Document Type: 
Document Number (FOIA) /ESDN (CREST): 
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Original Classification: 
Document Page Count: 
Document Creation Date: 
November 9, 2016
Document Release Date: 
December 7, 1998
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Publication Date: 
March 31, 1949
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PDF icon CIA-RDP82-00457R002500700004-7.pdf210.32 KB
25X1 A9a Approved For ., R~ %1p8% I 8 -004 INFORMATION REPORT CD NO. OUNTRY Hungary SUBJECT .., .,Deno Race,.: PLACE ACQUIRED DATE OF IN 25X1X6 DATE DISTR. 31 AGAR 1949 NO. OF PAGES 2 - 25X1 A2g NO. OF ENCLS. (LISTED BELOW) SUPPLEMENT TO REPORT NO. I.. RACZ should be considered one of the snoet tal =tnd j a+.arLeia.i, a its of the post-.war period in Hungary. PACZ is not 4 Commmnist and has no interest in politics. Vow about 4O years old, he has shown great talent in handling a variety of economic problems both inside and outside the sphere of the Finance Ministry. RACZ began his career in a large Hungarian bank an(I later was employed by the Budapest Ohamber of Commerce and Industry. For a while he worked in the Ian ariau Foreign Trade Office and during the war he helped to organize the Hungarian program for collection and distribution of food. By the end of the war he had obtained the title of ministerial adviser and was named economic consultant to Prime Minister iAGY of the Smallholders Party. This party, of which RACZ was not a member, contested the appointment of B&CZ as Minister of Finance in August 1.946. The Communists, who considered him too strong a man for their liking, could not at that time prevent his appointment. Before the time of ACZ' appointmeht to the Finance Ministry, his predecessor, GORBOh. who had, been too weak or too venal to fight Communist infiltration into key economic positions, had allowed virtually com)lete control of HXungarian vcono ;y to pass into the hands of Zoltan VAS, Comn=ist Chief of the Supreme Economic Council. 3. Since RACZ had. no particular ambition to become Minister of Finance, he sub- mitted preliminary conditions in writing. Aefore he entered into office, he demanded dissolution of the Secretariat of the aunreme Boonomic Council and restoration of various economic functions to those ministries and departments which had exercised them previously. After long negotiations, a compromise was reached whereby removal of Zoltan VAS was to be discussed six weeks after RACZ took over the Ministry of Finance. The question of rli em's s iing VAS, how- ever, was never raised agai.. , Possibly, Burin, the agreed interval of six week: tCCZ realized that his own superior knowledge of economios, coupled with an efficient, predominately non.Commzn.ist staff in the Ministry, would enable him to keep VAS in check without dissolving the Supreme Economic Council. 4. The six months during which V LO'" served as Minister of Finance represent a. temporary period of conservative and bourgeois orientation within the Ministry tie:" r r:.~ikAi;v Luatl a oonoiliatory policy on the part of Zoltan VAS. `.!foie Ministry CLASSIFICATION NAVY~_~ I NSRCi ff-A:TE 1X1_ ARMY ,` AIR FRI t 'r hereby regra I"his docurnen ith the CONFIDENTIAL in acco"da 8 from the letter of 1~ A gence to fhe 16 Director o f rchivis tates. 20 eview 6:rOVe r1- Document No. NO CHANGE in .Cass Autb: se 1999/09/09 : CIA-RDP82-00$SV 25X1A6a Approved For R, M 15 1111 002500700004-7 C aNMAL INTELLIGENCE, AGENCY 25X1A2g 'l oo regained itz eccxaomic power chiefly because iiA person'' am- earned himself with all important problems and dominated economic discussions in the Council of Ministers and the Supreaes Eoonosd c Councils Possibly his negotiations with the Soviets concerning the question of German assets in Hun gary were his greatest achieTsmaut in this period a 5. Since RACZ was thwnxting the program of the Soviets and of the Hungarian CF, they planned his rc ovals It was accomplished by an engineered 4* ? .t1.:~ct campaign in which many defendants at the various conspiracy trials were made to testify that they had counted on support from RACZ in carrying out their plots. Since his removal, the Communists have again regained full control over Hungarian economic life h,t The 'present regime in Hungary has not yet decided- definitely ghat to do .with RACZ, whether to make use of his great talents under strict supervision or to liquidate him as a dangerous person. In spite of frequent police investi- gations, RACZ is now employed by the Hungarian Institute for `".conomic Research and has just completed his ark on the agricultural part of the Hungarian Five Year Plan. He works long hours with utmost energy because of 'h is inter- est in the problems involved and is still devoid of political interests or convictions. His economic policy and tenets cannot be considered reactionary, even from a Communist point of view. As UU?inieter of Finance, RACZ was frequently more radical than his Communist State Secretary, APITOS, whenever F ACZ was convinced that a radical measure vvxould benefit Hungary economically. He was not ideally qualified to serve as Minister of Finance because of his tendency to try to do all the tisork himself. He would be better fitted for a position as an economic planner on a large scale or as a high level economic consultant. RACZ is currently in great financial difficulties. Last fall he ryas paid about 2,000 Swiss francs by an unspecified United p'ations agency in Geneva for his share in preparing an economic study which appeared under the auspices of the United :Nations,: Be had the money denosited in a %-Iss bank. Later, he made arrangements to turn over these Swiss fiends to a Hungarian in exchange for 18,,000 forints. The Hungarian purchaser of the Fmiss francs !p id RACZ 18,000 forints immediately, and RACZ has already spent this sum. However, according to RACZ, former State Secretary K rNY, nor. a refuges. In London, Thom RACZ had delegated to transfer the Sr.-Ise francs from ttACZ ? . account to that of the Hungary n purchaser, drew out the money and then absconded V th it. RACZ is now obliged to repay the sun in forints which had been advanced to him; on his present salary, it till take him tv* years to pay off this debt. Approved For Release 199 P82-00457ROO2500700004-7 NOW