Magyar külpolitika, 1930 (11. évfolyam, 1-7. szám)

1930 / 3. szám - Hungary and the International money market

20 HUNGÁRIA LLOYD August 1930 Hungary and the International money markét. By Dr. Charles de Kresz Unti] the niiddle of the nineteenth century Bungary was a prominently agricultüral coutitry. Owing to this I'.-H-I banking in Hungary developped later than in Western countries and the accumulation of capital in the country was insufficient. The first Financial establishment, the First National Savingsbank Corporation of Pest, was founded in 1839, the Hungárián Commercial Bank of Pesl in 1841. In the sixties of the century followed the foundation of other banks (of the Hungárián General Creditbank in 1867, and of the Hungárián Discounl and Exchange Bank in 1869), whicb in the course of the following half century became the leading banks of Hungary. Owing to the developmeht of banking and especially owing to the prosperous economic condition of the country, the accumulation of capital was aceeleratedj il was, however, nol sufficienl to meet the deinands of agriculture, industry and commerce which developped in a quite unusual way during the fifty years preeeding the world war. Especially longterm loans were ueeded for agricultüral improvements. The credit of Hungary and of the leading Hungárián banks was established on the foreign money raarkets of Europe and there was no difficulty to raise amounts necessary for of agricultüral and industrial purposes. Then came the world war, followed by revolutions, Bolshevism, Koumanian occupation, dismemberment of the country, and in consequence of all these facts, inflation and depreciation of the corrency to 1/15.000 of its originál value. The liquid capital of the country raelted away in quite an unexpected way. Accumulation of new capital was, of course, quite impossible in those times. The melting away of capital can best be shown by the fact that the deposits with the Royal Hungárián Postai Savingsbank and the 13 leading banking establishments of the country feli from 1,858 millión pengő on December 31, 1913, to only 88,8 millión pengő, or 0,4 per cent on june 30, 1924. With the aid of the League of íNations the financial reconstruction of the country took place in 1924, the equilibrium of the State budget was reestablished the curréncy stabilized, and the new monetary unit, the pengő (whose parity to the pound is. I £ — 27,8251 pengő) was introduced. Speaking about this financial reconstruction, it is impossible not to mention the great support given to the country by Greal Britain and the Bank of England, for which we always feel a great indebtedness. A new period in the life of Hungary succeeded. As soon as the confidence in the stability of the currency was restored, the accumulation of capital rebegan, the deposits with the Royal Hungárián Postai Savingsbank and the 13 leading banking establishments which, as we have seen, had shrunk to 0,4 per cent of their pre-war amount, began to rise rapidly, and increased on June 30, 1930 to 1,434,2 millión pengő, or 64,5 per cent of the amount deposited with the same establishments before the world war. of capital. This accumulation, however, cannot be sufficient to mect the requiremeHts of agriculture, industry and commerce of the country. The country needed capital, the more as during the period of over ten years from the outbreak of war until the stabilisation of the currency no constructive improvements have been made. It is obvious that after the financial reconstruction capital was ürgén tly needed for the economic development of the country. During the years from 1925 to 1928 there was a very considerable inflow of foreign capital to Hungary, and especially long-term capital, found its way to the country. The totál of longterm loans issued on foreign markets, from 1924 to the end of 1928, amounted to 1,152.000.000 pengő. Owing to the conditions of the international money markel the amount of long-term capital which came into Hungary in 1929 was considerably lower than in previous years. Offers in short term money were abundant during the whole year, the leading banks, however, availing themselves of it but to a limited extent. In order to develop agriculture and industry, the country needs new capital, the more so as the accumulation of capital is not sufficient now either, as it was not sufficient in pre-war times. It is to be expected that with the aid of the leading- Hungárián banks the country will obtain the capital which it needs and for which it can giVe perfect security. These figures show sufficiently the consider- A. Berzeviczy welcomes Jastinian Serfidy, Prince-Primate able development of deposits and the accumulation 0f Hungary.