And the answer: Hungary.
Facing economic pressure from Nazi Germany and Russia’s Red Army, the Kingdom of Hungary's prices doubled every 15 hours between 1945 and 1946. For example, if an item cost 379 pengős in September 1945, the price changed to over 1 trillion pengős by July 1946. Hungary would end up switching its currency the following month to the forint, which is the currency used today.
Up until 1944, Hungary managed to avoid the chaos and destruction brought on by the second World War. Yet when the fight shifted close to home with the onset of the Budapest Offensive, up to half of Hungary’s industrial capacity—and over 80% of its capital city—was destroyed. To make matters worse, what remained of Budapest was promptly seized by Nazi Germany or claimed as reparations by Russia. By the time 1945 rolled around, the Kingdom of Hungary was not in great shape.
Prices were already on the rise by the end of World War II. Due to the reduced availability of consumer goods, the cost of living more than doubled in Hungary between 1943-44. In fact, by April 1945, prices had increased about fourteen and a half times since 1944. Thus, by the time a new government could form in Hungary, hyperinflation could not be ignored.
The first impulse of the Hungarian government was, believe it or not, to print more money. Though it may seem antithetical to the problem of hyperinflation, the Hungarian government decided to print money in order to stimulate the economy. As money flowed to the hands of consumers, it seemed as though it might have worked. Yet, as prices shot up—reaching 150,000% increases at its peak—Hungary’s fight to stabilize their economy had just begun.
Ultimately, 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. For Hungary, the relative stability which arrived in 1946 came at a steep price.
Learn more about the history of Hungary’s hyperinflation here.
