Gál, Z.: The Golden Age of Local Banking. The Hungarian Banking Network in the Early 20th Century


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Gál, Z.: The Golden Age of Local Banking. The Hungarian Banking Network in the 
Early 20th Century. Gondolat Kiadó, 2010. Budapest, 199 p

Though this book was issued in 2010, the review is being published only in the end 
of 2011. This delay, however, does not lessen the actuality of the book. On the contrary, this 
way Viktor Orbán, the prime minister of Hungary and Jean-Claude Trichet, the president 
of the European Central Bank can also contribute to the review. If you would like to know, 
please read the review.

In our age economic strength responsible for social, urban and regional develop-
ment is expressed in the condition of all services, referred to as the third (tertiary) sector 
of economy. The stronger the tertiary is the more powerful the economy stands. And the 
cream of the tertiary services is the banking that yields the greatest profi t with the least 
investment. The American Historical Geography School found that the features of the urban 
network are in strong correlation with the spatial structure of the banking system.

Zoltán Gál examines in this book the impact of the Hungarian banking system on 
regional and urban development in the early 20th century, when local banks were already 
important territorial elements of the fi nancial space developing close links to regional eco-
nomic structures. Why can a Hungarian topic be interesting to others than Hungarians?

First, this book opens a window on the past of Central European provincial banks. 
We are reminded to the fascinating world of the provincial elites we have forgott en. By 
combining quantitative analysis of fi nancial stocks and fl ows with original insights into 
the relationships between fi nancial development and urban development, we witness a 

creative marriage of fi nancial geogra-
phy and fi nancial history. 

The book’s theme resonates 
with particular significance in the 
context of the ongoing fi nancial crisis, 
which has demonstrated what happens 
when banks indulge indiscriminately in 
globalization and innovation, neglect-
ing local knowledge, local responsibili-
ties and local innovations.

Second, the author has found 
new and original methods to exploit the 
data, which remained aft er the provin-
cial banks disappeared. He off ers a set 
of highly innovative approaches to im-
portant issues regarding the economic 
history of a Central European country, 
in fact including the present Slovakia, 
parts of Romania, Serbia and Ukraine, 
including the role of fi nancial interme-
diaries in urban development, the hier-
archy of fi nancial centers and economic 
disparities within this Euro Region.

Jean-Claude Trichet, the presi-
dent of the European Central Bank stat-
ed on 4th October 2011 that our ongoing 



402

fi nancial crisis resembles to the global fi nancial breakdown of 1929 in many aspects, though 
governments intervene more successfully than at that time. What can be the reason for it? 
They must be using the support of local expertise of a long history. This is what this book 
concentrates on: fi nding the roots of local banking expertise.

Viktor Orbán, the prime minister of Hungary said during his visit in Saudi Arabia 
on 4th October that one of the ways leading out of the worldwide banking crisis is hidden 
in the sleeping economic potentials of the Central European countries. These economic 
potentials must include the top ranking branch of the tertiary sector i.e. fi nance on the 
local and not global level. 

The nature, the root and the history of local banking of the Central European re-
gion are important to know once fi nancial, economic and regional reshaping is demanded 
and called for. Now, a large part of the Central European land used to belong to the histori-
cal Hungarian state, the territory of which is examined in the book of Zoltán Gál.

These are the reasons which make his book an interesting, timely and topical issue 
in our days for not only Hungarian geographers and economists, but for everyone being 
interested in the fi nancial and economic reconstruction of the Central European region, 
what is more in overcoming the global fi nancial crisis. Thus the laziness of the reviewer is 
rewarded by the increasing actuality and timeliness of this volume that has been published 
in the doctorial masterpieces series.

István Tózsa