On September 6, 1938, fourteen men dressed in uniforms of the Sudetendeutsche Partei (Sudeten German Party, SdP) marched through the Czechoslovak city of Český Těšín towards the town hall. Despite their rally-like promenade, the men did not intend to storm the building, however. On the contrary, they calmly settled on the seats reserved for the newly elected municipal assembly members and waited for the first meeting of the new election period to begin. After dealing with formalities, including the election of the new city council, the newly minted deputy mayor from the SdP, Anton Schneeweiss, outlined his party’s program. He made predictable demands, such as renaming the city “Böhmisch Teschen” instead of “Český Těšín” and instituting German as the town’s sole language of administration. His action plan’s final point was more peculiar. He declared that the Sudeten German Party would finally ensure the liquidation of the Teschen Savings Bank (Teschner Sparkasse, Těšínská spořitelna, Cieszyńska Kasa Oszczędności)—a municipal savings bank located just over the border in the Polish city of Cieszyn.Footnote 1
The issue of the Teschen Savings Bank went back eighteen years and had its roots in the border drawing of July 1920. Following World War I, the historical region of Teschen Silesia, previously part of the Austro-Hungarian Empire, became a contested territory between the emergent Polish and Czechoslovak states. Considering the predominantly Polish-speaking countryside, Poland’s claim was based on ethnic considerations, whereas Czechoslovakia emphasized historical rights and the significance of the local railway junction for its economy. The strong German-speaking urban milieu was caught in the middle.Footnote 2 In January 1919, the two states clashed over the territory during the week-long Polish-Czechoslovak War. Czechoslovakia managed to seize most of Teschen Silesia, including the city of Teschen—its urban center and home to both 22,489 inhabitants and the Teschen Savings Bank, that served locally based account holders.Footnote 3 However, Czechoslovakia’s control over Teschen was short-lived, as the Allies compelled its troops to retreat in late February 1919. This withdrawal led to eighteen months of uncertainty, during which the Allied powers attempted to resolve the situation via a plebiscite. Due to violent interference from both sides, they eventually abandoned this process in favor of arbitration. In July 1920, the Allies divided the region between Poland and Czechoslovakia, which resulted in the city of Teschen being split into Polish Cieszyn and Czechoslovak Český Těšín.Footnote 4 The new international border created a host of logistical and economic challenges, including the separation of Czechoslovak residents from their savings in the Teschen Savings Bank, situated across the river in Poland. Despite repeated assurances from Czechoslovak authorities that citizens would regain access to their funds, they consistently failed to deliver—frustrating both the public and local leaders.
This article explores the persistent efforts of Český Těšín’s municipal officials to reclaim these funds for the nationally diverse borderlanders in a period of slow political and national radicalization. It reveals how post-WWI border-making in Central Europe produced lasting financial disruption and investigates how both local and national-level actors mobilized these disruptions for their own goals. The international arbitration that divided Teschen required the fair liquidation of both the city’s and its municipal savings bank’s assets. Unlike cases that concerned large banks such as the Austrian and Hungarian Postal Savings Banks, which were resolved through multilateral agreements between Poland and Czechoslovakia as well as other successor states, the issue of Teschen proved to be uniquely complicated.Footnote 5 While the liquidation of the bank’s guarantor was bad enough, multiple currency conversions, inflation, and hyperinflation obfuscated the value of deposits, while the selling of the bank’s assets during the plebiscite period—a move Czechoslovak officials deemed, if not unlawful, then at least unfair—complicated the situation further. Given these challenges, it is hardly surprising that the Czechoslovak state failed to fulfill its promise of reuniting the locals with their savings. And yet, the authorities’ inability to recognize and resolve this deeply felt grievance revealed the inefficiency of the state apparatus and undermined its legitimacy in the borderlands. By tracing these dynamics at the local level, the article therefore underscores the broader political consequences of everyday financial disintegration in the unraveling of interwar political order.
While the history of Teschen Silesia following WWI has drawn considerable scholarly attention, the role of economic factors in the conflict remains neglected. Historians examining the region typically follow the common historiographical view of East-Central Europe as a region where the Great War failed to end, highlighting either the Polish-Czechoslovak clash over the area or the nationalist tensions between Polish, Czech, German, and Silesian loyalists that it helped to generate.Footnote 6 This emphasis on violence and ethnicity has produced a reductive understanding of the region, obscuring both key cross-border dynamics and the role of economic forces in shaping local politics. Indeed, both Poland and Czechoslovakia worked to assert sovereignty and integrate these territories not just politically, but also economically, introducing tariffs and national currencies to fold them into their national economic systems.Footnote 7
The economic history of interwar East-Central Europe has long been defined by narratives of disintegration and economic downturn caused by war-induced destruction, the dissolution of the Austro-Hungarian monetary and customs union, and an over-reliance on foreign capital.Footnote 8 States often experimented with autarky and economic nationalism as a solution to economic turmoil.Footnote 9 Despite increasing globalization, they incentivized home production and, while avoiding direct taxes, introduced tariffs and other indirect taxation, which made Eastern and Central European farmers dependent on Western markets. The Great Depression only intensified government intervention, even when governments still acted within a market economy and remained part of the international economic system.Footnote 10 The impact of these protectionist policies was particularly palpable in the newly created borderlands. Tariffs, seeking to shield inland manufacturers, seldom aided small and medium-sized businesses in border areas. Their supply and demand networks did not respect the newly drawn border lines that separated industrial zones from agricultural regions and locations rich in raw materials from their processing industries.Footnote 11
Yet this economic disintegration was far from complete. Scholars working on the afterlife of empire in East-Central Europe have shown that new national governments, even as they asserted sovereignty, often retained and repurposed imperial structures—both administratively and economically.Footnote 12 Non-state actors, too, proved adept at navigating the post-imperial landscape. Along the new borders, trade continued through smuggling to avoid tariffs and even intensified as locals dived into currency speculation.Footnote 13 From Alsace to Banat, industrialists and businessmen sustained their networks through creative adaptation, building a shadow economic empire across new frontiers.Footnote 14 Indeed, ordinary people and wealthy elites alike responded to new borders with economic pragmatism rather than nationalist zeal, maintaining—and sometimes establishing new—cross-border links when beneficial, and severing them when they were not.
This literature typically presents imperial continuities as positive for those who managed to maintain and recast them. The case of the Teschen Savings Bank illustrates that this was not always the case, however. Tenacious cross-border entanglements resistant to resolution could financially ruin ordinary men and women, who often lacked the social and financial capital to weather the postwar upheaval. Furthermore, they could bring local politicians head-to-head with their new governments, which, in some cases, proved to be either disinterested or powerless in the face of lengthy international negotiations. The resulting sense of injustice deepened local leaders’ broader—often national—grievances, fueling disillusionment with the newly formed states. In this climate, right-wing nationalist groups like the SdP—a powerful grassroots organization capable of fostering a community beyond its role as an outstretched arm of the Third Reich—instrumentalized these failures for political purposes.Footnote 15 Savings banks in particular occupied a distinctive place in Nazi ideology. The Nazi Party in Germany presented the local Sparkasse as the embodiment of völkisch finance and promoted saving as a path to both individual and national advancement, in opposition to “foreign domination” and “Jewish capital” associated with private banks.Footnote 16 This ideological framing made the Teschen Savings Bank a natural focal point of SdP interest. Consequently, unresolved prewar continuities risked generating disillusionment with the new states that could be exploited by fascist movements, especially when they remained frozen and seemingly incapable of adaptation to the new political order.
Economic forces played an integral part in the collapse of interwar Central European democracies, as scholars have often emphasized from a macroeconomic view. By focusing on the state as the primary unit of analysis, they highlight the role of the Great Depression, inflation, agrarian reforms, the return to the gold standard, and the burdens of war reparations and debt—frequently more damaging symbolically than materially.Footnote 17 Despite the excellent work challenging the myth of the First Republic, Czechoslovakia continues to be treated as an exception in this body of scholarship.Footnote 18 Unlike Germany, Austria, or Poland, Czechoslovakia did not experience hyperinflation.Footnote 19 The state even managed to achieve a net-creditor position through its exports by the mid-1920s, only to be disproportionately affected by the Great Depression due to its wide industrialization of the Bohemian Lands.Footnote 20 Yet this macroeconomic view does not explain how finance functioned as a lived social experience outside of moments of crisis. This article remedies this oversight, pointing to the fact that successor states had to work through claims of both major institutions like the already mentioned Austrian and Hungarian Postal Savings Banks, as well as smaller, more local financial institutions. Only in Teschen Silesia such arbitration concerned not just the Teschen Savings Bank, but also banks located in the towns of Fryštát (Freistadt, Frysztat) and Jablunkov (Jablunkau, Jabłonków), which found themselves on Czechoslovak territory but held deposits of Polish residents.Footnote 21 In emphasizing these postwar banking entanglements, the article brings to light a hitherto neglected aspect of border-related economic disruption in the immediate postwar period.
More importantly, however, the failed liquidation of the Teschen Savings Bank illustrates how long-standing financial grievances—intensified, if not produced, by political inaction and administrative inefficiency—were perceived by local officials as serious obstacles to consolidating support for the new states in the interwar period. Drawing on sources from the local, regional, and national levels, this article shows that borderland residents often lacked institutional access and political influence and therefore depended on grassroots lobbying. The local intermediaries who assumed this role possessed only limited leverage. While they repeatedly warned high-ranking officials that the protracted liquidation risked alienating affected populations from the state, their warnings fell on deaf ears. The article thus argues that the government’s failure to address these economic grievances undermined trust in democratic institutions and suggests that the perceived ineffectiveness of the state apparatus provided convenient fodder for grassroots authoritarian movements—such as the SdP in the opening anecdote—which capitalized on these deeply felt material grievances and offered promises of resolution. While available sources from the national level point to a similar tendency to paint the issue in national colors, they do not provide a clear answer as to why Prague did not solve the problem. Rather than a clear resolution, the present analysis thus offers a window into the local leaders’ experience of a near Kafkaesque nature of state bureaucracy and their snowballing frustrations. Consequently, the article highlights financial disenfranchisement on the local level as a key force behind interwar political disillusionment and calls for greater attention to negative continuities in studies of post-imperial transitions.
The narrative unfolds chronologically in two parts. It begins with an overview of the savings bank’s history and purpose, followed by the region’s turbulent plebiscite period of 1919–20 and the Czechoslovak authorities’ initial attempts to address the problem of stranded savings. The second part traces the persistent, often desperate efforts of local representatives to resolve the issue, exposing the state’s inability to remedy problems of its own making and the periodic political weaponization of the dispute.
The Teschen Savings Bank and the Collapse of Imperial Economic Space
Savings banks emerged in Germany and Switzerland in the late eighteenth century to provide the growing middle class with a secure place to save and invest, while also serving a distinct moral purpose—encouraging thrift among the lower classes. In Cisleithania, Vienna opened the Erste österreichische Spar-Casse in 1819, followed by Ljubljana in 1820, and Prague in 1823.Footnote 22 Deposits supported state credit needs and industrial growth, while Enlightenment ideals encouraged using funds for charitable purposes. Their mission was to safeguard and grow savings—especially for low-income clients—rather than issue personal loans. Based on small founding capital, savings banks only gradually built up reserves. This meant that initially, a municipal guarantee for liabilities, statute restrictions, and supervision secured the institution.Footnote 23 Local savings banks were therefore closely tied to local elites, who sat on their boards and guaranteed their solvency.Footnote 24 In Austrian Silesia, savings banks proliferated after the 1848 revolutions, aided by the 1853 and 1855 Model Statutes, which placed the responsibilities of founding and guaranteeing primarily on city authorities rather than private benefactors, under the oversight of government commissioners.Footnote 25 In this scheme, the municipality served as both a dependable sponsor and direct beneficiary, as surplus from the profit could only ever be used for purposes that served the common good, which naturally contributed to urban development. Troppau opened the region’s first savings bank in 1858, followed by Bielitz in 1859.
The rapid growth of these institutions indicated increasing demand for financial services as more people, both rich and poor, became part of a money economy. In fact, after economic stagnation in the mid-1860s, Cisleithania experienced industrial growth with many savings banks following the example of commercial banks and expanding to include more speculative ventures. The stock-market crash of 1873 abruptly ended this economic expansion. The resulting aversion to risk led to significant investment losses but also encouraged a shift toward local organization of economic assets, which further benefited savings banks that provided both security and good returns. Their deposits grew and opportunities for mortgage lending increased, even if government restrictions made it harder for these banks to compete with other financial institutions. Savings banks remained vital because of their local focus, offering financial services in markets only marginally connected to the financial centers of the monarchy and thus served as key drivers of local modernization, which bound them to the turn-of-the-century idea of progress.Footnote 26
The Teschen Savings Bank mirrors these larger trends. Founded in 1859, it was initially limited to serving a 20-kilometer radius.Footnote 27 Within a decade, it had attracted 5,000 depositors, and by the 1890s, it occupied a prominent corner house on the main square, signaling its central role in the town. Initially, the management prioritized capital accumulation, but with the turn of the century, the institution—just like other savings bank across the empire that achieved a favorable ratio of the reserve fund to deposits, which allowed for a significant distribution of surplus profits—became a vital tool for city development.Footnote 28 Teschen’s city thus played a dual role as guarantor and beneficiary, building public confidence.Footnote 29 For residents, trusting the Teschen Savings Bank must have come naturally—after all, what could endanger a thriving town? The new borders drawn following WWI soon put this trust into question.
As Austria-Hungary collapsed, both Poland and Czechoslovakia claimed Teschen Silesia as integral to their new nation-states. After the week-long war in January 1919, the Allied powers started to look for a resolution. Yet in the year-long power vacuum that followed, lawlessness and violence thrived.Footnote 30 In early 1920, members of an Interallied Plebiscite Commission arrived in Teschen to organize a referendum. They established Western and Eastern Prefectures to divide the contested territory between the Polish and Czechoslovak administrations, hoping to restore order. As a result, Poland held Teschen, Trzynietz, Jablunkau, and Freistadt, while Czechoslovakia controlled Karwin and Oderberg. The arrangement quickly deteriorated. During the plebiscite preparations, both states—and their local supporters—fought for the minds and hearts of the undecided while simultaneously secret Polish and Czechoslovak paramilitary groups crossed the new demarcation line to carry out bombings and shootings in an intimidation campaign.Footnote 31
Both states also sought to secure their respective zones financially, despite the fragility of their economies. In the Second Polish Republic—pieced together from territories previously controlled by Russia, Prussia, and Austria-Hungary with vastly different economic realities—the government officially adopted the Polish mark (Mp) as de-facto national currency in November 1918, but other currencies circulated well into 1920.Footnote 32 Czechoslovakia’s currency reform proved more decisive: it sealed its borders in February 1919 and stamped all Austrian crowns (K) within its territory. Given the uncertain future of Teschen Silesia, neither the Polish nor the Czechoslovak government introduced its currency in the region.Footnote 33 In 1919, locals continued to use unstamped Austrian crowns.
This dominance of the old Habsburg currency came to an end in April 1920 when Poland began exchanging unstamped Austrian crowns for Polish marks in its prefecture.Footnote 34 Although the Czechoslovak delegate to the Interallied Plebiscite Commission protested, and so did many local German-speaking businessmen, the Interallied Commission approved the plan.Footnote 35 In response, Prague dispatched an emissary of the Ministry of Finance to instruct locals sympathetic to Czechoslovakia to exchange as little currency as possible and keep their bank deposits untouched, promising they would not suffer losses after the plebiscite.Footnote 36 His advice followed national interests, as limiting the circulation of Polish money would weaken Warsaw’s territorial claim to the region. Many complied, expecting to convert their savings directly into Czechoslovak crowns (Kč) after annexation. They would soon come to regret their decision.
Amid mounting violence and administrative deadlock, the Interallied Plebiscite Commission abandoned its mission. In July 1920, the Allies at the Spa Conference divided the region between the two new states. The border, drawn along the River Olsa (Olza, Olše), was anything but seamless. It left many Polish-speakers in Czechoslovakia and split the region’s multiethnic capital in two, creating Polish Cieszyn and Czechoslovak Český Těšín. The latter, an industrial suburb, lacked administrative and cultural institutions; the former lost its light industry and its vital rail junction, though it retained the Teschen Savings Bank—still proudly occupying the main square, even as the Habsburg city of Teschen that had guaranteed its solvency faced liquidation.Footnote 37
Prague and Warsaw began to fully integrate their newly acquired territories. Seeking to safeguard its financial assets, the Polish government froze all deposits belonging to creditors resident in Czechoslovakia and prohibited their transfer across the border. This measure prevented Czechoslovak depositors from relocating their funds to domestic institutions in the two weeks between the decision and the formal introduction of the border on August 10, 1920, effectively stranding their money in Poland.Footnote 38 Czechoslovakia, in turn, began introducing its currency in its part of Teschen Silesia. Despite the earlier discouragement to circulate banknotes stamped by Polish authorities, they decided to accept the Polish mark as the preferred currency for exchange, suggesting that the Polish mark thoroughly proliferated throughout the region.
Eager to expedite the currency transition, the Czechoslovak government set the exchange rate at 300 Polish marks to 100 Czechoslovak crowns, commencing immediately upon assuming control of the territory on August 10, 1920. Bank deposits in unstamped Austrian crowns, held in Czechoslovak Teschen Silesia since at least February 26, 1919, were converted at par if the owner resided or was registered there. In October 1920, authorities introduced a retrospective surcharge on Polish marks acquired before August 10, making the exchange more profitable. The first cash amounts of 10,000 Mp exchanged at parity with a supplement of 66.66 Kč per 100 Mp. Larger amounts were traded at 200 Mp = 100 Kč plus 16.66 Kč per 100 Mp. This measure, which followed complaints of residents of the former Polish-controlled Eastern Prefecture, likewise aimed to encourage loyalty to the Czechoslovak state while at the same time attempting to prevent speculation by letting the authorities refuse these surcharges if at all suspicious.Footnote 39 This additional decree also addressed deposits held in Polish Teschen’s financial institutions and promised that when deposited in Austrian crowns, they were to be recognized at parity. When in Polish marks, the ordinance authorized the Czechoslovak Minister of Finance to grant an interest-free advance of up to 30 Kč per 100 Mp deposited there before August 10, 1920. Final settlement of such accounts was to be determined by government order. In exceptional cases, the minister was likewise empowered to grant special relief for hardships arising from the city’s split, attesting to a strong interest from Prague regarding the divided city’s future.Footnote 40
Men and women who wished to make use of this benefit had to apply by the end of November 1920, and while many did so, the decree proved little consolation when savings continued to be frozen just across the border, awaiting an international agreement to resolve the issue. The following section, therefore, traces the eighteen-year struggle of local elites, municipal authorities, and regional representatives to recover the savings of Czechoslovak citizens from the bank—an effort that steadily eroded their patience and confidence in the Czechoslovak state.
The Local Struggle for Stranded Savings and the Crisis of State Legitimacy
Following the town’s division, the Polish and Czechoslovak regional authorities established Administrative Commissions to govern Cieszyn and Český Těšín until municipal assemblies could be elected. Each was made of mostly local and regional dignitaries and national activists, many of whom were involved in the plebiscite and thus reflected the two towns’ ethnic composition: Poles, Germans, and Jews in Cieszyn; Czechs, Poles, Germans, Jews, and Silesians in Český Těšín.Footnote 41 Meeting a few weeks after the split, their immediate concerns lay in keeping shared infrastructure—gas, electricity, and water—running without interruption, coordinating relocations of civil servants and apartment exchanges for residents crossing the new border, and securing joint use of medical facilities.Footnote 42
Under such overwhelming pressure, the liquidation of the local savings bank was far from being their most urgent priority. Yet it was still a topic of concern, especially for those on the Czechoslovak side. At its first meeting in September 1920, the Český Těšín Administrative Commission resolved to send a representative to the board of the Teschen Savings Bank, reasoning that both towns now served as guarantors. The effort failed. By late December, the administrators complained that all written requests to attend board meetings as Český Těšín’s emissaries had been ignored by the bank’s leadership. Ultimately, the commission passed a resolution declaring that it “did not recognize any decisions made [by the Teschen Savings Bank] since the split of the city of Teschen.”Footnote 43 Meanwhile, the Czechoslovak Ministry of the Interior sought to determine the number of depositors residing on its territory. According to its report that offered data from December 1920, the total deposits amounted to 25,384,492 Mp among 12,770 depositors, roughly half of whom lived in Czechoslovakia. Mortgage loans totaled 4,392,082 Mp, including 2,124,000 Mp issued within Czechoslovakia. Loans to municipal governments, including the city of Teschen, came to 3,674,662 Mp, of which only 1,100,000 Mp—less than half—were issued to Czechoslovak municipalities.Footnote 44 Apart from this assessment, however, the issue lay mostly dormant.
Český Těšín’s municipal leadership only began to address the savings issue in earnest after the election of the first municipal assembly in September 1923. To the dismay of Czech national activists, voters elected a predominantly Silesian- and German-oriented assembly.Footnote 45 Josef Koždon, leader of the Silesian People’s Party (Ślůnsko Ludowo Partyjo, Schlesische Volkspartei, Śląska Partia Ludowa), became mayor. His party represented residents who identified as neither Polish nor Czech, spoke the transitional Teschen dialect commonly known as po naszymu (“in our own way”), and maintained strong cultural affinities with German life without necessarily claiming German nationality.Footnote 46 Despite political and national divisions, the drive to recover deposits held across the border united the town’s representatives as savings in the Teschen Savings Bank belonged to constituents of all nationalities. Accordingly, Czech, German, Polish, and Silesian delegates alike pressed the matter in their visits to Prague.
In January 1924, Český Těšín’s municipal representatives traveled to the capital to address this matter for the very first time. They urged the Ministry of the Interior that “under no circumstances should a large part of the population be deprived of their possessions through no fault of their own, solely because of an international decision.” Such injustice, they warned, would “destroy their belief in justice and law.”Footnote 47 If talks with Warsaw failed, they proposed creating an international commission or taking the case to the Permanent Court of International Justice in The Hague.Footnote 48 Ministerial Officer Dr. A. Schmidt, the official handling the matter, blamed delays on the complexity of the issue and repeated postponements of bilateral meetings. He added that the case lay beyond the Interior Ministry’s sole authority, advising them to appeal to the Finance and Foreign Affairs ministries. Undeterred, the delegation pressed those ministries as well, warning that if the state would not take the matter to an international court, the public would.Footnote 49 While recent studies have shown that many in East-Central Europe looked to the League of Nations for help, Český Těšín officials—perhaps embittered by the failed plebiscite and the partition of their city—seemed to have distrusted international arbitration.Footnote 50 The savings bank dispute was a rare exception, though here too, invoking international justice seemed to serve as a threat, rather than a genuine plan, as there are no records indicating that they ever made good on their promise.
In April 1924, rumors spread in Český Těšín that the savings bank leadership planned to liquidate the former Teschner Sparkasse. Alarmed, the Czechoslovak Ministry of Foreign Affairs contacted its Embassy in Warsaw, urging intervention. They stressed that depositors came from across the Teschen District—now divided between the two states—and argued that liquidation would violate Article 215 of the 1919 Treaty of Saint-Germain-en-Laye.Footnote 51 Only the presence of Czechoslovak state, municipal, and depositor representatives could protect Czechoslovak citizens’ interests. Citing local sources, Prague noted that the bank’s own management wanted to resolve the matter with Czechoslovak authorities and was willing to send an emissary. The ministry, therefore, instructed the embassy to ensure the Polish government raised no obstacles, while at the same time cautioning them against direct pressure on Warsaw to avoid endangering the normalization of the two states’ relations.Footnote 52
The move to liquidate the former Teschen Savings Bank was tied to sweeping economic reforms in interwar Poland. Although the Second Polish Republic unified its financial system, the 1919–21 Polish–Bolshevik War left the state heavily indebted and much of its territory devastated, triggering agricultural shortages and steep price hikes. To stabilize the economy and cover the budget deficit, the government printed large quantities of Polish marks—fueling inflation and eventually hyperinflation.Footnote 53 This had a detrimental impact on banks. The real value of deposits plummeted, prompting people to spend their money on goods, foreign currencies, jewelry, and gold, rather than keeping it in their accounts. Savings in Polish lands collapsed from 2.5 billion francs in gold in 1913 to almost nothing in 1924. Banks struggled to fund lending, while repayments in depreciated currency eroded real returns. The 1924 currency reform and introduction of the złoty (zł) forced balance sheet recalculations, exposing heavy losses that pushed some institutions, including savings banks, into liquidation.Footnote 54
By July 1924, the Teschen Savings Bank was in a critical condition due to both postwar hardship and limitations on its banking operations. Polish municipal leaders proposed to secure a state loan, enabling the bank to resume operations and add a pawnbroker service.Footnote 55 They also sought to restore public trust, issuing a proclamation urging residents to deposit funds in the bank, now ostensibly secure under stable currency conditions guaranteed by the establishment of the central Bank of Poland in April 1924.Footnote 56 These appeals had only a modest success as the once prosperous financial institution struggled to regain trust and attract depositors.Footnote 57 Consequently, leaders in both towns had strong incentives to resolve the dispute. While the bank’s management hoped to release their assets frozen in banks on Czechoslovak territory to bolster their finances, Český Těšín’s leaders aimed to liberate their constituents’ deposits to win favor before the next elections and reinsert held-up finances into the local economy.
Although Prague promised prompt interstate talks, negotiations stalled.Footnote 58 Only in April 1926, Poland and Czechoslovakia concluded a treaty addressing legal and financial disputes arising from the new border. The agreement covered issues such as debt adjustment, settlement of monetary liabilities, and release of certain deposits—all features of the regional banking system that had risen during the final decades of the imperial era, but excluded matters concerning the former city of Teschen, which were deferred to separate treaties. The Teschen Savings Bank was not alone to remain untouched. The same applied to the municipal savings banks in Fryštát and Jablunkov with depositors in Poland. Nonetheless, the treaty directed the vested parties to establish a joint Czechoslovak–Polish commission of experts that would meet in Cieszyn to review these banks’ deposits, assets, and liabilities. Their findings were to be reported to both governments to finalize an agreement—ideally within three months.Footnote 59 The speedy plan quickly proved illusory. By October 1926, the Czech-language newspaper Obrana Slezska reported further delays, noting that lobbying had yielded no results.Footnote 60 In April 1927, the paper announced that the Czechoslovak Ministry of the Interior had ordered an inventory, calling on depositors of the former Teschner Sparkasse, who had resided in Czechoslovakia before April 23, 1925, and their lawful heirs, to register. Footnote 61 A process meant to take three months dragged on for over a year, adding up to seven years in total since the border drawing.
Meanwhile, unease mounted in Czechoslovak Teschen Silesia as the Society for the Protection of Depositors (Spolek na ochranu vkladatelů, Einlagerschutzverband, Ochronny związek włożycieli) ostensibly stepped up its activity. Founded in 1925 by Artur Wohryzek, a lawyer and prominent figure in Český Těšín, the tri-lingual society’s main goal was to represent the local depositors impacted by the border drawing, who were, according to the Silesian Party newspaper Nasz Lud, “poor people” and “orphans” waiting for their savings as if for a “salvation.”Footnote 62 Still, the President of Czech Silesia, Josef Šrámek, claimed it was run by the Silesian Party and undermined Czechoslovak interests.Footnote 63 When looking for a resolution, he urged the officials in Prague to distinguish between local Czechs who favored liquidating the old municipal savings bank and those who merely pressed for covering losses from the devaluation of Polish currency. Casting the issue in national terms, Šrámek insisted that no loyal Czech would ever engage in speculation during a currency crisis and that it was Poland that should cover any genuine losses.Footnote 64 In reality, speculation was hard to prove. So were national loyalties. Yet by framing an economic dispute that cut across political and ethnic lines as a national one, Šrámek reinforced the state’s reluctance to pay compensation by inducing fear that such a move would benefit supporters of non-Czech parties and bolster the allegedly unreliable national elements.
Not all Czechoslovak officials viewed the dispute through a national lens, however. In November 1927, the former Czechoslovak representative to the Interallied Plebiscite Commission composed a report in which he avoided any mention of ethnicity but warned that repeated delays had bred “undisguised dissatisfaction and fear,” emboldening anti-government voices who accused Prague of breaking the promises made during the plebiscite. He called the population’s demands “justified” and pointed to their meager means by noting that many had relied on their frozen assets to the degree that they had to take out loans to be able to meet their obligations. Fulfilling their wishes would “strengthen their loyalty and trust in the state,” because the state was, in his opinion, more than a tax collector; it was the ordinary people’s “protector.”Footnote 65
These reports failed to produce a resolution. While progress was made on other issues, the Teschner Sparkasse dispute stalled. Frustrating many, in May 1928, the Polish and Czechoslovak governments agreed to settle claims at all financial institutions in Polish Teschen Silesia—except for deposits at the Teschen Savings Bank.Footnote 66 Šrámek expressed regret over the repeated postponement of the conference on the Teschen Savings Bank, warning that the delay could spark a press campaign against the Czechoslovak administration.Footnote 67 In Český Těšín, municipal officials likewise discussed these claim settlements. On June 12, a representative proposed a resolution praising the government’s effort to reimburse citizens but criticizing the unresolved deposits at the Teschen Savings Bank. After a brief debate, the resolution passed unanimously.Footnote 68 The Society for the Protection of Depositors scheduled to hold a meeting in Český Těšín five days later, on June 17, 1928, to update the locals on recent developments, even if none of these addressed the Teschen Savings Bank. In the regional capital of Opava, Šrámek once again turned to letter-writing, warning Prague that internal conflicts might prompt a protest at the Český Těšín District Administration. The meeting, which was attended by approximately 700 men and women and featured speeches in German, Czech, and Polish, passed without incident.Footnote 69 Nonetheless, dissatisfaction remained.
In September 1928, Český Těšín municipal representatives returned to Prague, where Schmidt at the Ministry of the Interior informed them that the Czechoslovak government had proposed two dates for talks—both of which were rejected by Warsaw. Using their close cross-border ties, the local leaders noted that “widespread opinion in Teschen” held that Warsaw favored a swift settlement, while Prague was slow to act. Schmidt firmly denied this accusation. Since Poland insisted on setting the conference dates, he advised the city representatives to appeal to the Ministry of Foreign Affairs to expedite the process.Footnote 70 The writers at Nasz Lud were starting to wonder if the issue would drag as much had it concerned not poor Silesians, but “wealthy Czech farmers.”Footnote 71 The case lay dormant until May 1930, when the Polish-Czechoslovak conference to liquidate the former Teschen Savings Bank was finally set to take place and to divide its assets and liabilities, including savings and loans. Whereas this task was expected to be straightforward, dividing reserve funds would likely prove more complex. Consequently, Schmidt informed city leaders that any action would follow only after a government agreement was firmly concluded.Footnote 72
This surge in activity coincided with the start of the Great Depression in Central Europe, which strained the banking system. However, government institutions like municipal savings banks usually benefited from the public’s distrust of private banks and ended the year with more depositors and higher deposit totals than the previous year. In fact, the rebranded Savings Bank in Cieszyn reported at the end of 1930 that its deposits increased by 11 percent, and the bank continued to operate without major stress in the subsequent years.Footnote 73 Despite Poland’s deflationary policies aimed at maintaining the gold standard, it remained relatively financially healthy given the circumstances.Footnote 74 The institution’s stability did little to help imperial-era depositors, however. For them, the crises made access to savings all the more urgent.
In October 1930, the Czechoslovak Senate discussed the “Treaty about the Use of Municipal Buildings of the former Municipality of Teschen,” which was signed a year prior. While addressing quite a few cross-border issues, it once again ignored the Teschen Savings Bank.Footnote 75 German Social Democratic Senator Hans Jokl raised this obvious oversight and sharply criticized the government’s inaction. He argued the issue could have been settled domestically without international negotiations, with the state paying depositors upfront and seeking reimbursement from Poland later. “The depositors of the Teschen Savings Bank are mostly poor people,” he reminded his fellow senators.Footnote 76 “They did not get a penny of their hard-earned money since 1920 and are in great need.”Footnote 77 Although he represented the Ostrava rather than the Teschen electoral district, Jokl took an interest in the issue. He was a staunch German nationalist who, in the aftermath of WWI, advocated for the annexation of the Sudetenland to German Austria.Footnote 78 Instead of casting the Sparkasse issue in explicitly national terms, however, he framed it within a broader catalogue of border-related grievances. These included disputes over the salaries of teachers serving in territories controlled by Poland during the plebiscite period, as well as the perceived reluctance of the Czechoslovak government to grant citizenship to certain applicants. While Jokl presented a more diffuse expression of disillusionment with the Czechoslovak government, the implication that many of those affected were considered nationally undesirable by the titular nation remained unspoken.Footnote 79 His complaints found indirect support in the Czech nationalist newspaper Obrana Slezska, which lamented recent developments and warned that “decade-long stalling will not add to the regard of the authorities.”Footnote 80 In this climate, Český Těšín city council, working together with the Society for the Protection of Depositors, resolved to press the issue once more. They drafted a memorandum urging a prompt resolution and circulated it to relevant government offices, as well as to senators and representatives from the district.Footnote 81
In April 1932, the Ministry of the Interior still blamed Warsaw. Schmidt complained that Poland had delayed convening a conference for eighteen months, forcing Czechoslovakia to act. He claimed the government now had all the material needed for a resolution, but evaded questions on deposit interest and challenged earlier figures—including the 1:1 exchange rate.Footnote 82 The following year, 1933, brought little change. Schmidt resorted to a new, personal set of excuses, including his health and being overworked. Municipal representatives called the situation a “scandal,” warning that public trust in the government’s ability to reach a resolution was gone and the remaining depositors were “slowly dying out.”Footnote 83 By March 1934, Schmidt dispensed with excuses altogether, simply stating that negotiations remained stalled.Footnote 84
Suddenly, two months later, Schmidt reported that the dossier was complete and ready for submission to the Council of Ministers for a final decision. Asked about payout amounts, he explained they would depend on the date of deposit: prewar and wartime contributions might be recognized at a 1:1 rate, while later deposits would be reduced under the 1924 Polish Valorization Act.Footnote 85 When asked about a precise date, he nonetheless stalled. Municipal representatives countered that the savings bank repeatedly claimed that funds were available while the delays lay with Czechoslovak authorities—an assertion Schmidt once again denied. Confidently, he assured them that the matter would be resolved within the year.Footnote 86
By March 1935, municipal leaders were visibly losing patience. After the familiar complaints, Schmidt repeated last year’s assurances: both the Justice and Finance ministries had approved the dossier, which would be presented for final government approval within two to three weeks, then forwarded to the Polish Foreign Ministry. Prewar deposits were to be honored at a 1:1 rate, but regaining accrued interest appeared unlikely. The information prompted the local representatives to remind Schmidt of the political consequences, with one of them mentioning that they “were facing new elections and that every candidate could expect to be asked how such conditions were possible. Every member of parliament promises to do his best […] and yet it seems impossible for it to come to an end […].” The municipal delegate likewise noted that even fifteen years in it still seemed unclear “who in the state [was] actually responsible for dealing with such questions.”Footnote 87
In July 1935, Schmidt repeated a familiar refrain, citing his workload and the constant arrival of urgent matters. He also accused Cieszyn’s mayor, Władysław Michejda, of obstructing progress by questioning Prague’s right to demand a list of all savers and their deposits, given that the Czechoslovak government had refused such lists for the Jablunkov and Fryštát Savings Banks in the past. This charge was unsurprising amid the heightened nationalist tensions in Teschen Silesia, where the Polish irredentist agenda was reaching its interwar peak.Footnote 88 Yet the renewed request for depositor lists suggested that the issue was far from resolution, despite Schmidt’s assurances. The mayor of Český Těšín, Koždon, voiced his frustration: “There is no other area in the republic where the population demonstrates such long-suffering and patience.” Koždon added that the board of the Cieszyn Savings Bank had confirmed it had raised 4,000,000 Kč in the Frýdek Savings Bank, with the help of Czechoslovak debtors, specifically to pay Czechoslovak creditors. Authorities were further reminded that the government’s continued delays gave the appearance of neglecting depositors’ interests.Footnote 89
In October 1935, the board of the Cieszyn Savings Bank, distrustful of Czechoslovak inaction, appealed directly to the Polish Ministry of Treasury. They requested a commissioner to begin recalculating old deposits, noting that earlier efforts had been stalled by the border dispute and the Polish-Czechoslovak Commission. They urged the Teschner Sparkasse case to be resolved under Polish law.Footnote 90 They argued that this would relieve the Polish depositors—who likewise continued to wait for their funds—and strengthen the basis for negotiating payouts to not only Czechoslovak claimants of the Teschen Savings Bank, but also Polish claimants of the Fryštát and Jablunkov Saving Banks, whose funds would remain frozen until a final settlement. Instead of merely emphasizing the need to safeguard depositors—as local Czechoslovak officials typically did when appealing to their central authorities—the board of the Cieszyn Savings Bank presented rapid resolution as an “urgent necessity” rooted in broader economic and institutional considerations.Footnote 91 Warsaw agreed but stressed that recalculation and repayment to Czechoslovak citizens would remain suspended until a bilateral agreement was reached.Footnote 92
By March 1936, frustration in Český Těšín had reached a new pitch. The municipal leaders discussed convening a meeting to draft yet another memorandum to intensify pressure on government authorities. One council member noted that the liquidation of Polish deposits was already underway and suggested publicizing this fact to embarrass Prague into action. Others supported renewed talks with the leadership of the Cieszyn Savings Bank. The council member and head of the local Jewish Community, Leo Ziffer, dismissed these steps as too timid. He called for a public demonstration and even a renewed push to take the case to The Hague. His proposals went unvoted, but they captured the deepening exasperation of the town’s leaders.Footnote 93
In May 1936, the issue was once again mentioned in the Czechoslovak Senate, this time in the context of the Law on State Defense. Jan Horák, a senator from the Czechoslovak Traders’ Party (Československá živnostensko-obchodnická strana středostavovská), underscored the precariousness of the saver’s financial standing during crisis of national security. He called the entire issue “embarrassing” since it concerned “our small-town folk, tradesmen, merchants, workers […] who then deposited money in that savings bank, because it was an institution with savings security, and today, when there is poverty and need, they need money, but they cannot get it from there.” Finally, he noted that if the government fulfilled its promises, maybe the men and women in the borderlands would actually feel like they lived “in their own state.”Footnote 94 Echoing Jokl six years earlier, his passionate intervention signaled how such financial grievances risked fueling disloyalty to the state.
Concurrently, the finalized memorandum of local leaders to the Czechoslovak state announced a “new phase” in the dispute: the Polish government had agreed to settle Teschner Sparkasse deposits held by Polish residents by August 1936, under the Polish Valorization Act.Footnote 95 The Savings Bank also pledged to compensate Czechoslovak citizens from funds stored in the Frýdek Savings Bank branch in Český Těšín, using the same law. Pre-1914 deposits would be paid at 95 K or 25 zł = 120 Kč—far better than the 1 K = 1 Kč exchange—while deposits from 1915–20 would be valued at a less favorable 200 K = 25 zł. Municipal leaders denounced this as unjust. The Society for the Protection of Depositors pressed the state to authorize the release of the savings bank’s assets on the Czechoslovak territory, ensuring Czechoslovak depositors were not disadvantaged compared to their Polish counterparts. They argued that this would also stimulate the local economy and improve public perceptions of the state. While endorsing adherence to the Polish Valorization Act, they urged the government to compensate those penalized by its less favorable provisions.Footnote 96
In March 1937, Polish authorities finally responded to the Czechoslovak dossier. When Schmidt received the local representatives in April 1937 in his new office below the Prague Castle in Malá Strana—a setting that only heightened the Kafkaesque character of their encounter with state bureaucracy—he informed them that Warsaw had rejected the Czechoslovak proposal and refused to negotiate on its basis. Instead, the Polish government demanded that all three banks in former Teschen Silesia—Cieszyn, Fryštát, and Jablunkov—be treated equally. Schmidt deemed such action impossible, as the Polish deposits in Czechoslovak savings banks were quite insignificant as opposed to those of Czechoslovak citizens in the Teschner Sparkasse. Moreover, unlike the Habsburg city of Teschen, neither of the guarantors of the two banks on Czechoslovak territory had to be liquidated. Still, he promised that he would initiate an interministerial conference with the Ministries of Finance, Justice, Foreign Affairs, and the Interior and work out a new proposal. The municipal representatives had had enough, though. They demanded that the Czechoslovak government would satisfy the depositors from its own coffers according to the principles it has established and subsequently, act towards Poland not only as a state authority but also as a client of the depositors. They argued that the current state of affairs was “unacceptable.” Schmidt promised he would submit this proposal to the planned conference.Footnote 97
When Český Těšín representatives returned to Prague in September 1937, local frustration boiled over: “We heard the same news six months ago. The matter has not advanced a step. If things continue at this pace, there is no telling if the depositors will ever see their money.” Pressed again on why the liquidation could not follow the Polish authorities’ proposals, Schmidt repeated his earlier points, but, for the first time, revealed the real sticking point: not the deposits themselves, but the division of the bank’s other assets—particularly the proceeds from properties which the Teschen Savings Bank had sold after the 1920 border settlement. Czechoslovak officials claimed these properties had been sold below value; a charge Poland denied. This admission confirmed the municipal leaders’ suspicion that depositors were being held hostage to a broader intergovernmental dispute. Arguing for a “completely different approach,” they echoed Jokl and urged separating the domestic political obligations to depositors from the diplomatic wrangling with Poland. The Czechoslovak government, they stressed, had publicly assured citizens during the plebiscite that deposits were safe. They demanded immediate payout from the state treasury at a 1:1 ratio, deferring interest payments until a final bilateral settlement. Schmidt advised them to submit the proposal in writing but cautioned that its enactment would require extraordinary legislation, making its success unlikely.Footnote 98
The men could not be put off any longer. On October 17, 1937, the Society for the Protection of Depositors held a public meeting in Český Těšín with about 100 men and women in attendance.Footnote 99 Some in the strained Czechoslovak government viewed it as a potential threat to state authority and security, even connecting it to Slovak separatism. The source of this anxiety was Štefan Lacko—a former legionnaire and municipal leader from Čadca—who attended the event. Like other Slovak depositors, Lacko placed his savings in the Teschen Savings Bank and, as a long-term member of the board of the Society for the Protection of Depositors, consistently acted in their defense. In 1937, he noted that the delays had already driven some depositors to financial ruin, and others even to suicide, and urged the government to “put the sixteen-year-old grievance to rest and strengthen the influence of the Czechoslovak idea on the threatened soil.”Footnote 100 Rather than engaging with his arguments, the Czechoslovak governmental officials debated the man’s motives, dismissing him—wrongfully—as a separatist and a sympathizer of the far-right, clerico-fascist Hlinka’s Slovak People’s Party (Hlinkova slovenská ľudová strana).Footnote 101 This neglect, combined with the issue’s nationalist framing, created fertile ground for radical parties that sought to exploit economic frustration, undermine the democratic regime, and challenge state authority—turning the local officials’ warnings and Prague’s fears into an self-fulfilling prophecy when the SdP won in the communal election in the summer of 1938.
Against Kafka’s Castle
On June 15, 1938, the Office of the President at Prague Castle received a letter addressed to Edvard Beneš from a self-described anonymous depositor of the Teschen Savings Bank. It opened bluntly: “Please have mercy on the depositors of the old Teschen Savings Bank. We have waited in vain for twenty years. Many depositors are already dead; the elderly—over seventy and eighty—have not even received their interest.” The writer alleged that, had most depositors been Czechs rather than Silesians and some Slovaks, the matter would have been resolved years ago, and appealed directly to Beneš: “You Mr. President, […] can help us! […] [W]e are your Slavic brothers, not Henleins.”Footnote 102 The letters’ direct tone, nationalist framing, and explicit scrutiny of certain government officials’ motives highlight the profound frustration that many local authorities had previously warned the central government about—frustration that likely contributed to the tense political climate in which Konrad Henlein’s Sudeten German Party gained a municipal majority in Český Těšín.
Although the SdP won the town’s communal elections in June 1938, it never had the chance to act on its promises. Its first meeting, described in the opening anecdote, took place only in early September—barely a month before the Munich Agreement, after which Poland annexed Czechoslovak Teschen Silesia and reunified the city under Polish rule. The new ethnonationalist regime forced many Czech- and German-speakers to flee or face expulsion. At this point, the stranded deposits at the Teschen Savings Bank disappear from the record, but it is reasonable to assume that those savers who remained were compensated on the same terms as depositors already on the Polish side, who had begun receiving payouts in March 1938.Footnote 103 In effect, the problem was therefore quite likely only resolved when the border of August 1920 was erased from the urban landscape, with consequences far more invasive than the loss of one’s savings.
The liquidation of the Teschen Savings Bank was exceptional, but not unique. Stranded deposits plagued border regions across the former Habsburg lands and beyond, as successor states struggled to settle the claims of major institutions such as the Austrian and Hungarian Postal Savings Banks. New borders also disrupted smaller, local financial institutions. The fact that the payout of deposits stored in the Kindersparkasse von Angestellten und ständigen Arbeitern der Nordbahn (Children’s Savings Bank of Employees and Permanent Workers of the Northern Railway) among Poland, Czechoslovakia, and Austria, took until 1933, underscores the scale of disruption to everyday finances.Footnote 104 The Teschen case—alongside the related, though far less documented, cases of Fryštát and Jablunkov—was likely among the most complex to resolve. Precisely because of these complications, however, it offers a particularly revealing case study: its protracted liquidation kept the issue alive throughout the interwar period, while the attention it attracted locally illustrates how seemingly small-scale economic grievances could be politicized and mobilized by different actors.
Indeed, the eighteen-year saga demonstrates how the redrawing of Central European borders could profoundly destabilize the finances of those without a wealth cushion or access to political influence. Unlike wealthy businessmen and industrialists, who could diversify assets and rely on personal networks, many borderlanders whose economic lives were rooted locally and whose savings were entrusted to small, low-risk banks were left vulnerable. On a day-to-day basis, they made do through currency speculation and smuggling. But in terms of banking, their financial security depended not on succumbing to illicit practices, but on the uncertain protection of state officials and the uneven success of grassroots lobbying. As a result, they bore the economic consequences of political rupture not only more severely, but also more intimately, with the erosion of modest savings threatening the very basis of their everyday lives.
It was in this way that local economic grievances had the potential to undermine the state and perhaps even radicalize political beliefs. During the plebiscite period, Czechoslovak authorities had convinced depositors of the Teschen Savings Bank to put trust in the Czechoslovak state and leave their funds untouched when Poland initiated a currency exchange. After the border was drawn, municipal leaders and local elites mobilized to defend the interests of these savers. They lobbied Prague for swift resolution, proposed international arbitration, and leveraged their proximity to Cieszyn to pressure central authorities. Their reports reveal mounting frustration with Kafkaesque state bureaucracy that ran across political and national lines—a fact that points to the fundamentally economic character of the issue, even if regional administrators and local activists cast it in national terms at times and if all actors involved had either financial or political reasons to “protect the depositors,” which went beyond the pursuit of justice. Only in the latter half of the 1930s did this national framing converge with local officials’ warnings about the protracted liquidation’s impact on popular support for the state in the region, gaining broader traction just as Prague grew increasingly wary of the region’s volatility and non-democratic parties began exploiting ingrained injustices to expand their appeal beyond nationalist slogans. That economic discontent eroded faith in interwar Central European states and by extension their democracies is well established. What the case of the Teschen Savings Bank highlights, however, is how the roots of such grievances often lay in imperial continuities that could at times deepen, rather than bridge, the fractures of the new political order—especially when paired with an inefficient and highly opaque state bureaucracy.
Acknowledgements
This article has benefited immensely from the insights of many wonderful scholars. I would especially like to thank David Armitage, Chad Bryant, Gábor Egry, Elena Hoffenberg, Ota Konrád, and Máté Rigó, as well as the participants of the 2025 New Economic History of Central and Eastern Europe at the Wissenschaftskolleg zu Berlin. My thanks also go to the two anonymous reviewers, whose comments and suggestions greatly strengthened this piece.
Competing interests
The author declares they have no competing interests.
Funding information
The research for this article has been supported by the Bucerius Ph.D. Scholarship “Beyond Borders” by the ZEIT-Stiftung Ebelin und Gerd Bucerius and ASEEES Dissertation Research Grant from the Association for Slavic, East European, and Eurasian Studies.
Zora Piskačová is an Academy Scholar at the Harvard Academy for International and Area Studies at Harvard University. She is currently preparing her first book manuscript, The Last Habsburg City: Cieszyn and Český Těšín, 1918–1938.
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