Władysław Grabski: 2 years of work at the base of our statehood (1924–1925) – Part I

Introduction

Among the fewer years of our renewed state existence, 1924–25 have their peculiar charter. In these years, the foundations of our fiscal and economical self-sufficiency have been laid, namely through the implementation of monetary reform, the improvement of the taxation strategy to accomplish budgetary balance, the establishment of state monopolies, the improvement of the customs strategy and the implementation of railway self-sufficiency. In addition, in these years, anti-state ferments were brought to an end and a policy of regulating language and another national minorities was launched.

A concordat was concluded with the Holy See.

The Polish defence force reached crucial development, and social peace was not clouded by any shocks throughout 1920 and 1925.

In the second half of 1925, the currency fluctuated and the economical crisis intensified. This caused uncertainty about the results of erstwhile attempts. But present it has been more than a year and a half since this breakdown, and we are pleased with the affirmative results of the previously developed and extended foundations of our statehood. In terms of taxes, we look for improvements — but we usage them to be efficient. The Bank of Poland is on an always stronger footing and the Bank of the National Farm and the Agricultural Bank are becoming an increasingly powerful financial power. All areas of Poland's financial and fiscal life present function on the basis of foundations located in the 1924–25 period. It was so years of exceptional labour strength at the base of state existence in the fields of treasure, currency and economical relations, and an era of considerable calming in political and social relations.

The current economical crisis obscures the orientation in the intent and necessity of state work in this area, which was carried out between 1924 and 25. But we should look at the tasks and works of our young state through the prism of broad past circles in order to be able to get appropriate orientation.

We know well how hard it was in erstwhile Poland to make the power of the Treasury and to establish efficient sources of improvement of economical life. We know how hard it was to have the atmosphere of a peaceful focus of the nation's creative forces in the field of political life.

We know how for all countries after the war, the task of lifting ourselves up requires long and patient efforts. We cannot so measurement what happened in our close past, what happened in the close future. — Crisis periods are trial periods. Even a severe crisis should not be considered as a breakdown if the state and social body wants to live and with its rights and aspirations it does not give up. Periods of effort are periods of learning their own forces, which should never be considered lost if they were utilized for deliberate combat. From the course of these fights, we must always draw conclusions that enrich us with experience, even though they do not always end in victory.

And that the efforts of 1924–25 were deliberate, is shown by the fact that their acquisitions proceed unwavering despite the passage of time and the change of people and directions, which are at the head of state affairs, and the pains which yet came out of that era gradually pass, subjecting to the essential albeit slow weakening of their intensity.

The efforts that were made between 1924 and 25 are collective work and merit of our full nation. This should, therefore, be seen in a separate work that outlines this work with the most comprehensive of all its components.

Among this collective work, I have put my own head and will on the line. This was due to the request for an accident. This necessity I gave up, without giving up on any hard decision and taking all the responsibility. erstwhile that burden had exceeded my strength, I gave way.

The explanation of my state activity in 1924–25 is simply a serious origin after the past of the 2 years. I do it in the form of my memories of this history. I would like to extract from these memories as much as possible the component of experience for the usage of present and later times, due to the fact that in my memories I would like to see not so much the illumination of these events, but the continuation of service with a pen of the same substance which I, as a man of deed, gave myself.

Section I. Beginnings and Trials

Chapter I

Before the Treasury in 1923

The question of how to safe Poland's conditions of being, in which it did not feel dependent on the occupiers in its regular and mass manifestations of economical and social life, was the primary concern of all those who did not think and sought another than the armed movements of the ways out of the political situation imposed upon us.

To emergence higher than Russia as regards the economical and social culture of the broad masses of the population, there seemed to be a measurement which would lead to the peaceful fallout of the largest of our partitions from Russia.

To show that our own forces were adequate to disengage from the possessors and to emergence much higher in their improvement than under their oppression, that was the intent of the studies, the collection of substance and the illumination of them in the publications and technological work.

During my speech in Duma in St. Petersburg from 1906 to 1912, I devoted myself to the studies to demonstrating the degree to which the Russian Treasury exploited Poland's financial forces and benefited Russia and developed work on gradually releasing Poland from the force of this operation and gaining our own improvement power, independent of Russia.

In particular, I have shown that the Russian Treasury has benefited greatly from the Russian occupation, hindering it in terms of spending useful to the country, and overburdening it many times in relation to Russia, both in the area of urban and land properties.

I argued that the Russian government was not only not a benefactor of its own at the expense of our lordships, which was the dogma on which the Russian government based all its influence and seriousness among the people, but that the possessive government in Poland had earned pure income. For preaching this thesis, I was sentenced to prison. I besides showed that the Russian government had earned money in giving salaries to the Catholic clergy in exchange for the collected spiritual assets, giving little than it took away. This program of studies on the financial settlement of Poland with Russia was dedicated to respective another people in the Russian partition, and besides to another districts concerning another possessive countries.

The thought that Poland should become a stand-alone financial and economical centre was becoming an increasingly clear programme as accidents pointed out that the world's political agreement could undergo very far-reaching changes that Poland can bring to life. After finishing my speech in Duma in the last 2 years before the war, I devoted myself to further studies at the Office of Social Labour on the issue of making financial and economical self-reliance on Polish lands. In this spirit I spent in 1913–1915 Statistical Yearbook of the Kingdom of Poland. The publication, in addition to the origin data collected for the Kingdom of Poland, contained data for another occupations and countries and with these compilations was visible the ability of Poland to become an independent centre of state life.

As shortly as the large war began, I immediately dedicated myself completely to organizing the land abandoned by the possessive authorities under the aegis of civilian committees, which became the first real bundles of our state organization. The Central Citizen Committee, which I organized and led, was brought to an end by the German business authorities, despite the large aid it has given the population; it has developed among the Polish exiles in Russia so extended social, cultural and economical care that it has managed to completely shield many exiles from the environment, to focus them and prepare them for their return to the country, protecting them effectively from the influence of destructive abroad factors.

When Poland became a real reality in 1917, I was at the head of the Polish exile organization in Russia, to prepare materiacs that would service to make Poland come out of its settlement with the possessive countries with a defensive hand and so that Russia could not burden Poland with financial burdens that could paralyze its development.

For this purpose, I entered the “Polish liquidation commission” which was formed by the Kiereński government after designation of the rule of Polish independency and whose leadership was entrusted to Lednicki. When, for reasons of inability to agree on my view of essential matters with the president of this institution, I spoke out of it, I concentrated the preparatory work for settlement with Russia in the body by the Central Civic Committee issued: Matery and survey on reconstruction of the Polish State. It was then that Mr Stanisław Kauzik, who became my closest associate in the field of state-wide activity, distinguished himself among the employees of this publishing house. And my closest companion at the time in both the “Polish Elimination Commission” and the issue Maters Mr Jan Mrozowski, the current typical of Poland in the Committee on Compensation in Paris.

When I arrived in Warsaw in the spring of 1918, I agreed to stay on behalf of the then Polish government in Warsaw the president of the commission to arrange Poland's trade relations with Germany. Instead, however, I was imprisoned in Prayer. After leaving there, erstwhile the business authorities were no longer there, my first concern (not counting the dozen-day office in the Świeżyński Cabinet) was to establish a Polish state body that would be devoted to settlement matters with the present countries. To this end, the “Chief Elimination Office” was established, dedicated to my management. At the same time, I was sent to Paris for the Peace Conference to guarantee our economical affairs at the conclusion of the Versailles Peace. “The task was highly difficult. The winners were large powers that suffered large losses and costs for war and demanded that the victors be compensated for it. As for the fresh states that did not wage war themselves, the large powers stood on the ground that they should bear part of the cost of the large war which brought them freedom from the invaders.

The peace treaty was laid down by the large powers and Poland could not exert direct influence. So quite a few the financial clauses have not been edited as much as we needed. “ But we have been able to defend ourselves against the dangers that endanger us so much that to this day our State is burdened with comparatively tiny financial burdens under the treaty, both due to the erstwhile debt of the possessive states and due to the fresh emergence due to the costly war. This is an highly crucial affirmative fact for the implementation of the thought of strength and financial autonomy of Poland.

Due to the harm done by Germany and Austria on Poland's lands, there should be serious damages. But they were meant to belong to those countries that waged war with Germany and Austria. That was the text of the Treaty in its general wording, which Poland could not exert any influence on due to the fact that it was not allowed to do so. It was then essential to make large efforts to prove that Poland was active in the war against Germany and Austrja, so that any right to compensation could be granted to us. Of course, these rights could not mention to the destructions made by Russia, but only by Germany and Austria, as victorious.

While the problem of compensation that we had already had presented many difficulties in itself, it was worse to avoid the burdens that we wanted to bear. First, it was argued that the cost of war should be distributed evenly to all countries that benefited from the war. Fortunately for us this thesis did not stand. But then England pushed through the the thesis that the recently created states were to pay to the fund the value of all government property on their territory, formerly owned by the victorious states, that is, the value of all railway lines, buildings and all state property. This was a terrible argument for all fresh countries. Not being able to refute this thesis due to the fact that it was as if the consequence of the resignation by the main powers of the thought of degrading the costs of the war itself into fresh states, which would have been even worse, I managed to make a serious breach in this thesis, showing that Poland could not pay for what the possessive states took. According to this my thesis, which was declared right, Poland was exempted from the work to account for forests which were formerly property of the Republic. erstwhile these rules were adopted, the most hard issue remained, namely to carry out the thought of compensation, i.e. that Poland should not pay anything to the general compensation fund unless it is granted a participation in this fund due to war harm in its territory. The designation of this idea, which I have put in place, is due to my colleague, Mrozowski, and the full squad of the Elimination Office. This was already a fewer years later and required a regular watchful work according to the above assumptions.

While we had an easier situation in terms of Germany, thanks to the general awareness that Germany was a large culprit to the world, it was more hard with Austria. The tiny modern Austrja was impossible to bear all the obligations that lay on the erstwhile Austrja. Therefore, any of these commitments had to fall on the succession states, which were demanded, in addition to their participation in the abroad debts of Austrja, to participate in a separate fund, called the Freedom Fund. However, the burden on Poland has not been great, thanks to the repartition key, which we have tried to make it the lightest possible for us.

There's inactive a settlement with Russia. In this case, the large allied powers have edited, completely outside the Polish delegation, an article imposing an work on us to take on us proportionally part of the burden of the erstwhile Empire. The text was shown to our main delegate (Paderewski) 1 hr before the date of signing the Treaty of Versailles itself. It is understood that it was impossible not to sign the treaty on its own for this reason. Oral reservations were made due to the fact that there could be no written arguments. There's a hard anticipation hanging over us. But this scourge was besides successful in dispelling, due to the fact that in the Ryski Treaty Poland stated that in the event of settlement between Russia and the states that were its creditors, Russia would take on all the burdens that could be borne by the departure from it from the Polish lands. The negotiations were carried out effectively in Riga by Mr Stanisław Kauzik.

All of the above settlements were of paramount importance for the further destiny of our financial independence, and I so wrote about them a small more comprehensively to show how hard and crucial tasks had rested at the Main Elimination Office, set up for this purpose. This office fulfilled its task well with the best consequence for Poland. We have come out of all these difficulties without the burdens that threatened us, and even with certain, albeit inadequate, damages in kind from Germany.

While I was in Paris in 1919, I was working to defend our state existence effectively from the financial burdens threatening us with global settlements, at the same time in the country the Minister of Treasury Englich, Karpiński, Bilinski laid the foundations for our public finances. Their main concern was that Poland had a strong currency, which presented highly large difficulties.

When I came to the Minister of the Treasury after Bilinski, I went first and foremost to unify the currency and bring the universal Polish brand, which caused large discontent on the 1 hand in Małopolska, on the another hand in the Russian partition. The population in Małopolska was reminiscent of the relation for the redemption of a crown more favourable than the 1 that came out of existing relations. I resisted this in the name of statewide reasons. The Sejm supported me, but the Members of Małopolska were against it, and this step of mine long left traces of animosity against me. Members of another districts have very clearly and powerfully supported me in this matter, in which I have been put at hazard many influential factors by leading the run in the name of the advantage of general interests over peculiar interests.

Since the monetary unification was a state necessity, I had to establish a legal relation between German brands and Polish and Polish brands. It was impossible to establish those relations another than those which occurred. erstwhile the 2.16 account was established for the ruble, it was absolutely right. If this had not been done, debtors would have repaid creditors with paper rubles the same as they had later repaid them with paper brands. Creditors would not have earned anything if there was no established relation between ruble obligations and brands. This relation was not the misfortune of the creditors, it was the decline of the brand. All these accounts that I carried out in 1920 were specified necessitys, without which 1 could not think at all about making Poland an organized and orderly state. What is different is the fact that erstwhile the national currency began to fall, justice required that the repayment of all liabilities within, not only pre-war but besides from 1918 to 1919, whether in crowns or rubles, or in German or Polish brands, should benefit from a moratorium. I made specified a proposal to the Council of Ministers already in 1920, but this proposal was not approved. The depreciated currency has done much harm to the country and much bad blood. In the end, the courts themselves conducted a moratorium on their own initiative for the payment of claims, but they did so late. In 1920, in the Witos Government, the Ministry of Justice objected to my then request that, by establishing a moratorium, the debtors be prevented from being harmed by debtors benefiting from a currency decline.

As Minister of the Treasury in 1920, I set up a programme to repair the Treasury, to reduce expenditure, halt issuing brands for budget purposes, and to cover extraordinary expenses that we had at the time, extraordinary incomes, as home and abroad loans.

The abroad debt that Bilinski prepared, I made. It was intended that American Poles contribute to rebuilding the Polish State. But it fell into the heaviest period of our fight with the Bolsheviks, and therefore, first of all, very small was received from it due to the fact that the American Poles were depressed by news from the front, and secondly, all its tiny sum was adequate for only a fewer months of decisive battles. For Poland, it was very crucial due to the fact that it helped to win, but for me to undertake with the aid of actions of the sanitation of the treasure and currency, it proved meaningless.

At the same time, I developed a broad effort to make interior loans. In preparing to stabilise the inactive falling brand and balance the pre-all budget, I began to make a debt first voluntary and then forced. For now, the Sejm has developed the thought of making the debt compulsory. I agreed to this and began to organise the collection of this loan. But then in the Sejm the atmosphere against this debt developed. Seeing the Parliament's hesitation in taxation matters and not uncovering support, I stepped down.

I stepped out of my first ministry erstwhile for not being a sufficiently reliable typical of the organization to which I belonged and from which I came out, and again for the fact that the course of the brand, which remained at an equal level throughout the spring and summertime of 1920, thanks to the American and interior loan, began to fall powerfully in autumn. This was not surprising, due to the fact that the war active a immense issue of brands on the 1 hand, and on the another there were crucial aeronautical needs requiring abroad currencies. It besides coincided with this, and the fact that the US's full old commission credits had ceased, which caused a strong request for abroad currency in cash.

In the spring of 1920, I was reasoning about joining the creation of an emanation Bank, I developed a plan for specified a Bank, and I based it on a abroad supply of currencies from an American loan, and on a supply of currencies from tree exports. For this purpose, a separate office of tree export was created at the Ministry of Treasury. I prepared the arrival of a Belgian expert in the issue of an issue bank in Poland. These plans were completely by the harsh course of our war in the spring of 1920, which was overturned. My function as Minister of Treasury had to be limited to delivering money for war. erstwhile I went to Paris in the fall of 1920 to arrange for a loan, I treated it to pay for the costs of our weapons, which were inactive needed after the war. I was counting on the fact that erstwhile the French debt covers these costs, we will be able to stabilise the balance of the budget with a compulsory loan. But neither France gave us a debt for reinforcements at the time, and only a year later, nor for a forced loan, I could not account for the temper of the Sejm. I besides tried to make a abroad debt in Paris in the fall of 1920 based on the contractual export of oil from Poland to France. The currencies of this debt were intended to defend the brand from inheritance, caused by commission purchases. But this debt crashed completely as a consequence of the opposition of oil industry, who did not see any interest in exporting to France.

So 1920 witnessed my first attempts to stabilise the currency, its reforms, and the sustainability of the budget. However, the conditions at that time were completely impossible for any plan to be carried out, for the war continued. My successors could not do anything lasting, though they had much better conditions, for from my resignation continued a constant state of peace.

Before I resigned from the position of Minister of the Treasury, as shortly as the war had ceased, I proceeded to make a state "post-war economical policy programme", which was the subject of deliberations by the economical Committee of Ministers and was then heard and mostly accepted by the Council of Ministers. I released this program in a limited quantity of 150 copies. I pointed out the request to reduce very crucial state spending. I have put the balance of the budget to the front of my tasks, and as for the brand, in the face of its strong decline, I have been on the ground of stabilising it first and foremost. Although most ministers agreed to this programme, it was not implemented at all after I left. prof. Taylor speaks about this program in his work Inflation Poland page 314 that "this was the first full formulation of the post-war policy issue and its solution".

On 1 July 1921, I made a proposal to the Sejm, which I had drawn up, "on improving state finances", as a parliamentary project. The proposal included the following requests: the valuation of taxes and charges, the simplification of authoritative staff, the release of an interior debt in the currency of gold against the dollar and the attachment of the issuing bank.

According to the above program, at the end of 1922, Minister Jastrzębski undertook 1 of the tasks mentioned, half-timely, by releasing a loan, partially based on gold.

After Michalski's failed effort to base the Sanitation of the Treasury on the stabilisation of the brand without further plan of reform, it became increasingly apparent that Poland had to make a wide-ranging plan to avoid the destiny of Austrja, which in 1922 gave itself under the control of the League of Nations. Under these conditions, I have been burdened with re-occupation of the Treasury Ministry.

Władysław Grabski