A further discussion of Forestry and related Industries
Finland’s economy largely relied on her Forests, with Finnish farmers owning approximately half the forested land, the state owning a third (mostly in the North) and the remainder largely owned by forestry companies. Sawmills and lumbering were a large source of employment in rural Finland, and in the 1930’s Finland led the world in the export of sawn timber, ahead of Canada, the USSR, Sweden and the USA. Britain was the largest buyer, followed by Germany, Holland, Denmark, Belgium and South Africa.
Finnish forestry workers with early mechanised log-haulers
With the rapid acceleration of industralisation and the consequent movement of people from rural areas to the towns and cities, there was a growing demand for housing. This resulted in the emergence of a new industry, which rapidly became one of Finland’s largest – the manufacture of prefabricated houses, schools, stores and warehouses. Initially, these were built for the Finnish market, but it was found that there was also an export market and through the 1930’s, sales picked up rapidly. In 1935 for example, 35,000 prefabricated houses were sold to the USSR. As their economies recovered from the Great Depression, Poland, Denmark, France, the UK, Holland, Belgium and Germany were among the countries which brought large numbers of these houses, with some thirty other countries buying smaller numbers.
Finland had, in addition to forestry, established a large variety of forestry-related industries including mechanical pulp mills, cardboard and building board factories, suphite and suplhite cellulose mills as well as paper mills. In 1932, Finland’s mechanical pulp production totalled 750,000 tonnes, cellulose 1.5 million tons and paper 550,000 tons and these numbers continued to climb through the 1930’s. The first plywood factpry was built in 1912 and by 1938, there were eighteen mills manufacturing plywood and exporting 200,000 cubic meters annually. In 1930, Finland began to maufacture wood-fiber panels and a geowing world-wide demand for this product had led, by the late 1930’s, to eight factories having been established to meet demand.
Finland had also established many smaller industries, both before and after independence, many of them to supply her own needs. As we covered earlier, the development of hydroelectric power was important to Finnish industry, as Finland had and has no black coal fields. With the development of hydroelectricity and the provision of increasing amounts of cheap power through the 1920’s and 1930’s, Finland’s small industries were able to increase production and compete successfully in both domestic and foreign markets. We’ve already looked at the metal industry’s growth – by 1938 this sector of the economy employed 83,000 works in 1,000 different companies, building machines and equipment for the woodworking industry, locomotives, ships, electrical machines and equipment, cables and machine tools, fittings for water and steam pipes, seperators, and automobile parts, bodies and engines among others. For a further example, the first porcelain factory in Finland, the Arabia, was started in 1874 in Helsinki, producing a wide variety of porcelain and earthernware articles such as toilets, basins, baths, technicak porcelain, china and the like. Arabia’s products won the Grand Prox at the World;s Exhibition in Barcelona in 1929, Salonika n 1935 and Paris in 1937 and were sold in more than thirty countries. Arabia's factory was the largest porcelain and china factory in Scandanavia, with 3,000 employees.
Arabia Porcelain Factory in Helsinki
Another of Finland’s important secondary industries was clothing and textiles, with factories in Tampere employing around 10,000 people, nearly all women, and satisfying primarily domestic demand. By 1934, Tampere had the largest textile manufacturing plant in Scandanavia. Other industries included flour mills, the dairy industry (which produced over 30,000 tons of butter and 10,000 tons of cheese, most of which was exported). Finland also produced a large amount of leather, with approx. ninety shoe plants producing 4.8 million pairs of shoes annually. And then there was the very visible contribution of Finnish architects and designers to architectural and furniture design which was rapidly gaining respect and being imitated around the world. Alvar Aalto, Erik Bryggman, Sigurd Frosterus, Armas Lindgren, Valter Jung and Eliel Saarinen among others. Here’s a few examples.
Eliel Saarinen’s Helsinki Railway Station (1909)
Alvar Aalto’s iconic Auditorium of the Viipuri Municipal Library.
Alvar Aalto’s Headquarters for the Suojeluskunta (Civil Guard) in Seinajoki
Alvar Aalto Armchair – now you know where Ikea got their concepts from
The Tilkka Military Hospital, Helsinki. Designed by architect Olavi Sorrka and built in 1930
Alvar Aalto’s Helsinki Olympic Stadium (Helsingin Olympiastadion)
Athletics have always held a particular importance in Finland and in the minds of the Finns. The first sports associations were founded as long ago as the end of last century, and from the beginning of the twentieth century the Finnish nation has been animated by a great zeal for sports. Finland participated in the international Olympia movement even before the country gained independence in 1917. The Finns’ excellent results in the Olympic Games of the 1920s fostered the dream that one day it would be possible to hold the Games in Helsinki. The Stadium Foundation, established 1927, started to implement this dream and their first and foremost task was to get a stadium built, which would permit Helsinki to host the Summer Olympics. Building began on February 12, 1934, and the Stadium was inaugurated on June 12, 1938.
The Stadium arena, which has been described as the most beautiful in the world, was the product of an architectural competition. Architects Yrjö Lindegren and Toivo Jäntti won the competition with their clearly lined functionalistic style design.
The 1940 Summer Olympics, officially known as the Games of the XII Olympiad were originally scheduled to be held from September 21 to October 6, 1940, in Tokyo, Japan. When Tokyo was stripped of its host status for the Games by the IOC after the renunciation by the Japanese of the IOC's Cairo Conference of 1938, due to the outbreak of the Second Sino-Japanese War, the IOC then awarded the Games to Helsinki, Finland, the runner-up in the original bidding process – much to the delight of Finns. The Games were scheduled to be staged from July 20 to August 4, 1940 but were cancelled after the Second World War broke out
The Emergence of Nokia Ltd (Nokia Oy)
In 1927, three companies, which had been jointly owned since 1922 (Finnish Rubber Works-Suomen Gummitehdas Oy, Finnish Cable Works-Suomen Kaapelitehdas Oy and Nokia Company- Nokia Aktiebolag) were merged to form a new industrial conglomerate named Nokia Oy. Through the late 1920’s and 1930’s, Nokia Oy was involved in many industries, producing paper products, car and bicycle tires, footwear (including rubber boots and boots for the Finnish Army), communications cables, electricity generation machinery, gas masks for the Finnish Army), aluminium and chemicals. Each business unit had its own director who reported to the Nokia Corporation President.
Nokia's history starts in 1865 when mining engineer Fredrik Idestam established a groundwood pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, in southwestern Finland, and started manufacturing paper. In 1868, Idestam built a second mill near the town of Nokia, fifteen kilometers (nine miles) west of Tampere by the Nokianvirta river, which had better resources for hydropower production. In 1902, Nokia added electricity generation to its business activities. In 1898, Eduard Polón founded Finnish Rubber Works, manufacturer of galoshes and other rubber products, which later became Nokia's rubber business. At the beginning of the 20th century, Finnish Rubber Works established its factories near the town of Nokia and began using Nokia as its product brand. At the end of the 1910s, shortly after World War I, the Nokia Company was nearing bankruptcy. To ensure the continuation of electricity supply from Nokia's generators, Finnish Rubber Works acquired the business of the insolvent company. In 1912, Arvid Wickström founded Finnish Cable Works as a producer of telephone, telegraph and electrical cables and in 1922, Finnish Rubber Works acquired Finnish Cable Works.
Despite their reputation of being reticent, the Finns were among the forerunners in the world in the use of the telephone. The first telephone line was erected in Helsinki towards the end of 1877; only 18 months after the telephone had been patented in the United States. The first telephone company was founded in Helsinki in 1882, and 1930 a total of 815 local telephone companies had been set up in Finland. In most other countries telephony was regarded as a successor to telegraphy and hence became a state monopoly. Telephones first arrived in the largest towns, then gradually spread to smaller towns and the surrounding countryside. In urban areas telephones grew common quite rapidly. At the turn of the century Helsinki had 3.3 phones per 100 population, which was considerably more than in other towns. By 1930 there was approximately one phone for every six people.
Measured with any indicators, private telephony activity was many times more extensive than that of the State. For example, in 1932 State telephone companies had 227 exchanges whereas private telephone companies had as many as 1,998. Likewise, in the same year the State had 1,763 "subscriber apparatuses" but private telephone companies had 133,456. At the time, Telephone Services in Finland were an open market, with the state-owned telecom company having a monopoly only on trunk network calls, while most (c. 75%) of local telecommunications was provided by telephone cooperatives, with most of the actual telephones and switches being purchased from the Swedish Ericsson Company. In 1930, the newly appointed President (and former Technical Director) of Finnish Cable Works, Verner Weckman, made a case for Nokia to move into the design and maufacture of telephony equipment for the Finnish market. With the support of the Finnish Government (by way of placing orders and placing tariff barriers on imports), Nokia quickly established itself in the limited Finnish market for such equipment, at the same time gaining experience in the design and manufacturing of telephones and the new automatic switches that were slowly penetrating the telephony market.
In the 1920s and 1930s, the world telephone markets were being organized and stabilized by many governments. The fragmented town-by-town systems which had grown up over the years, serviced by many small private companies, were being integrated and offered for lease to a single company. Finland was no exception and in 1932, Nokia was awarded the contract for Finnish Telephone Services nationwide. Within two years, Nokia had expanded into Estonia and had begun selling telephones and switches to the other Baltic States and to Poland. As part of the trade deals with the USSR, in 1935 the Government secured a contract for the delivery of automated switches to the USSR, a minor order for the established European and American manufacturers but a significant sale for Nokia. By 1935, Finnish Cable was securely established as a small (by world standards) telephone equipment designer and manufacturer. And in 1935, influenced by Finnish Cables success in the communications field, the Defence Forces signed a research and development contract with Finnish Cable to design and develop a number of military communications devices for the Army and Air Force. The significance and impact of this R&D contract will be discussed in a later section.
Finland Steamship Company Ltd. / Suomen Höyrylaiva Osakeyhtiö / Finska Ångfartygs Aktiebolaget (FÅA)
In an earlier section, the founding of Finnish transoceanic shipping companies was covered. However, it’s also important to note that there were other quite large Finnish shipping companies that were focused primarily on European shipping routes with over 800 ships of various sizes and types in operation. A good example of these is the Finland Steamship Company. This company was founded in 1883 by Captain Lars Krogius to compete with the increasing number of steamers coming into service in the Baltic, and to maintain a regular service to the United Kingdom for Finland's agricultural and forestry products. In 1884 the first steamships, Sirius and Orion were completed.
The company expanded rapidly and owned eight ships by 1890 and 27 by 1899, totalling 30,000 gross tons. Originally winter traffic to Finland was considered impossible, and their ships were forced to sail south for the winter months. However, with the assistance of a loan from the State, the CAPELLA was built in 1888, able to withstand ice pressure, and in the winter of 1888-89 maintained a service between Hanko and Hull for most of the season. In the light of this, new ships were planned to meet ice conditions, and from 1898 to 1914 an uninterrupted service ran between Hanko and Hull. The export of butter to the UK required regular sailings by vessels equipped with refrigerated cargo space, and the company placed it's best ships on this service between Hanko and Hull, and later also between Turku and Hull. They were also heavily involved in the transport of Finnish emigrants to Hull on their way to America and by 1932 had carried nearly half a million passengers on this route.
During the 1914-1918 war, the company lost eight of the nine vessels that were beyond the Baltic at the outbreak of war, and as these ships were employed by the British Admiralty, they never received full compensation. Payment was dependent on the approval of the Russian Government and this was never received due to the Russian Revolution. The company's ships played an important role in the country's war of independence and many ships were lost, but by 1919 economic conditions improved and the fleet expanded rapidly, by 1929 comprising 44 vessels, totalling 55,000 tons.
The trade depression of the 1930s did not affect Finland's export trade with regard to shipping to any great extent and the company continued to grow. Cargo services were operated to most European countries as well as the east coast of North America and passenger routes were operated between Turku - Stockholm, Helsinki - Stockholm, Helsinki - Copenhagen and Helsinki - Lubeck. From 1929 on, as the Company continued to expand, new ships were built in Finnish shipyards (18 altogether), and by 1939 the company owned and operated 62 Ships, both Cargo and Passenger, and operated 22 regular routes. This experience was typical of most of the smaller Finnish shipping companies, who experienced steady growth through the 1930's.
The economic effect of Logistical Improvements
Incidentally, the whole logistics sector had directly and indirectly greatly benefited from state intervention in maritime transportation. One of the crucial, although seemingly minor, modifications being implemented over the 1930's was large scale palletization of cargo combined with the large scale introduction of fork lifts. Although for the modern reader a humble pallet might not seem as important as the now ubiquitous container, it still had a dramatic impact upon labour and the time involved in cargo handling at the time. In 1931 it took three days man-effort to unload a boxcar filled with individual goods. In 1939, with palletization of loads, the same task took four hours. The effort to palletize transportation was carried out because investment in the Finnish rail network was well behind the countries strong economic growth, thus there was a need for the rail network to be utilized with maximum efficiency. Combined with strong Finnish trade with early palletizers in the UK and US, this path was inevitable.
Looks simple doesn’t it, but it changed the economics of freight handling dramatically
It must be noted that without the general economic boom that had been taking place, the change would have been very difficult to implement due to the strongly luddite tendencies of stevedores as the changes did result in rather drastic cuts to manpower in stevedoring. On the other hand, the wages of the remaining stevedores increased as the work changed from one needing the use of muscle power to one demanding more mechanical skills.
The Co-Operative Movement and Farming
As with the other Scandanavian countries, Finland was fertile ground for the co-operative movement in the changed economic and social conditions that were brought about by the growth of industry. The swift growth of industry as well as foreign competition in agricultural products encouraged farmers and workers to collaborate. The co-operative movement began in Finland in the 1880’s but split in 1916 into two parallel organisations, each with it’s own stores, factories and central organization. The two co-ops, SOK and OTK, were the largest wholesalers in Finland, owning flour mills, bakeries, brick, macaroni, match, margarine, bedding and chemical factories as well as operating their own insurance companies. They also bought and marketed local agricultural produce – grain, eggs, meat and vegetables and between the two organisations, they amounted to 40% of Finland’s retail grocery business.
There were also co-operative dairy associations (the Co-operative Butter Association exported 90% of Finland’s butter and 70% of it’s cheese) while there were many other co-ops, including co-ops for the sale of livestock and eggs, harvesting and threshing grain as well as electricity, flour mill and sawmill co-ops. With the average Finnish farm being on a small scale, these co-ops assisted Farmers in raising their incomes. Speaking of Co-ops, we’ll address Trade Unions in an upcoming section on Finnish Politics through the 1920’s and 1930’s.
However, life in rural areas was still tough. Most farming was done by muscle power, rather than with machinery, and this in part encouraged the migration from rural areas into the industralising towns and cities. Between 1926 and 1939, 687,000 Finns, approximately one sixth of the population, moved from rural to urban areas. Of those Finns in rural areas, around 100,000 worked for industrial concerns near their homes while there were also an estimated 200,000 part-time farmers who worked their own farms in summer and for the remainder of the year worked as lumberjacks or in woodworking plants. Subtracting these numbers, roughly 40% of the population continued to be primarily employed in agriculture, and highly manual agriculture at that.
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A typical small rural North Karelian Farm of the 1920's
In 1917, Finland produced only 40% of cereal consumed. By 1937 this had risen to 87% through the introduction of more scientific methods and the very slow introduction of mechanization, largely through farming co-operatives. As previously mentioned, Dairy farming made up a large percentage of agriculture but even by 1935, Finland was not self-sufficent in agricultural products and relied on imports to make up the difference. This began to change somewhat in 1935, when the Ministry of Agriculture encouraged the adoption of large-scale potato farming in Lapland. In initial trials the per-acre potato yield on land hitherto used for growing Hay had provided a better yield than prime potato growing acreage in the United States (25,000kg per hectare on average).
Large scale potato farming got underway in 1936, with acreage increasing rapidly on a yearly basis. This was fortuitis as it turned out – by 1939, substantial acreage in Lapland was devoted to potato farming (and to raising hogs, which happily lived off potatoes). When, with the outbreak of the Second World War, Finland was largely cutoff from from agricultural imports, it proved possible to expand potato cultivation and hog raising rapidly from a by-then well-established base, enabling Finland to become self-sufficent in food for the duration of the War.
An Economic Overview and a Note on the Finnish Education System
Prior to WW1, Finland participated fully in the global economy of the first gold-standard era, importing much of its grain tariff-free and a lot of other foodstuffs. Half of the imports consisted of food, beverages and tobacco. Agriculture turned to dairy farming, as in Denmark, but with poorer results. The Finnish currency, the markka from 1865, was tied to gold in 1878 and the Finnish Senate borrowed money from Western banking houses in order to build railways and schools. GDP grew at a slightly accelerating average rate of 2.6 percent per annum, and GDP per capita rose 1.5 percent per year on average between 1860 and 1913. The population was also growing rapidly, and from two million in the 1860s it reached three million on the eve of World War I. Only about ten percent of the population lived in towns. The investment rate was a little over 10 percent of GDP between the 1860s and 1913 and labor productivity was low compared to the leading nations.
During the two decades after the establishment of the republic in 1917, Finland made remarkable economic progress. At the time of the collapse of the Russian Empire in 1917, the Grand Duchy of Finland had the most backward economy in Nordic Europe. Situated at the outer edges of the spheres of influence of major European industrial powers – principally Britain, Germany and Sweden - newly independent Finland appeared destined to remain a poor, peripheral area. By the late 1930’s however, Finland had begun to gain somewhat of a reputation, with its citizens enjoying a high standard of living and industrialization proceeding rapidly. Although the economy was heavily dependent on exports, the Finns had developed markets in both Eastern and Western Europe, including the USSR, avoiding excessive dependence on any single market.
Material conditions had been difficult at the birth of the Finnish republic. The country's industries had started to develop after about 1860, primarily in response to a growing demand for lumber from the more advanced economies of Western Europe, but by 1910 farmers still made up over 70 percent of the work force. Finland suffered from food shortages when international trade broke down during World War I. The fledgling metal-working and shipbuilding industries expanded rapidly to supply Russia during the early years of the conflict, but the empire's military collapse and the Bolshevik Revolution in 1917 eliminated trade with the East. The Finnish civil war and the subsequent massacres of the Reds spawned lasting labor unrest in factories and lumber camps, while the plight of landless agricultural laborers remained a pressing social problem.
During the immediate post-WW1 years, Finland depended on aid from the United States to avoid starvation, but by 1922 industrial production had reached the prewar level and continued to grow rapidly. While trade with the Soviet Union languished through the 1920’s for political reasons, Western European, especially German, markets for Finnish forest products soon reopened. In exchange for lumber, pulp, and paper-which together accounted for about 85 percent of exports--Finland obtained needed imports, including half the nation's food supply and virtually all investment goods. Despite initial political instability, the state built a foundation for growth and for greater economic independence.
The first and most important step had been an agricultural reform program that redistributed holdings of agricultural and forest land and strengthened the class of smallholders who had a direct stake in improving farm and forest productivity. The government also nationalized large shares of the mining and the wood-processing industries. The subsequent public investment program in mines, metal foundries, wood and paper mills, dams and power generation plants, shipyards and the like improved the country's ability to process its own raw materials. By the late 1920s, agricultural modernization was well under way, and the country had set key foundation stones industrialization in place, including the establishment of Finnish owned trans-oceanic shipping companies trading with North and South America (expanding to include the Far East in the 1930’s).
The world-wide Great Depression started when share prices slumped on the New York Stock Exchange in September 1929. The effects from the 1930s depression could be seen earlier in Finland than elsewhere in Europe: the pace of economic growth already slowed down in 1929. In the same year the rate at which industrial output was going up also decelerated from the preceding years when it had exceeded 10 per cent. Between 1930 and 1931 Finnish industrial output suffered one of the strongest periods of decline in its history. The problems of Finnish industrial production did not arise as a direct consequence of the slump on the New Your Stock Exchange only. The biggest problems were caused by the difficulties the wood industry - the most important industry at that time - faced on the world market. Soviet Union entered the international market for wood, dumping prices downwards. At the same time, international demand for wood was declining as a consequence of the Great Depression of the 1930s. Added together, these factors caused to the industry serious problems, which could also be seen as declines in output in 1930 and 1931.
Yet, the Great Depression of the 1930s was much more short-lived in Finland than elsewhere in the world. Industrial output began to again climb in 1932. The international competitiveness of Finnish industry was improved by the devaluation of the Finnish markka in 1931-1932, which lowered its value by 50 per cent against the US dollar and by 15 per cent against the British pound. Although Finland suffered less than more-developed European countries during the Great Depression of the 1930s, the country nonetheless experienced widespread distress, which inspired further government intervention in the economy. Comprehensive protection of agricultural produce encouraged farmers to shift from exportable animal products to basic grains, a policy that kept farm incomes from falling as rapidly as they did elsewhere and enabled the country to feed itself better. Similar policies spurred production of consumer goods, maintaining industrial employment. As in other Nordic countries, the central bank experimented with Keynesian demand-management policies, using the creation of credit as well as loans from foreign banks and creative tax credit schemes to encourage investment in Finnish infrastructure by selected companies such as Ford (automobile manufacturing) and Inco (Nickel Mining at Petsamo).
In addition, such large-scale projects as Outukiumpu’s new nickel mines were financed by bank loans to the now well-established State-owned company itself, rather than by the extension of financing from the Government Budget. During the 1930s, the metalworking industries (Primarily the Shipbuilding, Machine Goods, Cable Products and new Locomotive construction industries) continued to grow their exports to the Soviet Union, a market in which the Finns faced virtually no competition from other Western countries. These were bartered for Oil, which was refined in the new Oil Refinery, with production in excess of Finnish demand in turn exported as finished petroleum products to Sweden, the Baltic States and even to Germany and Norway. In addition, transportation, communications, engineering, finance, and commerce became more important as the economy further developed and diversified.
Extensive borrowing in Western financial markets - especially in Sweden and in the United States - financed investments in infrastructure, agriculture, and industry. The consumer goods and construction sectors prospered in the booming domestic market, which remained protected by import controls until the end of the decade. In the 1930s, Britain replaced Germany as Finland's main trading partner. The two countries made bilateral agreements that gave Finnish forest goods free access to British markets and established preferential tariffs for British industrial products sold to Finland. Mainly driven by exports, industrial output grew very strongly, on average by over 20 per cent per year in the period between 1933 and 1938. This was assisted by a series of currency devaluations between 1935 and 1939 which boosted exports to the west. For example, the combined effect from the two devaluations in 1939 was that the value of the dollar rose by 70 per cent against the Finnish markka. From 1925 to 1939, Finland's gross national product (GNP) grew (despite the interlude of the Great Depression) at an average annual rate of 6.2 percent, considerably higher than the European average.
Control and ownership of Finland's economic life were highly concentrated, especially after the establishment of the large state-owned enterprises of the late 1920s. Thus, by 1937 three firms controlled most shipbuilding, a small number of large woodworking enterprises dominated the forest industries, and two main commercial banks exercised wide-reaching influence over industrial development. Large state-owned firms provided most of the energy, basic metals, and chemicals. The country's farmers, workers, and employers had formed centralized associations that represented the vast majority of economic actors. Likewise, a handful of enterprises handled most trade with the Soviet Union. Thus, while Finland remained a land of small family farms, a narrow elite ran the economy, facilitating decision making, but perhaps contributing to the average worker's sense of exclusion, which may have contributed to the country's endemic labor unrest through the 1930’s.
Innovative economic policies lead to rapid structural transformation, and Finland's structural transformation through the 1920’s and 1930’s was brutally quick, driving workers out of agriculture more quickly than had been the case in any other Western country. Although manufacturing output increased sharply, many displaced farm workers could not easily be placed in industry and this also contributed to the country's endemic labor unrest through the 1930’s. Yet, despite the costs of economic growth, most Finns were happy to have escaped the hardships of the Great Depression, short as it had been. The growing prosperity of the 1930’s made possible the extension of the welfare state, a development that did much to reduce tensions between workers and management. Finland's increased foreign trade made industrial competitiveness more important, causing greater interest in restraining the inflationary wage-price spiral. Starting in 1935, the government succeeded in sponsoring regular negotiations on wages, benefits, and working conditions. The political consensus that developed around income settlements helped to slow inflation and to increase productivity. Welfare programs and income policy thus helped to maintain economic growth and stability during the late 1930s.
A corollary of an increasingly industralised workforce is the need for a more educated workforce. Nationwide industrial growth requires all sorts of secondary and tertiary-level educated people...drawing office clerks, wages clerks, draughtsmen, skilled machinists, welders, mechanics. It also means a great expansion in secondary level "technical" education, you don't bring an agricultural farmhand in from the fields and teach him how to use a lathe/drilling bench and a micrometer! However, Finland had had a strong tradition of literacy since the Protestant Reformation. The Lutheran Church aimed at widespread literacy to enable the common man to read the Bible. In the eighteenth century, proof of literacy became a requirement for the right to marry. By the second half of the nineteenth century, legislation was in place for a general system of elementary education, although the tsarist regime did not allow its realization. Almost immediately after independence, the 1921 Comprehensive Education Act was passed that set the state a constitutional duty to provide "universal compulsory education," including elementary education, at no cost. Legislation also stipulated that Finnish citizens had a duty to be educated.
In the immediate post-WW1 period, the basic goal of Finnish education authorities had been to create a system that would provide equal educational opportunities for everyone within Finland. Even in the early 1920’s it was recognized that for Finland to evolve from an agricultural to an industrialized state had an educated and competent labour force as a key factor in the development process. With the Act of 1921, compulsory education came to apply to all children aged 7 to 13, that is, compulsory schooling consisted of a primary school with 6 grades. The State invested heavily in the education system to make this possible, constructing schools and hiring teachers. Gradually the Compulsory School Attendance Act extended primary education to cover the entire age group. In 1920 some 70 per cent of 15-year-olds were literate. The number of pupils in primary school started to rise quickly after the Act entered into force. As a consequence of regulations enacted in 1924 and 1922, two years of civic school were added to primary school, which then consisted of 8 grades.
An elementary school in the working-class section of Helsinki, named after the Finnish Poet and Writer, Aleksis Kivi
Discussion on the establishment of comprehensive schools started in the mid 1920’s with the introduction of the idea of a 9-year universally free municipal comprehensive school. Under the system preceding the comprehensive school, pupils in the fourth grade applied for admission to secondary school, which opened up the route to further studies, e.g. the matriculation examination. Pupils not admitted to secondary school, or pupils whose parents could not afford or did not want to educate their children, stayed in primary school. Generally a fee had to be paid for attending secondary school. The increasing wealth of families through the 1920’s meant that more and more parents wanted their children to receive better education than before.
An amendment to the Compulsory School Attendance Act on the basis of the education system was enacted in 1928, and the comprehensive school was established and realised over the 1930s, with the statutory school age covering the age groups 7 to 16, with 6 year olds entitled to receive pre-primary education during the year before the start of their compulsory education. By the late 1930’s, nearly the entire age group attended voluntary pre-primary education for 6-year-olds while 95% of 7-15 year olds were attending schools and were literate. Secondary School education also became much more common and available through the late 1920’s and 1930’s. Attending secondary school was rare up until 1920, with less than 10 per cent of the age group going to secondary school. Until the late 1920s, secondary school was an educational institution mostly for children from affluent city families. However, from 1928 on, when the majority of state and private upper secondary general schools were taken over by the municipalities, the number of secondary schools started to increase rapidly, from 200 in 1928 to 300 in 1930 and exceeding 500 in 1939. Attendance grew rapidly, from 10% in 1920 to 25% in 1930 to 40% in 1939. At the same time, secondary education was broadened and reformed to allow a greater range of choices and opportunities.
Vocational education was also dramatically expanded. Vocational colleges had been mainly established during the late 19th century but saw a rapid expansion with the industrialisation program of the late 1920’s and then the onset of the Great Depression. Government funding for vocational education (and later for unemployed workers to be retrained) was increased, with retraining focusing on apprenticeship training and vocational education in areas where the government was funding or encouraging development. These programs continued to grow slowly through the 1930’s, with apprenticeship training and competence-based skills examinations. In addition, the state-owned companies saw it as a patriotic duty to increase the skill levels of Finnish workers and many introduced their own internal training and education programs.
University education was also expanded and distributed more equally across the country, with access to it widened. The beginning of the 20th century saw the founding of the University of Technology and the Helsinki School of Economics. After Finland became independent, Åbo Akademi, the University of Turku and Svenska Handelshögskolan started their operations. The number of students attending higher education grew steadily. In 1900, the University of Helsinki had 2,500 registered students, in 1920 all higher education institutions had a total of just 3,600 students. The 1930’s was a decade of expanding higher education: several new higher education institutions were founded. During the decade, the Lappeenranta and Tampere Universities of Technology as well as the University of Joensuu and the Vaasa School of Economics were founded. The University of Social Sciences became the University of Tampere and the Institute of Pedagogics became the University of Jyväskylä. The University of Oulu started its operations in the late 1930s and in 1939, just before the Winter War, the number of students was about 15,000, with a heavy emphasis in particular on Engineering.
Thus, there was a continuing expansion of the education system through the 1920’s and the 1930’s that resulted in an ongoing supply of educated and literate students moving into the industrial economy. Concurrently, there was a steady rise of the numbers of graduates from vocational training institutes and, more slowly, from Universities. The large state-owned organisations and many of the larger private companies also ran their own internal training and vocational education programs. Taken together, this resulted in a steady increase in the numbers of trained and educated workers in the industrial sector. Where shortages of specific skillsets existed, as with the construction of the Oil Refinery or of Smelters, the expertise needed was generally imported from North America, Germany or Britain. This also applied with rather more urgency to some of the military-industrial projects of the 1920’s (as we saw with German assistance in submarine construction) and in the 1930’s as we will see in the upcoming section describing the establishment of Finland’s internal defence industries.
Social Cohesion and the rapproachment between the Suojeluskunta (Civil Guard) and the Social Democrats
There were other factors at play through the 1930’s. Social cohesiveness, a growing sense of national pride and Finnish nationalism had an effect on the events of 1939-1940. By the late 1930's the Finnish economy was enjoying its longest and most powerful economic boom ever (as in OTL). GDP per capita was slightly higher than Swedish, German and British levels (being on Dutch level OTL), the employment situation was very good and wages had increased, bringing the standard of living for all up to a level never before dreamed of. Free education was the norm, health care and social services had improved dramatically, the large estates had disappeared from the rural landscape, their place taken by small farms, the working day was a standard 8 hours, 5 days per week and their was a boom in the construction of good quality housing for the rapidly growing numbers of industrial workers.
One of the much loved new Finnish suburbs of the late 1930's. Identical two-story houses suited for the large families of the time, situated in spacious lots and flanked by three-story apartment buildings with two-bedroom apartments for young families. In coming years this scenery would change for the better as the birch and alder trees gave their shadow during summers. While these new suburbs were derided for their uniformity, they represented a huge leap in living standards.
The status symbols of the improved standards of living were still rather modest by modern standards. Bicycles were becoming a standard accessory for young and old alike. The yearly summer holidays, introduced in the mid-1930's, were being spent almost entirely in Finland due to the extremely high cost of foreign travel. However domestic travel became accessible for virtually everyone. Factory-produced functionalist furniture became a standard accessory. All this money and the demand for a better quality of life supported a burgeoning consumer goods industry and some rather innovative concepts, such as the large scale marketing of prefabricated housing.
Memories from the spring of hate of 1918 were rapidly being left behind. The general agreement of all the major political parties on the major industrial and construction projects being undertaken had lead to an increased sense of national unity and a decline in the formerly sometimes bitter disagreements between Left and Right on social and economic issues. There was a growing tendancy for behind-the-scenes compromise and with the economic boom, increased incomes and the “every family has a right to a home” policy that almost guaranteed everyone but the very poorest the ability to purchase their own house with affordable government-insured loans (and for the very poor, there was a state-owned rental housing program), there was a growing sense that this was “Our Finland” for all. The rapproachment between the Social Democrats and the Suojeluskunta in 1930, orchestrated behind the scenes by Vaino Tanner and Mannerheim (with the resultant rapid expansion of membership of both the Suojeluskunta and Lotta Svard organizations) was yet another manifestation of this growing social cohesiveness that would serve Finland so well in the dark days to come.
This rapproachment had its background in the ongoing meetings, both public and private, which took place over this period as a consensus was reached on the economic development programs being advanced in the late 1920’s. These served in particular to build an unexpectedly close relationship of mutual respect, if not liking, between Vaino Tanner, Risto Ryti and Mannerheim that had not previously existed.
Väinö Tanner (March 12, 1881, Helsinki – April 19, 1966) was a pioneer and leader in the cooperative movement in Finland, and Prime Minister of Finland from 1926 to 1927. Tanner did not participate in the Finnish Civil War. When the war ended he became Finland's leading Social Democratic Party (SDP) politician, and a strong proponent of the parliamentary system. His main achievement was the rehabilitation of the SDP after the Civil War. Väinö Tanner served as Prime Minister (1926–1927), Minister of Finance (1937–1939), Foreign Minister (1939–1945)
Risto Ryti, (3 February 1889 – 25 October 1956) started his career as a politician in the field of economics and as a political background figure during the interwar period. He made a wide range of international contacts in the world of banking and within the framework of the League of Nations. In 1921 he was appointed Finance Minister, in 1924 he took up the posoition of Chairman of the Bank of Finland. In 1934 he was awarded a British honour, being created a Knight Commander of the Royal Victorian Order (KCVO) due to his great merits in Anglo-Finnish relations. It must also be noted that he had excellent relations with the leaders of the Bank of England, due to his similar economic policies, such as the belief in the gold standard until the Great Depression, and due to his excellent command of English (In fact, Ryti regularly telephoned the Bank of England's leaders when he wanted to discuss economic or financial policies with them). Ryti served as Prime Minister during the Winter War and was the fifth President of Finland from 1940 to 1944.
Baron Carl Gustaf Emil Mannerheim (4 June 1867 – 27 January 1951) was the Commander-in-Chief of Finland's Defence Forces, Marshal of Finland and a politician. He was Regent of Finland (1918–1919) and the sixth President of Finland (1944–1946).
It was this relationship which had led to the unprecedented reconciliation betweent the Suojeluskunta (Civil Guard) and the Social Democrats – a reconciliation that was, incidentally, reviled by the Communists. While we will cover the Suojeluskunta (Civil Guard) and it’s role in Finnish politics and scoiety in detail in a subsequent section, the rapproachment between the Suojeluskunta (Civil Guard) and the Social Democrats Party in 1930 was one of the more epochal moments in Finland’s history, and one that also subsequently removed a major obstacle to increased defence spending.
Through the 1920’s, the Suojeluskunta (Civil Guard) and the Social Democrats had largely seen each other through the prism of the Civil War, in which many Social Democrats had fought as Red Guards. After the Civil War, the hostility continued, although the Social Democrats had to a certain extent moved away from the Communists. There were still, particularly in the industrial city of Tampere, running brawls between the so-called Lahtarit (the Butchers) and the Punikit (the Reddies) and these continued through the 1930’s. When, in 1930, Mannerheim and Vaino Tanner publicly and jointly announced that the Suojeluskunta (Civil Guard) and the Social Democratic Party (SDP) shared a common vision of the need for a spirit of national unity within Finland, jointly saw the dangers of the rising move towards totalitarianism in Europe and encouraged Finnish citizens of all political persuausions to join the Suojeluskunta or Lotta Svärd, this was a momentuous and earth-shattering political event that captured headlines across Finland.
However, Tanner had done his behind-the-scenes preparations within the Social Democrat organisation well, and Mannerheim’s allies and supporters within the Suojeluskunta and the rightist political parties had also done their groundwork. There was little publicly voiced opposition in the Press, indeed the Press generally hailed the rapproachment in the spirit with which it was made. The Communists reviled the move, but they were an illegal and underground movement, unable to voice their opposition publicly although the Unions they controlled or influenced were quick to make their opposition known, Within the Suojeluskunta, members were ready to take the first step in removing hostility between the SDP and the Sk-organization. In February of 1930, at the urging of Tanner, and with the active support of Mannerheim, the SDP party committee had first made private contact with the Suojeluskunta leadership, and the two organisations found common ground very fast. The means of publishing the news of the reconciliation between the two organizations needed some negotiating but this was also rapidly concluded and a formal event welcoming both Social Democrats into the Suojeluskunta, and Sk-members into the SDP was held on the 15th of March1930. The symbolic significance was large, but the actual results for members of both organizations were not immediately so.
By the 10th of April 1930, only about 1,000 Social Democrats had joined the Suojeluskunta. However, with Mannerheim, Vaino Tanner, other SDP politicians and party leaders and Suojeluskunta leaders working together to emphasis the need for Finland’s defences to be strengthened, and continually emphasizing that the Suojeluskunta was a “Finnish” organisation, and not a “political” organisation, membership of the Suojeluskunta began to grow significantly from 1931 on. Added encouragement was provided by the new financial incentives for Suojeluskunta training included within the State Budget from 1931 on, as well as the support offered by both state-owned and private businesses for Suojeluskunta membership. While there was still Union opposition, it became ever more muted over time as more and more Union members joined.
The growth in numbers of “Active” Suojeluskunta members from 1930 – 1939 was as follows:
The large surge in membership from 1935 to 1936 coincided with the outbreak of the Spanish Civil War whilst the additional large membership surge in 1938 concided with the Munich Crisis. There was a further massive surge in 1939 as the looming threat of another European War became ever more obvious and the pressure on Finland from the Soviet Union grew ever more blatant. These numbers were the “active” members capable of military service in the event of war. In addition, there were “Veteran” members, those who were classified as too old for active military service or who worked in a wartime-critical job and who were refused permission to leave their jobs but who kept up their training and who were grouped into “Home Guard” units. There were some 55,000 men in this category, grouped into Battalion-strength units and organised under the Home Guard Command structure. In addition there were a further 54,000 “Boy-Soldier” members (many of whom had, by 1939, military training as a result of the school-based Military Cadet program introduced starting from 1933).
The reconciliation between the Social Democrats and the Suojeluskunta had also had its effect on the Lotta Svärd. Unlike the Sk-organisation, this showed almost immediately with a substantial increase in the number of members as large numbers of women from Social Democratic families started to join almost immediately. The growth in numbers of Lotta Svärd members from 1930 – 1939 was as follows:
In addition, by 1939 there were also 49,000 Girl-Lotta’s (aged 17 and under, many of whom held positions of responsibility, particularly those in the 15-17 year old class (many of whom had also, by 1939, military training as a result of the school-based Military Cadet program).
And with SDP members in particular flocking to join the Suojeluskunta and Lotta Svard organisations, there was an ever increasing public awareness of the gaping holes in Finland’s defences. This rapproachment and growing public awareness somewhat indirectly resulted in some slow but significant adjustments in attitude to defence spending. Finnish politicians of the Left and even some of the Centre had been strongly resistant to any significant defence-related spending, placing their faith in the League of Nations and turning a blind eye to the potential threat posed by the Soviet Union. Indeed, Cajander had said at the time that he would “rather spend money on schools for our children than on uniforms and guns that will gather mould and rust in warehouses.”
However, public attitudes to defence spending had changed somewhat. The SDP’s rapproachment with the Suojeluskunta resulted in a lessening of opposition from the main Leftist political party (the promise of even more employment for industrial workers was also influential), the right-wing Kokoomus (National Coalition) Party had always backed Marshal Mannerheim’s defence proposals unanimously, the conservative Agrarian Party had usually supported improvements in national defence and the Swedish People's Party (RKP) saw the proposed naval buildup and construction work as a maritime issue of benefit to their supporters. As always, the only party wholly in opposition to the defence spending initiative was the Socialist Party of Workers and Smallholders (STP), a cover organization for Soviet-backed communists.
Starting in 1927, defence budget appropriations had been made to fund the early naval construction programs involving the Submarines and, in the early 1930’s, the construction of the Destroyer Flotilla. In 1931, Mannerheim was appointed Chairman of the Defence Committee, and for the first time, a significant increase in defence expenditure was included in the State Budget. This was a trend which would continue, and which we will examine more closely in a later section. For now, we’ll pause and take a closer look at the Suojeluskunta and Lotta Svard organizations and their changing social and military role in Finnish society.