When Bethlen took office, the government was bankrupt.
revenues were so paltry that he turned to domestic gold
foreign-currency reserves to meet about half of the
budget and almost 80 percent of the 1922-23 budget. To
his country's economic circumstances, Bethlen undertook
development of industry. He imposed tariffs on finished
earmarked the revenues to subsidize new industries.
squeezed the agricultural sector to increase cereal
which generated foreign currency to pay for imports
the industrial sector. In 1924, after the white terror had
and Hungary had gained admission to the League of Nations
the Bethlen government secured a US$50 million
loan from the league, which restored the confidence of
creditors. Foreign loans and domestic capital that had
removed from Hungary during the communist revolution
into the country, further fueling industrial development.
By the late 1920s, Bethlen's policies had brought order
the economy. The number of factories increased by about 66
percent, inflation subsided, and the national income
percent. However, the apparent stability was supported by
rickety framework of constantly revolving foreign credits
high world grain prices; therefore, Hungary remained
in comparison with the wealthier western European
Despite economic progress, the workers' standard of
remained poor, and consequently the working class never
Bethlen its political support. The peasants fared worse
(see Interwar Period
, ch. 2). In the 1920s,
60 percent of the peasants were either landless or were
cultivating plots too small to provide a decent living.
wages for agricultural workers remained below prewar
the peasants had practically no political voice. Moreover,
Bethlen had consolidated his power, he ignored calls for
reform. The industrial sector failed to expand fast enough
provide jobs for all the peasants and university graduates
seeking work. Most peasants lingered in the villages, and
1930s Hungarians in rural areas were extremely
Hungary's foreign debt ballooned as Bethlen expanded the
bureaucracy to absorb the university graduates who, if
might have threatened civil order.
Data as of September 1989