Latvian Jews - Jewish Population in The Latvian Republic - Economic Life

Economic Life

Jews already played an important role in industry, commerce, and banking before World War I. After the establishment of the republic, a severe crisis overtook the young state. The government had not yet consolidated itself and the country had become impoverished as a result of World War I and the struggle for independence which Latvia had conducted for several years (1918–20) against both Germany and the Soviet Union. With the cessation of hostilities, Latvia found itself retarded in both the administrative and economic spheres. Among other difficulties, there was running inflation. Jews made a large contribution to the rebuilding of the state from the ruins of the war and its consequences. Having much experience in the export of the raw materials of timber and linen before World War I, upon their return from Russia they resumed export of these goods on their own initiative. They also developed a variegated industry, and a considerable part of the import trade, such as that of petrol, coal, and textiles, was concentrated in their hands. However, once the Jews had made their contribution, the authorities began to force them out of their economic positions and to deprive them of their sources of livelihood.

Although, in theory, there were no discriminatory laws against the Jews in democratic Latvia and they enjoyed equality of rights, in practice the economic policy of the government was intended to restrict their activities. This was also reflected in the area of credit. The Jews of Latvia developed a ramified network of loan banks for the granting of credit with the support of the American Jewish Joint Distribution Committee and the Jewish Colonization Association (JCA). Cooperative credit societies for craftsmen, small tradesmen, etc., were established and organized within a central body, the Alliance of Cooperative Societies for Credit. However, the Jewish banks and cooperative societies were discriminated against in the sphere of public credit and the state bank was in practice closed to them. These societies nevertheless functioned on sound foundations. Their initial capital was relatively larger than that of the non-Jewish cooperative societies. In 1931 over 15,000 members were organized within the Jewisherion societies. Jews were particularly active in the following branches of industry: timber, matches, beer, tobacco, hides, textiles, canned foods (especially fish), and flour milling. About one half of the Jews of Latvia engaged in commerce, the overwhelming majority of them in medium and small trade. About 29% of the Jewish population was occupied in industry and about 7% in the liberal professions. There were no Jews in the governmental administration. The economic situation of the majority of Latvia’s Jews became difficult. Large numbers were ousted from their economic position and lost their livelihood as a result of government policy and most of them were thrust into small trade, peddling, and bartering in various goods at the second-hand clothes markets in the suburbs of Riga and the provincial towns. The decline in their status was due to three principal causes: the government assumed the monopoly of the grain trade, thus removing large numbers of Jews from this branch of trade, without accepting them as salaried workers or providing them with any other kind of employment; the Latvian cooperatives enjoyed wide governmental support and functioned in privileged conditions in comparison to the Jewish enterprises; and Jews had difficulty in obtaining credit. In addition to the above, the Jewish population was subjected to a heavy burden of taxes.