The Erosion of Property Rights during the First World War and the Origins of Economic Transition after 1918

The Chorins, similar to the rest of the business elites of Germany and Austria-Hungary, had no say in the decision of the Central Powers to declare war on Serbia and thus risk a global conflagration that eventually turned into the First World War.Footnote ¹⁶ The short-sighted political horizons and ‘Germanophilia’ of most Austro-Hungarian tycoons like the Chorins explained why they supported their government's decision to start a war as inevitable.Footnote ¹⁷ In a journal article aimed at educated middle-class audiences published four months after the outbreak of the war, Chorin supported the claim that the Allies conspired to strangle the Central Powers economically in the years leading up to 1914 – thus downplaying Austro-Hungarian and German responsibility for the outbreak of the world war during the July Crisis.Footnote ¹⁸ Hungarian industries, including the coal mines of the Jiu Valley, were unprepared for labour shortages and transportation difficulties in August and September 1914, even as industrialists tried to downplay these challenges in the annual reports to shareholders, especially because overpriced commissions by the joint army soon compensated for these enduring difficulties. Ferenc Chorin Jr. countered accusations of war profiteering by arguing that the enrichment of industrialists ultimately served Hungary's economic interests; given that profits could not be exported but had to be spent at home, they would ultimately enrich the national economy.Footnote ¹⁹ Chorin even urged affluent populations to keep buying ‘luxury’ products to help the luxury branches of the national economy. ‘Everyone must continue pursuing the lifestyle they did before [the war]. We are ready to put aside the idea of saving up’,Footnote ²⁰ declared the thirty-five-year-old tycoon in early 1915, attesting to the optimism of Hungarian industrialists that further increased after the territorial conquests of the Central Powers on the Balkans and the Russian empire. Furthermore, the economic blockade of Central Europe by the Allies ironically proved advantageous for German and Austro-Hungarian regions, which had previously lagged behind in industrialisation. Given that the Central Powers needed all the resources they could mobilise, factories sprung up and flourished even in far-flung regions like Transylvania. In the meantime, Budapest protected the interests of Hungarian industrialists as suppliers of the Austro-Hungarian army.

What belligerents could not foresee was that, despite the stellar profits of business elites, the First World War challenged the stability of property rights and undermined the static social hierarchies of the previous decades. These challenges came from the undermining of private property rights due to the radicalisation of economic warfare through the expropriation of enemy property on the one hand, and pressures on the home front by antisemites and the workers’ movement that criticised the enrichment of industrialists, albeit for sharply different reasons.Footnote ²¹ In Austria-Hungary, wartime measures of economic discrimination were implemented more leniently. Thus, they had a comparatively milder impact on the empire's economy than similar measures in Germany, France and the United Kingdom. Because Austria-Hungary had neither significant overseas colonial holdings nor sizeable investments by its firms in Entente states, the escalation of economic warfare did not affect the Dual Monarchy's economic elites as dramatically as the German empire's, which made them less prepared for expropriation attempts by successor states after 1918.Footnote ²² Furthermore, starting in 1917, the territorial conquests of the Central Powers, mainly as a result of the German army, gave rise to widespread expectations in Hungary regarding the country's role as a springboard for the Balkans and Eastern Europe's post-war economic exploitation. This orientalist civilising mission also promised new, unsaturated markets for Hungarian companies in an excellent geographical position to reap the fruits of the German army's gains in Romania, Serbia, Russian Poland and Ukraine.Footnote ²³

Yet the war years also revealed that many sectors of the modern capitalist economy could thrive during total war and amid the selective expropriation of private property. The decoupling of capitalism from the stability of private-property rights and free trade through the expropriation of enemy property and the Allied blockade of the Central Powers failed to undermine capitalism as an economic order as liberals like Keynes feared at the time.Footnote ²⁴ On the contrary, the era of the First World War threw light on the ability of the states and businesses to manipulate economic hierarchies and find creative means to obtain resources.Footnote ²⁵

Even though the business elites of Hungary, including Chorin, had a business-as-usual approach to life during total war, it soon turned out that states, governments and the antisemitic and left-wing press all started to challenge the prewar status quo regarding the lifestyle of the bourgeoisie and questioned their perceived enrichment, which prepared the ground for ideas and policies that aimed at remaking societies at the end of the First World War and its aftermath. The Hungarian socialist paper Népszava (People's Voice) cited the profit margins of German and Hungarian army suppliers as a sign of ‘inner rot’ and condemned the ‘swarm of new millionaires […] being born in the current shakeup of the world’.Footnote ²⁶ Antisemites of all social backgrounds misleadingly identified ‘war millionaires’ with Jews, and their views gained currency in the press and political life even as the governments of Germany, Austria and Hungary tried to minimise the political impact of antisemitic mobilisation.Footnote ²⁷

The First World War thus rattled ingrained social hierarchies yet it also favoured East-Central European businesses that benefitted from the territorial expansion of the Central Powers. Given the stellar profits of firms that supplied the war economy between 1914 and 1918, Austro-Hungarian industrialists had good reason to believe that their wartime gains would secure them a stable standing in the post-war economic order, regardless of the outcome of the war. In light of the optimistic expectations fuelled by Russia's exit from the conflict, the shock of business elites in the fall of 1918 when Austria and Hungary suddenly disintegrated was immense, especially as the empire's social and political elite, the aristocrats, landowners and industrialists, emerged as potential targets of expropriation in the aftermath of the armistices.Footnote ²⁸

The Balance of Post-Imperial Transitions Regarding Business Elites

‘Exceptional’ wartime economic policies between 1914 and 1918 became the new norm to build on during the postwar transition and, in many respects, served as templates for the successor states of Austria-Hungary as well; nationalists, fascists and socialists equally called for radical changes in social hierarchies, which makes the success of some of the Dual Monarchy's social elite in perpetuating its wealth all the more surprising. While contemporaries and historians both focused on sweeping border changes, the impact of revolutions and land reforms in remaking societies, the surprising continuities among industrialists, bankers, and the bourgeoisie, in general, remained overlooked. In many respects, the entire interwar period can be regarded as an extended era of reconstruction that left many of the legal, administrative and personnel structures of Austria-Hungary – in this case, mostly the Kingdom of Hungary – in place.

Post-imperial transitions comprised three distinct periods in the territories of the former Kingdom of Hungary. First, the chaos and state collapse that followed the armistices lasted until around early December 1918 in most places, followed by the rule of increasingly radical revolutionary administrations and national councils, culminating in warfare between the Hungarian as well as the Czechoslovak and Romanian troops that eventually led to the Romanian occupation of most of Hungary by August 1919. Béla Kun's Hungarian Soviet Republic was not an outlier in this regard either. Its primary preoccupation was to organise a national army and seize or retain territory; as we shall see, it also cooperated with relative ease with industrialists in order to pursue this agenda and consolidate the state. The third period lasted from the fall of 1919 until the mid-1920s when new states focused on the consolidation of their territories and borders. The Treaty of Trianon, signed on 4 June 1920, rubber-stamped territorial changes that had taken place since the end of the First World War. Still, the Horthy regime of the interwar period (and Hungarian governments since 2010) cast the treaty as shorthand for a Hungarian national tragedy, a story that has been repeated in rituals of collective memory and public education that have considerably overstated the peace treaty's impact. A one-sided focus on the treaty has allowed the interwar government to exaggerate the role of Great Powers and simultaneously minimise the responsibility and failure of Hungarian elites to retain most of the national territory. Nevertheless, as the manoeuvring of business elites demonstrates, there were ample means for retaining Hungarian economic, financial and social influence in successor states despite the loss of territories.

The persistence of the influence of the Hungarian capitalist class was far from guaranteed nor foreseeable in November 1918. The social and economic standing of Central Europe's bourgeoisie was especially precarious in the first, chaotic, and second, revolutionary and violent phases of the post-war transition. It seemed that the combined impact of revolutions, the power of workers’ councils and the ambitions of national councils and governments that established their sovereignty on formerly Austro-Hungarian territory would result in the displacement of the Hungarian and Austro-German business elite. Given the former Central Powers’ continued blockade and limited travel options, tycoons had difficulty fleeing workers’ councils and incoming nationalist regimes. The Thyssen-Bornemiszas, for instance, a German-Hungarian family, faced interrogation a few weeks after the armistice by revolutionary workers’ councils in Germany; four months later, the director's son, Heinrich Thyssen-Bornemisza, had to flee his Transdanubian estate in Hungary when Béla Kun's Hungarian Soviet Republic seized power in Budapest.Footnote ²⁹ The Chorin family and other captains of the Hungarian industry that remained in the country were duly interned, so Heinrich Thyssen-Bornemisza's impulse to escape was warranted.

The social standing and influence of the Chorins were even more precarious after the collapse of the Hungarian state and the fall of the wartime government, as the family's power had been connected to Hungarian state-building for two generations. In March 1919, the Bolsheviks seized power in Budapest, and the Chorins, as prominent representatives of the wartime and pre-war elite, were targeted by press campaigns while the new government transformed their villa in the Buda hills into a school for working-class children.Footnote ³⁰ The Bolsheviks were not finished: they had a popular magazine depict Chorin Jr. as a cross-dresser.Footnote ³¹ Antisemitism increased during Béla Kun's Hungarian Republic of Soviets and peaked during the White Terror in 1919 and 1920, following the collapse of the Soviet Republic. The rate of Jewish conversions to Christian denominations tripled.Footnote ³² The Chorins joined the wave of Jews who converted to Catholicism during Kun's regime. In the meantime, the family was also cut off from the SCMC's lignite mines in the Jiu Valley in Transylvania, which came under Romanian occupation.Footnote ³³ In contrast, their mines on remaining Hungarian territory were threatened by nationalisation, which mirrored demands on the nationalisation of coal mines by socialists in Czechoslovakia, Romania, the United Kingdom and the United States at the time.Footnote ³⁴

The fate of the Jiu Valley coal mines between 1918 and 1920 illustrates well how a situation that did not seem promising for the Hungarian owners at the time of the armistice turned around by the early 1920s. Due to a variety of factors, including the threat of resistance and upheaval by organised workers, the uncertainty of Romanian sovereignty over the region, lack of Romanian capital and a class of professional engineers and managers, the disapproval of the Paris Peace Conference and especially the French government of expropriations of ethnic minorities, neither nationalisation nor the ‘Romanianisation’ of Hungarian assets in Transylvania came to pass. It is noteworthy that national administrations, international organisations and even Great Powers were absent or weak in the aftermath of the 1918 armistices in East-Central Europe. The Hungarian state started to break down as early as October 1918, and a revolution toppled the existing government and put the progressive count Mihály Károlyi into power, which struggled to make its rule recognised internationally and in the countryside. Romanian, Hungarian and Czechoslovak national councils sprung up, which initially cooperated in preventing the looting that accompanied the dissolution of the Hungarian wartime administration.Footnote ³⁵

The Károlyi government negotiated an armistice with the commander of the French Army of the East in Belgrade, excluding the Romanian government that rejoined the Allies just days before. The consequences of the armistice regarding sovereignty over Hungarian territory were unclear, as the convention maintained that ‘civil administration will remain in the hands of’ the Budapest government. At the same time, ‘the Allies shall not interfere with internal affairs in Hungary’.Footnote ³⁶ Still, the Romanian army disregarded the armistice line and occupied most of Transylvania by early 1919, despite the peace conference's suggestions, and behaved as the new sovereign on occupied territories. The Romanian army and government initially attempted to initiate a change of guards among broad sections of society by firing non-Romanians, yet it soon turned out that these measures risked further precipitating the region into chaos; as a result, the removal of officials had to be limited to prominent top administrators of the Hungarian era.Footnote ³⁷

The period of transition in the Jiu Valley mining district following the collapse of the Hungarian state in October 1918 showed that social democratic trade unions were able to cooperate with ‘bourgeois’ mine owners and mining officials to sustain production and organise food and clothes provisioning in the region as well as to retain the mining community's autonomy when contrasted with Romanian attempts to overtake control. The link between multiethnic trade unionists, mining officials and even some of the Budapest Bolsheviks was a shared belief in technocratic expertise that contrasted sharply with the ultra-nationalism of the Romanian army that aimed to replace officials and skilled workers on the grounds of their ethnicity. As one of the workers’ papers in this mining region noted, ‘Modern socialism is no longer driven by the hatred of the rich, but by the need for a more advanced form of production.’Footnote ³⁸ This approach to bourgeois experts was also mirrored by the actions of the Hungarian Soviet Republic three months later when the directorate of the revolutionary regime asked Pál Biró, the wartime manager of the Rimamurány Iron Works, to remain in his position due to the lack of knowledgeable Bolsheviks to replace him. While the re-appointment of Biró and other industrialists mirrored the pragmatic attitude of the Bolsheviks and the shortage of socialist technocrats, it also attested to the shared belief in the value of technocratic expertise that connected the Kun regime with a class of engineers, managers and intellectuals who decided to cooperate with the Hungarian republic of Soviets.Footnote ³⁹ The miners’ loyalty to Hungary stemmed from their sympathies with the Károlyi government, which they perceived as more progressive and socialist than royal Romania.Footnote ⁴⁰ In the meantime, the Romanian army and government learned the hard way that they, too, had to rely on skilled workers and mining officials they had initially tried to fire. Following the removal of trade union representatives from the local administration of the Jiu Valley, a wave of strikes broke out in January 1919, which hampered the movement of Romanian troops eager to conquer Hungarian territories up to the Tisza River.Footnote ⁴¹

There were thus bottom-up pressures on the Romanian government not to upset the status quo and instead work with industrialists, mine owners and even trade unions when Romania was recovering from German occupation and the country faced shortages of food, raw materials and finished products. In the meantime, Romania had an ambiguous status at the peace conference. In 1916, the Allies had promised Transylvania to Romania in exchange for joining their side. Yet one of the conditions was that Romania could not sign a separate peace treaty with the Central Powers. After Bolshevik Russia's withdrawal from the Allied coalition, the Romanian government had to conclude a separate treaty with the Central Powers in May 1918. As it happens, Romania rejoined the Allied coalition merely one day before the Compiègne Armistice, which did little to guarantee the country's claim on Transylvania.

The ambiguity of Romania's status as a member of the Allied coalition meant that the Romanian army and governments had to tread carefully in order not to lose the right to annex Transylvania at a time when the Hungarian delegation in Paris argued that only ‘civilised’ Hungarian rule could save the region from economic ruin and massive ethnic discrimination.Footnote ⁴² Given the chaotic and violent nature of the transition in the Eastern Mediterranean and Eastern Europe, neither the peace conference nor the French government was interested in fuelling further chaos through the massive expropriation of the private property of Austrians and Hungarians in successor states. In the meantime, the French government expelled and expropriated wealth and resources from 100,000 Germans in the weeks after the Compiègne armistice, which served as a model for the successor states of Austria-Hungary. Yet, they lacked the means and the decisive military and diplomatic power to discriminate against ethnic minorities on newly acquired territories. Furthermore, despite their radical treatment of Alsace-Lorraine's Germans, the French government emerged as the defender of the economic interests and rights of German, Austrian and Hungarian minorities in East-Central Europe.Footnote ⁴³ Even though France emerged economically weakened from the First World War, it possessed some key advantages. The organisation of the peace conference made France look more important than it actually was in the eyes of its East European allies. At the same time, the French Army of the East constituted the only sizeable force by a great power in the region. There was no shortage of ambitious French plans for long-standing economic and political hegemony either. For instance, General Henri Mathias Berthelot, one of the French army's commanders and the wartime military advisor to the national liberal Romanian government, dreamt of making the country a French ‘colony’.Footnote ⁴⁴

Yet French governments in Paris were more cautious than French military men like Berthelot because it soon became apparent that, in the absence of a planned but ultimately cancelled French occupation of Hungary in late 1918, France had no means to powerfully influence the fate of Austria-Hungary and its shatter zones.Footnote ⁴⁵ Despite its seeming strength, France had lost two million people in the war, had become indebted to the United Kingdom and the United States, and lacked an army willing to continue fighting. The armies of successor states soon outnumbered French troops. At the same time, the Romanian government of Ion Brătianu disregarded the suggestions of the French government. It proceeded with the occupation of Transylvania, including its majority non-Romanian cities east of the river Tisza. However, the French were powerless to do anything about this since Romania had a strategic geopolitical position in the fight against the Bolsheviks in Russia, who expropriated French possessions and renounced payments on pre-1917 Russian bonds, dealing a blow to the French economy and broad sections of the French middle class.Footnote ⁴⁶ East-Central and Southeast Europe emerged as a ‘spatial fix’ of the problems of French investors, but this also entailed that the Paris government, ironically, had to defend German and Austro-Hungarian factories and mines in these regions from expropriation by successor states to retain these assets for French firms.Footnote ⁴⁷ Apart from post-war French economic interests in the natural resources of the region, Hungarian business elites could also count on their prewar business ties with French industrialists in Turkey and Southeast Europe.Footnote ⁴⁸

Hungarian industrialists realised that they had leverage over the Romanian administration despite the disappearance of the Hungarian state and army from Transylvania. In the meantime, especially after the French government vetoed a Romanian plan to nationalise mines, the governments of Bucharest were made keenly aware that it was impossible to expropriate Hungarian mining companies in the Jiu Valley. Informally, the Romanian mine inspectorate kept pushing Ferenc Chorin to hand over the Jiu Valley mines to Romanian owners and thus separate the firm from the Budapest-based Salgótarján corporation. Chorin and his business associates retaliated by starting negotiations in neutral Switzerland, which had emerged as a crucial hub of clandestine economic dealings between the Allies and the Central Powers during the First World War.Footnote ⁴⁹ Industrialists from France and Britain expressed interest in the Jiu Valley's coal, while Chorin also publicised these negotiations broadly in the press to make the sale of the mines to Western investors look imminent. This was a bluff, though, as Chorin did not even have proper documentation on the mines given the sudden end of the war and subsequent loss of contact with the coal mines in Transylvania. Yet the Romanian party was unaware of these difficulties and ultimately decided to prevent the sale of the coal mines to foreigners by offering Chorin a deal that was more advantageous than what any Western investor put on the table. In exchange for half of the mines’ shares, Romanian investors were to pay 18 million Swiss francs, which amounted to $3 million, an enormous sum the buyers planned to cover through borrowing and, mainly, profits from the coal mines. Until the purchase price was fully paid, however, the mines’ shares remained in the hands of the prewar owners, the Hungarian Salgótarján Corporation.Footnote ⁵⁰

Given that the Romanian party lacked the resources to pay the purchase price, partly due to the inflation of the leu, the Hungarian owners ended up retaining their majority until the end of the Second World War. On paper, the Jiu Valley coal mines became a new firm registered in Greater Romania as the Petroșani Corporation, but the management remained in the hands of the circle that had directed it before 1918. Similar to the solution worked out in the Jiu Valley, Romanian politicians like Alexander Vaida-Voevod, Emil Hațieganu, the banker Virgil Dessila, and others, received lucrative sinecures as board members of corporations owned by ethnic minorities in exchange for lobbying for these firms’ interests.Footnote ⁵¹ These alliances were often extensions of pre-war personal social ties in Austro-Hungarian high schools, universities, and the state administration among middle-class men, Romanians and Hungarians, who were connected by ideas of Transylvanian regionalism that defined itself in opposition to both Hungarian and Romanian ideas of unified nation-states.Footnote ⁵²

The failed ‘Romanianisation’ of the Jiu Valley mines and other Hungarian-owned businesses signalled the limited sovereignty of East-Central and Southeast European successor states to do as they wished with private property on their territory. Successor states were also more interested in redistributing land and nationalising schools than taking over industrial companies for which they lacked capital. Nationalisations followed the same script in Czechoslovakia as in Greater Romania, insofar as it was the profits of nationalised companies that were to be used to pay for their purchase price through a span of several years. Although Prague banks were able to mobilise more capital than Bucharest ones, even in Czechoslovakia, the French steel plant Schneider-Creuzot managed to obtain majority shares in the Škoda plants, the country's most prominent industrial company, which spoke to both Czechoslovakia's need for foreign capital and its growing – if hierarchical – ties with France.Footnote ⁵³

While French investors failed to gain ground in the Jiu Valley's coal mines, the Banque de Paris et des Pays-Bas took over the Deutsche Bank's interests in the Romanian oil industry.Footnote ⁵⁴ Unlike the Versailles Treaty regarding German property abroad, the Treaties of Saint-Germain and Trianon were remarkably conservative regarding property rights, confirming that successor states had to observe the private property of Austrian and Hungarian citizens on their territory, which contributed to ending the chaotic period of transition in these regions, yet also prevented changing uneven social hierarchies. By the late 1920s, Romanian middle classes, university students and intellectuals became profoundly disillusioned with the economic aspect of national ‘unification’, which helped push many of them to the ultraright by the late 1930s and helped normalise grassroots antisemitic violence and the discrimination against other ethnic minorities, too.Footnote ⁵⁵ It was mainly Greater Romania's Jewish populations that suffered. The deals that Hungarian, German and Jewish magnates like Ferenc Chorin made with Romanian politicians – who, in exchange, received lucrative positions on corporate boards – turned out to be inadequate tools to curb the radicalisation of Romanian politics by the late 1920s.Footnote ⁵⁶

The Ruptures of the 1940s among the Industrialists of Hungary and Romania

The radical measures of expropriation practised during the First World War prefigured the wave of expropriations during the 1940s, including the nationalisation of private property in Eastern Europe after 1948. Even so, in the same way that the successor states were unable to fully implement a change of guards among business elites after 1918, the former Austria-Hungary's bourgeoisie still occupied prominent positions on the eve of the Second World War; after all, merely two decades separated post-imperial transitions from the Second World War and the Holocaust. Ferenc Chorin Jr. was one of the industrialists who faced challenges in trying to retain his business empire in the 1920s and with the rise of Nazism in the late 1930s. An asymmetrical comparison of his options after the two world wars illustrates well that, if survival and perpetuation of wealth was possible for the bourgeoisie of East-Central Europe or the eastern half of Mitteleuropa, which eventually became ‘Eastern Europe’ by the end of the 1940s, this was an exception to the rule. There was considerably more potential for the bourgeoisie to preserve its social standing and capital in the aftermath of the First World War than after the Second World War.

Hungarian governments passed four anti-Jewish laws between 1938 and 1942, restricting Jewish presence in social and economic life, comparable to measures in other Axis-aligned states such as the Romania of the Antonescu regime.Footnote ⁵⁷ The proximity to the Eastern Front, though, allowed Romania to switch sides in August 1944 and fend off a potential German occupation, saving Jewish lives and assets. More importantly, as Ștefan Ionescu has argued, the corruption and cronyism of local Romanian notables, as well as the lack of enough experts to run the war economy, also contributed to the incomplete Romanianisation of Jewish property.Footnote ⁵⁸ Chorin managed to remain among the top ten taxpayers of Hungary even in 1941. On the morning of 19 March 1944, the Wehrmacht occupied Hungary, which Hitler judged to be a wavering ally. German occupation triggered the radicalisation of anti-Jewish policies in Hungary. The Hungarian administration remained in place and assisted Adolf Eichmann's forces in the spring and summer of 1944 with the deportation of Jews from the countryside. In mid-October 1944, the Germans handed power to the Hungarian Nazi formation, the Arrow Cross Party, after Miklós Horthy's failed attempt to switch to the Allies from the Axis alliance. The rule of the Arrow Crossmen ratcheted up the persecution of Budapest's Jews, who had managed to avoid mass deportations until then. Mauthner and the Chorins knew all too well to what extent German occupation limited their options to manoeuvre.Footnote ⁵⁹ The SS arrested Chorin and other members of the Jewish and anti-German elite of Hungary within days of the country's occupation.Footnote ⁶⁰ The occupiers interned Chorin and his family in Oberlanzendorf near Vienna, where they were beaten and housed in dismal conditions.Footnote ⁶¹ In the meantime, a competition developed within the Nazi elite regarding the spoils of occupied Europe, and Heinrich Himmler's SS attempted to outmanoeuvre Hermann Göring by seizing lucrative assets in Hungary.Footnote ⁶² Chorin Jr., as the head of Hungary's wealthiest family of industrialists, had the means to aid the economic chief of the SS in Hungary, Kurt Becher, in this competition.

The Chorin family's primary asset at the time was the Manfréd Weiss iron works and armaments production company of Budapest, which Chorin gained through his marriage to Daisy Weiss; naturally, some of the Hungarian shares in Jiu Valley coal mines also became formally transferred to German hands, although this had little consequence as Romania had switched sides to the Allied camp. While Becher initially wanted only a few industrial companies, Chorin surprised him by offering the entire Manfréd Weiss works and his shares in other companies to the SS in exchange for the exceptional request to transport over forty family members to Portugal.Footnote ⁶³ Chorin's leverage consisted of the secrecy of the deal that was not known beyond the circles of the SS as well as the interest of the SS in the continued and undisturbed operation of Hungary's industries that a smooth transition and the ‘economic intelligence’ provided by Jewish managers could assure. Saving a few Jews also helped some SS like Becher to gain credentials in case of an eventual Allied victory.Footnote ⁶⁴

Given all this leverage of the Chorin family, the SS duly organised chartered Lufthansa flights and bribed the Portuguese consul to grant visas to the family; Chorin duly received $170,000 in cash in a hotel room in Lisbon upon his arrival and other financial compensation. In Lisbon, the key task was to convince the US ambassador Herman B. Baruch, who was unable to locate Hungary on the map of Europe during the audition, that Chorin was a persecuted Jew whose escape from Nazi Europe was a ‘miracle’, as lawyer Hoff put it in his memoir four decades later.Footnote ⁶⁵ Chorin's attempt was a success. The US government had subsequently freed those ‘enemy assets’ of the Manfréd Weiss works, which Chorin had transferred to the United States before the Second World War, and granted him and his family entry visas.

Chorin's negotiation with Becher showed similarities to his dealings with the Romanian administration after the First World War. Yet his options were considerably more limited in 1944 than in 1920, mainly concentrated on saving his family and a fraction of his wealth. Chorin also faced the enormous ethical dilemma of cooperating with the SS and contributing to the prolongation of Nazi rule in East-Central Europe at the time when Becher's colleague at the SS, Adolf Eichmann, busied himself with the deportation of half a million provincial Hungarian Jews to their death in Auschwitz, including members of the extended Chorin family. Such manoeuvring was not available to ordinary Hungarian Jews. It was unprecedented in Poland and Czechoslovakia as well and is a sign of the uniqueness of the Holocaust in Hungary, as well as its unfolding at the last stage of the Second World War, which allowed for very wealthy businessmen like Chorin to save their lives. The Becher-Chorin negotiation spoke to the desperate attempts by the circle of SS leader Heinrich Himmler to negotiate with Western European Allies and use Jewish lives as bargaining chips while also gathering credentials in case of an Allied victory by helping some Jews survive.Footnote ⁶⁶ The deal also carried numerous risks: one of the Chorin family lawyers who helped draft the deal, Vilmos Billitz (1902–45), was liquidated by the SS in January 1945; Becher, on the other hand, was relieved from all charges at the Nuremberg Trials due to several positive testimonies by Jews he helped to save in exchange for money, including Rudolf Kasztner.Footnote ⁶⁷

The Economic Downfall of East-Central Europe's Bourgeoisie after 1945

By the time that the Hungarian government nationalised all businesses in 1949, Chorin had set up a new home in New York City, where he died as a prominent member of the Hungarian community in 1964, active as an investment broker and as the chairman of the board of the Penn Navigation Company, using his pre-Second World War investments as a seed fund.Footnote ⁶⁸ Business elites, however, had considerably less leverage after 1945 than after 1918 because the nationalisation of key sectors of the economy had reached a consensus beyond the political left.Footnote ⁶⁹ Unlike after the First World War, post-1945 governments were similar throughout Europe insofar as they deemed continued state intervention in economic life necessary. State ownership of certain key assets, such as coal, at the expense of the expropriation of their owners, also formed a consensus in the new coalition government of Hungary. Legislators pointed to the widespread presence of expropriations in leading capitalist economies and praised the Soviet model.Footnote ⁷⁰ A communist politician, Ernő Gerő, argued that the military victory of the Soviet Union over Nazi Germany proved that state ownership was more efficient and superior to private property.Footnote ⁷¹ Calls for nationalisation in Soviet-occupied Europe were also strengthened by the wave of nationalisations in France and the United Kingdom at the time, which suggested that the eventual takeover of mines and heavy industries by the state had its international parallels, too, and was more than simply the result of Soviet and domestic pressure on East European governments.

As the somewhat poetic preamble to the law on the nationalisation of coal mines maintained:

The preamble to the law did not mention that coal mine owners needed to be expropriated so that the state could hand over their shares to the Soviet Union.

In sharp contrast to the massive French presence in the region after the First World War, the Paris government had neither military nor economic influence over the region. Nevertheless, wartime Hungary's amicable relationship with Vichy France meant that French firms had functioned undisturbed through most of the Second World War and the French bourgeoisie and banks retained a sizeable portfolio of companies, including textile and porcelain works and a major Budapest bank.Footnote ⁷³ Of course, French firms were not spared in 1948, when most mid-size and large companies were expropriated, but state socialist Hungary's reliance on the French economy for post-war economic reconstruction prompted the regime of first secretary Mátyás Rákosi to offer monetary compensation for the nationalisation of French corporations, despite heightened political tensions between the two states.Footnote ⁷⁴ In exchange for this concession, Rákosi wanted the French to build and furnish a factory producing sulphite acid in Hungary. This spoke to the importance of east-west commercial and economic connections across the Iron Curtain, even at the height of the Stalinist period.Footnote ⁷⁵ Just as the nationalist governments of the successor states of Austria-Hungary were reticent to admit the persistence of path dependence regarding commerce and social hierarchies, so communist states that came to power after 1948 downplayed their continued dependence on commerce with the industrialised states of Western Europe.

The Potsdam and Yalta negotiations among the Allies established, already before the end of the war, that German private and state property abroad was subject to expropriation by the Allies.Footnote ⁷⁶ In Eastern Europe, the Soviet army immediately transformed German assets into Soviet ownership. For the rest of the privately owned corporations, East European states had some manoeuvring potential, as they retained some form of their sovereignty despite the presence of Soviet troops, primarily until 1948. Relations between Hungary and Romania remained hostile after the end of the Second World War, and the competition that characterised their participation in the Axis alliance between 1939 and 1944 continued in a different form when they became part of the Soviet zone of influence.Footnote ⁷⁷ New conflicts stemmed from clashes over Transylvania's sovereignty and the fate of its industrial companies and mines.Footnote ⁷⁸ Romania left the Axis alliance and joined the Allied coalition following the armistice with the Soviet Union in September 1944; Hungary only followed suit in January 1945 and was thus in a less favourable position from Moscow's perspective. On top of that, the Romanian state was the de facto sovereign of Transylvania even before the Paris Peace Treaty formally awarded the entire region to the country; as a result, Budapest corporations and banks were cut off from their assets in the region. Another advantage on the Romanian side was that the country's armistice treaty with the Soviet Union allowed the Bucharest government to treat Hungarian capital as an enemy asset, and administer it along with German goods through the Office of Administration and Supervision of Enemy Properties (Casa de Administrare si Supraveghere a Bunurilor Inamice).Footnote ⁷⁹

Regarding the fate of the Jiu Valley's coal mines, intense competition developed between the Budapest and Bucharest governments and even between the Hungarian and Romanian communist parties. The Hungarian government attempted a similar strategy that Ferenc Chorin Jr. had used after the First World War when he wanted to transfer the mines to British and French ownership. The Budapest administration concluded that it was advantageous to offer these mines, located on Romanian territory, to the Soviet Union in exchange for crediting the sale price on Hungary's reparations account, thus limiting the economic burden to Hungary proper.Footnote ⁸⁰ Furthermore, Soviet ownership was to prevent the expropriation of these mines by Romania; initially, apart from economic concessions, Hungarian governments also wanted to receive territorial concessions in Transylvania, yet the Allies soon sidelined these propositions. According to the memoirs of Hungarian premier Ferenc Nagy, it was Stalin himself who singled out the Jiu Valley's mines during their March 1946 negotiation as a key asset; Ernő Gerő, a Hungarian communist, told Stalin during these negotiations that the value of these mines amounted to $50 million.Footnote ⁸¹ In the fall of 1946, a delegation of Hungarian and Soviet mining experts and other technocrats worked out the details of the transfer during lengthy negotiations (conducted in German). While the Romanian government of Petru Groza delayed the release of the Petroșani corporation's mines in the Jiu Valley from the list of enemy assets until 1947, eventually, the Romanian party had to give in. The new Soviet-Romanian coal company, the Sovromcărbune, in which Hungarian majority shares were substituted for Soviet participation, started its operations in 1949.Footnote ⁸²

The negotiations revealed that East European states had some agency to negotiate even with the Soviet Union and that the economic Sovietisation of the region did not follow a predetermined script. While the consequence of Soviet occupation was the seizure of many key corporations by the Soviet Union, it mattered under which conditions this transfer of ownership took place. Despite Hungarian expectations to achieve a higher price, the Soviets only credited $12 million to the country's reparations account over three years; still, the deal was a relative win for the Hungarian party. The Romanian government felt deceived, and Gheorghe Gheorghiu-Dej. who followed Groza in office, did everything to buy out the Soviet Union from Sovromcărbune; unsurprisingly, the Romanian government initiated talks about the takeover of Soviet ownership in the company two days after Stalin died, on 7 March 1953.Footnote ⁸³

Compared to the post-imperial transition era after the First World War, the fate of the key corporations and mines of Transylvania and East-Central Europe more generally after the Second World War reveals the limited agency of businessmen and large corporations. It was a sign of the diminished power of the international business elites that the non-communist Hungarian government of Ferenc Nagy quickly sidelined Swiss, British and American protests against the handover of Hungarian interests in the Petroșani mines to the Soviets, on the grounds that the mine had sizeable Western debts. Due to the Paris Peace Treaty that concluded the Second World War, the Budapest government had to compensate the Hungarian owners who lost out on the Hungarian-Soviet deal since the large-scale nationalisations from 1948 onwards rendered these promises worthless.

Hungarian industrialists thus only managed to preserve or convert their wealth in Soviet-occupied states after 1945 under exceptional circumstances, and the earlier an industrialist or banker left Hungary, the better their chances were to part with a substantial portion of wealth. Among the bourgeoisie that remained in Hungary, only those who joined the Communist Party were able to retain their influence and social status. A few who had communist or partisan credentials from before the Soviet occupation experienced remarkable professional mobility. János Nyerges, who came from a family of shop and factory owners but joined the Communist Party and had been a partisan, managed to gain important positions at the Foreign Trade Directorate at the age of twenty-seven in 1945.Footnote ⁸⁴ János Fekete, who was a bank clerk in the interwar period and managed to survive the Holocaust, was given a position at the Hungarian National Bank due to his communist credentials.Footnote ⁸⁵ Others, such as members of the German-Hungarian Renner family of Cluj, only had the option to work as skilled workers in the tannery they had directed before 1944.Footnote ⁸⁶ It is thus unsurprising that when Eastern European states transitioned from state socialism to market capitalism after 1989, it was not the post-1945 era but the first three decades of the century that emerged as a usable past.

Epilogue: From 1918 to 1989 and the Present

The end of the Cold War is set apart from the two world wars both in time and in terms of being a war only in the metaphorical sense, thus making for an imperfect comparison as regards the transformation of social hierarchies. Yet the transition of East European states from state socialism to market economies and liberal democracies around 1989 brought promises of changes in the ranks of these states’ economic elites similar to the expectations of many in the successor states of Austria-Hungary after 1918.Footnote ⁸⁷ Both post-imperial transitions and post-1989 regime changes resulted from the collapse of the ancién regime(s). In contrast, in 1944–5, a decisive military defeat of the Axis Powers was coupled with an immediate military occupation that opened up new vistas for social transformations and clearly sidelined prewar elites (unlike in 1918 and 1989). After 1918, given the lack of full-scale military occupation of the Central Powers by the victorious Allies, the transition proceeded more slowly.Footnote ⁸⁸

The post-1989 transition to liberal democracy bore a striking resemblance to arrangements reached after the First World War insofar as both enabled the continued economic influence of the elites of previous regimes. Continuities did not persist in all fields of economic activity and showed variation country by country. Moreover, the influence of technocrats and business managers should not be exaggerated. Still, the post-1918 and post-1989 regime changes were coupled with a power vacuum following the collapse of imperial administrations and the Soviet Union, respectively, which enabled continuities in economic and social life and, to some extent, even politics. After 1989, post-socialist states stopped orbiting the Soviet centre, yet they were not immediately admitted to the alternative military, economic and political alliances of the European Union and NATO. With the exception of East Germany, no radical reshuffling of elites took place in the former Eastern Europe. What makes the post-imperial continuities after 1918 more relatable today than the radicalism of the 1940s are their many similarities to the post-socialist era; the experience of slow shifts in the ranks of economic elites despite radical political changes speaks to some of these similarities and explains comparable social and political frustrations.

Socialist-era business elites and managers of state-owned enterprises who became wealthy after privatisation were quickly turned into scapegoats in an era when anti-communism became popular as an ideology of its own, and the perceived influence of these pre-1989 technocrats (labelled ‘communists’ or ‘red barons’) led to successful calls by right-wing populists such as Hungary's Viktor Orbán for a ‘second regime change’ in the early 2000s and 2010s, following an era of relative liberal hegemony in Hungarian culture and politics.Footnote ⁸⁹ While technocrats, who mostly belonged to ethnic minorities, managed to make a case for their continued relevance after 1918, a similar perpetuation of influence based on technocratic expertise has faced increasing challenges in the 2010s. The goal of populists was to transfer economic power to domestic, loyal entrepreneurs and create a ‘national bourgeoisie’, replacing ‘no alternative’ technocrats and liberal elites, who allegedly served the interests of Western multinational firms, the United States, and the European Union.Footnote ⁹⁰ The wealthiest man of 2010s Hungary has no university degree and used to work ‘connect[ing] the gas pipeline into the houses of villagers in the framework of the contemporary state gas program’ in the 1990s before state policies to create a ‘national bourgeoisie’ (nemzeti burzsoázia) resulted in the skyrocketing success of his previously mid-size business.Footnote ⁹¹ Ironically, the xenophobic rhetoric and dissatisfaction of the new, emerging elites with the pace of social change in the ranks of the business elite was very similar in states such as post-1918 Romania. The same is true of the challenges these regimes faced as they tried to balance a belligerent rhetoric of rapid elite change and economic nationalism with a lack of domestic capital and tariff walls, as well as the constraints stemming from their respective diplomatic alliances and clandestine deals with domestic or foreign adversaries. Chorin and many other Hungarian businessmen in Transylvania, for instance, made lucrative agreements with the Romanian political elite in the 1920s and 1930s in order to fend off expropriations.

In sharp contrast to Chorin's successful trajectory during the period of post-imperial transition, he experienced the loss of much of his fortune and influence at the end of the Second World War, which made him reconsider his beliefs in the linear progress of history toward a better future. He also started questioning the club-like elitism of Hungarian political life, without admitting his responsibility as part of this political establishment. A few months before his death, he warned the Hungarian-American community not to be overly optimistic about the relative political thaw of the Kádár regime in the 1960s:

Yet Chorin never confronted his dealings with the SS, which emerged as the cornerstone of his hostile reception in socialist Hungary.Footnote ⁹³ The Hungarian press silenced news of his death and continued to refer to him as a ‘traitor’ and ‘war criminal’ in the 1960s.Footnote ⁹⁴ Even the more moderate Hungarian Biographical Lexicon only spared him one paragraph in 1967 – as opposed to a slightly longer and less critical section devoted to his father, Ferenc Chorin Sr. The lexicon described him as ‘the most infamous representative of industrial magnates, who supported the Horthy regime until the end. He fought against the workers’ movement, the trade unions, and energetically defended the class interests of finance capital.’Footnote ⁹⁵ It was not until 1977 that Hungarian historians started to offer a more nuanced portrayal of Chorin Jr. by stressing his support of anti-Nazi political mobilisation in the late 1930s; with the gradual opening of the socialist economy to private enterprise starting in the mid-1980s, in turn, historians also begun to discover the histories of nineteenth and early-twentieth-century business families.Footnote ⁹⁶

After 1989, members of the pre-1945 business elite appeared as models to emulate on the road to a capitalist future, which many understood as American-style prosperity for all. The massive social inequality stemming from the transition to market economies was of little interest in East European societies of the 1990s, which had become increasingly fragmented as well as centred on individualism and family solidarity. When Chorin's grandson and Manfréd Weiss's great-grandson, the ‘elegant businessman’ Ferenc Ráth (b. 1955), returned to Hungary from the United States for a series of business visits, he was feted by the newspapers close to the reform socialist and liberal parties. Ráth, a lawyer running a modest law firm in New York at the time, was trying to connect Hungarian companies with American investors without much success. He nonetheless used his ancestors’ business practices as models for the Hungarian economy in the transition from socialism to capitalism and admonished slowness and inefficiency:

His statement illustrates the slow-changing economic structures and social attitudes of business life in Hungary after 1989, which made the entry of an American ‘outsider’ like Ráth difficult at the time. Ironically, it was the inertia of social networks that had helped his grandfather, Ferenc Chorin Jr., and other businessmen to retain their influence in successor states following the collapse of Austria-Hungary. Even as capitalism underwent substantial changes and showed remarkable adaptiveness to political and social transformations in the twentieth century, business elites changed slowly after both 1918 and 1989 in East-Central Europe.