CZECH FINANCE SYSTEM

Press, Volume LXXXV, Issue 25994, 23 December 1949, Page 9

CZECH FINANCE SYSTEM

CONTROL BY STATE BANK LONDON, November 8. Czechoslovakia is planning a State banking institute which will control all finances of the State, local authorities, industry, and import and export trade (reports Reuter from Prague). Statements have been made indicating how Czechoslovakia hopes to meet the effects of Western devaluation in foreign markets without officially devaluing her own currency, the crown against the dollar. By abolishing private ownership the Communists in Czechoslovakia have abolished the private accumulation and issue of capital. . . Various means are now being adopted to ensure an adequate “Socialist accumulation” to provide investment moneys for the five-year plan, operating cash for nationalised industrial and trading corporations, compensation moneys for export industries forced by Western competition into price cutting, and all the means required for the daily financing of a vast and growing State system. Concentration of the whole financial system in a single system of control based on a single banking institute enables every sector to be interlocked. Thus, a scheme for “converting” all insurance policies, in the words of Dr. Jaroslav Karel, deputy-general manager of the nationalised monopoly, Insurance Corporation, is aimed at accumulating premium payments into a fund to “compensate for any unexpected damage in the whole economy and to support the investment programme of the State.” Similarly, as the Minister of Finance, Dr. Jaroslav Kabes, explained:— “Private savings are welcomed as a supplementary source of means to finance the five-year plan.” Or as Dr. Leopold Chemela, general director of the National Bank, put it: “Gains or losses in world markets can be equalised by a mutual balancing account, which helps us to detach our internal price level from price levels abroad.” Demands for credit from the nationalised monopoly trading and production corporations can be satisfied from State surpluses, accumulated through taxation and other means. A special law is now being drafted to found a new "State Bank” which will be the centrepiece of the nation’s controlled economy. Beside it will work a centrally operated investment bank and a centrally controlled system of savings bank which may issue small credits but not for private enterprise. Czechoslovakia’s Communist planners are now taking steps to tighten the control of planning. A new system of contracts to be operated through the entire governmental and industrial system was announced in October. It requires that one nationalised firm placing orders with another or one Government department placing or accepting an order must do so on a contractual basis. Contracts must contain penalty clauses. Foreign trade is included in the system. When a Czech monopoly trading corporation receive an order it must pass it on to the home producer and have a contract signed specifying all relevant conditions. These inter-related systems are to be co-ordinated in what is called the “national finance plan.” which will coyer every detail of the nation’s working life.