The Czechoslovak Review/Volume 3/Economic Situation

Economic Situation

Just as in the United States, so in the Czechoslovak Republic the great economic problem at present is the lack of coal. Although the country is well supplied with coal deposits, every industrial interest complains of an insufficient supply of coal. Sugar mills besiege the government with urgent requests to increase their share of the fuel, so that they can turn out beet sugar, the principal means by which the Republic pays for its purchases abroad; glass factories have to turn down foreign orders because they do not get their allotted quota of coal, farmers cannot thrash their wheat, and Prague street car service has to be cut down.

Minister of Public Works Hampl claims that the coal supply is still only about 70% of the normal. The efficiency of the workmen has been affected by the war, improvements in the mines have long been neglected, and the owners in view of the possible nationalization of coal mines have refrained from investing more money in machinery or opening new shafts. Importation of coal and coke from Germany has ceased, and on the other hand Bohemian coal has to serve much wider areas than before—Slovakia which formerly was supplied chiefly from the Salgo-Taryan mines which are now controlled by Roumanians, and Poland and Austria to both of which countries the Czechoslovak Republic is compelled by the Allies to deliver a specified amount of coal weekly. There is also a lack of railroad cars, but since Bohemia has the steel industry highly developed and possesses important railroad car and locomotive shops, this problem is being solved.

In the end the Czechoslovaks had to do what other European countries were compelled to do before them, namely reduce passenger traffic to save coal for freight traffic and for factories. Beginning with October 5 many passenger trains were taken off and on Sundays especially traveling has been reduced to a minimum. At that the Czechoslovaks are much better off than Austrians who have to depend for their coal supplies on what the Czechoslovaks send them; and on the whole the situation in Bohemia is not as serious as in France, to say nothing of Italy.

While many of the great Bohemian industries are still crippled by lack of raw materials, those industries which draw their material from agriculture have been producing and exporting. The amount of sugar, malt, beer and alcohol, available for export and for all of which a ready market will be found, is estimated at four billion crowns. Other exports consist of hops, lumber, manufactures of wood, chinaware and glassware, bringing the total to five billion. The problem has been, how to employ these products to get. for them partly the needed deficiency of food supplies, but mainly raw materials, like cotton, wool, copper, rosin, rubber etc.

Since the Czechoslovak Republic, like every European state and particularly the new states, finds it difficult to obtain loans, an arrangement was reached with a group of Holland-French banks to advance to the Republic 300 million francs on the security of the beet sugar crop. The loan is made at a rate one percent higher than the prevailing Dutch bank rate which in September was 5 1/2%, and a two percent commission was charged. The syndicate advances the money at once, and in return gets the handling of the entire sugar crop, charging the usual commission on the sale of sugar abroad. Of the sum advanced 80 million francs will be used to buy cotton, 37 mill. to buy wool, 80 million for needs of the metal industries, 20 million for chemical industries, 50 for leather industries.

The first shipment of the cotton which reached Bohemia in July has long since been worked up. into dress goods. It is interesting to note that the Czech manufacturers were pleasantly surprised by the quality of this American cotton; fears were expressed in advance of its arrival that inferior quality would be sent, since the Bohemian mills had to take whatever they could get. But the yarn made of this cotton was so good that is was mixed with inferior yarn purchased in Italy. On the other hand the problem of payment is still bothering the Bohemian cotton syndicate. The shipment which cost $6,300,000 was bought on ninety days credit in New York and with much difficulty was renewed for ninety days more. When it was purchased in July, a dollar was worth 15 crowns, now it is worth more than 30; in other words the cost of the first shipment of cotton to the Bohemian mill owner has more than doubled. It is stated that a second shipment of 15,000 bales, bought before America’s entry into the war, is now on the way.

The new republic has as yet no commercial treaties with its neighbors and customers, except one with Jugoslavia providing for the most favored nation treatment; a similar treaty with France will be signed soon. From Jugoslavia wheat and pork is being brought in, and there is also wheat on the way from Argentina, as the government is taking steps to have the balance of food stuffs needed for this crop year, brought in at once. In this connection preliminary crop figures for Bohemia—figures for the rest of the Republic are not yet available—will prove interesting, especially in comparison with crops before and during the war.

The total amount of grain crops for Bohemia was in quintals of 220 pounds:

	1919	1918	1917	1914
Wheat	2,805,980	2,124,823	1,901,806	4,387,430
Rye	5,687,683	4,530,973	3,743,819	8,994,566
Barley	2,628,390	1,780,547	1,632,696	6,254,218
Oats	4,206,054	3,270,914	1,842,199	9,696,394

The yields per hectar compared as follows:

	1919	1918	1917	1914
Spring wheat	11.2	07.5	07.0	.18.3
Winter wheat	12.7	09.2	08.1	.18.3
Winter rye	11.5	08.9	07.2	.17.0
Spring rye	06.6	06.5	05.2	.12.6
Barley	12.4	08.3	06.7	.20.7
Oats	11.2	08.7	04.7	.19.3

The discrepancy between the yield before the war and during the war is startling, and while for the current year a great improvement is to be seen, it is evident that the fertility of the soil has been affected by lack of commercial fertilizers and by insufficient cultivation, due to lack of draft animals. Undoubtedly, though, some of the decrease in total yield is accounted for by the fact that the farmers hid as much grain as possible before the authorities to avoid requisitioning, and than even today this motive is exerting an influence, because all foodstuffs must be sold to the government at fixed prices.

The great Škoda Works in Pilsen, famous for their cannon, have passed under the financial control of the French armament firm Schneider-Creusot. While the president of the company and majority of the directors will be Czech, French capital will enable the great plant to change more rapidly to peace basis; it is stated that the Pilsen factory will get large French orders in connection with reconstruction work in northern France. French and Holland capital has also been invested in the Prague Credit Bank which has recently raised its capital from 50 million crowns to 100 million. The foreign banks interested are the Banque of Paris, Rotterdamsche Bankvereinigin and the Societe Generale; there will be three French and one Dutch director on the board.

Complaints have been frequently voiced in the financial and economic columns of Prague newspapers against too much government interference in foreign trade. Early in October a few restrictions were taken off and a list of commodities was published which may be exported or imported without the necessity of showing that it is to the advantage of the country to import, respectively to export them. A license is still necessary, but will be issued as a matter of course. Among commodities which may be imported are: Meats, fats, vegetable and mineral oils, hardwoods, coal, coke, mother-of-pearl, celluloid, ores, phosphates, naval stores, cotton, flax, jute, hemp, wool, rubber, cork, iron and steel, tin, copper, nickel, zinc, cobalt, sulphur, salts used for fertilizers, starch, dyes, rags for making paper. Following are the principal commodities which may be more freely exported: Dried vegetables, preserved fruit, wines, alcohol, mineral waters, coffee substitutes, lumber, building stone, manufactures of paper, rugs, hairnets, brooms and brushes, reed furniture, shoes with wooden soles, gloves, wooden toys, novelties, most glass products, beads, imitation precious stones, nails, agricultural implements, cement manufactures, brick and clay products, wire, iron pipes, wagons, clocks.

On October 15 the last of the old one and two crown banknotes were withdrawn from circulation and Czechoslovak one and five crown bills were substituted for them. It is now a question of only a few weeks, before the last of the old money disappears. The change is sure to have a favorable effect on the value of the Czechoslovak crown in foreign capitals, and it will among other things enable the government to relax the severe inspection measures which are at preserit in force on all the frontiers of the Republic.