A Pesti Victoria Gőzmalom összeomlása
The Collapse of Victoria Steam Mill in Pest

Summary/Abstract: The Victoria Mill was founded by wholesale grain merchants and private bankers in 1866 and was one of the big Budapest flour-mills. The once prosperous company became insolvent in the beginning of 1926. The author presents the economic background and the main factors of this bankruptcy on a macro- and micro level as well. The Hungarian milling industry, which was the leading sector of the Hungarian industry before 1918 faced serious problems in the years following World War I. It lost its main markets with the dissolution of the Austro-Hungarian Monarchy. The big flour-mills had to reduce their capacities significantly and lost their importance in economic growth and exports. The collapse of Victoria Mill coincided with the stabilization crisis of 1925-26. During the inflation years Victoria made significant investments in order to maintain the former exports activities in the successor states. The company acquired shares of many milling firms in Hungary and in the neighbouring successor states as well. However, these efforts proved to be futile, flour exports and profitability decreased substantially after 1924. As a consequence of serious losses and over-expansion the financial positions of the firm deteriorated. The servicing of her debts became increasingly difficult because former short-term credits were not renewed and revenues got significantly reduced. Victoria was not granted bank loans and she did not belong to the clientele of the big Budapest universal banks. To strengthen financial stabilization, central bank narrowed the money supply and decreased the discount of the milling bills. At the same time Victoria also suffered serious losses on the commodity exchange and its shares began suddenly to depreciate. Due to these factors Victoria collapsed. The failure incited government and central bank intervention, which ended in the liquidation of the whole concern.

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