3. The Interwar Period

Edvard Beneš was well aware of the dangers of nationalism after World War I, when he said: “The war caused the nationalism of all the different peoples there to expand to such a degree that any attempt to suppress it would lead to another terrible war .” Berman (1995, pp. 619-620).

After World War I, John Maynard Keynes got involved in a discussion about the future of Central Europe. Keynes has seen in Central European nationalist endeavors—representing for him a destructive energy—an enemy of post-war reconstruction. Besides, he has considered the potential connection between nationalists and the anti-market forces of societal and economic planning. He presented these ideas in the Economic Consequences of Peace, which criticized the Treaty of Versailles, arguing that Europe’s rebuilding after World War I without Germany was an impossibility. The good times in Central Europe were in Keynes’ eyes, connected with prosperous Germany. Keynes understood that Europe’s economy was highly interdependent, and weakening Germany could also make the European continent economically weaker with further political repercussions, another war, and revolutions. That is why he proposed revising of the Treaty, especially reducing the reparations demands and moderation of coal and iron deliveries. Berman (1995). 

The additional difficulty was that the leading sector of the Hungarian economy, agriculture, was before World War I, to no small extent oriented toward the Austrian and Czech markets. Thanks to the Monarchy’s high import tariffs, the Hungarian agricultural producers faced no real competition outside the Monarchy. Berend and Ránki (1972).

“In 1922, Hlinka wrote an anti-Czechoslovak manifesto whose English title captures its hysterical tone: ‘A Country Doomed to Death, A Nation in her Last Agonies Implores the Civilized World for Help.’” Maxwell (2009, p. 176). Czechoslovak leaders attributed Slovak-Czech tensions to Slovak economic backwardness; they believed that the Slovak society’s economic development and modernization would erase those tensions. Maxwell (2009, p.184).

For Hungary, there were additional reparation costs to be paid. “The prospect of having to pay reparations increased already existing uncertainties, made it almost impossible to balance the budget of the respective states, and to obtain foreign financial help to curb the inflation.” Ránki (1983a, pp. 476-477).

Berend and Ránki (1972, p. 121) show the effect of hyperinflation by providing data on the value of the Hungarian crown vis-à-vis the Swiss franc. The value of hundred Hungarian crowns in Swiss franc was in June 1914, 104.28; in March 1919, 22.46; in December 1919, 3.20; in December 1920, 1.24; in December 1921, 0.76; in December 1922, 0.23; in December 1923, 0.03; and in May 1924, 0.0065. The tragic destiny of the crown ended by 1927 when the pengő replaced it. Teichova (1983, p. 537) provides data on the adequate gold cover of selected note-issuing banks. Thus, comparing July 22, 1914, with September 23, 1919, the Austro-Hungarian Bank had 58% cover before the War and 0.6% after the War. The data for Reichsbank was 71.8% and 3.9%, for Bank of France 69.4% and 10.0%, and the Bank of England 137% and 108%. On the situation in Poland, see Landau (1968) and Landau (1983).

When the War ended, the notes issued by the Austro-Hungarian Bank were to finance government expenditures, and the Bank was discounting the war loans near par, even if the market rate was well below. Czechs initially got a membership on the Board of this Bank but pulled out. The Czechoslovak National Committee in early November 1918 prohibited branches of the Austro-Hungarian Bank on the territory of Czechoslovakia to accept war loan securities; also, taxes could not be paid by war loans by the decision of the Committee. Consequently, these securities moved to Austria, Hungary, and other places and pushed the inflation upward. Teichova (1983, p. 544).

In the pre-World War I period, German or Hungarian speaking universities made it more difficult for a nationally oriented Czech and Polish economists to be awarded the university professorship. For instance, Krameš (2016) mentions the story of František Ladislav Rieger and Maximilian Wellner in Prague in the 1860s. Rieger, known as the Czech Bastiat, was a Czech journalist and writer. Rieger and Wellner were Czech nationals who felt strongly about their national identity and were denied university positions. The situation in Prague changed once in 1882, the Austrian government re-established the Karl-Ferdinand Prague University as a bilingual twin university, that is, a Czech as well as a German university. From 1882 almost every unit of Prague University was divided into its separate Czech and German language section. Havránek (1997). This division also continued in the period 1918–1939. In 1939 the Nazi occupation forces closed Czech universities, and from May 1945, German education at Prague University terminated.

Kowalik (2003), Amsden (2018), Van Duin (2018), Dellheim and Wolf eds. (CitationRef CitationID="CR16">2016</CitationRef>), Kowalik (1987). We include Rosa Luxemburg into this period, as it was the interwar period in which her influence was dominant in internal socialist discussion in the Central European lands concerning their vision of socialism. For a similar reason, we also mention in the text Mikhail Tugan-Baranovsky, who was of Ukrainian-Tartar origin and had written in Russian but impacted Central European socialist thought. We thank a reviewer for these suggestions.

Swianiewicz (2008).

Šiková (2017), Drápela (2007), Bažantová (2003), Holman (2003).

Rašín was critical to the concept of Mitteleuropa, which was emerging into discourse at that time. He, in Národní Listy, on October 21, 1917, had published the following: “Herr Naumann may for a time cease roaming over Central Europe, public agitation for ‘Mitteleuropa’ may diminish, but in reality no new idea, no program has been offered which would make amends for centuries of oppression. … All the pronouncements of the Austrian and Austro-Hungarian governments have been designed to conceal the real intentions.” Meyer (1955, p. 189). A similar position was of Masaryk, who also rejected Naumann’s framework and saw the concept of Central Europe as a German domination tool. Trencsényi (2017, p. 169). During World War I, Tomáš Garrigue Masaryk (1850–1937) and Robert Seton-Watson (1879–1951) established a journal in London titled a ‘New Europe’ to counteract the influence of the concept of Mitteleuropa.

Rašín was part of the influential Group of Five, consisting of representatives of essential democratic parties. This group included Antonín. Švehla from the Agrarians, Rudolf Bechyně from Social Democrats, Jiří Stříbrný from National Socialists, Jan Šrámek from People’s Party, and Rašín from National Democrats.

Lóránt Hegedüs (1872-1943) studied law in Budapest and graduated in 1895, sub auspiciis regis, awarded to those students who received the best marks for all exams. He continued in Berlin studying finance, where one of his teachers was Adolph Wagner. He also studied sociology under Herbert Spencer in London. From 1898 Hegedüs was the youngest member of Parliament. In the first ten years of the twentieth century, he edited Hungarian economic journal Közgazdasági Szemle and from 1905, he was Director of the Association of Hungarian Industrialist, and from 1913 Director of Hungarian Commercial Bank. In 1919 he was arrested by the revolutionary socialist government. He was a member of the Hungarian delegation at the Peace Treaty negotiations in Paris. From December 16, 1920, until September 27, 1921, he was Minister of Finance. Hegedüs’ stabilization plan did not succeed; he suffered from it personally and spent years hospitalized after a nervous-breakdown. Rab (2017), and https://​novekedes.​hu/​elemzesek/​arckepek-a-magyar-panteonbol-hegedus-lorant-a-reneszansz-penzugyminiszter​-5ce0665011324, accessed 22 April 2020.

Doležalová (2018), Koderová (2011), Paulík (2004), Vencovský (1990), Vencovský (1997), Vencovský (2000), Bažantová (2016).

A student of Engliš, František Vencovský, tried to rehabilitate Engliš already in the late 1960s, Koderová (2011, p. 82). Vencovský succeeded after the fall of socialism when Engliš’ work became again discussed. A university was established in Brno and named after Karel Engliš. In the 1990s, Vencovský also published manuscripts of Engliš, and have published studies on the work of Engliš, for example, Vencovský (1990).

This citation follows Vencovský (1990, p. 902); the original work of Engliš is Hospodářské soustavy (Economic Systems), Prague Všehrd 1946, page 148.

This does not mean that we consider Karel Engliš a Keynesian, clearly not, as during his career, he faced disputes with important Keynesians as Josef Macek and Jaroslav Nebesář (1882-1958). Engliš was a strong supporter of liberal economic policies, possibly, with some state interventions.

For example, Bilimovich (1931) and Bilimovich (1933) did not agree with the position taken by Engliš that the main difference between natural sciences and economics lies in the fact that the former belongs to the causal sciences while economics belongs to the teleological sciences. Bilimovich’s critical review of the work of Engliš sparked a polemic between them. Bilimovich argued that despite the teleological character of economic activities, it might not be accurate to claim that economics is not a causal science. Sušjan (2010, p. 211), Engliš (1932), and Engliš (1933).

Tkáč (2005), Leková (2008), Hlavatý (2003), Horváth (2002), Horváth (2011).

Németh (2010), Jeřábek (2011), Piahanau (2018), Zsugyel (2009), http://​www.​hantosprize.​org/​biography.​htm, accessed 14 October 2019. We quote Németh (2010) from the English translation of his article available on the internet.

In the 1920s, Hantos accepted an active role in elaborating on the economic program of the Pan-European Union by Coudenhove-Kalergi. He submitted a draft recommendation to the first Pan-European Congress in Vienna in October 1926, concerning the importance of transportation. Németh (2010, p. 3, we follow the English translation of this paper). Trencsényi (2017, p. 171) writes that Hantos’ efforts to reconstruct economic cooperation among countries of Central Europe and beyond “was a step toward Paneuropa that is a broader framework of economic and political integration.”

Spirit of Hantos is somehow alive in the Central Europe Foundation, which values those who worked to improve Central European nations’ cooperation. Jeřábek (2011, pp. 130-131) considers Hantos a forerunner of George Soros with his emphasis on education in the Central European region and the creation of educational institutions and cooperation. The Central European Foundation, which keeps alive the spirit of Hantos, awarded its prize to different intellectuals, including George Soros.

Hild (2007), and various.

Sipos (1990), Mátyás (1998), Madarász (1980/2000), Sipos (2005). His family originated from Prussia and Silesia. His father, August (Ágost) Heller (1843-1902), whose mother tongue was German, became a member of the Hungarian Academy of Sciences in 1893. His work Geschichte der Physik von Aristoteles bis auf die neuste Zeit, Stuttgart 1882-1884, was reprinted in 1965 in Wiesbaden by Sändig Verlag, and in 2013 in Hamburg by Severus Verlag. His younger brother Erik Heller (1880-1958) was a lawyer and a member of the Hungarian Academy of Sciences from 1934. A relative from his mother’s side is Pál Bolberitz (1941-), an eminent Hungarian professor of theology.