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Modern Hungary was within the borders of the Roman Empire. It was the province of Pannonia and the remains of Roman roads and building exist. The Carpathian Basin subsequently became a center for both the Huns and Avars. The conquest by the Magyars meant that this early history had almost no impact on modern Hungary. Economics is even more affected by geography than history. In Roman times, Pannonia ws primarily an agricultural land. Rich pasture land attracted the Avars, Huns, and eventually after the fall pf Rome the Magyars. Mounted Magyar raiders would terrorize central Europe until subdued by Otto I. Hungary after being defeated by the Ottomsn Turks was absorbed into the Austrian Empire (16th century). Hungary remained a largely agricultural area. Much of the economy was based on large landed estates owned by nobles. Hungary emerged from the Feudal era later than the countries of Western Europe. The Austrians, unlike the Germans, did not strongly promote industrial development. Much of the industry of the Austro-Hungarian Empire was in the Czech lands,primarily because several notable Czech businessmen promoted industry. Although industry was not absent from Hungary, the same level of industrial development did not occur. After World War II, the Communists under the aegis of the Red Army seized control of Hungary (1945). The Communists launched on a massive program of industrialization. To the shock of the Communists, the economy did not grow like the economies of Western Europe. Not only were the state-owned industries not profitable and able to pay good wages, but because of state policies shortages developed for agricultural products. The economic problems were only partly due to Communist inefficiencies. The Soviet Union exploited all of its Eastern European subject peoples. This would prove to be a factor in the Hungarian Revolution which was brutally suppressed by the Soviets (1956). After the repression that followed, more liberal outlook took hold in Hungary and an economy which came to be called Goulash Communism. There were notable improvements, but Hungarian industry was not competitive outside the COMECON barter system. This was the situation when Communism fell (1989).
The first people of historical importance to inhabit modern Hungary were the Celts. It was a fertile land that would be coveted by other peoples including the Germans who moved west pressured by barbarian steppe people.
Modern Hungary meaning the was Carpathian Basin was for a time within the borders of the Roman Empire. It was the province of Pannonia and the remains of Roman roads and building exist.
The subsequently became a center for the Huns. The Carpathian Basin offered rich grazing for the Hun horses, the critical aspect of the Hun and other militaries into the 20th bcentury military.
The Avars were another fierce steppe people who coveted rich grazing lands. They held the Carpathian Basin for two centuries.
Charlemagne finally defeated the Avars.
The Magyars were one of the many war-like tribes to emerge out of Euro-Asian Steppe. Like the other Steppe people they were nomadic herders. The origins of the Magyars are not known. The only available clues are linguistic. There origins seem to have been east of the Urals. The conquest by the Magyars meant that this early history had almost no impact on modern Hungary. They move into the Carpathian Basin, the plains of Hungary and Transylvania (about 900 AD). There were seven tribes led by Árpád It was not an outright invasion. The Holy Roman Emperor Arnulf negotiated an alliance to help defeat the Moravians. The arrival of the Magyars meant that this early history had almost no impact on modern Hungary. Economics is even more affected by geography than history. In Roman times, Pannonia ws primarily an agricultural land. The same rich pasture land after the fall of Rome attracted the Avars, Huns, and eventually the Magyars. Mounted Magyar raiders would terrorize central Europe for decades. The resulting booty became a major part of the Magyar economy. They were finally conquered by Otto I.
The defeated Magyars were converted (late-10th century). Unlike the Avars, they dud not disappear but became the basis for a new Christian kingdom. The Magyars had done immense damage throughout central Europe, devastating some areas. The conversion of the Magyars changed this equation. There now existed a new Christian kingdom in central Europe with considerable martial skills that erected a barrier against depredations from other Asian invaders. steppe people. The Mongols would later get bogged down in Hungary, but not penetrate further west (13th century). Later the Ottomans would threaten Western Europe. They would defeat the Hungarians, but like the Mongols did not advance further west.
The Ottoman invasion of the Hungarian plain destroyed the Hungarian monarchy. Hungary was divided between the Ottomans and the Hapsburgs. For a time the Ottomans threatened Vienna. Hungary was on the outer fringe of Ottoman power and by the time they seized Hungary, the Renaissance, sea routes to the East, and the Reformation was remaking Europe and the power balance between the Ottomans and Christian Europe was shifting. The moving forces were economics and science. Neither figured greatly in Hungary, but both meant that the Ottomans could not hold Hungary and eventually the Balkans as well.
Hungary after the Ottomons were driven out was fully absorbed into the Austrian Empire (17th century). The Austrian Emperor became the king of Hungary. Hungary remained a largely agricultural area. Much of the economy was based on large landed estates owned by nobles. Hungary emerged from the Feudal era later than the countries of Western Europe. The Austrians, unlike the Germans, did not strongly promote industrial development. Much of the industry of the Austro-Hungarian Empire was in the Czech lands, primarily because several notable Czech businessmen promoted industry. Although industry was not absent from Hungary, the same level of industrial development did not occur, especially heavy industry. The nobles who dominated tge economy and held vast estates had little interest in industrialization.
We do not yet have much information on Hungarian economic sectors. Hungary had a largely agricultural economy, although there was some limited industrial development. Here a factor was the excellent educational system based on German models. The county is landlocked, so the transport system is primarily terrestrial, albeit there is barge traffic on the Danube River. (Maritime ship transport ends in Romania.) The Danube is the second-longest river in Europe, some 2,850 km (1,770 mi), Today, 2,415 km (1,501 mi) of its total length are navigable including the Hungarian area. The major mode of transport in Hungary is the rail system. The first rail line was built during the Austrian-Empire era (1840s). Most of the development, however, occured during the Austro-Hungarian Empire era (1866-1918). It is at this time that a major system was developed. Before this time people might travel by stage coaches and goods by horse-drawn carts at considerable cost. Danube River barges were important, but limited riverine areas. Rail quickly became the major transport mode, as in other countries making possible new economic activity by reducing the the cost of moving goods and unlike the Danube, cities, towns, and even villages could be connected. .
As a result of World War I, Hungary became independent (1918). Agricultural reform became a major issue.
Hungary had been part of a great empire for centuries. The Hapsburg Austria-Hungary Empire had had been Germany's principal ally as one of the Central Powers. After defeat in World War I, Hungary became a small republic on its own with a very small domestic market. As part of the Treaty of Trianon ending the War (1920) suffered the greatest loss of all the belligerents. It lost nearly 70 percent of its territory, although most of the territory lost in Romania and Slovakia had majority non-Hungarian populations. This had dramatic economic consequences. Before the War Hungary depended upon the Austrian and Czech areas the Empire for the import of nearly 80 percent of its raw materials and a market for about same proportion of its exports. As a result of the War. Hungary was with limited raw materials, the loss of its primary markets, and no outlet to the seas. All requiring major adjustments. The country experienced a range of problems, especially high inflation.
The Hungarian Government was forced to adopt a range of controls including foreign exchange regulations. By the mid-1920s, the economy had begin to stabilize, thanks in part to a League of Nations Financial Reconstruction Plan (1924). As the economy stabilized, heavy regulation was being replaced with more open policies.
The Government introduced a new currency, the pengő, which equaled 12,500 of the inflated paper crowns. Hungary despite its small size, due to its rich agricultural productivity managed to export more wheat than any other country in Europe. This included the Soviet Union whose agricultural sector was greatly impaired by Communist policies, especially Stalin's brutal collectivization program.
Improving economic conditions came to a sudden stop with the onset of the Great Depression (1929). There was a collapse of world commodity prices, in Hungary's case--wheat, Hungary's primary export. Suddenly Hungary faced massive foreign trade deficits. The Government implemented the boletta system. This provided price support and tax relief for Hungarian farmers to help them whether the precipitous decline in wheat prices. The Government also established a National Council for Industry to aid the industrial sector. With its major export sales drying up, Hungary had unceasing trouble financing imports pr ping interest on foreign loans. The country had to suspend loan repayment (1931).
The Government adopted deflationary policies designed to help balance the budget. A major step was achieving lower inflation rates. Here a bilateral bilateral trade agreement the Gyula Gömbös Government signed with NAZI Government now dominating Germany was very important (1934). This provided Hungary a secure market for its important wheat exports along with attractive pricing. This was a major factor in tying the Hungarian economy to the German market. A balanced budget was finally achieved 1936/37. Hungary reached an agreement to resume paying interest on long-term non-governmental debts, which had been suspended since 1931. More than 65 loans were affected. This was made possible with the beginning of a recovering economy. The German trade agreement helped Hungary recover from the Depression, but there were serious restrictions. The funds from the German purchases were designated for an account in Germany. The funds could only be used to purchase German industrial goods. This mean that as NAZI Germany moved toward war, the Hungarian economy was essentially linked with Germany. There were also developing trade ties with Fascist Italy. Tragically political ties followed and Hungary joined the Axis (1940). This lead Hungary into World War II.
Hungary with its economic ties to Germany joined the Axis alliance because it did not have the military power to stay out (1940). In addition neighboring states, especially Romania, had territorial demands. The Red Army moved into Hungary (late 1944). Hitler committed the few remaining SS armored units to defend Budapest. which did not fall until the end of the War. This left Berlin, however, undefended with armor.
After World War II, the Communists under the aegis of the Red Army seized control of Hungary (1945). Stalin oversaw the same process in Hungary as the rest of the Soviet Empire he was constructing in Eastern Europe. There was a brief transitional period which was useful both to mollify the Western press and to identify independent thinking figures to be be purged later (1945-47). The Communists were in control from the beginning, but ruled through coalition governments giving the illusion of democracy. The Communist Party seized full control (1948-49). With the breakdown of Soviet-Allied cooperation in occupied Germany and the formal outbreak of the Cold War, cosmetic coalitions were no longer needed. A new constitution gave the Hungarian Workers' Party an exclusive monopoly on political power and thus the ability to completely overhaul the Hungarian economy. The Communists proceeded to enact a thoroughly Stalinist political and economic system (1949-53). The Communists launched on a massive program of industrialization. To the shock of the Communists, the economy did not grow like the economies of Western Europe. Not only were the state-owned industries not profitable and able to pay good wages, but because of state police, shortages developed for agricultural products. The economic problems were only partly due to Communist inefficiencies. The Soviet Union exploited all of its Eastern European subject peoples. Stalin's death seemed to create the the possibility of more flexibility (1953). Imre Nagy became prime minister. He announced new policies called the New Course. The Soviets engineered his ouster (1955). The economic failure of the Stalinist economic system gave rise to growing dissension and protest. The workers paradise the Communists had promised not only did not occur, but shortages and shoddy productions meant that Hungarian living standards not only did not rise like those in the West, but fell below pre-War standards. The rumors reached Hungary of the Soviet 20th Party Congress and De-Stalinization. Workers and students rose up against the orthodox Communist regime that had replaced (October 1956). Imre Nagy assumed leadership, but the Soviets sent in their tanks to suppress the rebellion. They installed János Kádár, as prime minister.The Soviets and their Hungarian acolytes like Kádár launch a Stalinist crackdown and widespread arrests. Nagy was promised safe passage, but arrested and executed. The Hungarian Workers' Party because of its hated reputation was renamed the Hungarian Socialist Workers' Party. After the repression that followed, more liberal outlook took hold in Hungary and an economy which came to be called Goulash Communism. There were notable improvements, but Hungarian industry was not competitive outside the COMECON barter system. This was the situation when Communism fell (1989). While the economic failings of Communist Hungary were well known, before the fall of Communism, what was not know was the environmental detestation wrought by state-owned industrial concerns.
The Communist Party after the fall of the Berlin Wall voluntarily gave up its autocracy. A multi-party parliamentary democracy came into being in the country. The Soviet army left Hungary.
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