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The Political and Economic History of Budapest

The site where the cities of Buda and Pest developed is one of great geographic potential. First of all it is a location on the Danube River where the river is most easily fordable, in part because Margaret Island provides a convenient intermediate resting place. Thus the trade routes by land and the trade routes by water intersect at the site. However, probably before the commercial advantage of the site were recognized it was the site of tribal conclaves. A seismic fault lying along the course of the river gave rise to hot springs, which in ancient times would have been a unique and glorious attraction for the area.

The area east of the river is a flat plain. This is where the city of Pest developed. On the west side of the river there are mountains and the terraces slope downward to the river. This is where the city of Óbuda (Old Buda) developed. Much later Buda was established as an administrative center.

The site was occupied in very ancient (neolithic) times. The first historically identifiable occupants were the Eravisci Celts. The Celtic name for the site was Ak-Ink, meaning abundant water, and this led to the name Aquincum which the Romans used for their city at the site. For a period of time Aquincum was a significant outpost of the Roman Empire, but in 376 AD it fell to barbarian invaders. Over time control of the site shifted among the various barbarian groups. The Avars, from Central Asia, controlled the region from about 600 AD to 800 AD. When the Magyars, the ancestors of the Hungarians, arrived under the leadership of Árpád in about 900 AD there were Slavonic people living there. The name Pest comes from the Slavic word Pestj which means oven, probably in reference to the hot springs of the area. The Germanic name for what became Buda was Ofen, also meaning oven.

The Mongols destroyed Pest in 1241, but the Magyar king, Bela IV, had Pest rebuilt, partly by encouraging the settlement of German colonists at the site, and founded the city of Buda in 1247. Buda developed sufficiently that by 1361 it was designated the capital of Hungary. Pest had developed as a city of commerce so the site had the adminstrative center of Buda and the commercial center of Pest separated only by the Danube River. Together they became a cultural center as well.

In 1526 the armies of the Ottoman Empire captured Pest and looted it. Later, in 1541, the Turks captured Buda. This Turkish occupation lasted until 1686 when the Austrians drove them out. Under Austrian influence the cities of Buda and Pest recovered their former glories, but Pest, the commericial center, more so than Buda, the administrative center. In 1867 the dual monarchy of Austria and Hungary was established and in 1872 the cities of Óbuda, Buda and Pest were combined into one, Budapest.

In 1880 the ethnic composition of Budapest was 57 percent Magyar, 33 percent German (including Jews) and 6 percent Slovak. By 1930 this composition had shifted to 94 percent Magyar, 4 percent German and 1 percent Slovak.

The commercial economy of Budapest was based upon processing and trading the produce of the Hungarian plain. In particular this involved the milling of wheat into flour. It also processed and traded the wine, hides and wool of the region. In performing these functions Budapest developed a substantial financial center. Its economy also benefited from the administrative functions as the capital of Hungary. There was also substantial support for educational institutions because of their role in preserving Magyar culture.

When the Austro-Hungarian Empire broke up at the end of World War I Hungary gained its independence but ultimately lost about two-thirds of its territory. This was territory that was traditionally part of Hungary but occupied by non-Hungarian ethnic groups. In particular it lost Transylvania which had a substantial Hungarian minority but was overwhelmingly Romanian demographically. On the other hand there were territories that had a dominant Hungarian population but were controlled by other polities, such as the northern part of Serbia.

Budapest underwent a period of political turmoil after World War I. First there was a coup d'etat by commnists in 1918 which led to Communist rule until 1919. There was an invasion by the Romanian army in 1919. The government that came to power after the departure of the Romanian army nearly collapsed the grain milling industry by imposing high tariff on imported grain. After a financial restructuring of the city in the mid-1920's the economy began to recover.

In that period after World War I Budapest was burdened by the influx of ethnic Hungarians from the territories lost in the political restructuring of the region.

Hungary and Budapest with it suffered from Soviet control after World War II. Although Hungary was allied with Germany in the war its domination came not as a result of that alliance; it came simply from the conquest of its territory by Soviet armies. Poland and Czechoslovakia, which had not been allies of Germany, suffered the same Soviet domination.

Budapest and the rest of Hungary tried to overthrow that Soviet domination in 1956 but after a short period of freedom they were reconquered by the Soviet army. True freedom did not come until the collapse of communism in 1990. The transition period was very difficult as the old system collapsed without a new economic system to take its place.

However after a period of difficulty Budapest has once again become the cultural and economic center it once was. Its beauty has led to a vibrant tourist industry.

The map below gives the location of the bridges and some of the major roadways of modern Budapest.

Pest viewed from the Buda side of the Danube

(To be continued)


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