Czech History Jaroslav Preiss: banking and business colossus of inter-war Czechoslovakia

09-08-2011 15:49 | Chris Johnstone

The name Jaroslav Preiss does not create many ripples when it is thrown out today. Perhaps one Czech in a hundred could identify who he was. But at the birth of Czechoslovakia and in the 1920s and 1930s, Preiss was an economic and business colossus and contributed to making the country into a major industrial player between the wars. Chris Johnstone looks at the life of the controversial figure.

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Jaroslav PreissJaroslav Preiss At one level the life of Jaroslav Preiss is a classic rags to riches story of the man from a modest family who made good. At another, the wheeling and dealing of the man who headed Czechoslovakia’s biggest bank, Živnostenská Banka, and the industrial empire it created reads like a who’s who and what’s what of the inter-war era.

Strangely though for a man who made such a splash at the time in the media, business, industry, politics and the economy, his name does not trip off the lips today. And that has a lot to do with the enemies he made as well, first amongst them the Czechoslovak Communist Party.

Ilona Bažantová is a lecturer in law and economics at Prague’s Charles University.

“Generally it is said that Jaroslav Preiss was one of the most influential men during the First Czechoslovak Republic. It is certainly true that he was in charge of Živnostenská Banka. But his influence dates from the birth of Czechoslovakia. He was not just a banker. He influenced the functioning of the state, at least at the start of the republic, from an economic perspective.”

Preiss was born in 1870 in a small town a few kilometres south of the West Bohemian city of Plzeň but the family moved soon after to Domažlice where he grew up. His father was a modest legal official. After excelling at school, Jaroslav went to Prague to study law.

But he did not follow in his father’s footsteps. At university he marked himself out as a leader among a growing band of Czech nationalist students and thanks to one of the professors of national economy there stepped into a job as a journalist with the newspaper Národní listy at the turn of the century.

1 Czech crown, 19191 Czech crown, 1919 The paper and its economic correspondent, Jaroslav Preiss, pushed the line of greater Czech industrial and economic power. Preiss quickly realised that the road to that came from finance, pointing out the uncomfortable truth that Czech business at the time was mostly stashing its profits in Vienna bank accounts which allowed them to decide how and where it was used.

That realisation, together with his growing activity creating associations for Czech industry, such as the groupings of textile and engineering companies, brought him to the doorstep of the Czech bank Živnostenská Banka, which at the time mainly targeted small businesses. He got a job as a journalist with the bank’s weekly financial newspaper, the first such Czech paper, and a few years later was offered posts within the bank itself, dealing first with mortgage and then industrial loans.

Preiss was already part of an influential group of Czech nationalists that become leaders of an independent Czechoslovakia. And, like them, he showed during World War I that he was prepared for pay a price for independence.

“The whole group around Alois Rašín and Karel Kramář during the First World War agitated against Austria or Austria-Hungary. In the end Preiss was imprisoned for his stand against Austria-Hungary and the whole group was sentenced to jail. So Preiss proved that that he was willing to fight and perform sacrifices for Czechoslovakia and his idea of freedom,” said Bažantová.

Alois RašínAlois Rašín With while Kramář was the first Czechoslovak prime minister and Rašín the first minister of finance, Preiss stuck with the bank where he had already been symbolically made director. Here, he began to create an economic powerhouse, greatly helped by a law which he helped frame which ensured that the domestic economy was in local hands.

“In the mid to late 1920’s Živnostenská Banka had a decisive economic influence. Through shareholdings it owned around half of industry, and where it did not have shares it had loans outstanding with major businesses. It is said that some of this stemmed from the fact that Preiss took part in the formulation of, or rather jointly formulated, the so-called nostrification norms which came into effect at the start of the 1920s and which called for the Czechification or Czechoslovakisation of the industrial sector.”

Ilona Bažantová explains how the law worked in the bank’s favour.

“All big shareholder companies which were not based in Czechoslovakia had to create a headquarters there or to give up their Czechoslovak shares. So in this way industry really became Czechoslovak and in this way Živnostenská became an industry flagship.”

The bank pulled strings in almost all the country’s biggest industrial companies, the only real exception being engineering and arms giant Škoda Plzeň, and that was not far want of trying.

Živnostenská Banka share, 1933Živnostenská Banka share, 1933 On the political stage, Preiss made less of an impact, partly due to his links with the National Democrats, a party that began losing power and influence almost as soon as it gained it. Throughout most of the interwar period the Agrarian party and left leaning parties were often in control with the National Democrats gaining few seats and being seen as the voice of big business. The party lost even more influence, and Preiss a personal friend, when Alois Rašín was assassinated in 1923.

Preiss still had some powerful contacts. These included the president, even though the two rarely saw eye to eye on basic questions of political philosophy.

“In spite of this, Masaryk really appreciated Preiss as an expert. And he accepted him on account of his expertise. At the end, during the 1930s, Preiss was considered for some major functions, such as minister of finance. It was even considered that he might have been president under the Second Republic though that job eventually went to Emil Hácha,” said Ilona Bažantová.

In the political field, Preiss also made enemies. The left-wing press described him as the shark from Živnostenská Banka. Things were not helped by the fact that Preiss defended his fat cat wage and perks, rumoured to be around 18,000 crowns a day, as being fully merited. The Communists hated him and the feeling was, apparently, mutual. He also had a very prickly relationship with Czechoslovakia’s second president Edvard Beneš and the governor of the national bank Karel Engliš.

Emil Hácha, Adolf HitlerEmil Hácha, Adolf Hitler During the depression, Preiss came to despair ever more of Czechoslovak governments who did not get to grips with the economy and to admire the success of Hitler’s Germany, which he believed did. He was hardly alone in underestimating Hitler, taking the same line as his industrialist friends in Germany that the Nazi leader could be controlled.

But it was ahead of the Munich agreement that Preiss got into trouble. He took a totally different line from President Beneš, saying the Czechoslovak state should come to terms with the Sudeten Germans before the terms were forced on the country from outside. Beneš helped make the domestic dispute international and, as Preiss had warned, an international settlement was imposed. But Preiss’ advocacy of a deal was used against him after World War II when the Communists already were consolidating their hold.

He had already stepped down from being the director of the bank before Munich in 1938, but remained in some key positions. When the Nazis took over the country he refused to cooperate with them. He was investigated three times by the Gestapo and on one occasion fined 5.0 million crowns for sabotage, a charge that could have carried the death penalty.

Victory over the Nazis came at a cost for Preiss as the Communists were intent on getting revenge on their adversary from the First Republic. They wanted to disgrace his reputation as one of the Munich traitors.

“The Communists tried really hard after 1945 to find some sort of scandal that could show that he became rich in an underhand way or through breaking the law. And in spite of all their attempts they did not find anything. So we can say that he did not misuse his positions for any personal gain. In this way I think we can describe him as a very decent and honourable man.”

Živnostenská Banka in 1938Živnostenská Banka in 1938 He was detained from the end of May, 1945 and in spite of his rapidly deteriorating health repeatedly questioned. Soon after his release from one session at Prague’s Pankrác prison he died at his Smíchov home in April 1946.

Charles University’s Ilona Bažantová sums up his reputation, which is still overshadowed by the Communist attempts to drag his name through the dirt.

“Preiss was behind the creation of the economic miracle that occurred in Czechoslovakia. In this perspective we have a great debt towards him. We are making some attempts to pay this back but it is still not enough. We know more about American or British economic leaders than our own Czech or Czechoslovak ones. I think this is a mistake, since we have nothing to be ashamed of.”

 

The episode featured today was first broadcast on July 21, 2010.

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