Around the year 1000 Stephen I, King of Hungary, organized a feudal state on the Central European model and introduced Christianity. A few years later merchants from central and western Europe settled in Buda and Pest and helped both places to develop rapidly. In 1241-42 
Mongols stormed the Danube towns of Buda and Pest. A few years later the construction of the Castle of Buda ordered by King Bela IV was completed. The royal court moved to Buda in 1347 again, when work was begun to expand the fortification into a palace in contemporary Gothic style. From then on Buda became a royal town, while Pest developed into a prosperous trading center. In the second half of the 15th Century Matthias Corvinus extended the Royal Palace and Buda to became a center of Renaissance culture.
In 1526, the Turks took Buda and Pest. It was 1686 before Charles of Lorraine was able to reconquer Buda and Pest for the House of Habsburg. Various measures taken during the reign of Empress Maria Theresa led to a further economic upsurge in Buda and Pest, largely brought about by an influx of German-speaking settlers. In 1777 Buda was made a university town but lost this title to Pest a few years later. The left bank of the Danube soon became the intellectual and political center of the country.
The Chain Bridge was opened in 1849, with the aim of helping Buda and Pest to merge more quickly. In 1867 Emperor Franz Joseph I and Empress Elisabeth ("Sissi") were crowned in Matthias Church. The Austro-Hungarian monarchy of the Danube came into being. In the history of Budapest the year 1872 stands out as a milestone, for it was then that the three separate settlements of Pest, Buda and Óbuda (literally "Old" Buda) were united into one city with a population of more than 150,000. Budapest officially became the capital city of Hungary, and underwent rapid growth in size and eminence. This was the city's golden age, and coincided with the Hungarian millennial celebrations in 1896 when the continental Europe's first underground railroad was opened.

Towards the end of the Second World War, in the autumn of 1944, Budapest became a front-line town and suffered severe damage, especially in the castle quarter where units of the German army were barricaded in. From February 13th 1945 onwards Soviet troops controlled the whole of Budapest and thereafter it was ruled along strict Soviet lines. In the autumn of 1956 political turmoil and economic hardship fueled popular uprisings which were savagely put down by Hungarian and Soviet forces of law and order. The inner city presented a picture of devastation.

In the 1960s and 1970s much inner-city building and reconstruction took place, such as the opening to traffic of the Elisabeth Bridge, extension of the underground network, renovation of the old city center, especially the castle quarter, and the building of large luxury hotels both in the castle quarter and on the Pest bank of the Danube. What soon became known as "goulash communism" encouraged an upsurge in tourism, and visitors from both Eastern and Western Europe as well as the US.
The shot below is from Gellert Hill overlooking the Danube River in Budapest, Hungary. Buda Castle, to our right, is more than 1300 years old and dominates old city of Pest which lies to our left. Today, Buda and Pest are one.
It is a beautiful and fun city to visit! It has been rebuilt following the damage of World War II and the Soviet invasion. The Reds pulled out in 1991 leaving the Hungarian people to pull themselves back to their heritage. And they have done it! We are enjoying their enthusiasm and pride.
Sixty percent of the city was destroyed in World War II. Rebuilding started after the war but the city suffered further damage in the 1956 Hungarian Revolution and subsequent Soviet armed invasion. Bullet holes are still seen on buildings in Pest and in Budapest Castle. However, much of the city has been restored to it's original state. While there has been modernization, the authenticity of the architecture has been maintained.
Economically Hungary is suffering from it's days of Communist domination. The Communist government financed its socialist largesse by borrowing heavily from neighboring countries to pay for free medical care, wages and retirements while collecting no taxes. Today, the Hungarian government and the Hungarian people are repaying the "sins" of the past. We Americans need to pay attention!