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Chapter 10
Economic and Social Assimilation
of the Refugees

One of the persistentiy repeated slogans of the post-revolutionary period, and indeed of the entire Horthy era, was: "Save the middle class,'' or more precisely, save the intelligentsia, the dispossessed, and unemployed official class. The long-brewing crisis in the life of the gentry and gentroid strata finally reached the crisis point; society was no longer capable of absorbing the vast surplus of educated people. But the gentry refused to recognize that as a class it had become superfluous and insisted on viewing itself as the "nation-sustaining historical class," entitled to special claims and special rights within the Hungarian state. During the 1920s and 1930s, scores of publicists, historians, sociologists, and politicians trumpeted the grievances of the intelligentsia and analyzed the causes of the gentry's demise.[1]

The fate of the middle classes was always a burning issue which no political leader dared to ignore lest he alienated precisely that class on which the counterrevolutionary edifice had been erected. It is not at all surprising. therefore, that Prime Minister Bethlen in his inaugural address to the National Assembly chose to single out the revitalization of the middle class as one of the prime tasks of his government. His speech both mirrored the attitude of the gentry and set the tone for the policies of the state for the next two decades.

In addition to the historical circumstances, Bethlen attributed the decline of Hungary to the decline of its middle class, which in his vocabulary meant the landed gentry. During the Bach era, he argued, " the Hungarian landed class was destroyed and the problem was that this class, instead of entrepreneurship, sought improvement of its life through office holding."[2] This economically weakened class was no longer capable of fulfilling its historical role of leading the nation, and, with it, the nation also declined. The main task of the new government, therefore, was to diversify the middle class by encouraging it to move into commerce and industry, thereby strengthening it economically. As Bethlen put it: " The government. therefore, must initiate a large-scale middle-class oriented politics. We will take the first step when, for those officials who are left out of state offices, and for those refugees who come home from territories torn away from us, we organize retraining courses and establish such an organization that through its own efforts will be capable of providing employment for these officlals."[3]

The problem, nevertheless, defied simplistic solutions. In fact, most government efforts to transform the intelligentsia into a productive part of society were doomed to failure. The economic chaos brought on by war, revolution, and partition of the country, forced a wide-scale reduction in economic activities everywhere in Hungary, with a corresponding reduction in employment. The sheer size of the unemployed or underemployed officials made the solution more difficult. Finally, and most importantly, its mentality and its training made the gentry unsuitable for few jobs other than government employment.[4]

[]Changing over from war to peacetime production in itself would have caused major disruptions in the economy, but, within Hungary's reduced borders, this changeover became a monumental task. The new frontiers sliced across old lines of communications, separated industries from raw materials and markets, and forced a sudden severance of the banking and currency ties with Austrian financial institutions. Simultaneously, in a somewhat unusual pattern, at the time when the country had a contracting, deflationary economy, it was also hit by a high rate of inflation. The consequences of all these factors was massive unemployment in industry and commerce, with some 300,000 workers at the end of 1919, not counting other groups, without jobs.[5]

The refugees could not find employment in private industry or commerce; they had to look to the state for providing them with jobs. We have already had occasion to discuss the rapid rise of the numbers of gentry officials in the Dual Monarchy. By 1914 Hungary's bureaucracy had far exceeded the needs of the country, according to some estimates, by threefold. In 1919, the territory and population of the country sharply contracted, Hungary lost about 64 percent of its previous territory; its population was reduced from about eighteen million to eight. Yet, the size of the group that had a claim to state employment was reduced only slightly. The reason for this phenomenon can be attributed only to the flight of the officials from the Successor States.

Reliable figures on the occupational breakdown of the refugees were never compiled. The Refugee Office's records are far from complete: they merely give some sketchy information about the occupations of 350,000 refugees, but as we have estimated, an additional 75,000 refugees must have escaped registration. According to the OMH Report, among 350,000 refugees, 104,804 were wage earners: 245,196, dependents. Occupationally they fell into the following categories:[6]


Table 1
Occupational Distribution of the Refugees Arriving
Between October 30, 1918 and June 1S, 1924

Public Employees




Municipal, village


State railroad




Industry and Commerce


Independent craftsmen and merchants


Workers in industry and commerce


Mine officials and workers




Pharmacists and doctors




Agriculture (landowners and workers)


Men of independent means


Pupils and university students


Housewives and other dependents


Occupation unknown


A closer examination of these figures gives us some indication of the occupations of the additional unrecorded 75,000 refugees. It appears that the more affluent individuals and their families who did not need the Refugee Office's aid, or those who readily assimilated into the economy of Hungary went unrecorded. Many were, most likely, officials of the higher ranks whose employment was never terminated. This is reflected in the sharp increase of officials in the higher categories. The number of classified persons (Functionnaires de classe) of the civil service, excluding state enterprises, actually increased between 1913 and 1924. But, whereas the number of individuals in the upper grades sharply increased, the lowest grades declined.[7] An additional sizable group of people were officers, clergymen, monks, nuns, and professionals. OMH figures are especially low in this last category: 280 doctors and pharmacists; and 341 lawyers. Yet, according to the 1930 census, there were in Hungary 2352 doctors, 841 pharmacists and chemists, and 1539 lawyers in public employment alone, who were born in the lost territories.[8] It is likely that many of these were refugees. It is also safe to assume that the actual number of refugee officials was at least 20-25 percent higher than indicated by the OMH Report. A comparison of the total number of state employees in 1910 in some specific categories and the reported number of refugees in 1921 falling into the same categories supports this statement and illustrates the strength of the refugee groups. (See Table 2). In short the problem was this: a state of eight million had to provide some form of livelihood to over 400,000, employment for well over 100,000, and educational opportunities for about 100,000. There were several possible solutions to the refugee problem, but none was completely satisfactory. Only revision of the terms of the Treaty of Trianon, peacefully or otherwise, would have been able to provide a solution that was totally acceptable to both the Hungarian state and the refugees. This possibility was never abandoned as an answer to the issue; it remained an axiom of Hungary's foreign policy throughout the Horthy era. But until the day of reunification of the country some, if only a temporary, alternate solution had to be found.

Table 2
State Employees in 1910 and Refugees in 1921[9]

Employment Categories

Total in 1910

Number of Refugees in 1921 from







State Officials








County Officials








Judges and Lawyers








Elementary Teachers








Burgher School Teachers








Secondary Teachers








Kindergarten Teachers








The first requirement was to limit the refugee influx and, then, possibly even to reduce the number of refugees by encouraging remigration. Bethlen, himself, for a brief period in 1919, contemplated such a move; his friend Count Miklós Bánffy actually retired to Transylvania. It was not realistic, however, to expect that the great majority of the refugees would even consider, or that the Successor States would permit, their return. Only a handful made such a move, mostly those who had politically compromised themselves in Hungary and some peasants who had fled from their homes in the first moment of panic.

If the government could not actually reduce the number of refugees, it felt compelled to tighten controls at least over entry permits. By the time effective measures were introduced, however, the refugee problem already had assumed enormous proportions. Only in the beginning of March 1921 were the screening procedures of potential refugees intensified. Entry permits were no longer issued automatically. They had to be granted only to reunite families, to students who went to Hungary to complete their education. and to those state officials whom the Hungarian government ordered to cross into Hungary. Some who were expelled by the new authorities were also allowed to enter, but entry was subject to approval of the Refugee Office. Restrictions notwithstanding, refugees continued to pour into the country: in March 1921, 3994; in April. 4498; in May 3441; in June. 3377; in July. 3814.[11]In July, therefore, the government decided to prohibit issuing entry permits, except in special cases. Only then did the number of new refugees begin to decline.

The government's motives in limiting the number of refugees was only partly economic. Fears were widespread that through large-scale emigration the Hungarian minorities would be greatly weakened, thereby exposing themselves to rapid assimilation. [12] Reduction of the number of Hungarians in the lost territories also weakened Hungary's case for the revision of the Treaty of Trianon. These fears led some officials to adopt a rather hostile attitude toward refugees. As we have seen, already in Szeged, signs of such resentment surfaced, Béla Kelemen, then minister of education in the cabinet of Gyula Károlyi, considered flight from the Successor States virtually a treasonous act.[13] The Szeged government urged all officials in the lost territories to take the oath of loyalty, if thereby they were able to retain their positions.

Resentment over the number of refugees increased as competition for offices in Hungary intensified. Even the various refugee organizations began to attack those who wished to follow them into Hungary. The Bocskay Alliance, a Transylvanian refugee organization, repeatedly called upon all Hungarians to remain in Transylvania. They warned their Székely brothers that Romania's plan was to rob Transylvania of its Hungarian character by forcing the Hungarian intelligentsia, the official class, to emigrate to Hungary, thereby depriving the remaining Hungarian population of their natural leaders. "For this reason," according to the Bocskay Alliance, "nobody may consider it desirable or permissible for Hungarians to emigrate from Transylvania. On the contrary, out of patriotic duty we must do everything possible to assure that those who were already forced by hostile circumstances to depart temporarily should return as soon as possible."[4]

Again, according to the alliance, it was an error to believe that the only patriotic act was to leave Romania, what was far more patriotic and far more admirable was to remain, suffer, and struggle. Thus the first of the "Transylvanian's Ten Commandments" was: "Do not emigrate from Transylvania! . . . And if you left . . . immediately return, because Transylvania can be lost only if the number of Hungarians diminished. The fatherland is not made up of mountains, rivers, and meadows, but by those who live in it, the members of the nation, the people. Do not forget the truth that no one can take Transylvania from us; only we can lose it through our sins and errors."[15]

[]Each refugee, in fact, had to justify his departure and prove that it was the only course open to him. The refugee press was constantly forced to defend compatriots by frequent, often grossly exaggerated reports of continuing terror in the lost territories against the Hungarian population. At other times, through sentimental articles, it tried to arouse public sympathy for the mental anguish of the refugees.[16]

The suggestion was also made that if all other solutions for refugee unemployment problem failed, the burden on society might be lightened through encouragement of overseas emigration. A few individuals, indeed, departed, settling mostly in Canada and the United States. A number of refugee officers and soldiers from Slovakia and Transylvania left the country to join the French Foreign Legion. Generally, the suggestion was bitterly resented; it was tantamount to admitting that Hungary no longer had a place for the gentry officials; the gentry had become superfluous. The radical right, in fact, advocated a diametrically opposite population policy. They argued that the tiny nation surrounded by enemies could not afford to lose its most valuable human material. The nation must, therefore, do everything in its power to encourage the return to Hungary of the hundreds of thousands who had emigrated during previous decades.

The only alternative remaining was either to retrain the refugees for employment in the private sector of the economy or to absorb them in an enlarged state bureaucracy. The first option enjoyed the strong support of the government, especially after Bethlen took office. As early as 1920, organizations such as MOVE made some efforts in that direction. MOVE established some purchasing and handicraft cooperatives to make available to members and to impoverished officials and refugees food and other items of necessity at a reduced cost.[17] It also organized secretarial schools for the wives and daughters Of the intelligentsia. Similarly, but on a much larger scale, the National Refugee Office, too, attempted to retrain and find employment for the refugees. It even offered to support the refugees during their retraining. OMH's activities, therefore, fell into two categories. One, it established enterprises designed to provide temporary employment and aid to the refugees; two, it organized retraining courses. Initially, it was hoped that some of the refugee corporations might become permanent, thereby assuring the economic independence of its employees. The Refugee Office viewed direct economic aid as only temporary, since the "govering principle was . . . to assimilate the great masses of refugees into the population of the country and thereby end their refugee status.... To search for job opportunities was far more fruitful than direct aid."[ 18] The feeding of the refugees was handled by special refugee-owned and -operated cafeterias, where the refugees were served decent food at a reduced price or even free of charge.

Some employment was also found for a number of persons in the Refugee Industrial and Commercial Shop. Its largest division, the shoe and clothing repair shop, employed 77 workers, but the "mass production" section had only 15 and the carpenter shop 6 workers.[19] It was a rather amateurish enterprise. Not surprisingly, therefore, in August 1922, it folded because of financial problems, but, perhaps, more important, because enthusiasm for these kinds of occupations was lacking among the refugees.

OMH originally planned to organize 76 retraining courses in 23 different subject areas. For lack of interest only 16 courses were held, mostly in banking and general commerce. Courses in agronomy, wine making, bee keeping, fruit and vegetable growing, as well as in homecraft industries had to be cancelled for want of students. Only 1034 individuals signed up to take some of these courses, out of which 576 were ex-members of the officers corps, mostly reserve officers. The remainder were former officials. Of course, most of the reserve officers themselves had been members of the state bureaucracy before the war. The dropout rate in all cases was extremely high, only about half of those who began these courses actually graduated.[20] The general absence of enthusiasm among the refugees for retraining can be attributed only to their gentry mentality. Conscious of their noble background they were reluctant to accept the decline in social status by leaving state employment for industry and commerce.

Jews played a decisive role in Hungary's economic life. For example. excluding stock companies, Jews owned 40.5 percent of the large- and medium-sized industrial firms. In some other categories. the percentage of Jews was equally high: 39 percent of the white-collar workers employed in industry; 53.8 percent of the self-employed merchants; 46.5 percent of the white-collar workers in commerce and banking.[21 ]Thus wherever a refugee turned to find employment in commerce or industry he found himself competing. usually unsuccessfully, with Jews in enterprises owned by Jews. Not surprisingly, most refugees shied away from these occupations and gave vent to their resentments by demanding that the government take strong measures to Christianize Hungary's economic life. Helplessly, they turned again to the state, expecting a position within the state administration.

The gentry traditionally avoided the free professions, except the practice of law. It became customary among the lesser nobility to look toward the county or to the state for employment. They preferred fixed-salaried official positions which offered the security of reasonable pensions and built-in pay raises. According to Antal Balla, the gentry's "centrist political and social views found their manifestations mostly in those tendencies, which attempted to organize nearly all life functions of the collective around the state. But more significantly, [the gentry] expected even the shaping of private lives from the government. From this attitude issues that constant shoving and pushing for the so-called pensioned positions and the neglect of the free professions."[22] To this tradition, the refugee gentry remained faithful.

Bethlen, himself, realized that this was an ossified group, lacking initiative and vitality, and that, owing to their excessive dependence on the state, the gentry represented an intolerable burden on the state treasury. When he called for revitalization of the intelligentsia through retraining, he, in fact, asked them to abandon their old values and old identity as a separate privileged elite. This the gentry was incapable of doing and, therefore, opposed all efforts to remove them from state offices. In the end, the state had to yield and to absorb most of the refugee officials.

The result was that the number of state employees failed to decline in proportion to the territorial or population losses of the country. According to the 1914-15 budget, the total number of state employees had been 331,920; during the 1921-22 fiscal year it was 209,083. The reduction, however, was unevenly distributed in the various categories of employment. As can be seen in Table 3, the decline was significant only in the category of workers; in the clerk and official categories there was either no change or an actual increase.

That the increase was not greater was due largely to the wholesale dismissal of those state employees who were considered to be politically unreliable. In the eyes of the counterrevolutionary government anyone

Table 3
Number of State Employees in 1914-15 and in 1921-22[23]

Employment category

1914 15
State officials and clerks
69 765
Junior officers and servants
State workers and other

who continued to serve under the Károlyi regime, and especially those who served under the Hungarian Soviet Republic, were immediately suspected of leftist sympathies. It was in the interest of the refugees that this purge of the state bureaucracy should be as widespread as possible; hence, they fully supported any government effort in this direction. The persecution of the liberal- and left-leaning state employees began almost immediately after the defeat of the Hungarian Soviet regime. In August 1919, the Friedrich government ordered the dismissal of all those who had obtained their employment between October 31, 1918 and August 1919.[24] Almost at the same moment, the Szeged government was issuing its instruction to Prónay and the leaders of the other officers, detachments to remove all suspicious officials and to restore to their posts the employees of the old regime. Every public institution was carefully combed in search of politically dangerous elements -- the courts, the prison administrations, universities, schools, state, county, and city offices, the state railroad, the post office, even the sanitation department. Disciplinary procedures were initiated against thousands of individuals on the flimsiest of charges, and the slightest amount of compromising evidence was sufficient cause for dismissal. It was sufficient to have accepted the slightest promotion during the Soviet Republic, to have dropped a few unguarded words, to have recognized the dictatorship of the proletariat, to have carried out an order, or to be maliciously informed against by a personal enemy, and the life of an official was destroyed; he was branded for decades. The state could afford to adopt an uncompromising attitude toward the suspected officials because for every dismissed official, judge, or teacher, several refugees were waiting in the wings, eager to take their places.

The number of dismissals, however, was still not sufficient to provide employment for all the refugees. The state bureaucracy, itself, had to be expanded if accommodations for the refugees were to be found. This forced the government to adopt a contradictory financial policy. Its prime financial objectives were to reduce expenditures, halt run-away inflation, stabilize the currency, open the country for foreign investment: in all, to stimulate the economic recovery of the country. Only for political reasons did the state assume the refugee burden, increasing its financial obligations at the time when the country was on the verge of bankruptcy. According to the projected 1920- 21 budget, for example. the state deficit was to run nearly fifty percent, 20.2-billion crowns of expenditures against 1().t billion in revenues.[25]

[]It fell on Beth]en's shoulders to tackle the delicate and politically dangerous question of reduction of the number of state employees to a reasonable size. He had no other choice if Hungary was to recover economically. The reduction of the state administrative machinery was one of the prime conditions under which Hungary was allowed to float its reconstruction loan in the foreign markets under the guarantee of the League of Nations.

The first step in this direction was taken during 1922, when the so-called B-List was established. According to Ottó Szabolcs, in June 1922, 11,126 state employees were placed on the list, that is, their employment was terminated and they were either pensioned off, or received a lump sum in severance pay. Out of these, 4377 were office holders, 3616 educators, and 2918 clerks and other office employees.

Table 4
B-Listed State Employees in June 1922[ 26]


Office Servants
Of these Refugees
Prime Minister








State R.R


Postal Service

Postal Saving



State Steel Co























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