land caused
him to participate in the overland trades between the Adriatic and the Bosnian
Sava ports. It w-^as thus that he travelled to Brcko where he took employment in
the store of Mica Krsmanovic, whose main business was in the import of
"colonials" through Trieste.^ The energetic Páranos rose speedily in the firm,
married his employer's daughter, and was given a partnership, in about 1852.
On the death of Mica Krsmanovic, in the mid-1850's, his sons, and Páranos
(who became the driving force behind the business), moved from Bosnia and re-
established the firm at Sabac and Belgrade. Some years later, by which time the
partners had amassed enormous wealth from the Danube trades in salt and
Bulgarian grain tithes, the firm initiated the export of Serbian prunes.^ Several
independent sources affirm that Krsmanovic-Paranos was the first firm in Serbia
to do so, and that the subsequent rapid development of the trade was heavily
dependent on its enterprise and activity.^ Paranos's widow went even further,
to claim that:* "In the first years, and later, only the fiim of Krsmanovic and
Páranos exported [dried] plums from Bosnia and Serbia. On the initiative of Rista
Páranos, the firm of Krsmanovic and Páranos was the father of the trade in dried plums in
Bosnia and Serbia." (The italics are in the original.)
Most of the other names which became prominent in the early days of the
trade had strong links with this firm. Rista Damjanovic, later to become a leading
plum exporter, and reputedly the richest merchant in Sabac, a town w-hich
"exported millionaires", went into business after having served with Krsmano-
vic-Paranos in Bosnia,^ and Luka Celovic Trebinjac, wealthy Belgrade banker,
merchant, and prune exporter, served the firm in Belgrade between 1878 and
1880 before opening his own business with its assistance.^
^ Istorijski Arhiv Beograda K-V 2-4 Milivoje Kostic, 'Podaci o zivotu i radu beogradskih privrednika
trgovaca i zanatlija xix i xx' (Data on the life and work of the Belgrade businessmen, merchants, and
craftsmen in the nineteenth and twentieth centuries) (hereafter I.A.B. Kostic, 'Podaci...'), fo. 76 (Braca
Krsmanovic i Páranos) ; N. R. Djordjevic, 'Rista Páranos. Uspomene iz pncanja pokojne Ristine zene
Vasilije, rodjene Krsmanovic' (Rista Páranos. Memories from the telling of the late Rista's wife Vasilija,
née Krsmanovic), T.G. XLHI, I 12, 30 April 1933, 5; J. Dedijer, 'Hercegovina' N.S.Z. vi (1909), 65.
^N. R. Djordjevic, loc. cit.; I.A.B.Kostic,'Podaci...', fos. 76-9 (Braca Krsmanovic i Pai-anos), 255/2
(Kxagujevacka Kompanija): Sponwnica Beogradske Trgosacke Omladine, 1880-1930 (Memorials of th
Belgrade Junior Chamber of Commerce, 1880—1930, hereafter Spomenica B.T.O.) (1931), p. 62, col. 2;
A.A.E. C.C.—B. t 3 dispatch, 11 Sept. 1863, fo. 132; M. D. Milojevic, Macva, Sabacka Posavina i Pocerina.
Privredno—Geografsko Proucavanja (The Macva, Sabacka Posavina and Pocerina. An economic-geographi
study) (196a). p. 65.
3 ¿ivorad Popovic, Kosta D. Glavinic (in Serbian) (Sabac, 1939), p. 5; Spomenica B.T.O. p. 62; Arhiv
Sapea (Sabac) (hereafter A.S.), L.O. 127, stenographic copy of a lecture by K. Clavinic to 'Sabacki
Narodni Univerzitet', dated 30 May 1938; 'Berba Sljiva—nekoliko zanimljivih podataka' (The plum
harvest—some interesting information), Stampa, x (1911), 247; I.A.B. Kostic, 'Podaci . . .', fos. 76—7
(Braca Krsmanovic i Páranos). While some of these sources could have copied information given by
others, Gla\'inic at least was intimately concerned with the prune trade, and is probably completely
reliable. Milivoje Kostic may have acquired his information from Gla\'inic, but he would also have been
able to evaluate it from his encyclopaedic knowledge of the Belgrade carsija.
* N. R Djordjevic, loc. cit.
^ D. J. Popovic, 0 Cincarima (About the Cincars) (2nd edn, 1937), p. 346; M. S. Djuricic, Sabac kao
Kulturna ^iza Srbije XIX i XX veka (Sabac as a cultural focus of Serbia in the nineteenth and twentieth
centuries) (Sabac, 1937), p. 28.
^ I.A.B. Kostic, 'Podaci...', fo. 59 (Luka CeloNric Tiebiajac); Spomenica B.T.O. p. 161, col. 2.
 PLUM-BASED TRADES 593

The Krsmanovic-Paranos firm's infiuence also extended to the important

prune market of Valjevo, where the trade was dominated by Ranko Godjevac
and his associates. Godjevac, whose family was also of recent Bosnian origin,^
has been claimed as pioneering the prune trade in Serbia, but it has been noted
that he "began propagandizing the drj-ing of plums under the influence of
[un-named] merchants from Bosnia".^ These were m.ost likely to have been
Krsmanovic and Páranos, for the families were closely connected with the
Godjevci by marital and business links.* The only prominent merchant in the
plum trade of western Serbia who was identifiably of Serbian birth, and not
linked with Krsmanovic-Paranos was Joca Jovanovic Sapcanin. He was success-
ful, but it was concerning his difficulties that the following comment was made :*
The export trade in that period was by no means an easy and congenial task. The
merchant exporter was left entirely at his OV^TI risk. Alone he carved his routes to
other people, alone he maintained relations abroad, alone he opened himself
credits. For the successful conduct of the export business were needed great
capabilities. . .
The establishment of plum-drying capacity required the transfer of the tech-
nique—it could hardly be described as technology—^from Bosnia, where it was
relatively long established. It entailed the building and opei'ation of large but
simply-constructed mud-brick stoves which contained a number of trays,
stacked one above another, on to which the plums were loaded for drying, and
underneath which a wood fire was maintained.* This stove, or pusnica ("smoke
oven") was commonly to be found in the Bosnian plum-producing villages. It
afforded a much quicker and more efficient processing system than sun dr\'ing,
the technique which was occasionally used in Serbia to prepare prunes for self-
consumption, and it yielded a qualitatively superior product.*
Despite the siraplicity of construction of the pusnica, Serbian farmers seem to
have been unable to build their own ovens and needed the services of Bosnian
specialists for this work. Moreover, skilled menfiromBosnia were also needed to
operate them. The reason for this probably lay in the very crudity of the pusnica's
construction. The rate of drying called for nicety of judgement. The pluras had to
be raised very slowly to about 7o°G. and maintained at an even temperature. The
line between incomplete drying and damaging the fruit by scorching was a fine
one, and for this reason all subsequent improved designs incorporated a thei mo-
meter set in a mndow. But this refinement would greatly increase the price of
ihe drier, so skill was effectively substituted for capital.' Thus migrant Bosnian
^ Lj. Pavlovic, 'Istorija i Duhovne Osobine Vaznjih Porodica—Godjevci' (The history and spiritual
foundations of the more important families—^the Godjevci), Glasnik Geografskog Drustva, iv, Sv. 5 Nov.
1920, 341.
^ Ljubica Trajkovic, op. cit. p. 48.
^ I.A.B. Kostic, 'Podaci . . .', fos. 78, 81 (Braca Krsmanovic i Páranos), 24/96 (Ranko Godjevac).
* Spomenica B.T.O. p. 160, col. i.
* A.N. F is.'/i'jQ:T.Biajiicom,Cart£s Commerciales, 4, i-ère série. Royaume de Serbie (Paris, i885),pp. 27—8.
8 L. R. Iovajiovitch, L'Agriculture en Serbie. Monographie composée pour l'Exposition Universelle de igoo
(Paris. 1900), p. 45 Sun-dried prunes were saleable in Budapest in the 1870's at a 14J per cent discou.at
according to a Budapest merchant's price list of 1875—see enclosure in Muzej u Smederevu, Sava
Stankovic correspondence (hereafter M.S. S.S.), 1228. 70, 20 May 1875.
' K. Glavinic, 'Susenje Sljiva' (The drying of plums), T.G. x, 190, 28 Aug. 1901, 1 ; 'Lujova Susnica'
(Louis's drier). Stamps, xi (1912), 161, 2. A thermometer was also an essential component of the GlaNrinic
oven, about which see A.N. F 12.7179.
594 MICHAEL PALAIRET
and Sokoljani builders and pusnica operators found themselves in great demand
in the early years of the Serbian prune export boom. The two skills were probably
combined.^ "The Bosnians," reported a British consul in 1873, "seem to have a
monopoly in the art of drying plums which they do in rude ovens, and numbers
of peasants are annually hired to go into Austria and Servia to dry the plums
produced there".^ They did more than merely respond to the demand for their
services ; they were also instrumental in creating it—as did one Bosnian master
who settled near Valjevo, hvdlt pusnice, dried plums, and traded them through his
own warehouse;^ or as did two Muslim brothers from Sokol, who introduced the
system in the i86o's to one Serbian village by leasing its orchard and drying the
produce.* The skills of building and operating the pusnica were, in time, trans-
planted, for the Bosnian masters took assistants from among the resident popula-
tion, and many settled permanently in western Serbia. By the end of the century
(and probably well before) Serbia's own upland villagers provided the necessar)'^
labour.*
But in the early days of the trade, such manpower was hard to come by, and
its importation owed much to the efforts of Krsmanovic-Paranos, whose first
concern was to set up a system for getting the produce dried.^ They probably
dried much of the fruit they handled thenaselves, and this still seems to have been
a frequent practice of the trade in later years.' Paranos's widow claimed that
even in Bosnia, the people had dried their plums ' ï n a primitive way", whereupon
Páranos "began to perfect a special kind of dryer for the drying of plums, which
the people adopted very qmckly".^ Whatever we may make of this claim,
Krsmanovic-Paranos seem to have been known in business circles as the people
to address if you had plums to dry, and needed to hire workers with the requisite
skills.«
Establishment of a drying system was only one of the items of infrastructure
that concerned the prune-exporting firms. A further problem, which related to
the difficulty of organizing small-scale peasant production to meet world market
standards, arose from the heterogeneity of the fruit grown in the Serbian plum
orchards. Though all variants were good enough for distilling, only one, the
Madzarka or Pozegaca, was sufficiently sweet and fieshy to be really suitable for
drying.^" Quality was all-important, for the prune sold in its main markets as a
semi-luxury product, so the trade established big price differentials between the
1V. Karic, Srbija. Opis Zemlje ... (Serbia. A description of the country...) (1887), p. 413; Trajkovic,
op. cit. pp. 48-9; B. Milojevic, loc. cit.
^ Report by Consul Holmes on the Trade and Commerce ofBosna Serai for theyear 1873 (P.P. 1874, LX
607.
^ Trajkovic, op. cit. p. 49; 'Izveätaji komisija za pregled sljiva' (Reports of the commissions for the
inspection of plums), S.M. L (1882), 224.
* B. Milojevic, loc. cit. 740. ° Ibid. 789, 791 ; Pa\'lovic, 'Kolubara i Podgorina', 423-6.
* I. A.B. Kostic, 'Podaci.. .'fo. 76 (Braca Krsmanovic i Páranos).
'' A.S. L.O. 127; Iovanovitch, op. cit. p. 43; Dragisa Lapcevic, PolozajRadnicke Klase iSindikalni Pokret
u Srbiji (The condition of the working class and the s^Tidicalist movement in Serbia) (1928), p. 291.
® N. R. Djordjevic, loc. cit.
s See certain letters of the firm of Despinic, in which their Smederevo agent is trying to recruit man-
power to dry a consignment of plums. M.S. S.S. 937/67, 16 Aug. 1876; 884/67, 27 Aug. 1876; 364/66,
30 Aug. 1876; 576/66, 26 Aug. 1876. I am grateful to Dr Leontije Pavlovic, director of the Smederevo
Museum for bringing this source to my notice.
1" La Serbie à l'Exposition Universelle de 1911 à Turin (1911), p. 100; Karic, op. cit. pp. 333-4.
 PLUM-BASED TRADES 595

better and the inferior grades.^ Between the best that Serbia exported and the
common "merkantil" quality, the price per kilo varied by upwards of ioo per
cent.^ In 1883, Germany was taking only prunes of the better grades, refusing the
cheaper ones.^ The American market was no less choosy.* So the Kxsmanovic-
Paranos firm attempted to get its suppliers to raise better fruit, and brought in
"large numbers of plum seedlings for improving the orchards in the \dllages,
firstly in Valjevo and Sabac okruzi, and later, further afield"." After drying, the
fruit had to be warehoused, sifted to French trade specifications, and packed
appropriately, processes which needed skilled supervision, which the firm was to
carry out to much higher standards than others who were drawn into the
trade.*
The strength of the firm's financial resources was brought early into play. Its
turnover was dependent on the activity of its network of up-country agents and
storekeepers in purchasing the produce from the peasants.' Credit was needed
by them, for in Bosnia, "the peasant . . . in the spring calculates on receivircg
advances [on his plum crop] from the merchants,"* and trading conditions in
the Serbian villages seenx to have been similar. Only by contracting with the
producers was the merchant able to ensure himself a supply. Thus Krsmanovic-
Paranos reputedly financed the trade by extending interest-free loans to the
suppliers who worked with them,^ and who often packed and graded the produce
for them as well.^" This was probably a common practice.^^
In addition to extending finance backward down the production chain,
normal trade credit had to be extended forward. At this time, the nascent Bel-
grade money market could not supply credit except at usurious rates, and it is
likely that the firm financed its operations through Trieste, with wiiich it had
strong links. It may therefore have been for this reason that the early plum
merchants were actively involved in the organization of financial institutions.
Among other banking interests, the Krsmanovici were powerful shareholders in
Beogradski Kreditni ^avod, and Jovan Krsmanovic became Serbia's first central
banker in 1883.^^ Other pioneer plum merchants were also energetic organizers
of banks, which were particularly active in the primary product export trades.^*
Strong contacts were also needed with world markets, which were generally
lacking to the Serbian merchant class. According to his widow. Páranos was first
made aware of the opportunities in the prune trade on a business trip to Germany,
while the firm was still trading from Bosnia. The story has an apocryphal ring
^ Miljutin Sa%'ic, Sljiva. Gajenje i Upotreba sa Predhzima za Unapredjenje (Plums. Rearing and utilization
with proposals for improvement) (1900), pp. 54-5; T.G. xxi, 206, 24 Sept. 1911, i,col. i.
2 A.N. F 12.7179; Miljutin Savic, op. cit. p. 89. The French trade specifications were noted in Jovan
Krikner, Industrie undIndustriepoktik Serbiens (Halle, 1913), p. 141.
3 'Susenje Sljiva, i' Videlo, iv (1883), 16, 3, col. 2.
* René Millet, La Serbie Économique et Commerciale (Paris, 1889), p . 51.
^ I.A.B. Kostic, 'Podaci . . .', fo. 76 (Braca Krsmanovic i Páranos).
* Ibid. fos. 76-7; A.S. L.O. 127.
"^ I.A.B. Kostic, 'Podaci. . .', fo. 76 (Braca Krsmanovici Páranos).
^ Report by Consul Holmes on the trade ofBosniafor theyear 18/1 (P.P. i872,Lvm),p. 1331.
* Spomenica B. T.O. p. 39, col. 2. -^ Djuricic, op. cit. pp. 28-9.
^^ For example see I.A.B. Kostic, 'Podaci . . .', fo. 85/1 (Djordje Vuco).
^ Ibid. fos. 77, 79,83 (Braca Krsmanovic i Páranos) ; Spomenica B. T.O. p. 57, col. 2.
1^ I.A.B. Kostic, 'Podaci...', fos. 60/2-66/8 (L. CelovicTrebinjac) ; fo. 89/3 (Dj. Vuco) ; Kostic, 'Auto-
biografija', fo. 24 of transcript in my possession; Spomenica B.T.O. pp. 160, col. i, 162, col. i.
596 MICHAEL PALAIRET

about it but does serve to emphasize the firm's pre-existent market connexions
in Germany and initial awareness of demand as well as supply potential:^
As soon as he became a member of the Krsmanovic and Páranos firm, Rista
began to take up direct trade links and to procure goods at first hand from lower
Germany. On one occasion when he was doing business in Berlin, setting goods
aside, he was invited to lunch by a certain manufacturer. . . After the lunch,
cooked prunes were served. The manufacturer asked Rista if he liked cooked
prunes, Rista said he did, and asked him where he got them from. The manu-
facturer replied: from California. How much a pound, asked Rista. Replied the
manufacturer, ten marks a pound. Rista asked him if he could sell even better
dried plums atfivemarks a pound. The manufacturer said he could.
But although the German market always absorbed a significant share of
Serbia's plum output, the main consumer in the early years (till California dis-
placed all competitors in the 'nineties) was the U.S.A. According to an American
estimate of 1883, the U.S.A. absorbed at least half of Serbia's annual export,
while a later (1889) estimate put the proportion at two-thirds.^ This trade passed
through Trieste, and about 1880, Rista Paranos's son Sima entered into partner-
ship with Celovic-Trebinjac, so that while Celovic could handle affairs in
Belgrade, Sima Páranos could operate from Trieste, the better to maintain
contact with the American market.^ Subsequently Sima Páranos established
himself still closer to the market in New York, whence he was trading and
reporting back to Serbia in 1883.*

IV
After the initial boom in prune exports which lasted until about 1886, subsequent
expansion ofthe plum trade was accompanied by continued structural change.
Its central feature, however, that of primitive on-farm drying, remained intact,
despite the introduction of machine processing. By the end of the period there
appear to have been 21,000-46,000 pusnice in the country,^ which were probably
protected against the competition of large-scale centralized machinery by the
poor qualit\' ofthe transport network.^ The persistence in the use oithe pusnica as
the standard means of drying the fruit was commonly regarded as the cause of
the alleged low standing of Serbian prunes on the international market. It was
said that the system imparted a smoky taste to the fruit and dried it imperfectly.'^
^ N. R. Djordjevic, loc. cit.
^ Cons.-Gen. E. Schuyler, Foreign Commerce of Servia, Athens, 29 March 1883. House Misc. Docs. 48-1.
vol. 4, no. 12, pt I, Consular Reps. 31 v. 10, p. 95; Rapport Commerciale et Économique (Baron Guil-
laume), Belgrade, 4 Oct. 1889, Recueil Consulaire, Lxvni, 275. These estimates cannot be verified directly
from foreign trade statistics because of complications arising from the intermediary' role ofthe Austrian
market.
3 I.A.B. Kostic, ' P o d a c i . . . ' , fo. 60/2 (Luka Celovic Trebinjac).
4 GlasnikMinistarstvaFinansija (hereafter G.M.F.), 11 (1883), 41,656.
ä The lower figure is an estimate of Glavinic, A.S. L.O. 127, and the upper is derived from reports for
1908—9 that there were 10,981 driers in Podrinje okrug and 5,121 in Uzice okrug, see 'Okruzni Ekonomni
Izvestaji' {Okrug economic reports), Izvestajipodneseni Ministru Norodne Pnvrede . . . za igo8 i igog godinu
(1911) (hereafter Izvestaji M.JV.P igo8-g), pp. 1019, 1142.
8 Milivoje M. Savic, J\fasa Industrija i Zanati (Our industry and crafts), 11 (Sarajevo, 1922), a-3, notes
only one prune-processing plant which took on labour to stone plums, indicating that they were being
purchased in raw condition.
' A.N. F 12.7179; Miroslav D. Popovdc, Kragujevac i J^jegovo Privredno Podrucje (Kragujevac and its
 PLUM-BASED TRADES 597
With the object of improving quality, the state therefore sought to promote the
use by growers of generally high-priced "French" stove systems, \\\hich proved,
predictably, far too expensive for any but a handful of producers to take up.^
Whether such systems were much used in the French département of Lot-et-
Garonne which, supplied the top end of the international market is doubtful, for
here the farmers dried the fruit in simple kilns after which it was reprocessed by
the trade, using large-scale techniques.^ In any case, Serbian prunes were not of
particularly low quahty. Worse than the French, they were claimed to be
superior to the Galifornian,^ and from the point of view of quality control, the
labour-intensive techniques of the small producer were not necessarily disad-
vantageous.* It appears that the fundamental determinant of the quality of the
crop lay in the chance conditions of the harvest. Sometimes the output was
superb, and sometimes barely edible. Little appreciable effect of a beneficial
nature was achieved by the institution of qualitj'-control commissions, which
inspected the prunes at the point of export. Their operations achieved an unen-
viable reputation for incompetence and corruption.^
Even if capital shortage—or simple technical backwardness—rendered the
highest qualit}' of initial processing unattainable, Balkan prunes could still be
improved by redrying as in France. Redrjáng plant was established in Bosnia
very successfully as early as 1888 (though the simultaneous attempt to encourage
the use of improved ovens by producers was a predictable failure).* It did not,
however, encourage emulation in Serbia, despite fears of the threat it posed to
Serbian exports, as much of the produce was I'edried in Austria-Hungary before
reaching the German consumer market.*^ It seems likely that this arrangement
was favoured by the Austro-Hungarian tariff structure. Only two redrying
plants were estabhshedin Serbia befbre 1906 (one of them by the Páranos family,

economic zone) (1956), p. 99; for a sample of adverse comments on drying practice, see 'Ozbiljna
opomena naSim slj-'varskim trgovcima, Berlin Mart 1896' (An earnest reminder to our plum merchar ts,
Berlin, March 1896), Tezak, xxvii (1896), 29, 292, col. 2.
1 For details of government policy and promotion, see La Serbie.. .à Turin, pp. 90-1 ; La Serbie à l'Expo-
sition Universelle de igo¡ àLiège (igo^), p. 100; Bianconi, op. cit. p. 28, col. 2 ; 'Nova Susnicau Arandjelovcu'
(The new drier at Arandjelovac) G.M.F. i (1882), 16, 247; S.A'. 8 June and 19 Dec. 1890; Miljutin Savic.
op. cit. p. 84. Milivoje Kostic and K. Glavinic claimed that by 1912 there were 10,000-15,000 improved
(Glavinic system) stoves in the country, but partial statistics for 1909 show that in that year their
numbers were negligible. See I.A.B. Kostic, 'Podaci . . .', fo. 251/79 (Kosta Glavinic); A.S. L.O. 127;
'Okruáni Ekonomni Izveätaji', loc. cit. pp. 1019, 1142.
^ Glavinic, 'Susenje Sljiva'; L.-A. Janitch, La Serbie an Point de Vue Économique (Paris. 1910), p. 20;
V/. R. Heam, Report on the Preparation of French Plums (P.P. 1901, Lxxx), pp. 3—5.
* Janitch, op. cit. p. 20.
* Bosanac Emigrant (pseud.), 'Sljiva i Njen Promet' (The plum and its trade), ^astava (Novi Sad), x
(1875), 69, 2.
ä See as evidence ofyear-to-year qualityfluctuations'Sljiva' (plums), T.O. xxi (1911), 269; 'Jedan nas
uspeh' (Our one success), Stampa, iv (1905), 304, i, coL i; Handelsmiiseum, 1910, p. 16; Industnjaka
Komora Kr. Srbije, Izvestaj 0 Radu i Stanju Industnje u igii godtne (Report on the work and condition of
mdustry ini9ii)(i9i2),p.22. Critical insights into the effectiveness or otherwise of the commissions may
be gleaned from 'Izvestaj izaslanika za pregled hrane, pekmeza i suvih sljiva 1909 godine' (Report of the
delegates for the inspection of food, pekmez, and dried plums in 1909), Izvestaji M.JV.P. . . . igo8-g, pp.
35-8, 47; 'Ekonomija i Trgovina—iz sljivarske trgovine' (Economy and trade—from the plum trade),
Potitika (1910), 2432,1, col. 4; 'Berba Sljiva...' loc. cit.
® Sugar, op. cit. pp. 158-9 (Sugar describes the units as canneries). Also see E. B. Freeman, Report on
the Plum Crop in Bosniafor 1887 and 1888 (P.P. 1889, Lxxvii), p. 2.
" A.A.E. C.C,—^B. 18 dispatch, 31 Oct. 1891, fo. 93 ; Milivoje Savic, op. cit. 11, 5.
 MICHAEL PALAIRET
always in the forefront) when the onset of commercial war between Serbia and
Austria-Hungary removed access to the services of Austrian intermediaries, and
resulted in the estabhshment of four new redrying units,^ and plans for further
expansion still.^
Of greater significance to the evolution of the countrj^^'s commercial structure
was the outcome of the protracted struggle which began to get under way
between domestic business and importer competition, after the opening of the
main-line railway in 1884 placed the Sumadija (at Kragujevac) in direct contact
with Budapest. Budapest interest in Serbian plum supplies lay more in the pro-
curement of cheap jam (pekmez), which was sold for working-class consumption in
central Europe, than in encouraging the production of prunes.^ It appears to
have been almost wholly through the intervention of Budapest houses that this
new export trade developed. Itinerant gangs of Slavonian pekmezari,financedby
Budapest, toured the Sumadija, in particular those parts of it which were con-
veniently located for the railway, to buy up plums from the peasantry for con-
version on the spot intopekniez- It is important to note that the grower was entirely
dependent on the pekmezar to get the produce on to the market, for whereas most
peasant producers could manufacture prunes (and thereby retain the value
added by manufacturing) the capital cost of the "imposing batteries" of equip-
ment that the pekmezari used cost about 10,000 dinars—as much as that of many
small "factories".* Austro-Hungarian demand and tariff discrimination also
stimulated the rail freighting of substantial supplies of unprocessed plums from
much the same areas for distilling inside the imperial tariff.^ Many growers,
particularly the smaller and poorer ones, probably welcomed the opportunity
that Austro-Hungarian intervention created, to monetize their output without
the delay or capital cost which was necessitated by drying or distilling.®
The competition of Budapest firms was much feared in Serbian commercial
circles, for the former were understood to enjoy access to far better credit facilities
and stronger market contacts. According to one writer of 1905, the Serbian
plum merchants were gradually being reduced to purchasing agents for the
Budapest commercial houses.'
But native competition for a bigger share in the dealing profits did result in
development of the Serbian commercial system by a means peculiar to this
situation. The institutions which would likely possess suitably strong foreign
correspondence connexions and ample credit resources would be the banks,
particularly those of Belgrade and the primarj^-produce exporting centres. As

^ Milivoje Savic, op. cit. 11,2-3 ; Trgovinsko-Zanatlijski Sematizam za 1902-3 (Commercial-craft directory
for 1902-3), p. 290; D. Djordjevic, op. cit. pp. 381-2; M. D. Popovic, op. cit. p. 296.
2 Istorijski Arhiv Valjevo (hereafter I.A.V.),ValjevskaStedionicaKnj. 137, kopijapisama, Stedionica-
Duveaux Frères, 12 Nov. 1920, fo. 280.
^ M. D. Popovic, op. cit. pp. 296-7, 363; Milivoje M. Kostic, Srpska Izvozna Trgovina od 1893-1903
godine (Serbian export trade from 1893 to 1903) (1905), p. 54; M. Marko\'ic, 'Glasovi iz naroda—
Kragujevac' (Voices from the people—Kragujevac), T.G. xvii (1907), 216, 2, cols. 2-4; R. D. G. Mac-
donald. Report on the Trade and Commerce of Seroiafor theyears i8gy—8 {?.¥. 1899,011),p. 17.
* Miljutin Savic, op. cit. pp. 124—7 ; A.N. F 12. 7179 ; 'Mere za bolju proizvodnju pekmeza' (Measures
for the better production oípekmez), T.G. xvi ( 1906), 144, i, col. 3 ; ¿a Serbie . . . à Turin, p. 93 ; O. Sa™,
op. cit. p. 99, n. 53, and text.
5 'Izvoz Sirovih Sijiva' (The export of raw plums), T.G. xvii (1907), 192.
^ K. Jovanovic, loc. cit. 335. " Kostic, Srpska Izvozna Trgovma... p. 52.
 PLUM-BASED TRADES 599

already noted, the pioneer plum merchants were active bank organizers, and
several new banks were created in Belgrade and the plum-growing regions for
the express objective of providing credit for the local export traders. Valjevska
Zadruga (of Valjevo) was founded in 1888 with the object of extending credit to
exporters, particularly of prunes, the town's staple trade at this period, and simi-
lar motives probably explain the establishment of the two other Valjevo banks.^
In 1912, the merchants of Arilje township (Uzice okrug) set up a savings bank
{stedimica) in order to assist the export trade in fruit. ^ Two Belgrade banks were
also founded fi-om similar but more ambitious motives. Srpska Trgovacka ^adruga
was founded in 1900 by several Belgrade export houses wath the aim of cartellizing
the export trades, to organize the "undirected" Serbian exporters and protect
them from "heartless outsiders".* This in turn spawned Izvozna Banka (Export
Bank) of Belgrade to support this objective which arose from jealousy of the com-
manding position of Budapest market in the Serbian export trades. The IzvozxM
Banka projectors solicited government aid in the form of tax concessions by
advancing essentially "patriotic" arguments.* Patriotism consisted of diverting
the dealing profits from Budapest to Belgrade hands. Other banks appear to have
been promoted for similar "patriotic" purposes.^
From supporting the trade with credit it was only a short step, though a risky
one, for banks to enter the export trade themselves, as intermediaries. This they
began to do around the turn of the century by establishing brokerage depart-
ments which placed produce held by the merchants on the export market against
payment of commission.
The acti\dty of the European "Universal" bank as industrialist has been well
explored, but its analogous role as substituter of commercial enterpi-ise has
received little attention. This development was by no means pioneered in
Serbia; in Bohemia-Moravia the sugar brokerage business was dominated by
bank enterprise to the extent that it effectively relieved the sugar manufacturers
of their selling function. Hungarian banks were also actively engaged as inter-
mediaries in the produce trades.* The technique would scarcely have been diffi-
cult to transmit to the Balkans where bank correspondence connexions and
credit resources made good a most obvious deficiency.' In Serbia, bank brokerage
or commission business did not confine itself to handling plums ; at the grain port
of Smederevo, the old established Smederevska Kreditna Banka opened a grain
brokerage department in 1908, and competed with several Belgrade banks which
also traded grain at that port. Beogradska Zflàrtiga and Izvozna Banka engaged in
commission transactions in livestock.® But the banks found the plum trade paj--
^ I.A.V. Secondary material in t>'pescripts headed 'Valjevska Zadruga, 1888—1948', 'Valjevska
Stedionica', and 'Valjevska Trgovacka Banka'.
^ Igajic, op. cit. p. 89. ä Spomenica B.T.O. p. 160, col. t.
* Ibid. ; I.A.B. Kostic, 'Autobiografija', fos. 21—5 ; idem, Srpska Izvozna Trgovina ... pp. 33—6.
^ RadPrve Koriferencije Izaslanika Trgovackih i Trgovaíko-Zanatlijskih OmJadina Kraljevine Srbije (The woik
of the first conference of the delegates of the commercial and commercial-craft junior chambers of
commerce of the kingdom of Serbia) (1907), pp. 64—3.
^ Richard L. Rudolph, 'The Role ofFinancial Institutions in the Industrialization of the Czech Cro^vn-
lands, 1880-1914' (unpublished Ph.D. thesis. University of Wisconsin, 1968) pp. 202-7; I.A.B. Kostic,
'Autobiografija', fos, 17-18; idem, Srpska Izvozna Trgovina . . . p. 54.
' Note the Einalogous activity of the Bulgarian Agrictiltural Bank in the silk trade. Vladislav Savic,
Bugarska. Proslost-Buducrwst (Bulgaria. Past-Future) (1933), p. 64.
* Report to members oí Smederevska Kreditna Banka at 36th A.G.M, in Spomenica Pedesetogodisnjeg Rada
600 MICHAEL PALAIRET

ticularly receptive to the services they could offer. W'^hile the rival Belgrade Pro-
duce Bourse languished, the trade speedily channelled itself into the hands ofthe
bankers.^ International connexions are what are stressed most heavily in the
following advertisement, directed to the Serbian merchant community by the
\ve\l-run Sabacka Trgovacka Banka (of Sabac) in 1902:^
The . . . Bank (founded in 1898) completes Banker's business, besides which it
also practises brokerage business abroad, at a moderate commission with Serbian
dried [plums] (packed in sacks) and double stove dried plums (packed in boxes),
pekmez, foodstuffs, etc. It has strong business connexions abroad. It guarantees
solid service in every aspect.
Even a small bank like Valjevska Stedionica, which engaged in prune brokerage,
maintained a wide correspondence network. In the 1911 export season it placed
only 954 tonnes of prunes, but these were sent to 19 firms in 13 towns as far
afield as Vienna, Eger, Munich, Mainz, Prague, Berlin, Duisburg, Ulm, and
Danzig, as well as Budapest.^ Similarly, the banks tried also to strengthen their
networks at the supply end. Izvozna Banka, one ofthe largest firms in the produce
brokerage business, which in 1907 was exporting to W^arsaw, also dealt through
branch offices at Sabac, Obrenovac, and Kragujevac, all towns whose trade was
mainly in plum products, and two other Belgrade banks maintained branch
offices at Sabac for the same purpose.*

V
The development of trade in plum products after i860 has been shown to have
had powerful beneficial effects on the economic life of a significant portion ofthe
Serbian peasantry, particularly as those regions which came to depend most
upon the plum harvest were not particularly fertile. Because ofthe advantages
resulting from their adoption, plum-dr>dng techniques were probably bound to
reach Serbia sooner or later, but it should not be assumed that, as the techniques
employed were rather primitive, and only had to be transferred from a neigh-
bouring territory, their diffusion would inevitably be swift and easy. On the
contrary, to surmount the problems entailed in introducing the commerce in
dried prunes into Serbia, it appears that entrepreneurial resources of a high order
were called for. In this respect, it is also significant that diffusion came about
through immigration of enterprise from the territory where the trade had origin-
ally been established, rather than through the intervention ofthe world market
importer, for if the original stimulus had had to wait upon the interest of the
latter, it might easily have been another twenty years before the Serbian plum

Smederevske Kreditne Banke, i8yi-igsi (Memorials ofthefiftyyears of work ofthe Smederevo Credit Batik,
1871-1921) (Smederevo, 1929), p. 386; Kostic, Srpska Izvozna Trgovina . . . p. 56; Trgovacka Komora za
Kr. Srbije (Chambers of Commerce for the kingdom of Serbia) Izxestaj za Godinu igii. (/) Izvestaj 0
trgovini za igii (Report for the year 1911 (i) Report on trade for 1911) (i9i2),pp. 10, 14.
1 Vladislav Milenkovic, Ekonomska Istorija Beograda (Economic history of Belgrade) (1932), pp. 116-18
2 In Trgovinsko-Zanatlijski Sematizam za igog-3, p. 297. The claim appears to be confirmed by 'Pred-
stavka Sabacke Trgovacke Banke Ministru Narodne Pri\'rede' (Representation ofthe Sabac Commercial
Bank to the Minister ofthe National Economy), T.G. xvii (1907), 102, supp. i, cols. 1-2.
ä I.A.V. Valjevska Stedionica. Knj. 137, kopija pisama, fos. 1-70.
* Ignjic, op. cit. p. 87; Kostic, Srpska Izvozna Trgovina . .. pp. 56-7.
 PLUM-BASED TRADES 6oi

orchards were given over to serious exploitation. Even then, exploitation might
only have been for pekmez, a commodity whose trade would have been of much
less value to most plum producers than that of prunes, because they would not
have earned the value added by on-farm manufacturing.
The Serbian experience also demonstrates that peasant production, despite
its admitted qualitative defects, and a necessarily obsolete processing technology,
did not need to become unviable on either account, as reprocessing could remedy
to a large extent those defects which would most likely cause rejection by a
quality-conscious consumer market.
Finally, the key role of the banking system is apparent, in substituting its own
organizational capacities, correspondence networks, and financial resources for
those lacking in the commercial sector of a backward economy, in a way which
parallels its better-known role in substituting the same deficiencies in industrial
enterprise in conditions of analogous industrial backwardness.
University of Edinburgh
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