Sometimes, seeing how rough the other guy has it can help you feel better. Hungarians have had it rough in the past.
There was Habsburg rule and Germanization, then the post-WW1 treaty of Trianon that substantially trimmed the Kingdom of Hungary and eliminated their sea access via Fiume (modern day Rijeka, Croatia). There was also a brief fascist era followed by decades of communism. In the transition period between these last two difficult historical periods, a monetary economic event took place that is rarely discussed having been overshadowed by the consequences of the end of World War 2.
If someone asked you which country has experienced the worst inflation to their currency, you might point to early 1920s Germany or 2000s Zimbabwe. Both would be good guesses, but they would be incorrect. Today, you could say Argentina and Iran are dealing with catastrophic currency devaluation. While each has struggled of late, their challenges are thankfully far from historic.
The correct country to name when asked for the worst victim of currency hyperinflation in recorded history would be Hungary.
Hungary’s Pengő (a currency named after the ringing sound coinage makes clinking against metal surfaces. Think “ping” but pronounce “peng” with a fitting oo at the end) was ironically introduced as part of an interwar currency stabilization program.
Its predecessor, the Hungarian Korona (crown in Hungarian), endured rapid inflation in 1923 at the same time Weimar Germany began to buckle financially and politically under the strain of hyper inflation. While the Korona was not inflating as outrageously as Germany’s Papiermark, it saw 98% inflation in that same year.
Hungary was reeling from the post WW1 reduction in their territory and therefore economic power, and poorly conceived banking law changes caused distrust in the traditional banking system. Put plainly, bank users were essentially fined 20% for saving. Naturally, this caused a bank run. Enough former bank users pulled their money that the sudden influx of liquid currency into the economy began to squeeze the Korona’s value.
Attempts to stabilize Hungary’s economy in early 1927 saw the Korona removed from circulation and replaced with the Pengő. This new currency’s roughly 20 year lifespan as the Magyar’s legal tender began without much to note. This quiet was beginning was far from predictive of the country’s monetary direction. Its eventual inflation rates would make citizens long for the days of near triple digit annual inflation of the Korona.
The Pengő was not just moderately stable early on. It faired relatively well for most of its lifespan. Then, once the late stages of WW2 arrived, its historic moment would begin to take shape.The current currency in Hungary, the forint, has a roughly 342 Forint to US dollar exchange rate. This may seem large but the Pengő’s grew preposterously outsized by its twilight in mid 1946. The way to calculate it annually was to multiple 4.6 x 10 to the 29th power. Good luck finding a calculator (even an internet one) with the screen space to present the resulting number in its entirety.
During the late stages of Pengő hyperinflation in June of 1946, you would consistently see prices double approximately every 15 hours. If you ran a restaurant or cafe, by the time you closed up shop at night, your morning’s prices would be a distant memory. Writing out menus with firm prices would have been comically absurd, let alone impossible if you wanted to stay afloat.
Being able to adjust prices on the fly might be difficult for restaurant owners, shop keepers, and landlords, but the paper currency struggled as much as its users to keep up with the pengő’s ever inflating value. Greater and greater bill notes needed to be introduced and at rapid succession. This lasted until a 100 quintillion pengő note was issued.
By the time the fast-faltering pengő’s death knell drew near, the total value of its entire printed circulation was worth approximately 1/1,000 of a US cent. Out with a whimper. In with the Forint (still Hungary’s currency).
The forint may not be strong compared to the dollar or Euro but it is not set to draw pengő comparisons any time soon, God willing.
For context, it is worth comparing the Pengő’s epic collapse to Weimar Germany’s infamous 1923 inflation. The Weimar Papiermark’s worst month occurred in November of that year during which it saw an inflation rate of 29,525%. This is roughly 29.5 x 10 to the 4th power. The Pengő’s worst month, June of ‘46 saw a one-month increase of 41.9 x 10 to the 15th power. 10 to the 4th power is 10,000, 10 to the 15th is 1 quadrillion…
There is no doubt that the results of inflation so out of control was functionally similar but the severity of the Pengő’s weakening handily “beats” the Papiermarkt mathematically. It may not be as noteworthy, but its place in history has not been usurped for nearly 80 years (and hopefully never will).
There are few forces more destabilizing and demoralizing to a country than hyperinflation. Moderate inflation can cause political uproars and election defeats for incumbents. Hyperinflation causes economic, moral, and societal decay that proceeds affording a with rate of increase. It can ravage a nation and a national psyche in ways wars cannot.
Enough math, enough remembrance of economic calamities past. Let’s talk about what really matters, namely the author of this piece.
While morbid, the Pengő’s hockey stick ride north on the Y axis of the inflation chart in the mid 40s is long past us. It felt ok to find a relic of that one-of-a-kind monetary mania.I had read about the Pengő, heard about it too. I was desperate to see one in person.
For months I had looked through antique dealers’ offerings in both Buda and Pest in search of just one elusive pengő. I found modern currency in various styles and denominations. But, fanning through stacks of encased forints, I failed to find any of those once worthless bills I wanted to hold.
As I wrapped up my stay in Hungary, I decided to cast one last glimpse at Pest from across the Danube. Just above the mouth of the tunnel that Széchenyi bridge leads to once one completes a partial (or full) spin around the circle next to Clark Adam square, I knew amazing views were to be found.
Only a few steep pseudo-flights of the King’s Stairs needed to be scaled and I’d arrive at an unbeatable lookout I had first stumbled upon during an aimless stroll.
As I neared the halfway point of my ascent, I noticed an older gentleman with a small table before him. “Jó napot.” “Jó napot!” I took in the spread of currency that lay before him. “Pengő!” He smiled at my surprise. As luck had it, the aged uram had both billion and hundred million Pengő notes. I had to take one of each.
Old man. He’d been collecting for years he said. He was thrilled with my interest, astonished with my limited Hungarian (most visitors struggle to learn hello and I’d exceeded the low bar). He was a self-proclaimed “hardcore bachelor” (he smiled when he said that but there was a sadness behind the claim) and a contributor to encyclopedias. For over a hundred years he and his ancestors had lived just down the way and enjoyed a flat with a balcony view of the stunning Hungarian parliament. So he said. Unlike the pengős that lay before me, I took his claims at face value.
László, that was his name. Old László had plenty of pengős and was proud to show them off. He also had in the array coinage from Bavaria, Czechoslovakia, and Austria-Hungary. Currency that could buy you nothing, save for the value of stories that lie behind owning legal tender from lands that no longer exist. I was inclined to buy it all, but I held back so as not to be greedy with his limited collection. I was satisfied enough in attaining victory in my lengthy path toward finding a pengő to purchase.
We chatted, talked New York, talked writing. Learned about the fiancée who ran off on him in his youth. We enjoyed the chat, exchanged names but no means of contact. Then we let each other carry on. I to the bridge lookout, he to serve more curious customers and tire kickers (coin flippers?).
My prized find cost me just €4 (I choose a one trillion pengő note and one hundred billion pengő bill). It seems the now defunct pengő has regained some of its value in exchange.
Pulling out a trillion pengő note at a shop when it is time to pay has proven good for a laugh. The Hungarians know its tragic story well and now maybe some more people will too.Inflation is rough, no matter how gently it takes place, but I hope the Pengő’s trajectory saves us all from total self pity as we see prices rise in ways we thought impossible in the modern West. We might have it rough right now but Hungarians of old would find our situation worthy of envy. After all, millions of them survived the worst inflation you've never heard of, until now at least.
We might trade our elected officials for better economics but Hungarians of the 40s would trade all their pengős for low double digit price increases. Pain is unpleasant, but pain in its context can feel a bit more tolerable.
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