Central Bohemia attracted human settlement as far back as the primeval stone period.  As early as in the 6th century ancestors of the Czechs settled in suitable areas of today's Prague and after 870 the Prague castle was established.  In 973 a bishopric was established at the rotunda of St. Vitus.  The 10th century saw the creation of a second castle - Vysehrad - on the right bank of the Vltava.

From 1085 this castle became the seat of the first Czech king Vratislav I.  In 1172 a stone bridge (called Judith's) was built - the second in central Europe.  The 13th century saw the formation of two fully independent towns developed from the old settlement areas:  The Old Town, and the Lesser Quarter.

When the indigenous dynasty of the Oremyslids died out, the Luxembourg dynasty was established in 1310.  In 1338 the Old Town Hall was built - a symbol of civic autonomy - and in 1344 the Prague bishopric was elevated to archbishopric.  As a result the construction of St. Vitus Cathedral was began.  In the years 1346-1378 Charles IV, Czech king and Roman Emperor, ruled the country.  In 1348 he founded the New Town and first university in central Europe.  He also had initiated the replacement of Judith's Bridge by an impressive gothic one.

Attempts at religious reformation connected with the priest Jan Hus culminated in a revolutionary movement from 1419 to 1437.  The situation calmed down during the reign of King George from the Jagellon dynasty when new building development took place.  

In 1526 the throne was taken over by the Hapsburg dynasty which ruled until 1918.  In the years 1583-1611 Prague was the seat of the emperor Rudolf II and became the center of social and cultural life.  The defeat of the Czech Estates uprising against the Hapsburgs during 1618-1620 was followed by a decline in the Czech language and national consciousness.

During the period 1784-1848 there was a revival of the Czech nation, beginning with the industrial revolution and the establishment of Czech institutions.  In 1918, at the end of WWI, brought the declaration of independence of Czechoslovakia, and Prague became the capital of the new state.

The development of the country was disrupted in the years 1939-1945 due to occupation by Nazi Germany.  In February 1948 the Communist Party came to power enforcing the Soviet model of society.  The "Prague Spring," an attempt to reform socialism in Czechoslovakia was terminated by the invasion of the Warsaw Pact armies.  However, the "Velvet Revolution" in 1989 signaled the end of the power of the Communist Party.  It was the beginning of democracy, multiparty political system and the opening of private enterprise.

In 1993 the federal state was divided and a new independent Czech Republic was formed.
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Lecture by Professor Jiri Amort 
"From 40 Years of Communism to Free Market Economy"

1. Transition to free market system
     Up to 1918, the Czechoslovakia area produced 65% of industrial capacity of the Austro-Hungarian Empire.  After the establishment of the new country, the burden was too great and lead to decreased markets.  In 1918 separate currencies were created to prevent inflation.  Gradually this "island of democracy" became very prosperous.  The first president did much for the new country (his wife was American).
     There were lots of refugees from Russia and then Germany starting in 1933 - especially the German Jews.  (Hitler used the pretext of large suppressed German population in Czechoslovakia for his invasion in 1939).

2.  After 1948, Czechoslovakia was under Russian influence.  The country did not join the Marshall Plan.  With the increase Russian influence, businesses were nationalized and subjected to the needs of the Soviet Bloc. 
     With further Soviet support, political persecution, murder and prison awaited person who did not go along with the new socialism.  Emigration increased with some of the great minds going to other countries.

3.  Early 1990s, with the Soviet withdrawal, saw privatization, liberalization, restructure and new legislation.  A comparison was made comparing Austria's free market system since 1955 and Czechoslovakia/Russian's socialism system.  People were told it was so much better with the western free market system.
     a.  Privatization - The new government tried to trace ownership after 40 years. Property was auctioned when owners were not found.  Many properties were sold to former Communist officials.  Adults were given 1000 coupons for 1000 crowns (1 weeks wage) to buy property.  The state is still selling off property - a requirement for entry into the European Union.
     b.  Liberalization - A free market system was started with consumer prices and foreign exchange system.  Czechoslovakia had the lowest inflation rate of all the eastern European countries.  The government still controls public transportation and utilities.  Housing prices are still regulated.
     c.  Restructure - With privatization and free markets, there was a decrease in heavy industry and increase in services.  In the past the workers in steel, coal, army and police were the privileged.  Now it's private business owners, managers, employers, judges, advocacy lawyers and those with computer knowledge.  The most privileged are the sport athletes.
     d.  Legislation - New laws for taxation and budget were passed.  This is still not complete and changes are needed before European Union membership.  Private schools were not allowed before, but now a few private and religious schools have opened.  University study is free unless the student is not completing studies on time.

4.  Achievements and Accomplishments:  Dissolution of socialist party was peaceful.  Increasing economic growth is progressing but still with heavy debt.  Increase in literacy and social condition.  Employment was artificially low in the early 1990s, now officially at 8%.
     Budget:  Efforts to privatize and sell off state property and businesses.  Country not yet competitive in western markets.  Political system with two strong parties, but minority party not active in criticizing majority party until election time.

In Prague there are a little over 100 churches - no new churches built for many years.  About 20% of the population actively practice their religion.  The Czech Republic is know as the "Heart of Europe."

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