Editing History of Latvia (section)

==Parliamentary era, 1920–34==
After Latgale was finally liberated from the Soviets in January 1920, elections to the [[Constitutional Assembly of Latvia]] took place on April 17–18, 1920. While the population of Latvia had fallen by almost a million, from 2,552,000 to 1,596,000 in 1920 (in Riga from 520,000 to 225,000), 50 party-lists and candidates competed for 150 seats. Close to 85% of eligible voters participated in the elections, and 16 parties were elected. The [[Latvian Social Democratic Workers' Party|Social Democratic Workers' Party]] won 57 seats, the [[Latvian Farmers' Union|Farmers' Union]] 26, and the Latgalian Peasant Party 17. This voting pattern marked all the future parliaments – a high number of parties representing small interest-groups required the formation of unstable coalition governments. While the largest single party, the Social Democrats, held the post of [[Speaker of the Saeima]], they avoided participating in governments. Between 1922 and 1934 Latvia had 13 governments and 9 [[Prime Minister of Latvia|Prime Ministers]].

On February 15, 1922, the [[Constitution of Latvia]] and in June the new Law on Elections were passed, opening the way to electing the parliament – the [[Saeima]].

During the parliamentary era, four national elections took place, which elected the [[1st Saeima]] (1922–25), [[2nd Saeima]] (1925–28), [[3rd Saeima]] (1928–31), and [[4th Saeima]] (1931–34). Three [[President of Latvia|State Presidents]] were elected – [[Jānis Čakste]] (1922–27), who died in office; [[Gustavs Zemgals]] (1927–30), who refused to stand for re-election; and [[Alberts Kviesis]] (1930–36), who accepted the [[1934 Latvian coup d'état|May 15 coup d'état]].

===Border conflicts===
==== Eastern ====
The Latvian-Soviet peace treaty had set the eastern border between Latvia and Soviet Russia. After 1944 the Soviet Union annexed parts of [[Abrene District]] as the [[Pytalovsky District]] of the [[RSFSR]]. Latvia gave up all legal claims to these lands in 2007.

==== Northern ====
During 1919 Estonia had provided military assistance to Latvia on the condition that some of its territorial claims in [[Vidzeme]] would be met. The Latvians refused, and Estonia withdrew its support. Estonian claims centered on [[Valka]] district as well as territories in [[Ape Municipality|Ape]], [[Veclaicene Parish|Veclaicene]], [[Ipiķi parish|Ipiķi]] and [[Lode parish|Lode]]. On March 22, 1920, Estonia and Latvia agreed to a settlement commission led by British colonel [[Stephen Tallents]]. Latvia retained [[Ainaži parish]], and most of other contested lands, but lost most of [[Valka]] city (now [[Valga, Estonia]]). The issue of the ethnically Swedish-inhabited [[Ruhnu]] island in the [[Gulf of Riga]] was left for both countries to decide. Latvia finally renounced all claims on Ruhnu island after signing a military alliance with Estonia on November 1, 1923.<ref>{{Cite web |url=http://www.lvportals.lv/print.php?id=275129 |title="Sveša negribam, bet sava arī nevienam nedosim" jeb Latvijas robežu vilkšana |access-date=May 1, 2016 |archive-date=September 23, 2017 |archive-url=https://web.archive.org/web/20170923075430/http://www.lvportals.lv/print.php?id=275129 |url-status=live }}</ref>

==== Southern ====
Latvia proposed to retain the southern border of the former Courland governorate with Lithuania unchanged, but the Lithuanians wanted to gain access to the sea, as at this time they did not control the German lands of [[Klaipėda]]. In September 1919, during an attack against the Soviets, the Lithuanian army occupied much of [[Ilūkste Municipality]] and threatened to take [[Daugavpils]] as well. Between late August and early September 1920 the Latvian army pushed the Lithuanians out.<ref>{{Cite web |url=http://www.tvnet.lv/zinas/latvija/207802-latvijas_un_lietuvas_robezas_izveidosanas |title=Latvijas un Lietuvas robežas izveidošanās |access-date=May 1, 2016 |archive-date=April 24, 2017 |archive-url=https://web.archive.org/web/20170424085202/http://www.tvnet.lv/zinas/latvija/207802-latvijas_un_lietuvas_robezas_izveidosanas |url-status=live }}</ref> The Lithuanians, weakened by [[Żeligowski's Mutiny]] of October 1920, did not escalate this confrontation. On September 25, 1920, Latvia and Lithuania agreed to have an international arbitration committee led by [[James Young Simpson (scientist)|James Young Simpson]] settle this dispute. In March 1921, Lithuania was given the port town [[Palanga]], the village of [[Šventoji, Lithuania|Šventoji]], parts of [[Rucava Municipality]] and the railroad junction of [[Mažeikiai]] on Riga – Jelgava – Liepāja railroad line, which meant that Latvia had to build a new railway line. Latvia received the town of [[Aknīste]] and some smaller territories in the [[Aknīste Municipality]], [[Ukri parish]] and [[Bauska Municipality]]. Latvia gave up 283,3 square km, while receiving 290&nbsp;km<sup>2</sup>. About 16 to 20 thousand ethnic Latvians thus became Lithuanian citizens.

As a result of the [[Polish–Soviet War]] of 1918–1921, Poland secured a 105&nbsp;km long border with Latvia. In July 1919 Poland announced its annexation of all lands south of [[Daugavpils]] and their inclusion in [[Braslaw]] district. Latvia could not complain, as it still needed Polish military help prior to the decisive [[Battle of Daugavpils]] of January 1920 against the Soviets. The issue was solved by a renewed Soviet attack against Poland, and later, by Polish-Lithuanian conflict over Vilnius. During the Soviet attack in July 1920, Polish forces retreated from this area, which Latvian forces then occupied. After [[Żeligowski's Mutiny]] Poland wanted to have good diplomatic relations with Latvia and did not raise any serious territorial claims. The issue was solved in February 1929, when Latvia and Poland signed a trade treaty which included a secret agreement about compensation to Polish landowners for lost properties. By 1937 Latvia had paid the full amount of 5 million golden lats.<ref>{{Cite web |url=http://www.historia.lv/raksts/eriks-jekabsons-latvijas-un-polijas-robeza-1919-1939-gada-69-79lpp |title=Ēriks Jēkabsons. Latvijas un Polijas robeža 1919.-1939. gadā. |access-date=May 1, 2016 |archive-date=February 13, 2021 |archive-url=https://web.archive.org/web/20210213055158/https://www.historia.lv/raksts/eriks-jekabsons-latvijas-un-polijas-robeza-1919-1939-gada-69-79lpp |url-status=live }}</ref> Over some protests from Lithuania, the Latvian-Polish border was demarcated between 1933 and 1938.

===Foreign relations===
Independent Latvia's earliest foreign-policy goals involved securing peace with Soviet Russia and with Germany, gaining international recognition, and joining the [[League of Nations]]. All this was achieved by the efforts of [[Zigfrīds Anna Meierovics]].

Hopes for the union of Baltic countries – Poland, Lithuania, Latvia, Estonia, and Finland – faded after 1922. After that Latvia was the most energetic proponent of Baltic unity and [[Baltic Entente]]. On November 1, 1923, Latvia and Estonia signed a military alliance, followed by trade agreements. Latvia tried to maintain good relations with the regional hegemons - Soviet Russia and Germany - and hoped for more support from Great Britain. Foreign governments opened 21 embassies and 45 consulates in Latvia by 1928; some of these consulates were located in the port cities Liepāja and Ventspils.

Latvia purchased embassy buildings in Berlin (1922), Tallinn, Warsaw (1923), London (1925), Paris (1927), and Geneva (1938).<ref>{{cite web |url= http://www.mfa.gov.lv/ministrija/arlietu-dienesta-vesture/ieskats-latvijas-arlietu-dienesta-vesture |title= Latvijas valsts ārpolitika un diplomātiskais dienests |access-date= May 1, 2016 |archive-url=https://web.archive.org/web/20160601011025/http://www.mfa.gov.lv/ministrija/arlietu-dienesta-vesture/ieskats-latvijas-arlietu-dienesta-vesture |archive-date=June 1, 2016 |url-status=dead }}</ref>

===Politics===
The [[Latvian Social Democratic Workers' Party|Social Democratic Workers' Party]], as the largest party, held the position of the [[Speaker of the Saeima]] in all the interwar Saeimas. The [[1st Saeima]] was chaired by [[Frīdrihs Veismanis]], the Second, Third and Fourth Saeimas were chaired by [[Pauls Kalniņš]]. The refusal of the Social Democrats to participate in governments (except twice in short-lived cabinets) meant that government was usually led by the center-right Farmers' Union, or by a coalition of smaller parties, as the Saeima seats were divided among many parties, each with just a few MPs.

The Social Democrats were split between the main Social Democratic Workers' Party led by Pauls Kalniņš, [[Ansis Rudevics]] and [[Fricis Menders]] (which first won 30 seats but had a tendency to lose votes in subsequent elections) and the splinter [[Union of Social Democrats – Mensheviks and Rural Workers|Social Democrat Minority Party]] led by [[Marģers Skujenieks]], who were more centrist and managed even to lead governments on two occasions. The mainstream Social Democrat party maintained a strong policy of [[Labour and Socialist International|Socialist International]] ideals and criticized the existing [[capitalist]] system. The Party avoided using the State flag and singing the National anthem, instead using the [[Red flag (politics)|Red flag]] and singing the [[The Internationale|"Internationale"]] in their meetings. Their popularity increasingly fell, and in the [[4th Saeima]] they had only 21 seats.

Officially banned, the [[Communist Party of Latvia]] in the [[1928 Latvian parliamentary election|1928 elections]] managed to get 5 seats standing as the Left Trade Union (which was banned in 1930). In the [[1931 Latvian parliamentary election|1931 elections]] Communists won 6 seats as the Trade Union Workers and Peasants Group, but were once again banned in 1933.

The [[Latvian Farmers' Union]], comprising the second-largest parliamentary faction with 14 to 17 MPs, was the largest of the conservative parties. It increasingly had to compete with some smaller farmer, catholic-farmer and [[Latgale]]-farmer parties which won more votes in each election. The Farmer's Union was led by [[Kārlis Ulmanis]], [[Zigfrīds Anna Meierovics]] and [[Hugo Celmiņš]]. The decreasing popularity of Ulmanis and of the Farmers' Union may have been one of the reasons behind the May 15, [[1934 Latvian coup d'état]], as Ulmanis tried to prevent further loss of his political influence and power in the elections scheduled for October 1934.

The Democratic Centre Party, led by [[Gustavs Zemgals]] represented mostly urban, middle-class office-workers and state employees.

The [[National Union (Latvia)|National Union]], led by [[Arveds Bergs]], was nationalistic, anti-Soviet, center-right party that attracted urban followers. The extreme nationalists were represented by the [[antisemitic]] [[Pērkonkrusts]] (founded in 1933), led by [[Gustavs Celmiņš]].

Most of the remaining small parties were either ethnic – German, Jewish, or Polish – or represented single-issue economic groups – small-holders, house owners, even railroad workers. The small parties usually formed larger coalitions (blocks) and then used their influence to join governing coalition. One of the most influential was coalition of Latgale parties.<ref>{{Cite web |url=http://www.uzdevumi.lv/p/vesture/12-klase/lr-parlamentara-posma-6157/re-cc837c4c-1c76-45e8-8d6e-ab1f98eaca77 |title=Politiskās partijas |access-date=April 23, 2016 |archive-date=March 5, 2021 |archive-url=https://web.archive.org/web/20210305133126/https://www.uzdevumi.lv/p/vesture/12-klase/lr-parlamentara-posma-6157/re-cc837c4c-1c76-45e8-8d6e-ab1f98eaca77 |url-status=live }}</ref>

===Referendums===
During this time four referendums took place, all indicative of the issues facing the new state.

On July 19, 1922, Latvia signed a [[Concordat]] with the [[Holy See|Vatican]]. This was motivated by the need to better integrate the heavily Catholic Latgale in the Lutheran-dominated state. In traditionally Lutheran Riga some buildings belonging to Russian Orthodox Church were given to Catholics, and the Lutheran [[St. James's Cathedral, Riga|St. James's Cathedral]] was transferred to Catholics as their new cathedral. On September 1–2, 1923 the [[1923 Latvian church property referendum|Church property referendum]] was held in an attempt to prevent any further forcible transfer of churches and properties from one confession to another. About 200,000 or 20% of voters participated, and the referendum failed.

On June 2, 1927, the Saeima once again changed the Citizenship law. An earlier version had granted Latvian citizenship to anyone who had lived in Latvia for 20 years before August 1, 1914 (at the start of World War I). The new law shortened the period of eligibility to 6 months before August 1, 1914. This mainly aimed to allow many Latvian farming colonists, who now were fleeing Soviet Russia, to receive citizenship. However, this also meant that many Soviet Jews now could claim Latvian citizenship. On December 17–18, 1927 the [[1927 Latvian citizenship referendum|Latvian citizenship referendum]] was held to prevent the proposed changes, but it failed, as only 250,000 or 20% of voters participated.

The Concordat with the Vatican occasioned another [[1931 Latvian Riga Cathedral referendum|church-property referendum in 1931]]. When the St. James's Cathedral was given to Catholics, Latvian Lutherans lost their bishop's cathedral and were sharing the [[Riga Cathedral]] with the Baltic German congregation, which belonged to the autonomous German Lutheran confession. Anti-German sentiment was widespread and an initiative to give Riga Cathedral to Latvian Lutherans gained strength. On September 5–6, 1931 almost 400,000 voters supported this idea, but the referendum failed, as it did not gather over 50% of votes. In any case, the Saeima soon passed a law confiscating the church from the Germans and giving it to the Latvians.

On February 24–25, 1934 the [[1934 Latvian Insurance Law referendum|Insurance Law referendum]] took place, aiming to introduce a new old-age- and unemployment-benefit scheme which would be funded by taxing employers, higher-wage earners and municipalities. The referendum was initiated by Social Democrats, who managed to get over 400,000 votes for this idea, but the referendum failed.<ref>{{Cite web |url= https://www.cvk.lv/pub/upload_file/Konference_R_Ceruzis_Tautas%20nobalsosanas%20Latvija%20starpkaru%20perioda.pdf |title= Tautas nobalsošanas Latvijā starpkaru periodā 20.gadsimta 20. – 30.gados |access-date= April 14, 2016 |archive-url= https://web.archive.org/web/20140422214720/http://cvk.lv/pub/upload_file/Konference_R_Ceruzis_Tautas%20nobalsosanas%20Latvija%20starpkaru%20perioda.pdf |archive-date=April 22, 2014 |url-status=dead }}</ref>

===Economy===
The young Latvian state had to deal with two main economic issues: the restoration of industrial plants (especially in Riga), and the implementation of [[land reform]] that would transfer most of the land from German nobles to Latvian farmers.

The Constituent Assembly passed a land-reform law which expropriated manor lands. Landowners were left with 50 hectares each, and their land was distributed to the landless peasants without cost. In 1897, 61.2% of the rural population had been landless; by 1936, that percentage had reduced to 18%. The extent of cultivated land surpassed the pre-war level as early as 1923.<ref>{{cite book | last = Bleiere | first = Daina |author2= Ilgvars Butulis |author3= Antonijs Zunda |author4= Aivars Stranga |author5= Inesis Feldmanis | title = History of Latvia: the 20th century | publisher = [[Jumava (publisher)|Jumava]]| location = [[Riga]] | page = 195| year = 2006| isbn = 9984-38-038-6| oclc = 70240317}}</ref>

Before the World War I some 2% of landowners owned 53% of land in Kurzeme and Vidzeme, in Latgale it was 38%. The Agrarian reform Law of September 16, 1920 created the State Land Fund, which took over 61% of all land. The German nobles were left with no more than 50 ha of land. This destroyed their manor-house system. Many of them sold their possessions and left for Germany. Former manor-house buildings often became local schools, administrative buildings or hospitals. The land was distributed to a new class of small-holding farmers – over 54,000 ''Jaunsaimnieki'' (New farmers) with an average farm-size of 17.1 ha, who usually had to establish their farms from nothing, in the process building new houses and clearing fields. Due to their small size of their holdings and unfavorable grain-prices, the new farmers rapidly developed dairy farming. Butter, bacon and eggs became new export industries. Flax and state-owned forests were other export-revenue sources.<ref name="bank.lv"/>

On March 27, 1919, the Latvian Provisional Government introduced the [[Latvian ruble]], with an exchange rate of 1 Latvian ruble equal to 1 [[Ostrubel]], 2 German marks and 1.5 tsarist ruble. On March 18, 1920, the Latvian ruble became the only legal currency. Due to high inflation, the new [[Latvian lats]] was introduced in 1922 at a rate of one lats to 50 rubles. In 1923 the [[Bank of Latvia]] was established and the lats replaced the ruble entirely in 1925.

Between 1923 and 1930 the state budget ran surpluses. On average, 25.5% went to defense, 11.2% to education and 23.4% to capital-investment projects. The state's [[liquor|spirits]] monopoly generated around 15% of government income.

The restoration of industry proved complicated. Before World War I, 80% of industrial production went to internal (Russian Empire) markets. Latvia signed a trade agreement with the Soviet Union in 1927, but this did not result in high trade-volumes. By the end of the 1920s Latvia's largest export markets were Germany (35.6%), the United Kingdom (20.8%), France, Belgium, Netherlands (22.9%). Latvia had to import almost all its modern machinery and fuels.<ref name="bank.lv"/>

In 1929 Latvia had three [[state-owned bank]]s, 19 private banks, 605 credit unions and many more mutual credit unions.

The [[Great Depression]] reached Latvia in the middle of 1930. Exports fell and imports were strictly limited, to save foreign exchange reserves. State monopolies of sugar and bacon were created. To prevent banks from collapse, between July 31, 1931, and September 1, 1933, a law prohibited withdrawal of more than 5% of the total deposit per week. In 1932 the trade agreement with Soviet Union expired and industrial unemployment reached its peak in January 1932. The national income fell from 600 lats ''per capita'' in 1930 to 390 lats ''per capita'' in 1932.

In place of free international trade came interstate clearing-agreements which set the volumes and types of goods that states then would trade. In 1932 Latvia signed clearing agreements with France and Germany, in 1934 with the United Kingdom, in 1935 with Sweden, Estonia and Lithuania.

Economic recovery started in 1933 as production increased by some 30%. The state budget deficit fell from the record 24.2 million lats in 1931/32 to 7.8 million lats in the 1933/34 budget.<ref name="bank.lv"/>
<gallery widths=180>
Latvia 1rublis.jpg|1 ruble note
Two latvian lats 1925.jpg|2 lats coin
Five Latvian Lats 1931.jpg|The iconic design of 5 lats coin still used in [[Latvian euro coins]]
</gallery>