REVISION OF OCI COUNTRY HANDBOOK ON CZECHOSLOVAKIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A001500290001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: November 16, 2016
• Document Release Date: February 11, 2000
• Sequence Number: 1
• Publication Date: August 3, 1956
• Content Type: REPORT

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REVISION OF OCI HANDBOOK - CZECHOSLOVAKIA
Delete last 9 lines of page 1 and flrat 2paragraphs on page 2 and
substitute following three paragraphs in 'Current Issues" Section:
Goals of the Second Five-year Plan (1956-60), first revealed during
a series of iadnatrial conferences held in the fall of 1955, aontinue to
be discussed now as draft directives of the Plan. This draft, as issued
on 3 May 1956, calls for a WO increase in national income and a 33%
increase in personal consumption over 1955, and more moderate rates of
growth than achieved in indnstry and planned for agriculture under the
First Five-Year Plea (1949-53), Gross industrial output is scheduled to
increase 50% over 1955, producer goods output 57% and consumer goods out-
put only 40%. If the plan is fulfilled, gross industrial output will
increase on the average 8.4% per year during the neatlive years, as
compared with an annyal average increase of 1118% 6,6411949-55. Inasmuch
as 90% of inaustrial growth over the neat five years is predicated on
increased labor productivity, major themes of current economic discuasions
are the need to introduce new technology and to extend mechanization,
particularly in the mining, steel, and chemical industries, and in agri-
culture.
Gross agricultural output is to increase 30% during 1956-60. Current
agricultural policy continues to support aome of the reforms instituted
under the new course" program of late 1953. Although such incentives
as reduced compulsory deliveries and credits to private farmers have not
been retracted, a firmer tone on collectivization has been apparent since
mid 1955. Current efforts are directed toward 1.) expanding the coopera-
tive sector of agriculture in line with the policy to bring about the
predominance of the socialized sector by 1960, and 2.) cultivating the
approximately 300,000 hectares of idle land taken out of production as
a result of the new course" retrenchment program on collectivization
and earlier shifts of agricultural labor to industry.
Simplification of planning througb a gradual reduetion of the number
of .plan indexes and transfer of some planning responsibilities from
ministerial to local levels, as well as a shortening of the work week
at the end of the. Second Five-Year Plan have been recently announced.
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irst paragreph on page 90 beeinn ith line 5, to read:
"LT.nd tett Followingthe death of 3ta1ir in 1953, Czecho-
slovakia, along with other East EUropean bloc countr.es, adopted a
"new couree" referred to in Czechoslovakia as a policy of "proportionate
growth." Under this policy the rate of industrial growth was decelerated
in order to correct imbiances which had developed through forced industrializa-
tion. Some aims of this policy, such as the expansion of the raw materials
base of heavy industry and the development of agriculture, continue to be
emphasized und.er current plans 'New coursepolicy has been modified
somewhat in 1956, however,vipermitting producer goods to grow more raiAdly
than consumer goods."
Change Page 12
. International Commitment ' o:
L.
Czechoslovakia has treaties of friendixip, co1iabortIon
'stance with the USSR and all the Ea?t Etropean
2. It also has technical, scientific colla ration and cultural
agreements with the USSR, all the astern European Satellites and Communist
China.
Change Page
"4.Prade Agreements" to:
In addition to trade agreemen s with all of the 1
countries, Czechoslovakia has formalized trading re
numerous Western countries. Since 1 January 1955, ne agreements
(including 104me that had previously lapsed) have been signed with:
Uruguay, Egypt, Iraa Sudan, Burma, Ceylon, and Sweden.
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For pages 16 25 substitute:
?
A.
Currency
L. Basic Monetary Unit: Crown.
2. Exchange Rate: 1.2 crowns * US B1 at the official 1.8
s 1 ruble.
B. BankinK System: All beaks operate as part of a un ted banking
structure under the control of the Ministry of Finanne Because banking
transactions are conducted within the framework of a financial plan, banks
act more as monitors of economic plan fulfillnent than as banking institu-
tions in the Western sense. The present banking system includes three banks:
1. a State Bank which regulates currency circulation, controls foreign ex-
ehange transactions and grants short term credit; 2. an Investment Bank
which supervises financing of investment and long term credits; and 3. a State
Savings Bank which administers workers' savings and social benefits.
C. Economic Trencts
1 Basic Ecomic tactors: Czechoslovakia is one of the most
industr alized countries of Eaetern Europe. The Communiats have reorganized
the structure of industry by &hitting emphasis from light industrial manu-
factures, notably textile and leather goods, to the output of produzer goods.
Because of the preoccupation to expand heavy industry and to industrialize
once backward areas as Slovakia during the period of the First Five Year
Plan (1949-53), agriculture was seriously neglected. Although greater atten-
tion has since been given to this sector, its production is estimated as
still below prewar, and the country remains more dependent on food imports
than in the prewar period.
In 195, Czechoslovakia produced an estimated gr se national
output of 11 billion US Dollars (at 1955 prices), which *counts for
of the total GNP of the East European Satellitea. In 1955 Czechoslovak GNP
was 65f higher than in 1948. Because of concentration on producer goods
almost none of the benefit of this growth had been passed along to the
populace. Under the new course', however, some efforts have been. made to
increase the supplies of consumer goods and foodstuffs. Results of these
efforts were apparent by the end of 1954 and during 1955.
2. Currency Stability: Because of the unauscessful attempt to
repress inflation through rationing, Czechoslovakia abolished its dual price
system on 1 June 1953 in conjunttion with a drastic currency reform. This
reform not only greatly reduced currency in circulation, depoeits of organi-
zations and individuals, but aleo
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the currency reform, the crown vas officially tied to the ruble.. Thus
the official rate of exchange of the crovn to the US dollar ahanged from 50
to 7.2 to 1.*
the currency reform there have beeu five general price
reductions, which have increased pre-reform purchasing Dover. Due to the
high. cost and on-availability of certain essentials, however, the scale
of living is prebably still below that of the prewar period.
3. Government Controls: Under the enes government (1945-Feb.
1948), about 65177-Muatr1a1 enterprises were nationalized. The Communist
regime speeded the nationalization process, and &nee 1950 virtually all
industry, transportation, foreign trade, and finance have been nationally
administered. State ownership has been extended to a far leafier degree over
construction, retail trade, and agriculture. About 43% of the arable land
is farmed by state farms and cooperatives. Although cooperatives are state-
regulated, they are not state-owned.
D. Annual Budge (in mlii ions of c crown)*
'fetal
Budget
Military &
Security
Expenditures
ent Czee
1. & Sec. Exp.
as per cent
of Total Budget
1956
89,887
9,606
10.7
1955
36,039
10,430
12.1
1954
87,573
7,787
8,9
3. Soviet Economic Aid: Economic aid from the USSR has been confined
since 1950 to scientific and techrical assistance. No gold or foreign
currency loan has been granted since 1949.
* The official rate of exchange set by the Czechoa1vak Government (7.2
crowns US $1) overstates the value of the crown. A satisfactory
rate for conversion of crowns to dollars is not available.
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P. Natural Resources
1. Agrioultural: The agricultural sector cWriaes 12,958,000
acres of arable land; (approximate4 5% thereof =utilized in 1955)) employs
about 30% of the total labor force, and in value of production confibutes
approximately to the gross national product.
The chief cultivated crops are potatoes, and maser beets,
Live stock and animal products amount to about of the total value of
agricultural production, industrial wood production vas 3 million cubic meters
in 1955, less than one-fifth of European Satellite preduction.
Sugar, hops, and timber are exported. Agricultural imports
have im reeved considerably since prewar, especially grains, ehich currently
amount to about one million metric tons annuall,Y.
2. Iron ore, manganese ore, mercury, copper, 1ea, zinc
and iron pyrttee are prOxc.d, but none in eufficient quantity to supply
domestic needs. Antimoxy production is sufficient to allow small exports.
Uranium ore is mined for export to the WAR.
3. Fuel: Coal sopplies about 97% of Czechoslovakia's primary
energy. Coal iMuction was 63,900,000 metric tons in 19550 about 16% of
European Satellite output. Sizable shipments of coal from Poland make
Czechoslovakia now a net importer of coal.
indostrY
1. Capital Goods: CzechoaloVakia has the largest armaments and
iron and steel industry of the Satellites. Crude steel production tota10
,500,000 tons in 1955, roughly one-third of European Satellite production.
Machine tools and other heavy engineering products, precision, electrical,
transportation, and agricultural equipment more than meet internal require-
ments, although certain epeciallted products in each of these categories
are imported.
2. CO ods: Production of almost all types
goods is sufficient to meet requirements. Nxtiles, shoes, and glass are
Czechoslovakia's traditional export items. The export of textiles is
planned to be reduced, however, in order to meet domestic rev/Temente.
3. Murat/04o: Chiefly small arms and ammunition plus same
srtillery, tanks; armored cars, and aircraf are manufaetured. Czechoslova-
kia is an taportant producer of M34-15,0"etrighters and trainers with an
estimated output of 45 planes per month. Production of the IL-14 (CRATE)
wonventional traneport aircraft was initiated late in 1955/an4 a production
rate of 2 per month will he reached hy the end of 1956. in addition, the
aircraft industry produces a variety of light sports aircraft, utility-
liaison and small transport types, many of which are exported. Military end
items for the ground forces more than meet domestic requirements.
ign Trade
. Trade with the
.11.11.41..... *era, ??*.???
Czeehoslarskia' trade with Tree World
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cutriea was valued at approximately $600 million in 1955. Western
Europe accounted for over 50% of Czechoslovak 's total exports to
and imports, from the Free World, EMports to countries in Latin
America an4Q'the Near Zest and Africa were 17 percent and 12 per-
cent respectively. imports from these areas were of approximately
he same magnitude. Total exports to the free World in 1954
tinted, to $238 million, of which menuftetured goods represented
rent; machinery and transport equipment, 14 percent; and
crude materials, 12 percent. Total imports for 1954 approximated
$166 million. Of this amount, crude materials represented 38
percent (textile fibers constituted out 70 percent of this
category); food, 32 percent; and manufacture& goals, largely base
metals and manufactures, 10 pereent.
2. Trade within the Sino-So et Bloc: In 1955, 71 per-
cent of Czech=vaiarrt1 trade was with other Orbit countries.
Principal exports were: cepital goods, transportation equipment,
electrical and technical apparatuses, and chemicals. Prineipal
imports were agricultural moducts, industrial raw materiels,
industrial equipment, and petroleum preduots.
ce 9i payments; There is not uftio1flt infor-
mation vai1b1e on Czechoslovakia's trade and finanstal relations
er Orbit countries to enable the construction or a
balance of payments. According to Free World statistics, exports
choslovakia in 1955 exceeded her ieports from Pree World
countries by $81 million.
I. Telecommunications
1. Domestic
a. Tele hone and Teleqv e vire telecommuni-
cations system provi s adequate coverage for civilian and military
needs. Its efficiency is about eqeal to that of modern Western
European countries. The network, operated by the government, is
densest in the northern and central industrial regime of Bohemia
sad Nbravia and in western Slovakia. In January 1955 there were
410,000 telephone, mostly automatic, including about 75,000 in
Prague. The telegraph system, to a large extent utiliting tele-
printer connected by an underground cable network, is as exten-
sive as the telephone system. In addition, the Communist party,
army and security policy operate independent telephone and tele-
printer nets.
b. Medic and, ision: The radio ccuriIcations
facilities are of a generally hien standard but are saordinate
to the wire facilities. They are estimated to be in good opera-
tional condition and provide adeqeate, efficient and dependable
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service. The 24 transmit ers of the sta -operated broadcasting
syetem cover practically all the country except certain mountainous
areas of northern and eastern Slovakia. By the end of 1955, there
were about 2,900,000 radio receivers in the country, about 6o
percent , though mostly prewar models, are pable of
receiving foreign broadcasts. In addition, wire-diffusion radio
is being rapidly expanded by the government. By the end of 1955
approximately 50,000 loudspeakers were in use Television broad-
casting was teaugurebdwith much fanfare on I May 1953; to date,
only 2 stations (Pregee'and Ostrava) are in operation. Additional
stations aft plena& for Bratislava, Bra?, and Bradec Kralove.
International: The international telecommunications
sion of the domestic system. They oonsist
daring countries, and radio facilities for
and Western Europe, North and South America,
road. AU international broadcasts originate
in Prague. Western broadcasts to Czechoslovakia are effectively
Jammed in Prague and most urban areas of Bohemia, but less effectively
in other areas of the country.
J a Transportation
1. Railroads are the moat important agency
zechoslovakia, accounting for more than 85
f total inland freight taansport. The Czech State Rail-
roads (CSB) operate more than 8,300 route miles of track, all, but
about 100 miles of which is standard gauge .- Approximately 120
route miles of the system are electrified. The network is most
dense in the western provinces and least developed in Slovakia.
The principal route is a double track line running from Prague
through Kosice to Cierna in Eastern Slovakia on the Soviet
border. There is a large transleeding station at Cierna where
the system connects with the broad-gauge Soviet rail network.
The system also connects with the Polish, BUngarian, last and
Vest German and austriaa networks. Czech railroad operation is
generally efficient, but hampered by a Shortage of rolling stock.
2. RoardatHighway transport is well developed in con,
parison with FEW Eastern European countries. Highways are an
important supplement to the railroad system, acting primerily as
a feeder service. There are about 43,500 miles of rotas, about
0.88 miles per square mile of area. Most of the principal high-
ways have concrete, asphalt or bituminous surf as, with widthe
varying from 16 to 36 feet. Sharp curves and steep grades make
facilitle
of land-lines to
broadcasting to
and to Caechosl
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driving hazardauf; in bad weather. Snow, especially in Slovakia
and the mountainous border areas of Bohemir, interrupts traffic
in winter.
3. Merchant Marine: In addition to chartering a large
number of oceaa-going Valiiirs, primarily for the China trade,
Czechoslovakia owns three merchant vessels whieh sail from Polish
ports.
4. lassalWatwww: Though poorly sttuated in rela-
tion to indW31712111-and agricultural centers the two principal
LI/liana waterways - the Me and. Danube ayst;ms - permit water
j
access to tho North and Black Seas; and a third eyetem - the
Oder - links the country with the Baltilp Sea. Hamburg, at the
mouth of the Elbe, is an impiortant tranehipping center for
Czechoalovakia'a overeeas foreign trade. In 1955 river trans-
port accounted for about 7 percent of total freight traffic in
Czechoslovakia.
5. ctniAirlinee; Tbe CiethoalovelL_ _ air carrier
Ce venake Aerolinte tCSA) has approximately 40 twin-engine
transport aircraft inalAing DC-re, L1-2's and 11-110e.
Internal routes link the major citiee and converge
on Prague; external routes serve Hbecow and the European Satellite
cepitals es well as Belgrade, Yugoalavia. International services
to the West luau outea to Paris, Copenhagen, Stockholm and
Helsinki. Airlinee serving Prague, in additioa to those of the
HUropean &dell/tee and the Soviet carrier, ot, include Air
India ?Swissair, Air Dutch
lgian Airlines Cf,- +3 fr:a
Mr/1 - ;--
Principal civil airports are at Prague !Wayne)
and at Bratislave..(Ivanka).
On page 29, line 2: Change population to 13,090,000
,
a , a
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G R E-T
annul, INTELLIGENCE AGENCY
Office of the Chief, Economic Research
Office of Research and Reports
Project Action Memorandum
akatraia .1:10..1.3.4,0
Project NI. 10.1098
Date 1 Mev 1956
TITLE: Revision of CCI Country Handbook on Czechoslovakia
RNUESTER, OCI
STATEMENT OF THE PROBLEM AND TERNS OF REFERENCE:
Problem: o review, revise and update the pertinent economic portions
of thri5UT-ffandbook on Czechosl,svakia.
Terms of Reference: (1) Special attention should be paid to deletion
of material no longer having current significance or background value and
to adding information on recent important developments.
(2) 1955 data should be added wherever possible.
(3) Total length and outline should remain the same.
RESPONSIBILITY:
Action Division: D/A
Dram : A/E
manse aaarLa
Contributing Divisions: D/M
uaa ear a
TVS
1)/I
Staffs: 25X1A St/PR
wad.. saw..
25X1A CSS
Concurrence
Man-hours Due Dates (Initials)
25 Jul 56
20
5 19 Jul 56
10 19 Jul 56
5 19 Jul 56
P4ncipa1 Analyst: x 3362
Pmslasl, Monitor: x 4585
This project will not delay completion of currently scheduled projects.
The classification of this project will be no higher than SECRET.
APPROVED C kg--
Gh/E
S-E-C-R-E-T
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