The Republic was proclaimed in the aftermath of the Soviet occupation of Hungary at the end of World War II in Europe and with the formal abolition of the Hungarian monarchy, whose throne had been vacant since 1918,[iv] in February 1946.

Initially the period was characterized by an uneasy coalition government between pro-democracy elements—primarily the Independent Smallholders' Party—and the Hungarian Communist Party.

At Soviet insistence, the Communists had received key posts in the new cabinet, particularly the Interior Ministry, despite the Smallholders' Party's landslide victory in the 1945 elections.

From September 1944 until April 1945, as World War II in Europe drew to a close, the Red Army occupied Hungary.

[7] The combination of high demand for finance to pay war reparations with a very weak system of tax collection meant that during 1945 and 1946, the national currency, the pengő, would be destroyed by the most ruinous hyperinflation in recorded history.

[8] The hyperinflation was largely due to the inability of tax revenues to pay the country’s war debts, but some historians argue it was a deliberate policy of the Soviet Union to destroy Hungary’s middle class.

Under Parliament, the leader of the Smallholders, Zoltán Tildy, was named president and Ferenc Nagy prime minister in February 1946.

In October 1947, Rákosi gave the leaders of the non-Communist parties an ultimatum: cooperate with a new, Communist-dominated coalition government or go into exile.

[14] The Republic of Hungary effectively ended in June 1948, when the Social Democrats were forced to merge with the Communists to form the Hungarian Working People's Party.

At the 1949 elections, voters were presented with a single list from the Communist-controlled Independent People's Front, which carried 95 percent of the vote.