6 - Sneaking Nationalization

Summary

This chapter challenges the conventional chronology of the interwar era that distinguishes the conservative 1920s, when policy makers were preoccupied with the restoration of the pre-First World War liberal economic order, and the revolutionary 1930s, when they reacted to the global economic and financial crisis by pursuing isolationism, state interventionism, and trade blocs. Taking the example of Hungary’s monetary management in the 1920s, it shows that there was more continuity between the two decades than is usually recognized. Due to the dislocations arising in the wake of the war and subsequent peace arrangements, the fragmentation of empires into small ethnonationalist states, and revolutionary and counterrevolutionary political and social upheavals, institutional and policy adjustments in the direction of what was to become mainstream in the 1930s were already budding in the 1920s. The chapter provides empirical evidence of this sneaking nationalization in Hungary’s monetary management, manifest in a combination of adherence to the rules of the gold standard game, on the one hand, and capital-flow neutralization, on the other, depending on what was appropriate to stimulate or sustain domestic economic activity.