Developing Foreign Banking
By F. PICK
Under the Austro-Hungarian regime the foreign trade of the lands now comprising the Republic of Czechoslovakia was held in absolute check. Commercial relations with the outside world could only be carried on through Vienna. As a result the principal Viennese banks had branches in Prague and waxed fat from the profits flowing out of the Bohemian and the Slovak trade.
After the dismemberment of Austria-Hungary there was but one institution which maintained branches in other countries for the purpose of developing foreign business. This was “Bohemia” Joint Stock Bank, which had been organized in 1909 with a capital of 1,000,000 (Austrian) kronen by the Savings Bank Corporation to engage in North American trade. Owing to the satisfactory development of this line of business its capital has been several times increased and its present amount is 25,000,000 Cs. crowns, while a proposition is under serious consideration to still further increase it to 100,000,000 Cs. crowns. The name has also been changed to “Bohemia” Czechoslovak Foreign Banking Corporation. The chief activity of this bank has been confined to catering to the needs of travellers and in dealing in foreign exchange. In connection therewith it closely cooperates with a firm (which it controls) in New York. It also has some Balkan connections.
Of the other Czechoslovak banks only the Prague Credit Bank maintains foreign branches, and these are in the Balkans. The “Bank of the Czechoslovak Legionaires” is now in process of incorporation in Czechoslovakia and its branch in Vladivostok is already operating successfully. It is noteworthy that the capital stock of this bank has been subscribed by the troops of the Czechoslovak Siberian armies out of funds saved from their meagre pay during the time they spent in the Eastern wilderness. The bank has purchased a steamer of about 10,000 tons to ply between Vladivostok and Trieste to develop commercial relations between Siberia and Czechoslovakia, which have already proven profitable.
These circumstances led to a formation of another foreign bank having its main offices outside of the Republic with a view to stimulating Czechoslovak foreign commerce at some of the more important points.
Czechoslovakia is called the “Heart of Europe” and has an important commercial “valve” at Hamburg where The Elbe, its most important transportation artery, enters the sea. Because of the established principle that trade follows the courses of navigable rivers—particularly in these days—the Peace Conference reserved to the Republic definite wharfage facilities in this port (Hamburg) and thus laid a foundation for a possible development of Czechoslovak overseas trade.
Some financiers saw an opportunity to aid Czechoslovak commerce and at the same time establish a lucrative business in Hamburg, hence the “Commercial Union of Czechoslovaks Banks, Ltd.” was formed by three Prague banks, (Czechoslovak Agricultural Bank, Bohemian Union Bank and Prague Credit Bank). The capital, 25,000,000 Marks, was paid in by the organizers. Offices were opened in Prague, Hamburg and Berlin. Its organization and service are patterned after the Belgian Bank of Foreign Trade. It does a general banking busines; it specializes in foreign exchange, trade acceptances, opens accounts current and issues letters of credit. It also undertakes to finance large foreign projects as well.
The expansion of Czechoslovak foreign banking is satisfactory but it is still in its infancy. It does not answer the requirements of the volume of Czechoslovak commerce. However, the banks now serving the field are reliable, sound and accommodating. Undoubtedly, in view of the successes already recorded and in response to demands, others will enter this field and thus promote Cezchoslovakia’s commerce.
