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The Treaty of Trianon was signed with Hungary after World War One had ended. The treaty was signed on June 4th 1920. The Treaty of Trianon stated clearly that “the Allied and Associated Governments affirm and Hungary accepts the responsibility of Hungary and her allies for causing the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Austria-Hungary and her allies.”
World War One witnessed the break-up of the Austro-Hungarian Empire into separate entities. The Treaty of Trianon recognised this at a legal level by signing separate peace treaties with what were now separate and independent states. Austria signed the Treaty of St. Germain while the newly independent Hungary signed the Treaty of Trianon. As with all the other treaties with those who had fought against the Allies, Hungary suffered territorial losses that affected her economic strength, military restrictions and population issues.
When compared to its pre-war borders, what was seen as 'Hungary' within the Austro-Hungarian Empire, lost nearly 75% of its territory. This land was redistributed to the newly created states of Romania, Czechoslovakia and what was to become Yugoslavia. Nearly 33% of ethnic Hungarians found that they no longer lived in Hungary with nearly 900,000 living in the new Czechoslovakia, 1.6 million in the Transylvania region of Romania and 420,000 in Serbia. The Hungarian delegation at Trianon argued for the case of self-determination as proposed by Woodrow Wilson but the Allies mainly ignored this plea for the use of plebiscites. The city of Sopron was given a plebiscite as to whether the city wanted to remain in Hungary, which the population voted for. The Allied delegation at Trianon paid minimal attention to the make-up of Hungary's population with 700,000 people in the new state being either German (550,000) or Slovak (140,000). The Treaty of Trianon also stated that those Hungarians who now lived outside of Hungary's borders would lose their Hungarian nationality within one year of the treaty being signed in June 1920.
The new Hungary was a landlocked state and had no direct access to the Mediterranean Sea with is many ports. This had a major impact on her weakened economy as any trade that required to be moved by sea had to pay tariffs simply to reach a dock to enable it to be shipped abroad. Railways had shown their worth in World War One but the old rail lines of the Austro-Hungarian Empire that ran freely across the empire's territory now ran across new state borders. Post-1920 Hungary only had 38% of the rail lines that had existed in the pre-war Austro-Hungarian Empire. The payment of what were effectively tolls made Hungarian exports that were moved by rail more expensive. Before World War One, Hungary had been a major produced of grain with the Austro-Hungarian Empire and much of this was exported. After the war, a landlocked Hungary faced with numerous tariffs and tolls to pay, produced only 30% of the grain she had been producing in pre-war Europe. The new state was also bereft of a healthy supply of raw materials such as iron ore as pre-war supplies of this were now found outside of Hungary's borders. More worryingly for the new government, the bulk of the financial institutions that had powered the Austro-Hungarian Empire were also found outside the borders of the new state. With the economic issues facing Austria, the bankers and investors in Vienna had little reason to look towards Budapest for their investments. Post-Trianon, Viennese bankers invested in Hungary only 5% of the pre-war total.
The Treaty of Trianon ensured that the new Hungary would have a minimal growth in her economic clout. This was, in fact, a deliberate policy. All the treaties signed by the defeated nations had at their core a desire to ensure that none of the Central Powers could ever become a threat to European peace again. Ironically, the unemployment that impacted Hungary in the interwar years was a primary reason for her association with Nazi Germany.
Hungary's army was reduced to 35,000 men with no conscription and as a land-locked nation she was not allowed a navy. An air force was also banned.
The Hungarian people were greatly angered by the Treaty of Trianon - both those living within the new state's borders and those forced to live outside of them. Within Hungary, government buildings kept the national flag lowered to show their grievance and it was not until 1938 that the flags were flown at a third mast after the Munich Agreement returned Southern Slovakia to Hungary - an area that included 550,000 Hungarians who made up 85% of the area's population.