Hungarian pengő paper money (Hungarian: pengő papírpénz) was part of the physical form of Hungary's historical currency, the Hungarian pengő. Paper money usually meant banknotes, which were issued (either in fact or in name) by the Hungarian National Bank. Later - during and after the second world war - other types of paper money appeared, including emergency money, bonds and savings certificates.

In the beginning, paper money was designed abroad Hungary, and were printed using simple methods. Later, developed techniques were used creating banknotes which reflected stability. After the war, in parallel with the value loss, the quality of banknotes decreased. Finally, not even serial numbers were printed on the notes

After the war the new democratic government suffered from serious lack of money, so it ordered the national bank to manufacture banknotes quickly and cheaply. There was little time to design new notes, thus the plates of banknotes printed in 1926 were reused (compare the 50, 100, 1 000 000 and 100 000 000 notes with the 50, 100, 20 and 10 pengő notes from the 1926 series, respectively) as well as portraits from other notes (e.g. compare the 500 pengő note with the 500 000 korona note and the 100 000 pengő note with the 2 pengő note from 1940). Beginning with the 1000 pengő note, only denominations of integer powers of ten were used. The uncontrolled banknote issuing aggravated inflation.

In December 1945, the government tried (and failed) to take the inflation under control by a one-time capital levy. This meant that the 1000, 10 000 and 100 000 pengő banknotes had to be overstamped with a stamp that could be bought for 3 times the value of the banknote. Banknotes without stamp were worth 1/4 of their nominal value after this campaign. Later the 100 000 pengő note was issued again with different colors - this banknote and higher denominations did not fall under the capital levy.

Although there were plans to issue ten billion (1010) pengő notes (similar in design as the 1946-version 10 Ft note), denominations higher than one billion were renamed milpengő (which stands for million pengő) and the indicated value was reduced with a factor one million. The next denomination after the one billion pengő note became the 10 000 milpengő, which was equal with ten thousand times million (that is ten billion) pengő, and had similar design as the 10 000 pengő note. The aim was to alleviate everyday money handling and accounting as well as to reuse the designs of earlier banknotes with little changes.

After the one billion milpengő note a new abbreviation had to be found out, since further higher denominations were necessary. This became the b.-pengő (which stands for billion pengő; billion is on the long scale i.e. million times million) and the designs could be reused again with changes in the color and adding "B" letters. The highest printed denomination - the one billion b.-pengő (i.e. 1021 pengő) note - was never released into circulation.

This naming scheme and reuse of the designs is the reason of the cycle pattern in the hyperinflation pengő notes. The cycle was 6 digit, meaning that notes with the same number before the denomination (e.g. 10 000 pengő, 10 000 milpengő, 10 000, b.-pengő) had the same design.

Hungary was spared much of World War II’s destruction until 1944 when it became a battleground between Russia and Germany, and half of Hungary’s industrial capacity was destroyed and 90% was damaged.  Transportation was difficult because most of the rail lines and locomotives had been destroyed. What remained had either been taken by the Nazis back to Germany or seized as reparations by the Russians.

Prices were already rising in Hungary after the war because production capacity fell due to the destruction.  With no tax base to rely upon, the Hungarian government decided to stimulate the economy by printing money. It loaned money to banks at low rates who then loaned the money to companies. The government hired workers directly, they provided loans to consumers, and they gave money to people.  The government literally flooded the country with money to get the economy going again. Money may not have grown on trees, but it certainly flowed off the printing presses.

To see how quickly the money supply rose, consider the fact that the currency in circulation stood at 25 billion Pengö in July 1945, rose to 1.646 trillion by January 1946, to 65 quadrillion (million billion) Pengö by May 1946 and to 47 septillion (trillion trillion) Pengö by July 1946.

How bad was the inflation? Something that cost 379 Pengö in September 1945, cost 72,330 Pengö by January 1945, 453,886 Pengö by February, 1,872,910 by March, 35,790,276 Pengö by April, 11.267 billion Pengö by May 31, 862 billion Pengö by June 15, 954 trillion Pengö by June 30, 3 billion billion Pengö by July 7, 11 trillion billion Pengö by July 15 and 1 trillion trillion Pengö by July 22, 1946. Obviously, the inflation was devastating to the mathematically challenged.

At the height of the inflation, prices were rising at the rate of 150,000% PER DAY. By then, the government had stopped collecting taxes altogether because even a single day’s delay in collecting taxes wiped out the value of the money the government collected.

Before the war, in March 1941, there were 5 Pengö to the US Dollar, by June 1944, there were 33 Pengö to the USD and in August 1945 when the real hyperinflation began, there were already 1320 Pengö to the USD.  Then, the Pengö collapsed.  There were 100,000 Pengö to the USD by November 1945, 1.75 million by March 1946, 59 billion by April 1946, 42 quadrillion by May 1946 and 460 trillion trillion by July 1946. 

Of course, Hungary had taken some failed measures to reduce the inflation. In December 1945, the government imposed a 75% capital levy by making people turn in 400 Pengö and receive 100 Pengö back with a stamp on the banknotes to indicate they were legal tender.  But they didn’t stop printing money.  The hyperinflation made it even more difficult for the government to collect taxes, so they introduced the Adopengö which supposedly was indexed to inflation, but even the indexed Adopengö succumbed to the inflation.  By July 1946 there were 2 million trillion Adopengö to the Pengö.

So how did people cope with this onslaught of money?  How did the government that printed the money handle so many zeroes?  The solution was simple: change the name of the currency.  The Pengö was replaced by the Milpengö (1,000,000 Pengö) which in turn was replaced by the Bilpengö (1,000,000,000,000 Pengö) which was replaced by the inflation-indexed Adopengö. 

The banknotes would have the same picture on them, but be a different color.  The Milliard Pengö was lavender, the Milliard Milpengö was blue and the Milliard Bilpengö was green, but except for the color, the notes looked alike.  Someone who lived through the hyperinflation said they gave up on looking at the denominations and when someone bought something the cashier would say that their bread cost them two blues and a green.  The Milliard Bilpengö, pictured here, is the highest denomination note ever printed since it was equal to a Billion Trillion Pengö. Unfortunately, at the end of the inflation, it was only worth about twelve cents USD.

The Forint replaced the Pengö on August 1, 1946 at the rate of 400,000 Quadrillion Pengö to the Forint; however, the stabilization worked, and prices remained relatively stable in Hungary into the 1960s. As for all the old Pengö, they were thrown away because they were worthless.

Francis II Rákóczi (Hungarian: II. Rákóczi Ferenc, Hungarian pronunciation: [ˈraːkoːt͡si ˈfɛrɛnt͡s]; 27 March 1676 – 8 April 1735) was a Hungarian nobleman and leader of the Hungarian uprising against the Habsburgs in 1703-11 as the prince (Hungarian: fejedelem) of the Estates Confederated for Liberty of the Kingdom of Hungary. He was also Prince of Transylvania, an Imperial Prince, and a member of the Order of the Golden Fleece. Today he is considered a national hero in Hungary.

His full title was: Franciscus II. Dei Gratia Sacri Romani Imperii & Transylvaniae princeps Rakoczi. Particum Regni Hungariae Dominus & Siculorum Comes, Regni Hungariae Pro Libertate Confoederatorum Statuum necnon Munkacsiensis & Makoviczensis Dux, Perpetuus Comes de Saros; Dominus in Patak, Tokaj, Regécz, Ecsed, Somlyó, Lednicze, Szerencs, Onod.

His name is historically also spelled Rákóczy, in Hungarian: II. Rákóczi Ferenc, in Slovak: František II. Rákoci, in German: Franz II. Rákóczi, in Croatian: Franjo II. Rákóczy (Rakoci, Rakoczy), in Romanian: Francisc Rákóczi al II-lea, in Serbian Ференц II Ракоци.