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Hungary was spared much of World War II’s destruction until 1944 when it became a battleground between Russia and Germany, and half of Hungary’s industrial capacity was destroyed and 90% was damaged. Transportation was difficult because most of the rail lines and locomotives had been destroyed. What remained had either been taken by the Nazis back to Germany or seized as reparations by the Russians.
Prices were already rising in Hungary after the war because production capacity fell due to the destruction. With no tax base to rely upon, the Hungarian government decided to stimulate the economy by printing money. It loaned money to banks at low rates who then loaned the money to companies. The government hired workers directly, they provided loans to consumers, and they gave money to people. The government literally flooded the country with money to get the economy going again. Money may not have grown on trees, but it certainly flowed off the printing presses.
The banknotes would have the same picture on them, but be a different color. The Milliard Pengö was lavender, the Milliard Milpengö was blue and the Milliard Bilpengö was green, but except for the color, the notes looked alike. Someone who lived through the hyperinflation said they gave up on looking at the denominations and when someone bought something the cashier would say that their bread cost them two blues and a green. The Milliard Bilpengö, pictured here, is the highest denomination note ever printed since it was equal to a Billion Trillion Pengö. Unfortunately, at the end of the inflation, it was only worth about twelve cents USD.
The Forint replaced the Pengö on August 1, 1946 at the rate of 400,000 Quadrillion Pengö to the Forint; however, the stabilization worked, and prices remained relatively stable in Hungary into the 1960s. As for all the old Pengö, they were thrown away because they were worthless.
So did the inflation achieve the goal of stimulating production? The hyperinflation did raise Hungary’s industrial capacity, got the railroads moving again, and got much of the capital stock replaced. However, workers lost 80% of their wages and creditors were wiped out.
Politically, however, Hungary’s fate was sealed by the Communists, who eventually seized power and turned the Republic of Hungary into the People’s Republic of Hungary in 1949 with a new constitution modelled on that of the Soviet Union.
Global Financial Data is happy to announce that it has added over 1600 new exchange rate files to the GFDatabase, doubling the number of exchange rate files within the database.
All of the new files are cross exchange rates between currencies other than the United States Dollar with over 100 cross rates to the Euro, 70 cross rates to the British Pound, 50 to the Canadian Dollar, and so forth. Virtually all of the series have daily data that extend back to 1900. Many of the series have monthly data that extend back into the 1800s.
If you know the currency codes that are used by the ISO, you can put together the symbols for these currencies. The first three letters are the ISO currency code for the currency the data are in terms of, while the second group of three letters is how many currency units are needed to obtain the primary currency. As an example, CADEUR would tell you how many Euros are obtained for a Canadian Dollar. EURCAD would tell you how many Canadian Dollars are obtained for a Euro.
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