Economy of Hungary in Dualism

ECONOMY OF HUNGARY IN DUALISM

Compromise 1867: constitutional monarchy with two centers –Bp. and Vienna but one ruler
      - dual system between Austria and Hungary: 1867-1918
      - Gyula Andrássy, from 1875 Kálmán Tisza were prime ministers , Francis Joseph crowned Hungarian king (dualism: a system with two centers, common affairs (military, financial, foreign—common ministries where 60-60 delegates were sent from each independent legislations)
      - Transylvania annexed
      - common customs area, common currency, free flow of capital and work force ( economic union the economic agreement had to be renewed (újratárgyal) every 10 years
      - affording common affairs: Hungary 30%, Austria 70 %
      - Hungary was not entirely independent however had better prospects to carry out national issues; economic development
    - Creation of a protectionist policy (védvám)-covering both agriculture and industry
        (see in book 4. pg. 235- chart)


Before the Compromise: Hungary was an agricultural country (80% lived from agriculture, only 10% from industry), lack of capital in the country.

The capitalist transformation (tőkés átalakulás) started in the reform age, through the Bach era and after the compromise it greatly increased. In 1873 an overproduction crisis came, but the boom started again in the 1880s. The largest problem before the compromise was the lack of capital. After 1867 it changed due to the stabilized political situation, foreign capital started to flow in. (state loans)
(Foreign capital:   - in the development of infrastructure (railway, investments of urbanization)
                      - in the modernization of agriculture-through loans
                                - in establishing large banks
(The basis of the economic welfare and improvement was the evolution of a credit system – many banks established e.g. Magyar Földhitelintézet, Magyar Általános Hitelbank –MÁH. These banks bought business shares therefore firms...