1938: Hungary

The year 1938 was of momentous importance for Hungary, as well as for the rest of Central Europe. It brought to Hungary the first satisfaction of the aspirations which have directed her whole policy since the end of the World War, namely, that of regaining some of the territory lost in that upheaval. She had suffered losses to Rumania, Yugoslavia and Austria; and, after the war, to Czechoslovakia although part of this she has now regained. But she had to pay the price of throwing in her lot with the Rome-Berlin Axis by becoming dependent for her whole foreign and internal policy upon Nazi Germany, the more powerful partner of the Axis. This final outcome did not entirely correspond to the situation at the beginning of the year, when Hungary's aim was to steer a middle course and to remain, although with a definite leaning toward Italy, independent in her foreign and internal policy. But the Pact of Munich and its consequences drove Hungary into the Fascist camp.

Hungary's Territorial Claims.

Early in 1938 a conference in Budapest united the so-called Rome Protocol Powers, Italy, Austria and Hungary. On this occasion the Italian Government advised Hungary to try to establish better relations with Rumania, where, at that time, the Fascist government of Octavian Goga was in power. In Transylvania, that part of Hungary which had been ceded to Rumania after the World War, more than one million Hungarians lived under a much more unfavorable régime than did the Hungarian minority in Czechoslovakia. In February the Hungarian Regent, Admiral von Horthy, visited Poland, and during this visit the common policy of the two states was discussed. Both Poland and Hungary were friendly towards Italy and Germany, and hostile towards the Soviet Union, Czechoslovakia, and the system of the Little Entente. But whereas the relations between Hungary and Rumania were unfriendly, those between Poland and Rumania were most cordial. Poland could thus function as an intermediary between Hungary and Rumania.

Growth of National Socialism.

Hungary's will to independence was strongly expressed by the Cabinet of Bela Imredy which took office in May. The Prime Minister, well-known as the leading financial expert of Hungary, a Director of the National Bank, and Hungary's Minister of Finance, had succeeded in balancing her budget, in paying a large part of her external debts, and in accumulating a Treasury reserve. Mr. Imredy's Cabinet was Hungary's answer to the threat of Nazi hegemony which had become imminent after the annexation of Austria by Germany in March, and which was increased by the growing National Socialist movement within Hungary, both among the relatively large German minority and among the younger Hungarian middle class.

Hungary, a feudal country with a very rich aristocracy, and a very poor peasant class which forms a large majority of the population, found herself in the throes of a deep social and economic crisis. The long-overdue agrarian reform was being resisted by the upper classes. The middle classes, mostly Jewish and German by origin, had suffered through the shrinkage of the Hungarian territory after the World War; the result having been especially disastrous for the Hungarian intelligentsia, who in pre-war Hungary had occupied all the official positions in that extensive country. After the World War a younger intelligentsia grew up for whom there were no positions open as officers or officials. These discontented youths became natural soil for the growth of a National Socialist movement in Hungary. They spread agitation among the impoverished and suffering peasant masses, and they appealed, as they had done in Germany, to anti-Semitism as a strong incentive to National Socialism.

The preceding Government of Daranyi had passed in April anti-Semitic legislation which severely restricted the economic and civil rights of the Jews. The law established professional chambers or syndicates in Hungary and decided that no syndicate should contain more than 20 per cent of Jews. In enterprises having over ten employees, Jews were not allowed to represent more than 20 per cent of the total number employed or of the salaries received. In a largely agrarian country like Hungary, the Jews, formerly unable to settle on the land, had built up most of the industry and commerce of the country and were represented in the professions by a proportion which varied between 25 and 50 per cent. The new government of Imredy continued this anti-Semitic policy, at the same time however trying to suppress the more radical sections of the National Socialist movement in Hungary. One of its leaders, Major Ferenc Szalasi, was sentenced to one month's imprisonment for subversive activities. The new Government endeavored to arrive at a compromise, accepting some of the Nazi methods and policies, but trying to preserve Hungarian independence. The Nazi agitation made itself especially felt in the schools, among the students and teachers, in the army and among the officials. The measures taken by the new Government aimed at eliminating this tendency in the schools and the army.

Question of Habsburg Restoration.

The absorption of Austria by the Reich and the growing strength of Germany were responsible for the waning influence of that group of Hungarian leaders who had favored the restoration of the Habsburgs to the throne of St. Stephen. Hungary was the only country of the former monarchies which had not become a republic after the World War. It had remained a Kingdom, although without a king. Admiral von Horthy became Regent of Hungary, at first with the expectation of filling the position only until the coronation of the king, but he now seems disposed to consider his status permanent. There is little prospect of the Kingdom finding its king. The occupation of Austria settled not only the question of the Habsburgs, but also the question of the Burgenland, that part of Hungary which had been ceded to Austria and which the new Great Germany was determined to keep.

Nazi Influence in Hungary.

The German campaign against Czechoslovakia in the summer of 1938 awakened a two-fold echo in Hungary. On the one hand the Hungarians hoped that the dismemberment of Czechoslovakia would put them in a position to reclaim territories which they had been obliged to cede to Czechoslovakia after the World War; on the other, they foresaw that the occupation of Czechoslovakia by Germany would spell the doom of Hungary's independence and would lead the way to Hungary's complete absorption within the orbit of Nazi influence. German aggressiveness in Central Europe increased the strength of the Hungarian Nazis. The Hungarian Government answered by again sentencing the Nazi leader, Major Szalasi, to imprisonment, this time for a term of three years. Thus Hungary's situation depended on the outcome of events in Czechoslovakia.

Although the grain harvest in Hungary was exceptionally good in 1938 and although the rearmament program increased employment, nevertheless the unemployment situation remained serious among middleclass youth, who continued to listen to promises of great opportunities in Hungary, similar to those which Nazi Germany seemed able to provide. Late in the summer it became apparent that although the Imredy Government had come into power to check the Nazification of Hungary, the drift under Imredy was more and more to the Right. The question in dispute between the Government and the more vehement Nazi opposition was no longer that of orderly progressive government versus authoritarianism, but of a more or less orderly authoritarianism as opposed to a revolutionary and riotous one. The economic life of the country was put under rigid control on Fascist lines; civil liberties were practically abolished.

Hungary and the Little Entente.

At the end of August Admiral von Horthy paid a visit to Chancellor Hitler. At the same time the states of the Little Entente held a conference in Bled, Yugoslavia. They announced in an official communique that the relations between Hungary and the three countries of the Little Entente, Czechoslovakia, Yugoslavia and Rumania, had developed during the last months in a more satisfactory way than during all preceding years and that there was real hope for a complete understanding between them. Negotiations which had been conducted throughout the year with Hungary had made it possible to reach an agreement resulting in a pledge by Hungary and the Little Entente members to refrain from the employment of force of any kind against one another, and in the recognition by the three Little Entente members of Hungary's equality in the matter of rearmament. Thus the long-standing conflict between the Little Entente and Hungary seemed to be approaching a favorable outcome. The states of the Little Entente had officially agreed to Hungary's full rearmament against the stipulations of the Peace Treaties. Hungary still refused, however, to conclude minority treaties with the three states of the Little Entente, because she hoped at that moment to be able, on account of German pressure upon Czechoslovakia, to get especially favorable terms from Czechoslovakia. The events of September abruptly brought to an end these promising beginnings for mutual understanding among the Danubian countries. (See also LITTLE ENTENTE.)

Cession of Territory by Czechoslovakia.

During the Czechoslovak crisis in September and October, the Hungarian Government moved cautiously. Whereas Poland seized on the Pact of Munich as the opportunity to present an ultimatum to Czechoslovakia and to insist upon the acceptance of all her demands, the Hungarians tried to negotiate with the Czechoslovaks, or rather, as all their claims were confined to the territory of Slovakia and Carpatho-Russia, which had formerly been part of Hungary, they conducted their negotiations with the new autonomous governments of Slovakia and of Carpatho-Russia. The Hungarian demands seemed unacceptable to the Slovaks and Carpatho-Russians. The negotiations were broken off several times and the atmosphere on the border was very tense for weeks. Finally Hungary and Czechoslovakia agreed to submit to the arbitration of Italy and Germany. On Nov. 2 the two foreign ministers, Count Ciano and Von Ribbentrop, met in Vienna. By their decision a large part of southern Slovakia and the fertile part of Carpatho-Russia, with several of the most important cities, were given to Hungary. At the beginning of November Admiral von Horthy, Prime Minister Bela Imredy and Foreign Minister Koloman de Kanya triumphantly entered the new territory. As Admiral von Horthy arrived on a great white charger, he was greeted by Premier Imredy with the words: 'Your Serene Highness, the great vision has materialized. Hadur, the war god of the Magyars, has today ridden in on a white steed and liberated the land of our forefathers.' (See CZECHOSLOVAKIA.)

Hungary did not receive full satisfaction of her claims. She had claimed the whole of Carpatho-Russia, and she had been supported in this claim by Italy and by Poland, but opposed by Germany. Whereas Italy quickly went over to the German point of view, Poland continued to press for the transfer of the whole territory to Hungary. She wished to establish a common frontier with Hungary and so to act as a check upon further German expansion eastward, especially against the transformation of the remainder of Carpatho-Russia into a nucleus for Pan-Ukrainian propaganda. In view of Germany's violent opposition to a common Polish-Hungarian frontier, the Polish-Hungarian aspirations could not be realized. This led to a short Cabinet crisis in Hungary, but Admiral von Horthy rejected the resignation of Imredy. Only Minister of Foreign Affairs Kanya resigned, on account of his old age, after having been six years in office. The result of the crisis was a definite shift towards the Right. Imredy himself now decided to accept Nazi adherents in his right-wing majority.

Complete Nazification of Hungary.

The German minority in Hungary, under the leadership of Dr. Franz Basch, now put forward demands for recognition of German minority rights and especially for the right to the Nazi ideology. The Minister of Agriculture, Count Michael Teleki, declared in the General Assembly of the landed aristocracy that the Government would proceed with an agrarian reform, but that this reform would be limited to lands in the hands of foreigners, of stockholding companies, and of Jews, and only in the last resort would it touch the lands of the aristocracy. The Hungarian National Socialist movement, the symbol of which is the Arrow and the Cross instead of the Swastika, inaugurated a new intense activity. At the end of December the Italian Foreign Minister Ciano visited Hungary. Although he came ostensibly only as a guest of a hunting party, his presence served the purpose of drawing Hungary definitely within the Rome-Berlin Axis and of coordinating Hungary's life completely with that of the two leading Fascist powers.

The complete Nazification of Hungary expressed itself for the time being in two directions. Internationally, Hungary was to leave the League of Nations; at the same time she was to join the anti-Communist Pact with Germany, Italy and Japan. It was expected that Czechoslovakia might take the same course. Thus a strong block consisting of Germany (including former Austria), Czechoslovakia, Hungary and Italy, would be formed which could be used for further advances in the sense of the anti-Communist Pact. Count Ciano also visited Yugoslavia and worked for a rapprochement between Hungary and Yugoslavia. It was expected that Yugoslovia would cede at the beginning of 1939 some small part of former Hungarian territory to Hungary, and perhaps get in exchange the Italian city of Zara in Dalmatia. Thus Yugoslavia would be drawn into a common front with the Fascist Powers and would probably also join the anti-Communist Pact. On the other hand, the talked-of rapprochement between Rumania and Hungary temporarily receded into the background. It became clear that after the incorporation of Czechoslovakia and Hungary, and probably Yugoslavia, in the German front, the next country on which the pressure of this front would be exercised would be Rumania. Hungary was expected to start a campaign for the return of territory held by Rumania, after having settled her territorial claims with Czechoslovakia and Yugoslavia. This would lead to an estrangement between Hungary and Poland, as Poland sees herself threatened similarly to Rumania by the forthcoming German Pan-Ukrainian propaganda and by the expected German drive eastward.

Anti-Semitic Campaign.

Internally, as another consequence of the inclusion of Hungary within the orbit of Nazi Germany, Hungary agreed to an intensification of the anti-Semitic campaign. After having, by a law in the spring of 1938, curtailed the economic rights of the Jews, a new law was proposed which was to exclude the Jews completely from all participation in Hungary's cultural life, from teaching, from journalism, from the theater, from music, from the movies, from the radio and from any other kind of cultural activity. At the same time the political rights of the Jews were practically suspended. Their participation in economic enterprises, outside the professions, was reduced to 9 per cent of the number of employers or employees in commerce, industry, banking and trade. Thus the rapid coordination of Hungary proceeded at a fast pace and opened a new chapter in her history.