During the First World War, Hungary did not play a very important role in the war, however it suffered many losses during the conflict. In the interwar period, Hungary experienced a political inestability. Hungary was tied to Austria since before First World War . In 1918, with the end of the First World War, the Astro-Hungarian State was dissolved and the democratic republic of Hungary was created. This event marked the Hungarian independence of the Habsburgs. The following year, in 1919, a revolution took place, creating the communist state of the Hungarian Soviet Republic. In fact, that new communist state was in force until 1920, when the counterrevolution appeared. The communist state was dissolved by a militanty anti-communist authoritarian goverment composed of military officers.
In 1920, Hungary became a dictatorial state controlled by the traditional monarchy. In 1932, the Gombos Family came to power. They were quite conservative an also very anti-semitic. The Gombos set the line of conservative prime ministers who practiced anti.semitism and, the often colaborated with Germany to dominate Europe. However, further on Hungary suffered a big cession of land mandated by a peace treaty (Trianon Treaty). The countries who got more benefits from the land cession were Rumania, Yugoslavia and Czechoslovakia. This created more political inestability during the inerwar period in Hungary.
This is a picture of the effect of the Trianon treaty, that was signed by the allies and Hungary. It sets how the territory of Hungary will be splitted in diferent parts, lossing two of the three parts of its territory.
Related with the economic evolution of Hungary during the interwar period, during 1920/21 after the treaty of Trianon, Hungary was facing an enormous expenditure and inflation. In order to decrease the expenditure, the goverment intervened in the economy. The economy was in a very bad situation until 1924, when League of Nations agreed the Financial Reconstruction Plan. This plan was based on lending money to Hungary to stabilize their economy. The budget was balanced until the great Depression in 1929. When the crisis hit, Hungary came back into a budget deficit, depending mainly of wheat exports. The principal consequence was that could not pay the interest in foreing exchange on long-term foreign debts. To counter the situation, deflation policies were applied and were finally achieved in 1937. The payment of interest was starting to be settled after signs of recovering economy thanks to the politics applied to balance the deficit of the country.
In 1920, Hungary became a dictatorial state controlled by the traditional monarchy. In 1932, the Gombos Family came to power. They were quite conservative an also very anti-semitic. The Gombos set the line of conservative prime ministers who practiced anti.semitism and, the often colaborated with Germany to dominate Europe. However, further on Hungary suffered a big cession of land mandated by a peace treaty (Trianon Treaty). The countries who got more benefits from the land cession were Rumania, Yugoslavia and Czechoslovakia. This created more political inestability during the inerwar period in Hungary.
This is a picture of the effect of the Trianon treaty, that was signed by the allies and Hungary. It sets how the territory of Hungary will be splitted in diferent parts, lossing two of the three parts of its territory.
Related with the economic evolution of Hungary during the interwar period, during 1920/21 after the treaty of Trianon, Hungary was facing an enormous expenditure and inflation. In order to decrease the expenditure, the goverment intervened in the economy. The economy was in a very bad situation until 1924, when League of Nations agreed the Financial Reconstruction Plan. This plan was based on lending money to Hungary to stabilize their economy. The budget was balanced until the great Depression in 1929. When the crisis hit, Hungary came back into a budget deficit, depending mainly of wheat exports. The principal consequence was that could not pay the interest in foreing exchange on long-term foreign debts. To counter the situation, deflation policies were applied and were finally achieved in 1937. The payment of interest was starting to be settled after signs of recovering economy thanks to the politics applied to balance the deficit of the country.
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