Chase: The Story of Lithuania • Chapter 28

After 123 years of political non‑existence, Lithuania, having recovered her political sovereignty in 1918, was faced by an inevitable series of domestic and foreign problems. However, during the following years she succeeded in devising and obtaining some solution for these difficulties. Besides establishing a permanent constitutional government of a democratic nature with the approval of the entire nation, she also inaugurated a much needed agrarian reform, created her own national currency, obtained international de jure recognition, fixed her frontiers with neighboring Latvia and Germany. Nevertheless, she found it impossible to evolve a satisfy modus vivendi with Poland because of the latter's refusal to abide by the terms of the Suvalkai Agreement. And due to the aggressive tactics of the Berlin Nazis, she was unable to retain Klaipeda, her only port.

1. Agrarian Reform

Since Lithuania was mainly an agricultural country, the actual control and possession of the land presented a problem important not only for the maintenance of Lithuanian national independence, but also for the development of the economic security of her citizens. Before the outbreak of the World War some 450 families (mostly Polonized Lithuanian gentry) in Lithuania were in possession p284 of some 22% of the land. Furthermore, stretches of Lithuanian territory were occupied by transplanted Russian colonists, who had received various grants from the Tsarist regime at the expense of exiled Lithuanians. In the meanwhile, numbers of Lithuanian farmers remained either landless or without sufficient areas to pursue their occupation adequately. Consequently, the question of land reform was given serious consideration even by the Provisional Government.

During the last months of 1918, the Provisional Lithuanian Government began to annex all forests in Lithuania, which previously had belonged to the Russian state, as well as those forests whose private owners had not returned to the country after the Armistice. Through the Ministry of Agriculture it appropriated all entailed estates, which were lands either bestowed freely upon individuals by the Russian government, or obtained from the same source by Russian nobility under rather privileged conditions, or held by the Polonized lords. It also arranged for the recovery of areas held by Russian colonists, promising in this case the payment of indemnities. All these expropriated territories thus constituted the property of the Lithuanian Republic and were destined for distribution among the Lithuanian citizens, in accordance with the procedure to be determined by the Constituent Assembly.

During 1919 some attempts were made at the actual distribution of these state lands to soldiers wounded in the service. Plans were drawn for the delimitation of vast estates owned by private individuals and their partial parcellation with due and proper compensation. In August, 1920, the Constituent Assembly enacted some preliminaries for the Land Reform Law, which appeared in its finished form in March, 1922.

The Land Reform Law in Lithuania created more than 45,000 new farms by 1939. It provided necessary land for soldiers and their families, permitted additions to the possessions of small landowners, endowed landless citizens with farms, abolished the outmoded rural village communities (established during the times of Sigismund Augustus) in favor of separate homesteads, and furnished loans where necessary. The result was that before the Russian invasion of 1940, Lithuania possessed some 287,380 individual p285 farms. Recipients of new land, excluding those soldiers who had participated in the wars of independence, were required to make small payments over a period of 36 years in proportion to amount of territory obtained.

Besides the actual distribution of land, successful efforts were made (since 1922) to maintain agricultural work in Lithuania at high standards, by the organization of such cooperative societies as Pienocentras, Lietukis, Lietuvos-Kooperacijos Bankas, and by the introduction of canalization and drainage systems on rather extensive scales.

2. National Currency

Proceeding with her program of reconstruction, Lithuania, a few months after the enactment of the Land Reform Law, established her own bank system and introduced her own national currency.

Incorporated into the Russian Empire during the partitions of 1795, Lithuania naturally had little choice but to use the roubles and the kopeks of the Tsarist regime. The financial situation, however, became increasingly difficult after the German occupation in 1915. The Russian rouble was ousted in favor of the German obost roubles⁠a and Ostmarks issued by the Darlehnskasse-Ost, a German Loan Bank, operating in the German-occupied areas of the east since April, 1915. When the Provisional Lithuanian Government was able to assume the actual administration of Lithuanian territories in November, 1918, it found itself in no position to begin the issuance of its own banknotes. Consequently, it was compelled to proceed gradually and to retain the German currency, merely changing the names of ostmark and pfennig to auksinas (golden) and skatikas (farthing). In 1919, it also entered into an agreement with the Darlehnskasse-Ost, whereby the continued circulation of German ostmarks throughout Lithuania, under the direction of the German Bank and the Lithuanian Ministry of Finance, was authorized, until such date as the Lithuanian government would find it possible to create its own independent bank.

Within the following three years inflation had multiplied the p286 numbers of German notes and vastly decreased their value. Lithuanian citizens, as a result, suffered tremendous losses. Finally, on August 16, 1922, the Bank of Lithuania was established as a private enterprise under governmental control. On September 25th, the new Lithuanian monetary unit, based on the gold standard, and known as the litas, was introduced. Subsequent efforts to obtain some reparations from Germany for the undue depreciation of the ostmarks, as well as for their compulsory introduction into Lithuania in 1916, proved thoroughly futile. And until the Russian invasion of Lithuania in June, 1940, the litas successfully retained its original gold parity and never underwent devaluation.⁠1

3. The Return of Memel

By the end of the year 1922, Lithuania had rather definitely stabilized her position in the world of international affairs. She had amicably settled her border problems with Latvia (1921). She had participated in the conferences of the Baltic states. She had been admitted to membership in the League of Nations in spite of the protests of the Poles. She had also received from the nations of the world de jure recognition, which had been earnestly sought by the Lithuanian government since 1917.⁠2 And in 1923‑24, she witnessed the return of a small portion of Lithuania Minor;⁠3 namely, the Klaipeda or Memel territory.

The principle followed by the Lithuanians, seeking to regain the independence of Lithuania, called for the restoration of the nation within its ethnographic and not its historical boundaries. This notion was quite in accord with the doctrine of self-determination, although quite contrary to the program of their former political partners, the Poles. During the period of German occupation 1915‑1918, neither the Vilnius Conference nor the Lithuanian Taryba, for manifest reasons, could openly demand the inclusion of Lithuania p287 Minor within the borders of the reconstructed state. Both, therefore, were compelled to content themselves merely with the general statements that ethnographic Lithuania be granted her independence, which, of course, included all territories inhabited by the Lithuanian people. Nevertheless, Lithuanian exiles and refugees in Russia, Switzerland, America and elsewhere, quite freely declared for the reunion of Lithuania Major and Minor in one independent Republic. Although refused a seat at the Paris Peace Conference because of the uncertain international status of their country at that time, the Lithuanian delegation officially enunciated these same claims on March 24, 1919.

By the Versailles treaty Germany was required to renounce possession of the Memel territory north of the Nemunas (Niemen) River. This strip of land, some 1,100 square miles, was the area most heavily populated by Lithuanians in all of Lithuania Minor. Yet, more than three years elapsed before the Allied Powers made any attempt to arrange for the final disposition of the Memel port and hinterland. During that period, Memelland, as it was known, continued to be administered by the French authorities under Odry and Petisné. Most of the Kaiser's officials were retained at their former posts, while others were admitted from Germany, with the result that an advisory directorate, composed of the German element, was formed. And since these German parties could hardly with any grace request the restoration of Memel to Germany, they sponsored a strong movement for the conversion of the Memel area into a so‑called free state. The Poles for obvious reasons favored this proposal and even proceeded to send their representative to Memel. And on November 11, 1921, the Constituent Assembly of Lithuania impatiently demanded the immediate return of this Klaipeda territory, since it was not only ethnographically Lithuanian, but was also vitally important for the economic interests of the Republic.

After Hymans' project to reconcile the Lithuanians and Poles had failed, the Allied Powers appointed a Commission in the autumn of 1922, for the purpose of preparing a Statute for Memel. The Commission seemed favorably inclined towards the German fostered notion of a free state. Consequently, the Lithuanians p288 living in Memel organized the Aid Committee for Lithuania Minor under the leadership of Martin Jankus, a native and resident of the Memel district. This small group soon resorted to revolutionary tactics. It summoned volunteers from Lithuania. A meeting held at Silute (Heydekrug) passed a resolution in favor of the union of Memel with Lithuania as an autonomous unit. These local patriots then, together with the Lithuanian volunteers directed by Colonel John Budrys, occupied the Memel area, forced the French garrisons to withdraw, and authorized the government of the Lithuanian Republic to effect the desired union (January 10‑15, 1923).

Heated discussions between the Allied Powers and the Lithuanian Republic followed immediately. One month later, on February 16, the Conference of Ambassadors decreed upon the recognition of Lithuania's rights to Memel. However, no easy solution for the details of a final settlement of this issue could be found by the representatives of the Allied Powers (Britain, France, Japan, Italy) and the Lithuanian government. The Conference of Ambassadors sought to reduce Lithuanian sovereignty over Memel to the role of a merely nominal authority and seemed to be unduly concerned with the interests of Poland, who had never possessed any ethnographic claims to this area. The Memel Statute issued by the Lithuanian government on May 7, 1923, was rejected by the Conference of Ambassadors. Lithuania, in turn, refused to accept the proposals of July, which, among other privileges, would have bestowed upon Poland the right to transport munitions on the Nemunas (Niemen) River and to maintain an official delegate with the Memel Port Committee.

Finally, the Conference of Ambassadors submitted the entire question to the League of Nations. In December of that year the League Council appointed a Commission headed by Norman Davis to investigate the matter. The Commission visited Memel and quickly came to an agreement with the Lithuanian government. On March 14, 1924, the terms of this agreement were accepted and approved by the League Council in spite of the protests of the Poles and their demands for extraordinary privileges in the Memel port. On May 8, 1924, the final draft of the Klaipeda Convention was signed at Paris by Galvanauskas, Poincaré, p289 Avezzana, Ishii and de Crewe, representing Lithuania, France, Italy, Japan and Great Britain, respectively. It recognized Lithuanian sovereignty over the Memel area and guaranteed the inhabitants local autonomy. It also arranged the details of the form of government to be upheld in the district; this consisted of a governor, appointed by the President of Lithuania, a directorate of five, whose chairman was appointed by the governor, and a local diet, elected every three years by the residents. And by the treaty of 1928, Lithuania regulated all her frontier questions with Germany, at least for a few years.

4. Relations with Poland

Besides the already unfortunate state of affairs existing between Lithuania and Poland, because of the latter's refusal to submit the dispute over Vilnius to the Hague Tribunal, the Polish attitude towards Memel merely served to complicate matters.

On June 6, 1924, one month after the conclusion of the Klaipeda Convention, the Ambassadors' Conference requested Lithuania and Poland to establish diplomatic relations and come to terms concerning transit on the Nemunas (Niemen) River. Lithuania replied that no diplomatic relations were possible until Poland reconsidered the seizure of Vilnius; she suggested a conference through the mediation of the Allied Powers, as a means of bringing about a suitable settlement of the Vilnius question. Negotiations at Copenhagen and Lugano the following year, concerning the floatage of logs on the Nemunas, proved dismal failures due to the insistence of the Poles to link transit on the Nemunas with consular relations. Finally, on January 27, 1926, Lithuania issued her own regulations for the use of the Nemunas, which, however, were regarded by Poland as unacceptable.

Polish authorities retaliated with reprisals on Lithuanians living in the Vilnius territory, and even proceeded to mass armed forces at the demarcation line in a threatening manner. Neither did the meeting of Pilsudski and the Lithuanian Prime Minister, Voldemaras, in Geneva, under the auspices of the League Council p290 (1927), bring to an end the so‑called state of war existing between Lithuania and Poland. The tenseness was still more magnified when Soviet Russia indicated in a note to both Lithuania and Poland, that the treaty of September 28, 1926, between Russia and Lithuania, guaranteed Lithuanian independence against aggression. Continued negotiations at the request of the League Council at Koenigsberg produced only meager results, alleviating to a certain extent the difficult position of residents on both sides of the demarcation line. In 1931, the Hague Tribunal justified Lithuania's stand on the Vilnius question and her refusal to enter into normal diplomatic relations with Poland, when it issued a decision stating that Lithuania was not guilty of an international offense in closing the means of communication and transit to Poland.

5. Internal Government

Alexander Stulginskis, President of the Lithuanian Republic, found it necessary to dismiss the first Lithuanian Seimas (1922‑23) in March, 1923. The newly elected second Lithuanian Diet (1923‑26), which served its full term of three years, reelected Stulginskis in accordance with the requirements of the Constitution (June, 1923). He was succeeded by Casimir Grinius, chosen in 1926 by the third Seimas, which had been elected May 10‑12. However, Grinius' term of office perdured scarcely six months. And the activities of the government during that period were seriously hindered by the break between the Liberal-Socialist bloc and the Christian Democrat grouping, with the result that the former were compelled to cater to the minority deputies of the Diet. The entire situation was aggravated by the general crisis through which democracy in Europe (e.g., Pilsudski's rise in Poland) was passing due to the subversive activities of the Communists. Naturally Lithuania was also affected.

Although Slezevicius, the Prime Minister, successfully negotiated a significant second treaty with Moscow in September, 1926, which also included a note from the Russian government recognizing Lithuania's claims to the boundaries disputed by Poland, p291 nevertheless various circumstances created unrest within the country. Slezevicius, seeking to maintain a controlling majority in the Seimas through the support of the minority representatives, yielded to the exaggerated demand of the latter. His liberal policy in coping with the Communistic propaganda which emanated from Moscow and was definitely dangerous for Lithuanian independence, further increased the general discontent with the existing government among the bulk of the Lithuanian leaders. Meanwhile, President Grinius evidently thought it unwise to dissolve the Seimas at such a critical moment or to dismiss Slezevicius, and thereby, alienate himself from the parties that had raised him to the presidency.

Consequently, fearing lest matters, sooner or later, get out of hand, a group of officers of the Lithuanian army, on the night of December 16‑17, 1926, dispersed the Seimas while still in session, forced the resignation of Slezevicius and his Cabinet of Ministers and obtained a similar resignation from President Grinius. Two days later, the Seimas was once again convoked, although abandoned by a number of the minority and leftist deputies, and proceeded to elect Anthony Smetona as the President of the Republic. A new Cabinet was quickly formed by Voldemaras, who had been appointed to the post of Prime Minister by Grinius. In April of the following year, the Seimas was dissolved and Smetona inaugurated a period of semi-authoritarian rule. On May 26, 1928, he promulgated by decree a new Constitution, which referred to Vilnius as the Lithuanian capital; provided for the election of the president by an electoral college for a term of seven years; introduced a new electoral system; extended the term of Seimas to five years; reduced the number of deputies to the Seimas from 85 to 49; restricted the privilege of voting to the age of 24; and created a State Council as an advisory organ.

6. The Polish Ultimatum

In 1935, at Geneva, formal negotiations between Lithuania and Poland, in order to end the so‑called state of latent war existing between the two countries were once more begun. Again no solution p292 could be devised. Lithuania refused to give up her claims to the Vilnius area and to consider the Suvalkai Agreement null and void. Poland, in turn, refused to consider any possible compromise. Finally, the numerous private and, in many cases, secret discussions concerning the liquidation of the Vilnius problem, as well as the numerous skirmishes between the Lithuanian and Polish soldiers along the demarcation line, reached a climax in March, 1938.

On March 11th, a Polish border guard, who with a group of other Poles had ventured across the administration line and had refused to surrender, was shot by a Lithuanian sentry some distance inside the Lithuanian boundary. In the very wake of Hitler's seizure of Austria on March 13th and prompted by German intrigues concerning Memel, the Polish government issued an ultimatum to Lithuania. It demanded that Lithuania renounce her claims to the Vilnius territory, open the frontier for communication and transit, agree to diplomatic and consular relations, and absolutely barred all possibilities of arbitration. Mobs in Warsaw publicly demanded the annexation and the occupation of Lithuania as a step to the restoration of the historic Polish-Lithuanian Republic, while anti-Jewish demonstrations and riots swept over all of Poland. The German Foreign Office in Berlin pressed the Lithuanians to accept the conditions proposed. Through the intervention of the Great Powers the terms of the ultimatum were somewhat modified. And on March 19th, the Lithuanian government, fearing lest the Polish ultimatum would produce the same results in a Europe already disturbed by Nazi activities, as did the Austrian ultimatum served to Serbia in 1914, agreed to the establishment of diplomatic relations and to the opening of the disputed frontier.

This mode of settlement of the Vilnius question, chosen by the Polish government in a rather troubled period of European history, was not well received by the Lithuanian nation at large. So strong was the protest made by the Lithuanian population to its government, that the Cabinet of Ministers was forced to resign and martial law had to be introduced for Kaunas. However, the new Lithuanian Constitution of May 12, 1938 continued to retain the clause stating that Vilnius was the Lithuanian capital, while Kaunas was p293 only the provisional capital. In fine, a rather uncertain modus vivendi, not conducive for friendship, had been established between Lithuania and her neighbor, Poland.

7. The Loss of Memel

Although Memel prospered with the support of the Lithuanian hinterland to which it naturally belonged, nevertheless many were the difficulties that appeared, especially after the rise of the Nazi Party in Germany. The rural districts continued to remain predominantly Lithuanian, while the German element was concentrated mainly in the town itself.

In 1933, the same year Adolph Hitler became the Chancellor of Germany, two subversive organizations were created in the Memel territory with the secret approval of Berlin. They were known as the Socialist Peoples' Party and the Christian Socialist Workers' Party under the leadership of Neumann and Sass, respectively. Both were directly responsible for much of the subsequent unrest in Memel. In February, 1934, the Lithuanian government was compelled to suppress these clearly illegal and anti-Lithuanian organizations, in a serious effort to forestall the interference of a foreign power in the Lithuanian affairs of state. Consequently, on March 26, 1935, the trial of some 122 Nazis for treason was concluded. Four, being guilty of the murder of a Lithuanian, George Jessutis, were condemned to death. Eighty-three others were sentenced to prison terms for conspiring to overthrow the Lithuanian regime in Memel. Evidence produced at trial showed that these individuals had been actively engaged in making preparations for the separation of the Memel territory from Lithuania, and that they had been inspired and financed for this work by the Nazi Party in Greater Germany. The Lithuanian government, however, modified the sentences, and the tenseness of the situation was somewhat, although not too definitely, relieved when political and trade agreements between Lithuania and Germany were signed in August, 1936.

After Hitler had quite successfully engineered the assimilation p294 of Austria and the Czecho-Slovakian Sudetenland in March and September, 1938, the activities of the Nazi partisans in Memel were intensified. Internal disorders were fomented. Pressure was brought to bear upon the Lithuanian government and people, in the form of propaganda and threats of force. And scarcely one week after German troops had occupied Czecho-Slovakia, the German Foreign Minister, Joachim von Ribbentrop, in the name of the German Reich, made known to Joseph Urbsys, the Lithuanian Foreign Minister, his demand for the immediate cession of the Memel territory to Germany. In those days when the appeasement policy flourished in European politics, the Lithuanian government had little choice, but to accept this ultimatum on March 22nd, especially since it received no aid from the signatories of the Memel Convention. Lithuania was guaranteed a free port zone in the Memel area. Further details were regulated on May 20th. Immediately, a program of Germanization of the entire district was introduced. Lithuanian schools, newspapers and language were banned. And 21,000 Lithuanians and Jews were forced to flee from Memel into Lithuania Major.

The Author's Notes:

1 Foreign Exchange Quotations listed the relation of the litas to one American dollar as follows:

1928 — 10.06; 1930 — 10.00; 1932 — 10.02; 1934 — 6.42; 1936 — 5.93; 1938 — 5.93; 1939 — 6.01.

Thayer's Note:

Lithuania was not rich with capital before the war of 1914-18, but whatever savings and assets the people had were swept away by war's devastations, changing currencies and inflation. Russian ruble notes which circulated in Lithuania until 1915 were eventually replaced by special occupational Obost rubles and German marks which became almost worthless in 1922, when the redemption of the Obost marks with litas was begun on October 1. A notion of how great was the loss suffered by the Lithuanian people due to the inflation and to the fact that Lithuania was excluded from the post-war relief and rehabilitation may be obtained from the following figures: In January, 1919, the rate of exchange was 8.27 marks (one Obost ruble equaled two German marks to the American dollar, while one year later, in February, 1920, it was 98.994 marks, and in the beginning of 1922, it was 200 marks. On October 1, 1922, the day that redemption of the Obost marks commenced, one dollar equaled 1,650 marks; on October 2 it equaled 1,815 marks. The new Lithuanian currency unit, the litas contained 0.150463 grams of fine gold, which is one tenth of the American gold dollar. It was never devalued until its circulation was abolished by the Soviet government after the occupation in 1940. In 1939 there were 165,930,000 litas bank notes in circulation, while the gold reserve constituted 57,710,000 litas.

1.	Agrarian Reform
2.	National Currency
3.	The Return of Memel
4.	Relations with Poland
5.	Internal Government
6.	The Polish Ultimatum
7.	The Loss of Memel

p283 Chapter XXVIII Domestic and Foreign Settlements