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Hungary - HISTORY

Hungary - Acknowledgments


The authors wish to express their appreciation to a number of people who assisted in the preparation of this study. Paul Marer of Indiana University furnished his considerable expertise on the Hungarian economy. Thanks go to Sharon Schwartz, who edited the chapters, and to Cissie Coy, who performed the final prepublication review. The index was prepared by Shirley Kessell. Malinda B. Neale of the Library of Congress Composing Unit prepared the camera-ready copy under the supervision of Peggy Pixley.

A number of members of the Federal Research Division of the Library of Congress made significant contributions to the preparation of this book. Special thanks are owed to Richard F. Nyrop, who supplied help and suggestions on chapters 1 through 4, and to Sandra W. Meditz, who reviewed Chapter 5. The authors are also grateful to Raymond E. Zickel, who assisted in research and writing. Martha E. Hopkins ably oversaw editing, and Marilyn Majeska managed production of the book. Elizabeth A. Yates, Barbara Edgerton, and Izella Watson assisted on numerous phases of manuscript preparation. Helen R. Fedor gathered and helped select the photographs, and Walter R. Iwaskiw assembled the materials for the maps. Invaluable graphics support was given by David P. Cabitto, assisted by Sandra K. Ferrell (who did the cover and chapter illustrations) and Kimberly A. Lord. Stanley M. Sciora furnished information on the ranks and insignia of the Hungarian armed forces.

Finally, the authors wish to note the generosity of those individuals who provided photographs for this book. All photographs are original work not previously published.


Hungary - Preface


Since the mid-1970s, few countries in the world have experienced such rapid and extensive change as Hungary. The political system has moved from an authoritarian regime dominated by the Hungarian Socialist Workers' Party (HSWP) to a multiparty republic. The HSWP itself split, in October 1989, and most of its leaders organized a new party, the Hungarian Socialist Party. In the late 1980s, relations with Western countries improved dramatically, and the Hungarians also received significant support for their reform efforts from the Soviet Union. By contrast, until late 1989 tensions between Hungary and Romania were rising over the latter's treatment of its Hungarian minority, but, after the December 1989 revolution in Romania, the chances for the resolution of that problem improved. Although sporadic efforts had been undertaken since the late 1960s to introduce elements of a market economy into a socialist command economy, Hungarian leaders in 1989 declared their intention to create a full-fledged capitalist economy. The government has also reduced the defense budget, and it has taken steps to make the police apparatus accountable to the people and to their elected representatives. Yet, the discontent that emerged from pressures stemming from the economy's precipitous decline continued. This discontent, coupled with the regime's need to widen its support to sustain the transition from a state socialist to capitalist economy, led the Hungarian regime to undertake political reform efforts.

These changes have necessitated a new edition of Hungary: A Country Study, which supersedes the edition published in 1973. Virtually everything discussed in the previous edition has been overtaken by events. Like the earlier edition, this study attempts to present the dominant historical, social, economic, political, and national security aspects of Hungary. Sources of information included books and scholarly journals, official reports of governments and international organizations, foreign and domestic newspapers, and numerous periodicals.

The Hungarian people are descendants of the Magyars, an Asiatic tribe whose origins lie in what is today central Russia. The word Hungary appears to derive from a Slavicized form of the Turkic words on ogur, meaning "ten arrows," which may have referred to the number of Magyar tribes. Unlike most Europeans, Hungarians do not speak an Indo-European language. Hungarian is a member of the Finno-Ugric language family, which also includes such languages as Estonian and Finnish.


Hungary - History


THE HUNGARIAN PEOPLE'S REPUBLIC emerged in 1949 after the Hungarian Workers' Party eliminated its rivals and assumed control of the state. Soviet control of Eastern Europe after World War II had enabled a minuscule communist party lacking popular support to gain power in the country and gradually eliminate its political rivals. Under Matyas Rakosi, the party consolidated its control and radically transformed the country economically, socially, and politically.

In the mid-1950s, after the Soviet Union had somewhat relaxed its control of Eastern Europe, Hungarian society began to mobilize against the regime, culminating in the Revolution of 1956. Soviet troops crushed the rebellion, leaving power in the hands of Janos Kadar. After consolidating his authority, Kadar embarked on a program of economic reform in the mid-1960s.

Like other countries of Eastern Europe, Hungary has a history of class, religious, and ethnic conflicts that were intensified and sometimes decided by the actions of larger, more powerful neighbors. Beginning in the tenth century, German and Bohemian missionaries converted the Magyars. In the early eleventh century, Bavarian knights helped Stephen I eliminate rivals and quash peasant revolts. Suleyman the Magnificent's Ottoman armies conquered and partitioned the country with the Habsburgs in the sixteenth century, expediting the spread of Protestant faiths. Habsburg rulers colonized Hungary with non-Magyars, repressed its Protestants, stifled its economic development, and attempted to Germanize its people. The Entente powers carved up Hungary after World War I and distributed most of the land to new nation-states. Finally, dictator Joseph Stalin enforced Soviet domination over postwar Hungary.

Despite internal divisions, strong foreign influence, and outright attempts to force the Hungarians to assimilate into other cultures, Hungarian nationalism has thrived throughout the nineteenth and twentieth centuries. Nationalism drove Hungary to ally itself with Nazi Germany to regain territories lost after World War I. Nationalism also inspired Hungarians to revolt against the Stalinist political order in October 1956.




The Hungarian nation traces its history to the Magyars, a pagan Finno-Ugric tribe that arose in central Russia and spoke a language that evolved into modern Hungarian. Historians dispute the exact location of the early Magyars' original homeland, but it is likely to be an area between the Volga River and the Ural Mountains. In ancient times, the Magyars probably lived as nomadic tent-dwelling hunters and fishers. Some scholars argue that they engaged in agriculture beginning in the second millennium B.C.

Before the fifth century A.D., the Magyars' ancestors gradually migrated southward onto the Russian steppes, where they wandered into the lands near the Volga River bend, at present-day Kazan, as nomadic herders. Later, probably under pressure from hostile tribes to the east, they migrated to the area between the Don and lower Dnepr rivers. There they lived close to, and perhaps were dominated by, the Bulgar-Turks from about the fifth to the seventh century. During this period, the Magyars became a semisedentary people who lived by raising cattle and sheep, planting crops, and fishing. The Bulgar-Turkish influence on the Magyars was significant, especially in agriculture. Most Hungarian words dealing with agriculture and animal husbandry have Turkic roots. By contrast, the etymology of the word Hungary has been traced to a Slavicized form of the Turkic words on ogur, meaning "ten arrows," which may have referred to the number of Magyar tribes.

The Magyars lived on lands controlled by the Khazars (a Turkish people whose realm stretched from the lower Volga and the lower Don rivers to the Caucasus) from about the seventh to the ninth century, when they freed themselves from Khazar rule. The Khazars attempted to reconquer the Magyars both by themselves and with the help of the Pechenegs, another Turkish tribe. This tribe drove the Magyars from their homes westward to lands between the Dnepr and lower Danube rivers in 889. In 895 the Magyars joined Byzantine armies under Emperor Leo VI in a war against the Bulgars. However, the Bulgars emerged victorious. Their allies, the Pechenegs, attacked the weakened Magyars and forced them westward yet again in 895 or 896. This migration took the Magyars over the Carpathian Mountains and into the basin drained by the Danube and Tisza rivers, a region that corresponds roughly to present-day Hungary. Romans, Goths, Huns, Slavs, and other peoples had previously occupied the region, but at the time of the Magyar migration, the land was inhabited only by a sparse population of Slavs, numbering about 200,000.

Tradition holds that the Magyar clan chiefs chose a chieftain named �rpad to lead the migration and that they swore by sipping from a cup of their commingled blood to accept �rpad's male descendants as the Magyars' hereditary chieftains. The Magyars probably knew of the lands in the Carpathian Basin because from 892 to 894 Magyar mercenaries had fought there for King Arnulph of East Francia in a struggle with the duke of Moravia. Estimates are that about 400,000 people made up the exodus, in seven Magyar, one Kabar, and other smaller tribes.

The Carpathian Basin and parts of Transylvania southsouthwest of the basin had been settled for thousands of years before the Magyars' arrival. A rich Bronze Age culture thrived there until horsemen from the steppes destroyed it in the middle of the thirteenth century B.C. Celts later occupied parts of the land, and in the first century A.D. the Romans conquered and divided it between the imperial provinces of Pannonia and Dacia. In the fourth century, the Goths ousted the Romans, and Attila the Hun later made the Carpathian Basin the hub of his short-lived empire. Thereafter, Avars, Bulgars, Germans, and Slavs settled the region. In the late ninth century A.D., only scattered settlements of Slavs occupied the Carpathian Basin. The Magyar forces, light cavalrymen who used Central Asian-style bows, quickly conquered the Slavs, whom they either assimilated or enslaved.

Romanian and Hungarian historians disagree about the ethnicity of Transylvania's population before the Magyars' arrival. The Romanians establish their claims to Transylvania by arguing that their Latin ancestors inhabited Transylvania and survived there through the Dark Ages. The Hungarians, by contrast, maintain that Transylvania was inhabited not by the ancestors of the Romanians but by Slavs and point out that the first mention of the Romanians' ancestors in Hungarian records, which appeared in the thirteenth century, described them as drifting herders.




In the four centuries after their migration into the Carpathian Basin, the Magyars gradually developed from a loose confederation of pagan marauders into a recognized kingdom. This kingdom, which became known as Hungary, was led by the �rpad Dynsaty and was firmly allied to the Christian West. Eventually the �rpad line died out, however, and Hungary again descended into anarchy, with the most powerful nobels vying for control.

Christianization of the Magyars

The bonds linking the seven Magyar tribes grew frail soon after the migration into the Carpathian Basin. At that time, Europe was weak and disunited, and for more than half a century Magyar bands raided Bavaria, Moravia, Italy, Constantinople, and lands as far away as the Pyrenees. Sometimes fighting as mercenaries and sometimes lured by spoils alone, the Magyar bands looted towns and took captives for labor, ransom, or sale on the slave market. The Byzantine emperor and European princes paid the Magyars annual tribute. In 955, however, German and Czech armies under the Holy Roman Empire's King Otto I destroyed a Magyar force near Augsburg. The defeat effectively ended Magyar raids on the West, and in 970 the Byzantines halted Magyar incursions toward the East.

Fearing a war of extermination, Chieftain Geza (972-97), �rpad's great-grandson, assured Otto II that the Magyars had ceased their raids and asked him to send missionaries. Otto complied, and in 975 Geza and a few of his kinsmen were baptized into the Roman Catholic Church. Geza consented to baptism more out of political necessity than conviction. He continued to offer sacrifices to the pagan gods and reportedly bragged that he "was rich enough for two gods." From this time, however, missionaries began the gradual process of converting and simultaneously westernizing the Magyar tribes. Geza used German knights and his position as chief of the Magyars' largest clan to restore strong central authority over the other clans. Hungary's ties with the West were strengthened in 996 when Geza's son, Stephen, who was baptized as a child and educated by Saint Adalbert of Prague, married Gisela, a Bavarian princess and sister of Emperor Henry II.


Hungary - Stephen I


Stephen (997-1038) became chieftain when Geza died, and he consolidated his rule by ousting rival clan chiefs and confiscating their lands. Stephen then asked Pope Sylvester II to recognize him as king of Hungary. The pope agreed, and legend says Stephen was crowned on Christmas Day in the year 1000. The crowning legitimized Hungary as a Western kingdom independent of the Holy Roman and Byzantine empires. It also gave Stephen virtually absolute power, which he used to strengthen the Roman Catholic Church and Hungary. Stephen ordered the people to pay tithes and required every tenth village to construct a church and support a priest. Stephen donated land to support bishoprics and monasteries, required all persons except the clergy to marry, and barred marriages between Christians and pagans. Foreign monks worked as teachers and introduced Western agricultural methods. A Latin alphabet was devised for the Magyar (Hungarian) language.

Stephen administered his kingdom through a system of counties, each governed by an ispan, or magistrate, appointed by the king. In Stephen's time, Magyar society had two classes: the freemen nobles and the unfree. The nobles were descended in the male line from the Magyars who had either migrated into the Carpathian Basin or had received their title of nobility from the king. Only nobles could hold office or present grievances to the king. They paid tithes and owed the crown military service but were exempt from taxes. The unfree--who had no political voice--were slaves, freed slaves, immigrants, or nobles stripped of their privileges. Most were serfs who paid taxes to the king and a part of each harvest to their lord for use of his land. The king had direct control of the unfree, thus checking the nobles' power.

Clan lands, crown lands, and former crown lands made up the realm. Clan lands belonged to nobles, who could will the lands to family members or the church; if a noble died without an heir, his land reverted to his clan. Crown lands consisted of Stephen's patrimony, lands seized from disloyal nobles, conquered lands, and unoccupied parts of the kingdom. Former crown lands were properties granted by the king to the church or to individuals.


Hungary - Politics and Society under Stephen's Successors


Stephen died in 1038 and was canonized in 1083. Despite pagan revolts and a series of succession struggles after his death, Hungary grew stronger and expanded. Transylvania was conquered and colonized with Magyars, Szekels (a tribe related to the Magyars), and German Saxons in the eleventh and twelfth centuries. In 1090 Laszlo I (1077-95) occupied Slavonia, and in 1103 Kalman I (1095-1116) assumed the title of king of Croatia. Croatia was never assimilated into Hungary; rather, it became an associate kingdom administered by a ban, or civil governor.

The eleventh and twelfth centuries were relatively peaceful, and Hungary slowly developed a feudal economy. Crop production gradually supplemented stock breeding, but until the twelfth century planting methods remained crude because tillers farmed each plot until it was exhausted, then moved on to fresh land. Gold, silver, and salt mining boosted the king's revenues. Despite the minting of coins, cattle remained the principal medium of exchange. Towns began developing when an improvement in agricultural methods and the clearing of additional land produced enough surplus to support a class of full-time craftsmen. By the reign of Bela III (1173-96), Hungary was one of the leading powers in southeastern Europe, and in the thirteenth century Hungary's nobles were trading gold, silver, copper, and iron with western Europe for luxury goods.

Until the end of the twelfth century, the king's power remained paramount in Hungary. He was the largest landowner, and income from the crown lands nearly equaled the revenues generated from mines, customs, tolls, and the mint. In the thirteenth century, however, the social structure changed, and the crown's absolute power began to wane. As the crown lands became a less important source of royal revenues, the king found it expedient to make land grants to nobles to ensure their loyalty. King Andrew II (1205-35), a profligate spender on foreign military adventures and domestic luxury, made huge land grants to nobles who fought for him. These nobles, many of whom were foreign knights, soon made up a class of magnates whose wealth and power far outstripped that of the more numerous, and predominantly Magyar, lesser nobles. When Andrew tried to meet burgeoning expenses by raising the serfs' taxes, thereby indirectly slashing the lesser nobles' incomes, the lesser nobles rebelled. In 1222 they forced Andrew to sign the Golden Bull, which limited the king's power, declared the lesser nobles (all free men not included among the great Barons or magnates) legally equal to the magnates and gave them the right to resist the king's illegal acts. The lesser nobles also began to present Andrew with grievances, a practice that evolved into the institution of the parliament, or Diet.

Andrew II's son Bela IV (1235-79) tried with little success to reestablish royal preeminence by reacquiring lost crown lands. His efforts, however, created a deep rift between the crown and the magnates just as the Mongols were sweeping westward across Russia toward Europe. Aware of the danger, Bela ordered the magnates and lesser nobles to mobilize. Few responded, and the Mongols routed Bela's army at Mohi on April 11, 1241. Bela fled first to Austria, where Duke Frederick of Babenberg held him for ransom, then to Dalmatia. The Mongols reduced Hungary's towns and villages to ashes and slaughtered half the population before news arrived in 1242 that the Great Khan Ogotai had died in Karakorum. The Mongols withdrew, sparing Bela and what remained of his kingdom.


Hungary - King Bela and Reconstruction


Bela realized that reconstruction would require the magnates' support, so he abandoned his attempts to recover former crown lands. Instead, he granted crown lands to his supporters, reorganized the army by replacing light archers with heavy cavalry, and granted the magnates concessions to redevelop their lands and construct stone-and-mortar castles that would withstand enemy sieges. Bela repopulated the country with a wave of immigrants, transforming royal castles into towns and populating them with Germans, Italians, and Jews. Mining began anew, farming methods improved, and crafts and commerce developed in the towns. After Bela's reconstruction program, the magnates, with their new fortifications, emerged as Hungary's most powerful political force. However, by the end of the thirteenth century, they were fighting each other and carving out petty principalities.

King Bela IV died in 1270, and the �rpad line expired in 1301 when Andrew III, who strove with some success to limit the magnates' power, unexpectedly died without a male heir. Anarchy characterized Hungary as factions of magnates vied for control.




After the �rpad Dynasty ended, Hungary's nobles chose a series of foreign kings who reestablished strong royal authority. Hungary and the adjacent countries prospered for several centuries as Central Europe experienced an era of peace interrupted only by succession struggles. But over time, the onslaughts of the Turks and the strife of the Reformation weakened Hungary, and the country was eventually partitioned by the Turks and the Habsburgs. Golden Era

Hungary's first two foreign kings, Charles Robert and Louis I of the House of Anjou, ruled during one of the most glorious periods in the country's history. Central Europe was at peace, and Hungary and its neighbors prospered. Charles Robert (1308-42) won the protracted succession struggle after Andrew III's death. An �rpad descendant in the female line, Charles Robert was crowned as a child and raised in Hungary. He reestablished the crown's authority by ousting disloyal magnates and distributing their estates to his supporters. Charles Robert then ordered the magnates to recruit and equip small private armies called banderia. Charles Robert ruled by decree and convened the Diet only to announce his decisions. Dynastic marriages linked his family with the ruling families of Naples and Poland and heightened Hungary's standing abroad. Under Charles Robert, the crown regained control of Hungary's mines, and in the next two centuries the mines produced more than a third of Europe's gold and a quarter of its silver. Charles Robert also introduced tax reforms and a stable currency. Charles Robert's son and successor Louis I (1342-82) maintained the strong central authority Charles Robert had amassed. In 1351 Louis issued a decree that reconfirmed the Golden Bull, erased all legal distinctions between the lesser nobles and the magnates, standardized the serfs' obligations, and barred the serfs from leaving the lesser nobles' farms to seek better opportunities on the magnates' estates. The decree also established the entail system. Hungary's economy continued to flourish during Louis's reign. Gold and other precious metals poured from the country's mines and enriched the royal treasury, foreign trade increased, new towns and villages arose, and craftsmen formed guilds. The prosperity fueled a surge in cultural activity, and Louis promoted the illumination of manuscripts and in 1367 founded Hungary's first university. Abroad, however, Louis fought several costly wars and wasted time, funds, and lives in failed attempts to gain for his nephew the throne of Naples. While Louis was engaged in these activates, the Turks made their initial inroads into the Balkans. Louis became king of Poland in 1370 and ruled the two countries for twelve years.

Sigismund (1387-37), Louis's son-in-law, won a bitter struggle for the throne after Louis died in 1382. Under Sigismund, Hungary's fortunes began to decline. Many Hungarian nobles despised Sigismund for his cruelty during the succession struggle, his long absences, and his costly foreign wars. In 1401 disgruntled nobles temporarily imprisoned the king. In 1403 another group crowned an anti-king, who failed to solidify his power but succeeded in selling Dalmatia to Venice. Sigismund failed to reclaim the territory. Sigismund became the Holy Roman Emperor in 1410 and king of Bohemia in 1419, thus requiring him to spend long periods abroad and enabling Hungary's magnates to acquire unprecedented power. In response, Sigismund created the office of palatine to rule the country in his stead. Like earlier Hungarian kings, Sigismund elevated his supporters to magnate status and sold off crown lands to meet burgeoning expenses. Although Hungary's economy continued to flourish, Sigismund's expenses outstripped his income. He bolstered royal revenues by increasing the serfs' taxes and requiring cash payment. Social turmoil erupted late in Sigismund's reign as a result of the heavier taxes and renewed magnate pressure on the lesser nobles. Hungary's first peasant revolt erupted when a Transylvanian bishop ordered peasants to pay tithes in coin rather than in kind. The revolt was quickly checked, but it prompted Transylvania's Szekel, Magyar, and German nobles to form the Union of Three Nations, which was an effort to defend their privileges against any power except that of the king.

Additional turmoil erupted when the Ottoman Turks expanded their empire into the Balkans. They crossed the Bosporus Straits in 1352, subdued Bulgaria in 1388, and defeated the Serbs at Kosovo Polje in 1389. Sigismund led a crusade against them in 1396, but the Ottomans routed his forces at Nicopolis, and he barely escaped with his life. Tamerlane's invasion of Anatolia in 1402-03 slowed the Turks' progress for several decades, but in 1437 Sultan Murad prepared to invade Hungary. Sigismund died the same year, and Hungary's next two kings, Albrecht V of Austria (1437-39) and Wladyslaw III of Poland (1439-44), who was known in Hungary as Ulaszlo I, both died during campaigns against the Turks.

After Ulaszlo, Hungary's nobles chose an infant king, Laszlo V, and a regent, Janos Hunyadi, to rule the country until Laszlo V came of age. The son of a lesser nobleman of the Vlach tribe, Hunyadi rose to become a general, Transylvania's military governor, one of Hungary's largest landowners, and a war hero. He used his personal wealth and the support of the lesser nobles to win the regency and overcome the opposition of the magnates. Hunyadi then established a mercenary army funded by the first tax ever imposed on Hungary's nobles. He defeated the Ottoman forces in Transylvania in 1442 and broke their hold on Serbia in 1443, only to be routed at Varna (where Laszlo V himself perished) a year later. In 1456, when the Turkish army besieged Belgrade, Hunyadi defeated it in his greatest and final victory. Hunyadi died of the plague soon after.

Some magnates resented Hunyadi for his popularity as well as for the taxes he imposed, and they feared that his sons might seize the throne from Laszlo. They coaxed the sons to return to Laszlo's court, where Hunyadi's elder son was beheaded. His younger son, Matyas, was imprisoned in Bohemia. However, lesser nobles loyal to Matyas soon expelled Laszlo. After Laszlo's death abroad, they paid ransom for Matyas, met him on the frozen Danube River, and proclaimed him king. Known as Matyas Corvinus (1458-90), he was, with one possible exception (Janos Zapolyai), the last Hungarian king to rule the country.

Although Matyas regularly convened the Diet and expanded the lesser nobles' powers in the counties, he exercised absolute rule over Hungary by means of a secular bureaucracy. Matyas enlisted 30,000 foreign mercenaries in his standing army and built a network of fortresses along Hungary's southern frontier, but he did not pursue his father's aggressive anti-Turkish policy. Instead, Matyas launched unpopular attacks on Bohemia, Poland, and Austria, pursuing an ambition to become Holy Roman Emperor and arguing that he was trying to forge a unified Western alliance strong enough to expel the Turks from Europe. He eliminated tax exemptions and raised the serfs' obligations to the crown to fund his court and the military. The magnates complained that these measures reduced their incomes, but despite the stiffer obligations, the serfs considered Matyas a just ruler because he protected them from excessive demands and other abuses by the magnates. He also reformed Hungary's legal system and promoted the growth of Hungary's towns. Matyas was a true renaissance man and made his court a center of humanist culture; under his rule, Hungary's first books were printed and its second university was established. Matyas' library, the Corvina, was famous throughout Europe. In his quest for the imperial throne, Matyas eventually moved to Vienna, where he died in 1490.


Hungary - Reign of Ulaszlo II and Louis II


Matyas's reforms did not survive the turbulent decades that followed his reign. An oligarchy of quarrelsome magnates gained control of Hungary. They crowned a docile king, Vladislav Jagiello (the Jagiellonian king of Bohemia, who was known in Hungary as Ulaszlo II, 1490-1516), only on condition that he abolish the taxes that had supported Matyas's mercenary army. As a result, the king's army dispersed just as the Turks were threatening Hungary. The magnates also dismantled Matyas's administration and antagonized the lesser nobles. In 1492 the Diet limited the serfs' freedom of movement and expanded their obligations. Rural discontent boiled over in 1514 when well-armed peasants (if they are in rebellion they are not really acting as serfs) under Gyorgy Dozsa rose up and attacked estates across Hungary. United by a common threat, the magnates and lesser nobles eventually crushed the rebels. Dozsa and other rebel leaders were executed in a most brutal manner.

Shocked by the peasant revolt, the Diet of 1514 passed laws that condemned the serfs to eternal bondage and increased their work obligations. Corporal punishment became widespread, and one noble even branded his serfs like livestock. The legal scholar Stephen Werboczy included the new laws in his Tripartitum of 1514, which made up Hungary's legal corpus until the revolution of 1848. The Tripartitum gave Hungary's king and nobles, or magnates, equal shares of power: the nobles recognized the king as superior, but in turn the nobles had the power to elect the king. The Tripartitum also freed the nobles from taxation, obligated them to serve in the military only in a defensive war, and made them immune from arbitrary arrest. The new laws weakened Hungary by deepening the rift between the nobles and the peasantry just as the Turks prepared to invade the country.

When Ulaszlo II died in 1516, his ten-year-old son Louis II (1516-26) became king, but a royal council appointed by the Diet ruled the country. Hungary was in a state of near anarchy under the magnates' rule. The king's finances were a shambles; he borrowed to meet his household expenses despite the fact that they totaled about one-third of the national income. The country's defenses sagged as border guards went unpaid, fortresses fell into disrepair, and initiatives to increase taxes to reinforce defenses were stifled. In 1521 Sultan Suleyman the Magnificent recognized Hungary's weakness and seized Belgrade in preparation for an attack on Hungary. In August 1526, he marched more than 100,000 troops into Hungary's heartland, and at Mohacs they cut down all but several hundred of the 25,000 ill-equipped soldiers whom Louis II had been able to muster for the country's defense. Louis himself died, thrown from a horse into a bog.

After Louis's death, rival factions of Hungarian nobles simultaneously elected two kings, Janos Zapolyai (1526-40) and Ferdinand (1526-64). Each claimed sovereignty over the entire country but lacked sufficient forces to eliminate his rival. Zapolyai, a Hungarian and the military governor of Transylvania, was recognized by the sultan and was supported mostly by lesser nobles opposed to new foreign kings. Ferdinand, the first Habsburg to occupy the Hungarian throne, drew support from magnates in western Hungary who hoped he could convince his brother, Holy Roman Emperor Charles V, to expel the Turks. In 1538 George Martinuzzi, Zapolyai's adviser, arranged a treaty between the rivals that would have made Ferdinand sole monarch upon the death of the then-childless Zapolyai. The deal collapsed when Zapolyai married and fathered a son. Violence erupted, and the Turks seized the opportunity, conquering the city of Buda and then partitioning the country in 1541.


Hungary - Partition of Hungary


The partition of Hungary between the Ottoman and Habsburg empires lasted more than 150 years. Habsburg Austria controlled Royal Hungary, which consisted of counties along the Austrian border and some of northwestern Croatia. The Ottomans annexed central and southern Hungary. Transylvania became an Ottoman vassal state, where native princes, who paid the Turks tribute, ruled with considerable autonomy. After the Hungarian defeat at Mohacs, the Protestant Reformation took hold in Hungary. Initially, German burghers in Transylvania and Royal Hungary adopted Lutheranism; later, John Calvin's works converted many Magyars in Transylvania and central Hungary. The Reformation spread quickly, and by the early seventeenth century hardly any noble families remained Catholic. Archbishop Peter Pazmany reorganized Royal Hungary's Roman Catholic Church and led a Counter-Reformation that reversed the Protestants' gains in Royal Hungary, using persuasion rather than intimidation. Transylvania, however, remained a Protestant stronghold. The Reformation caused rifts between Catholic Magyars, who often sided with the Habsburgs, and Protestant Magyars, who developed a strong national identity and became rebels in Austrian eyes. Chasms also developed between Royal Hungary and Transylvania and between the mostly Catholic magnates and the mainly Protestant lesser nobles.


Hungary - Royal Hungary


Royal Hungary became a small part of the Habsburg Empire and enjoyed little influence in Vienna. The Habsburg king directly controlled Royal Hungary's financial, military, and foreign affairs, and imperial troops guarded its borders. The Habsburgs avoided filling the office of palatine to prevent the holder's amassing too much power. In addition, the so-called Turkish question divided the Habsburgs and the Hungarians: Vienna wanted to maintain peace with the Turks; the Hungarians wanted the Ottomans ousted. As the Hungarians recognized the weakness of their position, many became anti-Habsburg. They complained about foreign rule, the behavior of foreign garrisons, and the Habsburgs' recognition of Turkish sovereignty in Transylvania. Protestants, who were persecuted in Royal Hungary, considered the Counter-Reformation a greater menace than the Turks, however.


Hungary - Ottoman Hungary


Central Hungary became a province of the Ottoman Empire ruled by pashas living in Buda. The Turks' only interest was to secure their hold on the territory. The Sublime Porte (a term used to designate the Ottoman rulers) became the sole landowner and managed about 20 percent of the land for its own benefit, apportioning the rest among soldiers and civil servants. The new landlords were interested mainly in squeezing as much wealth from the land as quickly as possible. Wars, slave-taking, and the emigration of nobles who lost their land depopulated much of the countryside. However, the Turks practiced religious tolerance and allowed the Hungarians living within the empire significant autonomy in internal affairs. Towns maintained some selfgovernment , and a prosperous middle class developed through artisanry and trade.


Hungary - Transylvania


Transylvania, an Ottoman vassal state, functioned for many years as an independent country. In 1542 Martinuzzi revived the 1437 Union of Three Nations to govern the land, and the Transylvanian nobles regularly met in their own Diet. In 1572 the Diet created freedom of worship and equal political rights for members of Transylvania's four "established" religions: Roman Catholic, Lutheran, Unitarian, and Calvinist. The Eastern Orthodox Romanian serfs were permitted to worship, but the Orthodox Church was not recognized as an "established" religion, and the Romanians did not share political equality.

In 1591 the Habsburgs invaded Transylvania under George Basta, who persecuted Protestants and expropriated estates illegally until Istvan Bocskay, a former Habsburg supporter, mustered an army that expelled Basta's forces in 1604-05. In 1606 Bocskay concluded the Peace of Vienna with the Habsburgs and the Peace of Zsitvatorok with the Turks. The treaties secured his position as prince of Transylvania, guaranteed rights for Royal Hungary's Protestants, broadened Transylvania's independence, and freed the emperor of his obligation to pay tribute to the Ottomans. After Bocskay's death, the Ottomans compelled the Transylvanians to accept Gabor Bethlen as prince. Transylvania prospered under Bethlen's enlightened despotism. He stimulated agriculture, trade, and industry; sank new mines; sent students to Protestant universities abroad; and prohibited landlords from barring children of serfs from an education. Unfortunately, when Bethlen died in 1629, the Transylvanian Diet abolished most of his reforms. After a short succession struggle, Gyorgy Rakoczi I (1648-60) became prince. Under Rakoczi, Transylvania fought with the Protestants in the Thirty Years' War (1618-48) and was mentioned as a sovereign state in the Peace of Westphalia. Transylvania's golden age ended after Gyorgy Rakoczi II (1648-60) launched an attack on Poland without the prior approval of the Ottomans or Transylvania's Diet. The campaign was a disaster, and the Turks used the opportunity to rout Rakoczi's army and take control of Transylvania.


Hungary - End of the Partition


The Ottoman Empire gradually weakened after Suleyman's death in 1559. Soon, the Ottoman occupation of Hungary continued not so much because of the Turk strength but because of the West's disunity and lack of resolve. Hungarian nobles grew impatient with the Habsburgs' persecution of Protestants and reluctance to take steps to drive out the Turks. Their discontent exploded after the Habsburg imperial army routed a Turkish force at St. Gotthard in 1664. Instead of pressing for concessions, Emperor Leopold I (1657-1705) concluded the Treaty of Vasvar in which he conceded to the Turks more Hungarian territory than they had ever possessed. After Vasvar, even many Catholic magnates turned against the Habsburgs.

After a failed Hungarian plot to throw off Habsburg rule, Leopold suppressed the Hungarian constitution, subjected Royal Hungary to direct absolute rule from Vienna, and harshly repressed Hungarian Protestants, handing over Protestant ministers who refused to deny their faith to work as galley slaves. Hungarian discontent deepened. In 1681 Imre Thokoly, a Transylvanian nobleman, led a rebellion against the Habsburgs and forced Leopold I to convoke the Diet and restore Hungary's constitution and the office of palatine. Sensing weakness, the Turks made their strike against Austria, but Polish forces routed them near Vienna in 1683. A Western campaign then gradually drove the Turks from Hungary, and the sultan surrendered almost all of his Hungarian and Croatian possessions in the Peace of Karlowitz in 1699.




The Habsburgs ruled autocratically on almost all questions except taxation and relegated Hungary to the status of a colony, a factor that, together with other factors, stifled economic development. After more than a century of stagnation, the lesser nobles, under increasing economic pressure and prompted by nascent Hungarian nationalism, pressed for reform. The crescendo of discontent climaxed in the March 1948 revolution. Russian troops quashed the rebellion, enabling Austrian emperor Franz Joseph to impose absolute control for almost two decades.


Hungary - Reign of Leopold II


As the Habsburgs gained control of the country, the ministers of Leopold I argued that he should rule Hungary as conquered territory. One even said Vienna should first make the Hungarians beggars, then Catholics, and then Germans. At the Diet of Pressburg in 1687, the emperor promised to observe all of Hungary's laws and privileges. Hereditary succession of the Habsburgs was recognized, however, and the nobles' right of resistance was abrogated. In 1690 Leopold began redistributing lands freed from the Turks. Protestant nobles and all other Hungarians thought disloyal by the Habsburgs lost their estates, which were given to foreigners. Vienna controlled Hungary's foreign affairs, defense, tariffs, and other functions, and it separated Tranyslvania from Hungary, treating it as a separate imperial territory.

The repression of Protestants and the land seizures embittered the Hungarians, and in 1703 a peasant uprising sparked an eight-year national rebellion aimed at casting off the Habsburg yoke. Disgruntled Protestants, peasants, and soldiers united under Ferenc Rakoczi, a Roman Catholic magnate who could hardly speak Hungarian. Most of Hungary soon supported Rakoczi, and the joint Hungarian-Transylvanian Diet voted to annul the Habsburgs' right to the throne. Fortunes turned against the rebels, however, when the Habsburgs made peace in the West and turned their full force against Hungary. The rebellion ended in 1711, when moderate rebel leaders concluded the Treaty of Szatmar, in which the Hungarians gained little except the emperor's agreement to reconvene the Diet and to grant an amnesty for the rebels.


Hungary - Reign of Charles VI and Maria Theresa


Leopold's successor, Charles VI (1711-40), began building a workable relationship with Hungary after the Treaty of Szatmar. Charles needed the Hungarian Diet's approval for the Pragmatic Sanction, under which the Habsburg monarch was to rule Hungary not as emperor but as a king subject to the restraints of Hungary's constitution and laws. He hoped that the Pragmatic Sanction would keep the Habsburg Empire intact if his daughter, Maria Theresa, succeeded him. The Diet approved the Pragmatic Sanction in 1723, and Hungary thus agreed to became a hereditary monarchy under the Habsburgs for as long as their dynasty existed. In practice, however, Charles and his successors governed almost autocratically, controlling Hungary's foreign affairs, defense, and finance but lacking the power to tax the nobles without their approval. The Habsburgs also maintained Transylvania's separation from Hungary.

Charles organized Hungary's first modern, centralized administration and in 1715 established a standing army under his command, which was entirely funded and manned by the nonnoble population. This policy reduced the nobles' military obligation without abrogating their exemption from taxation. Charles also banned conversion to Protestantism, required civil servants to profess Catholicism, and forbade Protestant students to study abroad.

Maria Theresa (1740-80) faced an immediate challenge from Prussia's Frederick II when she became head of the House of Habsburg. In 1741 she appeared before the Hungarian Diet holding her newborn son and entreated Hungary's nobles to support her. They stood behind her and helped secure her rule. Maria Theresa later took measures to reinforce links with Hungary's magnates. She established special schools to attract Hungarian nobles to Vienna. During her reign, the members of the magnate class lost their Hungarian national identity, including their knowledge of the Hungarian language.

Under Charles and Maria Theresa, Hungary experienced further economic decline. Centuries of Ottoman occupation, rebellion, and war had reduced Hungary's population drastically, and large parts of the country's southern half were almost deserted. A labor shortage developed as landowners restored their estates. In response, the Habsburgs began to colonize Hungary with large numbers of peasants from all over Europe, especially Slovaks, Serbs, Croatians, and Germans. Many Jews also immigrated from Vienna and the empire's Polish lands near the end of the century. Hungary's population more than tripled to 8 million between 1720 and 1787. However, only 39 percent of its people were Magyars, who lived mainly in the center of the country.

A complex patchwork of minority peoples emerged in the lands along Hungary's periphery. Droves of Romanians entered Transylvania during the same period. The Protestant and Catholic Hungarians and Germans who had been there for years had considered the Orthodox Romanians inferior and relegated them to serfdom. In the eighteenth century, leaders of the Orthodox Church began arguing that Romanians were descendants of the Roman Dacians and thus Transylvania's original inhabitants. The Orthodox leaders demanded, without success, that the Romanians be recognized as Transylvania's fourth "nation" and the Orthodox Church as its fifth "established" religion.

In the early to mid-eighteenth century, Hungary had a primitive agricultural economy that employed 90 percent of the population. The nobles failed to use fertilizers, roads were poor and rivers blocked, and crude storage methods caused huge losses of grain. Barter had replaced money transactions, and little trade existed between towns and the serfs. After 1760 a labor surplus developed. The serf population grew, pressure on the land increased, and the serfs' standard of living declined. Landowners began making greater demands on new tenants and began violating existing agreements. In response, Maria Theresa issued her Urbarium of 1767 to protect the serfs by restoring their freedom of movement and limiting the corvee. Despite her efforts and several periods of strong demand for grain, the situation worsened. Between 1767 and 1848, many serfs left their holdings. Most became landless farm workers because a lack of industrial development meant few opportunities for work in the towns.


Hungary - Enlightened Absolutism


Joseph II (1780-90), a dynamic leader strongly influenced by the Enlightenment, shook Hungary from its malaise when he inherited the throne from his mother, Maria Theresa. Joseph sought to centralize control of the empire and to rule it by decree as an enlightened despot. He refused to take the Hungarian coronation oath to avoid being constrained by Hungary's constitution. In 1781 Joseph issued the Patent of Toleration, which granted Protestants and Orthodox Christians full civil rights and Jews freedom of worship. He decreed that German replace Latin as the empire's official language and granted the peasants the freedom to leave their holdings, to marry, and to place their children in trades. Hungary, Croatia, and Transylvania became a single imperial territory under one administration. When the Hungarian nobles again refused to waive their exemption from taxation, Joseph banned imports of Hungarian manufactured goods into Austria and began a survey to prepare for imposition of a general land tax.

Joseph's reforms outraged Hungary's nobles and clergy, and the country's peasants grew dissatisfied with taxes, conscription, and requisitions of supplies. Hungarians perceived Joseph's language reform as German cultural hegemony, and they reacted by insisting on the right to use their own tongue. As a result, Hungarian lesser nobles sparked a renaissance of the Magyar language and culture, and a cult of national dance and costume flourished. The lesser nobles questioned the loyalty of the magnates, of whom less than half were ethnic Magyars, and even those had become French- and German-speaking courtiers. The Magyar national reawakening subsequently triggered national revivals among the Slovak, Romanian, Serbian, and Croatian minorities within Hungary and Transylvania, who felt threatened by both German and Magyar cultural hegemony. These national revivals later blossomed into the nationalist movements of the nineteenth and twentieth centuries that contributed to the empire's ultimate collapse.

Late in his reign, Joseph led a costly, ill-fated campaign against the Turks that weakened his empire. On January 28, 1790, three weeks before his death, the emperor issued a decree canceling all of his reforms except the Patent of Toleration, peasant reforms, and abolition of the religious orders.

Joseph's successor, Leopold II (1790-92), recognized Hungary again as a separate country under a Habsburg king and reestablished Croatia and Transylvania as separate territorial entities. In 1791 the Diet passed Law X, which stressed Hungary's status as an independent kingdom ruled only by a king legally crowned according to Hungarian laws. Law X later became the basis for demands by Hungarian reformers for statehood in the period from 1825 to 1849. New laws again required approval of both the Habsburg king and the Diet, and Latin was restored as the official language. The peasant reforms remained in effect, however, and Protestants remained equal before the law. Leopold died in March 1792 just as the French Revolution was about to degenerate into the Reign of Terror and send shock waves through the royal houses of Europe.

Enlightened absolutism ended in Hungary under Leopold's successor, Francis I (1792-1835), who developed an almost abnormal aversion to change, bringing Hungary decades of political stagnation. In 1795 the Hungarian police arrested an abbot and several of the country's leading thinkers for plotting a Jacobin kind of revolution to install a radical democratic, egalitarian political system in Hungary. Thereafter, Francis resolved to extinguish any spark of reform that might ignite revolution. The execution of the alleged plotters silenced any reform advocates among the nobles, and for about three decades reform ideas remained confined to poetry and philosophy. The magnates, who also feared that the influx of revolutionary ideas might precipitate a popular uprising, became a tool of the crown and seized the chance to further burden the peasants.


Hungary - Economic and Social Developments


By the turn of the nineteenth century, the aim of Hungary's agricultural producers had shifted from subsistence farming and small-scale production for local trade to cash-generating, large-scale production for a wider market. Road and waterway improvements cut transportation costs, while urbanization in Austria, Bohemia, and Moravia and the need for supplies for the Napoleonic wars boosted demand for foodstuffs and clothing. Hungary became a major grain and wool exporter. New lands were cleared, and yields rose as farming methods improved. Hungary did not reap the full benefit of the boom, however, because most of the profits went to the magnates, who considered them not as capital for investment but as a means of adding luxury to their lives. As expectations rose, goods such as linen and silverware, once considered luxuries, became necessities. The wealthy magnates had little trouble balancing their earnings and expenditures, but many lesser nobles, fearful of losing their social standing, went into debt to finance their spending.

Napoleon's final defeat brought recession. Grain prices collapsed as demand dropped, and debt ensnared much of Hungary's lesser nobility. Poverty forced many lesser nobles to work to earn a livelihood, and their sons entered education institutions to train for civil service or professional careers. The decline of the lesser nobility continued despite the fact that by 1820 Hungary's exports had surpassed wartime levels. As more lesser nobles earned diplomas, the bureaucracy and professions became saturated, leaving a host of disgruntled graduates without jobs. Members of this new intelligentsia quickly became enamored of radical political ideologies emanating from Western Europe and organized themselves to effect changes in Hungary's political system.

Francis rarely called the Diet into session (usually only to request men and supplies for war) without hearing complaints. Economic hardship brought the lesser nobles' discontent to a head by 1825, when Francis finally convoked the Diet after a fourteen-year hiatus. Grievances were voiced, and open calls for reform were made, including demands for less royal interference in the nobles' affairs and for wider use of the Hungarian language.

The first great figure of the reform era came to the fore during the 1825 convocation of the Diet. Count Istvan Szechenyi, a magnate from one of Hungary's most powerful families, shocked the Diet when he delivered the first speech in Hungarian ever uttered in the upper chamber and backed a proposal for the creation of a Hungarian academy of arts and sciences by pledging a year's income to support it. In 1831 angry nobles burned Szechenyi's book Hitel (Credit), in which he argued that the nobles' privileges were both morally indefensible and economically detrimental to the nobles themselves. Szechenyi called for an economic revolution and argued that only the magnates were capable of implementing reforms. Szechenyi favored a strong link with the Habsburg Empire and called for abolition of entail and serfdom, taxation of landowners, financing of development with foreign capital, establishment of a national bank, and introduction of wage labor. He inspired such project as the construction of the suspension bridge linking Buda and Pest. Szechenyi's reform initiatives ultimately failed because they were targeted at the magnates, who were not inclined to support change, and because the pace of his program was too slow to attract disgruntled lesser nobles.

The most popular of Hungary's great reform leaders, Lajos Kossuth, addressed passionate calls for change to the lesser nobles. Kossuth was the son of a landless, lesser nobleman of Protestant background. He practiced law with his father before moving to Pest. There he published commentaries on the Diet's activities, which made him popular with young, reform-minded people. Kossuth was imprisoned in 1836 for treason. After his release in 1840, he gained quick notoriety as the editor of a liberal party newspaper. Kossuth argued that only political and economic separation from Austria would improve Hungary's plight. He called for broader parliamentary democracy, industrialization, general taxation, economic expansion through exports, and abolition of privileges and serfdom. But Kossuth was also a Magyar chauvinist whose rhetoric provoked the strong resentment of Hungary's minority ethnic groups. Kossuth gained support among liberal lesser nobles, who constituted an opposition minority in the Diet. They sought reforms with increasing success after Francis's death in 1835 and the succession of Ferdinand V (1835-48). In 1843 a law was enacted making Hungarian the country's official language over the strong objections of the Croats, Slovaks, Serbs, and Romanians.


Hungary - The Revolution of March 1848


In March 1848, revolution erupted in Vienna, forcing Austria's Chancellor Klemens von Metternich to flee the capital. Unrest broke out in Hungary on March 15, when radicals and students stormed the Buda fortress to release political prisoners. A day later, the Diet's liberal-dominated lower house demanded establishment of a national government responsible to an elected parliament, and on March 22 a new national cabinet took power with Count Louis Batthyany as chairman, Kossuth as minister of finance, and Szechenyi as minister of public works. Under duress, the Diet's upper house approved a sweeping reform package, signed by Ferdinand, that altered almost every aspect of Hungary's economic, social, and political life. These so-called April Laws created independent Hungarian ministries of defense and finance, and the new government claimed the right to issue currency through its own central bank. Guilds lost their privileges; the nobles became subject to taxation; entail, tithes, and the corvee were abolished; some peasants became freehold proprietors of the land they worked; freedom of the press and assembly were created; a Hungarian national guard was established; and Transylvania was brought under Hungarian rule.

The non-Magyar ethnic groups in Hungary feared the nationalism of the new Hungarian government, and Transylvanian Germans and Romanians opposed the incorporation of Transylvania into Hungary. The Vienna government enlisted the minorities in the first attempt to overthrow the Hungarian government. Josip Jelacic--a fanatic anti-Hungarian--became governor of Croatia on March 22 and severed relations with the Hungarian government a month later. By summer the revolution's momentum began to wane. The Austrians ordered the Hungarian diet to dissolve, but the order went unheeded. In September Jelacic led an army into Hungary. Batthyany resigned, and a mob lynched the imperial commander in Pest. A committee of national defense under Kossuth took control, authorized the establishment of a Hungarian army, and issued paper money to fund it. On October 30, 1848, imperial troops entered Vienna and suppressed a workers' uprising, effectively ending the revolution everywhere in the empire except Hungary, where Kossuth's army had overcome Jelacic's forces. In December Ferdinand abdicated in favor of Franz Joseph (1848-1916), who claimed more freedom of action because, unlike Ferdinand, he had given no pledge to respect the April Laws. The Magyars, however, refused to recognize him as their king because he was never crowned.

The imperial army captured Pest early in 1849, but the revolutionary government remained entrenched in Debrecen. In April a "rump" Diet deposed the Habsburg Dynasty in Hungary, proclaimed Hungary a republic, and named Kossuth governor with dictatorial powers. After the declaration, Austrian reinforcements were transferred to Hungary, and in June, at Franz Joseph's request, Russian troops attacked from the east and overwhelmed the Hungarians. The Hungarian army surrendered on August 13, and Kossuth escaped to the Ottoman Empire. A period of harsh repression followed. Batthyany and about 100 others were shot, several society women were publicly whipped, and the government outlawed public gatherings, theater performances, display of the national colors, and wearing of national costumes and Kossuth-style beards.


Hungary - Aftermath of the Revolution


After the revolution, the emperor revoked Hungary's constitution and assumed absolute control. Franz Joseph divided the country into four distinct territories: Hungary, Transylvania, Croatia-Slavonia, and Vojvodina. German and Bohemian administrators managed the government, and German became the language of administration and higher education. The non-Magyar minorities of Hungary received little for their support of Austria during the turmoil. A Croat reportedly told a Hungarian: "We received as a reward what the Magyars got as a punishment."

Hungarian public opinion split over the country's relations with Austria. Some Hungarians held out hope for full separation from Austria; others wanted an accommodation with the Habsburgs, provided that they respected Hungary's constitution and laws. Ferencz Deak became the main advocate for accommodation. Deak upheld the legality of the April Laws and argued that their amendment required the Hungarian Diet's consent. He also held that the dethronement of the Habsburgs was invalid. As long as Austria ruled absolutely, Deak argued, Hungarians should do no more than passively resist illegal demands.

The first crack in Franz Joseph's neo-absolutist rule developed in 1859, when the forces of Sardinia and France defeated Austria at Solferno. The defeat convinced Franz Joseph that national and social opposition to his government was too strong to be managed by decree from Vienna. Gradually he recognized the necessity of concessions toward Hungary, and Austria and Hungary thus moved toward a compromise. In 1866 the Prussians defeated the Austrians, further underscoring the weakness of the Habsburg Empire. Negotiations between the emperor and the Hungarian leaders were intensified and finally resulted in the Compromise of 1867, which created the Dual Monarchy of Austra-Hungary, also known as the Austro-Hungarian Empire.




The Compromise of 1867, which created the Dual Monarchy, gave the Hungarian government more control of its domestic affairs than it had possessed at any time since the Battle of Mohacs. However, the new government faced severe economic problems and the growing restiveness of ethnic minorities. World War I led to the disintegration of Austria-Hungary, and in the aftermath of the war, a series of governments--including a communist regime--assumed power in Buda and Pest (in 1872 the cities of Buda and Pest united to become Budapest).

Constitutional and Legal Framework

Once again a Habsburg emperor became king of Hungary, but the compromise strictly limited his power over the country's internal affairs, and the Hungarian government assumed control over its domestic affairs. The Hungarian government consisted of a prime minister and cabinet appointed by the emperor but responsible to a bicameral parliament elected by a narrow franchise. Joint Austro-Hungarian affairs were managed through "common" ministries of foreign affairs, defense, and finance. The respective ministers were responsible to delegations representing separate Austrian and Hungarian parliaments. Although the "common" ministry of defense administered the imperial and royal armies, the emperor acted as their commander in chief, and German remained the language of command in the military as a whole. The compromise designated that commercial and monetary policy, tariffs, the railroad, and indirect taxation were "common" concerns to be negotiated every ten years. The compromise also returned Transylvania, Vojvodina, and the military frontier to Hungary's jurisdiction.

At Franz Joseph's insistence, Hungary and Croatia reached a similar compromise in 1868, giving the Croats a special status in Hungary. The agreement granted the Croats autonomy over their internal affairs. The Croatian ban would now be nominated by the Hungarian prime minister and appointed by the king. Areas of "common" concern to Hungarians and Croats included finance, currency matters, commercial policy, the post office, and the railroad. Croatian became the official language of Croatia's government, and Croatian representatives discussing "common" affairs before the Hungarian diet were permitted to speak Croatian.

The Nationalities Law enacted in 1868 defined Hungary as a single nation comprising different nationalities whose members enjoyed equal rights in all areas except language. Although non-Hungarian languages could be used in local government, churches, and schools, Hungarian became the official language of the central government and universities. Many Hungarians thought the act too generous, while minority-group leaders rejected it as inadequate. Slovaks in northern Hungary, Romanians in Transylvania, and Serbs in Vojvodina all wanted more autonomy, and unrest followed the act's passage. The government took no further action concerning nationalities, and discontent fermented.

Anti-Semitism appeared in Hungary early in the century as a result of fear of economic competition. In 1840 a partial emancipation of the Jews allowed them to live anywhere except certain depressed mining cities. The Jewish Emancipation Act of 1868 gave Jews equality before the law and effectively eliminated all bars to their participation in the economy; nevertheless, informal barriers kept Jews from careers in politics and public life.


Hungary - Rise of the Liberal Party


Franz Joseph appointed Gyula Andrassy--a member of Deak's party--prime minister in 1867. His government strongly favored the Compromise of 1867 and followed a laissez-faire economic policy. Guilds were abolished, workers were permitted to bargain for wages, and the government attempted to improve education and construct roads and railroads. Between 1850 and 1875, Hungary's farms prospered: grain prices were high, and exports tripled. But Hungary's economy accumulated capital too slowly, and the government relied heavily on foreign credits. In addition, the national and local bureaucracies began to grow immediately after the compromise became effective. Soon the cost of the bureaucracy outpaced the country's tax revenues, and the national debt soared. After an economic downturn in the mid-1870s, Deak's party succumbed to charges of financial mismanagement and scandal.

As a result of these economic problems, Kalman Tisza's Liberal Party, created in 1875, gained power in 1875. Tisza assembled a bureaucratic political machine that maintained control through corruption and manipulation of a woefully unrepresentative electoral system. In addition, Tisza's government had to withstand both dissatisfied nationalities and Hungarians who thought Tisza too submissive to the Austrians. The Liberals argued that the Dual Monarchy improved Hungary's economic position and enhanced its influence in European politics.

Tisza's government raised taxes, balanced the budget within several years of coming to power, and completed large road, railroad, and waterway projects. Commerce and industry expanded quickly. After 1880 the government abandoned its laissez-faire economic policies and encouraged industry with loans, subsidies, government contracts, tax exemptions, and other measures. The number of Hungarians who earned their living in industry doubled to 24.2 percent of the population between 1890 and 1910, while the number dependent on agriculture dropped from 82 to 62 percent. However, the 1880s and 1890s were depression years for the peasantry. Rail and steamship transport gave North American farmers access to European markets, and Europe's grain prices fell by 50 percent. Large landowners fought the downturn by seeking trade protection and other political remedies; the lesser nobles, whose farms failed in great numbers, sought positions in the still-burgeoning bureaucracy. By contrast, the peasantry resorted to subsistence farming and worked as laborers to earn money.


Hungary - Social Changes


Hungary's population rose from 13 million to 20 million between 1850 and 1910. After 1867 Hungary's feudal society gave way to a more complex society that included the magnates, lesser nobles, middle class, working class, and peasantry. However, the magnates continued to wield great influence through several conservative parties because of their massive wealth and dominant position in the upper chamber of the diet. They fought modernization and sought both closer ties with Vienna and a restoration of Hungary's traditional social structure and institutions, arguing that agriculture should remain the mission of the nobility. They won protection from the market by reestablishment of a system of entail and also pushed for restriction of middle-class profiteering and restoration of corporal punishment. The Roman Catholic Church was a major ally of the magnates.

Some lesser-noble landowners survived the agrarian depression of the late nineteenth century and continued farming. Many others turned to the bureaucracy or to the professions.

In the mid-1800s, Hungary's middle class consisted of a small number of German and Jewish merchants and workshop owners who employed a few craftsmen. By the turn of the century, however, the middle class had grown in size and complexity and had become predominantly Jewish. In fact, Jews created the modern economy that supported Tisza's bureaucratic machine. In return, Tisza not only denounced anti-Semitism but also used his political machine to check the growth of an anti-Semitic party. In 1896 his successors passed legislation securing the Jews' final emancipation. By 1910 about 900,000 Jews made up approximately 5 percent of the population and about 23 percent of Budapest's citizenry. Jews accounted for 54 percent of commercial business owners, 85 percent of financial institution directors and owners, and 62 percent of all employees in commerce.

The rise of a working class came naturally with industrial development. By 1900 Hungary's mines and industries employed nearly 1.2 million people, representing 13 percent of the population. The government favored low wages to keep Hungarian products competitive on foreign markets and to prevent impoverished peasants from flocking to the city to find work. The government recognized the right to strike in 1884, but labor came under strong political pressure. In 1890 the Social Democratic Party was established and secretly formed alliances with the trade unions. The party soon enlisted one-third of Budapest's workers. By 1900 the party and union rolls listed more than 200,000 hard-core members, making it the largest secular organization the country had ever known. The diet passed laws to improve the lives of industrial workers, including providing medical and accident insurance, but it refused to extend them voting rights, arguing that broadening the franchise would give too many non-Hungarians the vote and threaten Hungarian domination. After the Compromise of 1867, the Hungarian government also launched an education reform in an effort to create a skilled, literate labor force. As a result, the literacy rate had climbed to 80 percent by 1910. Literacy raised the expectations of workers in agriculture and industry and made them ripe for participation in movements for political and social change.

The plight of the peasantry worsened drastically during the depression at the end of the nineteenth century. The rural population grew, and the size of the peasants' farm plots shrank as land was divided up by successive generations. By 1900 almost half of the country's landowners were scratching out a living from plots too small to meet basic needs, and many farm workers had no land at all. Many peasants chose to emigrate, and their departure rate reached approximately 50,000 annually in the 1870s and about 200,000 annually by 1907. The peasantry's share of the population dropped from 72.5 percent in 1890 to 68.4 percent in 1900. The countryside also was characterized by unrest, to which the government reacted by sending in troops, banning all farm-labor organizations, and passing other repressive legislation.

In the late nineteenth century, the Liberal Party passed laws that enhanced the government's power at the expense of the Roman Catholic Church. The parliament won the right to veto clerical appointments, and it reduced the church's nearly total domination of Hungary's education institutions. Additional laws eliminated the church's authority over a number of civil matters and, in the process, introduced civil marriage and divorce procedures.

The Liberal Party also worked with some success to create a unified, Magyarized state. Ignoring the Nationalities Law, they enacted laws that required the Hungarian language to be used in local government and increased the number of school subjects taught in that language. After 1890 the government succeeded in Magyarizing educated Slovaks, Germans, Croats, and Romanians and co-opting them into the bureaucracy, thus robbing the minority nationalities of an educated elite. Most minorities never learned to speak Hungarian, but the education system made them aware of their political rights, and their discontent with Magyarization mounted. Bureaucratic pressures and heightened fears of territorial claims against Hungary after the creation of new nation-states in the Balkans forced Tisza to outlaw "national agitation" and to use electoral legerdemain to deprive the minorities of representation. Nevertheless, in 1901 Romanian and Slovak national parties emerged undaunted by incidents of electoral violence and police repression.


Hungary - Political and Economic Life, 1905-19


Tisza directed the Liberal government until 1890, and for fourteen years thereafter a number of Liberal prime ministers held office. Agricultural decline continued, and the bureaucracy could no longer absorb all of the pauperized lesser nobles and educated people who could not find work elsewhere. This group gave its political support to the Party of Independence and the Party of Forty-Eight, which became part of the "national" opposition that forced a coalition with the Liberals in 1905. The Party of Independence resigned itself to the existence of the Dual Monarchy and sought to enhance Hungary's position within it; the Party of Forty-Eight, however, deplored the Compromise of 1867, argued that Hungary remained an Austrian colony, and pushed for formation of a Hungarian national bank and an independent customs zone.

Franz Joseph refused to appoint members of the coalition to the government until they renounced their demands for concessions from Austria concerning the military. When the coalition finally gained power in 1906, the leaders retreated from their opposition to the compromise of 1867 and followed the Liberal Party's economic policies. Istvan Tisza--Kalman Tisza's son and prime minister from 1903 to 1905--formed the new Party of Work, which in 1910 won a large majority in the parliament. Tisza became prime minister for a second time in 1912 after labor strife erupted over an unsuccessful attempt to expand voting rights.


Hungary - World War I


On June 28, 1914, a Bosnian Serb assassinated Archduke Franz Ferdinand, heir to the Austrian throne. Within days AustriaHungary presented Serbia with an ultimatum that made war inevitable. Tisza initially opposed the ultimatum but changed his mind when Germany supported Austria-Hungary. By late August, all the great European powers were at war. Bands playing military music and patriotic demonstrators expecting a quick, easy victory took to Budapest's streets after the declaration of war. However, Hungary, was ill prepared to fight. The country's armaments were obsolete, and its industries were not prepared for a war economy. In 1915 and 1916, Hungary felt the full impact of the war. Inflation ran rampant, wages were frozen, food shortages developed, and the government banned export of grain even to Austria. Franz Joseph died in 1916, and Karl IV (1916-18) became Hungary's new king. Before being crowned, however, Karl insisted that Hungarians has expanded voting rights. Tisza resigned in response. By 1917 the Hungarian government was slowly losing domestic control in the face of mounting popular dissatisfaction caused by the war. Of the 3.6 million soldiers Hungary sent to war, 2.1 million became casualties. By late 1918, Hungary's farms and factories were producing only half of what they did in 1913, and the war-weary people had abandoned hope of victory.

On October 31, 1918, smoldering unrest burst into revolution in Budapest, and roving soldiers assassinated Istvan Tisza. Pressured by the popular uprising and the refusal of Hungarian troops to quell disturbances, King Karl was compelled to appoint the "Red Count," Mihaly Karolyi, a pro-Entente liberal and leader of the Party of Independence, to the post of prime minister. Chrysanthemum-waving crowds poured into the streets shouting their approval. Karolyi formed a new cabinet, whose members were drawn from the new National Council, composed of representatives of the Party of Independence, the Social Democratic Party, and a group of bourgeoisie radicals. After suing for a separate peace, the new government dissolved the parliament, pronounced Hungary an independent republic with Karolyi as provisional president, and proclaimed universal suffrage and freedom of the press and assembly. The government launched preparations for land reform and promised elections, but neither goal was carried out. On November 13, 1918, Karl IV surrendered his powers as king of Hungary; however, he did not abdicate, a technicality that made a return to the throne possible.

The Karolyi government's measures failed to stem popular discontent, especially when the Entente powers began distributing slices of Hungary's traditional territory to Romania, Yugoslavia, and Czechoslovakia. The new government and its supporters had pinned their hopes for maintaining Hungary's territorial integrity on abandoning Austria and Germany, securing a separate peace, and exploiting Karolyi's close connections in France. The Entente, however, chose to consider Hungary a partner in the defeated Dual Monarchy and dashed the Hungarians' hopes with the delivery of each new diplomatic note demanding surrender of more land. On March 19, 1919, the French head of the Entente mission in Budapest handed Karolyi a note delineating final postwar boundaries, which were unacceptable to all Hungarians. Karolyi resigned and turned power over to a coalition of Social Democrats and communists, who promised that Soviet Russia would help Hungary restore its original borders. Although the Social Democrats held a majority in the coalition, the communists under Bela Kun immediately seized control and announced the establishment of the Hungarian Soviet Republic.


Hungary - Hungarian Soviet Republic


The rise of the Hungarian Communist Party (HCP) to power was swift. The party was organized in a Moscow hotel on November 4, 1918, when a group of Hungarian prisoners of war and communist sympathizers formed a Central Committee and dispatched members to Hungary to recruit new members, propagate the party's ideas, and radicalize Karolyi's government. By February 1919, the party numbered 30,000 to 40,000 members, including many unemployed ex-soldiers, young intellectuals, and Jews. In the same month, Kun was imprisoned for incitement to riot, but his popularity skyrocketed when a journalist reported that he had been beaten by the police. Kun emerged from jail triumphant when the Social Democrats handed power to a government of "People's Commissars," who proclaimed the Hungarian Soviet Republic on March 21, 1919.

The communists wrote a temporary constitution guaranteeing freedom of speech and assembly; free education, language and cultural rights to minorities; and other rights. It also provided for suffrage for people over eighteen years of age except clergy, "former exploiters," and certain others. Single-list elections took place in April, but members of the parliament were selected indirectly by popularly elected committees. On June 25, Kun's government proclaimed a dictatorship of the proletariat, nationalized industrial and commercial enterprises, and socialized housing, transport, banking, medicine, cultural institutions, and all landholdings of more than 40.5 hectares. Kun undertook these measures even though the Hungarian communists were relatively few, and the support they enjoyed was based far more on their program to restore Hungary's borders than on their revolutionary agenda. Kun hoped that the Soviet Russian government would intervene on Hungary's behalf and that a worldwide workers' revolution was imminent. In an effort to secure its rule in the interim, the communist government resorted to arbitrary violence. Revolutionary tribunals ordered about 590 executions, including some for "crimes against the revolution." The government also used "red terror" to expropriate grain from peasants. This violence and the regime's moves against the clergy also shocked many Hungarians.

In late May, Kun attempted to fulfill his promise to restore Hungary's borders. The Hungarian Red Army marched northward and reoccupied part of Slovakia. Despite initial military success, however, Kun withdrew his troops about three weeks later when the French threatened to intervene. This concession shook his popular support. Kun then unsuccessfully turned the Hungarian Red Army on the Romanians, who broke through Hungarian lines on July 30, occupied and looted Budapest, and ousted Kun's Soviet Republic on August 1, 1919. Kun fled first to Vienna and then to Soviet Russia, where he was executed during Stalin's purge of foreign communists in the late 1930s.


Hungary - Counterrevolution


A militantly anticommunist authoritarian government composed of military officers entered Budapest on the heels of the Romanians. A "white terror" ensued that led to the imprisonment, torture, and execution without trial of communists, socialists, Jews, leftist intellectuals, sympathizers with the Karolyi and Kun regimes, and others who threatened the traditional Hungarian political order that the officers sought to reestablish. Estimates placed the number of executions at approximately 5,000. In addition, about 75,000 people were jailed. In particular, the Hungarian right wing and the Romanian forces targeted Jews for retribution. Ultimately, the white terror forced nearly 100,000 people to leave the country, most of them socialists, intellectuals, and middle-class Jews.




After World War I, a conservative government ruled Hungary and made some progress toward economic modernization. The Great Depression, however, brought economic collapse, and the country's mood shifted to the far right. An alliance with Nazi Germany resulted, and Hungary fought on the Axis side in World War II. Again Hungary experienced defeat, and the country was occupied by the Soviet Red Army.

Postwar Political and Economic Conditions

In 1920 and 1921, internal chaos racked Hungary. The white terror continued to plague Jews and leftists, unemployment and inflation soared, and penniless Hungarian refugees poured across the border from neighboring countries and burdened the floundering economy. The government offered the population little succor. In January 1920, Hungarian men and women cast the first secret ballots in the country's political history and elected a large counterrevolutionary and agrarian majority to a unicameral parliament. Two main political parties emerged: the socially conservative Christian National Union and the Independent Smallholders' Party, which advocated land reform. In March the parliament annulled both the Pragmatic Sanction of 1723 and the Compromise of 1867, and it restored the Hungarian monarchy but postponed electing a king until civil disorder had subsided. Instead, Miklos Horthy (1920-44)--a former commander in chief of the Austro-Hungarian navy--was elected regent and was empowered, among other things, to appoint Hungary's prime minister, veto legislation, convene or dissolve the parliament, and command the armed forces.

Hungary's signing of the Treaty of Trianon on June 4, 1920, ratified the country's dismemberment, limited the size of its armed forces, and required reparations payments. The territorial provisions of the treaty, which ensured continued discord between Hungary and its neighbors, required the Hungarians to surrender more than two-thirds of their prewar lands. Romania acquired Transylvania; Yugoslavia gained Croatia, Slavonia, and Vojvodina; Slovakia became a part of Czechoslovakia; and Austria also acquired a small price of prewar Hungarian territory. Hungary also lost about 60 percent of its prewar population, and about one-third of the 10 million ethnic Hungarians found themselves outside the diminished homeland. The country's ethnic composition was left almost homogeneous. Hungarians constituted about 90 percent of the population, Germans made up about 6 to 8 percent, and Slovaks, Croats, Romanians, Jews, and other minorities accounted for the remainder.

New international borders separated Hungary's industrial base from its sources of raw materials and its former markets for agricultural and industrial products. Its new circumstances forced Hungary to become a trading nation. Hungary lost 84 percent of its timber resources, 43 percent of its arable land, and 83 percent of its iron ore. Because most of the country's prewar industry was concentrated near Budapest, Hungary retained about 51 percent of its industrial population, 56 percent of its industry, 82 percent of its heavy industry, and 70 percent of its banks.


Hungary - Bethlen Government


Horthy appointed Pal Teleki prime minister in July 1920. His right-wing government set quotas effectively limiting admission of Jews to universities, legalized corporal punishment, and, to quiet rural discontent, took initial steps toward fulfilling a promise of major land reform by dividing about 385,000 hectares from the largest estates into smallholdings. Teleki's government resigned, however, after the former emperor, Karl IV, unsuccessfully attempted to retake Hungary's throne in March 1921. King Karl's return narhed a split parties between conservatives who favored a Habsburg restoration and nationalist right-wing radicals who supported election of a Hungarian king. Bethlen, a nonaffiliated, right-wing member of the parliament, took advantage of this rift by convincing members of the Christian National Union who opposed Karl's reenthronement to merge with the Smallholders' Party and form a new Party of Unity with Bethlen as its leader. Horthy then appointed Bethlen prime minister.

As prime minister, Bethlen dominated Hungarian politics between 1921 and 1931. He fashioned a political machine by amending the electoral law, eliminating peasants from the Party of Unity, providing jobs in the bureaucracy to his supporters, and manipulating elections in rural areas. Bethlen restored order to the country by giving the radical counterrevolutionaries payoffs and government jobs in exchange for ceasing their campaign of terror against Jews and leftists. In 1921 Bethlen made a deal with the Social Democrats and trade unions, agreeing, among other things, to legalize their activities and free political prisoners in return for their pledge to refrain from spreading anti-Hungarian propaganda, calling political strikes, and organizing the peasantry. In May 1922, the Party of Unity captured a large parliamentary majority. Karl IV's death, soon after he failed a second time to reclaim the throne in October 1921, allowed the revision of the Treaty of Trianon to rise to the top of Hungary's political agenda. Bethlen's strategy to win the treaty's revision was first to strengthen his country's economy and then to build relations with stronger nations that could further Hungary's goals. Revision of the treaty had such a broad backing in Hungary that Bethlen used it, at least in part, to deflect criticism of his economic, social, and political policies. However, Bethlen's only foreign policy success was a treaty of friendship with Italy in 1927, which had little immediate impact.


Hungary - Economic Development


When Bethlen took office, the government was bankrupt. Tax revenues were so paltry that he turned to domestic gold and foreign-currency reserves to meet about half of the 1921-22 budget and almost 80 percent of the 1922-23 budget. To improve his country's economic circumstances, Bethlen undertook development of industry. He imposed tariffs on finished goods and earmarked the revenues to subsidize new industries. Bethlen squeezed the agricultural sector to increase cereal exports, which generated foreign currency to pay for imports critical to the industrial sector. In 1924, after the white terror had waned and Hungary had gained admission to the League of Nations (1922), the Bethlen government secured a US$50 million reconstruction loan from the league, which restored the confidence of foreign creditors. Foreign loans and domestic capital that had been removed from Hungary during the communist revolution flowed back into the country, further fueling industrial development.

By the late 1920s, Bethlen's policies had brought order to the economy. The number of factories increased by about 66 percent, inflation subsided, and the national income climbed 20 percent. However, the apparent stability was supported by a rickety framework of constantly revolving foreign credits and high world grain prices; therefore, Hungary remained undeveloped in comparison with the wealthier western European countries.

Despite economic progress, the workers' standard of living remained poor, and consequently the working class never gave Bethlen its political support. The peasants fared worse than the working class. In the 1920s, about 60 percent of the peasants were either landless or were cultivating plots too small to provide a decent living. Real wages for agricultural workers remained below prewar levels, and the peasants had practically no political voice. Moreover, once Bethlen had consolidated his power, he ignored calls for land reform. The industrial sector failed to expand fast enough to provide jobs for all the peasants and university graduates seeking work. Most peasants lingered in the villages, and in the 1930s Hungarians in rural areas were extremely dissatisfied. Hungary's foreign debt ballooned as Bethlen expanded the bureaucracy to absorb the university graduates who, if left idle, might have threatened civil order.


Hungary - The Great Depression


In 1929 the New York Stock Exchange crashed. As a result, world grain prices plummeted, and the framework supporting Hungary's economy buckled. Hungary's earnings from grain exports declined as prices and volume dropped, tax revenues fell, foreign credit sources dried up, and short-term loans were called in. Hungary sought financial relief from the League of Nations, which insisted on a program of rigid fiscal belt-tightening, resulting in increased unemployment. The peasants reverted to subsistence farming. Industrial production rapidly dropped, and businesses went bankrupt as domestic and foreign demand evaporated. Government workers lost their jobs or suffered severe pay cuts. By 1933 about 18 percent of Budapest's citizens lived in poverty. Unemployment leaped from 5 percent in 1928 to almost 36 percent by 1933.

As the standard of living dropped, the political mood of the country shifted further toward the right. Bethlen resigned without warning amid national turmoil in August 1931. His successor, Gyula Karolyi, failed to quell the crisis. Horthy then appointed a reactionary demagogue, Gyula Gombos, but only after Gombos agreed to maintain the existing political system, to refrain from calling elections before the parliament's term had expired, and to appoint several Bethlen supporters to head key ministries. Gombos publicly renounced the vehement anti-Semitism he had espoused earlier, and his party and government included some Jews.


Hungary - Radical Right in Power


Gombos's appointment marked the beginning of the radical right's ascendancy in Hungarian politics, which lasted with few interruptions until 1945. The radical right garnered its support from medium and small farmers, former refugees from Hungary's lost territories, and unemployed civil servants, army officers, and university graduates. Gombos advocated a one-party government, revision of the Treaty of Trianon, withdrawal from the League of Nations, anti-intellectualism, and social reform. He assembled a political machine, but his efforts to fashion a one-party state and fulfill his reform platform were frustrated by a parliament composed mostly of Bethlen's supporters and by Hungary's creditors, who forced Gombos to follow conventional policies in dealing with the economic and financial crisis. The 1935 elections gave Gombos more solid support in the parliament, and he succeeded in gaining control of the ministries of finance, industry, and defense and in replacing several key military officers with his supporters. In September 1936, Gombos informed German officials that he would establish a Nazi-like, one-party government in Hungary within two years, but he died in October without realizing this goal.

In foreign affairs, Gombos led Hungary toward close relations with Italy and Germany; in fact, Gombos coined the term Axis, which was later adopted by the German-Italian military alliance. Soon after his appointment, Gombos visited Italian dictator Benito Mussolini and gained his support for revision of the Treaty of Trianon. Later, Gombos became the first foreign head of government to visit German chancellor Adolf Hitler. For a time, Hungary profited handsomely, as Gombos signed a trade agreement with Germany that drew Hungary's economy out of depression but made Hungary dependent on the German economy for both raw materials and markets. In 1928 Germany had accounted for 19.5 percent of Hungary's imports and 11.7 percent of its exports; by 1939 the figures were 52.5 percent and 52.2 percent, respectively. Hungary's annual rate of economic growth from 1934 to 1940 averaged 10.8 percent. The number of workers in industry doubled in the ten years after 1933, and the number of agricultural workers dropped below 50 percent for the first time in the country's history. Hungary also used its relationship with Germany to chip away at the Treaty of Trianon. In 1938 Hungary openly repudiated the treaty's restrictions on its armed forces. With German help, Hungary extended its territory four times and doubled in size from 1938 to 1941. It regained parts of southern Slovakia in 1938, Carpatho-Ukraine in 1939, northern Transylvania in 1940, and parts of Vojvodina in 1941.

Hitler's assistance did not come without a price. After 1938 the fuhrer used promises of additional territories, economic pressure, and threats of military intervention to pressure the Hungarians into supporting his policies, including those related to Europe's Jews, which encouraged Hungary's anti-Semites. The percentage of Jews in business, finance, and the professions far exceeded the percentage of Jews in the overall population. The 1930 census showed that Jews made up only 5.1 percent of the population but provided 54.5 percent of its physicians, 31.7 percent of its journalists, and 49.2 percent of its lawyers. Jews controlled an estimated 19.5 percent to 33 percent of the national income, four of the five leading banks, and 80 percent of Hungary's industry. After the depression struck, anti-Semites made the Jews scapegoats for Hungary's economic plight.

Hungary's Jews suffered the first blows of this renewed anti-Semitism during the government of Gombos's successor, Kalman Daranyi, who fashioned a coalition of conservatives and reactionaries and dismantled Gombos's political machine. After Horthy publicly dashed hopes of land reform, discontented rightwingers took to the streets denouncing the government and baiting the Jews. Daranyi's government attempted to appease the anti-Semites and the Nazis by proposing and passing the first socalled Jewish Law, which set quotas limiting Jews to 20 percent of the positions in certain businesses and professions. The law failed to satisfy Hungary's anti-Semitic radicals, however, and when Daranyi tried to appease them again, Horthy unseated him in 1938. The regent then appointed the ill-starred Bela Imredy, who drafted a second, harsher Jewish Law before political opponents forced his resignation in February 1939 by presenting documents showing that Imredy's own grandfather was a Jew.

Imredy's downfall led to Pal Teleki's return to the prime minister's office. Teleki dissolved some of the fascist parties but did not alter the fundamental policies of his predecessors. He undertook a bureaucratic reform and launched cultural and educational programs to help the rural poor. Illiteracy dropped to about 7 percent by 1941. But Teleki also oversaw passage of the second Jewish Law, which broadened the definition of "Jewishness," cut the quotas on Jews permitted in the professions and in business, and required that the quotas be attained by the hiring of Gentiles or the firing of Jews. By the June 1939 elections, Hungarian public opinion had shifted so far to the right that voters gave the Arrow Cross Party--Hungary's equivalent of Germany's National Socialist German Workers' Party (the Nazi Party)--the second highest number of votes. In September 1940, the Hungarian government allowed German troops to transit the country on their way to Romania, and on November 20, 1940, Hungary signed the Tripartite Pact, which allied Germany, Italy, and Japan.


Hungary - World War II


In December 1940, Teleki signed a short-lived Treaty of Eternal Friendship with Yugoslavia. The Yugoslav government, however, was overthrown on March 27, 1941, two days after it succumbed to German and Italian pressure and joined the pact. Hitler considered the overthrow a hostile act and grounds to invade. Again promising territory in exchange for cooperation, he asked Hungary to join the invasion by contributing troops and allowing the Wehrmacht (German armed forces) to march through its territory. Unable to prevent the invasion, Teleki committed suicide on April 3. Three days later, the Luftwaffe mercilessly bombed Belgrade without warning, and German troops invaded. Shortly thereafter, Horthy dispatched Hungarian military forces to occupy former Hungarian lands in Yugoslavia, and Hungary eventually annexed sections of Vojvodina.

Horthy named the right-wing radical Laszlo Bardossy to succeed Teleki. Bardossy was convinced that Germany would win the war and sought to maintain Hungary's independence by appeasing Hitler. Hitler tricked Horthy into committing Hungary to join his invasion of the Soviet Union in June 1941, and Hungary entered the war against the Western Allies the following December. In July 1941, the government deported the first 40,000 Jews from Hungary, and six months later Hungarian troops, in reprisal for resistance activities, murdered 3,000 Serbian and Jewish hostages--near Novi Sad in Yugoslavia. By the winter of 1941-42, German hopes of a quick victory over the Soviet Union had faded. In January the German foreign minister visited Budapest asking for additional mobilization of Hungarian forces for a planned spring offensive and promising in return to hand Hungary some territory in Transylvania. Bardossy agreed and committed onethird of Hungary's military forces.

Horthy grew dissatisfied with Bardossy, who resigned in March 1942, and named Miklos Kallay, a conservative veteran of Bethlen's government, who aimed to free Hungary from the Nazis' grip. Kallay faced a terrible dilemma: if he broke with Hitler and negotiated a separate peace, the Germans would occupy Hungary immediately; but if he supported the Germans, he would encourage further pro-Nazi excesses. Kallay chose duplicity. In 1942 and 1943, pro-Western Hungarian government officials promised British and American diplomats that the Hungarians would not fire on their aircraft, sparing for a time Hungarian cities from bombardment.

In January 1943, the Soviet Red Army annihilated Hungary's Second Army during the massive counterattack on the Axis troops besieging Stalingrad. In the fighting, Soviet troops killed an estimated 40,000 Hungarians and wounded 70,000. As anti-Axis pressure in Hungary mounted, Kallay withdrew the remnants of the force into Hungary in April 1943, and only a nominal number of poorly armed troops remained of the country's military contribution to the Axis Powers. Aware of Kallay's deceit and fearing that Hungary might conclude a separate peace, Hitler ordered Nazi troops to occupy Hungary and force its government to increase its contribution to the war effort. Kallay took asylum in the Turkish legation. Dome Sztojay, a supporter of the Nazis, became the new prime minister. His government jailed political leaders, dissolved the labor unions, and resumed the deportation of Hungary's Jews.

While Kallay was prime minister, the Jews endured economic and political repression, but the government protected them from the "final solution." The government expropriated Jewish property; banned the purchase of real estate by Jews; barred Jews from working as publishers, theater directors, and editors of journals; proscribed sexual relations between Jews and non-Jews; and outlawed conversion to Judaism. But when the Nazis occupied Hungary in March 1944, the deportation of the Jews to the death camps in Poland began. Horthy used the confusion after the July 20, 1944, attempt to assassinate Hitler to replace Sztojay in August 1944 with General Geza Lakatos and halt the deportation of Jews from Budapest. Of the approximately 725,000 Jews residing within Hungary's expanded borders of 1941, only about 260,500, mostly from Budapest, survived.

In September, Soviet forces crossed the border, and on October 15 Horthy announced that Hungary had signed an armistice with the Soviet Union. However, the Germans abducted the regent and forced him to abrogate the armistice, depose the Lakatos government, and name Ferenc Szalasi--the leader of the Arrow Cross Party--prime minister. Horthy abdicated, and soon the country became a battlefield. Hungary was sacked first by the retreating Germans, who demolished the rail, road, and communications systems, then by the advancing Soviet Red Army, which found the country in a state of political chaos. Germans held off the Soviet troops near Budapest for seven weeks before the defenses collapsed, and on April 4, 1945, the last German troops were driven out of Hungary.




In the aftermath of World War II, a victorious Soviet Union succeeded in forcing its political, social, and economic system on Eastern Europe, including Hungary. But the Hungarians never reconciled themselves to Soviet hegemony over their country and rebelled against the Soviet Union and its Hungarian vassals in 1956. That revolution was crushed by Soviet tanks, but it brought to power Janos Kadar, who then attempted to institute a milder form of communist rule.

Coalition Government and Communist Takeover

The Hungarian Communist Party (HCP) enjoyed scant popular support after the toppling of Bela Kun's short-lived Hungarian Soviet Republic in 1919 and the subsequent white terror. During World War II, a communist cell headed by Laszlo Rajk, a veteran of the Spanish Civil War (1936-39) and a former student communist leader, operated underground within the country. Matyas Rakosi led a second, Moscow-based group whose members were later called the "Muscovites." After the Soviet Red Army invaded Hungary in September 1944, Rajk's organization emerged from hiding, and the Muscovites returned to their homeland. Rakosi's close ties with the Soviet occupiers enhanced his influence within the party, and a rivalry developed between the Muscovites and Rajk's followers. Between the invasion and the end of the war, party membership rose significantly. Although party rolls listed only about 3,000 names in November 1944, membership had swelled to about 500,000 by October 1945.

Hungary's postwar political order began to take shape even before Germany's surrender. In October 1944, Britain's Prime Minister Winston Churchill and Foreign Minister Anthony Eden agreed with Stalin that after the war the Soviet Union would enjoy a 75 percent to 80 percent influence in Hungary, Bulgaria, and Romania, while the British would have a 20 percent to 25 percent share. On December 22, 1944, a provisional government emerged in Debrecen that was made up of the Provisional National Assembly, in which communist representatives outnumbered those of the other "antifascist" parties, and a cabinet, whose members included a general and two other military officers of the old regime, two communists, two Social Democrats, two members of the Independent Smallholders' Party, one member of the National Peasant Party, and one unaffiliated member. The provisional government concluded an armistice with the Soviet Union on January 20, 1945, while fighting still raged in the western part of the country. The armistice established the Allied Control Commission, with Soviet, American, and British representatives, which held complete sovereignty over the country. The commission's chairman, Marshal Kliment Voroshilov, a member of Stalin's inner circle, exercised absolute control.

Stalin decided against an immediate communist seizure of power in Hungary; rather, he instructed HCP leaders to take a gradualist approach and share power with other parties in freely elected coalition governments. Stalin informed Rakosi that a communist takeover would be delayed ten to fifteen years in order to deflect Western criticism of rapid communist takeovers in Poland, Bulgaria, Romania, and the Soviet zone of Germany. Stalin desired a quick return to normal economic activity to rebuild the Soviet Union and sought to avoid a confrontation with the Allies, who still had troops in Europe. The members of the HCP who had worked underground during the war opposed Stalin's gradualist approach and argued for immediate establishment of a dictatorship of the proletariat.

In April 1945, after Soviet troops had rid Hungary of the Nazis, the government moved from Debreceu to Budapest, and a second, expanded Provisional National Assembly was chosen. With the support of representatives of the trade unions and the Social Democratic Party, the HCP enjoyed an absolute majority of the assembly's 495 seats. The provisional government remained in power until November 15, 1945, when voters dealt the HCP an unexpected setback in a free election. The Independent Smallholders' Party won 245 seats in the National Assembly; the HCP, 70; the Social Democratic Party, 69; the National Peasant Party, 21; and the Civic Democratic Party, 2. The National Assembly proclaimed the Hungarian Republic on February 1, 1946, and two Smallholder-led coalitions under Zoltan Tildy and Ferenc Nagy governed the country until May 1947.

The HCP soon formed a leftist alliance with the Social Democratic Party and the National Peasant Party and gained control of several key offices, including the leadership of the security police and the army general staff. Voroshilov vetoed an agreement reached by the coalition members to name a member of the Independent Smallholders' Party to head the Ministry of Interior. A National Peasant Party member loyal to the HCP won the post and made the police a powerful tool of the communists. The National Assembly undermined freedoms guaranteed in Hungary's constitution when it banned statements that could be interpreted as hostile to the democratic order or the country's international esteem. Later, as Hungary's democratic order became identified with HCP policies, the law was used to silence legitimate opponents.

In the immediate postwar period, the government pursued economic reconstruction and land reform. Hungary had been devastated in the last years of World War II. About 24 percent of its industrial base was destroyed. Many of the large landowners and industrialists fled Hungary in advance of the Soviet Red Army. Reconstruction proceeded rapidly, expedited by gradual nationalization of mines, electric plants, the four largest concerns in heavy industry, and the ten largest banks. In 1945 the government also carried out a radical land reform, expropriating all holdings larger than fifty-seven hectares and distributing them to the country's poorest peasants. Nevertheless, the peasants received portions barely large enough for self-sufficiency. Finally, the government introduced a new currency--the forint--to help curb high inflation.

Using methods Rakosi later called "salami tactics," the HCP strengthened its position in the coalition by discrediting leaders of rival parties as "reactionaries" or "antidemocratic," forcing their resignation from the government and sometimes prompting their arrest. In 1945 ex-members of Horthy's regime lost their positions. A year later, members of the Smallholders' Party and the Social Democratic Party were ousted from power. In late 1946, leaders of the Smallholders' Party were arrested. In 1947 the Soviet Union ordered the arrest of Bela Kovacs, the secretary general of the Independent Smallholders' Party, on the false charge of plotting to overthrow the government. The Independent Smallholders' Party was dissolved after Ferenc Nagy resigned his position as prime minister. The leftist bloc gained a small lead over its rivals in the 1947 general elections. The HCP tallied only 22 percent of the vote, but fraud tainted the election, and suspicions arose that the party actually enjoyed less support.

The Treaty of Paris, signed on February 10, 1947, required Hungary to pay US$200 million in reparations to the Soviet Union, US$50 million to Czechoslovakia, and US$50 million to Yugoslavia. Hungary also had to transfer a piece of territory to Czechoslovakia, leaving Hungary with slightly less territory than it had had after the Treaty of Trianon. Stalin had already returned Transylvania to the Romanians to reinforce the position of the procommunist Prime Minister Petru Groza. Thereafter, the Romanians' treatment of the Hungarian minority in Transylvania became an irritant in relations between the two countries.


Hungary - Rakosi's Rule


In 1947 the postwar cooperation between the Soviet Union and the West collapsed, marking the beginning of the Cold War and the beginning of the end for Hungary's democratic coalition government. Having seen communist parties seize power in Poland, Romania, Bulgaria, and Yugoslavia and a communist insurgency threaten Greece, the Western powers dedicated themselves to containing Soviet influence. In May communists were expelled from the governments of Italy and France, and a month later the United States promulgated the Marshall Plan for the economic reconstruction of Europe, which was appealing to the to East European governments.

Stalin feared a weakening of the Soviet Union's grip on Eastern Europe. Anticommunist forces in the region remained potent, and most of the communist governments were unpopular. In addition, East European parties began taking positions independent of Moscow; for example, communists in the Polish and Czechoslovak governments favored participation in the Marshall Plan, and Yugoslavia and Bulgaria broached the idea of a Balkan confederation. By September Stalin had abandoned gradualism and reversed his earlier advocacy of independent, "national roads to socialism." He now pushed for tighter adherence to Moscow's line and rapid establishment of Soviet-dominated communist states in Hungary and elsewhere. The policy shift was indicated in September 1947 at the founding meeting of the Cominform, an organization linking the Soviet communist party with the communist parties of Eastern Europe, France, and Italy.

The HCP proceeded swiftly to assume full control of the government. First Secretary Rakosi became the country's most powerful official and dictated major political and economic changes. In October 1947, noncommunist political figures were told to cooperate with a new coalition government or leave the country. In June 1948, the Social Democratic Party merged with the HCP, forming the Hungarian Workers' Party (HWP). In 1949 the regime held a single-list election, and on August 20 of that year the government ratified a Soviet-style constitution. The official name of the country became the Hungarian People's Republic, and the HWP's control of the government was assured. In 1952 Rakosi also became prime minister.

In 1948 Yugoslavia was expelled from the Cominform, and the Soviet-Yugoslav rift broke into the open. Almost overnight it became treasonous for communists to display any approval of Yugoslav leader Josip Broz Tito or to advocate national roads to socialism. Beginning in 1949, the Soviet Union unleashed a four-year reign of terror against "Titoists" in Eastern Europe. Rakosi purged members of the party's wartime underground, potential rivals, and hundreds of others. Rajk, who continued to support a Hungarian road to socialism, "confessed" to being a Titoist and a fascist spy and was hanged in 1950. Another victim was future party chief Janos Kadar, who was jailed and tortured for three years.

Between 1948 and 1953, the Hungarian economy was reorganized according to the Soviet model. In a campaign reminiscent of the Soviet Union's forced collectivization of agriculture in the 1930s, the regime compelled most peasants to join collective farms and required them to make deliveries to the government at prices lower than the cost of production. The regime accelerated nationalization of banking, trade, and industry, and by December 1949 nearly 99 percent of the country's workers had become state employees. The trade unions lost their independence, and the government introduced Soviet-style central planning. Planners neglected the production of consumer goods to focus on investment in heavy industry, especially steel production, and economic self-sufficiency. In January 1949, Hungary joined the Council for Mutual Economic Assistance (Comecon), an organization designed to further economic cooperation between the Soviet Union's satellites. The authorities also agreed to form joint-stock companies with the Soviet Union. These companies allowed the Soviet Union to dominate Hungary's air and river transportation, as well as its bauxite, crude oil, and refining industries and other sectors.

With the opposition parties disbanded and the trade unions collared, the churches became the communists' main source of opposition. The government had expropriated the churches' property with the land reform, and in July 1948 it nationalized church schools. Protestant church leaders reached a compromise with the government, but the head of the Roman Catholic Church-- Cardinal Jozsef Mindszenty--resisted. The government arrested him in December 1948 and sentenced him to life imprisonment. Shortly thereafter, the regime disbanded most Catholic religious orders, and it secularized Catholic schools.

Stalin died in March 1953. The new Soviet leadership soon permitted a more flexible policy in Eastern Europe known as the New Course. In June, Rakosi and other party leaders--among them Imre Nagy--were summoned to Moscow, where Soviet leaders harshly criticized them for Hungary's dismal economic performance. Soviet communist party Presidium member Lavrenti Beria reportedly upbraided Rakosi for naming Jews to Hungary's top party positions and accused him of seeking to make himself the "Jewish King of Hungary." (Communists of Jewish origin had dominated the party leadership and the secret police for a decade after the war, and every party leader from Bela Kun to Erno Gero had Jewish roots.) Rakosi retained his position as party chief, but the Soviet leaders forced the appointment of Nagy as prime minister. He quickly won the support of the government ministries and the intelligentsia. Nagy also ended the purges and began freeing political prisoners. In his first address to the National Assembly as prime minister, Nagy attacked Rakosi for his use of terror, and the speech was printed in the party newspaper.

Nagy charted his New Course for Hungary's drifting economy in a speech before the Central Committee, which gave the plan unanimous approval. Hungary ceased collectivization of agriculture, allowed peasants to leave the collective farms, canceled the collective farms' compulsory production quotas, and raised government prices for deliveries. Government financial support and guarantees were extended to private producers, investment in the farm sector jumped 20 percent in the 1953-54 period, and peasants were able to increase the size of their private plots. The number of peasants on collective farms thus shrank by half between October and December 1953. Nagy also slashed investment in heavy industry by 41.1 percent in 1953-54 and shifted resources to light industry and the production of consumer goods. However, Nagy failed to fundamentally alter the planning system and neglected to introduce incentives to replace compulsory plan targets, resulting in a poorer record of plan fulfillment after 1953 than before. Rakosi used his influence to disrupt Nagy's reforms and erode his political position. In 1954 Soviet leaders who favored economic policies akin to Nagy's lost a Kremlin power struggle. Rakosi seized the opportunity to attack Nagy as a right-wing deviationist and to criticize shortcomings in the economy. Nagy was forced to resign from the government in April 1955 and was later expelled from the Politburo, Central Committee, and finally the party itself. Thus, the Central Committee that had lauded the New Course in June 1953 unanimously condemned its architect less than two years later.

After Nagy's fall, collectivization and development of heavy industry again became the prime focus of Hungary's economy. The purges did not resume, however, as Rakosi did not enjoy the same amount of power or Soviet support that he did while Stalin was alive. Moreover, he now had to contend with many outspoken opponents within the party, including numerous victims of the purges who had been readmitted to the HWP on Moscow's orders. A schism soon split the party leadership from the rank and file, and the party organization within the Writers' Association became a forum for intraparty opposition. In 1955 a rapprochement between the Soviet Union and Yugoslavia produced the Belgrade Declaration, in which Moscow confirmed that each nation had the right to follow its own road to socialism. One year later, Soviet leader Nikita S. Khrushchev denounced Stalin in his "secret speech" before the Twentieth Party Congress of the Soviet communist party. These external events shook Rakosi, who was a strong opponent of Titoism and the instigator of Hungary's purges.

HWP members opposed to Rakosi compelled him to admit that the purges involved abuse of power and that Rajk and others had been its innocent victims. Rakosi ordered an investigation, but it cleared him and blamed the state security police instead. This result not only inflamed the party opposition but also alienated Rakosi from the police. In June 1956, Rakosi's position became untenable. The party press printed open attacks. The Writers' Association, the newly created Petofi Circle, and student organizations clamored for Rakosi's ouster and arrest. On June 30, the Central Committee dissolved the Petofi Circle and expelled intellectuals from the party. By mid-July, however, Soviet leaders began to fear outright revolution and called for Rakosi to step down. He resigned after a meeting of the Central Committee on July 17. Gero, Rakosi's deputy, was appointed first secretary. Moscow hoped to introduce a slow liberalization, but Gero was too closely identified with Rakosi, and party discipline subsequently broke down completely.


Hungary - Revolution of 1956


On October 23, a Budapest student rally in support of Polish efforts to win autonomy from the Soviet Union sparked mass demonstrations. The police attacked, and the demonstrators fought back, tearing down symbols of Soviet domination and HWP rule, sacking the party newspaper's offices and shouting in favor of free elections, national independence, and the return of Imre Nagy to power. Gero called out the army, but many soldiers handed their weapons to the demonstrators and joined the uprising. Soviet officials in Budapest summoned Nagy to speak to the crowd, but the violence continued. At Gero's request, Soviet troops entered Budapest on October 24. The presence of these troops further enraged the Hungarians, who battled the troops and state security police. Crowds emptied the prisons, freed Cardinal Mindszenty, sacked police stations, and summarily hanged some member of the secret police. The Central Committee named Nagy prime minister on October 25 and selected a new Politburo and Secretariat; one day later, Kadar replaced Gero as party first secretary.

Nagy enjoyed vast support. He formed a new government consisting of both communists and noncommunists, dissolved the state security police, abolished the one-party system, and promised free elections and an end to collectivization, all with Kadar's support. But Nagy failed to harness the popular revolt. Workers' councils threatened a general strike to back demands for removal of Soviet troops, elimination of party interference in economic affairs, and renegotiation of economic treaties with the Soviet Union. On October 30, Nagy called for the formation of a new democratic, multiparty system. Noncommunist parties that had been suppressed almost a decade before began to reorganize. A coalition government emerged that included members of the Independent Smallholders' Party, Social Democratic Party, National Peasant Party, and other parties, as well as the HWP. After negotiations, Soviet officials agreed to remove their troops at the discretion of the Hungarian government, and Soviet troops began to leave Budapest. Nagy soon learned, however, that new Soviet armored divisions had crossed into Hungary.

In response, on November 1 Nagy announced Hungary's decision to withdraw from the Warsaw Pact and to declare Hungary neutral. He then appealed to the United Nations and Western governments for protection of Hungary's neutrality. The Western powers, which were involved in the Suez crisis and were without contingency plans to deal with a revolution in Eastern Europe, did not respond.

The Soviet military responded to Hungarian events with a quick strike. On November 3, Soviet troops surrounded Budapest and closed the country's borders. Overnight they entered the capital and occupied the National Assembly building. Kadar, who had fled to the Soviet Union on November 2, assembled the Temporary Revolutionary Government of Hungary on Soviet soil just across the Hungarian border. On November 4, the formation of the new government was announced in a radiobroadcast. Kadar returned to Budapest in a Soviet armored car; by then, Nagy had fled to the Yugoslav embassy, Cardinal Mindszenty had taken refuge in the United States embassy, Rakosi was safely across the Soviet border, and about 200,000 Hungarians had escaped to the West.

With Soviet support, Kadar struck almost immediately against participants in the revolution. Over the next five years, about 2,000 individuals were executed and about 25,000 imprisoned. Kadar also reneged on a guarantee of safe conduct granted to Nagy, who was arrested on November 23 and deported to Romania. In June 1958, the Hungarian government announced that Nagy and other government officials who had played key roles in the revolution had been secretly tried and executed.


Hungary - Kadar's Reforms


The Revolution of 1956 discredited Hungary's Stalinist political and economic system and sent a clear warning to the leadership that popular tolerance for its policies had limits, and that if these limits were exceeded, popular reaction could threaten communist control. In response, regime leaders decided to formulate economic policies leading to an improvement of the population's standard of livings. Pragmatism and reform gradually became the watchwords in economic policy-making, especially after 1960, and policymakers began relying on economists and other specialists rather than ideologists in the formation of economic policies. The result was a series of reforms that modified Hungary's rigid, centrally planned economy and eventually introduced elements of a free market, creating a concoction sometimes called "goulash communism".

In late 1956, the party named a committee of mostly reform-minded experts to examine Hungary's economic system and make proposals for its revision. The committee's report marked the first step on Hungary's road to economic reform. Its proposals presaged many of the changes implemented a decade later, including elimination of administrative direction of the economy, introduction of greater enterprise autonomy, cooperation between private and collective sectors in agriculture, economic regulation using price and credit policies, and central planning focused only on long-term objectives. However, the committee's proposals were never really implemented. Some observers suggested that the party had solidified its power so quickly that it no longer needed to enact such drastic measures; others claimed that Soviet leaders opposed such reform until they ensured that the party (on November 1, 1956, renamed the Hungarian Socialist Workers' Party--HSWP) had consolidated its power and demonstrated a clear need for a fundamental economic change. During the chaos of the revolution, Hungary's collective farms lost about two-thirds of their members. Many left to become private farmers. In July 1957, Kadar appeased hard-liners in Hungary and abroad by agreeing to recollectivize agriculture, and in early 1959 the drive began in earnest. The regime combined force and economic coercion with persuasion and incentives to drive peasants back to the collective farms. The government abolished compulsory production quotas and delivery obligations and substituted voluntary contracts at good prices. It also permitted profit-sharing schemes and programs to promote technical innovation. The regime allowed peasants to retain sizable private plots and ample livestock and to choose between collective or cooperative farms. The farms also received substantial government investments. As a result, Hungary became the only country with a centrally planned economy where crop output increased as a result of collectivization. By 1962 more than 95 percent of all farmland had been collectivized either in the form of state farms or cooperatives. The collectivization drive deflected the hard-liners' criticism of Kadar for his advocacy of reform, and problems with the program's implementation, including excessive coercion of the peasants, later helped Kadar oust the hard-line agriculture minister.

By the early 1960s, Hungary was ripe for a political shakeup . Khrushchev had consolidated his position in the Kremlin and had begun a second wave of de-Stalinization, thus leading Kadar to believe that the Soviet leadership would support political changes in Hungary. Kadar replaced Ferenc Munnich as prime minister (who had served in that position since January 28, 1958), and thus assumed the top government post, as well as the leadership of the HSWP. He then dismissed other hard-line officials. Kadar's consolidation of power led to a more flexible, pragmatic atmosphere in which persuasion took on greater importance than coercion. Kadar relaxed government oppression and released most of those imprisoned for participating in the revolution. Soon Hungary became the leader of the reform movement within the Soviet alliance system. Kadar intended to provide the regime with some legitimacy and political stability based on solid economic performance. The Soviet Union demonstrated its support with its decision to withdraw its advisers to the Hungarian government.

Kadar next sought a modus vivendi with the population, summarizing the new policy with the slogan "He who is not against us is with us." As part of this "alliance policy," in 1961 he denounced the practice of making party membership a prerequisite for jobs demanding specialization and technical expertise. Kadar sought to remove opportunists who had joined the party solely for the status and economic benefits that membership conferred. Rather, Kadar wanted to open the government and economic enterprises to talented people who were prepared to cooperate without adhering to party discipline or compromising their political beliefs.

At the Eighth Party Congress of the HSWP in November 1962, Kadar supporters replaced Stalinists and incompetent officials in leading party positions. The congress also called for higher party recruitment standards, for elimination of political and class considerations in university admissions, and for allowing nonparty members to compete for leading public positions. Although the party still had influential conservative members after 1962, the Eighth Party Congress removed them from the party's policy-making core. As a result of these changes, by 1963 Kadar had acquired genuine popular support.

Plans for reforming the centrally planned economy steadily took shape after the Eighth Party Congress. Central Committee secretary Rezso Nyers, who supported a comprehensive reform rather than continued piecemeal adjustments to the economic system, took charge of economic affairs. The regime also appointed committees to prepare reform proposals. By 1964 the government had identified problems in the economy, including excessive investment, decreases in output and labor shortages in agriculture, misuse of inputs, hoarding of materials, and production of unsalable goods. Since the Treaty of Trianon, Hungary had depended on foreign trade, and in the early 1960s the government placed top priority on improving the trade with the West and the Comecon countries. Despite improving the terms of trade, however, by 1964 Hungary had accumulated a serious trade deficit, and the government could not slow imports without cutting material supplies and personal consumption. Officials realized that because Hungary had to boost exports, it would have to meet the needs, quality standards, and technological requirements of the world economy.


Hungary - New Economic Mechanism


Khrushchev's ouster in October 1964 failed to weaken Hungary's desire for reform. Kadar responded to the change in the Kremlin by affirming that "the political attitude of the HSWP and the government of the Hungarian People's Republic has not changed one iota, nor will it change." In December 1964, a Central Committee plenum approved the basic concept of economic reform and formed a committee to provide fundamental guidelines.

Economic problems also continued to underscore the need for reform. Agricultural output fell by 5.5 percent. In addition, the government increased production quotas, cut wages, and announced price hikes. Popular discontent rose as a result.

In May 1966, the Central Committee approved a sweeping reform package known as the New Economic Mechanism (NEM). Although many of its elements could be phased in during a preparation period, the central features of the reform could be implemented only with the introduction of a new price system, which was set for January 1, 1968. With the NEM, the government sought to overcome the inefficiencies of central planning, to motivate talented and skilled people to work harder and produce more, to make Hungary's products competitive in foreign markets, especially in the West, and, above all, to create the prosperity that would ensure political stability.

The NEM decentralized decision making and made profit, rather than plan fulfillment, the enterprises' main goal. Instead of setting plan targets and allocating supplies, the government was to influence enterprise activity only through indirect financial, fiscal, and price instruments known as "economic regulators." The NEM introduced a profit tax and allowed enterprises to make their own decisions concerning output, marketing, and sales. Subsidies were eliminated for most goods except basic raw materials. The government decentralized allocation of capital and supply and partially decentralized foreign trade and investment decision making. The economy's focus moved away from heavy industry to light industry and modernization of the infrastructure. Finally, agricultural collectives gained the freedom to make investment decisions. The NEM's initial results were positive. In the 1968-70 period, plan fulfillment was more successful than in previous years. The standard of living rose as production and trade increased. Product variety broadened, sales increased faster than production, inventory backlogs declined, and the trade balance with both East and West improved. In practice, however, the reform was not as sweeping as planned. Enterprises continued to bargain with government authorities for resources from central funds and sought preferential treatment. The reform also failed to dismantle the highly concentrated industrial structure, which was originally established to facilitate central planning and which inhibited competition under the NEM.

The Kadar regime failed to understand that real economic decentralization required political reform to resolve conflicts that naturally arose between different interest groups. The government's problem was to expand "socialist democracy," that is, to build a system that would simultaneously resolve conflicts and maintain the HSWP's political monopoly. In fact, the government attempted some incremental changes. The courts gained greater independence in administering justice, and changes were introduced in parliament as deputies on committees of the National Assembly were instructed to examine and debate legislation more effectively. A 1966 electoral law created single-representative constituencies and contained a provision for elections with multiple candidates. However, the Patriotic People's Front (PPF) retained control of nominations. Even after a second electoral law in 1970 made it legal for other groups to nominate individuals, few multiple candidacies actually arose. These minimal changes quickly encountered resistance from entrenched party officials. The 1968 Soviet invasion of Czechoslovakia and suppression of the reform program there had also discouraged the HSWP from pursuing further political changes. However, Kadar was able to work out a modus vivendi with the Soviet leadership. The Soviet Union allowed Kadar leeway to implement economic reforms, develop some economic contacts with the West, and permit Hungarians to travel abroad as long as Budapest accepted Moscow's hegemony in Eastern Europe and adhered to Soviet foreign policy positions.

The Kadar regime gave serious attention to implementing the NEM from 1968 to 1972. In 1971, however, counterreform forces were gathering strength and calling for the return of central controls. The opposition arose from government and party bureaucrats and was supported by large enterprises and some workers. The bureaucrats perceived the NEM as a threat to their privileged positions. The large enterprises saw their income drop after the introduction of the NEM and were troubled by competition for materials and labor from smaller enterprises. Disaffected workers who were on the payrolls of outdated, inefficient industries resented the higher incomes earned by workers in more modern firms. This opposition successfully reversed the reform a few months after Moscow expressed reservations about the NEM and concern about "petit bourgeois tendencies" in Hungary.

In November 1972, the Central Committee introduced a package of extraordinary measures to recentralize part of the economy, but the regime did not formally abandon the NEM. Fifty large enterprises, which produced about 50 percent of Hungary's industrial output and 60 percent of its exports, came under direct ministerial supervision, supported by special subsidies. New restrictions applied to small enterprises and agricultural producers. Wages rose, prices came under central control, and the regime introduced price supports. In the following years, the government also merged many profitable small firms with large enterprises.

The 1973 world oil crisis and the subsequent recession in the West caused a drastic deterioration of Hungary's terms of trade and strengthened opposition to the reform. Inflation threatened, and counterreformers argued for protecting the living standard of the working class from an economic shock in the capitalist world. The government intervened by raising taxes on successful firms and increasing government purchases and subsidies. Consumer prices eventually fell below the level of producer prices, and Hungary accepted credits from Western banks. Centralized material allocation was reintroduced. After the oil crisis arose, ideological opposition to the NEM and to "bourgeois attitudes" arose. A clampdown on intellectuals began, and Nyers lost his Politburo position in 1974.

By 1978 Hungary's dismal economic performance made it clear even to the counterreformers in the leadership that a "reform of the reform" was necessary. Return to central control had only rewarded inefficiency and stifled innovation and initiative. Enterprises ignored market signals, and shortages plagued producers. Large amounts were invested in poorly conceived projects, and a trade deficit accumulated. Hungary's hard-currency debt reached US$7.5 billion by 1978 and had jumped to US$9.1 billion by 1980.

In 1978 the government admitted that its attempt to shield Hungary from world economic conditions could not be continued. Hoping to improve its trade balance with the West and avoid forced rescheduling of its debt, the government announced its intention to boost exports. This policy change marked the beginning of a new wave of reforms. First, the price system was restructured to bring consumer prices gradually in line with world market prices and to ease the burden of subsidies on the state budget. Next, producer prices were reformed to bring about more rational use of energy and raw materials. Finally, the government overhauled exchange-rate and foreign-trade regulations.

In 1979 and 1980, the government implemented a number of institutional reforms. The new reforms abolished branch ministries and replaced them with a single Ministry of Industry intended to act as a policy-formulating body without direct authority over enterprises. Large enterprises were broken up into smaller firms. In 1982 the government legalized the formation of small private firms, including restaurants, small shops, and service companies, and it permitted workers to lease enterprise equipment, use it on their own time, and keep the earnings from their products. In 1984 the regime introduced new forms of enterprise management, including supervisory councils that would include worker-elected representatives. New financial institutions also emerged, and a 1983 government decree allowed enterprises, cooperatives, financial institutions, and local governments to issue bonds.

In the early and mid-1980s, Kadar had encouraged a limited amount of political liberalization. The HSWP maintained its monopoly on political power, but the norms of democratic centralism were looser than in other countries of Eastern Europe. County party secretaries acquired the freedom to make decisions of local importance, including control of personnel. The government again exhorted delegates of the National Assembly to scrutinize laws and government policies more critically. In 1983 a new electoral law required a minimum of two candidates for each national and local constituency in general elections. Trade unions began to defend workers' interests more energetically. Journalists were urged to expose low- and mid-level corruption and abuse of power, although they could not criticize the regime's basic tenets. The leadership also bolstered economic reforms of the early 1980s with a foreign policy geared to a greater degree than before on trade with the West, and it maintained this course during the deterioration of superpower relations in the early 1980s. Thus, the economic reforms of the late 1960s had also come to provoke a measure of political reform and changes in foreign policy. These new departures were inspired in large measure by Hungarian nationalism, a force that had long encouraged Hungarians to control their own destiny and to resist the hegemony of their larger, more powerful neighbors.


CITATION: Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999.

Please note: This text comes from the Country Studies Program, formerly the Army Area Handbook Program. The Country Studies Series presents a description and analysis of the historical setting and the social, economic, political, and national security systems and institutions of countries throughout the world.

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