History of the Hungarian People's Republic (1928–1939)

In 1928, the Hungarian Communist Party (MKP) announced a new policy of total collectivisation at a party progress. Small-scale private agriculture and commerce were abolished, bringing virtually all of Hungary's economy under state control.

Although this obviously resulted in famine, the Great Depression had little effect on the four (Soviet Union, Hungary, Mongolia and Tannu Tuva) communist countries then in existence. Consequently, Hungary continued to industrialize and grow economically throughout the 1930s, focusing on heavy industry, as the USSR had done, instead of consumer goods.

Living standards for the majority of Hungarians also improved, at least in comparison to the Habsburg monarchy, but civil freedoms were constantly repressed by the ÁVH. In 1933, medical treatment for all citizens became free and guaranteed by the state.

Hungary's foreign policy during this period was dominated by an alliance with the USSR and rivalry with Romania, which occupied all of Transylvania and adjacent territory. The treaty of Trianon had no military restrictions, allowing Hungary to buy weapons from neutral Czechoslovakia, Switzerland and Sweden in order to strengthen its military capabilities.

After the rise of Adolf Hitler to power in Germany in 1933, small-scale fascist movements rose in Hungary and among exiles, but all were suppressed by the Comintern. The concurrent popularity of movements such as the Iron Guard in neighbouring countries led the MKP to increase funding for national defence; after Germany annexed Austria in 1938, Hitler began planning an invasion of Hungary, butterflying away the nonaggression pact.