Latvia has no political annals throughout the seven centuries which preceded the formation of the present republic in 1918. Lettish tribes, racially akin to the Lithuanians, inhabited the ter ritory which now constitutes Latvia from about the loth century, but were neither the sole nor the oldest inhabitants, and there was no cohesion between them. Hence they became a subject people who, from 1158 to 1918, suffered four distinct periods of foreign domination. (a) During the period of pure German rule (1158-1562) the conquerors were the knights of the Teu tonic Order and the prince-bishops, now in alliance, now in feud, with the knights. What is now Latvia consisted then of two States : Livonia and Courland. During this period the former became powerful and, though German-ruled, wholly independent during 1347-1494. It fought Poland and Moscovy (1411-94), but exhausted itself in the effort and eventually fell a prey to powerful neighbours. (b) The period of Polish rule lasted from 1562 to 1795 in Courland under the dynasties of Kettler and Biron; from 1562 to 1795 in Livonia under Polish governors.
(c) The period of Swedish rule, 1629-1721, extended over Li vonia only, which was administered by Swedish governors-general.
(d) The period of Russian rule, which first comprised Livonia, after the Peace of Nystadt, and included Courland after the parti tion of Poland (1795), lasted until 1918.
Throughout this time, the cultural superiority of the Germans remained unchallenged, the Teutonic knights and their descend ants, the Hanseatic merchants and their successors being the privileged representatives of the public power and overlords on the land. The Letts, on the other hand, being serfs, obtained per sonal freedom only in Russian times, in Courland in 1817, in Livonia in 1819, in Latgalia in 1861. Even then, as cultivators, they remained small holders dependent upon the big landowners, mostly of German extraction. This inequality before the law survived even after the liberation, the landlords having power to impress labour for road construction and transport. They maintained their game rights intact and obtained exclusive licences for the sale of alcohol.
From about 186o onwards, the Letts, through associations of their own which met with the support of an active and alert press, encouraged Lettish enterprise in parochial and municipal affairs ; Lettish co-operatives and savings banks ; Lettish gather ings for the propagation of folk-lore and song. By this means was attained a level of education and an economic standard which placed the Letts of Courland and Livonia far ahead of the Rus sian peasantry, and out of it arose, during the insurrectionary movement of 1905, the idea of independence, or at least of autonomy.
By this time, the Russian and German imperial armies, the Bolshevik troops who followed in their wake and, lastly, the soldateska of the adventurer, Bermondt, had between them com pleted the ruin of this formerly prosperous agricultural country.
Nevertheless, the founders of Latvian independence were jus tified in believing that the political frontier which now separated their country from Soviet Russia would not wreck all the former economic advantages and that their people, under a free demo cratic institution, would make good the ravages of war. So great have been the effects of intermittent lulls in commercial activity that even the port of Libau (so important and prosperous in pre-war Russia) has become impoverished and its waterways have become impaired.
The policy of the Latvian government was based on the follow ing requirements : ( 1) the regulating of economic relations be tween the Baltic States; (2) the obtaining of every possible advantage in the principal export countries; and (3) the regulating of import trade. For present purposes attention is drawn only to such parts of the commercial treaties as relate to the exchange of goods. All the treaties of commerce so far concluded have been based on the most favoured nation principle. This principle is applicable to the citizens of both contracting parties, in con formity with local laws, in all matters relating to travel, sojourn, study, craft, profession, industry and trade in all permissible articles. Latvian commercial treaties also contain the so-called Baltic clause, conceding to Finland, Estonia, Lithuania and Russia privileges over and above the most favoured nation principle, and in article 7 of the treaty with Great Britain (signed on June 22, 1923) it is laid down that though most favoured nation treatment is accorded to British commerce "it is understood that His Bri tannic Majesty will not claim the benefit of any Customs pref erences or other facilities of whatever nature, which are or may be granted by Latvia in favour of Russia, Finland, Estonia or Lithuania in regard to Russian, Finnish, Estonian or Lithuanian goods respectively, so long as such preferences or facilities are not extended by Latvia to any other foreign country," a similar clause being inserted in all Latvian commercial treaties.
In May 1934 the prime minister, Karlis Ulmanis, suspended the diet (Saeitna) ; and on Apr. I 1, 1936, he assumed the office of president in addition to that of prime minister.
Ballod, "Les Forces Hydrauliques et les voies d'eau de la Latvie" (vol. vi., 1923) and P. Salito, "L'Ame du peuple Latvien" (vol. viii., 1923) of the Latvijas Augskolas Raksti (Acta Universitatis Latviensis) ; I. L. Evans, "The Agrarian Revolution in the New Baltic States," in No. 9 of the Slavonic Review (1924) ; A. Ceich ners, "The Latvian Balance of Payments," in No. 12 of the Latvian Economist (Dec. 1925) ; Stephen Graham, Russia in Division (1925) ; 0. Rutter, The New Baltic States and the Future (1925) .
For the Latvian standpoint, see M. Walters, Lettland and seine Ent wicklung zum Staat und die baltischen Fragen (1925) ; B. Siew, Lat tische V olks und Staatswirtschaft (Riga, 1925). See also L'Annuaire Statistique de la Latvie (Riga, 192o, etc.) ; Latvijas Saute (Riga, 1923, etc.).