1919 Treaty separates Austria and Hungary
1920 Treaty of Trianon is signed; Hungary loses two thirds of its territory
1920s-1930s The Silver Age of Budapest
1941 Admiral Horthy, governor of Hungary, sides with Hitler
1944 Mass deportations of Jews to concentration camps
1945 Russian military control is introduced
1946 Hungarian Monarchy gives way to Hungarian Republic
1948 Communist Party take control; collectivization of land ownership and nationalization of industry
Although World War I proved disastrous to the country as a whole - the treaties shrinking the territory to almost one-third of its original size (millions of ethnic Hungarians found themselves living outside their native land), Budapest itself did not suffer particularly, so the process of development resumed after a brief halt.
In 1918, the Austro-Hungarian Empire fell into pieces, and in 1919, the weak bourgeois government consigned its power to social-democrat/communist leaders. The Soviet-inspired, Proletarian/Wing Dictatorship, led by Béla Kun, was put to an end by invading Roman and French Troops. Following a peace treaty, order was re-established by a former admiral, Miklós Horthy, who was later elected as governor. In the so-called „Horthy-era”, between 1919-39, Budapest became a cosmopolis. Development was halted by the breakout of the 2nd World War, where Hungary aligned with Nazi Germany, attacked Yugoslavia, then the Soviet Union, and encountered great losses on the Eastern Front.
Anticipating and knowing about Horthy's communication with the Allies, and possible defection from the Axis alliance in 1944, Nazi Germany staged a coup and overthrew Horthy as the leader. The Germans installed an Arrow Cross government, which enabled them to begin the unobstructed massacre of the Jews of Budapest without mercy. When the Communist Red Army of the Soviets reached Budapest, a six-month long siege reduced the entire city, but mostly the Castle District to rubble. Bombs blew through most roofs in Budapest; walls were blown to pieces by tanks. The occupants sought shelter in cellars, and often ate dead horsemeat found in the streets just to survive.
The Second World War had a catastrophic effect. Apart from the horrifying cost in terms of human casualties, the architectural splendor of the city was brought to a shameless ruin. The retreating Germans blew up every bridge over the River Danube. The authorities managed to replace these within four years, as work to rebuild the city progressed apace. Reconstruction restored, and even outshone the old familiar look of the city, with its buildings and investments. From a governmental standpoint, another decisive change took place in 1950, when the surrounding cities and other settlements were connected to Budapest, and Greater Budapest came into existence with 22 districts to replace the old 10, later 14.
As the Communists gained power by force, the Allies retreating and giving way, fearing the Communists, the former Arrow Cross torture chambers in the prisons filled up once again. But this time with the Soviet appointed staff, mad up of mostly opportunity seekers to gain wealth and power over their neighbors. A huge statue of the Soviet dictator (whose name was bestowed upon Budapest's main street) symbolized the reign of terror carried out by Mátyás Rákosi (a puppet to the Soviet Communists) also know as; Hungary's "Little Stalin", the murderer of his own people.