Hungarian pengo
Encyclopedia
The pengő was the currency
of Hungary
between 1 January 1927, when it replaced the korona
, and 31 July 1946, when it was replaced by the forint
. The pengő was subdivided into 100 fillér
. Although the introduction of the pengő was part of a post-World War I
stabilisation program, the currency survived only for 20 years and experienced the most serious hyperinflation
ever recorded.
pengő means 'ringing' (which in turn derives from the verb peng, an onomatopoeic word equivalent to English 'ring') and was used from the 15-17th century to refer to silver coins making a ringing sound when struck on a hard surface, thus indicating their precious metal content. (The onomatopoeic word used for gold coins is csengő, an equivalent of English 'chinking' meaning a sharper sound; the participle used for copper coins is kongó meaning a deep pealing sound.) After the introduction of forint paper money
in Hungary, the term pengő forint was used to refer to forint coins
literally meaning 'twanging forint', figuratively meaning 'silver forint' or 'hard currency'.
At the beginning of the First World War precious metal coins were recalled from circulation, and in the early 1920s all coins disappeared because of the heavy inflation of the Hungarian korona. The name pengő was probably chosen to suggest stability. However, there was some controversy when choosing the name of the new currency, though the majority agreed that a Hungarian name should be chosen. Proposals included turul
(a bird from Hungarian mythology), turán (from the geographical name and ideological term Turan
), libertás (the colloquial name of the poltura
coins issued by Francis II Rákóczi
), and máriás (the colloquial name of coins depicting Mary
, patroness of Hungary).
The denomination of the banknotes was indicated in the languages of ethnicities living in the territory of Hungary. The name of the currency was translated as follows: pengő (pl.
pengő) in German
, pengő (pl. pengi) in Slovak
, пенгов (pl. пенгова) in Cyrillic script Serbo-Croatian
, пенгыв (pl. пенгывов, later пенге) in Rusyn
, and pengő (pl. pengei, later penghei) in Romanian
. Later pengov (pl. pengova), the Latin script Serbo-Croatian
version was also added.
The symbol of the pengő was P and it was divided into 100 fillér (symbol: f).
, the Austro-Hungarian Bank (the joint bank of the Monarchy) had to be liquidated and the Austro-Hungarian krone
had to be replaced with a different currency, which in the case of Hungary was the Hungarian korona. This currency suffered a high rate of inflation during the early 1920s. A stabilisation program covered by League of Nations
loan helped to bring down inflation, and the korona could be replaced in 1 January 1927 by a new currency, the pengő, which was introduced by Act XXXV of 1925 It was valued at 12,500 korona, and defined as 3,800 to one kilogram of fine gold
- which meant that the pengő was pegged to the gold standard, however, without exchange obligation. In the beginning the cover ratio (which included gold and - to 50% - foreign exchange) was fixed at 20% which had to be raised to 33.3% within 5 years. This goal was reached quickly: the cover ratio was 51% in 31 July 1930. Later it decreased somewhat due to the economic and financial crisis caused by the Great Depression. Until then the pengő was the most stable currency of the region.
in 1938 and 1940 were economically less developed, which was an additional aggravating factor regarding the economic situation of the country.
.
The pengő lost value after World War II
, suffering the highest rate of hyperinflation
ever recorded. There were several attempts to break down inflation, such as a 75% capital levy in December 1945. However, this did not stop the hyperinflation and prices continued spiralling out of control, with ever higher denominations introduced. The denominations milpengő (1,000,000 pengő) and b.-pengő (pronunciation: bilpengő) (1,000,000 milpengő, 1,000,000,000,000 pengő or one billion pengő (long scale)) were used to alleviate calculations, cut down the number of zeros and enable the reuse of banknote designs with only the colour and denomination name changed.
was introduced at a rate of 400 000 000 000 000 000 000 000 000 000 (400 octillion) = 4 pengő, therefore the total amount of circulating pengő notes had a value of less than 0.1 fillér. The exchange rate to adópengő was set at 200 000 000 = 2 (hence the 2 ratio, mentioned above). The exchange rate for the US dollar was set at 11.74 forints.
In 1926, 1, 2, 10, 20 and 50 fillér and 1 pengő coins were introduced. The 1 and 2 fillér pieces were bronze, the 10, 20 and 50 fillér were cupro-nickel and the 1 pengő coins were 64% silver. In 1929, 2 pengő coins were introduced, also in 64% silver. Commemorative 2 and 5 pengő coins were also issued on anniversaries, with a non-commemorative 5 pengő coin issued in 1939.
During the Second World War, the 1 fillér ceased production, the 2 fillér coins were issued in steel and then zinc, the 10 and 20 fillér coins were minted in steel and the 1, 2 and 5 pengő pieces were of aluminium.
In 1945, the provisional government issued aluminium 5 pengő coins which were the last coins issued before the hyperinflation.
The Hungarian National Bank issued the first series of 5, 10, 20, 50, 100 pengő banknotes in the last days of 1926. These were offset prints on watermarked paper (except for the 5 pengő note). The banknotes featured the outstanding people of the Hungarian history on the obverse and either different sites of Budapest or paintings on the reverse: the banknotes also served education purposes.
A new series of banknotes had to be printed soon to meet higher security standards. Since there was a lack of specialists in Hungary, the engraving was executed by Austrian professionals. New 5, 10, 20, 50 and 100 pengő notes were printed and even a 1000 pengő banknote was added to this series - however, the latter had such a high value that a big proportion of the people hardly ever saw any. This new series had almost the same topic as the previous. On the other hand, the 5 pengő notes were soon replaced with silver coins.
After the Vienna Award, Hungary had to supply its recovered territories with money. Since increasing the amount of silver coins would have been too expensive, 1 and 5 pengő notes were issued in 1941 and 1938, respectively. These notes were of simple design and poor quality. Meanwhile, a series of new banknotes including 2, 5, 10 and 20 pengő denominations was issued. The design represented ornaments based on Hungarian folk art and people.
At the end of the Second World War, the Szálasi government and the occupying Soviet army issued provisional notes in the territories under their power without any cover.
In 1945 and 1946, hyperinflation caused the issuance of notes up to 100 million b.-pengő (100 quintillion or 1020 pengő). During the hyperinflation, note designs were reused, changing the colour and replacing the word pengő with first milpengő, then b.-pengő, to generate higher denominations. The largest denomination produced was 100 million b.-pengő (100 quintillion or 1020 pengő). The note was initially worth about US$ 0.20. Notes of one milliard b.-pengő (one sextillion or 1021 pengő) were printed but never issued.
The introduction of adópengő was an attempt to keep inflation amongst limits, however, it could only slow down somewhat but did not stop the depreciation of the currency. Bonds were issued by the Ministry of Finance in denominations between 10 000 and 100 000 000 adópengő. These simple design bills on low quality paper became legal currency in the last months of the Hyperinflation almost completely replacing pengő.
The enormous amount of paper consumed during the production of the inflation pengő bills caused a shortage of good quality security paper; this hindered the production of forint banknotes.
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
of Hungary
Hungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
between 1 January 1927, when it replaced the korona
Hungarian korona
The Hungarian korona was the replacement currency of the Austro-Hungarian Krone/korona amongst the boundaries of the newly created post-World War I Hungary. It suffered a serious inflation and was replaced by the pengő in 1925...
, and 31 July 1946, when it was replaced by the forint
Hungarian forint
The forint is the currency of Hungary. It is divided into 100 fillér, although fillér coins are no longer in circulation. The introduction of the forint on 1 August 1946 was a crucial step of the post-WWII stabilization of the Hungarian economy, and the currency remained relatively stable until...
. The pengő was subdivided into 100 fillér
Fillér
The fillér was the name of various small change coins throughout Hungarian history. It was the subdivision of the Austro-Hungarian and the Hungarian korona, the pengő and the forint. The name derives from the German word Vierer that means 'number four' in English. Originally it was the name of the...
. Although the introduction of the pengő was part of a post-World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
stabilisation program, the currency survived only for 20 years and experienced the most serious hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
ever recorded.
Name
The Hungarian participleParticiple
In linguistics, a participle is a word that shares some characteristics of both verbs and adjectives. It can be used in compound verb tenses or voices , or as a modifier...
pengő means 'ringing' (which in turn derives from the verb peng, an onomatopoeic word equivalent to English 'ring') and was used from the 15-17th century to refer to silver coins making a ringing sound when struck on a hard surface, thus indicating their precious metal content. (The onomatopoeic word used for gold coins is csengő, an equivalent of English 'chinking' meaning a sharper sound; the participle used for copper coins is kongó meaning a deep pealing sound.) After the introduction of forint paper money
Paper money of the Austro-Hungarian gulden
Austro-Hungarian gulden paper money first appeared after 1881. The inscriptions on the banknotes were in German on the one side and in Hungarian on the other, however, the design for both sides was similar. The banknotes were issued by the Austro-Hungarian Bank and their value was guaranteed with...
in Hungary, the term pengő forint was used to refer to forint coins
Coins of the Austro-Hungarian gulden
Austro-Hungarian gulden coins were minted following the Ausgleich with different designs for the two parts of the empire.-Coins of Hungary:-Remarks:# "MAGYAR KIRÁLYI VÁLTÓ PÉNZ" = "Hungarian Royal token coin"# "FERENCZ JÓZSEF A. CSÁSZÁR MAGYARORSZÁG AP...
literally meaning 'twanging forint', figuratively meaning 'silver forint' or 'hard currency'.
At the beginning of the First World War precious metal coins were recalled from circulation, and in the early 1920s all coins disappeared because of the heavy inflation of the Hungarian korona. The name pengő was probably chosen to suggest stability. However, there was some controversy when choosing the name of the new currency, though the majority agreed that a Hungarian name should be chosen. Proposals included turul
Turul
The Turul is the most important bird in the origin myth of the Magyars .It is a divine messenger, and perches on top of the tree of life along with the other spirits of unborn children in the form of birds...
(a bird from Hungarian mythology), turán (from the geographical name and ideological term Turan
Turan
Tūrān is the Persian name for Central Asia, literally meaning "the land of the Tur". As described below, the original Turanians are an Iranian tribe of the Avestan age. As a people the "Turanian" are one of the two Iranian peoples both descending from the Persian Fereydun but with different...
), libertás (the colloquial name of the poltura
Poltura
The poltura is a historic Hungarian monetary unit that was struck under the Hungarian rulers Leopold I, Joseph I, Francis II Rákóczi, Charles III and Maria Theresa...
coins issued by Francis II Rákóczi
Francis II Rákóczi
Francis II Rákóczi Hungarian aristocrat, he was the leader of the Hungarian uprising against the Habsburgs in 1703-11 as the prince of the Estates Confederated for Liberty of the Kingdom of Hungary. He was also Prince of Transylvania, an Imperial Prince, and a member of the Order of the Golden...
), and máriás (the colloquial name of coins depicting Mary
Mary (mother of Jesus)
Mary , commonly referred to as "Saint Mary", "Mother Mary", the "Virgin Mary", the "Blessed Virgin Mary", or "Mary, Mother of God", was a Jewish woman of Nazareth in Galilee...
, patroness of Hungary).
The denomination of the banknotes was indicated in the languages of ethnicities living in the territory of Hungary. The name of the currency was translated as follows: pengő (pl.
Plural
In linguistics, plurality or [a] plural is a concept of quantity representing a value of more-than-one. Typically applied to nouns, a plural word or marker is used to distinguish a value other than the default quantity of a noun, which is typically one...
pengő) in German
German language
German is a West Germanic language, related to and classified alongside English and Dutch. With an estimated 90 – 98 million native speakers, German is one of the world's major languages and is the most widely-spoken first language in the European Union....
, pengő (pl. pengi) in Slovak
Slovak language
Slovak , is an Indo-European language that belongs to the West Slavic languages .Slovak is the official language of Slovakia, where it is spoken by 5 million people...
, пенгов (pl. пенгова) in Cyrillic script Serbo-Croatian
Serbo-Croatian
Serbo-Croatian or Serbo-Croat, less commonly Bosnian/Croatian/Serbian , is a South Slavic language with multiple standards and the primary language of Serbia, Croatia, Bosnia and Herzegovina, and Montenegro...
, пенгыв (pl. пенгывов, later пенге) in Rusyn
Rusyn language
Rusyn , also known in English as Ruthenian, is an East Slavic language variety spoken by the Rusyns of Central Europe. Some linguists treat it as a distinct language and it has its own ISO 639-3 code; others treat it as a dialect of Ukrainian...
, and pengő (pl. pengei, later penghei) in Romanian
Romanian language
Romanian Romanian Romanian (or Daco-Romanian; obsolete spellings Rumanian, Roumanian; self-designation: română, limba română ("the Romanian language") or românește (lit. "in Romanian") is a Romance language spoken by around 24 to 28 million people, primarily in Romania and Moldova...
. Later pengov (pl. pengova), the Latin script Serbo-Croatian
Serbo-Croatian
Serbo-Croatian or Serbo-Croat, less commonly Bosnian/Croatian/Serbian , is a South Slavic language with multiple standards and the primary language of Serbia, Croatia, Bosnia and Herzegovina, and Montenegro...
version was also added.
The symbol of the pengő was P and it was divided into 100 fillér (symbol: f).
Introduction of the pengő
After the First World War, according to the Treaty of Saint-GermainTreaty of Saint-Germain
The Treaty of Saint-Germain-en-Laye, was signed on 10 September 1919 by the victorious Allies of World War I on the one hand and by the new Republic of Austria on the other...
, the Austro-Hungarian Bank (the joint bank of the Monarchy) had to be liquidated and the Austro-Hungarian krone
Austro-Hungarian krone
The Krone or korona was the official currency of the Austro-Hungarian Empire from 1892 until the dissolution of the empire in 1918...
had to be replaced with a different currency, which in the case of Hungary was the Hungarian korona. This currency suffered a high rate of inflation during the early 1920s. A stabilisation program covered by League of Nations
League of Nations
The League of Nations was an intergovernmental organization founded as a result of the Paris Peace Conference that ended the First World War. It was the first permanent international organization whose principal mission was to maintain world peace...
loan helped to bring down inflation, and the korona could be replaced in 1 January 1927 by a new currency, the pengő, which was introduced by Act XXXV of 1925 It was valued at 12,500 korona, and defined as 3,800 to one kilogram of fine gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
- which meant that the pengő was pegged to the gold standard, however, without exchange obligation. In the beginning the cover ratio (which included gold and - to 50% - foreign exchange) was fixed at 20% which had to be raised to 33.3% within 5 years. This goal was reached quickly: the cover ratio was 51% in 31 July 1930. Later it decreased somewhat due to the economic and financial crisis caused by the Great Depression. Until then the pengő was the most stable currency of the region.
After the Great Depression
The effects of the Great Depression reached Hungary after 1930 and it hit predominantly agriculture. The pengő had to be devalued and the debt of the country increased. After a short period of recovery, the war preparations - amongst which the most important was the Győr-program - had loosened the financial and monetary discipline which in turn led to the depreciation of the pengő currency. The territories given back to Hungary by the Vienna AwardsVienna Awards
The Vienna Awards are two arbitral awards by which arbiters of Nazi Germany and Fascist Italy sought to enforce peacefully the claims of Hungary on territory it had lost in 1920 when it signed the Treaty of Trianon...
in 1938 and 1940 were economically less developed, which was an additional aggravating factor regarding the economic situation of the country.
World War II
The war caused enormous costs and, later, even higher losses to the relatively small and open Hungarian economy. The national bank was practically under government control, the issue of money was proportional to the budget demands. By this time, silver coins disappeared from circulation, and, later, even bronze and cupro-nickel coins were replaced by coins made of cheaper metal. In the last act of the world war, the Szálasi government took control of banknote printing and issued notes without any cover, first in Budapest, then in Veszprém when Budapest had to be evacuated. The occupying Soviet army issued its own military money according to the Hague ConventionsHague Conventions (1899 and 1907)
The Hague Conventions were two international treaties negotiated at international peace conferences at The Hague in the Netherlands: The First Hague Conference in 1899 and the Second Hague Conference in 1907...
.
Hyperinflation
The pengő lost value after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, suffering the highest rate of hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
ever recorded. There were several attempts to break down inflation, such as a 75% capital levy in December 1945. However, this did not stop the hyperinflation and prices continued spiralling out of control, with ever higher denominations introduced. The denominations milpengő (1,000,000 pengő) and b.-pengő (pronunciation: bilpengő) (1,000,000 milpengő, 1,000,000,000,000 pengő or one billion pengő (long scale)) were used to alleviate calculations, cut down the number of zeros and enable the reuse of banknote designs with only the colour and denomination name changed.
The adópengő
The adópengő (lit. "tax pengő") was introduced on 1 January 1946 as an accounting unit for budget planning. However, from 8 July 1946, it was allowed to be used as a legal tender. It was intended to retain its value as the pengő's fell. However, although its value rose dramatically relative to the pengő (finally reaching 2 pengő), the adópengő nevertheless suffered severely from inflation. In July 1946, the adópengő became the only circulating currency as the value of pengő fell to such an extent that even the 100 million b.-pengő note was effectively worthless.The end of the pengő
The Hungarian economy could only be stabilized by the introduction of a new currency, and therefore, on 1 August 1946, the forintHungarian forint
The forint is the currency of Hungary. It is divided into 100 fillér, although fillér coins are no longer in circulation. The introduction of the forint on 1 August 1946 was a crucial step of the post-WWII stabilization of the Hungarian economy, and the currency remained relatively stable until...
was introduced at a rate of 400 000 000 000 000 000 000 000 000 000 (400 octillion) = 4 pengő, therefore the total amount of circulating pengő notes had a value of less than 0.1 fillér. The exchange rate to adópengő was set at 200 000 000 = 2 (hence the 2 ratio, mentioned above). The exchange rate for the US dollar was set at 11.74 forints.
Coins
During the Second World War, the 1 fillér ceased production, the 2 fillér coins were issued in steel and then zinc, the 10 and 20 fillér coins were minted in steel and the 1, 2 and 5 pengő pieces were of aluminium.
In 1945, the provisional government issued aluminium 5 pengő coins which were the last coins issued before the hyperinflation.
Paper money
At the end of the Second World War, the Szálasi government and the occupying Soviet army issued provisional notes in the territories under their power without any cover.
The enormous amount of paper consumed during the production of the inflation pengő bills caused a shortage of good quality security paper; this hindered the production of forint banknotes.
Historical exchange rates
| Date | Pengő |
|---|---|
| 1 January 1927 | 5.26 |
| 31 December 1937 | 5.40 |
| 31 Mar 1941 | 5.06 |
| 30 June 1944 | 33.51 |
| 31 August 1945 | |
| 31 October 1945 | |
| 30 November 1945 | |
| 31 December 1945 | |
| 31 January 1946 | |
| 31 March 1946 | |
| 30 April 1946 | (5.9) |
| 31 May 1946 | (4.2) |
| 31 July 1946 | (4.6) |
| Date | Pengő |
|---|---|
| 1 January 1946 | 1 |
| 1 February 1946 | 1.7 |
| 1 March 1946 | 10 |
| 1 April 1946 | 44 |
| 1 May 1946 | 630 |
| 1 June 1946 | |
| 1 July 1946 | (7.5) |
| 31 July 1946 | (2) |
See also
- Hungarian National BankHungarian National BankThe Hungarian National Bank is the central bank of Hungary. The principal aim of the bank is to retain price stability. It is also responsible for issuing the national currency, the forint, controlling the cash circulation, setting the Central Bank base rate, publishing official exchange rates...
- HyperinflationHyperinflationIn economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
- Great DepressionGreat DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
- Names of large numbersNames of large numbersThis article lists and discusses the usage and derivation of names of large numbers, together with their possible extensions.The following table lists those names of large numbers which are found in many English dictionaries and thus have a special claim to being "real words"...
- Long and short scalesLong and short scalesThe long and short scales are two of several different large-number naming systems used throughout the world for integer powers of ten. Many countries, including most in continental Europe, use the long scale whereas most English-speaking countries use the short scale...
Further reading
- W. A. Bomberger; G. E. Makinen: Indexation, Inflationary Finance, and Hyperinflation: The 1945-1946 Hungarian Experience, in: The Journal of Political Economy, Vol. 88, No. 3. (Jun., 1980), pp. 550–560.