by Norman Stone
As Farkas says, ‘the parliamentary democratic order was condemned to collapse on the day the November election results were published.’ For a time, the Hungarians were told that they might have favourable peace terms in return for good behaviour: the eventual peace treaty, at the turn of 1946-7, went against them, as all of the lands awarded to Hungary by Hitler were returned to her neighbours. Then there was an inflation — the worst ever experienced in a European country, including Weimar Germany. By July 1946 there were 50 million million million pengo˝ in circulation, and you survived by doing deals with the Communists, who controlled things. Dealing illegally in dollars was also possible, but it gave the Communists an apparently legitimate way to try to sentence anyone who was involved, including, as things turned out, the Cardinal himself, József Mindszenty. But Hungary was not Poland. The Church did have its supporters, but there was a large Protestant element, itself divided between Lutherans, Calvinists and Unitarians; there was no basis here for the passive resistance that Poles could put up, or for the Christian Democracy that emerged in Italy to defeat the Communists. Indeed, strict Calvinists, hating the Catholics, supplied useful men for the Communists, including a pastor, Zoltán Tildy, who even became president for a few years. Meanwhile, the Communists infiltrated the trade unions, where there was supposed to be parity with the Social Democrats, and the trick was, as in Czechoslovakia, to identify a left-wing element. This was not altogether difficult. In the first place, there generally was, among the non-Communist left-wing elements, one that would always argue for appeasement: the Communists would behave better if collaborated with. But there was terror, and there was bribery, and there was cynicism; and in the hopeless condition of Hungary in 1945, many people (including among the intelligentsia) saw Communism as the way forward. There were vast demonstrations of ‘the organized discontent of the masses’ in Budapest, and in 1946 ‘conspiracies’ were unearthed, by which the non-Communists could be discredited (there is a heroically mistimed — 1986 — Communist book on this period, by Jakab and Balogh, which announces grandly that ‘the competent authorities of the Ministry of Home Affairs’ ‘discovered the existence of an anti-republican illegal organization’). In Hungary, there was a further factor. In 1920 she had lost many of her old and historic lands, Transylvania especially. With Hitler, some of Transylvania had been recovered; and there was a hope that, with collaboration, something could be saved from the wreckage. Not until early in 1947 were the 1920 borders reconfirmed, Romania taking back Transylvania, and Czechoslovakia or the USSR an equivalent region in the north-east.
In 1946 the non-Communist government had very limited power, given that the Communists held the Ministry of the Interior, i.e. the police, and the security services. Besides, the Red Army was in occupation, and it simply carried people off for forced labour in the USSR; meanwhile, the economy, such as it was, was now dominated by Soviet cartels, and the foreign factory owners were powerless. The government was in any case easy to divide, because some of its following remained doggedly faithful to free markets, whereas others were sympathetic to the Left; and the religious division was still so strong that, in 1947, there were vicious fights over the presence of religion in schools. With their stories of ‘conspiracy’, the Communists could arrest, torture and deport even quite prominent Peasant Party politicians, and then extract confessions from them which would incriminate the prime minister himself. The government was only really able to let people escape to the West, including, in spring 1947, the prime minister, whose little son (now a New York banker) was held hostage. At the same time, with mass demonstrations in public, and secret police threats in private, sections of the governing party could be isolated and banned (‘salami tactics’, as they were called). The Allied Control Commission, dependent upon its Soviet chairman, was powerless. In 1947 a left-wing stalwart of the Peasant Party, István Dobi, took over, a man so demoralized and given to drink that, when he headed a delegation to Moscow, Molotov simply slid the bottle contemptuously down in his direction. There was then a coup against the Social Democrat and trade union ‘Right’. An apparatus of dummy parties emerged, and in the elections of September ten parties fought, seven of them splinters, one of them so absurd as to be allowed to function openly: the ‘Christian Women’s Camp’. A Communist-dominated coalition with Social Democrats and Peasant Radicals easily won, and by March 1948 the Social Democrats had been forced into fusion with the Communists, as the ‘United Workers’ Party’. In 1949 this won ‘95.68 per cent’ of the vote, and Stalinism descended.
Its local face was that of Mátyás Rákosi, born as József Rosenfeld in Bácska, to a family of twelve children from a small trader. He had won scholarships to Hamburg and London, had been a prisoner of war in Russia (at Chita, where a Countess Kinsky had helped) and had then experienced, on and off, but more on than off, prison. He knew how to act. He had a superb voice and had charm of a sort; he was also very vain, and at his sixtieth-birthday celebrations had special shoes constructed so that he could appear taller than Anastas Mikoyan, the Party vice-chairman, who bore birthday greetings from Stalin. Thirty-three prominent writers managed to write assorted items in praise of him, at a celebration in the Opera. Rákosi was hideous, the very exemplar of the French line that at forty you are responsible for your face. For the next five years, until the death of Stalin, Rákosi ran Hungary.
As Churchill said, an ‘Iron Curtain’ had indeed descended, and though there were still Soviet sympathizers, they lost the battle for public opinion as the facts seeped through the Curtain. Greece at least had been saved from the Communist takeover because of Churchill’s bargain with Stalin in 1944. But, as ever, Churchill’s side needed American backing.
3. Marshall
When the British announced on 21 February 1947 that they could not go on in Greece, the American reaction went far further than they had expected — ‘quick and volcanic’ was the expression used. In 1945 the Americans had hardly expected to be much involved in the eastern Mediterranean, though they had oil interests in Saudi Arabia. They had not meant to be heavily involved in Europe, even. But now, in February 1947, Greece caused a sea-change. The new Secretary of State, George C. Marshall, spoke — even then, to complaints at his moderation — for the entire Truman administration when on 27 February he said, ‘It is not alarmist to say that we are faced with the first crisis of a series which might extend Soviet domination to Europe, the Middle East and Asia.’ He had spent the previous year in China, where there was a civil war in progress, and had been fooled by the Communist leader, Mao Tse-tung. The behaviour of Stalin was still more provocative. Everyone knew that the Soviet Union needed peace in order to recover from the devastation of the war, and American help was on offer. Instead, after a brief interlude tyranny had been reimposed, with starvation and in places cannibalism, while millions of people were worked to death in the camps, and Stalin had told Marshall to his face that Communism in Europe would win. But by March 1947 the Americans had had enough.
Marshall himself was an old military man, straight, austere, not given to panic, but also unwilling to tolerate untruths. Now he spoke for almost the entire American establishment. Dean Acheson, also a man of much integrity, told the Congress leaders that a Soviet penetration of the Near East ‘might open three continents to Soviet penetration’. The need now was to convince a largely apathetic public of the danger, and on 12 March, at a joint session of Congress, Truman made what was referred to as the ‘All-Out speech’: ‘It must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressure.’ Large majorities gave Truman what he wanted: $300m for Greece, $100m for Turkey. There followed a deliberate American strategy to contain Communism by using the economic weapon.
As Marshall returned from the exhausting and fruitless Moscow conference, without even an Austrian, let alone a German, deal, he could see that the Greek problem was just a small version of a much larger one. Western Europe desperately
needed help, and the British themselves were unable to go on shouldering the burden as before. The three western zones in Germany were producing hardly one third of their pre-war level and yet they had been the source of one fifth of Europe’s entire industrial output, including the heavy machinery for which Germany had been so famous. On the official market an egg in Hamburg cost a day’s wage. The former President Hoover had been sent in 1946 to study the food question, on which, with Belgium in the First World War and Russia after it, he was a considerable expert. Early in 1947 he reported that the whole problem was insoluble unless Germany were once more part of a wider European economy.
When Marshall returned he had a flurry of memoranda on the European crises and various officials had been sounding the alarm for some time. The fact was that the Europeans were importing far beyond their capacity to pay, and a businessman, William L. Clayton, who had become assistant for economic affairs in the Secretaryship of State, had written that ‘Europe is steadily deteriorating. The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving… The modern system of division of labour has almost broken down in Europe.’ The American trade surplus by March 1947 ran at over $12m, and American prices themselves rose by 40 per cent in 1946-7, such that imports from Europe themselves declined and made her overall balance of trade even worse. The US wartime deficit ended in 1947, with a budget surplus of $4bn. Had this been peacetime, no doubt banks could have been mustered for relief, or the European currencies could have been devalued, to make imports in the USA cheaper — a device eventually used in 1949. But in the immediate post-war era, and especially with the terrible winter of 1947, these escape hatches were blocked, and besides, the fledgling World Bank and International Monetary Fund, set up in 1944 for such emergencies, were too small to be effective (the IMF made a small loan to Denmark and was otherwise not heard from). Everything depended upon the Americans’ attitude, and in spring 1947 the British Chancellor complained, ‘[they] have half the total income in the world, but won’t either spend it on buying other people’s goods or lending it or giving it away on a sufficient scale’. Here he was quite right, and they even still maintained high tariffs, pricing out such European goods as could be sold. Getting round Congress over such matters was not easy, even if the administration itself clearly saw what needed to be done. Stalin greatly helped: the USA would have to act or Europe might fall to Communism. Marshall understood, and as Daniel Yergin says, ‘the anticommunist consensus was [now] so wide that there was little resistance or debate about fundamental assumptions’. Private businessmen would have to be deterred from pulling out of Europe altogether, as was happening.
In June 1947 Marshall spoke at Harvard and launched into a speech that entered history as one of America’s most positive contributions ever. Veteran diplomats who knew Russia drafted it (Kennan and Bohlen) and their words were carefully chosen — for instance, there was no overt anti-Communism and the Russians were invited to the initial conference (in Paris) to discuss things. The Marshall Plan was ingenious. It was presented as a design to put Europe back on its feet, thousands of millions of dollars being on offer, generally as a gift. That in itself offered hope in the bread queues, and the USA at the time counted as a land of milk and honey, a place of wizardry in typewriters and refrigerators. That in itself would counter any appeal that Communism might have. But the Plan also squared another difficult circle. Western Europeans blamed their own lack of recovery on the failure of the Americans to deliver reparations from Germany, and the Americans had let this happen (in May 1946) because they would have had to pay still more for a stricken Germany. But if Germany were allowed to recover, there were many, many Europeans who would fear the worst, given the German past. But without German recovery, as Hoover had stressed, there would be no overall European recovery given that, for instance, half of Holland’s exports generally went there.
Marshall presented German recovery in the context of overall European recovery, and in the summer of 1947 the Americans informally discussed the political unification of ‘Bizonia’ with the British. This was the restart of Germany: in April, at Frankfurt, an ‘Economic Council’ of fifty-two delegates chosen by the Länder parties had met. ‘Reparations’ were scaled down to permit the Germans to produce 10.7 million tons of steel. ‘Bizonia’ was formally included in the European Recovery Program, as the Marshall Plan was formally called, and after a conference of sixteen European nations in July, including Turkey, a project was submitted in September for increased output and exports, for financial stability and cross-border co-operation. The cost was put at $20bn. The winter had vastly weakened ideas of ‘socialism’, and liberalism, as the Europeans understood it, was coming back again. Marshall obviously meant capitalism, New Deal style, and it floated in on the tide of $40bn that the Americans disbursed in the second half of the forties. This was needed the more because the summer turned out in its way to mark more disaster: there was a drought, and the French had the smallest wheat crop for 132 years; extra rations had to be given to the Ruhr miners in a desperate effort to increase coal production. Importing food, France and Italy found their dollar reserves melting, and such private capital as was free to do so shifted to the USA. There was a run on the pound sterling, and as Truman wrote, ‘the British have turned out to be our problem children now. They’ve decided to go bankrupt and if they do that it will end our prosperity and probably all the world’s too.’ Late in September he told congressmen and said that some interim help (before the Plan started) was essential, ‘or… for all practical purposes Europe will be Communist’. A new international Communist organization had been set up, Cominform, and the French and Italian parties had been instructed to start disruption through strikes and industrial trouble: in fact, news that ‘in France the subway and bus strike is spreading’ caused congressmen to accept Truman’s proposal for a special session, at which the American people could be persuaded to endorse the Marshall Plan. A special session did then authorize a further $600 million as interim aid to Austria, France and Italy.
There was a final postscript when the next Council of Foreign Ministers assembled in November in London. By then, Marshall had no expectation of Russia: she would try to ‘get us out of western Germany under arrangements which would leave that country defenceless against communist penetration’. One such ‘ruse’ would obviously be to accuse the Western powers of dividing Germany, with the establishment of a separate state there (and some Germans did argue that siding with Russia would mean a united and neutral Germany). In due course Molotov was utterly intransigent, and, now, the French came round to the American side, at last willing to accept the principle of a sovereign Germany. Such plans included a currency reform, which would obviously mark off the western zones from the east, which would retain the old, managed, currency. At American initiative, the Council was broken off on 15 December. European reconstruction, under the Marshall Plan, now went ahead.
