Latvian Agrarian Reform Law of 1920


The agrarian reform law of 1920 in Latvia sought to transfer most of the land from Baltic German nobles to Latvian farmers. On September 16, 1920 Constitutional Assembly of Latvia passed the law of the Land reform, which would break up large landholdings and redistribute land to those peasants who worked it and to the newly created Latvian State Land Fund. Similar land reforms were carried out in Estonia, Lithuania and Poland.

Background

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 State Land Fund which took over 61% of all land.

Objective

The main objectives of the reform were several - the creation of new farms and the expansion of already existing smallholder farms, by so doing, the division of land of former large-scale farms into smaller land areas, thereby acquiring land for the creation of new farms. The creation of various economic enterprises, the satisfaction of social and cultural needs, is understood as implicit agrarian reform tasks as a consequence of the implementation of the reform. The aim of the reform was also to find opportunities for the expansion of cities and towns, which means that the territories borrowed from the state reserve reserved areas for the development of populated areas.

Land reform law

The various parts of Land reform law has been adopted by Constitutional Assembly of Latvia at different times:
The Land reform law expropriated the 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 been reduced to 18%. The extent of cultivated land surpassed the pre-war level already in 1923.
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 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 were used as local schools, administrative buildings or hospitals. The land was distributed to a new class of small-holding farmers - over 54,000 Jaunsaimnieki with average farm size of 17,1 ha, who usually had to create their farms from nothing, in process building new houses and clearing fields. Due to their small size and unfavorable grain prices, the new farmers rapidly developed dairy farming. Butter, bacon and eggs became new export industries.

Economic results

The agrarian reform was finally completed in 1937, transforming the country's economy and the Latvian society. Agrarian reform can be regarded as a social revolution in which the foundations of changing agriculture were created from large-scale farms with large but economically inefficient farming units on small farms. Legislators counted on emerging farms as economically productive, viable and cost-effective entities at the time. Although many foreign economists questioned the economic justification of such a radical reform because it required huge investments - about 700 million lats, and therefore predicted an economic downturn. However agrarian reform lead to a rapid economic growth due to increased productivity, increased agricultural output per hectare and increased size of productive agricultural land. When starting agrarian reform, Danish agriculture was largely a model, because it seemed most suitable for Latvia. Already in 1930, at the beginning of the year, the country was fully supplied with agricultural products and exports began to grow. In 1938 Latvia as the milk and meat exporter ranked fourth behind Denmark, Netherlands and Sweden.

Social consequences and owners compensation

The driving force behind agrarian reform was more political than economic.
As a result of agrarian reform the country's main natural treasures - land and forests changed it owners. The inherited feudal power over the state's main economic sectors was broken with elimination of feudal manor system, which connected inherited mansions with land around it. At the same time, the social problems of counter-terrorism, which had radicalized the entire nation, were solved.
The previous landowners affected by the reforms, mostly ethnic Baltic Germans, did not received any compensation, however they were left with small fraction of previously owned land.
In 1924 the Baltic Germans demanded a payment of 1200 million gold francs for expropriated land properties through a group of six their representatives in Latvia's parliament. However just before the crucial vote on the 30th of April 1924, the Baltic German faction abandoned the hearing room, which led to the dismissal of the claim by a small majority. Later, the German-speaking parliamentary faction appealed against the State of Latvia in the League of Nations, requesting compensation for seized land, but that claim was also rejected.
In 1929 Latvia signed an agreement with Poland, which resolved the controversial issues that were mostly related to the Latgale region. The Latvian government paid 5 million lats for estates that were expropriated from Polish noblemen in course of agrarian reform.