Before the first World War Hungary was a part of the Habsburg Monarchy, therefore the country basically relied on the market of the Empire. Being a member of the Monarchy ensured economic unity which meant common currency, common tariff and market system. In 1918 the Monarchy became disintegrated: Hungary got into a new situation; she had to reorganise her international trade, the tariff system and had to introduce own money.
June 4., 1920. : Hungarian delegation signed the peace treaty in Versailles (Grand Trianon)
The Treaty contained the following conditions:
← Fixing of new Hungarian borders. The new area became one third of the original one, 57% of the Hungarian population was excluded. The country lost Upper Hungary (Felvidék), Sub Carpathia (Kárpátalja), Transylvania, the Partium, Bánát, Bácska and Burgenland. ← Hungary was not allowed to reunite her territories with Austria ← Restrictions in connection with rearmament. Hungary was not allowed to have permament army, she was restricted in shipping and aviation, abolition of conscription. ← Protection of minority
← Bringing of war-criminals to trial
← Paying of huge reparation. Hungary had to pay in money, coal and animals. Moreover all of state possessions became blocked.
Hungarian economy after the Treaty
1. Great territorial losses
← Significant part of raw material sources was lost: salt, golden, silver, copper, manganese (Nagybánya, Körmöcbánya, Selmecbánya), oil (Nyitra, Erdély, Muraköz). The problem with this was not only the shortage of income but the disproportion between the amount of raw materials and the capacity. In other words the raw materials were lost but the processing industries (feldolgozóipar) remained in Hungary. ← 38% of the railway system remained. Consequence: Transportation and travel became harder and more expensive. The system had to be reorganised. ← 31% of iron...