N24 - Economic History: Financial Markets and Institutions: Europe: 1913-Return

The article deals with the fate of the first governor of the Czechoslovak Central Bank after World War II. It analyses his economic thinking and the sources that influenced it. The text sees him as deeply rooted in non-liberal Central European tradition but with a strong impact of Anglo-Saxon economics of the interwar period. The article also explores his contribution to the transition of the Czechoslovak economy to Soviet-type central planning and proves the hypothesis that his influence was much smaller than existing literature indicates.

Recent findings have shown that the Prague Exchange featured a very active and developed stock options market right until its pre-war closure in September 1938. This paper follows up on extensive research into fragmentary archival resources, aggregating a unique collection of options quotations on the shares of Škoda, the dominant industrial firm and stock in Czechoslovakia. A rigorous review of contemporary literature has been complemented with an empirical analysis including implied volatility measurements, resulting in a detailed appraisal of the market. Even though statistical option-valuation models have already been available and generally known, these were not used by practitioners. Instead, a heuristic approach based on perfect familiarity with intrinsic valuation and hedging as well as time-value drivers, effectively used since the 19th century, has resulted in surprisingly efficient pricing, constrained - rather than by information assymmetries - primarily by transaction costs and, over a relatively brief period in 1932-33, by crisis-related liquidity issues in the market.

The article is the authors' polemic against the review of their book Economic and Social History of Czechoslovakia, Volume II 1945-1992, which was published by Antonie Doležalová in Politická ekonomie No. 3/2012. In this context, the article also deals with general issues of economic historiography, particularly with the development and object of investigation of economic history, periodization of the economic development of Czechoslovakia after World War II, external and internal impacts on the economy, construction of statistical data and terminological problems.

Building upon exhaustive research of extant and often fragmentary contemporary resources, this paper provides a thorough analysis of financial options trading and sales in interwar Czechoslovakia. Whilst focusing primarily on a remarkable bucketshop episode occuring in the late twenties and early thirties, it also comprises the so far most comprehensive study on the historical development and practices of derivatives trading on the Prague Exchange including the eminent role of private banking firms. A distinct intertemporal and international perspective facilitates the establishment of numerous parallels and patterns, strikingly instructive in times of crises.