1. The Treaty of Versailles itself envisioned a customs union among the successor states of Austria-Hungary. This project was supported by Minister of Trade Rudolf Hotowetz (see: Lidové noviny, November 4, 1924, 1) and most Germans (MP Rudolf Fischer in the Chamber of Deputies 5 April 1922; Prager Tagblatt, November 10, 1922, 7), but rejected for openly nationalist reasons by most other actors (MP Jan Slavíček in the Chamber of Deputies 25 September 1924; Národní listy, September 8, 1922, 1), including the liberal Minister of Finance Karel Engliš (Lidové noviny, December 21, 1924, 1).

2. National Archive of the Czech Republic (NACR), Protocols of Government Meetings (Beneš Government, 1921–1922) (Prague, 1989); NACR, Catalogs and Indexes of Government Meetings, (Beneš Government, 1921–1922) (Prague, 1989); NACR, Protocols of Government Meetings (Third Švehla Government, 1926–1929) (Prague, 1995); NACR, Catalogs and Indexes of Government Meetings (Third Švehla Government, 1926–1929) (Prague, 1995). This contrasts with demands for a new autonomous tariff schedule, which was—as leverage for trade negotiations—mentioned several times in the Parliament and press (Chamber of Deputies: MP Heidler 25 November 1919, MP Slavíček 17 January 1922, MP Palme 13 December 1923, MP Kostka 25 September 1924, MP Hrušovský 19 December 1924; Národní Listy, September 7, 1922, 1; and September 14, 1922, 6).

3. James, Harold, The End of Globalization (Cambridge, Mass., 2002), 115–16Google Scholar.

4. Radice, Edward, “General Characteristics of the Region between the Wars,” in Kaser, Michael and Radice, Edward, eds., The Economic History of Eastern Europe I (Oxford, 1986), 23–65Google Scholar.

5. Kathleen Thelen, “Historical Institutionalism in Comparative Politics,” Annual Review of Political Science 2, No. 1 (1999): 369–404; Paul Pierson and Theda Skocpol, “Historical Institutionalism in Contemporary Political Science,” Political Science: The State of the Discipline, 3 (2002): 693–721.

6. After the dissolution of the Habsburg monarchy, the newly achieved political dominance of ethnic Czechs reinforced ideas to get rid of foreign competitors. Some of the policies and practical steps taken after the end of WWI were similar to other central European countries. Processes of nostrification, demanding that firms active in successor states transfer their official headquarters from Vienna or Budapest, were very similar in Czechoslovakia and Poland. See Jiří Štaif, “Multietnicita národní společnosti, hospodářské elity a jejich konfrontace,” in Drahomír Jančík and Eduard Kubů eds., Nacionalismus zvaný hospodářský (Prague, 2011), 51–79; and Eduard Kubů and Jíří Šouša, “Nostrifikace firem—cesta k uchopení rozhodující hospodářské moci,” in Dragomir Jančík and Eduard Kubů, eds., Nacionalismus zvaný hospodářský, 339–64.

7. Marta Romportlová and Zdeněk Sládek, Hospodářský a sociální vývoj ve střední a jihovýchodní Evropě 1918–1938 (Brno, 1994), 186–99.

8. Joan R. Roses and Nikolaus Wolf, “Aggregate growth, 1913–1950,” in Stephan Broadberry and Kevin H. O’Rourke, eds., The Cambridge Economic History of Modern Europe. Volume 2: 1870 to the Present (New York, 2010), 187.

9. Ibid., 228.

10. Vlastislav Lacina, “Podoba ekonomického nacionalismu v průmyslu po vzniku ČSR,” in Jan Hájek, Drahomír Jančík, Eduard Kubů, eds., O hospodářskou národní državu. Úvahy a stati o moderním českém a německém nacionalismu v českých zemích (Prague, 2009), 70–71.

11. Iván T. Berend and György Ránki, Economic Development in East-Central Europe in the 19 ^th and 20 ^th Centuries, (New York, 1974), 196–97.

12. Yugoslavia and Romania formed the “Little Entente” with Czechoslovakia—a key political and security alliance vis-à-vis Hungarian revanchism in the 1920s. Both countries were recipients of Czechoslovak arms as well as exports of physical and financial capital, often on concessional conditions. Czechoslovakia used this alliance to block the threat of annexation of Austria by Germany in the 1930s. The political influence of Czechoslovakia in the region nevertheless gradually declined and drifted into Germany’s sphere of influence.

13. Berend and Ránki, Economic Development in East-Central Europe, 201–8.

14. An ad valorem tariff or duty is a charge levied on imports that is defined by a fixed percentage of value (e.g. 10% of value). A different type of tariff is a specific duty, determined by a rate that is levied at a certain amount per physical unit of a specific item (e.g. USD 10 per 100 kg).

15. League of Nations, Tariff Level Indices (Geneva, 1927), 15; Heinrich Liepmann, Tariff Levels and the Economic Unity of Europe (London, 1938), 413; Zora Pryor and Frederic Pryor, Foreign Trade and Interwar Czechoslovak Economic Development (Bloomington, 1975).

16. Compare Ferdinand Peroutka, Budování státu 4 (Prague, 1936), 2316–20; Vlastislav Lacina and Jan Hájek, Kdy nám bylo nejlépe (Prague, 2002), 67; Rudolf Olšovský and Václav Průcha, Přehled hospodářského vývoje Československa v letech 1918–1945 (Prague, 1968), 71–73; Václav Průcha, Hospodářské a sociální dějiny Československa 1, 1918–1945 (Prague, 2004), 226.

17. Olšovský and Průcha, Přehled hospodářského vývoje, 71–73.

18. Zdeněk Kárník, České země v éře první republiky (Prague, 2000).

19. The average rate of growth during 1920–29 in western Europe was about 3.8%; in the US it was about 4.1%, derived from Angus Maddison, The World Economy: Vol. 1 (Paris, 2007), 429, 476.

20. Derived from data of the Historical Statistical Almanac (Prague, 1985), 836, 852; Brian Mitchell, European Historical Statistics (Berlin, 2007), 802.

21. As early as 1920, Czechoslovakia’s economy had a total trade surplus of 4.19 billion CSK. In the trade of raw materials and commodities, there was a deficit of 7.38 billion CSK; in the semi-processed and intermediate goods sector, there was a deficit of 323 million CSK. The overall surplus thus reflected the massive production and export of industrial goods, which amounted to 11.89 billion CSK.

22. Statistická příručka ČSR (Prague, 1925), 161; Statistická příručka ČSR (Prague, 1928), 127; Statistická příručka ČSR (Prague, 1932), 224.

23. Derived from the Bureau International de Statistique Commerciale, Bulletin (Brussels, 1925).

24. By Deputies Jan Malypetr, November 19, 1919, Ferdinand Heidler, November 25, 1919, and Richard Fischer, April 5, 1922 in the Chamber of Deputies; Jaroslav Preiss in Národní listy, March 2, 1919, 1; August 18, 1922, 4, Dušan Zachystal in Národní listy; September 13, 1922, 6; and František Fousek in Národní listy October 28, 1922, 6.

25. A tariff rate specified as amount of money levied per unit of import. In the case of Czechoslovakia, this amount generally was in the form of CSK per 100 kg (1 quintal) of goods.

26. Constitutional committee report, Parliament press No. 473, March 16, 1919. Discussion in Chamber of Deputies July 14, 1921, explanatory memorandum on Act 158/1923; government proclamation in Národní listy, September 7, 1922, 1; and Minister of Industry and Foreign Trade Ladislav Novák in Národní listy, September 14, 1922, 6.

27. The 55-million-inhabitant market of Austria-Hungary consisted of Bohemia, Moravia, and Silesia (the Czech lands and part of Poland) which were highly industrialized; Austria, a financial and commercial hub (with some industry); and agricultural Hungary, Slovakia, and parts of Romania and Yugoslavia.

28. Surcharges of 150%–900% were added to the tariff rate by Regulations 340/1918 and 44/1919 by the Ministry of Finance, and Executive Orders of April 26, 1920 (193/1921) and November 6, 1920 (460/1921). The latter introduced coefficients, which were multiplied by the original 1906 tariff schedule.

29. Various trade treaties de facto modified these rates. The extent to which these reduced tariffs were debated (Hotowetz in Lidové noviny, November 4, 1924, 1; response in Národní listy, November 5, 1924, 6; and by MP Jan Dvořáček in Národní listy, January 1, 1925, 1). To evaluate this, we have calculated the ad valorem equivalent of most favored nations’ rates—applied by treaties with France, Italy, Austria, and Germany between 1924 and 1925. We found that out of 184 items in our analysis, 63 were affected by treaties decreasing the rates applied to these countries, typically by between one-third and one-half (see Table 2, Col. 8 in the Data attachment: https://data.mendeley.com/datasets/s346b3tsbf/2).

30. Data attachment available at https://data.mendeley.com/datasets/s346b3tsbf/2.

31. Statistická příručka (1925), 190, 199.

32. It is necessary to point out that the tariffs in the first half of the 1920s were influenced not only by Czechoslovakia’s foreign trade, but also by administrative limits on trade (quotas, official authorization). These were implemented primarily by the Commission for Import and Export and the so-called “Syndicates” of individual producers, ultimately through the Office for International Trade. Exports were soon liberalized; a range of items, however, came under a licensing procedure. The vast majority of imports were liberalized by 1925, but some items were still licensed in 1928. See Vladimír Klimecký, Řízené hospodářství v Československu do roku 1939, II. Část, období 1918–1923 (Prague, 1968); Průcha, Hospodářské a sociální dějiny, 102, 226; Olšovský and Průcha Přehled hospodářského vývoje, 334. This is why we calculated the protection level for 1914 (the period before the First World War), 1921 (the period during the tariff increases), and 1923 (after the tariff increases), supplemented by 1926, for which we estimate trade on the basis of regulation by the tariff levels given above. At the same time, we assert that the existence of alternative regulatory instruments (administrative quotas) further reduced the need for high levels of tariff protection and thus correspond to our interpretation of this policy (see below).

33. We understand “strategic goods” as all finished machinery and electrical equipment goods.

34. See tables 2.1–2.7 at https://data.mendeley.com/datasets/s346b3tsbf/2.

35. Zahraniční obchod RČS (Prague, 1921); Zahraniční obchod RČS (Prague, 1923).

36. Statistická příručka (1925), 190.

37. Ibid., 199.

38. The Lafay Index for country i good j is LIij=100[(Xij-Mij)/(Xij+Mij)-Sk(Xik-Mik)/Sk(Xik+Mik)](Xij+Mij)/Sk(Xik+Mik) where X and M are exports and imports. See Gérard Lafay, “The Measurement of Revealed Comparative Advantages,” in International Trade Modelling, Marcel Dagenais and Pierre Muet, eds. (London, 1992), 209–34.

39. However, policymakers did occasionally mention the increased competitiveness of Germany and Austria caused by the depreciation of their currencies. Interestingly enough, before currency reform in Germany (in the second half of 1924), supporters of National Democracy defended tariffs as necessary to face artificially high competitiveness resulting from the devaluated Papiermark (MP J. Černý, in a report by the Budget Committee, August 6, 1921; MP J. Slavíček in the Chamber of Deputies, December 9, 1921; Minister of Industry and Foreign Trade L. Novák January 19, 1922; Lidové noviny, December 17, 1922, 9; Národní listy, August 22, 1922, 6). After stabilization and the introduction of the Reichsmark, however, policymakers defended tariffs as necessary to counter recovering German industrial competition (Lidové noviny, October 26, 1924, 11; January 7, 1925, 9).

40. Kárník, České země, 239–41.

41. In terms of electoral results, seats, and rankings in 1921 and 1925 (See Data attachment, Tables 4.1 and 4.2. at https://data.mendeley.com/datasets/s346b3tsbf/2).

42. Ian Budge and Dennis Farlie, “Party Competition: Selective Emphasis or Direct Confrontation?” in Western European Party Systems, Hans Daalder and Peter Mair, eds. (London, 1983), 267–305; Roman Chytilek, Politický prostor a politická témata (Brno, 2014), 117.

43. Lacina, Formování československé ekonomiky, 61.

44. Foreign policy as represented by Beneš focused on the building of intensive economic ties with key allies of Czechoslovakia: France, Britain, the countries of the “Little Entente” (Yugoslavia and Romania), and in some cases the US. The goal of this was to weaken the close economic bonds to Germany and—in the context of developing economic sovereignty—Austria as well. But at the same time, the goal was to further improve political relations with Germany and Austria, which were satisfactory at the time. In connection with this, Czechoslovakia never exploited possibilities of “sequestration” (confiscation) of German or Austrian property on its territory, and still allowed exports of raw materials and foodstuffs (particularly to Austria) immediately after the war, in spite of the dire economic situation. In its relations with Germany, Czechoslovakia refused to join in with sanctions imposed by its treaty counterparts (1921 and 1923) and continued in intensive economic relations with Germany even during the Occupation of the Ruhr.

45. Antonín Klimek, Velké dějiny zemí koruny české (13) 1918–1929 (Prague, 2000), 510.

46. There is little doubt that the mastermind behind the monetary policy of the Czechoslovakia was Preiss. See Jiří Hejda, Žil jsem zbytečně (Prague, 1991), 135.

47. To further illustrate the national conflict forming the context of economic policies, there was a purging of state-owned enterprises (railways, postal services): According to Klimek, these firms fired about 30,000 ethnically German employees and hired the same number of Czechs and Slovaks between 1921 and 1930. This was mostly accomplished using excessively strict language requirements. See Antonín Klimek, Nástup Hitlera k moci (Prague, 2003), 113.

48. Ibid., 111.

49. Widely acknowledged domestic economic experts supported by the President, such as Rudolf Hotowetz (Minister of Industry and International Trade) and Karel Engliš (Minister of Finance) were eventually pushed out of their positions. Tensions in later years arose out of Prague Castle’s support for the conglomerate around the machine-industry giant Škoda, which was controlled by Schneider-Creuzot, one of France’s most famous weapons, industrial, and investment groups. The merger of Škoda with the automobile manufacturer Laurin & Klement (after 1927 and today known as Škoda Auto) led to the establishment of some degree of counterweight to the dominant position of Živnostenská Banka. What is more, Živnostenská Banka’s support for the building of links between the Czechoslovak economy and that of the Entente powers (especially capital investment from Britain, the United States, and France—a key priority for Beneš) was minimal, to say the least. Its goal remained clearly to secure a hegemonic position in the domestic economy. See Lacina, Formování, 191; Kárník, České země, 214–17, 265.

50. While the nationalist Národní Listy downplayed the crisis of industry (August 22, 1922, 6; F. Fousek in Národní listy, September 3, 1922, 6; Národní listy, September 6, 1922, 5, and September 8, 1922, 1), the centrist Lidové Noviny frequently reported on collateral damage to the export performance of industry caused by the strengthened currency (Lidové noviny, September 3, 1922, 9; September 5, 1922, 9; September 14, 1922, 9; September 29, 1922, 9; and October 22, 1922, 1). The German Prager Tagblatt was of course extremely critical about the policy and regularly reported on the catastrophic developments in export industries (Prager Tagblatt, August 2, 1922, 7; August 4, 1922, 8; August 8, 1922, 7; September 3, 1922, 7; October 18, 1922, 6; and October 20, 1922, 6).

51. As the Koruna stabilized in 1923, the tariff policy was rarely mentioned, with the exception of discussing the introduction of agricultural tariffs. This issue developed into the single most important economic policy debate by late 1924 and remained so for the rest of the 1920s.

52. Peroutka, Budování státu, 2147; Kárník, České země, 227–28; Jakub Rákosník, Odvrácená tvář meziválečné prosperity. Nezaměstnanost v Československu v letech 1918–1938 (Prague, 2008), 134–36.

53. This was the main economic policy discussion for most of 1922. Both actors exchanged their views on the front pages of major Czechoslovak newspapers (Engliš in Lidové noviny, September 1, 1922, 1, followed by Lidové noviny, September 10, 1922, 1, and September 24, 1922, 1. Also R. Hotowetz in Lidové noviny, September 5, 1922, 2. This was opposed by Alois Rašín who was strongly supported by Národní listy commentators: Národní listy, August 27, 1922, 6, and August 27, 1922, 6).

54. Lacina, Formování, 191; Vlastislav Lacina, “Měnová politika v prvním desetiletí Československé republiky,” Časopis historický, 91 (1993): 1–17; Eduard Kubů, Jana Šetřilová, “Hrad a Alois Rašín 1922–1923,” Český časopis historický, 93 (1995): 458–62.

55. The extent to which the Ministry of Finance actually intervened using foreign exchange reserves is subject to debate.

56. For the exchange rate of the CSK to the USD and the CHF, see Data attachment, Table 5. at https://data.mendeley.com/datasets/s346b3tsbf/2.

57. In September 1922, the CSK was estimated to be overvalued by 34% relative to the GBP and eventually 145% relative to the Reichsmark. See Zdeněk Drábek, “Foreign Trade Performance and Policy,” in Economic Structure and Performance between Two Wars, Michael Kaser and Edward Radice, eds. (Oxford, 1985), 392.

58. Christoph Boyer, “Nationality and Competition: Czechs and Germans in the Economy of the First Czechoslovak Republic” in Economic Change and the National Question in Twentieth-Century Europe, Alice Teichova, Herbert Matis, and Jaroslav Pátek, eds. (Cambridge, 2000), 262–75; Jaroslav Pátek, “Economic, Social and Political Aspects of Multinational Interwar Czechoslovakia,” in Teichova, Matis, and Pátek, Economic Change, 248–61.

59. Alternatively, Jiří Hejda conducted an extensive qualitative study of primary sources from the years 1927 and 1928 published in Přítomnost (vol. 3, 1927, 709, 724, 759, 787, 815, 822; and vol. 4, 1928, 20, 38, 54, 70, 84, 104, 117). He estimated the share of Czech (and Entente) capital in industries in 1927 as follows: 60% in heavy industry, 95% in the automobile and airplane industry, 11% in the textile industry, 10% in the porcelain industry, 14% in glassmaking, 12% in fashion jewelry, 75% in ceramics, 10% in musical instruments, 20% in the paper industry, 68% in the leather industry and 85% in footwear production. See Hejda, Žil jsem zbytečné.

60. We used economic statistics regarding Czechoslovakia’s publicly traded companies and limited liability companies to determine totals of assets and liabilities in individual sectors of the economy in 1927; this percentage was calculated by looking at companies that listed German as the company language. We believe this indicator is sufficiently robust. It was highly unlikely that a company managed and owned by Czechs would use another language in an environment of strong patriotism, actively supported by the government. Putting patriotism aside, most Germans had limited command of the Czech language, unlike the Czech employees.

61. Another 5% of inhabitants included Hungarians, who controlled a large amount of the agricultural land in Slovakia. While Jews were also an economically influential group, they only amounted to 1% of the population. The remainder was composed of Russians and Ukrainians concentrated on their own land in the East, and Poles in Lower Silesia. When discussing the German minority, it is important to bear in mind that these were Austrian Germans, which had a hesitant relationship with Germany in the 1920s; similarly, Germany avoided interfering with their interests. This was in stark contrast to the activist position in support of the interests of the German (Reich) minority in Poland.

62. Radice, General Characteristics, 25.

63. This was related to the relatively slow rate of growth in domestic consumer demand as well as the limited incentives for investment and modernization of the export industry. Nevertheless, at the same time the Czech footwear industry—as a consumer-good light industry—served as an example of astounding success in the world market. The secret lay in a major modernization and the ability to leverage economies of scale. Therefore, the interpretation of the difficulties of the traditional Czechoslovak export industry as a part of an inevitable process of a structural transformation of an industrial economy, common in Czech literature, is not very persuasive. See Kárník, České země, 311, 434–39; Kubů, Eduard and Pátek, Jaroslav, Mýtus a realita hospodářské vyspělosti Československa mezi světovými válkami (Prague, 2000), 211Google Scholar; Průcha, Hospodářské a sociální dějiny, 218.

64. The heated protests about the consequences of economic policies on export industries in the German press died out in 1924. Meanwhile Czechoslovak papers articulated the issue of balancing the protection of industry and agriculture (Lidové noviny, September 10, 1922, 9; see also Engliš in Lidové noviny, January 7, 1925, 9; Národní listy, September 14, 1922, 6, and January 4, 1925, 2). German leftists fiercely fought against the agricultural tariffs in the Chamber of Deputies (in Chamber of Deputies, MPs R. Fischer April 5, 1922 and June, 16 1922; K. Kreibich April 24, 1923 and December 19, 1924; F. Palme December 13, 1924; A. Holitscher September 25, 1924; or K. Kostka December 19, 1924), while German right-wing parties, which later supported the issue as members of the government in 1926, remained silent.

65. Compare with NARC, Protocols of the Beneš Government, also NARC, Protocols and Catalogs of the Third Švehla Government.

66. Eduard Kubů, “Hospodářský nacionalismus v programech politických stran českých zemí v období Rakouska-Uherska a první Československé republiky” in Hájek, Jančík, Kubů eds., O hospodářskou národní državu, 108–13.