Masaryk University Faculty of Arts Department of History Milan Balaban Yugoslav-Czechoslovak Economic Relations between 1918 and 1938 year PhD thesis Supervisor: Doc. PhDr. Vladimír Goněc, DrSc Brno 2016 1 I declare that this thesis is a product of my own work in its entiretyand uses the sources and literature in the bibliography. Mgr. et. Mgr. Milan Balaban 2 I would like to thank my adviser, Doc. PhDr. Vladimír Goněc DrSc, for his valuable advice during the research and writing of this thesis. Similarly, I would like to thank other historians who provided me with assistance and advice in my exploration of the issue of Yugoslav-Czechoslovak relations. I would also like to thank all the employees in the Archive of Yugoslavia in Belgrade, Archive of the Ministry of Foreign Affairs in Prague, National Archive in Prague and Archive of the Czech National Bank in Prague. Without their selfless and professional support, the research for this thesis would not have been possible. In the end, I would like to thank my wife and family for their support and unlimited patience. 3 Content Introduction…………………………………………………………………………….....6 1. Historical background and general economic history…………………………….18 1.1. The creation of Czechoslovakia and Yugoslavia after the First World War and the Little Entante……………………………………………………………………...18 1.2. The economic history of the Central and Southeast Europe in the Interwar period in a wider European context…………………………………………………………………………….22 2. Economic relations and adaption to the new circumstances in the time of instability (1918-1924)……………………………………………………………….32 2.1. Adaptation to the new circumstances after the First World War………………...32 2.2. Trade arrangments………………………………………………………………..42 2.2.1. Trade relations in wine and beer export…………………………………..49 2.2.2. Speculators, workers, pensioners…………………………………………52 2.3. Financial questions……………………………………………………………….57 2.4. Weapons arrangement……………………………………………………………68 3. Economic relations in a time of relative stability (1925 – 1929)………………….70 3.1. General political and economic situation in the second part of the 1920s……….70 3.2. New Trade Agreement…………………………………………………………...73 3.2.1. Question of the beer import………………………………………………83 3.3. Weapons arrangement…………………………………………………………....85 3.4. Financial situation and general trade trends……………………………………...90 4. Relations after economic crisis, protectionism, Economic Little Entente………96 4.1.Political situation and Global Economic Crisis…………………………………...96 4.2.General economic trends on the beginning of the 1930s…………………………99 4.3. Economic Council of the Little Entente and the other institutions……………..103 4.4. Financial and clearing arrangements……………………………………………112 4.5. Other issues in economic relations……………………………………………...125 5. Years of German challenge and breaking of unity of Little Entente Allies, death of the Little Entente and end of the First Czechoslovak State…………………..139 5.1. The political situation and German economic and political penetration in the Balkans..................................................................................................................139 4 5.2. The general economic situation and state of economic relations between Yugoslavia and Czechoslovakia…………………………………………………………….........145 5.3. Efforts invested in improving economic relations……………………………...153 5.4. The last sessions of the Economic Little Entente and attmepts for revival of economic relations……………………………………………………………….169 5.5. End of the Little Entente………………………………………………………..178 6. Czechoslovak properties in the Kingdom of Yugoslavia………………………...181 7. Tourism……………………………………………………………………………..194 8. Instead of Epilogue: The destiny of Czechoslovak property in Yugoslavia after the Second World War…………………………………………………………….211 Conclusion……………………………………………………………………………....217 Appendixes……………………………………………………………………………...225 List of Abbreviations…………………………………………………………………..233 List of Tables…………………………………………………………………………...234 Sources and literature………………………………………………………………….236 5 Introduction The relations between Czechoslovakia and Yugoslavia1 is a topic that has been, in the past as well as today, attracting quite a lot of attention from scientists. That interest naturally came from the fact that, even before the first Czechoslovak and Yugoslav states were formed, there existed a long history of mutual relations between Czechs and Southern Slavic nations.2 After the formation of the independent states, the two new successor countries became close allies, united in their opposition to the revisionism of the system and borders based on the post-World War Versailles peace treaties. The formation of the Little Entente, an alliance which lasted for almost two decades, permanently marked their mutual relations. While political relations between Czechoslovakia and Yugoslavia from the earliest years after the brake up of Austro- Hungary preoccupied contemporaries and scholars, the issue of their economic relations were afforded less attention than political, military, and cultural issues. Such neglect of economic relations and the sparse attention they have received from past researchers motivated the author to choose this topic for his doctoral dissertation. This disparity between economic research and cultural/political inquiry was even more noticeable if we consider the fact that Czechoslovakia was, for most of the Interwar period, the second most important trade partner for Yugoslavia for both exports and imports. The Czechoslovak capital had a significant role in the industrialization of Yugoslavia as well as one of the most dominant positions in the Yugoslav banking sector. Mutual economic relations had a considerable influence on the political relations between the two states and were reflected in the functioning of the Little Entente. As economic relations were changing during this period and because this topic has not yet received sufficient attention in scientific literature, it warrants further study. 1 The author uses the name Yugoslavia for the entire Interwar period although the official name of the country until 1929 was the Kingdom of Serbs, Croats and Slovenes (KSHS). The name Yugoslavia was also used even before the official change of the name by the contemporary authors and diplomats. Because of that, the author sometimes simultaneously uses both names. 2 See more on the relations of Czechs and South Slavs before 1918 in: ŽÁČEK, Vaclav a kolektiv: Češi a Jihoslované v minulosti. Od nejstaršich dob do roku 1918. Praha 1975; HLADKÝ, Ladislav a kolektiv: Vztahy Čechů s národy a zeměmi Jihovýchodní Evropy. Praha 2010. 6 Theme and Goals of the Dissertation The subject of our work will be economic relations between the two countries in the period between 1918 and 1938. During this period, Yugoslavia and Czechoslovakia developed allied and economic relations which were quite intensive. As we already mentioned, the topic of economic relations between the two states was afforded much less attention than the other aspects of mutual relations. Past research usually dealt superficially with economic relations and did not pursue deeper analysis. Even in the cases where the economy was a primary topic of the research, especially in Yugoslavia, the results of the work were burdened by particular ideologies, which were dominant in both countries after the Second World War. In the works written during the communist era in Yugoslavia, this resulted in mutual economic relations being mainly observed through the lenses of a Marxist worldview as the exploitation of Yugoslav economic resources by the foreign capital, i.e. Czechoslovak capital among others. The scarcity is even more evident if one considers the number of works devoted to economic history in Yugoslav historiography. Czech and Czechoslovak historiography generally devoted more attention to economic questions and the results were less ideological, and therefore, more useful. With Milan Vanku, Yugoslav historiography synthesized the Little Entente, but his focus was mainly on political and military relations. The most important works dealing with economic relations in earlier scientific literature in the Czech historiography came from Zdeněk Sládek3 and Marta Romportlová4 and generally covered the issues within the Little Entente and between 3 Zdeněk Sládek (1926-2003) was a Czech historian, who specialized in History of Russia and Soviet Union. His other topics of interests were economic history and the ssue of Little Entante. Zdeněk Sládek worked in the Institute for history of Central and Eastern Europe of the Czech Academy of Science (ČSAV), until 1976, when he was forced to leave work. After the Velvet revolution, he started to work again in that institution until his retirement. Among his most important works belong: Malá dohoda 1919-1938, Její hospodářské, politické a vojenské komponenty. Praha 2000; Dějiny Ruska (together with Milan Švankmajer, Václav Veber and Vladislav Moulis). Praha 1995; Hospodařský a sociální vývoj ve střední a jihovýchodní Evropě 1918-1938 (with Marta Romportlová). Brno 1994. 4 Marta Romportlová (1939) is a Czech Historian who worked at Masaryk University in Brno. In her workd she is focused on the issue of Czechoslovak-Hungarian relations, and as well economic history and relations within Central European context. Among her most important works are: ČSR a Maďarsko 1918 – 1938. Brno 1986, and Hospodářský a sociální vývoj ve střední a jihovýchodní Evropě 1918-1938 7 the allied states. Except for them, there is also Drahomír Jančik,5 who dedicated significant