Two False Dawns
(1945-1956)
Matyás Rákosi Regime: Overview
The years 1945 to 1956 were really harsh for the people of Hungary since a new leader came to power: Matyás Rákosi. Rákosi was a really hard and strict charismatic leader that was in charge of Hungary a big period of time in the middle’s of the 20th century. He was at the end of his regime accused of endangering socialism in Hungary by excesses in industrialisation, collectivisation, military expansion, the reduction of living standards, the staging of show trials and, not least, the encouragement of a cult of personality.
The postwar economy faced many challenges, following the Soviet occupation of Hungary had agreed to pay war reparations worth 300 million dollars to the Soviet Union. The Bank of Hungary in 1946 estimated that repairs accounted for between 19% and 22% of annual national income, also in 1949 Hungary joined the COMECON (Council for Mutual Economic Assistance) which prevented the arrival of Western aid, thereby ensuring continuity of the heavy military presence by the Soviets in the country and ensuring the submission of the country.
The Second World War had left the Hungarian economy destroyed. In addition to the massive destruction of the infrastrusture, adding ruthless Russian confiscation of raw materials and machinery (Cartledge, 448).
Rákosi wanted a total nationalisation of the economy in Hungary, causing the stagnation of an economy that had not recovered from the war, low living standards were caused and social unrest was totally normal. In the year 1949, the Pengö experienced a sharp depreciation that resulted in the largest known historical rate of hyperinflation, a 41,900,000,000,000,000% per month, this meant that the prices were doubling every 15 hours.
A “reform” of wages and prices in 1951 increased wages by an average of 20% but raised prices between 50 and 100%. Many imported goods disappeared from the shops- citrus fruits, bananas and chocolate among them....