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By Gareth Jones

It is difficult to gauge the industrial achievements of the Five-Year Plan. It is true that on paper formidable results can be produced, such as the increase of coal production from 35 million tons in 1927-28 to 62 million tons in 1932, the increase of iron production from 3,283,000 tons to 6,206,000 tons, and the increase of oil from 11 million tons to 21 million tons in the same period. Official statistics also show great achievements in the building of tractors, the annual production of which rose from 1,27 five years ago to 50,000 last year, and in the building of motor lorries, the production of which increased from 677 in 1927-28 to 24,000 in 1932. In light industry, gigantic figures are also produced. On the other hand, in 1932 less rolled steel was made than two years previously, and the production of steel has remained almost stationary since 1929-30. One is justified, however, in having very little confidence in Soviet statistics.

The giants of Soviet industry, Dnieperstroy, Magritogorsk, the Nijni-Novgorod factory, and the Kharkoff Tractor Works, can also be regarded as great achievements, but achievements of the order of Wembley or the Crystal Palace rather than well-functioning organisations. Difficulties of production are so great that they will long continue to be white elephants.

Through the Five-Year Plan the Soviet Government has succeeded in creating many factories for the construction of machines, which were never made before in Russia. This was part of the autarchic aim of the Five-Year Plan, namely, to make the Soviet Union independent of the rest of the world. This aim has not been reached. In spite of all the various objects, which can now be made in the Soviet Union, such as motorcars, aluminium, hydraulic turbines, which were formerly imported, their quality is so bad, and the lack of specialists is so great, that the Soviet Union can never be regarded as independent of the capitalist countries. Autarchy has not been achieved in so brief a span as five years. The shortage of foreign currency will render the render the import of machinery difficult, and recent cutting down of orders from abroad points to a slowing down of Soviet industry. The number of foreign specialists in Russia grows less month by month and when most of them have gone, the plight of the machinery will be grave.

According to experts, the Five-Year Plan has succeeded in its munitions side, and, from the point of view of ammunition, large gun, rifle and tank factories, there is reason to believe that it was a great success, for it was first and foremost a military and not an economic plan. Its primary aim was to render the Soviet Union powerful in defence against capitalist aggressors.

Another achievement is the great increase in the production of cotton in Central Asia.

In spite of colossal achievements, however, on paper the difficulties facing Soviet industry are greater than ever, and are likely to increase in the future. They are mainly hunger, lack of skill and fear of responsibility, transport and finance.

In some factories, especially in the big Moscow factories, the first difficulty, hunger, does not yet exist, for there solid meals with meat are still given each day. But in the majority of factories, especially in the provinces, there is undernourishment. In a Kharkoff factory the male worker received the following rations: 600 grams (about 1.3/4 lb.) of black bread per day, a pound of sugar per month, a quarter-litre of sunflower oil per month, and 800 grams (about 1.3/4 pounds) per month of fish, which was usually bad. In Moscow the worker receives 800 grams (about 1.3/4 lb.) of bread per day, together with a meal at the factory. If he is a skilled worker, he will have sufficient to eat. There is every prospect of food conditions worsening, which will lessen the productivity of the workers.

Lack of skill and fear of responsibility are other great enemies of industrialisation. The damage done to good machinery through clumsy handling and negligence is disastrous. Much of the skill and brains of Russia has disappeared through shooting or imprisonment, while the successive trials have led to a condition of fear among many engineers, which is not conducive to good work and responsibility.

Transport difficulties are still unconquered and are responsible for most of the bad distribution in Russia. Last summer, according to "Pravda," perishable goods had from 30% to 95%, losses en route; potatoes sometimes took sixty days to come to Moscow from a village about forty miles away. The result of these difficulties has been a rapidly growing unemployment, which is a striking contrast to the shortage of labour one year ago. There have already been many dismissals throughout the country. In Kharkoff, for example, 20,000 men have been recently dismissed. Unemployment is a problem, which will attack the Soviet Union more and more and lead to increasing dissatisfaction, for there is no unemployment insurance, and the unemployed man is deprived of his bread card.

What are the causes of unemployment in the Soviet Union?

The first is technological. A director of the Kharkoff Tractor Factory explained why his factory had dismissed many workers: "We dismissed them because we had improved our technical knowledge, and thus do not need so many workers!" an admission that technological unemployment is not confined to capitalist countries.

The second cause of unemployment is the lack of raw material. A factors, has to lie idle, because the supply of coal or of oil has failed. Such is the synchronisation in the Plan that when one supply fails there are delays in many branches of industry. "Pravda" of March 10 contained the following item, which throws a light upon this cause of delay: "In the storehouses of Almaznyanski Metal Factory 13,000 tons of metal are lying idle, intended mainly for the agricultural machine factories; 550 tons are waiting to be sent to the Rostoff Agricultural Machine Factory, 1,500 tons to the Kharkoff Factory, 2,000 tons to Stalingrad Tractor Factory. The Southern Railway is only sending 12-15 wagons of iron per day, instead of 35. On some days absolutely no wagons are despatched."

The third cause of unemployment in the Soviet Union is the food shortage. The factory is now made responsible for the feeding of its workers, a given a certain agricultural district or certain State or collective farms from which to draw supplies. A director is made responsible for the supply department. When the food supply is not sufficient for the total number of workers, the surplus men are dismissed. Some experts consider this the chief cause of unemployment.

The final cause of unemployment is financial. This will be dealt in my next article, which will appear in tomorrow’s issue of the Financial News.

* * * * *

A drastic economy drive is now in progress in the Soviet Union. The control over expenses in the factory is new exceedingly strict. The factories no longer have financial autonomy and a heavy responsibility is placed upon the administration of the factories to balance their budget. Last year the expenses of the factories exceeded the estimates. To counteract the deficits, which were caused by over spending the planned figures imposed from above on the factory administrations are now to be absolutely obligatory, and the financial work of each factory is to be controlled each month by the bank, which gives it credit.

When a factory or a trust has a deficit, sanctions are applied. In some cases, where the deficit is attributed to bad organisation a trial of the director is held and he is condemned and thrown out of the Communist. Part. Other sanctions in cases of deficit are: Non-payment of salaries and the obligation for the factory administration to dismiss a part of the staff. The rigid economy drive has thus been responsible for a part of the growing unemployment. In some offices and factories 20 per cent, 30 per cent., and even 40 per cent of the staff have been dismissed on financial grounds.

The absence of statistics upon the most vital sections of financial life makes it difficult to form a judgment concerning the currency. Gold reserve figures are no longer published. Gold production figures are hard to obtain, but in one official organisation the figure given for 1932 was 84,000,100 roubles. No figures are published on the amount of gold obtained from the Torgsin Stores, where customers have been able to buy with gold, silver, or with foreign currency. Even on the issue of roubles there have been no statistics published since September 5^th, 1932. Some reliable observers state that they have seen at least l00 one-rouble notes with the same number printed upon them. The impression one obtains, is that those in charge of Soviet finances are bewildered.

There is only one certainly about. Soviet finances, and that is that there is a large-scale inflation, however loudly it may be denied by the Soviet Government, and however much members of the Communist Party may boast that "the chervonetz is the only stable currency in the world." Some data on prices form sufficient proof of this. The Government has opened the so-called commercial shops for those who earn good salaries, where the following prices are now normal:

Butter: From 62 roubles to 75 roubles a kilo. (rouble at par equals 3s.).

Meat: 15 roubles a kilo.

Sugar: 15 roubles a kilo., but difficult to obtain.

Bread (black): 3 roubles a kilo.

(white): 4 roubles 50 kopeks a kilo.

In the open market the prices are as follows:-

Meat: About 20 roubles a kilo.

Tea: 25 roubles a pound.

Butter (when obtainable): 65 roubles a kilo.

In the Ukraine, where the food shortage is greater, the prices are higher.

In the co-operatives bread may be obtained cheaply for breadcards at the price of 7 kopeks a pound for black bread and 12 kopeks a pound for so-called white bread.

The gold prices in the Soviet Union provide interesting data for the economist:-

Flour (25 per cent.): 47 kopeks a kilo.

Sugar (refined): 50 kopeks a kilo.

Potato flour: 40 kopeks a kilo.

Flour (85 per cent.): 24 kopeks a kilo.

Butter in Torgsin (gold or foreign currency) costs from 1 r. 40k. to 1 r. 90k.

The rapid rise in prices has been a source of disorder for the Plan, for long-term planning ahead is disarranged when the currency loses its value, in the same way as in the capitalist world falling prices disorganise trade. The high prices in the Soviet Union must, however, be studied in connection with the wages which are paid. An unskilled labourer receives about 120 roubles a month; a skilled worker may receive anything from 200 to 600 roubles. Engineers are well paid, and usually receive monthly from about 500 to 1,500 roubles, and even 2,000 roubles. A young train conductor receives about 67 roubles a month.

A part of the wages goes, however, to the loans and lotteries, which play an important part in financing the Plan. In 1932 15.9 per cent. of the budgetary receipts came from loans. In 1933 it is planned to raise 2,800,000,000 roubles through internal loans. Lotteries, while providing a negligible part of the State funds compared with the loans, are used to finance such undertakings as the Soviet Mercantile Marine, the Society for Aviation and Chemical Defence, and the Motorisation of the Soviet Union. Prizes, such as motor-cars, which may be owned as private property by one man, and even money prizes, are offered as incentives to invest in these lotteries.

In internal finances one obtains impression of disorder. The rouble seems to have run away from the Plan. On the Black Market 50 to 70 roubles can be obtained for a dollar, instead of the legal 1 rouble 94 kopeks. Any suggestion of devaluation, however, is immediately refuted with indignation.

The external financial situation also arouses no confidence. It is estimated that the Soviet Union’s obligations abroad total £120,000,000. Recently the adverse balance has mounted up with the declining prices of the goods exported by Russia. In 1929 the Soviet Union exported 923,700,000 gold roubles’ worth of goods, whereas in 1932 her exports amounted to 563,900,000 gold roubles. Her imports have not declined so rapidly, having fallen from 880,600,000 gold roubles in 1929 to 698,700,000 gold roubles in 1932.

World prices have declined so much and Russia’s agriculture has received such a blow from the Five-Year Plan, that it is doubtful whether the Soviet Union will long be able to maintain her payments abroad, however meticulous she may have been in meeting payments up to now. If an embargo is placed upon Soviet imports by the British Government, the difficulties of payment will become still greater, for normally nearly 30 per cent. of Soviet Russia’s exports are destined for Great Britain, and a blow will be dealt to the creditors of the Soviet Union in Britain, and especially in Germany, where the Government has guaranteed German ex-ports to Russia to a considerable degree.

* * * * *

BALANCE-SHEET OF THE FIVE-YEAR PLAN

THE main result of the Five-Year Plan has been the ruin of Russian agriculture, a fact which completely outbalances the achievements of Soviet industry and is already gravely affecting the industrialisation of the country. In the eyes of responsible foreign observers and of peasants, the famine

 in Russia to-day is far worse than that of 1921. In 1921 the famine was spread over wide areas, it is true, but, in comparison with the general famine throughout the country which exists to-day, it might be considered localised. In 1921 the towns were short of food, but in most parts of the Ukraine and elsewhere there was enough bread, and the peasants were able to live. To-day there is food in the towns although in the provinces not enough whereas the countryside has been stripped of bread.

Symptomatic of the collapse of Russian agriculture is the shooting of thirty-five prominent workers in the Commissariat of Agriculture and in the Commissariat of State Farms, including the Vice-Commissar of Agriculture himself, and Mr. Wolff, whose name is well known to foreign agricultural experts. They were accused of smashing tractors, of burning tractor stations and flax factories, of stealing grain reserves, of disorganising the sowing campaign and of destroying cattle. "Pravda " (March 5) stated that "the activities of the arrested men had as their aim the ruining of agriculture and the creation of famine in the country." Surely a formidable task for thirty-five men in a country which stretches 6,000 miles!

The shooting of thirty-five is a sign of the panic which has come over the Soviet regime on account of the failure of collectivisation. The writer has visited villages in the Moscow district, in the Black Earth district, and in North Ukraine, parts, which are far from being the most badly hit in Russia. He has collected evidence from peasants and foreign observers and residents concerning the Ukraine, Crimea, North Caucasia, Nijni-Novgorod district, West Siberia, Kazakstan, Tashkent area, the German Volga and Ukrainian colonists, and all the evidence proves that there is a general famine threatening the lives of millions of people. The Soviet Government tries its best to conceal the situation, but the grim facts will out. Under the conditions of censorship existing in Moscow, foreign journalists have to tone down their messages and have become masters at the art of understatement. The existence of the general famine is none the less true, in spite of the fact that Moscow still has bread.

What are the causes of the famine? The main reason for the catastrophe in Russian agriculture is the Soviet policy of collectivisation. The prophecy of Paul Scheffer in 1920-30 that collectivisation of agriculture would be the nemesis of Communism has come absolutely true. Except for drought in certain areas, climatic conditions have blessed the Soviet Government in the last few years. Then why the catastrophe?

In the first place, the policy of creating large collective farms, where the land was to be owned and cultivated in common, led to the land being taken away from more than two-thirds of the peasantry, and incentive to work disappeared. Moreover, last year nearly all the crops were violently seized, and the peasant was left almost nothing for himself. The passive resistance of the peasant has been a far more important factor in Russian development than the ability to cook statistics.

In the second place, the massacre of cattle by peasants not wishing to sacrifice their property for nothing to the collective farm, the perishing of horses through lack of fodder, the death of innumerable livestock through exposure, epidemics and hunger on those mad ventures, the cattle factories, have so depleted the livestock of the Soviet Union that not until 1945 could that livestock reach the level of 1928. And that is, provided that all the plans for import of cattle succeed, provided there is no disease, and provided there is fodder. That date 1945 is given by one of the most reliable foreign agricultural experts in Moscow. In all villages visited by the writer most of the cattle and of the horses bad been slaughtered or died of lack of fodder, while the remaining horses were scraggy and diseased.

In the third place, six or seven millions of the best workers (the Kulaks) have been uprooted and deprived of their land. Apart from all consideration of human feelings, the existence of many millions of good producers is an immense capital value to any country, and to have destroyed such capital value means an inestimable loss to the national wealth of Russia. Although two years ago the Soviet authorities stated that they had liquidated the Kulak as a class, the drive against the better peasants was carried on with renewed violence last winter.

The final reason for the famine in the Soviet Union has been the export of foodstuffs. For this it is not so much the Soviet Government as the world crisis, which is to blame. The crash in world prices has been an important factor in creating the grave situation in Russia. Prices have dropped most in precisely those products, wheat, timber, oil, butter, &c., which the Soviet Union exports, and least in those products, such as machinery, which the Soviet Union imports. The result has been that Russia has had to export increased quantities at lower value.

What of the future? In order to try and gauge the prospects for the next harvest, the writer asked in March the following questions in each village:-

(1) Have you seed?

(2) What will the spring sowing be like?

(3) What were the winter sowing and the winter ploughing like?

(4) What do you think of the new tax?

On the question of seed, several villages were provided with seed, but many lacked seed. Experts are confident that the Government has far greater reserves of grain than in 1921, but evidence points to a lack of seed in certain areas.

Peasants were emphatic in stating that the spring sowing would be bad. They stated that they were too weak and swollen to sow, that there would be little cattle fodder left for them to eat in a month’s time, that there were few horses left to plough, that the remaining horses were weak, that the tractors, when they had any, stopped all the time, and, finally, that weeds might destroy the crops.

Information received concerning the winter sowing and the winter ploughing was black. There had been little winter sowing, which accounts for about one-third of the total crops, and winter ploughing had been bad. The winter sowing had been very late.

On the question of the Soviet Government’s new agricultural policy, peasants were also doubtful. The new tax, by which the collective farms will pay so much grain (usually about 2 and half centners) per hectare and be free to sell, the rest on the open market, is not likely to make much difference to the situation, for the peasants have completely lost faith in the Government.

The outlook for the next harvest is, therefore, black. It is dangerous to make any prophecy, for the miracle of perfect climatic conditions can always make good a part of the ‘unfavourable factors.

The chief fact remains, however, that in building up industry the Soviet Government has destroyed its greatest source of wealth - its agriculture.

This is the concluding article of a series of three; the first appeared in our Issue of Tuesday and the second yesterday.