History of the Hungarian People’s Republic (PART 5: Three Year Plan 1947-49)

The Three-Year Plan was launched on August 1, 1947. The purpose of the plan was first of all to reconstruct the country after the massive devastation caused by the war, but also to start building a new society with better living conditions. The plan involved the nationalization of large mines and banks.

Nationalization

“The mines had been nationalised first, followed by some industrial concerns which had remained in private hands, and the banks. In March 1948, came the general nationalisation law which covered all factories employing more then one hundred workers.” (Pryce-Jones, p. 28)

“From July 1946 heavy industry was taken over by the state, and in 1947 ten banks. By March 1948 all industries employing more then a hundred workers were taken over, and late in 1949 all employing more then ten.” (Stone, pp. 413-414)

In the previous article I showed that the vast majority of Hungarians supported socialist policies even if they didn’t all vote for the communist party, because all the parties in the government coalition had adopted the same socialist program for the country. The vast majority of the population supported not only the nationalization of banks, but also of factories:

“Additional evidence… includes a study prepared in December 1945 by the respected Hungarian Institute of Public Opinion. In an extraordinary and quite surprising display of support for radical change, 67 percent of the respondents said that they favored the nationalization of factories (with 32 percent opposed and one percent “don’t know/no answer”), while 75 percent favored the nationalization of banks (with 23 percent opposed and one percent “don’t know/no answer”). Results reported by Robert Blumstock, “Public Opinion in Hungary,” in Walter Connor, Zvi Gitelman et ah, Public Opinion in European Socialist Systems (New York; Praeger, 1977), p. 140.” (Charles Gati, Hungary and the Soviet bloc, p. 70)

Recovery and living standard

“The Three-Year Plan that covered the period of 1947-49 aimed to increase investment and industrial production… Official and independent estimates put the resulting increase in the national income over 1938 levels at anywhere from 16 percent to 24 percent; the plan promoted a remarkable recovery” (Kovrig, p. 75)

“Hungarian industry has surpassed the pre-war level… For example, already by October [1948] the nationalized mining industry had increased its production to 37% higher than before the war. The real wage of the workers in Hungary is 15-20% higher than before the war.” (Kommunisti, no. 3, 1949, s. 130)

“The standard of living for the mass of the people was higher than it had ever been in Hungarian history.” (Howard K. Smith, p. 315)

“[U]nemployment had vanished… For the first time in Hungarian history, a complete system of socialized medicine was created and there was provided paid vacations for all workers, really universal education, and important social security benefits, especially for the incapacitated and the aged.” (Aptheker, p. 67)

The Budapest correspondent of The (London) Times, writing April 1, 1948, summed up the overall situation during the period of the Three-Year Plan:

“Listening to the wealthier peasants, to some of the middle classes, and to those [who had property confiscated], one would think that there was no one behind this Government at all. Listening to the poorer peasants, to their sons and daughters educated free in the new colleges, to young boys and girls going out to build railways, new fields, bring in harvests, and to most workers, one would think that the whole country was enthusiastic for it… Treaties have been signed with nations near by, for centuries enemies… Deserts of ruins have been rebuilt…” (quoted by E. P. Young in The Labour Monthly, Jan. 1957).”

“The three-year plan also provided for the creation of numerous labor unions. Since 1944 the railwaymen, post-office workers, heavy industrial workers, and even government employees formed unions, all of them in branches of industrial and public life, where they had been strictly forbidden under earlier regimes.” (Gyorgy, p.133)

“To come to Budapest in August, 1948… One could sense in the first days the elan of a people striding forward with a faith in the future based on what had been accomplished in the few years since the Liberation. The physical signs of reconstruction were there in front of everybody’s eyes to see, the new bridges over the Danube, whole streets repaired and rebuilt, food and clothing shops well stocked with unrationed goods. There was confidence and hope in the voices of youths and girls, marching through the streets singing their songs of liberation.” (Burchett)

“Village stores, full of new consumer goods which peasants had never seen in their lives before, or at most in Budapest shop windows, were packed with customers. Electrification of the villages gave the peasants an interest in electrical cookers, irons and other gadgets they had never dreamed of before. They were all available in the new village stores. Houses were springing up everywhere in the countryside on sites allocated from the large estates. In Budapest; the shops were crammed with unrationed food and textiles, crammed also with buyers until late at night. To enable the workers to do their shopping in comfort – it is the fashion now in Hungary for both husband and wife to work – the co-operative food stores stay open until 10 p.m. In each district there are special stores which maintain a twenty-four hours’ service.” (Burchett)

“…my travel in England would be limited by petrol rationing, and in Hungary petrol rationing, as all other forms of rationing, has long been abolished.” (Burchett)

“On May Day [1949] Budapest was a mass of banners, singing, marching people, flowers, mobile buffets and groups picnicking in every park and garden. It was the greatest celebration Budapest had ever known.” (Burchett)

“…in the spring of 1949, with the Three-Year Plan well on the way to completion, the people could justifiably celebrate four years of astounding progress.

The rebuilt city, the restored homes and bright new workers’ flats, the four new bridges over the Danube, the rubble heaps converted into gardens – this was all something done by the Budapestians themselves, at first working with their bare hands…” (Burchett)

“Nationalised industries delivered trams and buses to restore the city’s transport service, industrial workers put in extra shifts, at first on the most meagre rations, to get the city’s life pulsing again. Hand in hand with reconstruction went the social and economic reforms, without which the tempo of work and morale of the workers could not have been sustained. The nationalisation of the key industries, equal pay for women, establishments of creches and nursery schools, and generous maternity leave and pay for pregnant and nursing mothers, paid holidays and requisitioning of the former luxury hotels for workers’ holiday resorts…” (Burchett)

Burchett interviewed an old couple in Budapest in 1949. The old man Dindoffer said:

“We had it hard those first months… No food, no heating, no proper roofs over our heads and no clothes. Look at us now,” and he waved his hand round the flat, walked over and opened the wardrobe to show his own winter and summer suits, his good winter overcoat… “I never had two ‘best’ suits in my life before. Now I have one for winter, one for summer. He opened his wallet and showed two 100 forint notes (worth six pounds). I’ve got money in the bank and I always have a little reserve of cash in my purse. Did we ever have spare change in the house in the old days, Mama?” And Mama shook her head and murmured, “More often we were in debt.”

In Dindoffer’s normal week; he earned eight pounds, but as the old chap worked regularly twelve hours a week overtime, his average earnings were thirteen pounds ten a week. For his flat, including heating in winter, he paid eighteen shillings weekly.” (Burchett)

“There had been a very marked rise in real wages, and a rise in the living standards of the poorest peasants. In economic terms, the revolution was brilliantly successful.” (Warriner, p. 31)

“In addition to the average rise, there has been also a rise in the incomes of the lowest paid industrial workers, whose incomes have been levelled up by new wage scales. This large group is certainly much better fed than before… because they receive subsidised rations or factory canteen meals. All industrial workers have benefited by a great extension of social services — insurance, paid holidays, family allowances— which before were non-existent…” (Warriner, p. 81)

“Agriculture needed to be intensified… For both these developments, social welfare and intensification, the Three Years Plan (1947-49) made ample provision. The social results are apparent in every village” (Warriner, p. 97)

Success of the plan

“Bourgeois circles cherished the hope that the Plan was bound to fail. Some of them even claimed that nobody would seriously think of tackling it. This was the cherished dream of Hungarian reaction. However, the Plan is going ahead at a steadily increasing rate” (Rakosi, People’s Democratic Transformation in Hungary: Report to the Third Conference of the Hungarian Communist Party)

The plan was even more successful then predicted.

“All the targets in the original draft of the plan were much lower than those which were finally fixed, and were raised in the second half of 1949 when it was clear that the Three Years Plan targets had been easily over-fulfilled.” (Warriner, p. 99)

“The Three-Year Plan was completed almost 8 months ahead of schedule. Industrial production during the Three-Year Plan reached 140 percent of the last peacetime year. Agricultural production almost reached the prewar level. The standard of living of the workers is, on the average, 37 percent higher then before the war.” (Five-Year Plan of the Hungarian People’s Republic)

“Investment in industry and infrastructure had gone up from almost nothing to a fifth of the national income by 1948, and in 1949 industrial production was substantially above the level of 1941.” (Stone, p. 414)

“In the west, there are three current criticisms of the east European plans. The first, and simplest, is that the plans cannot be achieved… and that… there is never any proof that the targets are actually reached… Hungarian statistics claim that real wages had risen by… thirty-three per cent, in 1949 as compared with pre-war, and these figures can be roughly confirmed by observation—better food, cheaper housing would certainly be sufficient to account for a rise of the order claimed… there is no truth in the criticism that the plan results are not known…

A second line of criticism is that if the plans are achieved, they are achieved by forced labour… This is not true either, for though forced labour does exist it is not the means by which the plans are carried out… This sort of slapdash criticism shows only a complete ignorance of what the real conditions are in most of these countries; there is no need to force labour into industry, because there is so much labour on the land that it is easy to obtain any number of workers by the offer of regular industrial wages, and better food…

The third line of criticism is a genuine one. It is that the plans can be achieved, and achieved without forced labour but only at the cost of the workers present standard of living because the big investment in construction must mean cutting down the production of consumption goods. Now of course it is true that the increased investment must be made at a cost if a big proportion of labour is occupied in building dams and blast furnaces it will not bring in any immediate return in a bigger output of consumer goods and food. That in itself is no objection to the plans; it is indeed their real justification. For precisely what was wrong with the economy of east Europe before was that it did not invest enough… There can be no argument against raising the rate of investment as such” (Warriner, pp. 109-111)

Rakosi said:

“We have resolutely dislodged landlord-capitalist reaction and representatives of Western imperialism from the political and economic life of our country. The Three-Year Plan which was viewed sceptically not only by our enemies but sometimes even by our supporters, will be fulfilled seven months ahead of schedule.

We consider our economic achievements to be of the utmost importance, but we do not for a moment forget that the individual is the greatest asset of the people’s democracy. And that is why we consider the improvements in the public health to be no less important than our economic successes during the recent difficult years… The fact that we have now more marriages, that the birth-rate is higher and the death-rate lower than ten years ago, that we have been able to reduce infant mortality from 9 per cent to 6 per cent in Budapest – all this speaks of the vast improvement in the economic and living conditions of the working people.

Women are beginning to take an active part in the life of our country. In the past the Hungarian woman was shackled by capitalist exploitation; she did not enjoy equal rights with men, she shouldered the burden of family and household cares…

It is no exaggeration to say that the strength of our people’s democracy can be numerically determined, like the temperature on a thermometer, by the role women play in it. And we shall ensure that the role of the working women in the life of our country grows rapidly in the future.

There has been a radical change in the people’s attitude to labour. More and more people are beginning to understand the connection between individual effort and the common cause. They have adopted a new attitude to work, their outlook has broadened, they see the connection between their personal work and building up the country, realising that by better work they can build a better future. The slogan, “Work better and you will live better” has acquired a new and profound meaning. Realisation of this meant that work is no longer regarded as something that has just got to be done; it is more and more becoming a matter of honour and glory, a great incentive in strengthening the nation and building Socialism; it has given rise to new methods. Thanks to this we are able to carry out the Three-Year Plan in 2 years and 5 months…

In speaking of the gains of Hungarian People’s Democracy during the past four years we must not for a minute forget that we were able to achieve them only because we had the daily assistance and support of our liberator, the Soviet Union.” (Rakosi, Strengthening the People’s Democratic Order)

SOURCES:

Pryce-Jones, The Hungarian Revolution

Stone, Hungary: A Short History

Charles Gati, Hungary and the Soviet bloc

Kovrig Bennett, The Hungarian People’s Republic

Kommunisti, no. 3, 1949

Howard K. Smith

The (London) Times, writing April 1, 1948

Gyorgy, Governments of Danubian Europe

Howard K. Smith, The State of Europe

Burchett, People’s Democracies

Warriner, Revolution in Eastern Europe

Rakosi, People’s Democratic Transformation in Hungary: Report to the Third Conference of the Hungarian Communist Party

Five-Year Plan of the Hungarian People’s Republic

Rakosi, Strengthening the People’s Democratic Order

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