Macartney: Hungary - A Short History

9. TRIANON HUNGARY

IF the real demise of Historic Hungary had thus preceded by some eighteen months the formal recognition of the fact, so its diminished successor, Trianon Hungary, had of necessity largely taken shape before the same treaty legalised its existence. In the spring of 1919 a group of leading politicians of the old regime had formed an 'Anti-Bolshevik Committee' in Vienna; others had set up a counter-revolutionary government, situated first in Arad, then in Szeged, and had raised a small 'national army' under the command of Admiral Miklós Horthy, sometime Commander in Chief of the Imperial and Royal Adriatic Fleet.

On the fall of Kun the two groups had joined forces and asked the Allies to recognise them as the legal government of Hungary. The Allies had hesitated to hand over the country to a regime so pronouncedly counter-revolutionary in outlook, and had insisted on the formation of a provisional government including democratic elements, to hold elections on a wide, secret suffrage. The Roumanians having with some difficulty been induced to retire across the Tisza, this government was formed, under the Presidency of K. Huszár, in November 1919, and the elections (for a single House) held in January 1920. The successful candidates then met in what was de facto the first parliament of Trianon Hungary.

It met in a situation of extraordinary difficulty. Overhanging the whole picture was that shadow of the impending Treaty; and it may be said at this point that resentment against and determination to reverse what almost the whole nation, with little distinction of class, regarded as an intolerable injustice, was the dominating motif in the entire history of the diminished state until the extinction of its own real independence. But the situation in the spring of 1920 was also replete with immediate problems. Four years of exhausting war, in which the nation had suffered very heavy casualties, two revolutions and a predatory foreign occupation (the Roumanians had looted the country with great thoroughness, carrying off, in particular, much of its rolling-stock) would have been hard enough to repair within intact frontiers; but on top of all this had come the further blows inflicted by the dismemberment of the country and the disintegration of the Monarchy. The whole national economy had been disrupted by the disappearance behind new barriers, abruptly erected and jealously guarded, of accustomed sources of supply and markets, and the surviving national resources were being further taxed by a great influx of refugees from the Successor States.

Industrial unemployment had soared to unprecedented heights. Capital had fled headlong before the threat of Bolshevism; the national capital, estimated in 1910 at [sterling]51,794,000 foundation capital and [sterling]25,623,000 reserve capital, had dwindled by 1921 to [sterling]1,824,000 foundation and [sterling]1,153,000 reserve. The currency was following that of Austria, with which it was still linked, in a dizzy downward spiral of inflation. Shortage of labour during the war, exhaustion of stocks and deterioration of machinery had impaired even agricultural production.

There was extreme social cleavage and unrest. Both the industrial and the rural proletariats had seen their hopes raised high during the two revolutions, and were by no means willing to return to their previous condition of political impotence and social degradation. The same revolutions, on the other hand, had greatly embittered the former possessing classes (including all but the very poorest of the peasants, and some even of them), who ascribed to them the blame for all Hungary's misfortunes. Feeling ran particularly high against the Jews, who had played a disproportionately large part in both revolutions, especially Kun's; but the Social Democrats had also compromised themselves by their alliance with Communism, and even Liberal democracy was tainted by its associations with Jewry and its share in Károlyi's regime.

Already in the preceding autumn these resentments had erupted into violence. While the Allies were still laboriously negotiating the formation of a government to allow adequate representation to the workers and Liberal elements, bands of 'White Terrorists', most of them detachments of the 'National Army', were already ranging the country, wreaking indiscriminate vengeance on persons whom they associated with the revolutions. Huszár's government itself had turned so sharply on the Social Democrats and the Trade Unions, imprisoning hundreds and interning thousands of alleged revolutionaries, that the Social Democrats had withdrawn their representative from the government and boycotted the elections. Thus even this first parliament, the liberal franchise notwithstanding, was not at all representative of the nation as a whole. It was composed - apart from numerous 'independents' and representatives of dwarf parties - of two main parties, each hurriedly drummed together: the 'Christian National Union' and the 'United Agrarians' and Smallholders' Party'. Of these, the 'Christian Nationals' were Conservatives pure and simple, on the social issue. The core of the second party was constituted by a 'Smallholders' Party' formed shortly before the War by a peasant tribune, István Szabó of Nagyatád, and stood for the interests of the small peasants, and above all, for land reform, but even it contained hardly any representatives of the agricultural proletariat, so that it was true to say that labour of any class was unrepresented in the parliament.

Nor were impoverishment and embitterment confined to the working classes. The inflation was quickly reducing a large part of the fixed income middle classes, especially those who had patriotically invested their savings in Austro-Hungarian War Loan, to great poverty. Worse situated still were the families who had fled or been expelled - a distinction which was often without a difference - from the Successor States, leaving their all behind them. By the end of 1920 nearer 400,000 than 300,000 of these unfortunates, nearly all from middle-class families, had found refuge in Rump Hungary, where many of them were existing under lamentable conditions, camped in old railway carriages and supported by the scanty relief which was all that the government could provide for them.

If the financial condition of the members of this class was far worse than that of the workman in full employment, their outlook was traditionalist and above all, nationalist. They were even more embittered than the representatives of property against the revolutions and their authors, whom they regarded as responsible for their misfortunes. Thus in the clash between Left and Right they had sided with the Right; they had, indeed, been the chief executants of the White Terror. But they regarded the crushing of Marxism as the indispensable first step towards political recovery, but only as a first step. They were of the Right, but they were 'Right Radicals', and their aspirations included fairly drastic changes in the national structure at the expense of the great landlords, banks and industrial cartels.

Finally, the nation was split from top to bottom on the dynastic question. While hardly anyone, unless among the proscribed Reds, wanted a republic, the nation was acutely divided over the question whether Charles was still the lawful King of Hungary, or whether his declaration of 13 November 1918 entitled the nation to fill the throne by 'free election'. This question took a precedence in the politics of the day that is only comprehensible in the of the national history, and in fact, as will be seen, ended by determining, albeit indirectly, the course taken by the national development in other fields.

It was the 'question of public law' with which the parliament necessarily dealt first. Its first act was to declare null and void all measures enacted by either Károlyi's or Kun's governments. The institution of the monarchy was thus restored, and in recognition of the new situation outside Hungary, the House also annulled the legislation embodying the 1867 Compromise. In view of the division of opinion among its own members, it left in abeyance the question of the legal relationship between the nation and the monarch, but decided to elect as provisional Head of the State a Regent holding the essential political powers normally exercised by the Crown. Admiral Horthy was elected to this office on 1 March, 1920. The Huszár government then resigned, and as the two main parties emerging from the elections were approximately equal in strength (the Smallholders being slightly, but only slightly, the larger), a coalition government was formed out of these two parties, under the presidency of A. Simonyi-Semadam.

At this time the national policy towards industrial labour was still one of simple repression, but the demand for land reform was too strong to be ignored: it was strongly pressed by Szabó and his followers, and the necessity for some concession was not denied even by some of the landowners themselves. Discussions began in May, and on 10 August (by which time the Simonyi-Semadam Government had given place to a new one under Count Pál Teleki) an Act was passed under which 1.2 million hold (about 7.5 per cent of the total area of the country) were to be taken from the largest estates for distribution. This was a modest figure indeed, especially when compared with the land reforms being enacted by Hungary's neighbours; but Szabó had been persuaded that a larger figure would be financially impracticable at that stage, and had accepted it on the understanding that it was to be followed by a second instalment when times improved.

But in 1921 the Habsburg question erupted. In March, and again in October, Charles returned to claim his throne. Both times he was forced to withdraw, the command coming from the Allies, on the insistence of Hungary's neighbours; but the anti-Legitimists in Hungary were no less determined to have none of him. The question cut across the parties, for it had not been made an issue at the elections, but while the Legitimists had in the main voted for the Christian Nationals, the great majority of the Small-holders' coalition were vehemently anti-Legitimist; indeed, many of them had joined the party for no other reason, being uninterested in, or even opposed to, land reform. The Right Radicals had voted for it to a man, for in their eyes Habsburg rule was identical with the dominance of big vested interests. This gave his opportunity to the man who for the next ten years was to dominate Hungarian politics and to shape the structure in the image of his own wishes: Count István Bethlen.

A man less Right Radical than Bethlen never stepped. On every social issue he was an arch-conservative, so obviously so that, although Hungary's most experienced politician, who had played the leading part in the Anti-Bolshevik Committee in Vienna, in Hungary he had to content himself, in 1920, with a place behind the scenes. But in March 1921, when the government (several of whose members were Legitimists) resigned, Bethlen accepted the succession, and while not pronouncing formally (except in admitted lip-service to the Entente[29]) against the king's claims, consented to cover a policy which in fact excluded his return. In return for this, the Smallholders agreed to fuse with the non-Legitimists of the Christians in a new party under Bethlen's leadership and to support him in a complicated manoeuvre, the result of which was that the franchise enacted before the War, which again restricted the number of voters and restored the open vote outside towns possessing municipal charters[30], was declared to be still legally in force. This carried (against the frenzied opposition of precisely the highest Conservatives), Bethlen held new elections (May 1922), which naturally gave a large majority to his new 'Party of Unity'; in other words, since the structure of the Party itself made it a mere rubber stamp for endorsing the will of its leader, they gave Bethlen a free hand.

Bethlen was a very long-sighted man, and a man who put first things first. If asked to name in a phrase the supreme goal of his policy, he would probably have answered, like all his class and most Hungarians, total revision of the Treaty of Trianon. But he saw that as the situation then was, with the Allies, led by France, supreme in Europe, Hungary's chief neighbours banded together in the 'Little Entente' and Hungary herself weak and isolated, revision was not, for the time, practical politics; it could only become so when Hungary had recovered her internal strength, and had also acquired influential friends abroad. Thus, if only as the indispensable preliminary to revision, but also for its own sake, the first step must be internal 'consolidation', political and social, and this again, as he saw it, depended on financial reconstruction. The fount of capital was the west, and in particular Geneva, and it was therefore necessary, as a beginning; to renounce any actions which would block Hungary's access to those waters. He refused, indeed, to undertake any obligations towards Hungary's neighbours which, in his eyes or his country's, would have implied a moral renunciation of any revisionist claim; but he discountenanced any open policy of adventure (although conniving at certain surreptitious and sometimes scandalous devices) and applied for membership of the League of Nations. This was granted (not without difficulty) in September 1922. Bethlen then applied for a reconstruction loan, similar to that which had just been granted to Austria, and when the Little Entente (fearing that the money would be used for illegitimate purposes) made difficulties, authorised the acceptance of a declaration that Hungary voluntarily accepted, and undertook to carry out strictly and loyally, the obligations of the Treaty of Trianon. The only other political treaty concluded by him was a Treaty of Friendship with Italy, signed in 1927; and this, while it proved useful afterwards as a starting-point for a more active policy, did not signify very much at the time, since Italy in the mid-twenties was concluding Treaties of Friendship with practically every Central European State.

Bethlen's political opponents accused him of having betrayed the nation's cause for gold, but if the correctness of his order of priorities is conceded, then it must also be granted that his policy was most abundantly justified by its results. The protocols of the League loan, which were signed on 24 March 1924, included also the renunciation by the Allies of the lien held by them under the Treaty on 'all Hungary's assets and resources', and the substitution of a fixed total to be paid by her in reparations; and once this agreement had been reached, an almost magical change came over the whole financial picture. Money poured into the country - not only the League loan, but private capital from abroad seeking quick and large returns, while the fugitive domestic capital also returned home.

The inflation was stopped, and a new, gold-based currency, the peng , introduced, which proved to be among the most stable in Europe. The budgets began to close with surpluses. Agriculture still formed the backbone of the national economy, but in 1926 a new autonomous tariff was introduced, and behind its shelter a considerable amount of industrialisation was carried through; official statistics showed that the number of establishments ranking as factories increased by two thirds between 1920 and 1929, the number of workers employed in them by a little more, and the value of their production by nearly 300 per cent. A greatly increased proportion of the national imports now consisted of industrial raw materials or half-finished products, which were worked up in the national factories. The bulk of the exports still consisted of agricultural products, raw or processed, but markets for these had been found, and prices were good. The total value of foreign trade doubled, and the calculated national income rose by 20 per cent.

Parallel with the financial rehabilitation of Hungary had gone its social and political reconstruction. Bethlen was not himself greedy for money, nor interested in squeezing the poor, and he was too intelligent not to recognise that new times brought new social forces which could not be simply repressed out of existence. But his associations with the landowning class on the one hand, and his conviction of the necessity of meeting the wishes of international capital on the other, biased his outlook strongly in favour of property; and in any case, the idea of allowing the poorer classes an effective voice in the government of the country was entirely foreign to him. His concessions to modernity were thus kept to the minimum which his great tactical ability could contrive. The keystone of his political system was the 1922 franchise, with the help of which he was always able to command a sufficient parliamentary majority for his decisions; the reconstruction, in 1926, of an Upper House did not in practice weaken his position, for in a crisis, the Lower House could always impose its will on the Upper. The open franchise, combined with the complete authority exercised by him over the party machine, enabled him to eliminate foreign bodies from the Government Party (as it was always known) by the simple process of dropping their representatives from the list of candidates, and to prevent their entering parliament in inconveniently large numbers on an Opposition ticket. With the help of these weapons, he was soon finished with the rural poor. The genuine peasant element in the Small-holders' Party had already been greatly weakened in 1921 by a grave financial scandal, in which Szabó himself was involved; and after the 1922 elections the survivors were soon quietly excreted. A close ban on any combination among the agricultural workers prevented them from making their voices heard by direct action. Nothing more was heard after this of the second instalment of the land reform, and the application of the 1920 Act itself was halfhearted. The big landlords whose estates were trimmed for the purpose were allowed to choose what land they would surrender, and naturally parted with the least fertile and most inaccessible corners of their estates. In the event, less than half of the 1.2 million hold was distributed to landless men or dwarf-holders, of whom 298,000 beneficiaries received an average of 1.6 hold apiece. The rest was retained by the state as unsuitable for distribution, and devoted to communal grazing-grounds, state farms, etc., or distributed to the 'Order of Heroes' (Vitézi Rend), a picked body of men selected for their loyalty to the regime.

The industrial workers were not muzzled quite so tightly; as early as December 1921 Bethlen had concluded a formal treaty with the Social Democrat leaders under which they had been granted an amnesty, the cessation of various forms of persecution, and the same right of association as was enjoyed by other parties, and the Trade Unions had their confiscated funds restored to them with recognition of their right to pursue their legal activities. As, moreover, the franchise was not open in the towns, the workers' spokesmen were always able to send a quota of representatives to parliament. But these could never constitute more than a minority, and in return for these concessions the Socialists had to promise to abstain from anti-national propaganda, to adopt an 'expressly Hungarian attitude' on foreign political questions, to abstain from political strikes, to confine the activities of the Unions to the strictly non-political field, and not to extend their agitation to the agricultural workers.

It would be an over-simplification to describe Bethlen's operations as simply putting the poor in their places, for they also included the political neutralisation of a considerable opposition - Legitimists on the one hand, Right Radicals on the other - among the ruling classes themselves. Towards these, Bethlen employed, indeed, gentler methods. Whereas apprehended Communist agents were punished with great severity, offenders of the Right were usually treated very leniently, 'patriotic motives' being accepted as a sufficient defence, or at least as a powerful mitigating circumstance, in their cases. But the iron hand was there under the velvet glove. The White Terror was liquidated quietly, but effectively, and it became not much easier (although much less hazardous) to preach active anti-Semitism than Marxian revolution.

It must be admitted that, judged by his own standards, Bethlen's political and social consolidation was very successful. The Right Radicals were found jobs in a government service which was expanded, far beyond the national needs, to receive them, and settled down happily enough in what seemed to be a new security. The Legitimist question in any case lost its acuteness when Charles died in 1922, for although he left heirs, a new claimant to the throne could not command the devotion which attached to the crowned king. Even among the workers, of either category, there was little active unrest.

Withal, only a moderate amount of pressure was needed to keep this structure intact. Bethlen was an authoritarian, but not totalitarian, nor tyrannical. Personal and political freedoms were far more restricted than in the real democracies of the day, but generous compared with conditions prevailing in Russia, or even Italy.

Nevertheless, Bethlen's Hungary was emphatically a class state, and in a Europe which then believed itself to be advancing towards democracy, it was a conspicuous laggard; and its handsome facade, like that of Kálmán Tisza's Hungary, covered grievous unsolved social problems. Some not inconsiderable improvements were introduced in the working conditions of industrial labour in the 1920's, when real wages also rose perceptibly, but neither wages nor conditions could be called satisfactory. The condition of the rural poor was worse still. Fortunately for them, their birthrate was falling rapidly, and industrialisation was now proceeding fast enough to absorb most of the surplus. On the other hand, the American legislation had closed the main outlet of emigration, so that if the rural congestion did not increase, neither did it much diminish. The agrarian census of 1935 showed that nearly three million people - 30 per cent of the total national population and 60 per cent of that employed in agriculture - was either totally landless or occupying holdings insufficient to support life in decency. Real wages in agriculture were below even the pre-war level. Even the poorer members of the middle classes - and true wealth was concentrated in a very few hands indeed - existed precariously enough, and the universities were beginning to produce a large new potential intellectual proletariat.

Many of these evils might ultimately have vanished if prosperity had continued, but the whole structure of Bethlen's system rested on two pillars: the maintenance of international credit, until such time as Hungary no longer needed to borrow, and the continuance of high prices on the world market for her exports, particularly wheat. In 1929 both of these were shaken by the collapse of world wheat prices, started by over-production in Canada, and by the Stock Exchange crash on Wall Street. In 1930 the Government had already to support the price of wheat, but the consequences for Hungary did not become really serious until the collapse of the Austrian Creditanstalt in May 1931. Even this did not shake Bethlen's position; a month after it, he held elections which returned the Government Party to power with the usual large majority.

But in the next weeks the full impact of the financial blizzard hit the country. Unable to meet the demands of her foreign creditors, who were trying hurriedly to withdraw their funds, she had to appeal to the League of Nations, which prescribed a policy of ruthless financial orthodoxy, including the balancing of her budget by increasing revenue by heavier taxation and reducing expenditure by salary cuts and dismissals in the public services, and the balancing of her balance of payments by the throttling of imports. Meanwhile the cascading agricultural prices had left her entire producing agricultural class practically penniless and heavily indebted to the banks to boot, while the disappearance of the purchasing power of this class, coupled with the dwindling of exports (since other countries were in the same plight) and even of imported raw materials, sent industrial unemployment rocketing sky-high.

The fantastic severity of the depression not only wiped out the economic gains of the previous decade, but also threatened the political and social consolidation. Bethlen himself resigned in August 1931. His successor, Count Gyula Károlyi, was another great aristocrat, of unbending conservatism and irreproachable probity, who set himself with determination to carry out the League's recommendations. But as one severe measure followed another, unrest grew. There were strikes and demonstrations among the workers, but more dangerous to the system was the revolt of the medium and small farmers, crushed under the weight of their indebtedness to the banks, the axed civil servants and the officers, and the jobless young university graduates. This discontent took the form of a revived Right Radicalism, directed especially against the Jews, who were the creditor class in Hungary and whose entrenched positions in trade and industry barred employment to a class for which the state was now forbidden to provide.

Macartney: Hungary - A Short History