Content provided in partnership with
Business Services Industry
Hungary
American Journal of Economics and Sociology, The, Dec, 2000 by Balazs Konya
BALAZS KONYA [*]
BEFORE WORLD WAR I, Hungary was the food provider of the Austro-Hungarian Empire. The distribution of landed estates was inequitable because a few hundred landlords--forming the aristocracy--held in check with their privileges millions of "dwarfholders" as well as the landless laborers. The number of medium-sized farms was relatively small. [1]
Urgency to solve the land question had increased at the turn of the century due to the fact that, through the impact of the Industrial Revolution, the standard of living of the agrarian population was further lowered. So the annual rate of emigrants, mainly to the United States, was considerable at this time.
- Most Popular Articles in News
- The Ten Best Laptop bags
- Tata plans cheapest-ever car for Indian market
- GLOBALIZATION AND THE DEVELOPMENT OF UNDERDEVELOPMENT OF THE THIRD WORLD
- Corn is good for you; Corn is not only a tasty treat, but also a cereal that ...
- THE 50 BEST STYLISH HANDBAGS TO CARRY
- More »
Among those who tried to find a solution to this problem were a group of young Hungarian free-thinkers who formed the Galilei Circle and who were glad to hear about the very popular speeches and writings of Henry George in which he supplemented the Physiocrats' views with new social and economic arguments. [2] Between 1909 and 1914, the sociologist Robert Braun, who maintained a close relationship with some American Georgists, had brought out Magyar versions of Protection or Free Trade and Progress and Poverty. These Hungarians also established contacts with the Bodenreform movement in Germany. [3]
I
Dr. Julius J. Pikler and the Land Taxes of 1917-1921
BUT THE ASTONISHING, albeit short-lived, success of Georgism in Hungary was almost wholly due to the drive and persuasive logic of a truly remarkable individual-the physician and statistician, Dr. Julius J. Pikler, who had learned about the doctrine through Braun shortly before World War I. As deputy director of the Budapest Public Statistics Office, he commanded a respectful audience, and conducted a virtual one-man campaign for the idea of the land-value tax, writing articles for leading periodicals, and speaking wherever opportunity afforded. He made no effort to found a movement or organization, but relied solely on his ability to convert persons of influence and authority through rational argument. However, he had considerable support within the Social Science Society and among the Hungarian Freemasons.
Pikler's first victory was in the Transylvanian city of Arad (now in Romania) in May of 1917. This was followed, in November of the same year, by a breakthrough in Budapest. There, an ordinance for the taxation of land-values was passed by a large majority of the City Council, and a special Land Valuation Office was created, with Pikler as director. After this triumph, he traveled throughout Hungary promoting the concept.
According to the Budapest decree, an annual tax of one half of one percent was levied on land values, whether the land was used or not, and there were no exceptions allowed except for publicly owned sites. At the same time, the "rent-penny"--a three percent tax on rents collected for the use of buildings--was reduced to 1.5 percent. [4] Valuations were to be made every three years with the greatest possible publicity, each citizen having the right to petition and each owner to appeal.
To be sure, the rate on land values set by this decree was low. But considering that this was the first time that an ad valorem tax ever had been placed upon land in Hungary, [5] and taking into account the resistance of the real estate interests to such a tax, the step was significant. Also it was hoped that it would be the beginning of a program for the fuller collection of land values, and it served notice on speculators that henceforth, they would be required to contribute to the upkeep of the community from which they benefited.
Unhappily, such good effects as might have stemmed from the change were to a large extent nullified by the fact that in 1919, when the collection of the tax began, inflation had already depreciated the Hungarian currency considerably. Nevertheless, the principle upon which the tax was based had been established, and the example set by Mad and Budapest was soon followed by the cities of Debrecen, Szeged, Kaposvar, Gyor, Sopron, Ujpest, and Marosvasarhely (Targu-Mures). During 1918, an appraisal was made in all applicable cities of the value of all real estate property--without consideration for their use, possible construction, or improvements. [6]
It is worthy of note that the municipalities of Debrecen and Szeged at that time were essentially farm communities, consisting of enormous agrarian acreage centered by relatively tiny urban cores. Instead of being frightened by the bogey of taxing land, the small farmers proved especially receptive to Pikler's arguments. But the influence of this brilliant advocate was not confined to Hungary. Invited to speak in Vienna, he (although Jewish) won over the Christian Socialist mayor and the latter's deputy, and a law largely modeled after that of Budapest was passed by the City of Vienna in 1919. It was revoked by the Marxist Socialists in 1923.
In Hungary, the notion of a national land-value tax was included in the program of the short-lived republican regime of Count Michael Kairolyi, but that regime was overthrown in March of 1919 by a Communist uprising under Bela Kun. In August, the White army, headed by Admiral Nicholas Horthy, seized power in a rightist counter-revolution. 1-lorthy restored the monarchy but left the throne vacant, with himself as regent. The relatively liberal self-governing bodies in the cities were supplanted by ones that reflected his conservative outlook. The tenement house owners lobby now instigated a campaign against the land tax, using the effective if irrelevant argument that it had been supported by Freemasons and Jews. [7]
