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Jews in the Economic Life of Latvia

by Professor Dr. Benjamin Sieff

The Jewish community of Latvia played an important part in the economic life of the country. Their share in the establishment of the new state following the havoc resulting from World War I was particularly outstanding during the first few years of Latvian independence.


Stabilizing the currency

Jews had occupied leading positions in industry, commerce and banking before the War and were the representatives of Russian companies in Riga, Liepaja (Libau) and other cities. Among them were branch managers of important St. Petersburg banks such as: “The Azovsko-Donskoi Bank”, “The Russian Foreign Trade Bank”, etc. They headed outstanding industrial undertakings, e.g.: “Phoenix” railway wagons, “Provodnik” (galoshes), etc. In 1918, the Jews began to return from inner Russia to Latvia bringing with them precious metals, foreign currency and drafts on foreign banks. They actually laid the foundation of Latvian currency which, however, was stabilized only during the second half of 1921 after heavy upheavals.

The country was then passing through a grave crisis. The political regime was not firmly established and the economy was in a state of complete chaos. There was an extreme shortage in the means of production, transport and foreign exchange. The “financial” denominations in circulation were exceedingly varied. They included all kinds of Russian roubles, German ost-rouble, German mark, Latvian rouble, paper currency of the Liepaja Municipality, etc. K. Ullman's, head of the Latvian Provisional Government, adopted the financial policy of least resistance. He set the printing press in motion and currency in circulation rose from 36 million roubles in September 1919 to 2240 million by August 1921. Failure was inevitable. Paper money could not rebuild the ruins. Goods were scarce and there was a shortage even in the food supply. It was necessary to import foodstuffs, raw material and means of production. The prime condition for this, however, was – export.

During this period, the Jews played a decisive role. They had ample experience of the export of Latvia's main raw materials, i.e. timber and flax that went back to pre-war period. Upon their return from Russia, they renewed the export of these commodities with their own money and

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on their own initiative. A steady stream of stable currency began to reach the country, especially from England. This roused the envy of Ulmanis and his entourage. The slogan of “Jews are taking over Latvia” served for the establishment of a Government monopoly on flax. This, however, proved very expensive for Latvia. In 1921, the monopoly was liquidated thanks to the Minister of Finance, Ringold Kalnin. The free export of flax and timber, organized and developed by Jews, helped Latvia to overcome her crisis.

A considerable share of Latvia's import trade, e.g. mineral oil (kerosene), textiles, etc., was also in Jewish hands, Scandinavian and British firms established goods stores in Latvia headed mostly by Jewish managers.


Jewish Banks

Jews laid the foundations of the big private banks in Latvia and succeeded in attracting foreign capital which had adopted a very negative attitude towards Latvian investment to begin with. During the years 1922-1924, six banking houses were founded by Jews as share companies with a capital fund of 7.6 million Latt, or about 60% of the total capital of all private banks in Latvia. Actually, the percentage was even greater as several Latvian banks were purely speculative, their capital fund existing only on paper. Among these, two banks should be mentioned: “The Farmers Union”, “The Farmers Bank” and the “Union Bank”, the chief aim of which was to combat Jewish banking capital and accumulate financial resources for political ends. Within a few years they went bankrupt. The last manager of these two banks was A. Karklinsh who was prosecuted for embezzlement and sentenced to five years imprisonment.

The names of the “Jewish” banks were: 1) The Bank of Libau (founded 1922); 2) The Northern Bank (founded 1924); 3) The International Bank of Riga (founded 1922); 4) The Private Bank of Latvia (founded 1924); 5) The Merchants Bank of Libau (founded 1924); 6) The Commercial Bank of Riga (founded 1924).

Each of these had a character of its own and marks an epoch in the economic development of Latvia in general and of Latvian Jewry in particular.

The Bank of Libau (Liepaja) had been the bank of the Stock Exchange before World War I but was totally ruined. Jews succeeded in reviving it with the aid of Jewish-German capital. Instrumental in this connection was Dr. N. Soloveitschik of Kaunas, an outstanding economist with close ties in all European capitals, who also conducted the negotiations between this concern and the Jewish-German “Darmstaedter Bank”. The Bank of Libau soon played an important part in financing electric com-

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panies in which large German concerns of the type of A.E.C. took an interest. The Bank Council was rather diversified – its Jewish members being Raskin, Schlossberg and Minsker. Additional members included several Germans and the President of the Council was a Lett – A. Berzin, an uncultured person who, however, had good practical sense and personal connections with the heads of state including, most significantly, K. Ulmanis.
Berzin continued to be Ulman's economic adviser after the Fascist Revolution and assisted him in the extrusion of Jews from their economic positions “without bloodshed”.

The Northern Bank was the stronghold of the Jewish National Democratic party and the management consisted almost entirely of its members: A. Rabbinovitz (chairman) and formerly an important timber merchant; I. Landau, school owner and director of the Jewish section at the Ministry of Education; Dr. Mayer and Dr. N. Mintz, a brother of Prof. P. Mintz. The long-term manager was the Jewish banker Zachs, one of the leading experts on theoretical and practical economics in Latvia. He was greatly esteemed by the Latvians who treated his views very seriously.

The International Bank of Riga was founded by the Hoff brothers. These were the “Rockefellers” of Latvia and displayed matchless economic initiative. Jewish-German capital also participated in this bank and, indirectly, Jewish-American capital as well. Management was actually in the hands of the brothers Lewstein, two Jewish bankers of the old school who had been bankers in Riga before the war. The council included several Latvians: A. Krievinsh, Consul General of Latvia in Berlin; A. Anderson, ex-mayor of Riga and N. Dombrowsky who was a “liaison officer” between the Hoff family enterprises and the Government. It should be remarked that he was devoted to the Hoff family although he belonged to the decidedly anti-Semitic “Democratic centre” party. In later years, G. Zemgal, former President of the State of Latvia also joined the Council of the Bank.

The Private Bank of Latvia was a combination of Jewish initiative and Czechoslovak capital. The founder and first manager was Dr. A. Kogan, formerly a Moscow bank manager. He was a man of wide culture and a great expert in theoretical and practical problems of his profession. The capital required for this enterprise was supplied by the Bank of the Czech Legionnaires of Prague. (The capital of the latter derived from the gold of the State Bank of the Tsar. This gold was transferred by order of General Kolchak to Siberia under guard of the Czech Legion which, in due course, transferred it to Czechoslovakia). Dr. Kogan also succeeded in attracting

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Swedish capital and extensive credits were at his disposal abroad. This largely engaged in financing the export trade. Several Latvians were directors of the institution. They had previously been high government officials and it was impossible to deal with Government institutions without their mediation.

The Merchants' Bank of Libau also largely financed commerce and trade. Its founder was H. Epstein who actually held most of the initial share capital.

The sixth Jewish bank was The Commercial Bank of Riga most of whose clients were small tradesmen.

Although the Jewish banks were firmly established and properly organized, they were unable to survive a crisis. The Latvian rulers did not view them with favour in spite of the “Sabbath Goyim” (the Latvian members on the Council) and sought an opportunity to deal them a decisive blow. Such an opportunity occurred in 1929 when “The Darmstaedter Bank” suspended payments and distrust in banks reached the Baltic countries as well. A state of panic ensued and there was a run on the banks particularly those backed by Jewish-German capital. The first victims were The Bank of Libau and The International Bank of Riga which were forced to suspend payment. In actual fact, no commercial bank in the world, no matter how solidly financed, can ever repay all deposits at the same time. In such cases, the national or central bank usually lends it support to the banks in difficulty in order to ward off a general crisis. This, for example, was done by The Central Bank of Lithuania when it, at a crucial moment, extended ample credit to The Commercial Bank of Kaunas which was also affected by the Darmstaedter Bank crash. The Government Bank of Latvia, however, refused to assist in any way the local banks that found themselves in difficulties. It considered that the time had come to eliminate the Jewish banks. This, however, proved to be a miscalculation. The crisis spread to other banks and the Government was forced to declare a moratorium which caused violent convulsions throughout the economy and resulted in countrywide distress which lasted for over a year. This state of affairs weakened the Jewish banks considerably.

Jews also participated in the organization of the big “Latviesu Akeiju Banka” which was originally a cooperative credit society for Latvians. With the assistance of British capital, it was converted into a company limited by shares. The organization had the Lewstein brothers' participation after they retired from the International Bank of Riga.

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Credit Cooperative Societies

The assistance of the American Joint Distribution Committee (the “Joint”) made it possible for the Jews to develop a network of cooperative credit societies for artisans and small tradesmen. The central institution, The Union of Cooperative Credit Societies, was headed by Dr. I. Yaffe, a gifted organizer. Both the Jewish banks and cooperative societies were looked upon as step-children in respect to public credit and the Government Bank was closed before them. Nevertheless, they were more firmly based and soundly managed than the Latvian societies. Their invested capital was larger than the total capital of the cooperative societies of all other nationalities in Latvia combined. The same was true of deposits, as shown in the following table dated 31st December, 1931.

Percentage of General Turnover

German Russian Jewish
Capital invested 14.8 16.2 17.1 22.9
Deposits 22.9 55.3 9.8 65.0
Loans 57.3 17.0 67.3 3.8

This table shows that the total loans granted by the Latvian societies amounted to 57.3% of turnover while the corresponding figure in the Jewish societies was 3.8% only. The main source of such loans was The Bank of Latvia. All complaints lodged by the Jewish societies in connection with this discrimination were to no avail. The Jews were compelled to manage with their own resources.

The following list shows the composition of membership in the Jewish societies in 1931:

Artisans 3442
Minor industrialists 1673
Merchants 6419
House owners 406
Free professions 654
Others 1515
Total: 15,087

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More than 15,000 members were registered in the Jewish Cooperative societies under the supervision of the Jewish Cooperative Credit Company. Business was conducted on a sound business basis in accordance with the express stipulations of the “Joint”. In this field of cooperative credit, the sole support of the working people, something was literally created out of nothing. In 1920 the writer of this essay was appointed head of the Cooperative Society of Artisans and Small Tradesmen in Riga. This public institution, which had existed before the war, had been totally ruined. Most of its members were scattered all over Russia. I succeeded in persuading Mr. I. Hyman, the representative of the “Joint” to grant the institution a loan of 250 Latvian roubles. This petty sum was regarded at the time as a fortune. The institution went from strength to strength and in later years, achieved an important position in Latvian Credit Cooperation.

The Cooperative Credit Society of the “Kleinhandelschutz” (Protection of Retail Trade) was also regarded as a well-founded public undertaking.

Less successful were the activities of the “Mutual Credit Societies”. Some of them went bankrupt and others were converted into Share Companies.


Industrial Undertakings

The Jewish share in the reconstruction of the Latvian industry after the war has already been alluded to above. It should be mentioned here that during the war, the Tsarist government evacuated all industrial equipment capable of transportation. The rest was ruined or looted by the German army. During the early years of independent Latvia, only Jews dared to start new industrial enterprises. Among the Jewish industrialists, particular mention should be made of Berlin-Shalit, the brothers Hoff, M. Mizrach, U. Millman, Maikapar (a Karaite), R. Feldhoun, H. Feitelberg and A. Sobolevitch. The latter was not only a businessman of imagination but also an exemplary public worker.

The Jews made their particular mark in the following industries: Timber, matches, beer, tobacco, leather, textiles, canned food and flour. The importance of the Jewish industrial enterprises for the Latvian national economy was two-fold: They developed exports and reduced the import of finished articles.

A place of honour in the Latvian Balance of Trade was reserved for the export of timber. In 1930, the total export of Latvian raw materials and semi-finished products reached the sum of 103.93 million Latt. This also included timber exports to a value of 77.63 million Latt, i.e. 74.46%. The

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lion's share of timber exports were in Jewish hands. Among the Jewish timber industrialists, mention should be made of: Belinki, Brill, Berlin-Shalit, the brothers Hillman, Lulov, Shmulyan, Michelson, etc.

The Jews also played an important part in the export of finished products such as timber, matches, textiles and rubber shoes (galoshes). In the textile industry, several Jewish firms gained distinction: Hahn, Mercur, Feldhun, Hoff, Wulff, Rita (Feitelberg), Yegel, Kurshansky, Himmelhoch and others. The brothers Hoff headed two large industrial undertakings: “Hoff” Flax industries in Mitau and “Buffalo” in Riga. The former employed some 1,000 hands; the second about 600. Some 70% of their production went abroad. R. Feldhoun re-established the ruined “Cotton Spinneries of Sassenhof” where some 1000 men found work and which produced three million metres per annum.

An important part of the match industry before it was taken over by the “Swedish Trust”, was also in Jewish possession. Most of the enterprises were concentrated in the hands of the “Emolip” Company.

Riga was famous before World War I on account of its rubber-shoe industry. The “Provodnik” was famous throughout the entire world. The manager was Jewish. The invested capital was French, Swiss, Belgian and Italian. About 15,000 hands were employed and the annual production amounted to 57 million Gold roubles. During the war, the plant was destroyed and the first pioneer to renew this industry in Latvia was again A. Sobolevitch. He set up the “Continent” Rubber Shoe Factory which employed 800 hands and whose products soon earned a good name for themselves in many countries. Similar undertakings were erected by Sobolevitch in Lithuania and Poland. Sobolevitch, incidentally, was one of the first business men to recommence the transit trade of Soviet Russian raw materials through Latvian ports to the outer world; and it goes without saying that the youthful state benefitted greatly from these transactions.

Sobolevitch re-erected the “Tannhaeuser” brewery. B. Levitas, A. Lubotsky, Mizroch, I. Schiff and others, built large new flour-mills. Mizroch also reconstructed the famous liqueur factory “Wolffschmidt” which had been in German hands before the war. The tobacco industry was largely in the hands of the Maikapar Company (of Karaite descent) and a considerable portion of its shares was owned by U. Millman. This firm also held most of the shares of the large “Goegginger” canned goods factory. In this branch, mention should also be made of the “Soerensen” company, whose owner was Birman. In the chocolate industry, a prominent place was occupied by Mr. A. Frumtchenko.

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Space does not permit a more detailed survey of the Jewish part in the establishment and development of the Latvian industry; it should be stressed, however, that all of these Jewish undertakings incessantly met with envy and hatred and artificial obstacles were placed in their way by the Latvian authorities.



I have already mentioned that Jews also played an important part in the import of vital raw materials. Particular mention must be made of mineral oil (kerosene). The worldwide concerns of “Shell” and “Standard Oil” and the Russian Trust were all represented by branches in Latvia, and supplied their fuels on fairly reasonable credit terms. The first comer was the “Shell” Company which commenced operations in Latvia as early as 1921. The driving spirit in the Baltic countries including all the branches of this company was E. Ettingen who possessed an extraordinary expert knowledge of this very extensive field. His chief competitor, A. Nisse, the principal agent of the Russian Trust, was also a Jew.

In the import of coal, the activities of A. Mushkat call for particular mention.


The Economic Structure of Latvian Jewry

We have mainly dealt so far with the contribution made by individual Jews to the Latvian economy. We shall now briefly consider the economic structure of the Jewish community as a whole in the state of Latvia. For this purpose, we shall use the population census of 1930. It is worthwhile remembering that the head of the Department of Statistics in Latvia that year was the Jew-baiter Skujenek. Although he did not falsify figures, he edited the tables so as to give them a decidedly anti-Jewish bias.

The following table shows that Jewish income was derived mainly from commerce. In absolute figures, the Jews held second place in income from commerce, according to the table below; in relation to the size of the Jewish population, however, they held first place. In other words, 48.81% of the Jewish population were merchants. All the remaining income sources such as agriculture, transport, civil service, etc., were not accessible to Jews and only a small proportion enjoyed incomes from industrial and wholesale enterprises. The Jewish masses were excluded from the fundamental income-source of the country – agriculture. Their income from the land was

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0.93% only. Latvia's total income from agriculture amounted to 57.4% of the total National Income of the country.

  N° of
Income from
% of total
income for each
Latvians 1,394,957 50,409,000 3.61
Jews 94,388 46,070,000 48.81
Great Russians 201,778 5,653,000 2.80
Germans 69,855 13,373,000 19.94
Poles 59,374 2,557,000 4.31
White Russians 36,029 496,000 1.30
Estonians 7,708 538,000 6.78
Lithuanians 25,885 914,000 3.53
Miscellaneous 8,566 1,729,000 20.18
Unknown 1,505 53,000 3.52
Total 1,900,405 121,765,000  

The following table gives the Jewish share in various branches of the National Income:

  1925 % 1930 %
Agriculture 0.91 0.93
Industry 26.75 27.66
Commerce 48.08 48.81
Transport 2.72 2.85
Civil Service ------- -------
Jurisprudence, police 0.80 0.80
Free professions 0.97 1.31
Misc.occupations 12.39 8.40

Actually, the Jewish share in commercial occupations was even greater than shown in the official statistical figures as the latter did not include peddlers, dealers in old clothes and various bartering experts I the markets of the Riga suburbs or in the provinces.

Conditions in the provinces were extremely difficult for Jewish merchants especially in Latgale where economic conditions in general deteriorated severely as a result of the provinces' severance from Russia. The

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City of Dvinsk, for instance, had been a centre of Jewish industry and commerce before the war but went completely bankrupt. The Jewish masses were cut off from their sources of income and means of subsistence. Most of them were driven to “commercial” occupations. New shops sprang up next to one another, their owners competing for every single client.

In the town of Rezhitze (Rezekne) the Jews fell victim to the exorbitant interest rates claimed by the local branch of “The Latvian Bank for Industry and Commerce”. This rate reached 48% per annum. The matter was brought before the Seim and a motion was introduced to indict the managers of the bank. In the end, however,
Nothing came of this and a considerable share of Jewish property passed into its possession. Under the impression of his visit to Rezhitze, the writer commenced a campaign in the press and with the Economic Committee of the Ministry of Finance in order to promote legislation limiting the rate of interest to a maximum of 7%. This was not at all easy as fierce opposition was raised against the new law from Jewish circles as well, on the grounds that it might entail Government intervention in private business. The representatives of the Cooperative Credit societies also opposed the proposed legislation as endangering their position in view of the fact that these societies did not benefit from credits with the Government Bank. In the end, however, the campaign was crowned with success and the law passed. Earlier opponents eventually admitted that it was justified.

In the towns of Kurland, the economic conditions of the Jews were quite bad. The two harbour cities of Vientspils and Liepaja underwent a major decline on account of the stoppage of Russian exports and the Jewish merchants in the provincial towns could not hold their ground for three reasons: a) The grain monopoly introduced by the Ulmanis administration hit them hard; b) Latvian cooperatives were founded and enjoyed considerable Government support; c) Difficulties in obtaining credit. In addition, the Jewish population in the provinces collapsed under the burden of heavy taxation.


Commercial, Industrial and Artisan Unions

The Jews were also pioneers in organizing commercial and industrial associations. The German Chamber of Commerce, before the war the chief bulwark of commerce, did not dare to show any activity in the early years of Latvian independence and the committees of the Exchange in Riga, Liepaja and Vientspils also ceased to function. The Latvians themselves, on the other hand, were not used to this kind of institution. In 1920, a

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Jewish body was organized under the name of “Kleinhandelshutz” (Protection of Retail Trade) founded by the writer. The new union came at the right time as Jewish merchants were suffering greatly from the prevailing chaos in currencies, taxes, foreign trade, etc. They were an easy scapegoat in any case and a public body was clearly necessary to protect the interests of Jewish commerce in all dealings with the authorities. Within three months, about one thousand members enrolled. Most of them were minor traders and craftsmen but in time, they were joined by representatives of wholesale trade and industry such as Shmulyan, the brothers Hoff, Sobolevitch and others. After a while, the name of the organization was changed to “The Union of Industry and Commerce.

One of the main achievements of the Union from the beginning of its existence was that it secured the inclusion of Jewish members in the Assessment Committees for Taxation. (They functioned on a voluntary basis thus inspiring the respect of Latvian members). This was made possible largely thanks to the personal relations between the writer and Winter, the first Director of the Department of Taxes who was honest and incorruptible. In the course of time, the Union became a political centre and the Jewish members of the Seim often came for information and consultation on matters of economic interest.

The Jews were also members of non-Jewish organizations such as “The Union of Industrialists of Riga”, the “German Chamber of Commerce” and “The Exchange Committee”. “The Latvian Union of Timber Industrialists and Merchants” also had a largely Jewish membership.

The “Kleinhandelschutz” had a branch office in Liepaja which in due course became independent and played an important part in local commerce. In Latgale, two Jewish commercial unions existed, one in Daugavpils and one in Rezhitsa. There was also an Artisans' Union which also looked after the spiritual needs of its members. Lectures were held on a regular basis in their club on matters of current interest. Finally, mention must be made of “The Latvian Economic Society” which was founded by the writer and participated by representatives of industry and commerce belonging to all communities. This was a sort of political-cum-economic “salon” and was frequented by ministers of state, members of the Seim, etc. who used to come to listen to lectures. Ulmanis, the Prime Minister and later Dictator, was also one of the regular visitors. This society was responsible for a large number of memoranda and various projects submitted to the Government and the Seim. Jewish influence here was also considerable and ceased only with the Fascist Revolution.


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