The financial reconstruction of Hungary

Stabilisation of the German mark and a solution to the reparation crisis were, in view of Germany's central position in Europe, necessary preconditions for the general return of confidence and spread of stability that signified European recovery in the second half of the 1920s. But not everything could or needed to wait on Germany. As the Financial Committee of the League of Nations had finally succeeded, in 1922, in finding an answer to the desperate situation of Austria, the experience was used for the comparable problem of her fellow member of the losing side, Hungary.

The formerly centralised and economically, though not ethnically, coherent Hungarian state suffered greater losses in the peace settlement than any of the other defeated countries. The territory transferred to neighbouring successor states included, in addition to peoples of the appropriate nationality, over three million Magyars and important economic resources – 84 per cent of prewar Hungary's timber reserves, 83 per cent of the iron ore, 29 per cent of the lignite, 27 per cent of the hard coal. Manufacturing industry, which had been concentrated round Budapest, was little affected but was separated from formerly domestic sources of raw materials and markets. Hungarian industry was therefore vulnerable to the commercial policies of neighbouring countries.

Trianon Hungary still had considerable economic assets, but their development needed international economic cooperation, and that was the missing link in the Danubian area in the 1920s.