Lats – The Latvian National Currency

The famous Five Lats silver coin from 1931

Today June 5 Latvia made important historical step- the European Commission and European Central Bank have approved Latvian entry into the Eurozone. Latvia will join the Euro club in 2014 and replace its historical national currency the Lats (LVL) For years Lats was the symbol of the Latvian national sovereignty. It was also one of the most beautiful European currencies. It will be no wonder if in following decades Latvian coins will become the hit among the collectors. This article is about this currency and its history.

When the Republic of Latvia was proclaimed in 1918, it had no national currency. It was a currency chaos Russian Czarist rubles and German Ostmarks were all used at the same time. The first Latvian national currency was the Latvian Ruble that was supposed as the provisional currency until peace and economical stability was to be reached. The law establishing Lats as the national currency was approved in 1924. The law was made after long discussions. The Finance Minister Ringolds Kalniņš (Kalning) desired to remove state treasury notes and use the state gold fund to issue golden Lats. His plan was influenced by banker Izidor Friedman who advised to fill the state treasury with gold. However, the parliament turned down their plans as the Latvian golden reserves were too low and extra golden import was required to make golden Lats. Kalnings was forced to resign. On November 14, the parliament voted to keep state treasury notes and introduced the dual currency system. The Ministry of Finances was responsible for the state treasury notes while the Bank of Latvia emitted the paper currency. There was 10, 20, 25,50, 100 and 500 paper banknotes. And 1,2 and 5 silver Lats. 1, 2 and 5 Santims were made from bronze and 10, 20, 50 Santims were made from nickel. The name Santīms came from French word centime. Centime was used in France and is still used in many of its former colonies.

Latvian banknotes had national motives. The women in folk costumes, national heroes like Krišjānis Valdemārs and Jānis Čakste. The Five Lats silver coins featuring the profile of Latvian women in folk costumes were the most famous of those times. Nicknamed Milda – it became a symbol of the independent Latvia. During the Soviet occupation the 5 Lats silver coins were kept as treasures a symbolic reminder of the past.  On 1939 the Authoritarian leader Kārlis Ulmanis desired to make silver coins with his portrait. The sketch was made and despite coming war British coin mint received orders to issue them. The Soviet occupation halted this, however a prototype of this five Lats coin with Kārlis Ulmanis on it was made.

Latvian 25 Lats banknote

The Soviet occupation ended the life of Lats. After full annexation Lats was replaced with the Soviet ruble. Latvian Lats were kept by families as memorabilia. Others gathered them and sold them to collectors. After the regain of independence these old Latvian Lats became even more valuable.

Already in 1988 first calls of restoring the Lats were made. An art competition was made for new Lats design while official currency was still the Soviet Ruble. On July 31 1990 the Supreme Council of the Republic of Latvia (still unrecognized by Moscow) issued law for making the currency system for Latvia. Discussions about the new Lats  lasted all 1900, while Latvia was not still fully sovereign. Latvia was still pretty much dependent on the Soviet Currency. After full independence on August 1991 Latvia again used the old scheme. Before Lats the Latvian ruble was used as the interim currency. People nicknamed them repšiki after the president of the Bank of Latvia – Einārs Repše.

On 1993 Lats again returned in peoples wallets. 5, 10, 20,50, 100, 500 Lat banknotes were issued. Five Lat banknote features oak the Latvian national tree, 10 Lats shows the view of the river Daugava, 20 Lats has the Latvian national housing. 50 Lats has sailing ship and the 100 Lats features Krišijānis Barons the Latvian intellectual worker. 500 Lats features the famous Milda from historic five Lats silver coins. 1 and 2 Lats are coins. 1 Lats coin has salmon on it. Interestingly the 1 Lats with Salmon is very similar to the Icelandic 1 krona that also has fish on it. For years the Bank of Latvia has released many special coins dedicated to national events or sightings. Collecting these coins are the national sport for the collectors. Latvian special coins have won many international prices.

Special Lats celebrating the beginning of the 21th century

In 2004 Latvia joined the European Union. Latvian government set path to fulfill the Mastricht criteria to join the Eurozone. It was a long road thwarted by economic crisis however on 2012 Latvian government finally voted for joining the Eurozone. Despite the general distrust on the Euro and political campaigns made by many groups on both political wings, at January 1 2014 Lats will be replaced by the Euro. This time this historic decision is based on the general will of the Latvian people as the majority of the Latvian citizens voted for joining the EU. Estonia had already joined the Eurozone on 2012 and Lithuania will probably do it in 2015. As historian I will not go into speculations about the future of the Eurozone and its positive or negative effect on the Latvian economy, however Latvia had do to this sooner or later. The joining Euroze is a question of geopolitical importance. Even Poland with their Zloty will do it someday and its the historic responsibility of the Latvian government to carry out this transition successfully on the behalf of the Latvian people.

The Future Latvian Euro coin

The Evolution of the Soviet Victory Day Celebration. The Cult of the Great Victory

All Soviet Medals for anniversary of the Great Victory from 1965 to 2005

Tomorrow on the streets of Moscow and other capital cities of the former Soviet Union a large military parade will be held commemorating the Soviet victory over Nazi Germany in May 9 1945. In Riga, Latvia there are no military parades just a large celebration at the Monument of Liberation. Latvian Russian political movements have used this date for their political goals. For last four years the Riga city council has been led by the Russian party Harmony Center that has done a great deal of politicizing this celebration. There are similarities with the March 16 commemoration day of the Latvian SS Legion. While March 16 is  the main mythical date for Latvian nationalists and May 9 is an important date for all who still live with the soviet conciseness. The May 9 Soviet Victory day is artificially made celebration based on Soviet propaganda that made the cult of the Great Victory. Yet in first years after the war nor the soviet people nor the Stalin himself really believed that the victory over Nazi Germany needs to be celebrated.

Despite the fact that Soviet General  Ivan Susloparov had actually signed the capitulation agreement on May 7 at Reims, France that came to power in May 8, Stalin was dissatisfied with this and demanded to make another act of capitulation in Berlin. Because of these Soviets regarded the May 9 as the official end of the World War II.

The soviet Union explained the victory as the superiority of the communist system and the political and the moral unity of the Soviet people with Stalin in the lead. As the radio announced the victory the streets of Moscow rejoiced in celebration. With singing and fireworks from 1000 cannons the May 9 was celebrated with great joy. But, for many is was just sign of relief that the war killed over that more than 26 million Soviet people. In Germany and Poland the repressions and massacre against the German civilians continued for many months. In Latvia the Courland was still under the German control and last shots were fired there.

The Victory parade in Moscow took place on June 24 1945. It was intended that Stalin himself would enter the Red Square on horseback. However, during the practice Stalin fell off the horse and decided to hand him over to Marshal Zhukov. So it was Zhukov who entered the parade. For years this fact has circulated among the historiography and was mentioned even by prominent western historians. While there is a high possibility that Stalin never even took part in the practice as the whole story was made up. For the Cavalry Colonel S. N. Maslov who allegedly choose the horse for Stalin was sentenced in War Tribunal at Germany for 10 years. So he could not choose the horse for Stalin. More significantly this presumably false story was included in Zhukov memoirs. Zhukov memoirs have many false stories many of them not written by himself. So in reality Stalin simply did not want to participate in the parade because he did not consider the outcome of the World War II as truly victorious.

When one American diplomat told Stalin about how grateful for him must be to know that Soviet troops are marching in Berlin, Stalin replied:” Tsar Alexander reached Paris.” There is also another similar quote from Stalin: “This war is not as in the past; whoever occupies a territory also imposes on it his own social system. Everyone imposes his own system as far as his army can reach. It cannot be otherwise. If now there is not a communist government in Paris, this is only because Russia has no an army which can reach Paris in 1945.” This is a well known phrase, but most people only pay attention to the first part of the quote about how far the army goes is how far the soviet power goes. It’s true that communist governments were established in every country that was reached by the Soviet army. But, it seems even the whole Eastern Europe was not enough for him as he wanted to establish a communist government in Paris. The main goal for Stalin and the whole Soviet Union before the WWII was the Worldwide Socialist Revolution. Stalin saw WWII as the clash between Nazis and Capitalist forces, where the Soviet Union at the most advantageous moment could make the most decisive strike. As we know that his plan backfired when Germany attacked the Soviet Union first. Berlin was not enough for Stalin, he wanted Paris and maybe even London or Washington. That is why he did not take any direct part in the parade. Even if there was any incident with the horse it was used as a good excuse not to take part in the parade that was shameful for him.

It was also June 24 when Stalin significantly changed the main accents in the Soviet ideology. In the victory ball Stalin made a toast for the well being of the Russian nation, since it was the greatest of the Soviet nations and deserves the main recognition for her bravery in the war. Ethnic Georgian Stalin unleashed the Russian nationalism at the full scale. All talks of internationalism were forgotten, Russian nation now declared as the main nation in the USSR. On 1943 the old Soviet anthem Internationale was replaced with more patriotic and nationalistic anthem praising the Russian nation. Stalin had acknowledged that his quest for international Soviet republic had failed so he instead restored the traditions of the old Russian Empire.

On June 23 1945 a decree was issued to demobilize older soldiers. Complete demobilization was finished in 1948. About 8,5  million soldiers with them 3,8 invalids went back home. 2, 6 million of invalids were completely unable to regain health and find a new job. 2 million Soviet prisoners of war went home as traitors and cowards. 67% of them had to go through filtration camps for the Soviet power was suspicious if they collaborated with the Germans.

During the last years of Stalin’s rule until 1953, no major celebrations for the Victory day ever took place. Despite the official ideology praised the veterans, they got little attention from the state.  Stalin was afraid from the military elite and in coming years discharged most war generals like Zhukov from top posts. The social payments  for veterans and money for receiving awards were reduced.  No celebrations or holidays took place on May 9.

After the death of Stalin in 1953, his successor Nikita Khrushchev seeks to remove Stalin from the soviet historical memory. The campaign to disclose the Stalinist cult was underway and Soviet propaganda now accused Stalin of great losses of 1941 and too much trust on Hitler. However, the main myth of the peaceful policy of the Soviet Union before the WWII remained intact and was improved. Also Nikita Khrushchev had not abandoned the idea of the worldwide socialist revolution. He wanted to achieve with the economical and technical supremacy of the Soviet Union. His plans of outmatching the United States generally failed in 1962 during the Cuban missile crisis. However, for many years his propaganda of the great future reached by space race and technology shadowed the WWII memories.

On 1965 Khrushchev was replaced by Leonid Brezhnev. Brezhnev understood that reaching the worldwide Soviet supremacy was impossible; instead his policy was to keep the Soviet system stable for many years to come. In such situation a new festivity that would keep the peoples minds busy was needed. So in 26 April 1965 the May 9 was made as an official holiday. Before that official holidays were May 1 and November 7 the October Revolution day. Many books were published, awards and special coins were made, and special monuments were made. The cities that suffered heavy battles were named as the “Hero towns”.

Soviet leader Leonid Brezhnev introduced the Soviet Victory day celebrations

Leonid Brezhnev formed his own ideology of the Great Victory. The victory was international and the role of the Soviet Army was crucial in the WWII. The victory meant the Soviet supremacy over Nazi and the capitalist system. Also Brezhnev now called all major nations of the USSR including Latvians as the “infinite heroes”.  Also one of the main points was the commemoration and the worship of the war veterans and the war generation. For the cause for what they fought was infinite.

On May 9 1965 an epic, never before seen parade took part in Moscow. After celebrating 20 years of victory such parades were taken every year. The Victory Day became the main argument of legitimacy for the Soviet regime. The Great victory was the main reason for the revolution and the building of communism. The Brezhnev view of history was close to the Stalinist version of history. War films were made in masses. The main basis of WWII history was no longer the war but the victory. The dark side of the war: the great losses of the 1941-1942, GULAG, Stalin’s aggressions before 1941, punishment battalions, the Vlasov Army and the Soviet War crimes was diminished by the myth of the Great Victory. This myth halted the Khrushchev policies for anti-Stalinist, and slowed down calls for democracy. With that the Stalinist terror was also partly justified. There was also another prosaic explanation for this new policy. Brezhnev really liked orders and medals and like to receive them and award others. So such festivity was needed for mass awarding of medals and orders. Brezhnev even got himself awarded with the highest award the Order of Victory that he did not deserve in any way.

The monument of Mother Russia in Volgograd (Stalingrad) one of the distinctive sites of the Victory cult

Since then the Victory day celebrations have been routine for the Soviet people. Forgotten veterans now enjoyed social privileges. Veterans and war invalids became a special social group. As the years vent the privileges expanded marking the feeling of social injustice among many. This also made many to became a fake veteran. This people made up their birth dates and biography to get the medals and social status.

In 1985 the Victory Day was still celebrated as usual. In 1990 the common policy was more revisionist, mentioning Stalinist crimes, Molotov-Ribbentrop pact. In a social survey in Leningrad 60,8 % people agreed that the Soviet Union had begun a bloody war of conquer. Only 20% disagreed. The myth had collapsed as the Soviet power was now held responsible for the great war losses.

After the complete collapse of the USSR the revision of WWII history continued. However, many still believed that the common people during the Stalin’s era where good and honored and got nothing to with Stalinist crimes. Russian democratic regime canceled the official commemoration of the Soviet past. However, the social difficulties in  Russia the failure of the transformation to capitalist system made communist slogans to reborn again. People again looked for an iron hand to fix their problems and Stalin again was praised in many surveys. The Boris Yeltsin government failed to introduce the Russian society with ideas of national unity and the “Russian Idea”. The problem with the Great Victory was that the Stalinist crimes did not allow to use it in democratic propaganda.

The war veterans united in unions and committees.  In 1995 there were 2,4 surviving war veterans. Yeltsin celebrated the 50 years of victory in 1995 to boost his re-election campaign. Also because of the war in Chechnya the boost for army was needed. The parade in the Red Square was restored. A Medal of Zhukov was introduced. Yeltsin had given up his desires for democracy and again introduced May 9 as the tool to unify the nation. And it worked because of large mass appraisal. The editor of the newspaper Nezavisimaja Gazeta Vitaly Tretyakov called the May 9 as the “unofficial commemoration day of the Soviet Union”.

The traumatic decade of the nighties made many think that the Soviet Union was not so bad, that the greedy statesman was the blame for its collapse. The memories for “good and stable” Brezhnev years again made the Victory day cult rise again. The new president Vladimir Putin sought to restore the good image of Stalin and KGB. And since the Putins reign just as the Brezhnev reign begun with high rise of oil prices that returned stability, the old ways were good again. Also the attitude towards the war in Chechnya also changed from negative to positive.

A new attribute to the May 9 Victory cult was the “George Ribbon”. Taken from the Czarist time ribbon of the Order of St Georgy, the black and orange ribbon became the symbol of the national solidarity. In Czarist times the use of the colors of the St George was only for nobles and awarded officers. The simple mass use of these colors is a degradation of old tradition. On 2005 the celebrations in Moscow hit new heights with massive parades and use of aircraft and rockets. Since the war veterans are slowly depleting in numbers, many think that the Victory day is a day of nostalgic solidarity and commemoration of the great soviet past. As the years pass by the understanding of the WWII events have significantly changed. The young generation is sometimes more fanatical than the old veterans who really faced the war. The biased image of the WWII made by movies, TV documentaries and computer games are causing for young generation to misinterpret the history. The neo-soviet propaganda in Russia is growing. As the Putin’s regime is facing difficulties the pattern of Stalinist revision is making its way. Even if there are great numbers of liberal and educated young Russians, large numbers of Russian youth still worships the victory cult. Even worse a relative number of people who rejects both no-sovietism and liberalism turns to radical nationalism or even Nazism.

Putinist Era propaganda poster for Victory day “I remember I take pride”

In Latvia the May 9, has evolved as the day of protest and day of nostalgia. For some its the way of remembering the Soviet past, for others its a sign of protest against the Latvian democratic system. The Harmony center has failed to enter the government by its own fault for years and uses the Victory day to lure the voters. The movement to remove the Liberation monument where the celebration is held has been active for years. Calls for not using the WWII as a political tool and commemorate the victims on all sides on May 8 has been met with little support.

In the conclusion it must be said that the Soviet Victory day on May 9, was made as the tool of mass control. The struggling Soviet regime was searching for common sign of the Soviet collective identity and found it in the May 9. The main leader of the WW2 Soviet victory Stalin himself did not even want to celebrate his own victory. The cult of the Great Victory was made by people who had small or no experience in war and was made as the only uniting thing for the whole nation. Today as the Russian Federation is struggling to let go of the Soviet past and it has no uniting factor of its own; the Victory day continues to be the main event. It’s a matter of the new generation to finally let go the Stalinist grip and move into the new era.

The International Recognition of Latvian Independence 1918-1921

Zigfrīds Anna Meierovics the first Minster of the Foreign Affairs.

On January 8 1919 the president of United States of America Woodrow Wilson issued his fourteen points where he declared his vision that every nation has their rights of self sovereignty. However, the new state of Latvia for long years had a hard time to achieve international recognition. The leaders of Entente were skeptical about the stability of this new state and still hoped for the Bolshevik defeat in the Russian civil war. After the international recognition was achieved Latvia struggled to find its place in the European diplomatic arena. The process of gaining official recognition of Latvian independence was long and interesting story. Before we begin discussing an important explanation of juridical and diplomatic terms are needed. The de facto recognition means the country or government is recognized as existing legitimate body that can make legal contacts with other officially recognized nations. However, it means the borders of this country are not legally determined and it lacks full diplomatic rights. The de iure or de jure recognition means the country and its borders are fully recognized and the country has equal rights in the international affairs.

The first attempts of foreign diplomacy were made by Latvian Provisional National Council in 1918. It had its own chamber of foreign relations and its goal was to contact western powers to seek support for desired independence. The contacts were made with the western embassies in Petrograd (Petersburg). It was harder task to send delegates to allied countries. First Latvian delegate to London was Zigfrīds Anna Meierovics. His mission was to introduce everyone with the prospect of sovereign and indivisible Latvia. Before arriving in London Meierovics established an information bureau, that made important work by spreading the news and opinions about Latvia and it’s strive for independence.

In the mean time Germany and Soviet Russia had signed the Brest-Litovsk peace agreement, giving Germany full power over the Baltic region. It was now fully possible for Germany to annex the Baltic region. However, the German government was caught up with the troubled Western front and left the Baltic question behind. German Kaiser Wilhelm II even called the Baltic region as “free and sovereign region”. Although he possibly meant that local Baltic Germans can establish their own country, for Latvians such position was also promising.

Meierovics mission in London was successful. He could persuade the British about the need of the Latvian independence. On October 23 1918, the British Foreign Secretary Arthur James Balfour informed Meierovics that the British government has decided to temporary recognize the Latvian Provisional National Council as the Latvian government until the future peace conference would fully decide the Latvian question. Latvian politicians understood this as a de facto recognition. Meierovics asked Balfour to make a written resolution to confirm the British position. This was done in November 11 that again confirmed British support for the LPNC.

Latvians made contacts with the German government, however no direct answer came because of the revolution of the November 9 and the German capitulation changed everything. Allies instructed Germans to keep their forces in the Eastern front as long as necessary to fight of the Bolsheviks.

New German social democratic government decided to abandon all plans for desired “BalticState” and accepted the Latvian Provisional Government that was formed on November 18. The first Minister of Foreign affairs was Meierovics.

German-Latvian relations worsened in spring 1919 when Latvian army together with German Landeswehr and Iron Division fought off the Bolshevik invasion. The anti-Latvian coup in April 16 and forming of pro-German government clearly showed that Germany support for independent Latvia was only temporary.

Latvians sent their representatives on Paris Peace conference on January 1919. There they discovered the British inflexibility in the support for Latvia. Great Britain and France thought that the Bolshevik revolution in Russia soon will collapse and therefore was no longer interested in supporting Latvians. The Latvian delegation consisting Meierovics, Jānis Čakste, Jānis Seskis and others could not participate directly in the Peace conference. Instead Latvian representatives worked in background, keeping contacts with the leaders and gave many proposals. The western diplomats and leaders replied that Russia needs to decide the Baltic question. However the Treaty of Versailles concluded that Germany respects the independence of territories of the former Russian Empire and gives up all claims for them. Also Germany was allowed to keep its army in the Baltic region but not interfere the Baltic national governments. It was small but significant achievement.

The German-White Russian joint attempt in destroying the Latvian independence in November 1919 resulted the declaration of war against Germany. After the initial defeat of the army of Bermont, Latvia received German radio message that the Army of Bermont is now under the command of the State of Germany. Previously it was supposed to be under command of the White Russian general Yudenich. After Latvian received the confirmation from the German Foreign ministry; the Latvian government concluded that Latvia is at the state of war with Germany. On November 25 Latvia issued a note to Germany of entering the state of war and cancelation of all diplomatic relations. Ironically the German government did not understand the reason for this declaration of war and replied that Germany is in no means in the state of war with Latvia.

After the final defeat of German reactionary forces in 1919 things started to brighten up. Finland, Poland, Lithuania, Estonia, Belgium and France recognized Latviade facto. At the first half of 1920 the western powers discussed the de iure recognition of the Baltic independence. Italy and Japan was supportive, France was elusive about it, but the US was strictly against it. US were skeptical about the long lasting of the Baltic States and feared that other territories in Far East may break away from Russia favoring Japan.  Also Poland was quite hesitant of the de iure recognition since it would mean that it had to give up its claims for Latgalian region.

After complete defeat of the Soviet forces the peace talks with Germany and the Soviet Russia begun. Latvian side presented documents proving German extended support for the Bermot army. Germans became more compliant and promised to acknowledge Latvia as de iure after the Entente powers do this. Germans also gave indefinite promise to compensate the war losses done by German military formations. Germans also proposed not to call the coming agreement as Friedensvertag (peace agreement) but simply Vertag (agreement) since they still did recognized that they are in the state of war with Latvia.

The Agreement for restoring of contacts between Latvia and Germany was signed in July 15 1920. The formal state war was cancelled and issued the German formula of de iure recognition. However, Germany failed to take any responsibility for the Bermont army and the anti-Latvian actions. Therefore the Latvian declaration of war against Germany lost it meaning. Ironically Germany was the only country that Latvia has ever declared war and no real peace agreement was ever signed, because the other side did not recognized the Latvian declaration of war.

While neither Soviet Russia nor Latvia had ever declared war on each other, they had to sign a peace agreement. That was done in August 11 1920 and Soviet Russia promised to recognize the sovereignty and independence of Latvia and voluntary for ever gives up all claims against Latvia.

The peace agreement with Soviet Russia now paved way for full recognition of Latvian independence. Since the Bolshevik revolution had won and its government had recognized Latvia there was no other option for the western powers.

However, the new founded international body the League of Nations was hesitant to join all three Baltic nations in their ranks, since they were still not fully recognized. International diplomats and lawyers could not decide whether the joining the League of Nation mean the full de iure recognition. That was crucial for the state of Georgia that also submitted the application for joining the League of Nations since the lack of the international support made it vulnerable to the Soviet occupation.

At the end of 1920, Meierovics visited Italy, France and Great Britain. Italy was generally supportive to Latvian juridical recognition, since it had no interests in Russia and also was disappointed with the Treaty of Versailles. Meanwhile in France the political circles were more and more convinced that there is no way how to topple the Bolsheviks. This was crucial for France, since it was old-time supporter of Czarist Russia and had given large credits to it. The president of France Alexandre Millerand promised to support de iure recognition of Latvia. On 29 December France issued proposal to other partner states to recognize the Baltic States de iure. The British were however, still hesitant, the Foreign Secretary George Curzon was strictly against, but Prime Minister David Lloyd George wavering, however at the last moment he managed to persuade his Foreign Secretary to support Latvia.

On January 26 1921 the Higher commission of Entente (Great Britain, France, Belgium, Japan and Italy) unanimously decided to recognize Latvia and Estoniade iure. Entente now wanted to empower the newly founded national states in Eastern Europe to prevent any Soviet expansion. Soon Poland and Finland recognized Latvia. After that came Germany, Norway, Denmark, Sweden, Persia, Austria, Portugal and Romania. United States of America was the last of the superpowers to recognize Latvia de iure – on July 28 1922. It was because of American new emerging isolationist policies and loss of general interest in European affairs. During the inter war period 42 countries officially recognized Latvia. On September 1921 Latvia joined the League of Nations. Latvia was no ready to play active role in international politics.

Latvian Army 1918-1940

The Latvian Army Cockade 1919

No country cannot exist without its armed forces. There are few exceptions with fully sovereign countries without any official national armed forces, but even the smallest nations have their own armies. The Republic of Latvia was born in combat. With great difficulty the national Latvian government managed to form their own armed forces. Latvian Army fought the Bolsheviks and Germans and secured the Latvian independence. During first twenty years, Latvian Army became a disciplined and venerable force. However, in 1939 -1940 Latvian Army was unable to defend their country against Soviet occupation. It was partly due the completely disadvantageous military situation and mistakes done by Latvian rulers. This article tells the story about Latvian army during the years of independence.

When on 18 November 1918 the Republic of Latvia was proclaimed it had no armed force. Latvia was still under German military control and the Bolshevik invasion was looming. One of the first national armed units was the Special Student Company formed on 20 November 1918. It was formed from University students and members of the student fraternities. They were stationed at Brīvības Boulevard 32 where later for long years the Faculty of History and Philosophy was located. Many smaller units were made with the help of Latvian National Rifleman Union.

The first largest Latvian armed unit was formed in 5 January 1919. The Special Latvian battalion later brigade was commanded by lieutenant – colonel Oskars Kalpaks. He became the first supreme commander of the Latvian army. Sadly he was killed in accidental fire exchange with allied German forces in 6 March 1919. He was replaced by colonel Jānis Balodis. The second largest Latvian armed force was the North Latvia brigade commanded by colonel Jorģis Zemitāns. The brigade was formed with Estonian help. Latvian army baptized in fire in battles against German Iron Division at Cēsis, Bermont army at Rīga and against Soviets in Latgalia. On 1920 52 000 soldiers took part in Latvian army.

First commander of the Latvian Army Oskars Kalpaks

After peace agreement with Soviet Russia, the army moved to state of peace. The planned size of Latvian peacetime army was planned 240 00 men, but the real count was much smaller. Army was formed in four divisions – Courland, Vidzeme, Latglian and Semigallian with three infantry and artillery regiments in each. The regiments were numbered and named after largest Latvian cities: 1 Liepaja, 2 Ventspils, 3 Jelgava, 4 Valmiera, 5 Cēsis, 6 Riga, 7 Sigulda,8 Daugavpils, 9 Rezekne, 10 Aizpute, 11 Dobele, and 12 Bauska infantry regiment.

The technical units were united in the Technical division. It was based on Auto tank division, Field Engineer Division, Aviation Division, Electro technical division, Armed train division, Heavy Artillery Division, Coastal Artillery Division and Anti-air artillery division. On 1939 the Aviation division was formed of three fighter squadrons, four mainland and one fleet reconnaissance squadron. Latvians had 100-150 planes, but most of them outdated. The most modern aircraft in army where the British biplane fighters “Gloster Gladiator”.  Latvian army command planned to upgrade their air force and started talks with British to purchase “Spitfire” fighters. However, the outbreak of WWII halted this.

Tanks of Latvian army

Latvian Air Force. Note: the swastika was the official Latvian Air force sign and had nothing to do with Nazi Germany. Swastika was used a prehistoric national symbol

The whole Semigallian division and Cavalry regiment was stationed in Daugavpils. Latgalian division in Alūksne, Cēsis, Valmiera and Rēzekne. Courland division was stationed at Liepaja.

The Latvian War Fleet was located at Liepaja, the home of ex Russian Baltic Imperial Fleet. Latvian flagship was “Virsaitis”. Latvia had two submarines “Ronis” and “Spīdola”. Two minesweepers “Imanta” and “Viesturs”.

Latvian submarine “Ronis”

The Vidzeme division along with Technical division was placed in Riga. According to data in 1 January 1939, Latvian Army had 1969 officers, 3988 service instructors, 11 118 soldiers, and 1244 contract workers. Together 18 389 men. Latvia Army also included Latvian Guard (Aizsargs) organization a paramilitary force that was formed during the War for Freedom. It was under control of Ministry of Interior, from 1937 under Social affairs ministry. Aizsargi was an auxiliary force that maintained civil order in the countryside. They were formed in 19 territorial regiments and had its own aircraft and armed trains.

The most prestigious Latvian armed unit or special guard was the Army Staff Company. Only specially chosen men could serve in it. The requirements were personal height no less than 1,80 meters, the shoe size no less than number 43. Health had to perfect and also recommendation from local authorities were needed. Their tasks were to represent the state in national celebrations or during official foreign visits. Army Staff Company was entrusted of defending the main national objects – Presidential palace and the House of Ministers. Also their most honorable task was the guard of honor of the Monument of Freedom. The Army Staff Company was restored after the regain of independence and is doing the same tasks.

According to Latvian constitution (Satversme) the supreme commander-in-chief was the President of Latvia. Army and war fleet was ruled by the War Ministry. The orders and directions were fulfilled by the Army Staff. Latvia had military draft. The time of service was 18 months after 1931 12 months for infantry and 15 months for rest of the army men.

According to data sent to the League of Nations, on 1 June 1940, Latvia had 2013 officers, medical officers and administrative officers. 27 555 officer deputies, instructors and soldiers in all 29 569 men.

On 17 June 1940 Soviet tanks crossed the Latvian border and occupied Latvia. Latvian army was ready to resist the aggression, but was told not to resist. With Soviet garrison in Courland already stationed according to the Mutual agreement signed in 1939 it was already too late to resist the enemy. As the armies of Estonia and Lithuania also decided not to resist the independence was lost. If there ever was any chance of resistance it had to happen in 1939 by declining the Soviet demands for mutual assistance pact. As in case of Finland such move would cause Soviet invasion, and only joint resistance by three Baltic States would make any difference. Latvian army was subjected to Soviet repressions and its leadership was destroyed. Latvian army was included in Red Army 24^th Territorial Corpus that was nearly destroyed in 1941. The trauma of inability to resist the Soviet occupation later resulted in support for forming the Latvian Waffen SS Legion.

Latvian Army was reborn in 1991 after the regaining of independence. Today Latvian army may seem much smaller than before, but it’s a member of NATO and taken part in international operations. The ideals of the War for Freedom and the Latvian army are the prime motivation for Latvian National Armed forces.

Latvian Finances and Economy 1920-1940

From 1920 to 1940 Latvia was one of the leading exporters of butter, beckon and other goods across Europe

World War I did a great damage to all territory of Latvia. The War of Freedom was no less damaging and true peace only came to Latvia at August 11 1920 after peace agreement with Soviet Russia. Now Latvians had the chance of rebuilding what was lost and make whole new sovereign economy for the benefit of the Latvian people.

One of the first issues was the lack of the national currency. German Marks, Ostmarks (German currency for occupied Eastern regions during WWI), Ostrubles, Czar Rubles, Kerensky Rubles were used in same time sparking currency chaos. On March 27 1919, the Provisional Government issued directions in exchange rates. One Latvian Ruble equals 1 Ostruble, 2 German Marks, 1,5 Czar Rubles. The main source of income for the government was money emission that helped to cover the war costs and administration fees. From 18 November 1918 to 1 April 1920 37,9 millions of paper money were emitted. On 18 March 1920 the Latvian Ruble was declared single official currency in Latvia.

However, inflation was on the rise, the price of rye bread rose from 2,25-2,40 rubles 10,8-12,0 rubles. Government issued more directions to stabilize the ruble, also the preparations for establishment of new stable national currency Lats followed. On 3 August 1922 1 Latvian Lats equaled 50 Latvian Rubles, and Lats was fixed according Swiss Frank rate. On 1 November the Bank of Latvia was established. It also had commercial service rights. At 1929 there were three state banks (Bank of Latvia, State Land Bank and Latvian Mortgage Bank) and 19 private commercial banks.

Latvian governmental budget during the first years of independence had debts, until 1922/1923 for the first time had surplus that was kept until 1929/1930. The main source of income was taxes, state monopolies and gain from state enterprises. The main priorities were state security, education and capital investments. Two main state monopolies were flax and ethanol. Largest state enterprises were the bank, postal service and railroad service.

The Agricultural reform drastically changed the economic situation in the country. Before the war 53% of land belonged to 2% of landowners mostly Baltic Germans. Latvian government decided to change that by making special State Land Fund that gathered 61% of land, 45% of it agricultural. Previous landowners were stripped of their large possessions. This radical move changed the Latvian countryside in small farm economies. 54, 243 new farms were made.

New Farm building in Latvia

Latvians put large efforts in agriculture. During the first years after the war Latvians had to import crops, because of low harvest and the fact that most new farms were more effective in cattle production. Also the crop prices in global market fell down as the butter prices rose up. Because of this exports of butter, beckon and eggs reached great heights. The butter industry was one of the most progressive and until 1932 one-third of all export. Latvia also exported flax and timber to whole Europe.

Before the war, Latvia was one of the main industrial centers of the Russian Empire. After German invasion, large part of equipment, even workers was evacuated to Russia and the new Bolshevik government was not wiling to give it back. After the war Latvian industry worked mostly for inland needs. Latvian government had to subsidize the struggling industry for many years. However, the foreign capital from Germany, Great Britain, Soviet Union and others helped to get back on the track.

On 1929 Latvian export rose up by 10 times, however import was still larger than export. The main importer was Germany; the main source of export was Great Britain. After trade agreement with Soviet Union in 1927 export with that country started to rise up. With other neighbors – Estonia, Lithuania and Poland the import was greater than export.

Latvian export goods ready for shipping

The Great Depression reached Latvia on 1930. Crisis begun with drop of wholesale prices, the drop of prices for Latvian export goods and the breakdown of Latvian state gold reserves and foreign currency reserves. On 1931 the Bank of Latvia stopped issuing credits. Many companies went bankrupt. Banks took the first hit. Latvian banks suffered from German bank troubles making them impossible to settle with their depositors. After Great Britain devaluated their currency and canceled the golden standard the Bank of Latvia lost 2,1 million Lats. Latvia unlike Estonia kept the golden standard and issued many regulations to cancel unrestricted exchange to gold or foreign currency.

 Latvia had to sign clearing agreements with France, Great Britain and Germany to ease export costs during the crisis. The Nazi rise in power on 1933 caused economic disruption between Germany and Latvia as social democrats and Jews issued a boycott of German goods. Germany answered by halting butter exports causing great financial losses. Latvian government had to back down and make the boycotting stop. Also the export with the Soviet Union weakened as the export orders from the Soviet state ended. Almost all transit now went to Germany.

As the grocery product prices since 1927 begun to drop, the traditional Latvian exports brought smaller revenues. Government tried to lower import and raise export. Grocery import was halted, as foreign crops could be replaced with homegrown ones. With exception in 1937 because of dry summer, crop import was halted along with sugar import. Latvia could fully sustain itself with its own grocery production.

Industry suffered great losses, foreign capital went away and purchasing capacity dropped. As the trade agreement with the Soviet Union ended in 1932 many large industrial companies suffered losses. However, the worst of the crisis ended in 1933 and on 1934 during last months before the coup Latvian economy was again in the upswing. The government debt had dropped from its highest point 24, 2 million Ls 1931/1932 to 7,8 million Ls in 1933/1935.

The coup in 15 May 1934 was not caused by economic reasons rather political. However, Kārlis Ulmanis made significant changes in economic system making it more centralized. He issued a corporate chamber system forming four chambers: Trade and industry chamber, Agricultural chamber, Craftsman chamber and the Chamber of Labor. Such model of economical control was popular among many European authoritarian countries. The example for all was Fascist controlled Italy.

Authoritarian government made a great deal by fixing the crucial farmers debt problem. Agricultural auctions were canceled, debt rates for farmers were lowered and payback period was extended. New law allowed state corporative revision commission to change of fire members of the corporate boards. With that the state granted itself more power to control largest enterprises.

The new economy by Kārlis Ulmanis was based on protectionism and state enterprises. A new state owned Latvian Credit Bank was formed to make credit reorganization. State took over many private companies like vehicle factory “Vairogs”. Until March 1939 there were 38 state enterprises. Latvian industry started to recover. Textile, food, metal and machine industry begun to flourish. State owned industrial company VEF produced radios, telephones, MINOX cameras and even airplanes. “Vairogs” released first private cars based on Ford models.

The presence of foreign capital significantly dropped, however the construction of the first hydroelectric station at Ķegumi involved large investments from Sweden.

On 1936 Lats was fixed to British Pounds causing partial devaluation of Lats. Devaluation caused inflation and other troubles; however at 1936 the Latvian export gross total rose up fast and import went down. The export balance was positive and things were looking up good in the late thirties. However, an influx of agricultural foreign workers in later years started to become a problem. Because of the lack of native workers, people from Lithuania and Poland came to work in Latvia. It caused social and political problems and fully emerged after Nazi-Soviet invasion in Poland.

The great advancement of the Latvian economy was stopped in 1939. As WWII started Latvia declared full neutrality. Government issued regulations in trading Latvian recourses and prohibited Latvian ships from sailing under foreign flag. Lats was removed from the British Pound rate.

As Germany blocked the access to the Baltic Sea, Latvian traders were unable to send their productions elsewhere but Germany. All major ties with Great Britain were cut. On 5 October 1939 Latvia was forced to sign Mutual Assistance agreement with Soviet Union. Few days later both sides signed trade agreement allowing Latvia to export more to the east. The secret protocols of the Molotov – Ribbentrop pact included Latvia into Soviet sphere of interest. Similar agreement was later signed with Germany then a Soviet ally.

On 17 June 1940 Latvia was occupied by the Soviet Union and annexed in 5 August 1940. The sovereignty of Latvian finance and economy was canceled. Germany viewed this with anger, because they needed Latvian exports. Germany and Soviet Union both had different understanding over meaning of the “sphere of interest”, and Germans did not expect the occupation and annexation of their trade partner. That was one of the reasons that lead to German –Soviet conflict.

Latvia managed to recover from WWI damage and reached growth in trade and industry. For many years Latvian state budget was balanced with surplus. However, the Great Depression did a great strain on Latvian economy. But, Latvia managed to recover from the crisis and again reached growth at 1934 just before the coup. The coup by Karlis Ulmanis did not end the crisis as it was mostly ended before him. His policy only changed the economical system not the positive course of Latvian economy. Kārlis Ulmanis semi-centralized economy was successful for some time until the hardships of WWII brought end to it. Soviet occupation, German invasion and war ultimately destroyed many achievements of independent Latvia. The complicated story of Latvian soviet economy is to be told in future.

Latvian produced private cars