When savings were lost and dreams shattered: Czechoslovak monetary reform of 1953

70 years ago, on June 1, 1953, the ruling Communist regime announced a major monetary reform which significantly cut the value of the money in circulation. Many people lost most of their savings and became virtually penniless.

Joseph Stalin and Klement Gottwald | Photo: Czech Television

1953 was not a great time to be alive in Czechoslovakia. Show trials, inspired by those in the Soviet Union, had been going on for years and were just culminating in the prosecution of 14 high ranking Communist Party officials that had fallen out of favour. Among them was the former general secretary of the party, Rudolf Slánský. He would soon hang after a confession forced out of him through repeated torture sessions.

The country, which had been ruled by the Communists since 1948, was heavily in debt after five years of economic mismanagement and people were still reliant on a state rationing system that had been originally put in place during the Second World War.

But things were going to get even worse. To combat the economic problems, the party had begun preparations on a secret monetary reform.

Antonín Zápotocký in a factory  (1953) | Photo: Czech Television

Rumours were circulating and people were concerned, but on May 29th, the country’s president, Antonín Zápotocký, assured the public that the currency was strong and that no monetary reform would take place. That same evening the shops closed.

What was about to come would spell disaster for many living in the country. Take the example of the Metlička family, who had saved up to buy a house. They had packed up their furniture and were ready to sign the contract. When they tuned in to listen to the radio the next day, they were shocked to hear the country’s prime minister, Viliam Široký, was announcing a very different message to that uttered by the president just hours before. The current money in circulation, the banknotes that people used for daily purchases, would remain valid only until the end of the month and, from June 1, they would be exchanged for new ones that had already been printed in the Soviet Union.

Ration cards  | Photo:  Státní okresní archiv v Českých Budějovicích

The exchange rate was ridiculous, cash worth up to 300 Czechoslovak crowns would be exchanged at a ratio of 5:1, meaning that 300 crowns would become 60 crowns. Larger sums were exchanged at an even lower conversion rate – 50 old Czechoslovak crowns in cash were worth just 1 crown. Money in the bank was exchanged at a rate of 5:1 as long as it was no more than 5,000 crowns in total. Those who had savings ranging from 5,000 to 50,000 would see their money converted at a rate of 25:1 and those who had more than this in the bank had to settle with a ratio of 30:1. High ranking Communist Party officials were lucky, they got better exchange rates.

Many saw it as outright robbery. The Metlička family went from soon owning a new home to possessing nothing more than a bunch of worthless paper notes. Theirs was far from a unique story. Many pensioners lost the money to be able to pay for their funeral, others lost all of their savings. Some individuals saw no other way out of their misery than to take their own lives.

Protests in Plzeň | Photo: Czech Television

It may come as little surprise then, that when the reform came into effect on June 1, 20,000 people went into the streets in the West Bohemian city of Plzeň to protest. Most of them were workers at the local Škoda factory and they were hell bent on making sure that the monthly salary they were about to receive would not be paid out in the now worthless old currency. After all, they had been promised by their president that they had nothing to be afraid of. This demonstration was the first major expression of dissent in public to take place in the communist satellites of the Soviet Union since their formation after the end of World War Two.

Protests in Plzeň | Photo: Státní oblastní archiv v Plzni

It wasn’t just in Plzeň that people came out onto the street. However, the state had prepared for unrest. Units of the military and militia units loyal to the party were called into action and 650 arrests were made. Many of those who were rounded up would be fired from work, or forced to take on worse jobs. Other workers saw their salaries lowered. Those families that were seen as problematic by the authorities were forced to relocate into the border regions, made empty after the expulsion of the Sudeten Germans several years earlier. Some even had to face prosecution.

Those who remember the times sometimes recall the large amounts of banknotes that could be found lying on the pavement in front of shops and banks.

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