(Sanitized)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R002500700004-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: November 9, 2016
• Document Release Date: December 7, 1998
• Sequence Number: 4
• Publication Date: March 31, 1949
• Content Type: REPORT

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
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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