Central Bohemia attracted human
settlement as far back as the primeval stone period. As early
as in the 6th century ancestors of the Czechs settled in suitable
areas of today's Prague and after 870 the Prague castle was
established. In 973 a bishopric was established at the rotunda
of St. Vitus. The 10th century saw the creation of a second
castle - Vysehrad - on the right bank of the Vltava.
From 1085 this castle became the seat of the first
Czech king Vratislav I. In 1172 a stone bridge (called
Judith's) was built - the second in central Europe. The 13th
century saw the formation of two fully independent towns developed
from the old settlement areas: The Old Town, and the Lesser
When the indigenous dynasty of the Oremyslids died
out, the Luxembourg dynasty was established in 1310. In 1338
the Old Town Hall was built - a symbol of civic autonomy - and in
1344 the Prague bishopric was elevated to archbishopric. As a
result the construction of St. Vitus Cathedral was began. In
the years 1346-1378 Charles IV, Czech king and Roman Emperor, ruled
the country. In 1348 he founded the New Town and first
university in central Europe. He also had initiated the
replacement of Judith's Bridge by an impressive gothic one.
Attempts at religious reformation connected with
the priest Jan Hus culminated in a revolutionary movement from 1419
to 1437. The situation calmed down during the reign of King
George from the Jagellon dynasty when new building development took
In 1526 the throne was taken over by the Hapsburg
dynasty which ruled until 1918. In the years 1583-1611 Prague
was the seat of the emperor Rudolf II and became the center of
social and cultural life. The defeat of the Czech Estates
uprising against the Hapsburgs during 1618-1620 was followed by a
decline in the Czech language and national consciousness.
During the period 1784-1848 there was a revival of
the Czech nation, beginning with the industrial revolution and the
establishment of Czech institutions. In 1918, at the end of
WWI, brought the declaration of independence of Czechoslovakia, and
Prague became the capital of the new state.
The development of the country was disrupted in
the years 1939-1945 due to occupation by Nazi Germany. In
February 1948 the Communist Party came to power enforcing the Soviet
model of society. The "Prague Spring," an attempt to
reform socialism in Czechoslovakia was terminated by the invasion of
the Warsaw Pact armies. However, the "Velvet
Revolution" in 1989 signaled the end of the power of the
Communist Party. It was the beginning of democracy, multiparty
political system and the opening of private enterprise.
In 1993 the federal state was divided and a new
independent Czech Republic was formed.
Lecture by Professor Jiri Amort
"From 40 Years of Communism to Free Market Economy"
1. Transition to free market system
Up to 1918, the Czechoslovakia area
produced 65% of industrial capacity of the Austro-Hungarian Empire.
After the establishment of the new country, the burden was too great
and lead to decreased markets. In 1918 separate currencies
were created to prevent inflation. Gradually this "island
of democracy" became very prosperous. The first president
did much for the new country (his wife was American).
There were lots of refugees from Russia and
then Germany starting in 1933 - especially the German Jews.
(Hitler used the pretext of large suppressed German population in
Czechoslovakia for his invasion in 1939).
2. After 1948, Czechoslovakia was under
Russian influence. The country did not join the Marshall Plan.
With the increase Russian influence, businesses were nationalized
and subjected to the needs of the Soviet Bloc.
With further Soviet support, political
persecution, murder and prison awaited person who did not go along
with the new socialism. Emigration increased with some of the
great minds going to other countries.
3. Early 1990s, with the Soviet withdrawal,
saw privatization, liberalization, restructure and new legislation.
A comparison was made comparing Austria's free market system since
1955 and Czechoslovakia/Russian's socialism system. People
were told it was so much better with the western free market system.
a. Privatization - The new government
tried to trace ownership after 40 years. Property was auctioned when
owners were not found. Many properties were sold to former
Communist officials. Adults were given 1000 coupons for 1000
crowns (1 weeks wage) to buy property. The state is still
selling off property - a requirement for entry into the European
b. Liberalization - A free market
system was started with consumer prices and foreign exchange system.
Czechoslovakia had the lowest inflation rate of all the eastern
European countries. The government still controls public
transportation and utilities. Housing prices are still
c. Restructure - With privatization
and free markets, there was a decrease in heavy industry and
increase in services. In the past the workers in steel, coal,
army and police were the privileged. Now it's private business
owners, managers, employers, judges, advocacy lawyers and those with
computer knowledge. The most privileged are the sport
d. Legislation - New laws for
taxation and budget were passed. This is still not complete
and changes are needed before European Union membership.
Private schools were not allowed before, but now a few private and
religious schools have opened. University study is free unless
the student is not completing studies on time.
4. Achievements and Accomplishments:
Dissolution of socialist party was peaceful. Increasing
economic growth is progressing but still with heavy debt.
Increase in literacy and social condition. Employment was
artificially low in the early 1990s, now officially at 8%.
Budget: Efforts to privatize and sell
off state property and businesses. Country not yet competitive
in western markets. Political system with two strong parties,
but minority party not active in criticizing majority party until
In Prague there are a little over 100 churches -
no new churches built for many years. About 20% of the
population actively practice their religion. The Czech
Republic is know as the "Heart of Europe."