The development of Poland under the centrally planned system of Socialism and its transition to a market economy can be better understood if placed in the context of what had existed of the new modern Polish Republic between the World Wars and its fate during the years of conflict.
Prior to its destruction, in September 1939, a new modern state was in the process of development for some two decades. During the war this society and economy was then subjected to the most extreme depredations of exploitation and conflict.
What remained was then deeply restructured by the extensive redrawing of its borders accompanied by mass population movements. The Poland which emerged after 1945 was to some extent a new project, but inherited a collective memory of the Poland that had been, and much of the original territory belonging to interwar Poland.
The Second Polish Republic (1918 – 1939)
In the wake of the First World War a nation state dominated by the Polish-speaking ethnic group was formed again after over one hundred years of life within the empires of others. The full details of the complex and convoluted process by which the borders of the new Poland were carved out is beyond the scope of this article which is narrowly focused on economic development.
In the event it took from the end of the War in November 1918 till early 1921 for these borders to be essentially settled, though further adjustments and disputes continued. In fact the borders of the new Poland were not internationally recognised till March 1923. It left a legacy of tension with most of the country’s neighbours which festered until the final destruction of the republic in 1939.
The collapse of the three empires of Russia, Germany and Austria brought about by the war had created the opportunity for competing ethno-nationalist political activists to contest control of the spaces vacated. The borders of the new Poland were forged as the result of wars, great power diplomacy, plebiscites and direct action on the ground by ethno-nationalist militants.
At one moment in August 1920 the nascent republic looked to be on the edge of strangulation in its cradle by the Bolshevik advance on Warsaw, but a dramatic strategic coup de main by the Polish Army forced the Red Army into full retreat. In the end the borders of Poland were determined more by the actions of the direct participants then by the great powers who largely stood watching on the side lines as one fait accompli after another was presented to them.
Establishing the Second Republic November 1918 – March 1921
During the First World War as the Germans had swept eastwards, deep into what had been the Tsarist Russian Empire, they set up a Polish puppet state called the Kingdom of Poland. This was split into German and Austrian controlled regions and was ruled on behalf of the Germans by a politically conservative Polish “Regency Council” composed of a Prince, a Count and an Archbishop.
This council had limited autonomy to run internal Polish affairs such as education and the law courts. The aim was to create a Polish monarchy after the war. The Kingdom was to have had its own army, provided by those ‘Polish Legions’, originally set up under the Austrians in 1914. However the loyalty of their leading officers and men to serve under Germany came into question when they refused to swear an oath. Two of the most prominent senior officers Józef Piłsudski and Kazimierz Sosnkowski were imprisoned along with many of the soldiers. The remaining soldiers were then sent to various fronts where the Germans and Austrians needed them to fight.
The collapse of the Central Powers, Germany and Austria in November 1918 was accompanied by chaos in Germany and Eastern Europe. Following the outbreak of revolution in Germany on 9 November 1918, the German troops inside the Kingdom of Poland were voluntarily disarmed and returned home. With the collapse of central authority in Berlin and Vienna power devolved down to the local politicians and to groups of political activists and paramilitaries. These had a wide range of different goals and visions of the future. Some areas declared independent republics as happened at Ostrów Wielkopolski, south-east of Poznan by nationalists, and also at Tarnobrzeg in Galicia where a Catholic Priest and a Peasant rights activist led a peasant uprising.
In Wielkopolska, “Greater Poland”, a name for Poznania, a province inside the Second German Reich, Polish nationalist paramilitaries organised and rose up to seize control from the German authorities. Fighting started at the end of December 1918 and continued sporadically till the region was granted to Poland by the Treaty of Versailles in June 1919.
As well as nationalists, Marxist revolutionaries were also active, causing alarm to the conservative Council of Regency. With the outbreak of revolution in Germany many on the far left were expecting a Europe-wide revolution to break out. These Marxists were not interested in narrowly Polish conceptions of politics and were internationalists. They had some success in some industrial areas such as the Dąbrowa Basin, an industrialised region to the east of Katowice, in promoting workers setting up ‘Workers’ Councils’, like the Soviets in Russia.
Meanwhile Polish regular troops were fighting in the former Austrian province of Eastern Galicia alongside Polish paramilitaries. Here a “West Ukrainian Peoples’ Republic” had been declared by an army of Ukrainian paramilitaries. Although Ukrainian peasants made up the majority of the rural population, certain urban centres, notably the main city of Lwów had a majority Polish population. These had called on assistance from Polish military units based in Kraków. The fighting continued till July 1919 when a Polish victory established the line of the Zbrucz river as the de facto border between Poland and Ukraine.
During this chaos candidates were stepping forwards to claim the setting up of a national government. Within the Austrian controlled regions a “Liquidation Committee” had been formed under the leadership of Wincenty Witos, the leader of the centrist PSL-Piast (‘Polskie Stronnictwo Ludowe –Piast’, “Polish People’s Party-Piast”), a Peasant Party. Its purpose was to set up a Polish regime to take over from the Austrian authorities.
In Lublin on 6-7 November 1918 Ignacy Daszyński, a socialist and leader of the PPS (‘Polska Partia Socjalistyczna’, “Polish Socialist Party”), declared a “Provisional People’s Government of the Polish Republic”. Although Daszyński was a socialist he was also a Polish nationalist as opposed to an internationalist. He was one of the so-called ‘pro-independence’ socialists. He promulgated a programme which contained liberal measures, such as social welfare insurance, state pensions and free secular education, but also some radical ones such as the expropriation of land and its redistribution without compensation, and for workers councils, ‘Soviets’, to run firms.
The Germans and the Regency Council seeing the potential for Poland to disintegrate into chaos, and possibly then Marxist revolution, apparently set upon Józef Piłsudski as the best candidate to bring stability to Poland and to oversee the creation of a strong central government. He was released from prison and travelled to Warsaw where he was greeted on 10 November 1918 by Prince Zdzisław Lubomirski of the Regency Council. The next day he was formally made Commander-in-Chief of the armed forces. On the 14 November Piłsudski was formally given the title “Chief of State” a provisional presidency pending the drafting of a constitution.
By this time Piłsudski was widely seen as a national hero. His time in prison added to his credibility as a Polish nationalist leader prepared to make personal sacrifices. His political background was in fact left-wing but nationalist. Having been a member of the PPS he was one of the ‘pro-independence’ socialists. However in his new role he attempted to rise above narrow party issues to unite the range of political forces in Poland. This would eventually lead to many on the left feeling betrayed by him. At this time however he was viewed with suspicion by those on the right-wing, a situation which would persist. Crucially Piłsudski now represented a figure around who Polish military forces could coalesce to begin forming a truly national army. With control of the military Piłsudski was later to describe himself as having had ‘…almost dictatorial power.’
Piłsudski called on Daszyński to form a cabinet but he proved too left-wing to get enough support and so was replaced by another socialist of less radical hue, Jędrzej Moraczewski. Piłsudski is reported to have commented to his associates on returning to Warsaw that Poland was in too poor and devastated a state after the war to begin radical social experiments.
On 18 November 1918 Moraczewski became prime minister, leading a cabinet composed of roughly equal numbers of socialist and peasant party members and smaller numbers of others including two non-party ministers. To guarantee political breadth, two positions were held open for radical right-wing National Democrats and two further for other peasant parties. The overall complexion though was left-dominated.
The new prime minister’s programme was less radical than Daszyński‘s, but still socialist. The new government quickly established an ‘Electoral Law’ with universal suffrage for all over 21. It legalised labour unions and established an eight-hour working day. A labour inspection board was set up to guarantee safe working conditions. The eviction of tenants by landlords without a court order was banned. A system of universal health insurance was planned.
These popular moves undercut the hard left who now saw their support evaporating. As the central government authority came to be recognised local administrations dissolved or were absorbed into the new state. Workers’ councils began to dissolve.
With the issue of Poland’s borders still being determined, the authority of the Moraczewski government was in fact quite geographically restricted, to the Kingdom of Poland and to the former Austrian areas, except for those being contested in Eastern Galicia by the Ukrainian nationalists. To the west ‘Greater Poland’ fell under the control of the “Supreme People’s Council” (NRL, ‘Naczelna Rada Ludowa’), which was affiliated to the radical right-wing National Democrats. Further east German troops were still in control according to the terms of the Armistice agreement.
The face of Poland best known to the Entente powers was that of the “Polish National Committee” (KNP, ‘Komitet Narodowy Polski’) which had worked closely with France and also Britain during the war. This had been formed in August 1917 in Switzerland by Roman Dmowski and his associates with the backing of France and the Kerensky government in Russia. Part of the agreement was to set up a Polish army in France. This became the so-called ‘Blue Army’ under General Józef Haller. However the allies stopped short of considering the KNP as a government in exile.
Roman Dmowski, now based in Paris, was a radical rightist and leader of the National Democratic Party also known as the ‘Endecja’. Dmowski and Piłsudski were not just rivals, but represented completely opposed political visions. The radical right did not like the leftist direction the Moraczewski government was taking Poland. One view was that it was opening the way for communists to seize power. National Democracy also contained a strongly anti-semitic strand and many of its supporters viewed socialism as a “Jewish Conspiracy”.
Inside Poland serious opposition began to grow against the Moraczewski government. Demonstrations were continually being organised by rightist against the government and right-wing paramilitaries were forming. The upper classes were refusing to pay taxes or contribute to the ‘National Loan’. As a result the “Polish Loan Bank”, the main source of government funds, had to cut off government funding due to a cash flow crisis.
There was a danger of disorder, fragmentation of Poland, or even civil war. Thus it became necessary for Piłsudski and the KNP to negotiate. The process was initiated by the KNP in early December 1918, and Piłsudski and Dmowski both set aside their personal feelings to co-operate in the interests of the country. The KNP diplomat Ignacy Paderewski, most famous abroad for his piano playing, became an intermediary and negotiations took off.
On the night of 4 to 5 January 1919 there was an attempted right-wing military coup which fizzled out. The coup was led by Marian Januszajtis-Żegota, a senior commander in the Polish Legions who aimed to set up a government around the conservative aristocrat Eustachy Sapieha. Many on the left suspected the National Democrats of being behind it, but this has never been proved.
The failed coup seems to have accelerated the pace of negotiations to form a stable government acceptable to all parties. The idea was for a provisional government composed of ‘technocrats’ to oversee drafting of a full constitution for the new republic. It would be replaced after parliamentary elections by a cabinet reflecting the composition of the new parliament. In the meantime foreign policy would be looked after by an all-party commission headed by Paderewski.
Piłsudski went over the heads of Moraczewski and the socialists to cut the deal with the right. Thus on 18 January 1919 Paderewski became prime minister. He was a right-wing nationalist, but not as radical as some in the Endecja. He also had good standing internationally.
Elections were scheduled to be held on 26 January 1919 in the Kingdom of Poland and Western Galicia. It was not possible at that time to arrange elections in all the regions. The process proved to be confusing for everyone and there was a multiplicity of political parties to vote for often using different names and forming different alliances in different regions.
The organising of Polish elections in the disputed region of Cieszyn Silesia triggered the invasion of the whole region by the Czechoslovakian army on 23 January 1919 leading to a clash with Polish regular forces on the 28 January 1919 and the diplomatic intervention of the Entente powers who brokered a ceasefire.
The area was of great strategic and economic importance to Czechoslovakia, with rail links and coal mines, but had a majority Polish population. Previously an interim agreement had held from November 1918 when the rival Polish and Czech local councils which had sprouted up after the war, decided to divide the area. In fact Cieszyn was only one of a number of border points which were a source of friction between Poland and Czechoslovakia.
Attempts to settle the dispute by a plebiscite resulted in agitation and political violence. It was thus agreed the Entente powers should settle the border, and on 28 July 1920 the Spa Conference awarded the greater part of the area to Czechoslovakia. This formally divided a historically unified region. The outcome continued to rankle with the Poles and remained a source of friction between the two states.
Nationally in the initial January election a sharp contrast was found between the results in the Kingdom of Poland and the results in the poorer, less developed and more rural areas of Western Galicia to the south. In the north the National Democrats polled most strongly, but in the south centrist and even leftists peasant parties dominated.
From these results an initial 338 seat Sejm or parliament, was formed, containing ten blocs of parties. The outcome was an indication of the character of parliamentary politics to come. The vote was spread widely from right to left, with a proportionate showing for ethnic minorities, at this time the Jews and Germans. It was to be a recurring feature that the centre parties would become the ‘king makers’, being joined by elements from the left or right to form a cabinet government.
The immediate result presented a potential political crisis, with no strong mandate for left or right, it would be problematic to form a government. A government that was either too right-wing or too left-wing might trigger political unrest. In order to put off such problems till the immediate issue of drafting a constitution was complete, it was easier to just leave the Paderewski technocratic cabinet in place. This solution was quietly accepted by the major politicians.
As the borders of the new republic were settled in stages the initial election results had to be supplemented by several additional votes in the months to follow as territory was added to the new Poland. By the time of the first elections under the full constitution in November 1922 the number of seats in the Sejm had grown to 442. During this process the radical right National Democrats became weaker, the centrist PSL-Piast became stronger, and the socialist PPS essentially held its ground with one tenth of the vote.
One of the first actions of the so-called “Constitutional Sejm” was to approve a provisional constitutional framework under which to develop a full constitution. This “Small Constitution” was approved by parliament on 20 February 1919. However it left much to be settled, in particular the relationship and powers of the executive and the legislature.
While the cabinet government dealt with setting up the administrative structures of national and local administration and the difficult day to day problems of running the country, drafting of the constitution was the work of a “Constitutional Commission”.
The political parties concentrated on the Constitutional Commission hoping to influence the final outcome according to their distinct visions of the future Poland and also according to self-interest. Party politicians of the interwar period have been described as being generally nationalist and radical. Both the right and left, with the exception of the Marxist revolutionary minority, put creation of a nation state for the Polish ethnic group at the heart of their goals. However Politicians of the time held two main opposing models for the new Polish state.
The radical rightists of the National Democrats had developed the ‘Piast’ concept of what Poland should become. This referred to the era of the Polish Piast Dynasty (930 – 1370 AD), a kingdom with territories inhabited almost entirely by ethnic Poles. The opposing view looked to the era of the Jagiellonian Dynasty (1386 – 1572), this kingdom was wider ranging and multi-ethnic, encompassing large areas to the east inhabited by Ukrainians, Belarusians and Lithuanians. The radical right worried that these minorities might dilute the Polish character of the state. In the event the eastern borders were to be decided by war under the command of Marshal Piłsudski.
Another politically hot issue at the centre of the constitutional debate was the power of parliament versus the executive. Perversely the right actually wanted a weak executive, with a weak President and a stronger parliament. The reasons for this were entirely political, the Endecja worried that a strong presidency would simply mean a state dominated by their opponent Piłsudski. Meanwhile Piłsudski and his supporters in the military and on the left preferred a strong presidency so the policies of the Endecja could be reined in.
That most of the politicians were radical meant they had little interest in traditional conservative monarchist ideas. However there were those on the right and centre who saw the Catholic religion as an inseparable part of Polish identity and who would have liked to see the Catholic Church as an established part of the state. This was strongly opposed by the left for who a secular state was non-negotiable.
The military were also concerned about the relationship which would be created in the upcoming constitution, between the Houses of Parliament and the military, such as budgetary restraints and civilian control of military operations. The military leadership, many of who were Pilsudski’s close collaborators and fellow legionnaires, have been accused of trying to limit parliamentary budgetary control and oversight of operations. This resulted in tension between the military and parliament.
The military seem to have been able to get much of what they wanted as the government committed extensive funds in view of the security situation facing the new republic. Over half of the government budget at the time was being approved by the Sejm to go towards building and reforming the military.
In early 1919 the prospects facing the new Poland were grim. In the light of the Second World War it is easy to underestimate the damage that had been done in the territories forming the new Poland during the First World War. Located between the Central Powers and the Tsarist Russian Empire these territories were fought over for most of the war. Armies passing through confiscated everything imaginable, from food and livestock to industrial plant and equipment. The extent of damage from fighting was considerable, at one estimate nearly a fifth of the housing stock was destroyed. One and a half million farm buildings were destroyed with a third of the livestock gone. Much of this would have to be rebuilt or replaced.
There was massive destruction of the transport infrastructure which would have to be rebuilt. Estimates cited around half of all bridges, railway stations and rolling stock destroyed. Industries had been stripped of capital equipment and inventory. For example the important metallurgical industries had ceased to function, and it would prove to take several years for them to recover. Massive investment was needed to rebuild industry. The Polish delegation to the Versailles Peace Conference estimated the value of war damage as 73 billion French Francs.
However reconstruction of war damage was not the only problem facing the new Polish government. They were faced with the unique difficulty of uniting the legacies inherited from three different empires. Even before accounting for war damage, the new country had no unified transport system as the transport infrastructure had been developed according to the needs of the constituent empires. East to West lines of communication had been well developed, serving the interests of these empires, but North to South communications were underdeveloped. Much of the Russian region had been neglected.
Invisible borders still crossed the new Poland where the empires had met and transport routes ended. For example more than fifty Austrian and German railway lines led to the Russian frontier, but only ten crossed it. The German railways lines were constructed so as to transport goods in the direction of the German economic and trade centres of Hamburg and Bremen. Similarly during the nineteenth century Warsaw merchants and financiers had a railway constructed from Warsaw to Vienna. This was completed in 1848 and became Poland’s main link with the rest of Western Europe via the Adriatic. In addition to these problems the railway gauges, equipment and administrative methods of the railways in the different empires had differed.
The extensive waterways of Poland should have formed a natural South to North transportation system, however in the Russian Empire development and use of these systems had been deliberately neglected. Although the timber industries had traditionally floated logs down the Vistula, it was little used for any other industries. Regular navigation of the Vistula stopped above Warsaw. The Bydgoszcz Canal, constructed by the Germans diverted traffic on the Vistula westwards towards Stettin rather than northwards towards Danzig. In addition the mining and other industrial centres of Poland were not well located to make use of the waterways.
It would be necessary to invest in entirely new transport infrastructure both to integrate the economy and to serve the new directions of Polish trade. Linked to the problem of the orientation of transport infrastructure was the issue of the orientation of trade. Trade from the now Polish territories was dominated before the First World War by trade with the economic centres of the old empires: Germany, Russia and Austria. One estimate was that over four-fifths of both ingoing and outgoing trade of the regions within the new Poland were with regions outside the new Poland.
The mines, textiles industries and metallurgical works of the Kingdom of Poland were dependent on the Russian market. Upper Silesia’s mines, iron and zinc foundries, and chemicals industries had been integrated into the German economy. While the efficient, capitalised agricultural system of Poznania and Pomerania had fed the large German towns.
From 1918 these links were severed, the USSR essentially closed its doors to trade, while the newly independent republics of Eastern Europe, including Poland, tended to have high tariffs. Thus the development of international trade was hampered.
Industry had developed separately in each of the three empires. A consequence of this industrial legacy was that within the borders of the new Poland some industries now had overcapacity with duplication of functions, such as sugar refining, while other industries were now practically absent, like machine tools, and armaments.
Uniting all this into one economy meant establishing a single currency, when at birth the new Poland had six different currencies in circulation. As late as 1920 Prussia still maintained a tariff and a passport was still needed to travel from Warsaw to Poznan.
There were numerous issues of administration and government to resolve. Different regional systems of administration had been in use in Poznania, Eastern Galicia, Wilno (Vilnius) and Silesia. A wide variety of taxation systems had been in use, in Russia it had been mainly indirect, in Germany mainly direct, while in Austria a mixture of both direct and indirect had been used.
Four different legal systems had been inherited, and their unification was so difficult that the task was not entirely complete by the time of the destruction of the Second Republic in 1939. Standards of education throughout the region were uneven with the highest in Germany and the lowest in Russia. Illiteracy was common in the formerly Russian and Austrian rural regions.
In addition the soldiers that came together to form a new national Polish army had been used to serving under some four different languages of command. Against the background of all this, in 1919 the new Poland was still struggling to establish its final borders and was engaged in extensive warfare which would escalate before it would end.
The new Polish state thus had massively high demands for spending on reconstruction, development and war, and had few sources of income or capital. This required the government to run large deficits. In 1919 the Polish government ran a massive budget deficit with government revenues only covering less than one third of expenditure. The result was growing inflation and a weakening of the Polish Mark, the currency in the Kingdom of Poland, which fell to one tenth of its value against the US Dollar during the year. The conditions of high inflation, but not hyperinflation, coupled with the demands for goods for reconstruction and the military meant that industry grew.
In June 1919 Paderewski signed the Versailles Treaty on behalf of Poland. The Versailles Treaty essentially established the borders between Germany and the new Polish Republic. Poznania had largely been seized by force by Polish paramilitaries during the Wielkopolska (“Greater Poland”) Uprising, and was awarded as a fait accompli to Poland.
East Prussia was divided between Germany and Poland on the basis of a series of plebiscites. Danzig became a ‘Free City’ neither part of Poland or Germany, but with a German majority population. Poland was guaranteed various rights within Danzig, primarily to give Poland the use of a major Baltic sea port which it lacked itself in 1919.
Poland was also granted a short section of Baltic coast by the creation of the “Polish Corridor”. This in turn cut the German East Prussia off from the rest of Germany and would be a continual source of annoyance to right wing German politicians between the wars.
The treaty did not settle the borders at Upper Silesia, but required the holding of plebiscites within two years of the treaty signing to determine the future of the region. This led to a series of three major violent clashes by Polish and German paramilitaries known as the “Silesian Uprisings”.
In domestic affairs there was a limited attempt to improve the conditions of the rural poor by drafting land reform laws as demanded by the peasant parties but opposed by some on the right. The first “Land Reform Act” was passed by the Sejm on 10 July 1919. This required the breaking up and parcelling out of estates larger than 400 Hectares in area.
There were also measures intended to improve the conditions of the urban industrial workers. In January 1919 factory inspection was established to enforce the laws governing the conditions of employment. The principle of a forty eight hour week, and of a weekly day of rest, was enshrined in law on 18 December 1919. There were the beginnings of an unemployment insurance system too. In addition the “Post Office Savings Bank” was established for small savers such as peasants and industrial savers. It was modelled on similar banks in other countries.
In the field of foreign trade, in November 1919 one of the first acts of the new republic was to impose a general customs tariff based on the Russian tariff of 1903. It was a temporary measure while a new trade policy was developed. Immediately after independence foreign trade was practically under complete government control and was characterised by bilateral barter agreements based on quotas.
Poland’s trade position was helped by the fact that Germany was compelled by the economic clauses of the ‘Treaty of Versailles’ to maintain ‘most favoured nation’ treatment to Poland (and the other allied Powers) till 10 January 1925. In addition manufactured goods from parts of Poland which had been inside the German Empire before the war were to be exempt from all German customs for three years.
Paderewski resigned as prime minister and foreign minister in December 1919 over meeting obstruction to his policies from parliament. Attempts by Paderewski’s finance minister Leon Biliński to reduce the enormous budget deficit were obstructed, as were attempts to further the land reform measures.
Paderewski’s government was replaced by a centrist cabinet led by Leopold Skulski of the PSL-Piast. It was supported mostly by peasant groups and the rightist Christian Democrats, or ‘Chadecja’, led by Wojciech Korfanty.
In 1920 the Polish Mark became the only legal tender in Poland. The issue of Polish Marks had previously been taken over by the Polish government as they were originally issued by the Germans through the “Polish State Loan Bank”. Before this law there had been some six different currencies in circulation and in use within the areas forming the new Polish state. These included Russian Roubles, German Ost Marks and Austrian Kronen.
In spite of this reform, currency instability problems continued, as the currency kept falling in value. The falling Mark was caused by a vicious circle of the government running large budget deficits. The Sejm kept pressing for high expenditure to finance its social legislation, military spending was high. The budget could not be balanced and was managed on a month by month basis. To finance these deficits an increasing volume of paper money was issued.
Under Skulski welfare provisions continued to expand. In May 1920 employee contributions based systems of sickness and maternity insurance were legislated. These covered most private sector industrial and domestic workers subject to a means test, but did not cover national and local government employees. The majority of agricultural workers were not covered by this scheme, but by another for medical assistance and hospital treatment at the expense of the employer. Other schemes were also brought in for industrial workers for old age, invalidity and caring for dependents following death.
In 1920 the position of co-operative societies in the new republic was formalised by law. This law, with only minor amendments governed their position throughout the existence of the Second Republic. There had been a tradition of co-operative societies in Central and Eastern Europe dating back to the late nineteenth century. Originally Credit Unions were set up to help peasants, farmers and small businessmen acquire finance without becoming indebted to ‘loan sharks’. The co-operative movement then diversified into producer co-operatives such as dairy co-operatives for processing and marketing, and consumer co-operatives which reduced the costs of living for poor industrial and agricultural workers.
Such co-operatives would become an important feature of domestic trade and commerce in interwar Poland making it easier for the poor to afford food, clothing and fuel. For example data show that the average working-class household in 1927 spent 64 per cent of their budget on food and 11 per cent on clothing. Belonging to a consumer co-operative could significantly ease the cost of living.
In November 1918 a congress of the representatives of the co-operatives had been held to hammer out the main principles to base it on. The declaration of principles which was adopted put socialisation of the means of production and exchange in the interests of labour as the main aim and rejected the profit motive.
The new law now set a legal definition for a co-operative, laid down the principles of how a co-operative must operate, and importantly set out a legal framework for the oversight and supervision of co-operatives. Membership had to be open, with democratic governance based on one member, one vote. Co-operatives could band together into ‘Auditing Unions’, and had to be registered with the government’s “State Co-operative Council”, attached to the Ministry of Finance.
Throughout the period of the Constitutional Sejm Piłsudski remained “Chief-of-State” with the blessing of parliament, and also held the post of “Commander-in-Chief” of the armed forces. Thus Pilsudski was mainly preoccupied in reforming and building up the military for deployment to the east. There was a great increase in the size of the Polish Army from 30,000 troops in November 1918 to 600,000 in August 1919. Control of the military gave Pilsudski the opportunity to define the eastern borders of the new Poland by direct action.
In late 1918 to early 1919 the German Army of the ‘Ober Ost’ command stationed in Belarus and Lithuania, which had acted as a buffer between the Russian Soviet Socialist Republic and the new Poland, was withdrawn. The Entente powers had stipulated that these troops should stay to maintain peace and order, but events on the ground overtook great power diplomacy. This invited both the Russian Soviet Socialist Republic and Poland to expand into these areas.
The Bolsheviks wished to spread westwards initially in the hopes of linking up with the revolution in Germany. At this time there was still a belief in some circles that a world revolution was breaking out.
On the Polish side Marshal Piłsudski had a long term strategic plan for the creation of the ‘Międzymorze’ (“Intermarium”) a federal republic of east European states led by Poland and including at the least Ukraine, Belarus and Lithuania. He openly stated his view that Poland should become a great power, and this great federation was intended to be a power strong enough to stand up to Russia, the main threat to Poland in Piłsudski’s view. In addition Piłsudski subscribed to the strategic concept of ‘Prometheism’, the idea of weakening Russia by supporting the independence of the various nationalities which lived inside the Tsarist Empire.
From Feb 1919 clashes began between Polish forces and Russian Soviet ones. These continued in various phases until an armistice was finally signed on 18 October 1920. The climax of the Polish-Soviet War came in mid-1920, when Pilsudski decided to keep Ukraine out of the Russian sphere of influence by war if necessary. Diplomatic efforts to this end had failed, so Pilsudski set up a formal military alliance with Symon Petliura, the Ukrainian Nationalist leader recognised by Poland, who had been given asylum in Poland. Preparations were made for a full scale military offensive ‘Operation Kiev’ which began on 24 April 1920. The March on Kiev though initially successful soon got into difficulties and the Red Army chased the Polish forces out of Ukraine. The decision was made by the Russians to continue their advance into Poland and preparations were made for a Soviet government to take over the country under the Polish Marxist Julian Marchlewski.
In the face of the failure of ‘Operation Kiev’ the Skulski cabinet resigned on 9 June 1920 and was replaced by one led by Władysław Grabski which only served for one month. In Warsaw the military crisis led to the formation of a new coalition government on 4 July 1920 headed by the centrist peasant leader Witos. Needing to keep the peasant parties co-operative and fearing the attractions of Soviet revolutionary agitation for the peasantry, the government now approved more reforms, most notably a radical land reform law.
“The Agrarian Reform Act” of 15 July 1920 required the re-distribution of holdings greater than 180 hectares including woodlands, on the large estates to landless labourers and small peasants. Compensation was to be paid at half the market value. The law was not to be put into operation till after the retreat of the Red Army. It initially triggered a rapid rise in the sale of land to small farmers. They had profited from the famine conditions of the towns following years of conflict and so had cash to spend. Large land owners sold off land fearing compulsory expropriation. However the transfers proved limited in the end. After 1921 the peasantry became impoverished and the act was not effectively enforced. The result was that after peaking in 1922 land sales declined again.
As the Red Army reached the outskirts of Warsaw in August 1920, a brilliant coup by the Polish Army saw them outflank the advancing Red Army and advance northwards across their rear land lines of communication. This forced the Red Army into a panicked general retreat.
Despite this decisive victory, fighting in the east continued erratically for a few more weeks with the Poles exploiting the fluid military situation to seize Wilno in defiance of the Entente powers. Wilno had a Polish majority population and Pilsudski had personal connections with the city having been born nearby and having schooled there. It was claimed by the Lithuanians as an important urban centre. The western powers had intended to supervise the allocation of Wilno and its surrounding territory by diplomatic means.
The seizure of the city on 8 Oct 1920, followed a failed coup attempt which the Lithuanians accused the Poles of organising. The Polish government deflected criticism for the seizure of the city because the Army Commander responsible, General Lucjan Żeligowski, claimed to have acted insubordinately and took personal responsibility for leading a ‘mutiny’. In the process considerable territories around the city were also acquired. The outcome rankled with Lithuanian nationalists for years to come.
The signing of the armistice with the Bolsheviks in Oct 1920 was followed in March 1921 by the “Peace of Riga” which established the borders between the Soviet Republics and Poland. It lay well to the east of the ‘Curzon Line’ proposed by western diplomats in 1919 as a suitable eastern border for Poland, and brought millions of Ukrainians, Belarusians and Lithuanians into the new Polish Republic
On 17 March 1921 the full constitution of the Second Polish Republic was approved by parliament. It was intended to be a liberal parliamentary democracy and was modelled on the constitution of the Third French Republic. It became known as the “March Constitution”.
The constitution enshrined a wide range of liberal principles. Legal equality and equality of treatment of all irrespective of race, religion, ethnicity et cetera was guaranteed. The full range of political rights were guaranteed, such as freedom of political expression, freedom of assembly and freedom of the press. The right of property was also enshrined, so this was not a socialist constitution.
The constitution was secular. Although the Catholic Church was mentioned as having a ‘leading position’ among the religions of Poland, this was really a token gesture as the Church had no special incorporation into the state. All religions were technically equal before the constitution. This was something which upset many on the right and in the Christian parties.
Notable characteristics of this constitution were firstly that it limited the powers of the president relative to the houses of parliament, reflecting the fears of rightists that Pilsudski would concentrate too much power in his hands. A bicameral system was adopted. The lower house was the “Sejm”, elected by universal adult suffrage by proportional representation. It had extensive powers of decision in many financial and military matters. It had extensive powers to question cabinet ministers and could compel individual cabinet ministers, or entire government cabinets to resign by a ‘vote of no confidence’.
The upper house was the “Senate”. It was also elected by universal adult suffrage, but with a higher age qualification for voters. The Senate could not initiate legislation, and could only block it by demanding an eleven to twenty majority in the Sejm for bills to be passed.
The president was elected for seven years by a joint session of the Sejm and the Senate, the “National Assembly”. The president had no power to veto legislation. Despite being formally the highest ranking military officer, the president was not allowed to act as ‘Commander-in-Chief’ in time of war. Importantly, the president could dissolve the Sejm if he got a three fifths majority in the Senate.
A second notable characteristic of the March Constitution was that it contained explicit references to social welfare provisions at the insistence of the Socialist and Peasant parties. Benefits for unemployment and sickness were a right. There were explicit protections for workers in dangerous environments and for child workers. Education at the expense of the state was a right.
The rights of ethnic minorities for the preservation of their nationality, language and ‘character’ were explicitly stipulated. In addition the peasant parties and the left were successful in getting the inclusion of a commitment to land reform.
Poland in 1921
By mid-1921 the borders and political system of the Second Polish Republic were essentially settled. That year there was also a census carried out, so it is convenient to make a survey of the structure of the Polish economy and society at that time.
The Poland of the Second Republic was a geographically large and varied country. According to the 1921 census Poland had a population of approximately 27.2 million people. The Poznan region to the west was wealthier, with more productive farms. Although Poznania and Pomerania were among the least developed regions of the German Empire, they had received more investment than many formerly Russian or Austrian controlled regions in the new Poland due to Germany’s relative wealth. Excellent irrigation systems had been built, and were later used by Polish farmers.
The former Russian urban centres of Warsaw and Lódź were at the heart of the Russian Empire’s industrial region and were part of one of the fastest growing regional economies in all of Europe before the First World War. However the country became less developed when travelling eastwards. The wetlands of Polesie in the east were thinly populated and impoverished.
The ‘Kresy’ or eastern borderlands stretching from Wilno (Vilnius) in the north to Tarnopol and Lwów in the south, had bad roads, few towns and a very inefficient rural economy. The former Habsburg Austrian areas of Galicia also suffered from underinvestment, apart from a short lived oil boom, it was one of the most impoverished regions in the whole of Europe.
Poland in 1921 was a very poor country. As a guide it lay in the bottom third of European countries for Gross Domestic Product (GDP) per head. Even for the 1920s it had a low degree of urbanisation by the standards of North West Europe. The census showed that only one quarter of the population lived in towns and cities.
Interwar Poland was a predominantly rural society. Two thirds of the population gave their occupation as peasant. Another one tenth of the population were agricultural labourers. The peasants still noticeably differed from townspeople in language, dress and customs. The changes experienced rapidly in the cities and towns were much slower to be felt in the villages. Religion was strong in the countryside but it was attended by strange superstitions.
A man’s worth was equated with the amount of land he owned. Thus landless agricultural workers, of which there were estimated to have been about three million had the lowest social status. There were some with special skills who could earn good money, but the run of the mill farm labourers were among the poorest in society. In spite of stratification among these country dwellers, they also had a strong sense of sharing a common identity. Politically the peasants were conscious of their local environment and much less aware of national issues.
Polish farms produced on average only half the calories per hectare of those in Germany. Few Polish peasants had access to modern inputs such as chemical fertilisers, high yielding seeds or machinery. Holdings were subdivided to make marriages possible, the idea was that both partners should bring equal amounts of land to the union. The result was fragmentation of holdings with the fields belonging to a given couple often being widely scattered. Low yields meant low surpluses, meaning there was little left over to invest in improvements.
One third of farms were less than five hectares in size. Many plots were not self-sufficient and the owners had to supplement their income by working on larger farms. Small holdings though numerous did not represent the whole picture at all. Nearly a third of holdings were from 5 to 20 hectares in size, which were common everywhere.
Over 47 per cent of all arable land was in the form of large holdings, representing just under one per cent of holdings by number. So about one per cent of holdings contained nearly fifty per cent of productive land. These large estates were mostly well run and produced most of Poland’s grain exports, but were often a source of tension, for example in Eastern Poland where land owners were typically Polish but the farm workers were Ukrainian.
There were still estimated to be about 70,000 large and medium landowners in Poland, who had a strong position in agriculture. Legally the Polish nobility, or ‘Szlachta’, were no longer recognised, however local custom often perpetuated aspects of the traditional hierarchy. The image of the traditional ‘Szlachta’ still persisted to some extent. They were associated with ownership of large manorial estates and in old times had special legal privileges. In the March Constitution they had no legal privileges. The nobility now presented a more modern, twentieth century face, with modern clothing, a car, ownership of a radio, taking a newspaper et cetera. Wealthy urban businessmen and industrialists often acquired country estates in the hope of gaining some ‘aristocratic’ kudos.
It is almost impossible to generalise about the living conditions of the peasants as there were great differences in organisation, labour relations and status in different regions. This was partly the result of the legacies of the three different empires, but also depended on the varying farming conditions. The rural housing shortage was worse than in towns and cities, with an average of five people living per home. One half of homes had only one room.
One arrangement frequently found was ‘deputant workers’, permanent workers available year round providing the bulk of the labour, but paid only a low cash wage. Much of their pay was in the form of a dwelling provided by the employer together with a plot of land for the worker’s subsistence. In the east this was typically used to grow potatoes. Some pasture for one or two cows to graze, and allotments of cereals or other foodstuffs were also often provided. There were substantial variations in this pattern.
The independent proprietors of small holdings typically had to take up wage labour to supplement the income from their own cultivation. This sometimes involved annual contracts of employment. Thus their conditions were not, in practice dissimilar to the ‘deputantists’. An unskilled agricultural worker could sometimes earn more money than a small holder with a tiny plot.
Figures are scarce, but those from later, in 1929 show 64 per cent of the population living in the countryside consumed only 47 per cent of the total consumption in the Polish economy. Two-thirds of both rural and urban workers were underfed, the smaller independent peasants of the south were particularly badly off nutritionally.
The limited data available for the interwar years suggest that peasants may have received on average adequate amounts of those foods they produced themselves, such as potatoes and dairy products, but may have only received around half to two thirds of their minimum needs of other foods. J. Taylor in his 1952 monograph states that “Even before the Great Depression the poor Polish peasant lived below any acceptable standard of living”.
To make things worse there was pressure on land from the high rate of rural population growth, one of the highest in Europe. Under these conditions hundreds of thousands emigrated. As it happened the problem was to intensify, as in 1924 the USA restricted immigration from Eastern and Southern Europe on a quota basis. In addition the pace of economic growth in the towns during the interwar period proved not to be fast enough to absorb the surplus rural populations. Thus following independence the problem of rural over-population became more serious.
Poland was a major agricultural producer in Europe. There was considerable variety in the types of soils found in Poland at this time. To generalise the soils of the Northern and Central low-lands were podsols associated with temperate forest regions, of medium fertility, lacking phosphate and calcium. Such soils require careful cultivation and the use of fertilisers. Such conditions were met in Western and Central parts of Poland. The South-Eastern regions, which had the densest rural populations had the least developed cultivation of soils, were technically backward in their methods and had dramatically lower output.
Despite a trend towards mixed farming, output was still dominated by crop production. Throughout the period of the Second Republic the main crops by quantity produced were, in decreasing order, Rye, Potatoes, Oats, Wheat, Barley and Beets. Of these the most profitable was beets. Poland was the second biggest producer of Rye and Potatoes in Europe, and the third biggest producer of Oats.
In livestock production the order of importance was, in declining numbers, Cattle, Pigs, Horses, Sheep and Goats. Fresh water fish were a minor branch of the rural economy. There were many thousands of acres of fish ponds in Poland, with Carp and Pike the main fish produced.
As mentioned above, in 1921 only one quarter of the population lived in towns or cities. Polish towns between the wars were generally of small size, three quarters of all towns and cities had a population of 40,000 or less. The mode average town size was 10,000 to 15,000 in population, representing approximately one quarter of all towns and cities. The village was the most characteristic habitat for Polish people between the wars. Apart from a few major centres like Lódź, the towns of inter-war Poland were local and provincial in character, closely linked economically to the surrounding countryside.
A significant industrial legacy had been inherited from the three empires. In 1921 only 17 per cent of the population earned a living in mines and factories. The population as said, was growing quicker than most of the others in Europe, as a result this meant a high proportion of the workforce were young, which is theoretically good for the economy in terms of providing people of working age.
About three fifths of industrial workers worked in heavy industry and mining, while two fifths worked in cottage and handicrafts industries. There were wide variations in standards of living for industrial workers, with those employed in state-owned monopolies enjoying higher wages and more job security.
Unskilled workers in big industry and cottage industry workers tended to be poor, often very poor, for example those living in the industrial centres such as Lódź, Białystok or Bielsko-Biała. Industrial workers tended to be Poles, but many skilled workmen in Upper Silesia and Lódź were German. Working-class Jews were represented proportionately in big industries. As in most developing countries industrial workers tended to have higher incomes than the peasants.
The main heavy, large scale and mining industries were coal-mining, textiles, metallurgy, chemicals, food processing and timber. In the above industries employment tended to be concentrated in fewer, larger employers. Figures from 1928 show that just one hundred factories employed one third of this industrial work force.
However Polish industry between the wars had a dualistic character, and cottage industries were common in interwar Poland. About one third of a million handicraft workshops employed nearly one million workers. Trade was concentrated in Jewish hands with 63 per cent of people employed in trade and cottage industry being Jewish in 1921. The vast majority of these were in retail. There were no official statistics on the ownership of handicraft workshops, the estimate of about one million people making a living from these is considered unreliable. Most workshops were small, often employing only family members. Many were owned by Jews, especially in tailoring, leatherwork, baking and bookbinding.
It is estimated there were about 260,000 people living off the ownership of industries who could be described as industrialists or capitalists. Industry was not yet highly developed. A disproportionate number of these were Germans or Jews thus exciting prejudice against the class. Industrialists were able to lobby government through a body called the “Central Union of Polish Industry, Mining, Commerce and Finance”, commonly called ‘Leviathan’.
About five per cent of the population classed themselves as ‘professionals’, or members of the ‘intelligentsia’, a social stratum made up of those possessing academic higher education. Typically professors, doctors, literary figures et cetera. They occupied the leading role in all political groupings and had a wide variety of political and social perspectives.
The intelligentsia were particularly a characteristic of Polish and more widely Central and Eastern European societies. Manners, mores and an interest in the humanities were key to being regarded as a member, rather than just qualifications. They varied greatly in income and status but had a strong feeling of commonality.
Many of them were descendants of the old ‘Szlachta’, minor aristocracy, who had migrated to the towns in the late nineteenth century. They saw themselves as embodying the political consciousness of the nation. They often occupied posts in the state which was respected by their contemporaries, but tended to disdain trade and industry. In Poland many of this class embraced a right-wing radicalism in the universities.
Jews were an important part of the intelligentsia, representing about half of all lawyers and nearly half of all doctors. This was to become one source of resentment for anti-semitic Poles. Many Jews were important in the literary life of Poland. The educated, upper middle-class Jews tended to be more assimilated into Polish life and to use the Polish language more, unlike the working-class and less educated Jews who tended to speak Yiddish more.
The new Poland created by uprisings and war was a multi-cultural society which rankled with many Poles of the ‘Piast’ school of thought. In the 1921 census only 69 per cent of people classed themselves as having Polish nationality. One crude estimate is that, given the incidence of illiteracy, may be as few as 40 to 50 per cent of the population of the Second Republic could actually read and write Polish, the official language of government. In the same census only 64 per cent of the population gave their religion as ‘Latin Rite Catholic’.
The minority which perhaps was most noticeable throughout Poland because of their widespread distribution and concentration in the towns, were the Jews. In 1931 three-quarters of all Jews lived in towns and cities. They were certainly the minority to get the most attention from the right-wing political parties. Nationally only 11 per cent of the population identified itself as Jewish in the 1921 census, but the concentration of this population in the towns meant that in some cities such as Warsaw, Lódź and Lwów, Jews made up one third of the population.
In smaller towns of the eastern borderlands, the Kresy, like Grodno or Brześć, Jews could make up forty per cent or even more of the population. There had been a westwards migration of Jews, many Hassidic, since the 1860s to escape the poverty and persecution deeper inside the Tsarist Russian Empire. Hence many towns in the eastern region of the new Poland had large concentrations of Jews, and the Jewish population of Poland had dramatically increased in the decades prior to independence. As with the peasants, the blocking of emigration to the USA in 1924 was to reduce the options available to the Jewish population. There was thus a growing interest in Zionism during the interwar period.
The majority of the Jewish population in Poland was orthodox, and followed one of the great rabbinical courts. Many of them dressed distinctly so were highly visible. Jews in Poland were a distinct ethnic group, around eighty per cent of them spoke Yiddish at home, not Polish. In many towns Jews were concentrated in a ‘Jewish Quarter’ or ‘ghetto’ area and so formed a ‘race apart’. The concentration of Jews in retail, medicine, and small handicraft businesses like tailoring and cobbling also made them conspicuous.
Jews were practically locked out of jobs in the Polish state and public sector. There were no formal restrictions, but it is generally believed that informal discrimination caused there to be very few Jews employed as teachers in public schools, and practically none in the Civil Service.
Although Jews were associated in the public mind with the towns and cities, Jews were widespread throughout the countryside. Here they often occupied the niche of market traders supplying manufactured goods to the peasants, or merchants purchasing crop surpluses. Although only six per cent of Jews were involved directly in agricultural production, Jewish farmers existed. In Galicia the local laws, which allowed Jews to buy land, had led to the creation of a class of Jewish landowners, alongside Jewish peasants and market gardeners.
In the Second Republic there were also over one million ethnic Germans dispersed through the country. They did not make a majority of the population in any one district (powiat), though certain villages had predominantly German populations.
Despite many Germans emigrating after Polish independence, the remainder formed an important minority in the western areas of Poznania and Pomorze (Pomerania). Here they were often the more prosperous citizens such as large landlords or prosperous peasants. In the towns some German officials remained. Many agricultural processing plants were owned and managed by Germans.
In Upper Silesia almost all landowners and industrialists were German, and many of the Polish workers and peasants had been considerably Germanised. Germans were also important in the textile centres of Lódź and Bielsko-Biała. There were also long-established communities of German peasants in The Kingdom of Poland, Galicia and the Eastern Borderlands
The settling of the borders of the Second Republic far to the east as a result of the Polish-Soviet War brought over three million ethnic Ukrainians and nearly a million Belarusians inside Poland. In addition there are estimated to have been about 140,000 Russians and about 80,000 Lithuanians. This was to lead to political tensions and even open conflict at times.
The biggest single ethnic minority in the Second Republic was the Ukrainians. In the 1921 census 14 per cent of the population gave Ukrainian (or Ruthenian) as their nationality. Ukrainians were a large majority in the south eastern provinces (Voivodships) of Stanisławoskie and Wołyńskie (“Volhynia”), represented nearly half of the population of Tarnopolskie, and over a third of the population of Lwowskie.
The Ukrainians in Poland were divided as to their religion. Those from the former Austrian regions, Eastern Galicia, tended to be ‘Uniate’ but those from former Russian areas, Wołyńskie, tended to be Orthodox. Many Poles and some in the Polish authorities would tend to discriminate between these two populations having more sectarian affinity for the ‘Uniate’ Church members. Uniates are also known as ‘Eastern Rite Catholics’ and accept the authority of the Pope in Rome despite having eastern traditions.
There were not many Ukrainians living in the towns and cities, which tended to be mainly settled by Poles and Jews. Those urban Ukrainians were typically employed in low wage, low skilled jobs. There were hardly any Ukrainian industrialists. By the start of the twentieth century a small Ukrainian intelligentsia had arisen consisting mainly of priests, teachers and the managers of the extensive Ukrainian co-operatives. The co-operative movement was an important feature of the Ukrainian community.
The Belarusians formed a large majority in the Voivodship of Poleskie, nearly half the population of Nowogródzkie, and about a quarter of the population of Wileńskie. Most Belarusians were members of the Eastern Orthodox Church. Belarusians lived in the very poorest regions of the Second Republic and were nearly all peasants or farm labourers.
A number of unfortunate factors would exacerbate tensions between these two large minorities and the Polish authorities. Firstly economic divisions. The eastern border lands of the Second Republic were the poorest and least developed parts of Poland, creating a regional development problem.
Secondly social. Within the regions where the minorities formed a majority, the Ukrainians and Belarusians were mostly poor peasants and farm labourers, while the Poles would tend to be wealthier landowners and larger farmers who employed them.
In addition attempts at land reform which should have helped improve the condition of the Ukrainian and Belrusian peasants sometimes backfired. In time it became clear the Ukrainian and Belorusian minorities were not always pleased with the results of land reform. The Polish government was accused of abusing the process by focusing on expropriating non-Polish land owners in the eastern borderlands, known as the Kresy, and redistributing the land to Polish ‘colonists’, so-called Osadniks, many of who were soldiers demobilised after the Polish-Soviet war. This seemed to be a deliberate Policy for strengthening the Polish presence in these areas.
Thirdly political. Ukraininan and Belarusian ‘states’ existed across the border with the Soviets. The Ukrainians had got far down the road of creating a Ukrainian nation state in ‘West Ukraine’ which had been crushed by the Poles. As the interwar period progressed there were signs that foreign powers such as the USSR and Nazi Germany were attempting to encourage and exploit the disaffection of the these national minorities for geopolitical reasons.
Parliamentary Democracy March 1921 to May 1926
The March Constitution was not put into effect till November 1922 when the first elections according to its provisions were held. In the meantime the electoral system had to be implemented. It has been alleged that many politicians deliberately tried to manipulate the setting up of arrangements for the electoral system out of self-interest which delayed the whole process.
Some are accused of trying to keep the number of ‘deputies’ in the Sejm low so as to make it easier to pass legislation. Some on the right may have attempted to exclude the ethnic minority parties as much as possible. The centrists who held power at the time, might have feared losing their key position as ‘king makers’ in parliament after the election.
Meanwhile the centrist coalition under Witos had been losing members. No sooner had the threat from Soviet Russia passed in autumn 1920 then first the right-wing National Democrats, then the left-wing Socialists had left the government. Without the external threat the impetus for parties to work together evaporated. There were further desertions in early 1921 of the left-wing PSL-Wyzwolenie (Emancipation) and centrist National Workers Union (NZR) weakening the government still more. The government became vulnerable to attacks from the right.
Trouble now blew up again in Silesia. Attempts at holding plebiscites increased the violence and the results proved unhelpful. The ‘Third Silesian Uprising’ was the largest and most violent, beginning on 2 May 1921 and ending on 5 July 1921. It was brought to an end by a combination of negotiations and the dispatch of ‘neutral’ allied troops to keep the sides apart.
The Entente powers decided to hand the matter over to the League of Nations which eventually divided the territory between Germany and Poland. Poland acquired only about one third of the land area but half of the population, the acquired region having a Polish majority but a substantial German minority. This included the major towns of Chorzów, Katowice, and Tarnowskie Góry. Importantly, most of the coal, iron, zinc and lead industries were given to Poland. These provisions were embodied in the “Silesian Convention” finally signed in Geneva in May 1922. This agreement also gave the region a high degree of self-government.
In the field of the economy, by 1921 a set of legally regulated stock exchanges had emerged in Poland built on the Austrian pattern. There had been a Warsaw Stock Exchange in the Congress Kingdom in the nineteenth century, but in 1919 there were practically no stock exchanges in the Second Republic. Each exchange was supervised by a government commissioner who could veto all resolutions of the elective committee which administered each exchange. Stock Exchanges were set up in: Warsaw, Poznan, Kraków, Lwów, Lódź and Wilno.
In 1921 ‘Produce Exchanges’ were established by law, these were a set of government regulated wholesale markets. They were organised as closed corporations under the supervision of the ‘Commissioners’ of the “Ministry of Industry and Trade”. Agricultural produce exchanges were organised in: Warsaw, Kraków, Lwów, Poznan and Katowice. In addition there were ‘Timber Exchanges’ in Warsaw and Bydgoszcz, and a ‘Meat Exchange’ in Warsaw. At one time a ‘Textile Exchange’ operated in Lódź, but was closed down.
In September 1921 the Witos government finally fell when the Christian Democrats and part of the Polish Peasant Union (PZL) deserted the coalition. On 19 September 1921 a non-party, technocratic cabinet was set up under Antoni Ponikowski of the Polish Christian Democratic Party. It was supported by centre-left parties in the Sejm.
One of the more successful aspects of government in the Second Republic turned out to be education. In 1922 a unified state system of compulsory free education began to operate. The outlines of the system and its curriculum were first set out in 1919 at a “Teacher’s Sejm”.
There were also further developments on labour issues. A law of May 1922 provided for ‘Holidays with Pay’ on an extensive scale for both manual and non-manual workers. After one year’s work adults were entitled to eight days of paid leave, increasing to fifteen days after three years work. Young workers had a more generous provision of paid leave, while ‘intellectual’ workers were to receive one month of paid leave per year.
One of the Ponikowski cabinet’s main preoccupations however, was to be the economy. The government had been running enormous budget deficits since independence. In 1921 government revenues had covered less than half of government spending. In the financial year 1920 to 1921 the Polish Mark fell to one fifth of its value. By September 1921 there were 6,500 Polish Marks to one US Dollar. The slide in value of the currency was steady and continuous. Growing inflation was resulting. The government was still in the process of trying to establish its taxation and revenue collecting systems.
Under Prime Minister Ponikowski the Finance Minister Professor Jerzy Michalski attempted to deflate the economy and halt the slide of the Mark. He was given a free hand and drastic powers to address the problem. Michalski presented his programme to the Sejm on 4 October 1921. The aim was to balance the budget and balance trade. On the revenue side direct taxes would be increased and a ‘one off’ tax on ‘war gains’ would be imposed on firms and farms. On the expenditure side the number of civil servants would be reduced, loss making state-owned enterprises would be sold off, subsidies and credits to industry would be cut down. The army would be reduced to a peacetime strength. Railway tariffs would be increased.
To give the government a pool of cash to cover its needs during the transition to a new fiscal regime a ‘one off’ capital levy, the ‘Danina’ would be imposed. This was a tax on wealth, that is the capital worth of an enterprise, rather than its income. Two thirds of this revenue was to be raised from farms, the other third from industry and trade.
To keep control of state expenditure the finance minister was to have a veto on all government spending plans. There were planned to be reforms of state administration, and new institutions would be needed to promote trade and industry. One aim was to bring an end to state borrowing from the bank of issue, paving the way for the setting up of an independent central bank. This programme was approved by the Sejm.
The new policy of fiscal discipline and stabilisation boosted foreign confidence in the Polish Mark. From Dec 1921 to June 1922 the ‘Marka’ did in fact appreciate from 4,550 per US Dollar to 3,957 per US Dollar. Fiscal discipline was largely maintained, Michalski reduced the government’s contractual commitments, closed some foreign embassies and consolates, and many civil servants were made redundant. Although the state debt continued to increase, it did so at a slower rate.
The Danina which was imposed in December 1921, brought in revenues by the spring of 1922, which even enabled the government to slightly reduce its total debts of 217 billion Polish Marks to 214 billion. It seems that by this time the government was able to cover its regular expenditure by regular taxation. The ‘windfall’ of the Danina would only be used to cover the exceptional needs of war reconstruction. For the first time since independence government revenues nearly covered government spending in 1922.
However the effects of the stabilisation programme on the economy were largely negative. The strong mark choked off exports and boosted imports which were now cheaper, worsening the balance of trade. As the value of money rose it made more sense to save rather than spend, hitting the domestic economy. Banks were less likely to lend, this exacerbated an already severe lack of available credit which hits businesses. From October 1921 to January 1922 official unemployment nearly tripled from 78,000 to 218,000. The impact of deflation led to a wave of strikes.
Andrzej Wierzbicki, the president of ‘Leviathan’, the industrialists’ representative body, testified before the Sejm about these harmful impacts. The economics minister Strasburger then supported a range of policies aimed at stimulating industry. The state would provide cheap credit directly to business. Government credits to industry were doubled from 20 billion Marka to 40 billion in the space of seven weeks. The tax on coal was removed, and export duties on wood and petrol were slashed. Certain import duties were introduced to help balance trade.
The consequences were inflationary, with the money supply increasing by half from October 1921 to May 1922. There was only a small fall in the exchange rate, while inflation remained moderate, about 20 per cent in seven months. There was a steady decrease in the official unemployment figures from 221,000 in February 1922 to 129,000 in June 1922. Unemployment continued to fall until the next stabilisation attempt in March 1923.
In the field of foreign trade policy the government was trying to alter Poland’s pattern of trade to lower dependence on the former empires and develop new trading partners. In 1922 a commercial treaty was signed with France which reduced the general tariff by 25 per cent to 50 per cent on various French commodities.
Despite the economic troubles it was actually foreign policy which was to bring down this government. Piłsudki was very focussed on the idea of Soviet Russia as the main threat to Polish national security so he took a dim view of the Foreign Minister Konstanty Skirmunt’s moves towards improving relations with Russia. Piłsudki had been alarmed by the signing of the ‘Rapallo Treaty’ between Germany and Russia in April 1922, and was not happy about the diplomatic trend which was ending the international isolation of Soviet Russia. He recalled the government, accusing it of being too weak in a dangerous international climate. The Ponikowski government resigned on 28 June 1922.
The left leaning Śliwiński cabinet established by Piłsudki was almost immediately brought down by a vote of no confidence led by the National Democrats. They are thought by some to have been trying to manoeuvre themselves into government in time to oversee the elections. Piłsudki himself then survived a vote of no confidence and on 31 July 1922 a cabinet was formed led by Julian Nowak, a conservative who’s ‘Party of the National Right’ was associated with landowners. Most members of the Nowak cabinet were in fact members of Śliwiński’s cabinet. It was supported in parliament by the parties of the centre-left.
In September 1922 the “Gdynia Seaport Construction Act” was passed to direct more resources to the building of Poland’s own seaport. The decision to develop Gdynia went back to the Polish-Soviet war when imported war supply deliveries were interrupted by the mainly German dock workers going on strike. Polish leaders realised the country was vulnerable to such pressure so there was an attempt to build the port which had petered out due to a lack of resources.
In September 1922 a law was also passed which conferred considerable autonomy on the three voivodships of Eastern Galicia; Lwowskie, Tarnopolskie and Stanisławoskie. It has been suggested this was a manoeuvre to get the Council of the ‘League of Nations’ to formally accept their incorporation into Poland, as once this was achieved in May 1923 the provisions of the law were largely disregarded.
The Nowak government oversaw the organisation and running of the November 1922 national elections. The results were as before, a fairly even spread across the political spectrum from left to right. Right-wing parties polled 30 per cent, centre parties polled 21 per cent, left-wing parties polled 25 per cent, while the national minorities collectively polled 22 per cent.
The only way to get a majority and form a cabinet government would be to form a coalition with the centre parties. A right-centre coalition was complicated by the disagreement between the Endecja and the PSL-Piast over levels of compensation to pay landowners for land reform. While a centre-left coalition was complicated by the need to include the national minorities, which might have been unpopular in the country, and the schism between the centrist PSL-Piast and the leftist PSL-Wyzwolenie.
The political power struggle now focussed on the presidency. Piłsudki declined the presidency. It is generally believed he did not regard the weakened and limited presidency defined by the March Constitution to be a suitable vehicle for him to mould the nation according to his vision.
The field was now open for the parties to compete over the presidency. The Endecja nominated Maurycy Zamoyski, believed to be the biggest landowner in Poland and likely to be strongly opposed by the peasant parties. The PSL-Piast nominated Stanisław Wojciechowski, a former socialist and activist in the co-operative movement. The main left-wing backed nominee was Gabriel Narutowicz, who belonged to no party but was the Foreign Minister under Śliwiński and Nowak. He was hated by the right because he was a close ally of Piłsudki, and for championing the bill to grant autonomy to the provinces of Eastern Galicia.
After successive rounds of voting the Endecja’s candidate had the lead, but did not have enough support to win outright without another round of voting. However a backroom deal was done where the PSL-Piast candidate withdrew and they and the national minorities put their support behind Narutowicz. Hence Gabriel Narutowicz became the first elected president of the Second Republic.
On the military side the president now appointed General Władysław Sikorski as “Minister of War”. The parliamentary affairs of the armed forces were in the hands of the Minister of War, always an Army officer, even though the president was formally in charge of the armed forces. This minister was accountable to the Sejm for all activities of the military. He then recommended Marshal Piłsudki as “Commander-in-Chief”, who was duly appointed by the president. His role was the direct command of the military in the event of war.
Many supporters of the radical right felt cheated out of the presidency and could not accept the outcome. Some right-wing press organs claimed Narutowicz was not elected legitimately because he won with votes from ‘Jews and foreign elements’. The political situation in Poland became tense and violent, the result was agitation and militancy. Deputies were attacked outside parliament by nationalist mobs, and the President was assassinated on 16 December 1922 by a nationalist extremist, Eligiusz Niewiadomski. Narutowicz had served less than a week as president.
The assassination of Narutowicz was to further poison the atmosphere of Polish politics as many of the left and centre parties blamed the National Democrats, now rebranded as a parliamentary party called the “Popular National Union” (‘Związek Ludowo-Narodowy’, ZLN), for the murder. Importantly it seems Piłsudki also blamed them and became loathe to countenance a government led by them. The tone of Polish politics in the early 1920s was violent and militant.
The stage was set for political conflict, to many it looked as if civil war could break out, but the crisis was resolved by the formation of a non-parliamentary “Cabinet of Pacification” in late December 1922 under a military figure, General Sikorski. Despite being a rival he was on good terms with Piłsudski at that time. He was given emergency powers and a short-lived ‘State of Emergency’ was declared to restore order. His cabinet was backed up by a centre-left majority including PSL-Piast. Following a brief interregnum during which the Marshal of the Sejm, Maciej Rataj acted as ‘place holder’, Stanisław Wojciechowski was elected president with the support of the centrist peasants and the left wing.
The Sikorski government faced economic crisis as well as political turmoil. The slide of the Polish Mark was accelerating, from July 1922 to December 1922 it fell from 3,957 per US Dollar to 18,075 per Dollar. From 1918 to 1922 the supply of Polish Marks had increased nearly eight hundred-fold. A conference of experts was assembled to work out a reform programme to halt the slide and the growing inflation that accompanied it. Władysław Grabski, who had broken with the Endecja, was appointed as Finance Minister to lead the programme.
He attempted to balance the budget by reform of the taxation system to increase state revenues. Heavy cuts were to be made in government expenditure, while loans would have to be secured to balance the budget. He started to have some success in fighting inflation, but the implementation of the programme was cut short by political developments.
On 17 May 1923 a pact, or agreement was reached by a number of centrist and right-wing parties including the PSL-Piast, the Endecja, the Christian Democrats and a number of smaller Christian parties. It became known as the ‘Lanckorona Pact’. The PSL-Piast made concessions on the conditions of land reform to reach the agreement. It signalled a shift to the right with a commitment to assimilatory policies of ‘Polonisation’ of ethnic minorities in the eastern border lands and a more formal role for the Catholic Church in the state.
This parliamentary realignment of blocs robbed the Sikorski government of its majority and Sikorski resigned as prime minister on 28 May 1923. He was replaced by a government led by Wincenty Witos of the PSL-Piast. His government became commonly known as the ‘Chjeno-Piast Coalition’, built from Christian parties and his centrist peasant party.
Marshal Piłsudski who was often verbally abusive about parliament and parliamentarians as a class, was particularly hostile to the Chjeno-Piast government, and resigned his government post as Chief of the General Staff. He refused to serve under the government, as did his associate General Sosnkowski. Their departures were followed by purges of the military to remove some officers thought to support Piłsudski. Piłsudski ostensibly ‘retired’ from public life and remained at his private estate at Sulejówek, just outside Warsaw.
The Witos government faced critical economic difficulties as inflation continued to accelerate, partly under the influence of the German hyperinflation. The cabinet hesitated to act, not wishing to hurt its supporters in agriculture and commerce, thus the Polish Mark fell further from 52,000 per US Dollar in May 1923 to six million per US Dollar in December 1923. Poland was in the grip of hyperinflation in the autumn of 1923.
The fall in real wages caused a wave of strikes. In October 1923 railway workers went on strike, the government conscripted them and forced them to work. The atmosphere became militant and there was violence. In response on 5 November 1923 the PPS called a General Strike.
Demonstrations were banned but the workers in Kraków ignored this and clashes resulted with the police and with military units sent to support them. On the 6 November 1923 the clashes escalated leading to the name ‘Bloody Tuesday’. Some of the police were disarmed by demonstrators, and some of the soldiers, thought to be supporters of Piłsudski, reportedly embraced the workers and handed over their weapons. Many of the workers were veterans of the Polish-Soviet war and put the weapons to use.
The workers managed to consolidate control of the city centre. Attempts by the military to take back the centre using troops and armoured cars increased the casualties, but were unsuccessful. In the end the workers holding the city centre were besieged by the police and army. Both sides decided to negotiate and a ceasefire was declared. The PPS agreed to end strikes in return for the demilitarisation of the railways and the removal of an unpopular army commander and the unpopular Voivode (Governor) of Kraków. At least a dozen workers and a dozen soldiers were killed, with many more injured on both sides. The incident became known as the “Kraków Uprising” in socialist circles, but is also called the “Kraków Riot”.
On 19 December 1923 the Witos government fell when a faction of the PSL-Piast dropped out in protest against the Prime Minister for making too many concessions to right wing on land reform. It was replaced by a cabinet of non-parliamentary ‘technocrats’ led by Władysław Grabski. This government was to last longer than any so far, it did not fall till late in 1925. During this government many far reaching reforms were implemented and many key institutions were established. Grabski’s reforms were seen as drastic and sweeping.
By the start of 1924 there were 10 million Polish Marks to the Dollar. The investments and savings of the upper middle-classes were practically wiped out. The poorer members of society were not too badly affected as long as wages rose with prices. They also saw their debts erased. Many people saw their standards of living recovering quickly to pre-war levels at first. However the economy could not increase production adequately, and the harmful effects of inflation started to spread down to be felt by the less affluent.
On 11 January 1924 the Sejm voluntarily surrendered part of its prerogatives by granting Prime Minister Grabski plenary powers for the “restoration of the Treasury of the State and the reform of the monetary system.” From February 1924 to November 1925 Grabski worked intensively on the economy. The budget was balanced first.
The administration and collection of taxes was to be tightened up, and taxes increased. This included an unpopular tax on forest owners to provide timber for village reconstruction. Also a second, heavier capital levy which was later abandoned as being too severe a burden on those who had to pay it. Public expenditure was also slashed to bring the budget into balance. This included economies in government administration.
To cover the gap in revenues loans worth 500,000 gold Francs were raised. The government also raised funds by the privatisation of selected state owned industries and businesses.
April 1924 was a month when sweeping currency reform was introduced and the major institutions of the state banking system were established. The Polish Mark, the ‘Marka’, was replaced by an entirely new currency the ‘Złoty’, which was introduced on 14 April 1924, becoming the sole legal tender in Poland on 1 July 1924. The Złoty was nominated as equal to one Swiss Franc in value, which was equal to 1.8 million of the old depreciated Polish Marks at that time.
On 15 April 1924 “The Bank of Poland” (‘Bank Polski’) was decreed to be the sole bank of issue for the Złoty. The operational framework for the Bank of Poland had been initially decreed on 20 January 1924, it was to be launched as an independent bank of issue with capital of 100 million Złoty. It was set up as a joint stock company to guarantee its independence, and the sale of its shares began on 26 January 1924. The shares could only be purchased in foreign currency or gold.
The bank was granted the sole right to issue Złoty in return for providing interest free drawing rights to the government of up to 50 million Złoty. It replaced a number of government temporary credit institutions, such as the “Polish National Savings Union”, which had previously issued paper money.
Notes in circulation were backed to 30 per cent of their value with gold or foreign exchange, and 40 per cent of their value in metallic currency or bills of exchange. The aim was to strengthen the currency. One third of the shares were purchased by industrial companies, substantial numbers of shares were purchased by other banks and by government employees. One tenth of the shares were purchased by state institutions. Shares were also bought by agricultural businesses and co-operatives. The bank began operations on 24 April 1924 backed by 150 million gold Francs.
In April 1924 some further measures were also taken to reduce government expenditure. Government administration was ‘simplified’ to make it more efficient. The state railways were reorganised with the intention of making them financially self-supporting.
During May 1924 Grabski set up a series of other state banks. On 14 May 1924 the “National Land Bank” (‘Panstwowy Bank Rolny’) was reorganised. It had originally been decreed in 1919 but was not fully developed in practice. It was fully state-owned and intended to finance the development of Polish agriculture. It was empowered to finance land purchases in support of the land reform programme, the introduction of technical improvements, and to provide debt relief. The bank was also empowered to help finance agricultural co-operatives. In addition it worked closely with the government in implementing agricultural development policies by administering state funds allocated to agriculture, and marketing chemical fertilisers produced by state-owned factories. The bank did not become fully operational till 1928.
On the 30 May 1924 the “Bank of the National Economy” (‘Bank Gospodarstwa Krajowego’) came into being by the merger of three predecessors. It was fully state-owned with an initial capital of 150 million Złoty provided from government funds. It was intended as a mechanism for promoting economic development. It provided credit to all branches of the national economy. It financed state-owned enterprises, local government, and co-operative societies, especially those in agriculture and building. The bank took a leading role in financing post-war reconstruction work throughout the towns of Poland.
In 1924 the Post Office Savings Bank was reorganised. From 1925 it began to take off. In fact from 1925 to 1928 deposits in the bank were to multiply ten-fold. This largely reflected the improving economy in the late nineteen twenties. These savings were invested by the bank in state securities to finance government activities.
During this period the private banking sector was going through turmoil. In the early years of the new republic the reputation of private sector banks had been damaged by the proliferation of hundreds of banks set up to exploit the monetary confusion of the inflationary period. However many such enterprises collapsed. In the period 1923 to 1926 the number of private banks and bank offices fell from 834 to 296. Following this, public confidence in the private banking sector gradually began to return.
The Grabski cabinet also restructured Poland’s debts to ease the debt burden on the state. The currency reforms increased foreign confidence in Polish government finances. In November and December of 1924 the terms for the repayment of ‘relief debts’ contracted after the First World War from allied governments especially the USA and Great Britain, for the purchase of food, machinery and essential supplies, were renegotiated. The repayments were now to be spread over 62 years at a low rate of interest.
In 1924 another tariff convention was negotiated with France, and one with Czechoslovakia. ‘Friendly’ economic relations were established with the USSR, including bilateral barter agreements. In exchange for orders placed with Polish industries the USSR was granted import quotas and preferential duties on certain specified imports.
In 1924 there were also important developments in the field of social welfare legislation. Many of the provisions had been made earlier as the result of the strong socialist representation in the early governments of interwar Poland. However in 1924 a whole raft of “International Labour Organisation”, (ILO) conventions were ratified by the Sejm. One reason for this is that Polish socialists had been very active in the ILO. Polish delegates were active on the “Commission on International Labour Legislation” which worked out the principles and organisation of the “International Labour Organisation” (ILO). Then for the next twenty years, during the life of the Second Republic, a Polish representative sat on the governing body of the ILO.
The Second Republic adopted progressive legislation on the issue of collective bargaining between workers’ representatives and employers. Registered Trades Unions and employers’ organisations were given the exclusive right of making collective agreements which could not be replaced or superseded by individual contracts of employment. The terms of such collective agreements were registered with the appropriate Factory Inspector and applied not just to union members, but to all relevant employees in the workplace.
Individual disputes between workers and employers were dealt with by ‘Labour Courts’ composed of a Judge and two ‘lay members’. These ‘lay members’ were selected by the “Minister of Justice” from a panel drawn up by trades unions and employers’ organisations. This system applied to disputes in industry, commerce and transport.
Some of the twenty ILO conventions ratified in 1924 merely reasserted previous Polish legislation, but some made entirely new provisions. The ILO conventions on unemployment were a mixture of new and existing provision. The conventions required the state to provide a system of ‘employment exchanges’ and a system of unemployment insurance on a contributions based model.
There were two systems of unemployment insurance defined, one for manual workers which excluded agricultural workers and domestic servants, and another for broadly defined ‘intellectual’ workers. In both schemes the larger share of contributions came from the employer. To qualify workers must have been in employment and paying contributions for either six months for manual workers, or a year for ‘intellectual’ workers.
The payments were set at approximately one third of the recently received income, and only lasted for one quarter for manual workers or up to nine months maximum for ‘intellectual’ workers. Such schemes were adequate to deal with ‘frictional’ unemployment in the normal run of things, but were poorly suited to protect people from the chronic, long-term unemployment resulting from macroeconomic crises such as the Great Depression.
The ILO conventions on the weekly day of rest, and on the right of association and combination of agricultural workers were already covered by Polish legislation. The right of association and combination was in fact granted to all citizens in the March 1921 constitution. Under Polish law both agricultural and industrial workers had the right to combine in trade unions. However only registered trade unions were allowed to conclude collective agreements with employers and employers’ organisations.
The “Working Women’s Protection Act” (1924) banned night work and work in unsafe or unsanitary conditions for women. There was a complete ban for women on underground work, carrying heavy weights, and occupations involving exposure to toxic substances, such as white lead. Women labour inspectors were employed to safeguard the interests of female and juvenile workers. The position of pregnant women was protected, and employers had to provide a workplace crèche if they employed over one hundred women.
Some six ILO conventions ratified related to the employment of children and young persons. Overtime work for young persons was banned. The attendance of young people at ‘Trade Finishing Schools’ for six hours per week, paid as time employed, was compulsory.
Four ILO conventions were ratified by the Polish legislature on workmen’s compensation. Generally under the ‘state compulsory accident scheme’ a pension was provided for manual and non-manual workers incapacitated by an industrial accident. It also covered domestic servants. The contributions were paid by the employer alone, with a higher rate for more dangerous occupations. The incapacity pension was paid at two-thirds of the recent income level. If the worker died the widow or dependents received a pension.
There were a number of other conventions and international schemes approved, for industrial hygiene and safety, the employment of seamen, old age, widows and orphans insurance. The commitments of the Polish government to welfare provision were extensive and extremely ambitious for a country in such a weak economic condition.
As for the economy, the currency reform worked at first, the Złoty remained strong, at under 10 per US Dollar. A period of deflation began. On 19 January 1925 Grabski reported to the Sejm, that not only had he balanced the budget, but a surplus had been achieved. However the economy suffered, there was high unemployment in early 1925. During 1925 consumer spending ground to a halt and official non-agricultural unemployment quadrupled from 61,000 to 252,000.
Another problem was the impact on exports. The inflation of the early Second Republic had boosted exports, the effect being less than it should have been due to parallel inflation in Germany, Austria, Hungary, Czechoslovakia and the economic dislocation in the USSR. However, despite high rail cost and transit tariffs to Germany and Czechoslovakia, some industries gained ground in foreign markets during this inflationary period, notably the textile industries of Lódź. Grabski’s reforms resulted in a relatively high exchange rate for the Złoty and brought the artificial boom in export trades to a sudden halt.
In early 1925 Grabski’s government also addressed the issue of the position of the Catholic Church within Poland. In February 1925 a ‘Concordat’ was signed with the Vatican. It guaranteed the Church great autonomy. The clergy were exempted from personal income tax, military service, and were free from prosecution in the courts. The clergy were given a large degree of control over the teaching of compulsory religious education in schools. Church properties formerly confiscated by the three empires and now owned by the Polish state were to be used for the upkeep of ecclesiastical salaries. Importantly however the divorce laws from before 1918 were retained. This meant it was still legally possible to get a divorce in the former Prussian areas.
During Grabski’s tenure as prime minister relations between the Polish government and the national minorities deteriorated. The rightwards shift of policy at this point may have caused lasting damage. The use of the Ukrainian language was banned from use in government institutions and the name ‘Ukrainian’ was replaced with ‘Ruthenian’ in official documentation.
The prime minister’s brother Stanisław Grabski who acted as Minister of Religion and education in 1923 and 1925 to 1926 tried to exclude the use of minority languages from schools throughout Poland. It is reported that during the early nineteen twenties some 346 private Belarusian language schools were closed by the Polish authorities. In Ukrainian dominated areas the policy ironically led to an upsurge in the opening of new private Ukrainian language schools. The liberal policy which generally predominated under Piłsudski was somewhat undermined by these policies.
As the Second Republic developed, private sector commercial enterprises worked to form bodies which could represent their interests in the state. In 1925 the “Congress of Polish Merchants” created a ‘Supreme Council’ as the joint representative body of all Polish merchant associations. Voluntary associations of merchants had existed in the medieval past in Poland, especially in commercial centres like: Kraków, Poznan and Lwów. After the Russian revolution of 1905, the idea of forming such voluntary associations was resurrected in ‘Russian Poland’. When the Second Republic formed this trend accelerated. To the older associations were added local organisations and regional unions.
In June 1925 Poland’s status as a ‘Most Favoured Nation’ in trade with Weimar Germany as protected by the Versailles Treaty expired, Berlin raised its customs duties on imports from Poland which mainly affected coal exports, but also affected the zinc and ferrous metals exports from Silesia. In retaliation Warsaw raised duties on imports from the Weimar Republic, this hurt German exports of manufactured goods for which Poland was an important market. In the short-term the impact of the ‘Tariff War’ was that Polish trade became disproportionately dependent on the trade agreements with France and Czechoslovakia.
It seems what became known as the “German-Polish Tariff War” was politically aggravated, as attempts to negotiate a solution were linked by Germany to “border problems”. It seems many politicians in Germany had not reconciled themselves to the settlement of their eastern border with Poland. Gustav Stressmann of the DVP, a right-wing nationalist party, was German Foreign Minister at the time. In an article in ‘Frankfurter Zeitung’ from 14 June 1925, Stressmann identified border changes as the aim of economic warfare with Poland, and even went as far as to talk about the subjugation of the Polish state to Germany and Russia, probably implying it should cease to exist.
In July 1925 Grabski secured a compromise on land reform with the Sejm. Some 200,000 hectares per year should be voluntarily redistributed, being compensated at full market value. Land reform took four different forms. In ‘parcellation’ large estates were broken into small pieces and sold off. In ‘commassation’ excessively small strips of land were brought together to make economically viable units. Land reclamation brought waste land back into productive use, while common land was sold off. It is reported that the loss of common land actually relieved one source of friction between large landowners and the peasants and landless labourers. Disputes over the use of such land were apparently common.
The government offered credit facilities to the peasants, for instance through the National Land Bank, which greatly expedited land sales. In 1925 the area of land parcelled was 128,000 hectares, in 1926 it rose to 210,000 Ha and remained above the target of 200,000 Ha per annum till 1929. It would seem the impact of the Great Depression then impeded land sales. Low land prices generally deter vendors from selling, and a severe shortage of funds prevented purchases. The annual area parcelled then declined till 1935.
With recovery from the Depression in 1936 the area rose again, a trend which continued till the destruction of the Second Republic in 1939. This reflected the general improvement of the Polish macro-economy in the late nineteen thirties. The data available show a grand total of 2.7 million Ha of land were parcelled during the life of the Second Republic, the total land area used for arable farming in Poland in 1931 was 18.6 million Ha.
In the second half of 1925 a number of economic problems became manifest which threatened the success of Grabski’s efforts. As well as the high unemployment and high cost of living which hit urban workers it was becoming clear that Grabski would not be able to balance the budget after all. The government had not been able to secure enough in the way of foreign loans to help balance the budget. Wage and price controls were also difficult to maintain.
In 1925 the government ran a budget deficit of over 300 million Złoty. This was nothing like as bad as in 1923, but it was much worse than in 1924. Furthermore in 1924 there had been a poor harvest which caused a fall in tax revenues. With a shortage of revenues more money was issued causing the Złoty to depreciate. From June 1925 to August 1925 the Złoty depreciated from 5.18 per US Dollar to 5.98 per US Dollar. The public withheld tax payments hoping to save money as the value of the Złoty declined, exacerbating the problem.
A number of factors were hitting trade as well. The poor harvest meant food imports rose damaging the balance of trade and causing a rise in the costs of living. As mentioned, the strong Złoty hit exports, and together with the trade war with Germany this resulted in a massive trade deficit of nearly 570 million Złoty, the worst since before 1922. Trade had actually been in a healthy surplus in 1923.
With these economic conditions the Bank of Poland refused to assure Grabski that it would be able to halt the further depreciation of the Złoty. This caused Grabski to resign as prime minister. Grabski was succeeded on 20 November 1925 by an all-party coalition under Aleksander Skrzyński, a conservative and former Austrian diplomat. The economic situation became very serious, unemployment reached 250,000, while the Złoty continued to fall against the US dollar.
During the Skrzyński cabinet tensions with the army were building. After Grabski’s fall over four hundred army officers demonstrated outside Piłsudski‘s house at Sulejówek. This may have influenced the Skrzyński government to appoint General Zeligowski, an ally of Piłsudski, as Minister of War.
By April 1926 General Zeligowski had drafted a bill which would have made it possible for Piłsudski to return to active service. This bill was strongly opposed in parliament by the right wing. One right wing, National Democrat, Marshal Trḁmpczyński derided Piłsudski’s competence to be Commander-In-Chief.
Facing a continuing deterioration in the economy, the new finance minister cut state spending further and gave tax relief to industry. He also took action against speculation to please the left wing members of the coalition. This programme had little effect. In mid-April 1926 the cabinet decided that further deflation was needed but this caused the Socialists to pull out of the government and the prime minister was forced to resign on 5 May 1926.
Meanwhile internationally the diplomatic situation seemed to be turning against Poland. Piłsudski had been alarmed by the signing of the Locarno Treaty in October 1925. Signed by the western allies and Germany, Locarno represented part of the process of rehabilitating Germany and was intended to lead towards Germany being admitted to the “League of Nations”.
Whereas the treaty considered the Borders of Germany with France to be settled, it seemed to present the borders of Germany with Poland as still negotiable. This was a potential invitation for Germany to seek changes in its borders with Poland, something which was being backed up by the “Tariff War”. The outcome seemed to bring the national security of Poland into question.
To reassure the Poles and the Czechoslovaks, the French signed separate ‘guarantees’. These pledged mutual assistance in the event of conflict with Germany. The treaty with Poland was considered a reaffirmation of the treaty of alliance with Poland signed on 19 February 1921. However it appears the Poles were not impressed by these promises.
The fears of the Poles were intensified when on 24 April 1926 the “Treaty of Berlin”, often referred to as the “Soviet-German Neutrality Pact” was signed. The pact guaranteed neutrality in the event of either country being attacked by a third party for a period of five years. The treaty was interpreted in Warsaw as a threat to the continued existence of the Polish state.
Under the growing insecurity of the international situation President Wojciechowski agreed to the formation of a centre-right coalition under Witos, similar to the one formed in May 1923. The left wing strongly opposed this development, fearing it was the prelude to the setting up of an authoritarian system. Some of Witos’s comments in February 1926 had fuelled such suspicions.
Piłsudski also strongly opposed a Witos cabinet, and it is reported he had been plotting some unconstitutional action for some time, working through General Zeligowski, under who his influence in the army had strengthened. On 12 May 1926 Piłsudski brought armed troops out onto the street in an attempt to induce his old friend Wojciechowski to rescind the establishment of the Witos cabinet. However Wojciechowski did not back down and fighting broke out between government and rebel troops.
Seeing the situation the PPS decided to back the coup by calling a strike of railway workers which prevented troops loyal to the government from being moved into Warsaw to fight Piłsudski‘s supporters. After three days of fighting over 500 people were killed, and 1000 wounded, with Piłsudski seizing control successfully.
Piłsudski Establishes the Sancja Regime (May 1926 – November 1930)
Piłsudski did not immediately set up a military dictatorship, rather he adopted the position that the military supervision of parliamentary government was necessary for a time. His regime became known as the ‘Sanacja’ (“Rehabilitation”) regime, from its slogan that it would “Return the country to political health’.
The image of party politics was sullied and Piłsudski himself was often graphically verbally abusive about parliament and the parliamentarians. Incidents of rowdy behaviour and violence in politics, most notably the assassination of President Narutowicz, which many blamed on rightist in parliament, gave politicians an irresponsible and undisciplined image.
In addition there was a widespread belief among the public that those in parliament were corrupt and self-serving, a view which Piłsudski and his supporters often sought to reinforce. Incidents such as the “Dojlidy Affair” had contributed to this. In this affair a bank associated with the PSL-Piast bought land at preferential rates from the Government Land Office, it was then put up for sale at nearly ten times the purchase price, beyond the means of the peasants who might have benefited from it. In the end it was purchased by wealthy large landowners.
Following the coup Piłsudski immediately organised presidential elections which he won on 31 May 1926. This enabled him to legitimise his role. However Piłsudski’s style would turn out to be to direct the major issues from the side lines, allowing his trusted men to manage the daily details. Only occasionally would he take up formal leadership to take control of some critical matters. Thus Piłsudski stepped down from the presidency and was replaced by his nominee Ignacy Mościcki. As it turned out Mościcki would remain president from June 1926 till the destruction of the republic in 1939.
Piłsudski himself was mostly interested in military, defence and foreign policy matters relating to national security. After the coup Piłsudski‘s ideas on military organisation were adopted. Although the army was nominally controlled by the “Minister of War”, who was accountable to parliament, the real power lay with the “Inspector-General of the Army”, who was empowered to deal with all matters of military preparedness and defence, and who acted as ‘Commander-in-Chief’ in time of war. After the coup Piłsudski took both these posts.
Following the coup his purges of the military and the civil service were restrained reinforcing the appearance that this was not going to be a draconian dictatorship. The next stage in the establishment of the new regime was to strengthen the powers of the presidency versus parliament. This required constitutional changes. The weakness of the president was a feature of the March Constitution which Piłsudski had always objected to. In fact the character of the regime under Piłsudski would prove to be a phased weakening of the parliamentary opposition over the years. The first phase was to give the president more power.
In August 1926 Piłsudski got the constitution amended. The president was stronger, he now gained the power to dissolve parliament. The president had more power to issue decrees which parliament had to ratify within fifteen days of assembling.
Parliament was now weaker, it had a time limit to block the government’s proposed budget, if the issue was not resolved by this date the budget came into force automatically. If the budget proposed was rejected by parliament then parliament could be dissolved and the previous year’s budget applied.
Importantly the Sejm lost the power to dissolve itself and force an election. This was significant because Piłsudski resisted calls from many parliamentarians to hold a new election after his coup.
Piłsudski was to surround himself with an inner circle of associates who he would increasingly depend on as he aged and his health deteriorated. These men included: Walery Sławek, Józef Beck, Kazimierz Świtalski and Adam Koc. These men were key representatives of a strain of military and political figure in Poland often called a “Piłsudski-ite”, collectively the ‘Piłsudczycy’.
The Piłsudczycy were admirers of Piłsudski, many of whom came up through a similar background of actively fighting for Polish independence. Mostly they had served in the Polish Legions, which Piłsudski set up under Austrian supervision, or in the “Polish Military Organisation” (‘Polska Organizacja Wojskowa’, POW). This was a shadow underground organisation which existed alongside the Polish Legions to carryout covert activities such as intelligence, sabotage or politically sensitive operations. In today’s terminology the POW could be described as a mixture of intelligence and special operations.
Though generally left leaning the Piłsudczycy could be found in nearly any of Poland’s political parties except the Endecja with who they had a long history of enmity and rivalry. Thus there was no definite political ideology uniting them, and their policies would become increasingly right leaning, especially after the death of Piłsudski.
During the late nineteen twenties Piłsudski’s mainstay in government would be Kazimierz Bartel who acted as prime minister four times from 1926 till 1930, with Piłsudski himself serving as his deputy prime minister. Bartel addressed the domestic economic and political issues which only indirectly interested Piłsudski as a military man.
Bartel was originally from the left-wing peasant party PSL-Wyzwolenie, and had led a splinter group calling itself the “Party of Labour”. He was a man of the left and declared that his government would be a “Government of Labour”, but in keeping with what is known of Piłsudski’s views he reassured the right there would be no radical socialist experiments.
In coming to power Bartel’s key priorities included maintaining stability of the macro-economy and balancing the budget, along the lines laid down by Grabski. He intended to improve government administration to make it more efficient. Coming from a peasant party background he gave a commitment to pursue land reform fully. Finally he hoped to improve relations with the ethnic minorities.
In terms of reorganising government administration, the prime minister’s role became more dominant over the cabinet and the prime minister’s office was reorganised. A number of ministries were reorganised. Stronger central control of local authorities by the Minister of the Interior was asserted and power was shifted from locally elected bodies to the local government administration which gained wide-ranging functions. The overall effect was to create a stronger, more centralised state with a more hierarchical and less pluralistic decision making system.
The stronger control of local government by the centre had political significance with regards to the ethnic minorities, where it appeared that progressive policies emanating from Warsaw were often undermined by the attitudes and behaviour of Polish officials in the provinces. It would be a key step towards improving relations between the government and the minorities in the Kresy.
In 1926 Poland was still facing economic difficulties. Following Grabski’s departure there was an economic crisis followed by acute economic depression. During the years of inflation and generous government spending the rising market and government aid had promoted the continuous founding of new industries. The deflation following Grabski’s reforms lead to the crisis and depression. Domestic industries also generally suffered from the lack of credit as well as low demand.
The Złoty fell to half the value it had been set at and became stabilised at this lower level. In fact this now aided the ailing export industries. Another consequence of the lower Złoty was that the Polish state became less credit worthy. The small foreign loans that could be obtained from Italy and the USA were on disadvantageous terms. In addition valuable assets were traded away under adverse terms to raise funds, for example the state match monopoly which was sold to a Swedish company cheaply.
However Grabski’s successors were to stick to his policy of running a balanced or surplus budget. Tighter control was exercised over government spending. The automatic index linking of the salaries of government employees to inflation was ended which both reduced expenditure and helped weaken the wage-price spiral. In the years 1926 to 1929 the government finances were in surplus. This meant the Złoty remained stable. It also meant the Treasury accumulated reserves, which later proved useful when the depression hit the economy.
Bartel in attempting to address these problems recruited two very able ministers, Gabriel Czechowicz as Minister of Finance, and Eugeniusz Kwiatkowski as Minister of Trade and Industry. In addition, in 1926 the Polish government invited a commission of experts lead by Professor E. W. Kemmerer of Princeton University to investigate the country’s finances and economy. The commission published a number of reports which the government took heed of and the Polish government appointed an American financial adviser as a consultant.
In the event the economy began to recover rapidly in the last years of the nineteen twenties. There were a number of contributing factors which successively improved the outlook. Firstly the apparent imposition of greater political stability seems to have bolstered foreign investors’ confidence. Immediately following the coup the Złoty actually appreciated from 11 per US Dollar in May 1926 to 9 per US Dollar in June 1926.
Furthermore foreign trade was given a boost by the British coal strike which freed new markets for Polish coal exports, especially to Scandinavia. Increased demand for Polish exports, most importantly the coal, bolstered the Złoty. The strong Złoty made imports less expensive and gave Poland a large trade surplus in 1926, the first since the Grabski reforms.
At this time Polish trade was overshadowed by the Tariff war with Germany. This had forced Poland to become over-dependent on trade with France and Czechoslovakia. The British coal dispute in 1926 now eased the country’s trade problems a little.
Poland sought to direct more of its export activity towards the Baltic and Scandinavian countries. This involved significant expansion of the merchant marine and port facilities. In 1922 only 7 per cent of Poland’s foreign trade went by sea, but by 1938 it had grown to nearly 78 per cent, with nearly half of this passing through the new Polish port of Gdynia.
It was during the Tariff War with Germany that the port of Gdynia became fully developed and operational, its development accelerated with the growth of exports at this time. To expedite construction a contract had been signed by the Polish government with a French-Polish engineering consortium in November 1924. From 1924 to 1934 a tiny fishing village was transformed into one of the largest and best equipped harbours in Europe. Trans-shipments of goods through Gdynia grew from 10,000 tons per annum in 1924 to nearly three million tons per annum in 1929.
Political tensions with Germany and the ethnic German population of Danzig meant the Polish government sought an alternative. In spite of this Danzig remained important during the period but significantly declined in importance as the volume of trade through Gdynia grew.
Eventually regular shipping lines from Gdynia were to go to the ports of the Baltic, North Sea, France and the Mediterranean. There were also lines serving further afield such as the near east, Africa and the Americas. A new railway line was also under construction from Silesia to Gdynia to carry coal exports, but this was not completed till 1929.
The stabilisation of the currency created the right conditions for the recovery and development of consumer co-operatives in Poland. These associations enabled poor industrial and farm workers to purchase necessities such as foods at a discounted rate. Such consumer co-operatives had played an important role late in the First World War, but had problems during the hyperinflation of the early nineteen twenties. However with the stabilisation of the currency the consumer co-operatives found themselves with most of their capital wiped out and so had to start as if from ‘scratch’.
New workers co-operatives had started to organise themselves independently of the older societies in a separate “Union of Worker Consumer Co-operatives”. In 1925 this body had actually merged with the long-standing “Warsaw Union”, and formed the “Union of Consumer Societies of the Polish Republic”.
In 1926 this co-operative further absorbed the “Group of Consumer Co-operatives of State and Local Government Employees” and the “Central Organisation of Consumer Co-operative Associations of Christian Workers”. Thus from 1926 there was only one consolidated “Union of Consumer Co-operatives of the Polish Republic”, known as “Spolem” for short. This body prospered despite the impact of the great depression from 1929.
Around the same time a number of co-operatives rapidly developed serving the Jewish community. These typically developed in close association with the Jewish Socialist Party, the ‘Bund’. Some of these were producers’ societies for production and marketing, but the most notable were ‘Building Societies’ which built workers’ housing, typically blocks of flats.
Politically the relationship between the government and parliament was tense. As it was, Piłsudski always gave the impression of being intolerant of criticism from parliament and impatient with the horse trading of parliamentary politics. In September 1926 when parliament reassembled there was immediately conflict. The Endecja had been angered by the purges in the army and civil service, in retaliation they sought to cut the government’s budget.
When the former finance minister under Skrzyński, Jerzy Zdziechowski, an Endecja member, was beaten up by uniformed men in his own home, many in parliament believed Piłsudski was attempting to physically intimidate the opposition. Then in November 1926 a government bill to limit the freedom of the press also aroused resistance.
Meanwhile Piłsudski was actively courting support for his regime. In October 1926 he took up the position as Prime Minister, through which role he could cement the new regime in place. He wanted to widen his political base to create a broad based coalition government. Presumably he hoped this would both legitimise his regime and weaken opposition, making it easier to get the support of the Sejm.
At this stage Piłsudski was still confident of having the support of many on the ‘nationalist’ left and centre. These politicians still saw Piłsudski as a champion of progressive causes and had not yet become disillusioned by the coup. Many of their members were Piłsudczycy. In October 1926 Jędrez Moraczewski of the PPS entered the cabinet, and in January 1927 Bogusław Miedziński of the PSL-Wyzwolenie entered the cabinet. Some groups of left-wing activists, such a Bartel’s “Party of Labour” and others actively canvassed support for the government. The left-wing journal ‘Droga’ (‘The Way’) promoted support for the government.
As it was Piłsudski gained the support of some of the wealthiest and most powerful groups in society who apparently welcomed the political and economic stability which he was promising. He persuaded two leading conservative figures associated with the landowner class to join his cabinet. These were Alexander Meysztowicz who served as a Justice Minister, and Karol Niezabytowski who served as an Agriculture Minister. Significantly the agreement by which they entered the government was concluded at an estate in Nieśwież, in the Kresy, owned by the powerful landowning aristocratic family Radziwiłł. By the end of 1926 Piłsudski had gained the support of a number of conservative and Christian factions in the Sejm.
In addition the government won the support of the “Central Union of Polish Industry, Mining, Commerce and Finance”, ‘Leviathan’, the most important Polish industrialists’ representative organisation. Before the coup leading members of ‘Leviathan’ were more associated with the Endecja, or with conservative groups. However following the coup the association followed a pragmatic course.
An understanding seems to have been reached that ‘Leviathan’ was in favour of a strong president who could bring economic and political stability on the condition that no radical social experiments were embarked on. Both the government and ‘Leviathan’ made positive signals towards each other following the coup, and on 8 June 1926 Director General of ‘Leviathan’, Andrzej Wierzbicki met with Prime Minister Bartel. It is thought that it was agreed to follow the pattern of economic policy laid down by Grabski. The government had successfully reassured the right and centre that it would not be launching into any radical socialist programme.
The year 1927 began with the government’s national minorities policy running into difficulties. This new policy proposed by minister Młodzianowski was that assimilating minorities was no longer the goal, and that national minorities should receive equal treatment. In October 1926 Młodzianowski had been replaced in this role by Felicjan Sławoj-Składkowski, who continued with the policy.
Relations with the Belarusian community who lived in the north eastern border lands had broken down. The Belarusians represented about 1.5 million people according to the 1931 census, about 5 per cent of the population of Poland. Their majority areas had never been given any autonomy or separate administrative status.
Initially the Polish state had adopted a liberal policy as embodied in the March Constitution. Belarusian political organisations, Belarusian language press, and education in the Belarusian language were all permitted, although there was no legal requirement for the state to fund these activities which were intended to be financed by the local communities.
As a more right-centre government had formed under Grabski, there had been a reaction from those who thought such policies were leading to separatism. Some three hundred schools teaching in the Belarusian language were given over to Polish teachers.
In July 1925 a group of Belarusian deputies to the Sejm had led the legal formation of a new political party the “Belarusian Peasants’ and Workers’ Union”, which became known as “Hramada” (“Assembly”, Hromada in Polish) for short. Their ostensible programme was for the autonomy of a ‘West Belarusia’ entity within Poland, for recognition of Belarusian as an official language of Poland, and for an end to the ‘colonisation’ of Belarusian regions by Polish ‘osadniks’.
The party had a radical left-wing character and demanded the redistribution of land to the peasantry without compensation, that is, without the peasants having to pay for it. In addition it was suspected of ‘irridentism’, namely the intention to join with the Soviet Belarusian Republic across the border.
The character of Hramada is a bitterly contested subject. Today inside Belarus many regard it as having been a legitimate, home grown, nationalist reaction to assimilatory policies of the Polish government. Others, including the Polish authorities of the time, came to regard it as merely a puppet of Stalin being used to destabilise Poland and expand Soviet influence westwards. Evidence has been presented by historians and it is generally agreed that the movement did receive various forms of aid from the USSR and the Comintern.
From late 1926 the Polish authorities began to suppress Hramada, accusing it of being affiliated to the proscribed “Communist Party of West Belarus” (KPZB). From then the Belarusian media were subjected to increasing censorship by the Polish authorities. The KPZB had been banned because they were accused of being Soviet agents trying to join “Western Belarus” to the Soviet republic to the east.
During the autumn of 1926 Hramada expanded its ranks rapidly peaking it is believed at around 120,000 members. The Polish authorities acted to break it up. On 15 January 1927 top activists and leaders of Hramada were arrested and put on trial for subversion. Their trial became known to Belarusians as the “Trial of the Fifty-Six”. There was a riot by supporters in the village of Kosava in protest in February 1927 where the police opened fire killing six and wounding many more. The party was banned in the spring of 1927.
Tensions had been created with the Ukrainian minority too, as Grabski’s government had attempted to eliminate Ukrainian only primary schools. In addition his policy that all government offices should only use the Polish language even when operating in areas with a Ukrainian or Belarusian majority excluded these ethnic groups, disadvantaged them in dealing with the state, and was seen as an attempt to Polonise the population.
However the new government seems to have developed a better relationship with UNDO (The “Ukrainian National Democratic Union”), which was the main Ukrainian community organisation in East Galicia. In spite of this, no substantial changes were made to the much resented bilingual school system there which was seen as an instrument of Polonisation. In addition there was no progress in forming a Ukrainian University.
There were also some problems festering with the German minority. Although there were few problems involving the Germans living in the western provinces of Poznańskie or Pomorskie, there were serious tensions in Silesia. The new ‘Piłsudski-ite’ governor Michał Graźyński, a former PPS member, attempted to promote the absorption of Upper Silesia into Poland and strengthen the pro-government organisations there.
He is accused of trying to compete with Wojciech Korfanty, the Polish-Silesian Christian Democrat who had led Silesian uprisings, as the ‘champion of Polish interests’. He is accused of stoking conflict with the ethnic German minority. One particular source of dispute was the freedom of parents to choose whether to send their children to Polish or German schools.
The biggest success of the new policy on minorities was in improving relations between the government and the Jewish community. There were steps taken to improve Jewish trade, but the upturn in the economy temporarily solved this problem. The ‘Numerus Clausus’ favoured by the Endecja was banned in institutions of higher education. The ‘Numerus Clausus’ was the idea of a quota to limit the number of Jews in higher education. This was to address the concerns of radical right-wing and anti-semitic politicians that Jews were disproportionately over-represented in Universities.
In October 1927 a presidential decree formalised the position of local Jewish community organisations, the Kehillot (singular Kehilla) within the Polish state. These gave the Jewish community a measure of local self-government. The Kehillot were recognised legally and regulated by law. They were to be supervised by the government under the leadership of a ‘Starosta’ (Elder, or Chief). The Kehilla council was to be elected by Jewish male suffrage. The Kehila was empowered to raise its own finances to run local community organisations. This new policy was welcomed by Orthodox Jewish community leaders.
Piłsudski remained Prime Minister throughout 1927. The parties of the left and centre shied away from a confrontation with the government and in March 1927 the budget was passed without difficulty. The government was legally obliged to reconvene parliament to present the budget, but to avoid confrontations immediately adjourned it till its mandate expired at the end of November 1927.
In March 1927 the sudden ‘prorogation’ of parliament provoked the PPS and PSL-Liberation to take a more oppositional view of the government. Now there was practically an all-party consensus to restore the right of parliament to dissolve itself in order to force the government to hold elections.
The Sanacja regime presented itself as having a programme for the ‘Moral Rearmament’ of the nation so in 1927 the “Special Commission to Combat Financial Abuses” was established to investigate the corruption which Piłsudski and his supporters claimed was rife before 1926. It had difficulty finding any evidence of financial malpractice. It achieved only one successful prosecution against General Źymierski, who was sentenced to five years imprisonment over irregularities in the purchase of gas masks. Others who were identified as suspects such as Karol Popiel, a leading figure in the “National Workers’ Party”, and Wojciech Korfanty, had no charges brought against them in the end for lack of evidence.
There were many and increasing sources of tension between parliamentarians and the regime. There were attempts by parliament to repeal the press decree in May 1927. Another source of tension with parliament was the mysterious disappearance on 6 August 1927 of Air Force General Zagórski en route to meet Piłsudski. He had fought against the May 1926 coup and had been arrested following it. There were also threats to prosecute him for corruption. Now it was believed he had been murdered by Piłsudski, or by some of his supporters. Zagórski‘s body was never found and his disappearance has never been explained.
The normal business of government continued however. In 1927 in order to promote Polish business, a presidential decree standardised “Chambers of Commerce” and extended their organisation across the whole country. Official Chambers of Commerce had existed in Prussia and Austria, but were unknown in Russia.
These Chambers of Commerce undertook a range of activities to promote business including organising commercial exhibitions, conferences, and trade schools. They published trade journals, and sought to develop overseas trade and to attract tourists et cetera.
These Chambers of Commerce also acted to represent the interests of their industries and had some input into the development of the new ‘Produce Exchanges’ and the Stock Exchanges. By 1938 Chambers of Commerce had been established in Warsaw, Sosnowiec, Lódź, Lublin, Lwów, Kraków, Poznań, Wilno, Gdynia and Katowice.
There was also an important development in the field of social welfare provision with the formal ‘codification’ of the ‘Factory Inspection’ system. The factory inspection system was first established in January 1919 to enforce the laws governing conditions of employment. However it had wide ranging responsibilities to enforce many aspects or labour and social welfare regulations.
Factory Inspectors enforced the laws relating to social welfare provision, had powers to issue regulations regarding the fencing of machinery, could forbid the use of certain dangerous materials, and could even mediate in industrial disputes. The medical supervision of working conditions in factories and workshops was also the responsibility of doctors attached to the “Factory Inspection Department”.
The most important development in 1927 for the stabilisation of the Polish economy was that at last the government was able to secure substantial foreign loans. In October 1927 the government negotiated a foreign loan, while an international stabilisation credit was arranged for the Bank Polski.
The so-called “Stabilisation Loan” was an international bankers’ loan with leading roles played by the Bankers’ Trust Company (New York), the Chase National Bank (New York), and Lazard Brothers & Company (London). The loan was worth US$ 62 million plus £2 million sterling. The loan was issued at a 7 per cent interest rate. The terms were not considered generous at the time.
At the same time a group of fifteen European central banks and the US Federal Reserve, granted Bank Polski a stabilisation credit of US$ 20 million. Thus the Polish banking system became more linked to the international money markets. This enabled the Złoty to be stabilised, it was fixed to gold at 1 Zloty = 1/5,924.44 Kg of pure gold. The old Zloty was worth about 58% of the value of the new gold-fixed Złoty.
It became possible to put the Polish monetary system on a firmer footing. At the same time the capital of Bank Polski was expanded from 100 million to 150 million Złoty. Half of the small bank notes were withdrawn from circulation, while provision was made to convert the rest to silver coin. Such notes had contributed to the fall of the Złoty in 1925.
In addition the floating debt of the Treasury was paid off. Some 75 million Złoty were allotted as a reserve. Some 140 million Złoty were assigned to economic development. Thus during 1927/1928 there was unprecedented government investment.
The improvements in the economy led to greater revenues for the state, which combined with the foreign loan meant budget surpluses. The government budget for 1927/28 showed a surplus of 214 million Złoty, the highest ever recorded in the life of the Second Republic. Of this 88 million were invested in public works, 51 million were transferred to “The State Land Bank”, 45 million were invested in financial securities, while the remainder was held as a current account reserve.
The year 1928/29 showed a further surplus of 200 million Złoty. Thus the surpluses continued until the onset of the Great Depression.
In early 1928 national legislative elections were due. This was an opportunity for the regime to reduce the amount of opposition it faced in the Sejm. A new strategy was adopted by the regime, which was to try to set up its own all-party coalition bloc united only by the common cause of expediting the government’s legislation through parliament. Organisation of this ‘Pro-Government Party’ began in late 1927 and was led by Walery Sławek.
Sławek was a former military man and an important figure in the development of the PPS. He was in fact one of the closest Polish politicians to Marshal Piłsudski personally, as they had been good friends since they first met in Wilno in 1902. Piłsudski is reported to have referred to him as “Loyal Walery”. Historians’ opinions differ as to how much forming a pro-government party was the idea of Piłsudski or Sławek.
In January 1928 the “Non-Party Bloc for Co-operation with the Government” (“Bezpartyjny Blok Współpracy z Rządem”, BBWR) set out its programme. In fact it was built around a core of Piłsudczycy, former Polish legionaries and POW members and had little in the way of a definite programme. It contained the widest political spectrum of membership from right to left, including minorities. Its only strong political orientation was its opposition to the Endecja.
To try to shape the next parliament to its liking the government is accused of using every legal administrative means, and possibly some legally questionable means, to influence the outcome of the election. The government used its influence on the “Electoral Commission” to invalidate a number of party lists, mainly for communist parties. As well as legitimate private funds, some public funds were misused to finance a large-scale election campaign. Local government administration was also misused to support its candidates. However it is generally believed that voting itself was free and fair.
The elections were held on the 4 to 11 March 1928. The BBWR only won one quarter of the votes. The government probably hoped that the leftist parties would be supportive. The results were that as well as 25 per cent of the vote going to the BBWR, 26 per cent went to the non-revolutionary left, 10 per cent to the centrist parties and only 9 per cent to the right-wing. The minorities poled 21 per cent. With this composition the government should have been able to mostly get its own way in the Sejm. However the parliament rejected Piłsudski’s recommendation that Bartel be elected as speaker of the house, instead electing Daszyński, the socialist leader.
Parliament also resisted a number of proposed taxes, but still the non-communist left hesitated to attack Piłsudski and some members claimed their parties were a truer representative of his political views than the BBWR. However no party wished for a confrontation with the government and in June 1928 the budget was passed easily.
Piłsudski seemed to be growing less patient with parliament. Some commentators have implicated his deteriorating health in this. When Piłsudski stepped down as Prime Minister in June 1928 he gave an interview in which he was highly abusive about parliamentarians, and implied he might seek to change the constitution again. This created suspicions in parliament that he might be planning to impose a more authoritarian system. The left-wing in parliament, especially the PPS, now became more hostile towards the government. A new cabinet was formed under Bartel on 27 June 1928.
Despite clouds on the political horizon, the Polish economy was doing better than at any time since independence. The index of industrial production rose from 80 in 1926 to 116 in 1928. The real value of wages rose, and the official unemployment statistics continued to fall.
The rural economy benefitted too as the profitability of peasant farms increased. Large landowners took advantage of higher land prices to sell, with the result that the 200,000 Ha per year target of the land reform law was exceeded in these years. This was also helped by the availability of credit from the government for the purchases of land.
During the relatively prosperous period from 1926 to 1928 peasants were able to invest more in fertilisers and machinery with the intention of reducing their production costs. From 1928 Poland developed substantial agricultural exports. This was encouraged by high commodity prices on the world market. The domestic market was simultaneously protected by heavy tariffs.
In 1928 laws were passed by which the surviving private banks were reorganised on financially sound lines to attract savings again, and to attract foreign loans. In 1926 the “Kemmerer Commission” had noted the need for public confidence to be restored in the Polish joint stock banks. By 1927 there were already signs of renewed public confidence as 35 per cent of savings were now deposited in private banks as opposed to 19 per cent in state banks. In 1928 50 per cent of short-term credits were issued by private banks.
Private banks were still inferior in resources to state banks, but were becoming less dependent on them. The private banking industry was also becoming quite concentrated, for example in 1928 the biggest four banks out of the 29 banks in the “National Association of Polish Banks” attracted over half of all savings.
A perennial problem of the Second Republic was the regional development problem. Southern regions forming what was “Galicia” under the Austrian Empire remained relatively impoverished and underdeveloped. To stimulate regional development, in 1928 a law granted tax exemptions and reductions to industrial enterprises founded in the region north of Sandomierz. At the same time some plans for the development of the region were considered. These incentives proved inadequate, and in the end the onset of the Great Depression hit all plans for private investment or state intervention.
In late October 1928 the new parliamentary session began, and Piłsudski further verbally abused parliamentarians. This led the left-wing parties to draw closer and co-operate more fearing that the constitution was under threat. On 14 November 1928 three parties formed a “Consultative Committee for the Defence of the Republic and Democracy”, the PPS, the PSL- Wyzwolenie and the Peasant Farmers’ Party (SC).
This same month the Popular National Union (ZLN) finding itself politically hemmed in by the regime decided to reform itself into a new radical right party called the “National Party” (“Stronnictwo Narodowe”, SN). This party then linked up with Roman Dmowski’s party the “Camp for a Greater Poland” (“Obóz Wielkiej Polski”, OWP). Dmowski had formed this party in 1926 in response to the Piłsudski coup to try to unite radical-nationalist and right-wing Catholic parties in opposition to the Sanacja regime. The SN-OWP association was to become the strongest ‘single’ opposition party claiming up to a quarter of a million members in the early nineteen thirties. However it would evolve in the direction of Fascism. The OWP already had a reputation for encouraging anti-Jewish violence and had been banned from ‘Eastern Galicia’ in 1927 for this reason.
In November 1928 the PPS also split, a pro-government faction setting up a new party, “The PPS-Former Revolutionary Faction”. This was a reference to an organisation once led by Piłsudski, before WWI.
Conflicts between the government and parliament now grew up over a number of issues; there was the failure of the government to present for ratification its supplementary credits not authorised in the budget. Then the removal from the courts of a number of prominent judges. Most alarming to parliament were government demands for constitutional reform. In response Piłsudski’s inner circle of former legionaries and POW members, sometimes called the “Colonels Group”, increasingly urged the government to get tougher with parliament.
The year 1929 was a landmark in Polish aviation history as on 1 January the Polish national airline “LOT” was founded. This stood for “Polskie Linje Lotnicze”. It was formed by the nationalisation and merger of two private carriers, “Aero” and “Aerolot”. Aerolot was the first successful air carrier in Poland, founded in 1922 as “Aero Lloyd” by a group of oil barons who needed to travel regularly from Lwów to reach the Borysław and Drohobycz oil fields, Warsaw where the ‘Fanto’ oil company headquarters were based, and the Free City of Danzig, from where they exported their oil. It was backed by German capital, based in Danzig and flew German aircraft.
In the absence of civil airfields they were allowed by the Polish government to use military ones free of charge. They received a variety of other help from the government such as subsidies and access to military weather forecasts.
There were concerns by the Polish government about the influence of German capital on the line so in 1925 the German shareholders were paid off and the company was Polonised, changing its name to ‘Aerolot’. By the time it was nationalised it had a fleet of 17 aircraft flying between Danzig, Warsaw, Kraków, and Lwów.
Aero was a smaller airline serving Poznań, Warsaw and Lódź. It was set up in Poznań in 1925 by a group of Polish pilots and was financed entirely by Polish capital.
By 1929 the new Polish education system was also well established. Official statistics showed that in the academic year 1928-29 96 per cent of children in the age group 7 to 14 years old, were attending school. The improvement of education was to be a major achievement of the Second Republic.
Politically the year 1929 was to be a year when conflict between parliament and the Sanacja regime was to seriously intensify. On 9 February 1929 the BBWR presented its proposals for constitutional reform to parliament. These were totally unacceptable to the left. The leftist paper ‘Robotnik’ described them as the ‘liquidation of parliamentary democracy’. Importantly it soon became clear that the government lacked the parliamentary majority necessary to get the reforms passed through parliament.
One issue which was to put parliament and the regime on collision course was the issue of the government’s use of supplementary credits which had not been authorised in the budget. This was allowed as long as the credits had been presented to parliament for ratification. In the event this had not happened because it is believed Piłsudski prevented the finance minister Gabriel Czechowicz from doing this. The issue became known as the “Czechowicz Affair”.
It is reported that Piłsudski wished to hide the fact that some eight million Złoty had been misused to fund the BBWR election campaign. Given Piłsudski’s posturing on parliamentary corruption this would have been a serious embarrassment to the Marshal, discrediting him.
At the end of February 1929 the Sejm voted to establish a special committee headed by the socialist Herman Lieberman to investigate Czechowicz‘s responsibility. On 14 March 1929 this committee voted to impeach him. On 13 April 1929 Bartel resigned as prime minister.
Bartel was followed as Prime Minister by Kazimierz Świtalski. Świtalski was a hardcore Piłsudski-ite. He had socialist leanings and a successful military career. Again he had met Piłsudski and knew him long before independence. He had been involved in ethnic-Polish paramilitaries, and then the Polish Legions where he was arrested and dismissed over the ‘oath crisis’. He then went underground into the POW, later emerging as a political figure.
The Świtalski government marked the beginning of a change in the character of cabinets where Piłsudczycy and military men would play a larger role in running the government. Świtalski’s cabinet was nearly half-composed of military men including a number of figures who were considered to be very close to Piłsudski. It seemed that loyalty to Piłsudski was becoming an important consideration in gaining high office. These governments came to be known as the “Colonels’ Cabinets”.
To calm public opinion Świtalski allowed the trial of Czechowicz to take place before the “Tribunal of State”, a body composed of the President of the Supreme Court and twelve members chosen by the Sejm and Senate. The outcome was postponed to enable the Sejm to pass a judgement on the merit or otherwise of the government credits in question. However given the hostility of the Sejm to the government a finding against Czechowicz was anticipated. This situation of the pending verdict on Czechowicz raised tensions between parliament and government to the point where those on the left who hoped to avoid a clash, such as Daszyński, were less and less able to prevent it.
During 1929 the six main parties of the centre-left formed a united alliance to oppose the government. These included the PPS, three peasant parties including PSL-Piast and PSL- Wyzwolenie, the National Workers’ Party (NPR) and the Christian Democrats. This alliance became known as the “Centrolew”.
In the autumn there were signs that Piłsudski was seriously considering ‘extra-parliamentary action’ to deal with the opposition. On 17 October 1929 Bogusław Miedziński, formerly of PSL-Wyzwolenie, now a member of the BBWR is reported to have derided the parliamentary opposition and fore-warned his party of Piłsudski‘s decision “to act when he judged the time right”.
Meanwhile from ‘Black Thursday’ 24 October 1929 till ‘Black Tuesday’ 29 October the Wall Street crash unfolded sending an economic shock wave which would derail the world economy and hit Poland particularly severely. Poland was especially exposed to the condition of the world economy because it was highly dependent on exports of agricultural commodities, coal and metals. In addition it was highly dependent on foreign investment and short-term foreign credits, nowadays sometimes called “Hot Money”.
However when the new parliamentary session started on 31 October 1929 the preoccupation was with the growing domestic political crisis. At the opening session of the Sejm the Chamber of Deputies was packed with military officers carrying revolvers and drawn swords. It is reported there were over one hundred such soldiers assembled at the parliament, presumably to intimidate the deputies. The Marshal of the Sejm Daszyński refused to proceed under threats and the soldiers withdrew.
Rather than intimidating the Centrolew this incident seems to have stiffened their determination to resist a de facto dictatorship. The PPS called for the “Total liquidation of the post-May system.” On 6 December 1929 a vote of no confidence was passed against the Świtalski government, with opposition only from the BBWR and its allies.
The regime responded at first by trying to achieve a reconciliation. This may have been partly motivated by the need to pass the budget. Thus Piłsudski had Świtalski step down and on 29 December 1929 a new cabinet was formed around Bartel again. Bartel had given signs in an interview that he intended to compromise with parliament, and he took the step of excluding from his cabinet the most unpopular members of the previous government. Many of Piłsudski‘s inner circle are reported to have had little faith in the prospects of Bartel, and to have been pushing for a showdown with parliament.
By the start of March 1930 it became clear a majority in the Sejm were opposed to the constitutional changes the government wanted to make. In addition the Czechowicz affair was a political time-bomb waiting to go off, as once the budget had been passed opposition members of the budgetary committee would be able to examine the use of the credits at issue. These considerations may have been pushing Piłsudski into radical action against parliament as a way forward on the constitution, and as a way out of the embarrassment of the Czechowicz affair.
When the PPS called for a vote of no confidence in the “Minister of Labour” Colonel Prystor, who had been trying to diminish socialist control of local ‘sick funds’, Piłsudski decided to use it as a pretext and had Bartel make it a vote of confidence in his government. The motion was passed and Bartel resigned on 15 March 1930. This was the last Bartel premiership from now on Piłsudski would rely more on Piłsudski-ite military men.
Bartel was replaced by Piłsudski‘s confidant Sławek as Prime Minister. This signalled a switch to a new ‘hard line’ by the regime. On 5 April 1930 the Centrolew called for elections to be held, but Piłsudski would not agree. In the meantime Piłsudski used various constitutional tactics to delay the reassembling of parliament, which was being called for by the opposition. These tactics led to resentment on both the right and left-wings of the opposition.
Meanwhile conditions inside Poland began to deteriorate again. There were the first signs of the impact of the Great Depression. In 1929 the budget surplus had shrunk, in 1930 the government budget went into deficit for the first time since 1925. From 1928 to 1930 the number of transactions on Polish stock exchanges fell about a quarter from 87,000 to 56,000, then stayed at a similar level till 1938. Falling land prices and less availability of credit saw the parcellation and redistribution of land slowing dramatically. In 1929 the 200,000 Ha target was not achieved for the first time since 1925. The figure fell to only 131,000 Ha in 1930.
As the economic and social conditions in Poland began to deteriorate and political and social tensions increased, the Catholic Church became more active. In 1930 Count A. Bniński introduced the organisation “Catholic Action” into Poland which became established in every parish of the country. It had an affiliated set of subsidiary organisations, or ‘Leagues’, for Men, Women and Youth. By the time it was well established it came to have more members than any of the political parties.
In the summer of 1930 the internal security situation also deteriorated. The Ukrainian population inside Poland had a number of political parties and community organisations. Many of these were to the left and some sent deputies to the Sejm. The most important Ukrainian community organisation as mentioned was the UNDO, which was involved in social, cultural organisations and Ukrainian co-operatives.
However there were militant groups too, some of a communist complexion, others of a violently ultranationalist type. During the nineteen twenties the “Ukrainian Military Organisation” (UVO) had carried out sporadic assassinations, attempted assassinations and terrorist attacks. It was known to attack both Polish government figures but also Ukrainians who sought compromise with the Polish state.
One of the worst attacks had only recently occurred at the “Eastern Trade Fair” in Lwów in 1929, a triple bombing. Evidence has been presented by historians that the UVO was backed by German intelligence long before the Nazis came to power.
In February 1929 the UVO had been absorbed into a larger, similarly violent ultranationalist group, the “Organisation of Ukrainian Nationalists” (OUN). In July 1930 the OUN began what it described as a “Sabotage Action”. Properties belonging to ethnic Poles were burnt down, including government offices, and there were attacks on communications such as roads, mail trucks, telegraph lines and railway lines. The areas affected included Lwówskie, Stanisławoskie and Tarnopolskie Voivodships. The action seemed to focus on damage to property but made the Polish population of the region anxious.
All this was happening in the background while the political crisis unfolded. On 20 June 1930 the Centrolew called for the ‘removal of the governments of the dictator Józef Piłsudski and their replacement by a constitutional cabinet’. On 29 June 1930 the Centrolew held a special congress of their parties in Kraków, to rally around this demand. It was attended by about 1,500 delegates and over 25,000 supporters. It called for the end of the Piłsudski dictatorship by constitutional means. This was a direct challenge to the regime.
By 11 August 1930 it has been reported that Piłsudski had already asked Sławoj-Składkowski, the Minister of the Interior, to assemble evidence so that charges could be brought against the Centrolew‘s leaders.
On the 25 August 1930 Piłsudski took up the post of Prime Minister himself. This enabled him to take charge of a number of critical issues, notably the subjugation of parliament and the pacification of ‘Eastern Galicia’.
Almost immediately Piłsudski acted decisively, on 30 August 1930 parliament was dissolved and elections were announced for 16 and 23 November 1930. In the meantime he also acted to weaken the parliamentary opposition in the run up to the elections.
On the night of 9-10 September 1930 eleven of the less senior, but more radical leaders of the Centrolew were arrested. Piłsudski had tried to blame the instability in ‘Eastern Galicia’ on members of the Centrolew, identifying certain members as a threat to national security. With hindsight these allegations seem very far-fetched.
In the second half of September 1930 Piłsudski ordered what was formally defined as a ‘police action’ to pacify ‘Eastern Galicia’. Before this large numbers of Ukrainian activists, including former Sejm deputies were arrested.
It has been documented that over one thousand police first isolated, then searched some five hundred villages. Most of the searches were in Lwówskie but there were substantial numbers in Tarnopolskie and Stanisławoskie. Substantial caches of small arms and explosives were reportedly found. In addition several Ukrainian schools were closed and a Ukrainian youth scouting organisation “Plast”, was proscribed.
Complaints from the Ukrainian side were that some suspects were beaten, that much property destroyed during searches was not repaired or replaced. Some aspects of the circumstances are contested. Polish authorities claim there were no fatalities during the operation, but Ukrainian sources claim 35 people were killed.
It seems the operation was completed by the end of September 1930. However some observers claim it contributed to damaging relations between the Ukrainian community and the government and may have led to the radicalisation of some previously moderate Ukrainians.
As the elections approached arrests of opposition political activists continued. By mid-October several thousand people were in custody, including 64 members of parliament. Many of the more high profile political prisoners were detained in the Fortress at Brest-on-Bug (Breść-nad-Bugiem), where they were allowed no outside contacts.
The Centrolew did not respond with militant action, hoping to do well in the up-coming elections. It would have been very difficult to have organised a General Strike given the impact of the Great Depression and the high levels of unemployment.
However the government was not going to leave the elections to chance and intervened more aggressively than it had in 1928. Many electoral lists were invalidated, and administrative methods were used to bias the results, especially in eastern Poland.
The end result was a triumph for the regime in the elections. Government lists won nearly half of the vote, with right-wing parties winning only 13 per cent, the Centrolew parties, decimated and disorganised by the arrests, were reduced to just 17 per cent. Minorities poled nearly 15 per cent. The government was in a position of strength from which to govern. One quote attributed to Piłsudski on 18 November 1930 was: “We have five years of the most perfect quiet and we must know how to make use of it.”
POLAND IN THE THIRTIES
In 1931 another census was held, thus the start of the nineteen thirties is a good point at which to make a survey of the structure of the Polish economy and society. Although as will be seen, economic conditions changed greatly during the decade here the key structural features of the Polish economy and society will be reviewed.
According to the census Poland had a population of approximately 32.1 million people in 1931. Taking GDP per capita for 1928, the Second Republic’s most prosperous year, Poland was half as rich as the United Kingdom, two thirds as rich as Germany or France, and comparable to, but just poorer than, South European countries like Italy, Spain and Greece. It was about four times richer than poor Asian countries like China and India. At this time average life expectancy in Poland was just 50 years, compared with 60 in Britain, or 65 in Norway.
Throughout the period of the Second Republic Poland remained a primarily agricultural country in spite of advances in industrialisation. About 19.3 million people out of a total of 32 million depended on agriculture for their livelihood in 1931. This was followed by mining and industry with about 6.2 million, then 1.9 million in commerce and insurance, followed by just over one million in transport and communications.
In other words more than twice as many people depended on agriculture for their livelihood as those depending on mining, industry, commerce and transport put together. The urbanisation of the population was low with over 70 per cent living in rural areas, this was high compared to Western Europe. In Poland the percentage of the population dependent on agriculture in 1931 was 60 per cent, compared with 29 per cent in France and 20 per cent in Germany at about the same time. Greece and Italy were both close to 45 per cent.
Conditions of life for the typical urban working-class family were poor. The cost of living was high. Surveys showed that in 1927 such a family spent over sixty per cent of their income just on food. Clothing was another great expense taking one tenth of income, while rent and energy bills cost nearly all the rest of their income.
Housing conditions were not good for the urban working-class. One third of the urban population lived in homes lacking all utilities such as running water and electricity. Over two thirds of urban homes consisted of just one to two rooms occupied by an average of 4.4 persons. Only 38 per cent had electricity, and 16 per cent running water.
Because of poverty it was often not possible for working-class women to confine their activities to the home, most had to go out to work for the household to earn enough money. In the urban industrial workforce about three quarters of staff were male, about one quarter female, and four per cent children.
Strict laws supposedly regulated child labour, but they were inconsistently enforced. Full-time education was supposedly mandatory till the age of 13 years (seventh grade). In practice by the late nineteen thirties over 90 per cent of children stayed in school till the age of 11, and over 70 per cent till the age of 13. Only a minority went to secondary school but the figure was increasing.
Women predominated in certain industries such as in textile factories where just over half of workers were female, and in clothing manufacture where nearly two thirds were female. Women were over-represented in relation to their share of the workforce in chemicals, electronics and in food processing. In urban industry there was also great pay discrimination, average weekly take home pay was 23.90 Złoty for men but only 12.40 Złoty for women.
Yet the urban workers were in general much better off than the small peasants and farmworkers living in the countryside. It was generally impractical to enforce labour regulations in the countryside, so rural employees were largely at the mercy of the landlord for pay and working conditions.
The 1921 census had shown the composition of the rural workforce was: 70.5 per cent independent peasants, 15.0 per cent sharecroppers, 14.5 per cent hired agricultural labourers. It is believed this distribution did not alter much during the Second Republic. In cash terms the standard of living of the majority of independent peasants was low, Polish peasant earnings only being one third of those in Western Europe, and they had little purchasing power to stimulate the development of the domestic market economy. However it is difficult to get a true picture of their standard of living, most were self-sufficient for food. In some regions though, notably Polesie, the peasants struggled to subsist.
It is difficult to assess the standard of living of hired agricultural labourers solely from cash wages as they may have kept livestock, or worked an allotment. In addition they might receive food or accommodation from an employer. This suggests that all in all the standard of living of a proprietor peasant farmer may not have been significantly better than that of a hired farm labourer.
In 1931 over one third of farmhands were women. There was great discrimination in rates of pay, for example in 1928 the going rates for farmhands in the summer were as follows: men 5.60 Zloty per day, women = 3.50 Zloty per day and children = 2.90 Zloty per day
About 67.5 per cent of Poland’s land area of 38 million Ha was used for agriculture: 18.6 million Ha for arable farming, 3.8 million Ha for meadows, 2.7 million Ha for pasture, and 0.6 million Ha for orchards & market gardens.
The problems of the countryside were compounded by poor, low efficiency agricultural techniques, a high birth rate, and the restriction of immigration into areas that had previously accepted large numbers of Poles, notably the USA, Brazil and Canada. There was a massive problem of rural overpopulation. There was great ‘concealed unemployment’ in the countryside. In other words substantial numbers of those employed in agriculture could have left the land with no significant fall in output.
Various estimates were made of the number of the ‘superfluous’ population in the Polish countryside. Out of a total national population of 19.3 million in 1930 estimates have been made which vary from 4.3 million up to 11.6 million. All regions had a serious oversupply of labour, but there were great regional variations with the south of the country much more severely affected than other regions, and the west least badly affected. The pattern generally followed the pattern of population density, worst in the south, centre and east, best in the west.
The healthy growth of industry would have solved many problems by absorbing surplus labour from farms and employing it in factories. In turn this could raise the standard of living of those in the countryside, boosting their spending power and creating a domestic market for the products of industry. The growth of industry to draw the surplus workers into the towns could alleviate the condition of the countryside and allow for the modernisation of agricultural techniques. However both industrial development and agricultural modernisation required capital, which was the limiting factor severely in shortage in Poland.
Poland was caught in a poverty trap typical of a developing country. Agricultural prices were low relative to those of manufactured goods, the so-called “Price Scissors”. The rural population was thus poor and did not provide much of a market for the consumption of industrial manufactures. Thus there was little stimulus for the growth of industry.
Throughout the life of the Second Republic the regional underdevelopment problem remained. During the interwar period it became convenient for economists and policy makers to draw a simplifying distinction between ‘Poland A’, roughly west of the Vistula, and ‘Poland B’, east of it.
Urban life in ‘Poland A’ was broadly comparable to life in the modern cities of Germany and Austria like Berlin or Vienna. The modern conveniences of life were widely available such as radios, gas ovens, indoor baths and fashionable modernist furniture.
The countryside was also more developed with better infrastructure such as mettled roads, improved irrigation systems et cetera. Farmers in ‘Poland A’ were more prosperous, some had tractors and did not tend to dress and live so much like the traditional peasants of the Kresy.
‘Poland B’ was less urbanised and the countryside had poor infrastructure. The traditional ways of life and dress, and the traditional relations between the classes persisted informally. The trappings of modern life diffused only slowly into these areas where poverty was great.
Pay and working conditions were generally significantly worse, farmhands in the west earned one third more than those in the east and south on average. In the east one quarter of all workers earned less than 10 Zloty a week, but in prosperous Silesia only 8 per cent did.
There were marked differences in housing conditions. In 1931 the vast majority of houses in Silesia had running water and electricity, while in Warsaw and Kraków the figure declined to about sixty per cent. In Lublin the figure was as low as one fifth of houses. In the west most houses were built of fire resistant material, brick or stone, in the east most were still made of flammable materials. In the former Austrian areas almost a tenth of homes were still built from mud or clay. In eastern and southern towns one fifth of all homes still had thatched roofs, these had largely disappeared in western and central Poland. In the east four fifths of peasant homes still had thatched rooves.
Access to education was more limited. Education was generally more available to those living in towns and cities, but eastern regions were more rural, this showed in poorer education. The 1931 census of literacy at age ten showed that in the west only 3 per cent of children could not read and write, but in eastern regions such as Polesie and Wołyń some 46 per cent could not.
There were severe variations in the availability of medical care. Only one per cent of doctors worked in the country. Rural dwellers had to come to a local small town to be seen by a doctor. In big cities like Kraków doctors were numerous, 30 per 10,000 residents, (higher than average in the US at that time), but in Polesie and Wołyń the figure was as low as 2 per 10,000.
The Poland A-B regional development problem was seen by many politicians of all parties, as the most important problem of the Second Republic, and they offered policies and solutions. However the onset of war in 1939 cut short the development programmes involved.
The development of the nation’s infrastructure could go a long way to reducing the regional disparities and in stimulating the growth of industry and commerce. The underdevelopment of the waterways mentioned previously, and the underdevelopment of the roads meant that railways had to bear the main burden of commercial transportation.
From 1918 to 1936 the Polish Railways constructed over 2,000 Km of railways, followed in 1935 to 1937 by starting construction of another 500 Km. However this was less than half the 5,600 Km estimated as necessary by the “Ministry of Communications”. The main railway line from Warsaw to Kraków via the ‘Kielce Tunnel’ was only completed in 1933.
In 1938 the Second Polish Republic had over 18,000 Km of standard-gauge railway and over 2,000 Km of narrow-gauge rail. Using the length of railway operated per thousands of people in the population it is possible to compare different countries. In 1936 Poland had nearly as much as Great Britain, and significantly more than the USSR. However this analysis does not account for the land areas and population densities involved, thus France and Germany, large continental countries, both had considerably more than Poland.
Another important development in North-South communications was the building of the railway line from Katowice and Gdynia. This could boost foreign trade and ease the supply of coal from Silesia to the Lódź industrial centre where textile production was concentrated.
The “Polish Coal Trunk Line” (“Magistrala Węglowa”) was built during the late nineteen twenties and early nineteen thirties to carry freight from south to north across Poland. It connected the major Silesian terminals of Chorzów Batory and Tarnoeskie Góry to the newly developed Baltic port of Gdynia. It was and still is primarily a freight line and was built to expand the export of Silesian coal. It was one of the biggest infrastructure projects carried out under the Second Republic. Partly it was built to make full use of the new port, but it was also built to prevent the need to pass freight through a number of key rail junctions in Germany as the ‘Tariff War’ was ongoing.
Before independence the Germans had built Silesian railway lines from Chorzow to Kalety, serving the Upper Silesian Coal basin. In 1926 an extension connecting Kalety to Herby Nowe, just west of Częstochowa was built. In 1928 President Mościcki signed a bill to construct the main part of the Polish Coal Trunk line, 255 Km long to run from Herby Nowe northwards to Inowrocław, just south east of Bydgoszcz and connected by rail to Bydgoszcz. This section of line is noted for its attractive station buildings.
However this line ran to the west of the important industrial centre of Lódź failing to connect these important commercial locations. It did however cross the line connecting Lódź to Poznań at Zduńska Wola. So here at the village of Karsznice on the edge of Zduńska Wola was built a major rail junction, one of the most important in Poland even today, with a complex of buildings including blocks of flats for rail workers. This was completed in 1930.
From 1930 to 1933 the connections from Bydgoszcz to Gdynia were built so as to pass solely through the “Polish Corridor”, thus avoiding dependence on any German controlled segments. It ran through Wierzchucin and Kościerzyna approaching the port through Kashubia. By April 1939 the project was finally augmented by connection to Częstochowa.
One iconic feature of Polish luxury passenger rail travel in the thirties was the high speed train, known as the “Luxtorpeda”. Technically called the “Pociąg Motorowo-Ekspresowy MtE” (“Motor Express Train”) it was capable of travelling at one hundred kilometres per hour and carried up to sixty passengers and crew. It was an Austrian design built under licence in Poland where it was converted from petrol to diesel. Thus it differed from the majority of trains operating in Poland which were steam powered. The ‘Luxtorpeda’ services came into operation in 1933, and were based at Kraków. It served Warsaw, Kraków, Katowice and the mountain resort of Zakopane.
Road transport seriously lagged behind. From 1924 to 1936 some 11,600 Km of highways were constructed. However there was still a serious lack of roads. Partly this was due to a shortage of suitable stone for road building. The east of the country was particularly short of roads due to neglect by the Russian Empire in the years before the war. It has been suggested that the development of motor transport was held back by the shortage and poor quality of roads.
With the development of the port of Gdynia and growing foreign trade it became necessary to expand the Merchant Marine. The fleet was almost entirely state-owned. In the years 1930 to 1939 the number of vessels increased from 25 to 71. By 1935 the tonnage of Polish trade passing through Gdynia exceeded that passing through Danzig, and this remained the case till the invasion of Poland in 1939.
Transport infrastructure is not the only crucial type. Energy generation and distribution is also crucial to economic development. The development and expansion of electrical power generation during the Second Republic was a disappointment and remained at a low level. A scheme to develop hydroelectric power on the north slopes of the Carpathians, promoted by President Narutowicz was not fulfilled due to lack of capital.
However a 1922 law regulating electricity generation and distribution attempted to rationalise plans for the industry by trying to concentrate development on large efficient power stations, rather than uneconomical small stations. Only in the late thirties with major state led infrastructure development would there be a big increase in generation capacity.
Because of war damage and the deliberate policy of the German occupation of stripping industry of capital goods, after the First World War Polish industry was in many ways starting from ‘scratch’. However by the end of the Second Republic in 1939 Poland had become a moderately industrialised economy with 20 per cent of the population deriving its livelihood from industry. This compares with 38 per cent in Germany and 11 per cent in Yugoslavia.
Most of the industry was found west of the Vistula in ‘Poland A’, concentrated in centres such as: Silesia, Czestochowa, Łódź and Warsaw. The main industrial areas of Poland before the war had been Silesia for coal and metals, the Łódź Industrial District for light manufacturing, typified by textiles, and Galicia for crude oil. The rest of the country was largely unindustrialised, with just a scattering of factories here and there throughout the country. This pattern changed only slowly without government intervention.
The Second Republic was rich in a range of minerals, most notably coal, but also many metals including iron, zinc, and lead. Rock salt used to make chemicals, and potassium salts used in making chemical fertilisers were abundant. There was a good supply of oil and natural gas from ‘Eastern Galicia’. The output of these fields peaked in 1909 and was declining, but remained sufficient to cover domestic demand.
The Silesian coal fields were central to Poland’s industrial development, but never reached their estimated full capacity of 60 million tons per year, the peak year for production was 1929 with 46 million tons of output. This figure fell following the depression, but rose in the last few years of the Republic with the industrial upswing. Coal output significantly exceeded domestic demand and coal was one of Poland’s most important exports in this era.
Although Poland was a major zinc exporter, supplies of iron and lead were insufficient to cover domestic needs and had to be supplemented with imports. Typically half of the value of Polish imports were made up of industrial raw materials. The country needed to import a range of metals it lacked such as copper, tin, aluminium, nickel and manganese. The textile industry had a large demand for cotton and wool which had to be imported. The domestic wool supply alone though significant, was not sufficient. Like most temperate industrial nations at that time Poland had to import natural rubber from the tropics. Thus the growth of industry put a growing strain on the trade balance.
The dominant factor limiting Polish industrial development for much of the Second Republic was the shortage of capital at a time when capital for both intensive development, technological upgrading, and extensive development, increased capacity, were in great need. During the twenty years of the Second Republic average annual investment in industrial development was about 5 per cent of national income, which in 1938 equalled 18 billion Złoty. Between the two censuses of 1921 and 1931 the percentage of people employed in mining and industry increased by 25 per cent. From 1929 to 1939 the share of the value of output from mining and industry rose from about one third of the total to one half.
The shortage of capital and the poor state of many industries at independence meant the state played a large role in the ownership and running of industries. Private enterprise was not deliberately abandoned but it was more a case of the state husbanding industries till they were capable of operating independently. In addition the macro-economic instabilities and consequent problems of the financial sector meant that for much of the life of the Second Republic the state tended to dominate the domestic financial sector remaining the key source of investment funds.
In his 1952 monograph J. Taylor argues that the character of the economy of the Second Republic was ‘State Capitalism’ to a higher degree than any other European country of that time except for the extreme case of the USSR. Ignoring the armed forces, the Polish government in 1939 employed a million people, in around one hundred different state-owned industrial enterprises encompassing over one thousand establishments.
Certain industries were completely state-owned as with the armaments industry and the national airline ‘LOT’. Other industries were almost entirely state owned such as the ‘Merchant Marine’, railways and chemicals. The state was also a major shareholder in the metals industries. In addition the state owned some three million hectares of forests of which about one fifth were in active use for wood production.
In addition the state owned and managed five monopolies; alcohol, matches, tobacco, salt and the national lottery. In many countries such monopolies were a useful way of supplementing state revenues. The state-owned industries and monopolies were one target for sale as and when efforts were made to balance the government’s budget.
Domestic capital remained scarce and where industries were privately financed much of the funds came from abroad. Foreign investment in the Polish private sector included loans to banks and long-term mortgage credit institutions. Bonds issued by Polish private enterprises abroad to raise funds, cash loans to Polish enterprises, commodity credits to private enterprises. Also there was significant foreign direct investment (FDI), in other words foreign interests becoming major shareholders in Polish private enterprises.
Foreign companies also had branches operating in Poland which received foreign investment and granted credit. In fact by the late nineteen thirties the total value of foreign funds entering the Polish private sector slightly exceeded those received from the state sector. For example in 1936 3.8 billion Złoty came from foreign sources, whereas 3.6 billion Złoty came from state sources. It is estimated that on the eve of war in 1939, foreign capital contributed about 38 per cent of the capital of all Polish joint stock enterprises.
The largest amounts of foreign investment were in ferrous metals, mining, utilities (Gas, Water & Electricity), and the chemical Industries. In industry, foreign capital was much concentrated in large and medium scale industries. Much of the country’s industry was still small-scale, and was largely untouched by foreign investment, as was agriculture which was still the most important sector in the Polish economy. Thus the high overall figure for foreign investment in joint stock companies could be misleading as it was quite concentrated. From 1929 to 1935 Polish industry redeemed nearly one third of the amount invested or advanced by foreign capital. This is to be considered a comparatively good record.
The sources of foreign capital were concentrated in just a few countries. In 1937 nearly three quarters of investment came from, in declining order; France (over one quarter), the USA (one fifth), Germany (one seventh) and Belgium (one eighth). Note that from 1931 to 1937 the German share of investment in Poland fell from 25 per cent to 13.8 per cent, thus Poland avoided excessive dependence on Nazi Germany, unlike some other countries in the region.
Given the scarcity of capital and the instability of demand given the gross changes in the macro-economy during the Second Republic, it is not surprising that private industry was not a model of free market competition. Cartels were widespread, a trend which intensified in response to the ‘Great Depression’. In fact there had been a tradition within the local region for cartels, the first cartels in Polish heavy industries were set up in the eighteen eighties. Cartels were not unique to the region though, but were a commonplace feature of industries around the world before the Second World War.
Some analysts have commented that with the exception of textiles, every important Polish industry was organised into a cartel. In 1930 some 56 cartels controlled approximately 37 per cent of industrial production.
Typical strategies employed by such cartels was to agree market sharing quotas in the domestic market, while ‘dumping’ excess production in foreign markets (that is selling below cost price). The aims of such strategies were to maximise profits by maintaining prices in the domestic market, by not glutting the market and avoiding price wars.
Cartels were recognised legally and were regulated by law. The justification from the government’s point of view of legalising such arrangements may have been that unfettered competition would have driven many producers out of business adding to unemployment and social and political instability. Unfettered competition could have exacerbated differences in regional development. It was estimated that production costs varied greatly in different parts of Poland due to the legacy of economic development differences in the different empires. Another motive could be to subsidise the exports needed to raise foreign exchange.
In 1937 a total of 730,100 people were employed in manufacturing industry, plus another 98,800 were employed in mining, making a total of 828,900 in manufacturing and mining. The eight biggest industries, by number employed were, in declining order: Textiles, Metal Manufactures, Mining, Food Processing, Stone, Glass and Ceramics, Timber, Chemicals and Construction. In addition there were a number of small industries employing much lower numbers, such as Electro-technical, Paper Making, Clothing Manufacture, Printing Trades, Leather, and Toys.
In 1937 the single industry of textiles employed the most in manufacturing (157,100/730,100). The origin of the industry went back to the ‘Congress Kingdom’ (1815 – 1830) when foreign artisans were encouraged to set up business on government owned land at Łódź on favourable terms. There was a good water supply and a good supply of cheap labour.
The industry developed producing the cheapest type of textiles behind tariff walls and supplying them to Eastern Europe and Asiatic Russia. By 1938 Łódź had become the ‘Manchester of Poland’, with a population of nearly 700,000 of whom over 100,000 were employed in some 2,000 different industrial enterprises of the Łódź district. Cotton dominated production, then some wool, and very little silk, which was a new line just being developed at the outbreak of war.
In the Second Republic the main textile manufacturing centres were: Łódź here cotton goods, woollen rugs, haberdashery, natural and artificial silk, laces, curtains and embroideries were produced. Białystok where woollen rugs, haberdashery, and garments were made, and Bielsko which specialised in high-quality woollen fabrics. Thus there was some specialisation at the various centres of the industry.
The metals industries followed close behind textiles in terms of employment (155,700/730,100) in 1937. The high volume products were raw materials dominated by steel, closely followed by rolled iron, then pig iron. Next in somewhat lower volume came manufactured metal ‘intermediates’ such as iron wire nails, drawn iron wire and galvanised iron sheets.
A wide range of finished metal manufactures were also produced: metal bedsteads, railway cars, locomotives, steam boilers, internal combustion engines, pumps, machine tools (for woodwork & metal work), agricultural machinery, textile machinery and various electrical machinery. Throughout the period 1919 to 1939 there was steady and substantial development of these industries. However development was geographically uneven, being much higher in the developed west and low in the eastern regions.
Historically these metal industries had first developed following partition within the Russian Empire. Polish firms in: Warsaw, Sosnowiec and Lublin had supplied iron bridges, boilers, motors, and agricultural machinery throughout the Russian Empire. During the First World War these industries were hit hard with much of the industrial plant being removed to Russia or Germany.
Mining was a major industry in Poland employing as stated, nearly 100,000 people in 1937. Mining was far and away dominated by coal. In 1936 about 30 million tons of coal were mined. Other major minerals mined in similar amounts, just under half a million tons per year, were rock salt, potassium salts and iron ore. Lesser amounts of zinc ore were mined, and a small amount of lead ore.
In 1936 Poland was the third biggest coal exporter in Europe, and the World’s seventh biggest coal exporter. The high-efficiency technology and management which were inherited in the Silesian industry before 1914 were maintained throughout the Second Republic.
In 1937 various food processing industries employed 86,500/730,100 of manufacturing workers. These industries produced a wide range of products, such as: canned ham and meats, canned fish and canned vegetables. The canning industry was developing fast in the late 1930s.
The scale of the domestic sea fishing industry in the Second Republic was limited due to the country’s small coastline. Fewer than 2000 fishermen were employed. During the nineteen thirties, following the depression, the size of catch dramatically increased from only 2,800 Kg in 1929 to a peak of 23,300 Kg in 1936, then declining. This trend reflected the trend in catch per man, the workforce did not increase dramatically, rather there was investment in equipment. However despite the large increase in volume the value of the catch in Złoty only doubled from 1929 till 1938 due to depressed prices.
One very important food industry, having larger margins than grain crops, was the ‘beet sugar’ industry. In 1936 it produced 450 million pounds of raw sugar. In 1936 Poland exported 62,000 tons of refined sugar.
The chemicals industry though a much smaller employer was of great importance to Poland’s large agricultural sector. In 1937 it employed 54,600/730,100 manufacturing workers and was 80 per cent state owned. The production of chemical fertilisers for agriculture was a major product.
The Chorzow nitrate factory was one of the largest chemical factories in Europe. At one time it was run by Professor Mościcki who became president of the republic in 1926. The Chorzow factory was an important linkage between industry and the agricultural economy. Its success led to the founding by the state of a second factory at Tarnow.
As well as fertilisers, the Polish chemicals industry produced: coal derivatives, dyes, artificial fibres, oil, soap, scent, paints, laquer, explosives, celluloid, plastics and rubber goods. Warsaw had a very good reputation for perfumes and cosmetics. Some chemical products were exported, including: chemical fertilisers, artificial silk, benzol, zinc white, tar, carbide, soda ash, oil cakes, explosives, oil cloth, glue, potassium carbonate, ammonium chloride and ammonium carbonate.
The production of wood and its processing into timber products was an important aspect of the Polish economy. Some 600,000 people depended for their livelihood on forestry. Poland had over eight million hectares of forest, covering a little over one fifth of the land area. Some commentators have criticised the unsustainable overexploitation of Poland’s forests at this time.
Another 68,000 people were employed in manufacturing wood and timber products. The main timber product was sawed wood, but substantial amounts of round wood, railway sleepers and pulpwood were produced. Lesser amounts of plywood, pit props and telegraph poles were also mass produced. The timber industries were not just confined to timber proper but also included allied industries such as making furniture, which industry was centred mainly in Bydgoszcz, matches and paper.
In 1931 the percentage of the workforce engaged in distributive services (9.7 per cent) and Trade (5.3 per cent) together exceeded those engaged in factory industry (12 per cent) and was nearly as much as those involved in all secondary sector industry (16.7 per cent), including factory industry.
In retail the small unit was the norm with, in 1938, 344,000 out of 374,000 retail businesses being ‘one man’ enterprises, in other words the vast majority. Figures from 1938 show the retail trade was dominated by Foodstuffs (57 per cent) and Clothing (20 per cent), with the rest covering the full range of manufactured and household goods.
The co-operative movement in the Second Republic progressed so strongly that by the end of 1937, there were approximately 14,000 co-operative societies with a combined membership of three million. The biggest categories were Credit Unions (5,600), Agricultural (3,200), Consumers (2,100) and Dairying (1,500).
The credit co-operative societies, or “Credit Unions” were the best developed of the co-operatives. In 1939 there were 3,700 small village co-operative banks, based on the principles set out by the German pioneer of co-operative banks, Friedrich Wilhelm Raiffeisen. They were generally known in Poland as “Stefczyk Banks” after Francis Stefczyk, who brought the system to Poland from Germany and Austria. There were also some 1,600 larger ‘People’s Banks’, in the smaller towns and villages. These were Credit Unions based on the principles set out by the German pioneer of Credit Unions, Franz Hermann Schulze-Delitzsch.
Such institutions paid interest on even very small deposits and encouraged the accumulation of savings in poorer communities. Thus they could bring into action local funds which would otherwise not have been used productively. Given the severe shortage of capital in Poland this contributed to easing the difficult economic conditions. The government also made use of this system of local co-operative banks by using them to distribute public funds and loans from state banks intended for agricultural development.
These forms of credit organisation had been popular with small investors in central and Eastern Europe before 1914. Although like other financial institutions, they were hit by the Great Depression, they were not as badly affected as the private banks. In fact in 1930 and 1931 there developed a trend for savings to be transferred from private banks to municipal and provincial savings banks. From 1928 to 1938 the value of savings deposits in Polish savings banks more than tripled.
The agricultural co-operatives were organised into a single auditing union, headquartered in Warsaw, the “Union of Agricultural Co-operatives of the Polish Republic”. It was composed of nine provincial unions headquartered at Bialystok, Kraków, Lublin, Lwów, Luck, Poznań, Torun, Warsaw and Wilno.
Joining Co-operative Societies enabled small farmers to reduce their dependency on money lenders and middlemen. The first agricultural co-operatives in Poland were for credit, these were followed by co-operatives for the disposal of produce and the purchase of equipment, and then by co-operatives for the processing of produce to a form it could be retailed in. Consumption co-operatives also formed aiding the distribution of produce in rural as well as urban areas.
By the end of 1937 the union had 5,497 co-operative societies with a combined membership of 1.6 million. The majority were savings and credit unions, with over one million members. The next most numerous were the dairy farming co-operatives with 430,000 members. There was also a significant number of trading and consumer societies with 129,000 members.
Dairy co-operatives were examples of ‘manufacturing co-operatives’. These engaged in food processing and other manufacturing activities. They could give producers access to new markets and outlets for their agricultural raw materials by making them into finished products. They enabled producers to keep a larger share of the profits from selling the finished products by moving up the ‘value chain’ to higher value added stages.
Agricultural trading societies were less developed. They performed two important roles: the supply of agrarian materials and equipment such as fertiliser, fuel and machinery to producers and the marketing of produce especially cereals, cattle and pigs.
The nationwide consumer co-operative mentioned earlier, “Spolem”, had a combined total membership of nearly 400,000 members belonging to nearly two thousand different societies by the end of 1938. Some 44 per cent of its members were agricultural workers and 31 per cent industrial workers.
Spolem’s wholesale activities for 1938 involved the distribution of thousands of tons of, in declining order; coal and coke, salt, chemical fertilisers, sugar, cement and wheat flour. Along with smaller amounts of countless other commodities and products.
Spolem operated 32 branches supplied by 26 warehouses. It had bakeries and food processing and packaging operations including for fish, vegetables, fruit, coffee, condiments and yeast. It had a saw mill and factories for making furniture and household items. It had plants for the production of soap and pharmaceuticals.
THE DEPRESSION YEARS (December 1930 – May 1935)
In many ways the events of late 1930 and the results of the November 1930 election marked a ‘second coup’ which put the Piłsudczycy firmly in charge of government. There was a definite shift in the way the country was governed. From now Piłsudski himself would play a lesser direct role in domestic affairs and would never again take up the role of prime minister, rather he left this more to his trusted followers. It is likely that this change reflected the Marshal’s deteriorating health, a fact which was kept strictly private at the time.
From now government was to be dominated by military men. All but one cabinet from December 1930 to October 1935 would contain more military men than civilians. The Civil Service was affected too, where military men became particularly prominent in the Foreign Ministry and in the Ministry of the Interior.
The role of the military also became pervasive in local government. By the early thirties the majority of provincial governors, many sub-prefects, most heads of provincial departments dealing with national minorities and most heads of provincial departments dealing with security were military men.
Military men were also prominent in running state-owned enterprises. The state-owned sector had grown since the depression, as many firms went bankrupt and the government intervened. At the same time the government was getting more involved in arms production which was kept publicly owned. This would leave these officers, often not suitably trained or experienced for their responsibilities, open to charges of incompetence and even corruption.
In general, government became more authoritarian. The role of parliament was marginalised and parliamentary debate was avoided as much as possible. A range of authoritarian laws were passed, with restrictions of the right of railwaymen to strike, and restrictions on the freedom of assembly. Censorship of the press increased. An unfavourable ruling on the case of former finance minister Gabriel Czechowicz was avoided by changing the law to make his actions legal, thus sweeping the affair under the carpet.
Relieved of serious opposition the government party, the BBWR, became more prone to internal tensions. Some members disapproving of the authoritarian turn, left. The party came to be divided between conservatives and radicals. Some commentators accuse the party of becoming unpopular with the general public because of its authoritarianism, and of having no appeal to the young. Apparently the party had difficulty attracting new members and the young were increasingly moving towards radical right-wing politics.
The opposition now polarised between left and right as both tendencies radicalised and became more militant. Under the decimation and dislocations of the arrests, and the failure at the elections the Centrolew alliance disintegrated. Many in the PPS were embittered and turned to non-parliamentary ideas, working more closely with the Communists.
On the right politics became increasingly radical and militant gradually moving in the direction of European Fascism. In the universities the biggest tendency was towards far-right politics. Many non-Jewish students supported the National Party or other fascististic groups which emerged at that time. As a result the universities became the scene of frequent anti-government and anti-semitic disturbances. It became necessary for the government to ban Dmowski’s OWP.
Despite its powers the government seemed ineffectual in the face of the country’s economic problems. The impact of the Great Depression hit all aspects of the exposed Polish economy hard. The government decided to stick to financial orthodoxy of a balanced budget and attempting to maintain the strength and convertibility of the Złoty. As a result few measures were implemented which could have alleviated the stresses on society. Attempts by the government to balance the budget were frustrated by rapidly falling revenues due to the depth of the economic down turn, so that severe cuts in the spending which may have helped the condition of the economy did not pay off.
The divergence of the prices of manufactured versus agricultural goods, the so-called “price scissors” which hurt the rural population, were blamed by the government on the cartels. Cartels managed to maintain product prices in spite of deflation in the macro-economy. Some legislation on cartels was passed and there is evidence it was enforced, but it came late and did little to improve conditions. There were some measures of debt relief for agricultural producers but these were inadequate for most peasants.
In December 1930 Piłsudski stood down as Prime Minister and was replaced again by his close associate Walery Sławek for his second term in the office. By January 1931 detailed descriptions of the experiences of the inmates held at Brześć Fortress had received wide circulation and caused revulsion against the government. Inmates had been beaten, given inadequate food, subjected to mock executions to intimidate them, and forced to carry out humiliating tasks like clean toilets. The regime defied the outrage of the political opposition, even going as far as to reward some of those responsible for the abuses.
In March 1931 the peasant parties responded to the severe hardships in the countryside and to the unfavourable political situation by putting aside their long-standing divisions and uniting to form a single party, the “People’s Party” (“Stronnictwo Ludowe”, SL). The internal divisions were forgotten in the face of the deteriorating rural economy and the movement became more militant. There were calls for the large estates to be expropriated without compensation.
In May 1931 Aleksander Prystor became prime minister. A socialist and one time member of the POW, he had participated in the seizure of Wilno, and had been in charge of a purge of anti-Piłsudski officers after the 1926 coup. Prystor was experienced in government having held a number of cabinet positions since independence.
On 29 August 1931 Tadeusz Hołowko, a close associate of Piłsudski who was a moderate on the Ukrainian issue, was assassinated by OUN militants at Truskawiec. Hołowko had been an advocate of Ukrainian rights and issues within the government and handled negotiations with ‘moderate’ Ukrainian leaders who were despised by the OUN as ‘traitors’. Hołowko’s assassination marked the beginning of an intensification of violence by the OUN. More assassinations were to follow.
In October 1931 the trials of some of the Brześć prisoners began. The charge was of planning a coup to remove the government by force. The accused did not include many senior members of the Centrolew alliance, such as party leaders or members of the ‘Consultative Committee’. However they did include, Herman Lieberman, the main prosecutor in the Czechowicz case, some five other members of the PPS. Witos the leader, and Kiernik of the PSL-Piast, and some members of the PSL-Wyzwolenie and the Peasant Party
The trials were intended to justify the Brześć arrests, but failed to produce any damning evidence. In spite of this all but one of the accused were found guilty and given sentences, which were increased on appeal, to three to five years.
Rather than face imprisonment some were allowed to go into exile including Witos, Lieberman, and three others. Witos took up asylum in Czechoslovakia in 1933 from where he became a popular critic of the regime in exile. This was not the end of the political trials, it was followed by a series of trials directed against the PPS.
From March 1932 the government was granted vast powers of legislation by decree. That same month the autonomy of the Universities was curtailed enabling the government to dismiss some 50 professors seen as opponents.
The normal business of running the country continued however. In the thirties the development of secondary education was encouraged by the reforms introduced by the Education Minister Janusz Jędrzejewicz, and later once he became prime minister, by his brother Wacław, serving under him. Janusz Jędrzejewicz was a Piłsudski–ite and originally a PPS member. Later he joined the BBWR, becoming its Vice-President. From 12 August 1931, to 22 February 1934, he served as minister of education. He introduced a reform of Poland’s educational system that came to be named, after him, the “Jędrzejewicz Reforms.”
The education reform was approved by the Sejm on March 11, 1932. It introduced compulsory education, and unified the credentials of schools at their various educational levels. The restructuring of primary and secondary education was introduced, with the stated aim to make access to education easier for children from poorer families and those in rural areas. It was not entirely successful, nevertheless, education is considered to have been a success of the Second Republic overall. By the time the Republic was destroyed the incidence of illiteracy had been substantially reduced.
Education in national minority languages was largely left to those communities. Although the state only rarely attempted to supress minority schools, state funds were openly directed in favour of Polish language schools. There was a dramatic fall in the number of Ukrainian schools. In Austrian Galicia there had been some 2,500, but by 1938 the number had fallen in Poland to just 461. Thus Poland looked less favourable to the minorities than the Austrian Empire had been, and was open to criticisms of chauvinism.
On 11 July 1932 the government used its powers of decree to unify the criminal codes of the various regions of Poland. On 1 December 1932 the government then used its powers of decree to unify the codes of civil procedure. Around this time the immovability of judges was temporarily suspended, ostensibly to help with the introduction of the new codes, but was misused to remove government opponents from the judiciary.
On March 15, 1933 the Jędrzejewicz, reforms were extended to cover higher education. The shortage of resources and high demand for education obviously restricted what was possible. Inevitably very few poor people had the opportunity to go on to higher education.
In the same month a uniform pattern of local government was introduced at the lower levels. It continued the trend of reducing the role of elected bodies and retained ‘indirect election’, in some areas.
At the end of March 1933 Dmowski’s “Camp for Greater Poland” (“Obóz Wielkiej Polski”, OWP) was banned nationally. The group was affiliated with the “National Party” (SN) the main party of the Endecja or radical right. OWP was accused of inciting violent attacks on Jews and had been banned in ‘Eastern Galicia’ in 1927 for this reason. Together, the SN-OWP claimed to have nearly a quarter of a million members and to be the biggest opposition political party. Affiliated groups called for boycotts of Jewish shops and businesses, and for the “Numerus Nullus” in higher education, meaning a complete ban on Jewish students entering Universities.
The year 1933 is considered to be the year that the effects of the Great Depression had fully manifested themselves throughout the Polish economy. The hardships were to continue till at least 1935-36. Poland was hit harder than many other countries by the ‘Great Depression’. The depression was severer for longer, probably because of the deflationary policies adhered to by the government, the economy started from a worse level of poverty in the first place.
The Polish government at this time adopted a conservative approach to borrowing and aimed to pay off all its foreign debt obligations. This won it praise from abroad, however this restricted capital investment by the state and probably contributed to prolonging high levels of unemployment. The official number unemployed rose dramatically from 185,000 in 1929 to 315,000 in 1931. However the figure continued to rise peaking and flattening out in the years 1936 to 1937 at a figure of around 470,000. In 1938 it was still nearly as high at 456,000.
However the conservative borrowing policy enabled the government to keep the Polish currency stable from 1927 onwards. Determined to maintain the peg of the Złoty to gold, in the years 1930 to 1934, the gold reserves fell substantially and foreign exchange reserves of the central bank were run completely down. This enabled the government to hold off imposing foreign exchange controls until 1936.
An advantage of the ‘Strong Złoty‘ policy, which was largely due to Kwiatkowski, was that it enabled Poland to build the confidence of foreign investors, and domestic businesses in the Polish monetary system. He rejected the option of joining the ‘Sterling Bloc’, in other words abandoning the Złoty. However a big disadvantage was that it impeded exports adding to low state revenues, poverty and unemployment. Many have seen this policy as the worst mistake in Polish economic policy of the interwar period.
Taylor (1952) claims that during this period Bank Polski did not in fact reduce its level of lending to the government and to the financial system, but that private banks failed to lend. This may be a manifestation of Keynes’ observation that making credit available will not get a country out of depression if no one wants to borrow because they see no prospects of getting a return on their investment. The index of investment fell from 100 in 1928 to only 33 in 1932, and by 1937 it had only recovered to 64.
Central bank data also show the money supply, in circulating notes, fell dramatically from 1928 to 1932 and was held flat till 1938. The failure of the central bank to expand the money supply in order to promote growth and investment was probably a reflection of the Polish government’s bad past experiences with hyperinflation. However other data showing a slow rate of circulation of money support the view that it was the demand for money which was low, and the central bank merely acted to meet this low requirement. Again a loss of business confidence has been seen in Keynesian economics as a reason for businesses not borrowing or spending during a depression.
From 1928 to 1932 industrial wages fell by almost one third. Agricultural labourers saw their wages cut by nearly half. Agricultural prices fell to practically cost price, small proprietor farmers were severely hit as from 1928 to 1932 the net income per Hectare of farm land fell from 214 Złoty to 8 Złoty. Many peasants reverted to subsistence farming to survive.
From 1931, the peak year, the value of transactions on the Polish stock exchanges fell to half their value by 1934 and remained flat till 1938. The private sector banks which had been in recovery and were beginning to grow in importance again were severely hit by the depression. Many banks which had seemed strongly capitalised and well organised went bankrupt. The result was the importance of state-owned banks grew enormously in relative importance.
The depression badly affected the government’s revenues which badly affected all government activities. There were attempts to balance the budget by drastic spending cuts at a time of deflation. Government spending was reduced from nearly 3 billion Złoty per annum in 1929 to 2.2 billion Złoty in 1932. This failed to balance the budget as the impact of the depression on the economy was so severe that state revenues fell faster.
The biggest impacts at first were on import duties raised, as imports of manufactured and semi-manufactured goods fell. The railway revenues also fell. The falls in revenues from taxation, state monopolies, forestry, post and telegraph actually lagged these. The result was large budget deficits for all but one year in the period from 1930 to 1935 inclusive. These deficits were not as extreme as in the first years of Polish independence, but they were large.
The impact of the depression on foreign trade was that as the depression deepened, the value of foreign trade greatly declined. The combined value of exports and imports fell from nearly 6 billion Złoty in 1929 to only 1.8 billion Złoty in 1933. However the fall in imports was more severe than the fall in exports causing the balance of trade to go into surplus during the depression years. In 1929 the trade deficit was about 300 million Złoty, in 1930 it turned into a surplus of 187 million Złoty, peaking at 410 million Złoty in 1931. The trade balance did not go back into deficit till the recovery was well under way in 1937.
One positive feature of Poland’s trade during these years was the success in diversifying the country’s trading dependence. A commercial treaty was signed with Belgium, while tariff conventions were signed with Sweden, Holland and Switzerland.
The effect of all this on the standard of living of industrial workers was less than on the peasantry. Although urban industrial workers were poor, half the workers in large and medium enterprises earned from 10 to 30 Złoty per week, this was much better than the earnings by small peasants and farm labourers as shown above.
Ironically real wages actually improved for industrial workers during the depression because although wages fell, the cost of living fell more. The index of real wage levels rose from 100 in 1928 to 132 in 1936. The reason for the improvement in real wages was probably due to the scissors effect with food and agricultural prices falling more than the prices of industrial goods. This would have a significant impact as census data indicate poorer people spent the largest portion of their incomes on food.
Many aspects of working conditions were protected by law such as the eight hour working day, the 48 hour working week with annual paid holidays. The data show that during the depression years no major industry reached an average of 48 hours worked per week, per worker. This is seen as evidence that ‘underemployment’ may have been used as a strategy to reduce job losses during the down turn.
If so this would have been a significant benefit to many, as those who did become unemployed faced serious hardship. The unemployment insurance systems in place were contributions based and were limited in the duration of the support they offered. One estimate is that fewer than twenty per cent of the registered unemployed qualified for relief payments of any sort, while government intervention on behalf of workers’ welfare was largely confined to state-owned enterprises. Thus welfare provision fell heavily on private charities and the self-help organisations linked to unions and political parties like the PPS and the NZR (“National Workers’ Union”), linked to the Endecja.
The realities of the depression for that majority of the Polish population who lived and worked in the countryside were grim. Poland was affected as other countries by the depression, but the impact on rural life there was more severe than most of the suffering in Western Europe.
The available data show that the depression had a severe impact on the wages of agricultural labourers, reducing them by about half from 1928 to 1933. For example the summer daily wage for an adult male worker fell from 5.6 Złoty per day in 1928, to 2.5 in 1933. These wage levels had not recovered by the outbreak of World War Two, though it is reported that general conditions in the countryside began to improve considerably after 1936.
The progress of land reform was choked off during the depression. Historically low land prices generally cause a fall in the volume of land sales as landowners speculate on higher future prices. The shortage of cash, debts and tight credit meant few at the lower end of the income sale were in a position to buy. In 1928 the government target for parcellation and land redistribution was exceeded with transfers of 228,000 hectares. However by 1933 that had fallen to just 84,000 hectares, less than half the government’s annual target. The annual target of 200,000 Ha was nowhere near reached again during the life of the Second Republic, though land transfers started to recover in 1937.
A serious problem which was to develop and persist, was that of peasant debt. Many of those peasants who tried to modernise their farm production actually suffered financially as a result. During the relatively prosperous period from 1926 to 1928 such peasants invested in fertilisers and machinery with the intention of increasing their productivity. They may have borrowed to purchase land. The advent of the depression then drove down agricultural prices so much that it more than cancelled out any improvements achieved. Peasants’ gross incomes fell and they were saddled with heavy interest charges and mortgages which they had to service. By 1936 a medium sized farm was worth less than half its value in 1929.
The government intervened to help by reducing interest rates and declaring a form of debt moratorium, but the help was insufficient. The government also granted credits for farmers to withhold crops from the market to prevent grain sales at distress prices.
Another irony was the failure of land reform to improve the situation. From 1919 to 1938 some 2.7 million Ha passed into peasant ownership, over one-fifth of the area belonging to church, state and private landowners was diminished and 734,000 new holdings were created. Yet despite this considerable achievement it did little to relieve rural poverty because of the rapid population growth which outpaced land reform. It was found that conditions in the countryside were actually deteriorating.
As poverty worsened in the countryside government subsidies to farmers were reduced, borrowers defaulted on loans and credit was suspended. Investment in machinery and other improvements stopped. Peasants had difficulty feeding their families, and clothing them to send them to school. Usury flourished. Drunkenness flourished. The Jewish moneylender and the tavern-keeper naturally became targets of resentment. Seizures of debtor’s property were violently executed and violently resisted. Political militancy grew.
‘Peasant Strikes’ broke out in February 1932 starting at Limanowa near Kraków, then spreading and reaching the countryside around Warsaw. Peasants refused to pay the tax levied on goods taken to market and demanded a reduction in the prices of the products of the state monopolies. The SL was blamed by the government and hundreds of protesters and SL activists were arrested.
Incidents of violence between the police and peasant militants started to occur, with a number of peasants being killed in the countryside near Krosno and Kraków. In a string of villages south east of Lesko in the Lwowskie Voivodship, there was a major conflict between the security forces and militant Ukrainian peasants.
The incident sometimes called the “Lesko Uprising” by socialists, ignited in late June 1932 and was forcefully put down by early July 1932. The exact causes are contested. A local aristocrat Count Jan Potocki of Rymanow is said to have been trying to recruit peasants to a ‘public works’ project intended as a ‘poverty relief’ measure during the depression. Peasants were to work on repairing and improving local infrastructure such as roads, bridges and schools. A rumour spread among the peasants of the villages around Lobozew Dolny that it was an attempt to turn them back in to serfs. Both Uniate priests and Ukrainian Communists have been blamed for this hostile reaction.
Violent clashes broke out between the police and militant peasants. The peasant unrest spread from the county of Lesko to the surrounding counties of Sanok, Dobromil and Turka. Both police and military units, including a squadron of the Polish Airforce were dispatched to break up the demonstrations. It is reported that some 5000 peasant protestors were involved in nineteen different villages. A total of eight hundred were arrested according to one source. Figures differ, Davies (1981) cites six killed and three sentenced to death for incitement.
Davies (1981) also reports that during 1933 there was a running conflict between the police and militant peasants in the counties of Rzeszów, Lańcut and Przeworsk in the voivodship of Lwowskie. He cites scores of deaths, hundreds of police casualties, and thousands of arrests during this unrest. It seems the authorities were successful in ‘pacifying’ the countryside in this area by 1934.
There was a relative hiatus in the militancy of Polish peasants for the next three years, though unrest among the ethnic minorities was a chronic condition. SL was banned and Juliusz Poniatowski, a former PSL-Wyzwolenie member, was appointed to the Ministry of Agriculture, but his solutions to the problem of rural poverty, to increase the rate of industrialisation, could not bring fast results. Thus in 1937 there would be another large outbreak of militancy among the Polish peasantry.
On the 10 May 1933 Janusz Jędrzejewicz became prime minister. This signalled a slight liberalisation with a majority of civilians as opposed to military men in his cabinet. One issue this government attempted to deal with was the costs and difficulties of dealing with peasant debts. In 1933 and 1934 the “National Land Bank” had to absorb a lot of the costs of handling peasant debts. This caused the bank to have to draw on its reserves and reduce its level of capitalisation.
In 1933 a new institution was set up, the “Acceptance Bank” (“Bank Akceptancyjny”). Its main purpose was to grant credits to those institutions absorbing the costs of handling short-term peasant debts. It was wholly owned by state-owned banks and other government institutions.
On 7 March 1934 the Tariff War with Germany came to a final end. Earlier attempts to normalise the trade situation between the two countries were undermined by the impacts of the depression on trade and Germany’s maintenance of high tariffs in response. However on this date the “Zollfriendensprotokoll” was signed which formally removed the restrictions on trade.
In politics the right-wing gave birth to a new radical party. In April 1934 a large part of the ‘young’ faction broke away from the National Party to form the “National-Radical Camp” (“Obóz Narodowo Radykalny”, ONR). It was formed at the behest of former OWP members, probably to replace their organisation which had been banned. The ONR modelled itself on Italian fascism.
In May 1934 Leon Kozłowski became the prime minister with another military dominated cabinet. Kozłowski had been Minister of Agriculture from 1930 to 1932. He was a former legionary but not one close to Piłsudski.
In 1934 to 1935 the economy was still in a dire condition. In 1934 the index of industrial production was still only 79 as compared with 100 in 1928. The rural economy was still in a desperate state. In 1934 to 1935 the annual net income per hectare of farms sized two to fifty hectares was still only 18 Złoty, barely one week’s wages for an agricultural labourer. For farms smaller than two hectares it was worse, and these represented one third of all holdings. In 1933 less than 84,000 Ha were parcelled out and redistributed, well below the government target of 200,000, and the rate of land transfers was still falling.
In the summer of 1934 the security situation deteriorated and the government reacted harshly. On 15 June 1934 the Minister of the Interior, Colonel Bronisław Pieracki was assassinated by the OUN. This led to government reprisals. Summary courts were set up to prosecute Ukrainian nationalists accused of violence.
In July 1934 an internment camp was opened at Bereza Kartuska in Poleskie voivodship to accept those arrested on suspicion of political violence. It was to get a notorious reputation. Detainees could be held without trial, and without even being formally charged for an initial period of three months subject to indefinite extension. In time stories of mistreatment and torture of prisoners would emerge.
Initially the camp held about 100 inmates but the number interned grew reaching about 800 in 1938. Records indicate a minimum of 3,000 different prisoners passed through it. Some estimates claim a figure of up to 10,000. Initially most inmates, the majority, were communists, followed by Ukrainian nationalists, and some far right Polish extremists. The prison population varied over the years with the changing political and security situation.
The assassination of Pieracki seems to have galvanised the government and UNDO into reaching an agreement. In March 1935 an agreement known as ‘Normalisation’ was reached between the UNDO and the Polish government. UNDO co-operation with the government was to be rewarded with a guaranteed quota of seats in the Sejm and the Senate. The position of ‘Speaker of the Sejm’ was to be given to a Ukrainian, and there was to be the release of some prisoners. The state also extended some financial support to Ukrainian co-operative societies.
However these measures only applied to the Ukrainians of ‘Eastern Galicia’ and not to those of ‘Volhynia’ which caused a political split within the UNDO. Furthermore, attempts by the Ukrainians to build on this agreement to get greater concessions got nowhere leading to disillusionment.
Meanwhile in the field of foreign trade there were some successes. On 4 November 1934 an agreement establishing a limited ‘most favoured nation’ basis for trade between Poland and Germany came into force, valid for one year but with provisions for automatic extension and opportunities for revision. While in 1935 an ‘Anglo-Polish Trade Agreement’ was reached, and a commercial convention was also reached with Canada.
In March 1935 Walery Sławek became prime minister again, but for the last time. On the insistence of Piłsudski, Sławek retained all the ministers from Kozłowski’s cabinet. The chronic effects of the prolonged depression were becoming clear. The role of the state in the economy increased, as when much of private industry became unprofitable it was taken over by the government. In 1935 of the total capital of joint stock companies in Poland most was either foreign owned (52 per cent), or state owned (42 per cent).
The credit and banking system was also dominated by the state. Thus the Polish ‘capitalist class’ was largely financially wiped out by the depression. Hence the view sometimes expressed, that Poland had become a ‘state capitalist’ economy.
As Piłsudski‘s health deteriorated measures were taken to ensure the continuity of the regime. On 23 April 1935 a new constitution was adopted by parliament. The procedure was clearly illegal as only a simple majority was required rather than the two thirds majority stipulated by law.
It gave a dominant position to the president who was elected for seven year terms by universal suffrage chosen from just two candidates, one chosen by the out-going president, the other chosen by an electoral college (composed mostly of members chosen by parliament). The powers of the President were increased with more legislation by decree, a veto over measures passed by the Sejm, the power to appoint the prime minister, who was still accountable to parliament, and the power to nominate the Commander-In-Chief of the armed forces.
The visible aim of this constitution was to perpetuate the hold on power of the Piłsudczycy. In practice this constitution established a collective dictatorship and dispensed with the safeguards normal in parliamentary democracies.
On 12 May 1935, not long after the adoption of the new constitution Piłsudski died. His illness had been concealed from the public so his death came as a shock to many. He was given a magnificent state funeral and a hero’s tomb in the Wawel Cathedral in Kraków.
POLAND’S BIG PUSH (May 1935 to September 1939)
Piłsudski’s death opened up a whole series of issues concerning the maintenance of the regime. From now there would be no one, over-arching authority figure to unite the party and factionalism would result as well as a gradual shifting in the political complexion of the governments. The most radical departure would be in economic policy where a whole new experiment would begin.
The first problem was the succession to the presidency. Piłsudski had named the current prime minister, Sławek as his choice for the next president. However Sławek is reported to have been too deeply affected by the death of his close friend to be ready to assume the role. In the event Mościcki stayed on.
Meanwhile the crucial military posts were filled according to Piłsudski’s recommendations. General Tadeuz Kasprzcki was made “Minister of War”. He had been deputy minister for war since 1934. The most important post of “Inspector-General of the Armed Forces”, who was also the designate “Commander-In-Chief”, went to General Edward Śmigły-Rydz, a close colleague of Piłsudski before 1914. Śmigły-Rydz had been a senior officer in the Legions and a commander of the POW. He served briefly as Minister of Defence in the short-lived Daszyński government of November 1918. From 1919 to 1921 he had held various senior posts in the army.
Śmigły-Rydz had not supported the May 1926 coup and was not one of the inner-circle of Piłsudczycy, thus he was relatively politically ‘untainted’. It seems likely that Piłsudski‘s choice of Śmigły-Rydz was motivated by a desire to depoliticise the Army. It is said that Piłsudski had not trusted Śmigły-Rydz with political duties since he had criticised him for participating in the Daszyński cabinet, hence he had been kept out of politics.
On 8 July 1935 in spite of strong resistance from opposition parties and some sections of the government camp, a new electoral law was adopted. The law made the free selection of candidates virtually impossible and enormously increased the control of the regime over elections.
In the Sejm proportional representation was abandoned, instead the country was divided into 104 two-member constituencies. Candidates to face election were nominated by a ‘special assembly’ in each constituency. This ‘special assembly’ was composed of local government bodies, economic organisations, such as the local chamber of commerce, and professional associations. Elections for the Senate were organised on an indirect basis.
On 8 September 1935 the first elections were held under the new electoral law. Opposition parties boycotted the elections because the system gave the government too many opportunities for ‘administrative interference’ to bias the results. Only some national minorities’ parties and a break-away faction of the Peasant Party, which had an arrangement with the government, participated.
The boycott had a significant impact on voter turnout. Overall just under half of eligible voters turned out or cast a valid vote. In the 1930 elections, despite the circumstances surrounding it, three quarters of voters had ‘turned out’. In many prosperous western areas of ‘Poland A’, where it is thought to have been more difficult for the government to manipulate voting, only around one quarter of voters cast valid votes.
The disappointing election intensified divisions within the Sanacja, and hardened the attitude of President Mościcki, who blamed Sławek for the debacle of the new electoral law and the poor elections. President Mościcki was concerned about the impact of the continuing slump on the country and wanted to work with Kwiatkowski to adopt a more radical economic programme. He knew this would be opposed by Sławek who supported Piłsudski‘s long-term policy on the economy.
President Mościcki was able to force Sławek to resign as prime minister. Mościcki also succeeded in the face of opposition from the inner-circle of Colonels to persuade a younger Piłsudski–ite, Marian Zyndram-Kościałkowski to form a cabinet on 11 October 1935.
Kościałkowski was known as a liberal when he served as Governor of Białystok Province and as Minister of the Interior, and was a choice welcomed by many on the left and centre. Kościałkowski came from a szlachta family living near Kovno now in Lithuania. He had served in the POW during the independence struggle, and had been the leader of the radical left peasant party PSL-Wyzwolenie till 1925. He had been a close colleague of Bartel and had formed the ‘Party of Labour’ with him. Kościałkowski formed a cabinet excluding the ‘Colonels’ as a gesture to acknowledge public dissatisfaction with the performance of governments during the economic hardship.
On 30 October 1935 the BBWR was dissolved. It seems this was at the initiative of Sławek. It is not clear why he did this but there was an obvious lack of public appeal, the party was increasingly splitting between radicals and conservatives anyway. He may have judged that the new electoral system made the BBWR obsolete.
Some commentators see the dissolution of the BBWR as marking the end of the ‘Colonels Group’ as a force in politics. Although the ‘Colonels’ were united in their opposition to the new cabinet, they agreed on very little else, thus there was an attempt to find an authority figure to replace Piłsudski, a ‘new Pope’ as Mościcki called it.
Increasingly the idea of Śmigły-Rydz was being promoted, for example by the government associated paper ‘Gazeta Polska’. The personality cult of Śmigły-Rydz was now propagated, for example by the ‘Kurier Poranny’ newspaper. The special role of the army in Polish political life was played up and Śmigły-Rydz was depicted as a champion of radical social change.
Some describe him as more of a conservative than a radical, however Śmigły-Rydz was untainted by association with the ‘inner-circle’ of Colonels. In addition Śmigły-Rydz was very quiet about his own personal political views, which meant it was easier for his popularity to spread, even into opposition circles.
In politics the rise of Śmigły-Rydz, who strongly opposed the formation of the Kościałkowski government was a threat to the position of the President. So in December 1935 Mościcki proposed a deal with Śmigły-Rydz that the government be allowed to continue till the budget was passed, then together they would co-operate in putting together a new cabinet. Apparently Kościałkowski was unaware of this arrangement. As it was, despite Kościałkowski‘s attempts to court the left and centre, they soon became disillusioned with him. For example a January 1936 amnesty for political prisoners excluded those in Breść or Bereza Kartuska.
There were signs in 1936 that Poland was following the rest of the world into economic recovery. The index of industrial production was rising. In 1934 it had been only 79, but in 1935 it rose to 85, then rose again to 94 in 1936. It had still not recovered to the level of 1928 when it was set at 100. It has been suggested that the devaluation of the US Dollar caused some of the funds ‘hoarded’ in this form to be released, stimulating investment. The government budget was again beginning to move into surplus. It had not had a strong surplus since before the depression struck in 1929.
Transfers of parcelled land had started to rise again from a trough in 1935 they nearly doubled in 1936 to 97,000 hectares, but were still barely half the government target. The value of exports started a weak rise too, from a trough of 925 million Złoty in 1935 to 1,026 million Złoty in 1936, accompanied by a parallel rise in imports which started earlier, from 1934. However the official figures for unemployment continued to rise from 403,000 in 1935 to 466,000 in 1936.
The recovery from the ‘Great Depression’ around the world led to new ideas in economic policy being widely accepted, that the state could play a much larger role in managing the economy. This played out in different ways in different countries such as the USA, Germany and Italy.
In October 1935 when Kwiatkowski had been appointed “Minister of Finance” in Kościałkowski‘s cabinet, it did not mean an immediate switch in policy. He had been generally quite orthodox in his economic views, but was particularly competent at executing policies. At first Kwiatkowski continued to try to balance the budget but with greater success and acted more vigorously against the cartels.
One political issue which caused social tensions, and was being addressed at this time, was the scissors effect which hurt the rural majority. The government blamed cartels for the high prices of manufactured goods relative to agricultural prices. By 1935 farmers had to sell double the amount of produce to purchase the same amount of manufactured goods as in 1929.
The activities of cartels were regulated under the ‘Cartel Law’ of 28 March 1933, amended by presidential decree on 27 November 1935. Control of the cartels was exercised through the cartel register of the “Ministry of Commerce and Industry”.
In connection with this, the laws on cartels did include provisions to protect the public. All cartel agreements had to be registered with the Ministry within fourteen days of their conclusion upon a penalty of 50,000 Złoty. Officials of the ministry had powers to inspect all books and records of the cartels. The minister also had the power to dissolve a cartel. The minister was allowed to dissolve a cartel if he deemed it as ‘harmful to the public interest’, or found that it was charging ‘economically unjustifiable’ prices.
Cartels had a right of appeal to the “Cartel Court” composed of three judges of the Supreme Court, one government representative and one “Chamber of Commerce” expert in industrial and economic problems. There is evidence that these powers were in fact used, for example during 1935 to 1937 in the deflationary macroeconomic climate certain cartels were seen to be maintaining prices artificially. In December 1935 79 out of 154 cartels that came under scrutiny were dissolved if they did not agree to lower prices voluntarily.
The government had the further sanction of suspending tariffs on foreign imports if the cartels proved unresponsive. It was found though that reductions in prices due to tariff reductions were not being passed on to consumers. Unsatisfied with the response of the market the minister even threatened in his budget speech to introduce a new regime of profit controls.
In the end the minister dissolved a total of 118 cartels, mainly for maintaining ‘economically unjustifiable’ prices. Many cartels opted to dissolve voluntarily, before the ministry intervened, so the impact of the regulatory system was probably greater than revealed by the above statistics.
A number of factors were to force a change in economic policy. Despite the great efforts to balance the budget this goal had been elusive but the social costs of the policy were severe. In the spring and summer of 1936 industrial unrest was growing. The strong Złoty policy had not been rewarded by sufficiently large inflows of foreign capital. In addition the poor global economy meant exports were weak and failed to be a stimulus to growth to the domestic economy.
There was a dispute between many of the military led by Śmigły-Rydz, who wanted to follow Germany’s example of planned inflationary expansion to build up the defence industries, and Kwiatkowski who was more cautious. In March 1936 the government launched an initiative which was to raise the level of industrialisation of Poland significantly. The programme became called the “Central Industrialised District” (“Centralny Okręg Przemysłowy”, COP). The programme was part of a vision to transform Poland from a predominantly agrarian economy to an industrial one, and to eliminate the imbalances between the agricultural economy and the industrial one.
The COP was centred on the confluence of the rivers Vistula and San, roughly at Sandomierz, and encompassing some 60,000 square kilometres. This region had a population of about 5.5 million. It was a very poor area with a dense population of peasants, rural over-population was estimated to be about 400,000.
The region had certain natural advantages though, Kielce was rich in minerals, and Lublin was agriculturally rich. It was not until 1936 that the state had sufficient funds to intervene in the region, there had been much more limited attempts at development of the region some eight years earlier.
The COP was intended to help with a number of problems. Firstly the need to develop strategic heavy industries and an armaments industry to enable strengthening and modernisation of the military. This would also reduce Poland’s dependence on arms and ordnance supplies from abroad.
To help reduce the regional development imbalance between ‘Poland A’ and ‘Poland B’. It would help create an industrialised belt running west to east from Silesia to Volhynia.
To create industrial jobs to siphon off the surplus ‘underemployed’ rural population alleviating the rural underdevelopment problem. The location in the ‘security triangle’ between Kraków, Kielce and Lwów also suited military strategy, by being farther distant from the borders with Germany than the already well developed industrial regions, and also distant from the Soviet border.
The state investment was intended to ‘kick start’ private investment. It was hoped that the development of all the infrastructure needed for industry would attract private investment in new industries in the region alongside the state-owned ones. The investment should stimulate the growth of industry generally.
The chief planner was Vice-PM and Minister of Finance Eugeniusz Kwiatkowski. The plan was for the state to invest in roads, railways, water supplies, an electricity distribution grid, and gas supplies. All the infrastructure needed for the operation of a range of industries. In addition, to attract private industries a range of incentives were provided to private investors including tax exemptions, credits, grants et cetera. The intention was for the area to become a centre for public, private and joint public-private industrial enterprises.
The projects included as well as transport infrastructure such as roads and railway lines, energy generation and distribution infrastructure. Hydroelectric power stations were to be built, dams were to be constructed at Roznow and Porąbka. An extensive electricity distribution network was to be built, intended to be a skeleton around which electrification of the whole country could be completed. Gas supplies to the region were to be delivered by a 300 kilometre pipeline running from the oil and gas fields of ‘Eastern Galicia’. A large steel manufacturing complex was to be built at Stalowa Wola, and various chemicals factories producing cellulose and synthetic rubber. Others would be built for manufacturing machine tools and agricultural tools. At Mielec a large aircraft factory was to be built, and at Lublin a truck factory building vehicles under licence from Chevrolet. There were various other weapons and munitions factories to be built.
The project was to absorb some 60 per cent of the total government investment spending on infrastructure over the last years of the nineteen thirties, and provided 100,000 new jobs. By the time war broke out much of this development had been constructed or was under way.
The aim was to try to finance the project as much as possible from domestic sources of capital. However a French loan of 2.6 billion Francs helped finance the plan. France wanted to counter-balance the increasing military power of Hitler’s Germany. It is estimated some 2.4 billion Złoty were invested just in the COP region before Poland was invaded.
Inevitably the state-led industrialisation plan had ‘knock-on’ effects on other aspects of the economy and economic policy. The intensification of industrialisation demanded the importation of expensive capital equipment such as tools and machinery and numerous raw materials. For example Poland did not produce manganese, nickel, copper, tin, aluminium, rubber or cotton. The iron ore supplied domestically was of low quality and wool produced domestically was in grossly insufficient amounts. The problem of paying for increased imports by increasing exports was hampered by the fall in prices of agricultural export commodities since the depression, and the government’s ‘strong Złoty’ policy which made Polish exports uncompetitive.
To address these circumstances the government abandoned laissez faire trade policies. From April to July 1936 the Polish government implemented a series of measures including exchange controls, controls on imports and exports and the suspension of foreign debt repayments.
At the end of April 1936 the use of US Dollars domestically was banned, such currency could only be legally exchanged at the Bank Polski. US Dollars had been widely used in Poland as a way of hoarding value. This was followed by prohibition of the free purchase or export of gold or foreign currency. All foreign exchange ownership was nationalised and became the purview of Bank Polski. The markets abroad interpreted this as a way of propping up the value of the Złoty by retaining the country’s gold reserves which had been steadily draining away.
The Polish government now organised its trade as a series of bilateral clearing agreements, seeking to balance trade country by country. By 1938 ten such agreements covered 28 per cent of Poland’s foreign trade. In 1936 Poland had a trade surplus of 23 million Złoty, but in 1937 this fell rapidly to a trade deficit of 58 million Złoty. In 1938 there was a further deterioration to a trade deficit of 115 million Złoty. However by 1938 Poland’s trade was quite diversified. The three biggest trading partners, in descending order, Germany, Great Britain and the USA, represented just less than half of Poland’s trade, the rest being widely spread over numerous other trading partners.
The benefits of any of these policies could not come quickly enough to prevent unrest. During 1936 the continuing economic depression was increasing political radicalism and working class and peasant militancy. In the spring of 1936 there was a serious outbreak of labour unrest. Sit-In strikes led to violent clashes between the police and workers in Kraków, Częstochowa and Lódż, in which over fourteen people were killed. The unrest led Śmigły-Rydz to conclude that the Kościałkowski government was inadequate to deal with the country’s problems and must go.
The formation of a new cabinet was delayed by disputes between the factions over who should serve as prime minister. In the end the compromise candidate of Felicjan Sławoj-Składkowski was appointed on 15 May 1936. He was not seen as any one’s first choice and was intended as a temporary stop-gap, however in the end he served longer than any other prime minister of the Second Republic.
Sławoj-Składkowski was the only interwar prime minister to be a protestant, being a Calvinist. He was both a soldier and a qualified doctor. He had served in the Polish legions and had been head of the military health service. He had served as a Minister of the Interior in 1918 to 1929 and in 1930 to 1931, and as Minister of War from 1931 to 1936. He was not seen as politically ambitious and so was acceptable to both camps. The rest of the cabinet posts were shared out between those favoured by Mościcki or Śmigły-Rydz.
Over the following months the political influence of Śmigły-Rydz increased. Składkowski himself promoted the idea of Śmigły-Rydz as the successor to Piłsudski. Śmigły-Rydz now tried to get a wider base to his support. On 24 May 1936 he made a speech calling for national unity in the face of the external dangers facing Poland, which was apparently well received. He has been accused of trying to use his peasant origins to court Peasant Party supporters but he found it difficult to compete with the popularity of Witos who was still in exile.
In mid-June 1936 Mościcki attempted to challenge the position of Śmigły-Rydz in the cabinet but failed. So instead there was an attempt by Mościcki, reportedly based on an idea of Kwiatkowski, to make Śmigły-Rydz more co-operative by giving some official recognition to his ‘special role’ in the state. Thus Składkowski issued a memo on the 15 July 1936 which stated the “Inspector-General” was second only to the president in the state. This was in contradiction to the constitution which placed the prime minister and inspector-general of the armed forces as equally second beneath the president.
There were shifts taking place in the political landscape of the opposition during this time. On the left the PPS was trying to build bridges with left-wing elements in the government. They had favoured Kościałkowski as prime minister and so did not encourage the workers’ militancy during his tenure. This put them at odds with the Communists, with who they had been forging new links. Eventually, by the end of 1936, the relationship with the revolutionary left was severed and the PPS relied more on a close alignment with SL and the “Bund”, the Jewish socialist party. The popularity of the PPS was rising again, its high point may be taken as the Łódź municipal elections of September 1936. Here the PPS and the Bund with Communist support won an absolute majority of seats on the City Council.
The Peasant Party SL, also grew in influence and became more radical. The youth section of the party was calling for more determined action against the government, but this was resisted by the leadership. In the summer of 1936 there were violent clashes between striking agricultural labourers and blacklegs. The transport of produce to market was also blocked in the Zamość area and in Wolyńskie. There were increasing demands for a national peasants’ strike.
For their part the radical right apparently saw the death of Piłsudski as opening new opportunities to gain more influence in government by courting the right-wing elements. The National Party SN, was now dominated by the younger followers of Dmowski who were markedly inclined towards fascism. The party used anti-Semitism and the so-called “Jewish Question” to gain followers and embarrass the government. There was street violence. In December 1935 alone the police had reported 26 cases of assaults on Jews by nationalist vigilantes, including one death, 34 cases of breaking the windows of houses owned by Jews, and six cases of destroying Jewish property
The party became split over tactics, with the more conservative members opposing these criminal methods. Some elements of the National Party were seeking an accommodation with the government. During the labour unrest of spring 1936 the National Party tried to align itself with the government against the left, the party executive instructing its activists not only to avoid clashes with the police, but to assist them in dealing with the left. Splinter fascist groups, most importantly the ONR-Falanga of Bolesław Piasecki, also tried to court rightists in the government. It is reported that such factions had little popular support in the country.
In the economy however, attempts to create jobs through a “Four-Year Plan” of public works including building transport infrastructure such as railways, roads, bridges and canals, faced financial problems. By June 1936 the gold reserves of “Bank Polski” had shrunk to only 380 million Zloty. This was thought by the government to be inadequate to meet foreign debts, and finance the needs of the “Four-Year Plan”. The transfer abroad of sums due to foreigners holding government bonds or other Polish securities was suspended.
The value of Polish securities thus fell in the New York and London markets. Payments on these securities had to go through ‘blocked’ accounts, payable only in Poland. Settlements abroad were to depend on whether the trade balance with a country was favourable or not. The creditworthiness of the Polish government internationally was shaken. Thus Poland had to become more self-reliant for capital investment.
In the end fate intervened as in the autumn of 1936 Poland received a French loan of 12.5 million pounds sterling, enabling the initially more modest ‘Four-Year Plan’ set out in July 1936 to be expanded to a ‘Six-Year Plan’. Larger targets were thus set, with a concentration of government investment in the new “Central Industrial Region”. Government investments were concentrated in the armaments industries, such as the Azote Factory at Mościce, a complex to the north east of Tarnow, and the weapons factories. Also from 1936 to 1939 an electrification campaign increased power supplies by 600 per cent. However this was not as much as was achieved in Germany or the USSR.
Meanwhile under Śmigły-Rydz the military were to be reorganised and rearmed. The General Staff under General Stachiewicz was given the central place within military planning and organisation. It has been alleged that under Piłsudski they had been side lined in favour of Piłsudczycy.
Rearmament was supported economically by the ‘Six-Year Plan’ to build up the Polish armaments industry, however despite moderately heavy investment being made there was not time before Poland was invaded for much increase in strength to be achieved.
A plan was also presented to Śmigły-Rydz for the reorganisation of the armed forces from August 1936 to December 1937. The on-paper strength of the armed forces was thirty infantry divisions (plus 9 in reserve), eleven cavalry brigades, ten armoured battalions, and ten air force regiments. Equipment was in short supply, there were shortages of tanks, trucks and aircraft. Planning was largely based on the threat from the USSR, plans for operations in the west were rudimentary.
It seems that following Śmigły-Rydz‘s speech of 24 May 1936, which focussed on the issue of national unity, there were attempts by leading members of the regime to form a new government party to replace the defunct BBWR. The formation of a new government party was entrusted to Adam Koc, a younger Piłsudski–ite, and a once leading figure in the POW. From 1923 to 1926 in the run up to the coup, as a regular officer he had been an important link between Piłsudski and his supporters in the Army. Since 1928 he had been a deputy to the Sejm and from 1928 to 1930 editor of the pro-government newspaper Gazeta Polska. In 1930 he became under-secretary in the Ministry of Finance and in 1936 deputy-director of Bank Polski.
From May 1936 till early 1937 a process of negotiation and debate took place to agree on a common basis for this new party. There were attempts to attract the support of the radical right opposition. At the same time there was a failure to get agreement with the Peasant Party SL, due to conflicts over the new electoral law, the pace of land reform, and the demand for an amnesty for Witos who was still in exile abroad on pain of arrest should he return to Poland.
On 21 February 1937 the programme of the new pro-government bloc was made public. It became known as the “Camp of National Unity” (“Obóz Zjednoczenia Narodowego”, OZN, usually dubbed “OZON”). Its completion had partly been delayed because of clashes between one of the major architects of the new party, Bogusław Miedziński, a Piłsudski-ite and editor of Gazeta Polska who was more radical, and Śmigły-Rydz who was more conservative.
In the end the party programme emphasised a central role for the military in the state, with an attempt to build a ‘cult’ around Śmigły-Rydz as the ‘heir to Piłsudski’. It was nationalistic and conservative. It reaffirmed the 1935 constitution. It supported the new ‘expansionary’, state-led industrialisation policy in the economy. Due to the exclusion of the Peasant Party the land reform issue was side lined in the party programme.
With regards to the minorities it veered to the right with a Polish chauvinist complexion. ‘OZON’ has been accused of being intensely anti-semitic. It has been reported the party adopted a list of “Thirteen Theses” modelled on the Nazi’s “Nuremburg Laws”, which sought to deprive Jews of their rights as citizens with a view to ultimately expelling them from the country. Most of these ideas never became law, but remained principles of the party. It is also reported that Jews were not welcome to join the party.
In the following months its membership grew rapidly, it absorbed a number of parties including Christian groups, some splinter groups from the Peasant Party, the National Workers’ Party, some radical-right splinter groups from the Endecja, and some non-political military-Piłsudski-ite elements. Significantly no major party outside of the Sanacja joined.
Inevitably within ‘OZON’ many on the left and centre were dissatisfied as the government party was taking a strong tilt to the right. Adam Koc even went as far as to put the ‘Fascistic’ ONR-Falanga of Piasecki in charge of the ‘OZON’ youth organisation. Some saw the changes as warning signs the aim was to re-orient the government party towards Fascism and possibly a one party state.
Yet despite this ostentatious display of government unity two opposing political currents still ran beneath the surface of the ruling regime. One current was for example, represented by members of the ‘Club 11 November’ which supported the introduction of a Fascist, Totalitarian, one-party state. This club was patronised by Śmigły-Rydz, Minister of Justice Witold Grabowski, and the leadership of the ‘OZON’ Youth group. This group was trying to win more support from the nationalist right-wing, such as followers of the Endecja. The other current was a more liberal one, led by President Mościcki and Kwiatkowski.
In 1937 the economy continued its recovery. Kwiatkowski was able to run a modest budget surplus despite the substantial increases in government spending. During 1936 and 1937 there was a remarkable recovery from the depression seen in agricultural exports. This was due to rising global market prices and increased domestic demand resulting from the government’s industrialisation drive. However in 1937, overall trade went into deficit from a small surplus in 1936.
The trend in parcellation and land sales continued steadily up but was still just above half the official target of 200,000 Ha per annum in 1937. These improving conditions were still to be felt by the mass of the rural population.
The trend towards the increasing role of the government in the economy continued with the state intervening in the domestic trade in agricultural commodities. In 1937 wholesale and retail prices were fixed by the government for cereals, meat, milk, lard, and butcher’s pork. In the important market for cereals the “National Industrial and Cereals Company” was an official organisation set up with the sole right to export the wheat surplus. It also had a role in regulating the distribution of grain in the internal market. Loans were now made available on special terms against a farmer’s crops for wheat, hops or flax fibres. This was to prevent them having cash flow problems which might reduce production and create shortages which could lead to volatile supplies and prices.
In the late nineteen thirties tensions were running high in the countryside. Disillusioned by the lack of progress the SL became more radical. The SL was continuing to expand its membership and influence despite its branches being closed and its more prominent supporters being arrested such as the historian Prof. Stanisław Kot. Thus in 1936 to 1937 rural disturbances started again.
The biggest single event was the peasants’ strike of 16 to 20 August 1937. On 15 August 1937 a ten-day peasants’ strike was called. It is sometimes called the “Great Peasant Uprising” (“Wielki Strajk Chłopski”). Peasants refused to allow produce to be transported into towns. It was blatantly political calling for the ‘liquidation of the Sanacja system’, an amnesty for the Breść exiles, the re-establishment of democracy, and a change in foreign policy. It was carefully timed to coincide with the seasonal depletion of food stocks in the towns and cities.
The direct confrontation with the government has been seen as a sign the Peasants’ Party SL, had been becoming more radical, and Witos ‘s protégé Stanisław Mikołajczyk was having more influence. It is estimated that several million peasants participated over some twelve Polish voivodships (Provinces). The strike was strongest in ‘Southern Lesser Poland’ (Małopolska), where the SL had good networks. It was not just observed by Polish peasants but also by some Ukrainians and Belarusians. In support some one-day sympathy strikes were organised by urban workers in a number of towns.
In practice the strike was most strongly observed in and around Jarosław county in Lwowskie voivodship. The strike started peacefully but then violence broke out, it is alleged, as strike breakers were attacked by groups of ‘enforcers’. The police are accused of coming down with violent tactics.
On 17 August there was fighting between peasant activists and police in Jarosław county. A peasant was then killed in a separate incident at Grybów in Krakówskie voivode, which led to a blockade of the route between Lwow and Kraków by angry armed peasants. One police commandant described the local economy as ‘paralysed’ by the action. It seems the police forces were overwhelmed in places by the scale of what had turned into an uprising. On the 20 August the SL leadership called off the strike five days earlier than planned.
Some 5000 peasants were detained by the police of whom 617 were arrested. Police are accused of opening up with firearms as well as using batons et cetera. Some 44 peasants were killed, 15 of these came from one village, Majdan Sieniawski, in Przeworsk county. The largest numbers of arrests by county were in Jarosław, Brzozów, Rzeszów and Przemyśl. Some 700 farms were ‘pacified’ by violent police tactics according to a doctrine of ‘collective punishment’. It is claimed women and children were beaten by the police. It is reported that over 100 police were also injured during the violent incidents. In December 1937 in court at Przemyśl, a total of around 1000 people were sentenced to up to five years in prison.
As autumn approached another political confrontation blew up, this time over the control of education. On 30 September 1937 Prime Minister Składkowski suspended the executive committee of the Piłsudski–ite “Union of Poland Teachers”. Its affairs were taken over by a government commissioner Pawel Musioł, who was a leading member of the Fascistic ONR-Falanga. This was apparently at the prompting of Adam Koc who was trying to counteract what he claimed was growing influence of left-wing elements on the executive committee of the “Union of Poland Teachers”. This triggered strong protests both inside and outside the government from leftist elements.
During 1936 to 1937 the government was turning more right-wing with Fascist overtones. Relationships with the minorities were deteriorating. Notable was the down turn in the relations between Poles and Jews. The regime increasingly flirted with anti-semitic posturing. This may have been to win over younger, more radical nationalists, or to divert public attention from other economic and social problems.
The campaigns by nationalist activists for a boycott of Jewish shops and stalls in small market towns became more violent. In 1936 and 1937 there were incidents similar to pogroms. Although the government officially condemned the violence it did not actively oppose the boycott.
The most notorious single incident was an outbreak of communal violence at Przytyk in Radom county, Kielce voivodship on 9 March 1936. The economic stresses of the depression may have contributed as Poles, seeking to penetrate areas of commerce previously predominantly Jewish, began a campaign to boycott Jewish traders who were already themselves suffering difficult business conditions.
As with so much in Polish history the facts are contested. It has generally been described as a pogrom in which the Polish population violently attacked the Jews. Some Polish historians put the blame on Jewish traders angry at the boycott and on overzealous Jewish ‘vigilantes’. However it appears that running battles broke out between Poles and Jews on market day involving around a thousand Polish villagers. It is reported that a shooting incident during the riots, in which one Polish peasant was shot by a Jewish man, ignited the Polish crowds to attack Jewish market stalls and chase people into houses.
According to reports a number of Jews were killed and around two dozen injured. The official record stated three people killed, one Pole and two Jews, and twenty injured. Some eleven Jews and thirty nine Poles were convicted in court and jailed.
In universities Jewish students were also subjected to harassment. In the academic years 1935 to 1936 and 1936 to 1937 most universities had to be closed for short periods because of incidents of anti-Jewish violence. In October 1937 to placate anti-semitic students special ‘Ghetto benches’ were established in most universities and polytechnics, where Jewish students had to sit separately from Poles. There were growing calls for the reduction of the number of Jews in the professions, especially in Law and Medicine.
The government encouraged emigration as a solution, supporting Zionism and other schemes such as the migration of Jews to other places like Madagascar. Certain government policies increased the economic pressure on Jews to emigrate, for example the failure to include traders in the debt moratorium extended to peasants, and the exclusion of Jews from their prominent position in the timber trade.
During the late nineteen thirties the Belarusians were also subjected to increased attention from the regime. A number of Belarusian cultural organisations were banned for alleged communist connections, including the main political group the “Byelorussian National Committee”. The leaders were imprisoned in Bereza Kartuska.
Use of the Belarusian language was discouraged by the authorities. Belarusian sources report that schools using Belarusian language only were closed down. It is reported that not one school teaching in Belarusian alone existed by the time of the 1939 invasion, and at this time only 44 bilingual schools remained which still taught any Belarusian.
Orthodox churches were also being closed down. One figure from 1938 estimates around one hundred Orthodox churches either being destroyed or converted to Roman Catholic ones in the eastern border lands in just that year.
On the positive side the region remained quiet and there was no resurgence of terrorism as in the nineteen twenties. However attempts to improve the economic conditions of the region were largely unsuccessful.
In late 1937 the clash of political currents within the government reached a climax. At two cabinet meetings in early October 1937 Koc demanded the curbing of the left-wing opposition and the establishment of a totalitarian regime. He was opposed by President Mościcki and is accused by some commentators of trying to plot a coup at the end of October 1937. The left-wing members of the government rallied to support the President. On 13 November 1937 the PPS sent a delegation in support of the President, fearing an imminent Fascist coup.
From later 1937 Śmigły-Rydz himself is said to have become uneasy about Koc’s management of “OZON”. It seems there were concerns about how the youth wing had been taken over by Fascists. Śmigły-Rydz gave in to President Mościcki‘s demands that Koc be forced to resign.
On 10 January 1938 Adam Koc resigned as the leader of “OZON”. He was succeeded by General Stanisław Skwarczyński, the brother of a well-known radical Piłsudski–ite. This was seen as a shift to the left for “OZON”. Skwarczyński ended the Fascist monopoly on the youth organisation, in fact he seemed to depoliticise “OZON”, making it a means of mobilising the nation for defence.
In addition, in February 1938 Prime Minister Składkowski backed down and allowed the re-election of the executive committee of the “Union of Poland Teachers”. This was another swing away from the right-wing course and the ominous spectre of a Fascist regime being imposed.
With international tensions rising, the issue of national security was now playing a larger role in politics. Although divisions persisted within the governing circles a sense of international threat to Poland, combined with improving economic conditions, led to a lessening of internal political conflict. The improving economic conditions also increased the popularity of the government with the general public.
The ‘liberalisation’ of “OZON” rankled with many conservative and radical nationalist members. Parliament now became the platform for them to fight back. In February and April 1938 there were a number of ‘secessions’ from the “OZON” parliamentary group. In April 1938 ONR-Falanga members withdrew from “OZON”.
In 1938 the economy continued to improve. There was a modest drop in the official number of unemployed from 470,000 in 1937 to 456,000 in 1938. The rise had apparently halted. By 1938 public works provided employment for about 250,000 unemployed. It seems likely the official unemployment figures after 1936 would have been considerably higher without the public works.
Government revenues were growing faster than government expenditure, thus another modest budget surplus was achieved in 1938, albeit slightly smaller than in 1937. The parcellation and redistribution of land was still gradually increasing.
The government took a range of measures to support agriculture. In August 1938 the government set a minimum price for rye of 20 Złoty per quintal (100 Kg), also setting the minimum prices of other cereals proportionately. The government also attempted to support rye farmers by paying price premiums for exporters, extending special credits, and investing in infrastructure construction such as grain elevators and other storage facilities.
By 1938 Poland’s trade had become more diversified. The three biggest trading partners, in descending order, Germany, Great Britain and the USA, represented just less than half of Poland’s trade, the rest being widely spread over numerous other trading partners. However the value of exports had dropped while the cost of imports had continued its rise. The result was a growing trade deficit of 115 million Złoty.
In November 1938 a barter agreement was reached with Germany by which Poland received industrial machinery in exchange for Polish cereals. These cereal exports were in addition to the normal amounts exported. However the outbreak of war was to bring these arrangements to an end.
In politics, an election was due in 1940 at which a new president would be elected by the ‘National Assembly’, this posed a challenge to the leading figures of the government. Thus Mościcki and Śmigły-Rydz agreed to dissolve parliament and hold surprise elections. The elections were scheduled for 6 and 13 of November 1938.
The election campaigns exposed the divisions within the government, President Mościcki and Kwiatkowski taking a more liberal line, stressing their desire to reform the electoral system and co-operate more with the opposition political parties. While the prime minister Składkowski bitterly attacked the political parties for deciding to boycott the elections.
This time the boycott had less impact with 67 per cent turn-out, and only 4 per cent of the votes being ‘spoiled’. There were a number of possible reasons for the success of the government in getting people to vote: the economy was improving and the government’s international diplomacy had seemed to be successful, as in getting the return of Cieszyn from Czechoslovakia. Thus the government was less unpopular.
The major opposition parties such as the PPS and SL were trying to court left and centre elements in the government, with a view to possibly participating in the government, thus they did not take such a strong anti-government stance this time. The government also tried a cheap tactic to undermine the opposition parties’ election boycott. It was given out that reform of the electoral system would be dependent on a high voter ‘turn-out’.
One outcome was the decisive defeat of Sławek who failed to be re-elected in Warsaw and found he had much less support in the new parliament. In March 1939 he committed suicide.
Following the election, the government went back on its promises and became more repressive and authoritarian. In November 1938 a number of repressive laws were passed. There was a more rigorous press law, a decree protecting the unspecified ‘Interests of the State’ which could be used to ban all serious opposition, and the proscription of Masonic organisations, thus pandering to radical right-wing conspiracy theorists.
The government then promised to hold the overdue local elections in late 1938. The opposition parties saw this as an important opportunity to establish a strong footing in local politics. However the overall results of these elections in the 394 towns where they were held were good for the government: “OZON” and allied parties won 48 per cent of the seats, the National Party 16 per cent, the PPS 11 per cent, and Jewish parties 17 per cent.
The government may have been able to interfere with and bias the results in the numerous small towns and villages. Evidence of this is that the government polled much less well in the forty eight largest towns with populations of over 25,000. In these areas the PPS polled much more strongly, gaining 27 per cent of the vote, mainly at the expense of “OZON” and to a lesser extent, the “Bund” (Jewish socialist party).
Despite the success of opposition parties in the local elections the government dragged its feet about electoral reforms. The threat to national security of Nazi Germany was encouraging an atmosphere of national solidarity. In January 1939 the Peasant Party called for the ‘unification of society around the defence of the state’. From February 1939, not long after the death of Dmowski, the National Party sought an understanding with the government.
In this climate of external threat and unity, the government raised a domestic loan to help pay for defence. Upon the German invasion of Bohemia and Moravia in Czechoslovakia, Witos and his associates, who had been in exile there, returned to Poland. They were arrested as a gesture, but were released after a few days.
However attempts by the opposition to get the government to open up or form a coalition were rejected. PPS calls for electoral reform were rebuffed. The government began to slander Witos as a German collaborator, which damaged co-operation.
In June 1939 Śmigły-Rydz and the principal members of the government decided not to form a coalition or widen their political base. Thus the Second Republic went to its destruction with the government regime still clinging jealously to power.
The economy continued to grow. The industrial economy improved rapidly from 1936 to 1939, with output rising fast. It is not known how much of this was due to domestic economic policy and how much was due to improvements in the world economy. Government revenues continued to rise in 1939, but so did expenditure so that the budget was more or less balanced.
From 1929 to 1939 the share of the value of output from mining and industry rose from 32 per cent, (as opposed to 68 per cent agriculture), to 50 per cent. However unemployment remained high, the official figure for 1938, which was probably an underestimate, was 456,000.
In 1939 the government presented an ambitious ‘Fifteen Year’ Economic Development Plan for rebuilding Poland. It envisaged a series of three year projects culminating in 1954 with the elimination of the differences between ‘Poland A’ and ‘Poland B’. It was to begin with a focus on armaments production, starting from 1939. It then moved onto the development of transportation infrastructure. From 1945 the intention was to boost the productivity of agriculture. Industrialisation would then be increased further and then the branches of the economy supposedly brought into ‘balance’. The ambitious plan was never carried out as the invasions by Germany and the USSR brought about the end of the Second Republic.
In 1938 the value of foreign trade had not yet returned to its 1928 level. In 1938 the value of exports stood at 1.2 billion Złoty, in 1928 it had been 2.5 billion. There was a similar trend in import values.
Agriculture did not really revive. Attempts by the government to limit the burden of debt on small farmers had little effect. The price scissors still worked against the rural population. Although the government attempted to increase the pace of land reform, gains were defeated by rapid population growth. One estimate is that in the late nineteen thirties the annual growth of the ‘surplus’ rural population was 100,000 per year. By 1939 some estimated that 8 million people could leave the countryside without a fall in output.
By 1938 a total area of nearly 2.7 million hectares of land had been parcelled out and redistributed since the start of the programme. This represented about 15 per cent of the country’s 18.6 million hectares of arable land. Some 730,000 new holdings were created by this. Another 0.5 million hectares were reclaimed by draining marshy land et cetera, or about another three per cent.
Some analysts claim the impact of land reform on agricultural production and productivity was mixed. It has been claimed that the large estates were more efficient in yields per hectare than the small ones, and that parcellation resulted in a fall in the average yield across Polish agriculture. However this was counterbalanced by increases in efficiency due to the consolidation of small holdings. Some 5.4 million hectares were consolidated, representing about 29 per cent of arable land area. The outcome for rye and wheat was a greater total output, but a lower average yield per hectare.
As the international tensions grew, tensions with some of the minorities grew. The conditions of life for Jews in Poland were seriously deteriorating. Certain government policies increased the economic pressure on Jews, importantly the failure to include traders in the debt moratorium extended to peasants combined with the poor trading conditions for those in commerce. Also there was the exclusion of Jews from their prominent position in the timber trade. This all meant progressive economic ruin of the Jewish community.
In addition there was anti-Semitic harassment both physical and economic through trading boycotts, and government policies which were turning increasingly anti-semitic. The regime had some right-wing radical supporters who wanted more extreme measures against the Jewish population, and an anti-Jewish law had been presented to parliament in January 1939. The war interrupted its progress, otherwise it may well have been implemented.
By the time Poland was invaded it’s thought that about one third of the Jewish population was dependent on relief provided by private Jewish organisations financed from the USA. It was difficult for Jews to emigrate in the last years of the Second Republic, as the growing tide of refugees from Germany, Austria and Czechoslovakia, many of them Jewish was causing many countries to start closing their doors to Jews immigrants.
Tensions with the Ukrainians simmered. As the threat from Germany grew the military, concerned about security issues, tended to take over the execution of government policy in the Ukrainian areas. The military antagonised the Ukrainian majority by attempting to foster the separate identity of a number of small ethnic groups in the Carpathians in South East Galicia, and by claiming as Polish the large number of mostly Ukrainianised petty gentry in the region. In Volhynia there were attempts to prevent the local Uniate population from returning to Orthodoxy, and the closure of Orthodox churches or their transfer to Catholics or Uniates.
By 1939 many Ukrainian militants were tempted to look towards the rising prospect of Nazi Germany as their best hope of achieving their national aspirations. This undercut attempts by Warsaw to improve relations with Ukrainian political groups.
The position of the German minority became an acute concern as the threat of war with Germany loomed closer. During the period 1935 to 1939 the influence of National Socialism became strong among the German minority in Poland. A right-radical movement grew up alongside the established German nationalist political group, but both parties looked towards Nazi Germany anyway.
Formally relations between Germany and Poland had been improving during the thirties with the January 1934 “Non-Aggression pact” and the November 1937 agreement on the treatment of each other’s minorities. However on the ground tensions remained locally between the different ethnic groups especially in Western Poland and Upper Silesia.
From March 1939 there was a serious deterioration in German-Polish relations, and the German minority began to be considered more seriously as a potential threat to national security. Many ethnic Germans were arrested, or fled to Germany, claiming victimisation by the Polish authorities. When the German invasion came German paramilitaries appeared on the streets fighting in support of it. It later transpired that Germans living in Poland had helped with intelligence, for example in the drawing up of ‘death lists’ of those who would be unwelcome in a Nazi occupied Poland.
On 1 September 1939 the German Army invaded Poland bringing a sudden end to the Second Republic and to Poland’s experiment in state-planned industrialisation. Poland’s strategic position was untenable. Outnumbered by some estimates two to one in fighting manpower, three to one in tanks, two to one in artillery, and over five to one in aircraft, the country was attacked from three directions. German forces invaded from Germany in the east, East Prussia in the north and from Slovakia in the south.
The Poles hoped to hold on for six months, long enough for France and Britain to mount an attack on Germany. The British and French expected them to hold on for two or three months, in the event it took just three weeks for the Wehrmacht to dismember the Polish Army.
Just as the Poles were trying to withdraw to a last ditch defence in the Carpathian Mountains, the so-called “Romanian Bridgehead”, on 17 September 1939 the Red Army invaded Poland with a massive force consisting of two “Fronts”, or “Army Groups”. All that opposed them was a thinly spread, light infantry force of border guards. Despite orders to disengage and withdraw many Polish units fought against the Red Army which suffered surprisingly large losses.
Few Polish forces made it to the Romanian Bridgehead, either they were encircled, or unable to break through the Germans to get there. Other units were unaware of the order because of break downs in communication. Meanwhile the whole strategy of the Romanian Bridgehead collapsed in the face of the Soviet advance, and the survivors fled to Romania in the hope of making it to the west to join the French front. On 6 October 1939 the final isolated Polish units still fighting surrendered.
In the end the Poles were defeated by two aspects of German capabilities. Firstly the German’s superior command, control and communications. The new tactics of combined arms warfare where infantry, armour and artillery could all be co-ordinated to devastating effect, relied on the all-pervasive use of radios. Forces could be quickly concentrated to create a local superiority as and where the enemy buckled or left gaps. The Germans could move faster to exploit an opportunity and resupply at a greater rate.
Secondly the Luftwaffe quickly established air supremacy over the theatre. The Poles found themselves unable to move, resupply and communicate efficiently due to continual harassment from air interdiction attacks.
By the best estimate over 66,000 Polish servicemen were killed and nearly 140,000 wounded. German casualties are thought to have been around one quarter of this. Around 420,000 Polish servicemen were captured by the Germans and another 240,000 by the Soviets. Over 100,000 Poles escaped to neutral Romania, and another 20,000 to Lithuania.
From the start civilians were not spared. In the bombing of Warsaw alone several thousand civilians are thought to have died. There were reports of civilians being massacred from a number of locations and of towns being burned down. By some estimates as many as 200,000 civilians died in this short campaign. When the Wehrmacht entered Poland it brought with it the Einsatzgruppen (“Task Forces”), with death lists to round up and execute some 20,000 persons identified as undesirable by the Nazis. These horrors were just an indication of the extreme depredations and atrocities which would be meted out on the territories that were once the Polish Second Republic in the following few years.
The War Years (1939 – 1945)
It is beyond the scope of this article which is narrowly focused on economics, to cover the details of all the political and military events of the war years, and the range of horrors and atrocities which were inflicted in the territories which once made the Second Polish Republic. This is a deep and complex subject which could not be done any justice here. Rather here the focus will be on the economic impacts of the occupation and conflicts.
The division of Poland between Nazi Germany and the USSR in 1939 has been called by many historians the “Fourth Partition” of Poland. About 49 per cent of the land area of the former Second Republic fell under Nazi control, the remaining 51 per cent being occupied by the USSR. The German occupied regions contained nearly 63 per cent of the population of what had been the Second Republic, the other 37 per cent living under Soviet administration. As the Soviet areas were mostly not to be inherited by the new Poland after the war, I will consider here only the fate of those regions under Nazi occupation.
From the start the policy of the Nazis was to attempt to erase from the map, and from history, all notions of a Polish state. The areas of the Second Republic they occupied were divided into different administrative units, and mostly absorbed into Germany in the weeks following the defeat of the Polish army.
After the invasion of Poland in 1939, Polish Upper Silesia, including the Polish industrial city of Katowitz and the industrial Dąbrowa Basin, was directly annexed into the Province of Silesia. This annexed territory, also known as East Upper Silesia (Ostoberschlesien), became part of the new Regierungsbezirk Kattowitz. At the same time, the Polish population was expelled from eastern Upper Silesia. From 1939 until 1942, 40,000 Poles were expelled. In their place, ethnic Germans from the eastern regions of Volhynia and the Baltic countries were settled in Upper Silesia’s urban areas. The death toll of the Polish population in Upper Silesia at the hands of Germans is thought to have been about 25,000 victims, with 20,000 of them being from the urban population.
In the north-west the Reichsgau of Danzig-Westprussia was created from territory of the Free City of Danzig, the Greater Pomeranian Voivodship (Polish Corridor), and the Regierungsbezirk West Prussia of the East Prussia Gau. This was annexed to Germany. With its capital at Danzig it had a population of over two million, mostly Poles but with an ethnic German minority of 680,000.
The “Greater Poland” region of Poznania and its surroundings were absorbed into Germany as Reichsgau Wartheland, named after the river Warthe (Warta). With its capital at Posen (Poznan) it had a population of nearly five million. It contained the important Lódź with its industrial district. The German minority represented about 17 per cent of the population.
Following the fall of Poland the borders of the German province of East Prussia (Provinz Ostpreuẞen) were adjusted. The population of East Prussia was around 2.5 million with a strong majority of Germans, about 85 per cent. Most of the remaining population were Poles. Some territory, as mentioned above, was lost to Reichsgau Danzig-Westprussia, while other adjacent regions, despite having strong Polish majorities, were absorbed into German East Prussia, notably Regierungsbezirk Zichenau (Ciechanów).
Most of the territory not annexed to Germany formed the “Generalgouvernement”, the “General Governorate”, usually translated as the “General Government” (GG). It was largely composed of the poorer, less well developed regions of ‘Poland B’. The GG was initially composed of four districts, Warschau, Radom, Lublin and Krakau. With its capital at Kraków it is reported to have had a population of around 12 million in 1941. It was all that was left of ‘Poland’ under the Nazi system, but was not normally referred to as such in official documentation. The result of these divisions in the period 1939 to 1941 was that about 30 per cent of the population of interwar Poland found itself absorbed into the German Reich, while another 33 per cent remained in the GG.
In the regions of Poland fully annexed to the Reich, the aim was ultimately Germanisation. Given the large size of the ethnic Polish population this was not to be achieved immediately. The use of the Polish language was banned, place names et cetera were Germanised. The Polish community was ‘decapitated’ with its more educated members and leaders being killed, imprisoned in concentration camps or deported, typically to the GG.
Polish cultural and educational institutions were disbanded. The education of Poles was largely limited to primary level, and in German. Members of the population were graded according to Nazi racialist criteria and treated accordingly. There were to be deportations of Poles and the resettlement of ethnic Germans in the formerly Polish regions. One estimate is that by the end of 1944 over 330,000 Poles had been deported from these areas and some 750,000 ethnic Germans resettled in the annexed regions.
The annexed areas were to be fully integrated into the Nazi German economy. Poles were relegated to menial service and their movements restricted and controlled. All Polish industrial, commercial and agricultural enterprises were transferred to German ownership. For example Baltic Germans received some 3000 industrial properties, 2,500 agricultural properties and over 2000 workshops. In addition some 3000 German officials were brought in to Lódź to run the industries there. The confiscation of Polish enterprises was without compensation.
The annexed areas of Poland were intended to become the ‘granary’ of the Third Reich. Large exports from these regions to the rest of the Reich were demanded by the authorities. In order to achieve high yields per hectare investment was made in fertilisers, tractors and other machinery. German settlers were given training in modern agricultural methods.
There was discrimination in pay and working conditions, with ethnic Poles earning much less than Germans. From late 1940 the German authorities handed peasant farms over to new German landlords. The former proprietor farmers were forced to work as agricultural labourers, or were dispatched to the towns and cities to work as cheap labour in the factories.
With respect to the GG, for the duration of the war the Governor-General was Hans Frank. The upper layers of government in the GG were composed of all German personnel, but at local levels Polish administrators and police remained for convenience. German was the official state language but Polish was allowed and was used in the lower levels of administration. Education in Polish was also allowed, but there was increasing pressure on higher educational institutions which were steadily curtailed.
As far as the judiciary went, parallel systems of courts existed for Polish and for German interests. Thus the legal system discriminated in favour of Germans. Legislation as in other Nazi controlled areas discriminated on race. Poles were disadvantaged relative to Germans, but the Jews were most severely restricted. Use of the death penalty was widespread. The enforcement of often draconian laws has been described by some historians as erratic and arbitrary.
Hans Frank revealed in his writings that the ultimate intention towards the GG was to fully Germanise it within about twenty years. The Polish population was to go entirely, and be replaced by a much smaller population of only four to five million German settlers. In the meantime the GG became a reservoir of labour for use throughout Nazi controlled Europe. Poles were also deported to the GG from other areas of Nazi control.
All ethnic Poles over the age of 14 were subject to conscripted labour. Many were sent to work on farms or in factories in Germany. All Polish state property was confiscated by the Germans, as in the annexed areas. Peasants had to supply quotas of produce to the German authorities.
Jews were subject to conscripted labour from the age of 12. In January 1940 laws deprived Jews of the right to own property, and all Jewish-owned property was confiscated. The same month a law restricted Jews to their place of residence creating walled “Ghettos”, which acted much like concentration camps. Jews were confined to these ghettos which were kept under guard by the police. No food or goods were allowed to be brought into the ghetto.
The administration of the ghettos was left to Jews who had to implement the instructions of the German authorities. The ghettos were administered by German-appointed Jewish Councils (“Judenräte”) and policed by a Jewish police force. These Jewish authorities had to supply the quotas of Jewish labour as demanded by the German authorities. Able bodied Jews were forced to work under appalling conditions in labour camps. By 1944 there were over 300 such camps in former Poland.
In March 1941 a racialist law classed Poles as second-class citizens and deprived Jews and Gypsies of all legal rights. This meant that Jews could be robbed or attacked by Germans without them fearing prosecution. There were already outbursts of anti-Jewish violence, or ‘pogroms’, from 1939 to 1941 about 100,000 Jews died in such incidents. Those who sheltered or protected Jews were liable to summary execution.
From October 1941 the penalty for leaving the ghettos or labour camps without authorisation was death. Jews were allotted even smaller food rations than the Poles. In 1941 the daily food ration for a Warsaw Jew was 184 calories compared with 669 for a Pole and 2613 for a German. Food smuggling and the Black Market became a large, organised business. In spite of this the populations of the ghettos starved.
German businessmen were encouraged to emigrate to the GG by tax incentives, subsidies and credits. Price levels in the GG were fixed low compared to German prices to aid imports of products from the GG, and to stimulate investment in the GG. In the GG initially there was a policy aimed at deindustrialisation and specialisation in agricultural production. Factories were dismantled at first and the capital goods shipped to Germany. However as the war effort escalated, especially in the preparation for Operation Barbarossa, the policy was reversed. There were efforts to increase the output of iron and oil, and the armaments factories of the “Central Industrialised Area” were revived.
The Haupttreuhandstelle Ost (HTO, “Main Trustee Office for the East”) was an agency set up by Goering in early 1940 to liquidate Polish or Jewish businesses, or to sell them to German settlers for a nominal fee. Through Goering’s organisation the Nazis confiscated all economically important industries of the region, such as coal mines, the oil industry, the beet sugar industry and most of the chemicals industry. All former state-owned factories lying in the GG were united into “Die Werke des General Gouvernement A.G.”, an organisation on the lines of the Hermann Goering Werke. This was a Nazi state-owned industrial conglomerate involved in heavy industry, iron, steel and armaments.
Steps were also made to take financial control of the remaining private Polish industries. The Polish owners were expropriated without compensation. Once under Nazi control less efficient plants were closed and their machinery dismantled and shipped to other parts of the Reich, while the more efficient plants were expanded and upgraded, and production concentrated in them.
During the German invasion the Polish government managed to get the gold reserves of Bank Polski out of the country and used these to finance its activities in exile. However the Nazis maintained a facade of the Bank Polski as a means to pursue the return of these gold reserves.
Following the German invasion the Reichsmark was not introduced into the GG to avoid overexpansion of the money supply and weakening the German currency. Polish banks and financial institutions were temporarily closed and some of their assets nationalised. Many lost their savings. Jews were targeted for expropriation. Under the German occupation Polish banking virtually disappeared. There were no financial returns for private sector banks after 1939, even the returns published for the Nazi “Bank of Issue in Poland” were sketchy.
“The Bank of Issue in Poland” (Bank Emisyjny w Polsce) was decreed by the Nazi authorities on 15 December 1939, and began operating on 8 April 1940 with its headquarters at Kraków. The bank issued currency, discounted promissory notes and cheques, issued short term loans, and took deposits.
The bank mainly seems to have been used to finance the Nazi war economy at the expense of Poland. It acted together with other financial institutions to collect as much capital from Poland as possible to invest in the German war economy. One estimate is that 11 billion Złoty were transferred to the German army. The GG was forced to make loans to Germany to the detriment of its own monetary system, by the central and private sector banks buying German government bonds, and by Polish banks granting large overdrafts to the German government.
“The Bank of Issue in Poland” produced a new currency, known as the “Zloty Krakowski”, sometimes also called the “Młynarki”, after the Polish bank director Feliks Młynarski, who operated under a German supervisor Fritz Paersch. The bank of issue was set up in the GG initially without any gold reserves, so its notes were covered by its discount transactions and by holdings of German marks. From 1940 to 1941 the new bank notes were issued. The old Złoty had to be exchanged for the new bank notes which became the only legal tender.
In May 1940 exchange controls were imposed on the new Złoty along racially discriminatory lines, and its exchange rate against the Reichsmark was fixed at one Reichsmark for two Złoty. The Reichsmark was overvalued compared to the Złoty and prices were tightly controlled so there was an incentive to import Polish commodities on the cheap and to invest in the GG.
From 1941 to 1943 notes in circulation increased more than three-fold, indicating the inflationary effect of the German occupation. The bank notes were also undermined by counterfeiting by the Polish resistance and by imports of notes from Britain supplied to support the Polish “Home Army” resistance organisation. Młynarski was connected to the Polish resistance which enabled the bank and its facilities to aid the underground with currency and documents.
In January 1945 the German personnel of the bank together with its remaining financial assets were evacuated to Germany. However the bank was not formally wound up till 1950 under the communist system.
The Nazis proposed ambitious plans to boost agricultural output from the GG, but these may have been designed in an unsustainable way which stripped the soil. Exploitation of the forests was unlimited and unsustainable. Due to the predatory policies of the Nazis including unsustainable agricultural practices, artificially low prices and requisitioning, there was a progressive degradation of agriculture and declines in output. From 1939 to 1943 estimates show that the area under grain fell by 30 per cent, the yield of cereals per hectare, productivity, fell by 20 per cent, the numbers of livestock including pigs, cattle and sheep fell by up to one third. While the number of horses declined even more, by about 40 per cent. Low output and productivity resulted from an exceptionally long and severe winter 1941/42, farm labour shortages, shortages of draft animals, and shortages of fertiliser.
The impacts on agriculture resulted in drastic falls in food consumption during the war years. Shortages were exacerbated by the uneven distribution of food, so that the average figures are potentially misleading. Food shortages were worse than in most other parts of wartime Europe. Data survive from the League of Nations and the UN Relief and Rehabilitation Administration (UNRRA). One quote from a ‘League of Nations’ Report stated: “In Poland, Greece, parts of Yugoslavia and Albania, (food) distribution was irregular and consumption fell for shorter or longer periods to levels of semi-starvation or outright famine.”
The worst year seems to have been 1943 but average consumption did not increase significantly in 1944. Comparing average consumption in 1943 with data from 1929, consumption of bread was half, cereals generally just less than half, potatoes a subsistence crop, three quarters, meat and meat products only one sixth, sugar and jam et cetera about half.
In 1943 average calories per person per day in the GG were only 1,365 just less than half that in Great Britain under rationing at 2,827. These rations represented only about half of daily nutritional requirements. Germans received a higher ration. These statistics were based on official ration figures, however in reality it was not always possible to supply these rations. Those drafted as labourers were sometimes fed at work in canteens to ensure their ability to work.
The effects of the inadequate diet showed up in the health condition of the populace. A range of conditions became increasingly common, rickets, scurvy, gastrointestinal disorders, hunger oedema and outbreaks of Typhus and Typhoid fever.
The launch of ‘Operation Barbarossa’ in June 1941, the invasion of the USSR, and the eastward sweep of the Wehrmacht during its early successes, brought the remainder of what had been the Polish Second Republic under Nazi control. This was thus followed by a series of adjustments of the eastern administrative units.
Territory around Białystok was formed into a district which was ultimately absorbed into the German Provinz Ostpreuẞen. Eastern Galicia was finally absorbed into the GG as a fifth district. The remaining eastern border regions, once part of the Polish Second Republic, were administered separately as the ‘Reichskommissariats’ of ‘Ukraine’ and ‘Ostland’, to the north.
Following 1941 and the invasion of the USSR a policy of mass extermination of Jews was adopted. Implementation of the “final solution” began from the time of the Wannsee Conference in January 1942. From the spring of 1942 large scale extermination of Jews began under the guise of ‘resettlement’. Initially some three extermination camps were set up in the GG. By the end of the war some seven major extermination camps had been in operation, four of these within the GG. Nearly the entire Jewish population of Poland was exterminated, some 2.7 million. About 1 million non-Polish Jews were brought to ‘Polish’ areas by the Nazis for extermination.
The high point of Nazi power was reached at Stalingrad, but the strategic balance was from then to shift against Germany. A disastrous defeat at Stalingrad signalled the future prospects for the Nazi regime. From the time of the failure of Operation Zitadelle, the German attack on the Kursk salient in July 1943, the Soviet Army moved inexorably westwards towards Berlin. The sheer scale and violence of these campaigns defies the human imagination, taking place on a front ranging hundreds of miles from the Black Sea in the south to the Baltic in the north.
It was not a smooth movement but took place in a series of phases, major campaigns, each punctuated by counterattacks and the stabilisation of the front sometimes for months on end. However when the Red Army did move it pressed steadily forwards and each time the advance petered out the strategic position of Germany had deteriorated substantially.
By April 1944 Soviet forces were already occupying ground to the south of the Pripyet Marshes which had once been part of the eastern borderlands of the Second Polish Republic. From 22 June 1944 a massive campaign was launched by the Soviets employing some four main Army Groups, known in Soviet terminology as ‘Fronts’, accompanied by others, Operation Bagration. This pressed forwards as far as the Vistula across which a number of strategically crucial bridgeheads were established in the face of fierce German counter-attacks. By mid-August 1944 the front had stabilised. In the process German Army Group Centre had been practically destroyed.
With the approach of the Soviets to Warsaw the Polish “Home Army” (Armia Krajowa, AK), the main Polish underground resistance organisation, launched an uprising against the German occupation inside Warsaw on 1 August 1944. The circumstances surrounding this are bitterly contested, but the AK were essentially left to fight their battle alone.
Rather than fleeing the Soviet advance the Germans determined to crush the Polish resistance and dispatched fresh units to assist in the operation. Given the enemy’s superior supply and armament the resistance succumbed to the inevitable, signing the surrender on 2 October 1944. The remaining survivors of the AK were marched into captivity two days later.
The Soviet offensive was not to be relaunched on a major scale till the Vistula-Oder Operation commenced on 12 January 1945. In a little over two weeks the Soviet forces advanced some 300 miles from the river Vistula to the river Oder. By the time the offensive was halted on 31 January 1945, German forces had been ejected from most of what had once been the Second Polish Republic. Strong German resistance remained at certain points where the German population had been a majority as in East Prussia along the Baltic coast and in areas of large German populations such as parts of Pomerania and Silesia. Mass evacuations of ethnic German populations now took place, especially in the Baltic region. However by this time the strategic position of Nazi Germany was untenable as it was being squeezed in a vice between the USSR and the western allies, so that defeat was just a matter of time.
The best estimates available suggest that nearly six million citizens of the Second Republic died during World War Two. Approximately 16 per cent of the pre-war population. Of this the majority, some 5.4 million, died mainly in extermination camps, public executions, or during guerrilla warfare as opposed to conventional conflict. Over 90 per cent of the Jews died during the war, mainly due to implementation of the Nazi ‘final solution’.
Warsaw was largely destroyed following the uprising of August to September 1944, being deliberately razed to the ground on the orders of Hitler. One estimate is that, together with all the war damage and depredations, from 1938 to 1945 some 38 per cent of Poland’s national wealth was destroyed.
The war largely depleted certain sections of society, the Jews, the Intelligentsia, and the landowning gentry. The Catholic Church reportedly came out of the war with a high reputation among many in the population, who saw it as the “Guardian of Polish Nationhood”. The result of the destruction and slaughter of war was a society predominantly composed of peasants and the urban working class.