November 30, 2011

Russia's Economic Growth, 1934

by Alfred Senn

Foreign Imports No Longer a Necessity

Of the basic achievements recorded by the Party at the Seventeenth Congress, one of the most fundamental must be considered the fact that the USSR is no longer dependent on the capitalist world, either technically or economically. Our foreign trade, based as it is on a foreign trade monopoly, has contributed incalculably to the achievement of this independence.

During the sixteen years since the establishment of the Soviet Union-from 1918 to 1933-our imports have been considerable, reaching a total of 8.4 billion gold rubles.

Our import policy has at all times been guided by singleness of purpose: at all stages of our Socialist construction the structure of imports was made completely subservient to the vital tasks in hand.

Thanks to our foreign trade monopoly we imported almost exclusively producer's goods. Of the 8.4 billion gold rubles, 7 billion, or almost 85 per cent, were expended on the importation of the means of production, 3.3 billion being spent on machinery.

As early as December, 1920, at the Eighth Congress of the Soviets, Lenin pointed out that:

... the resumption of trade relations will enable us to make large purchases indispensable machinery. We must bend all our energies to this end ... to introduce a more equitable exchange of commodities so that we shall be able to buy as quickly as possible the necessary machinery for our extensive plans of rehabilitating the national economy. The quicker this is done, the greater will be our chances of achieving economic independence of the capitalist world. My italics, A. P. R.)

The execution of this plan outlined by Lenin and Stalin meant that by extending our economic contacts with the capitalist world and introducing the latest technical innovations and speeding up our Socialist construction by means of considerable imports over a definite period of time, we should prepare for the next stage-the continuation of Socialist construction with a limitation of imports.

It should be stressed here that the contraction of imports could not have occurred of itself. Had not Comrade Stalin with his usual energy taken this matter in hand, the plan would never have been realized.

The results are now before us. As late as 1931 we spent over 600 million rubles on imported equipment; in 1932, 270 million; by 1933 the figure had fallen roughly to 60 million rubles.

Since the establishment of Soviet foreign trade over 3 billion gold rubles' worth of machinery and equipment have been imported, of which more than 2.1 billion rubles' worth was imported during the last few years. As a result, the Soviet machine-building industry, created with the assistance of these imports, has been able to increase its output tenfold in comparison with the pre-war production. Today practically all the machinery needed by the Soviet Union is being turned out by Soviet plants. There is not a machine we cannot manufacture.

Scores of millions of rubles were invested by the Soviet Union on the erection of the giant plants of our Socialist construction. The sums expended on imports for the largest of these industrial giants are shown below in round figures.

Stalin Automobile Plant                             25 million rubles
Molotov Automobile Plant at Gorki           40
Dneproges Hydro-Electric Power Plant     30
Stalingrad Tractor Plant                             35
Kaganovich Ball-Bearing Plant                  20
Cheliabinsk Tractor Plant                          20
Kharkov Tractor Plant                              20

We observe from the foregoing table that considerable sums of foreign currency were expended on the reconstruction and the new construction of our plants. The outlays have proved effective in that today we are independent of the capitalist world both technically and economically.

We recall that the USSR spent more than 225 million rubles on the importation of tractors alone; whereas only 75 to 80 million rubles were spent on imported equipment for the tractor plants. It was the importation of this equipment for the establishment of an auto-tractor industry in the USSR at a cost of 75 to 80 million rubles that subsequently completely dispensed necessity with the necessity of importing tractors.

Extremely important for our technical reconstruction was the fact that the USSR as a rule bought only the latest and most up-to-date equipment, as, for example, that installed in the Ball-Bearing and Frazer Plants, the

Cheliabinsk and Kharkov tractor works and the Gorki Automobile Plant. There are few plants in the world that can compare with them.

Despite the growth of imports of equipment up to 1932 there was a steady reduction in the proportion of imported machines and lathes, etc. This was due to the fact that the output of the home machine-building industry h surpassed the growth of foreign machine imports. The figures of the census of lathes carried out by the Central Statistical Department as of April 10, 1932, are very instructive. On this date there were 227,000 lathes in the m chine shops of the USSR, of which 68,000 or 30 per cent had been install prior to the Revolution, and 159,000 or 70 per cent since the Revolution. But a quantitative comparison alone does not give us a true picture of the progress made. Whereas tsarist Russia produced and imported small-caliber lathes, the USSR has produced and imported high-speed automatic and semiautomatic lathes and machine tools whose productive capacity cannot compared with the old type machines. Of the total number of lathes installed since the establishment of the Soviet Government about 100,000 were imported from abroad; 70,000 of these were imported during the First Five Year Plan. And despite this stupendous importation, the ratio of produced lathes installed in the machine shops continued to grow. Before the war home-manufactured lathes comprised 22 per cent of the total equipment; during the rehabilitation period 30 per cent; during the First Five Year Plan this figure was increased to 38 per cent.

It is noteworthy that the USSR purchased as a rule only the machinery available in the capitalist world. As an example of the most up-to-date equipment acquired we might point to the turbines of 90,000 H. P each that were made to special order in the USA for the Dneproges Hydro-Electric Power Station. There are no turbines of this capacity elsewhere in Europe, and in the whole world there are few that can compare with them. The USSR bought and imported a 15,000-ton press that handles metal billets of up to 15,000 poods (250 tons). This is one of the biggest presses in the world. We purchased rotary presses for the Pravda printing press which produce over two million copies of a four-page newspaper per hour and much other similar large scale machinery.

This extensive importation of the most perfected equipment in addition to the stupendous growth of the Soviet machine-building industry have in large measure modernized the machine tools in Soviet plants. Today the USSR owns the most modern and the newest industrial apparatus in the world. In this respect the capitalist countries are far behind.

As a result of various improvements introduced during the last ten years, the productive capacity of lathes has been increased threefold, and, let us add, most of the lathes in the USA are more than ten years old. Harbord of the National Committee on Industrial Rehabilitation in the USA has come to the conclusion that "if, by some miracle from on high, business should suddenly swell to normal proportions, there is scarcely a factory in the land equipped to fill its orders.¾

Such then, is the situation in the USA, the most highly-industrialized capitalist country in the world. Naturally, the threatening condition, of which Harbord writes, does not apply to us.

During the last few years the drastic curtailment of our imports was accompanied by a simultaneous increase of our construction and production programs.

IMPORTS (According to Returns of Chief Customs Directorate)
(in millions of rubles)                                 1929 1931 1933
Imports of Machines & Accessories          207   490   131
Agricultural Machines & Spare parts         28     26     2.5
Tractors & spare parts                              35     80     2.4
Leather                                                     40     14     3.6
Tanning extracts                                        7       0.4    0.2
Cotton                                                      117   40     10
Wool                                                        84     32     21
Pig iron                                                     34     125   47
Non-ferrous metals                                   59     49     22
Artificial fertilizers                                      9      3       0

We could cite many more figures showing how imports have been curtailed. Suffice it to recall that comparatively recently we were importing 75,000 tons of paper; in 1930 we imported 69,000 tons; in 1931 28,000 tons; but since 1932 the USSR has imported no paper whatever. We observe the same reduction of imports for many other classes of goods.

One of the most outstanding achievements of our Socialist construction during the last two years is undoubtedly the fact that despite the drastic curtailment of imports there has been no slowing down either in the tempo or the extent of our colossal construction. Nor has the USSR allowed this economic construction to be hampered in any way by the extensive preparations made to defend the country in view of the events in the Far East, which, of course, no plan could foresee.

The USSR pressed forward its construction work despite the difficult task of reducing currency liabilities which it assumed and successfully carried out during the last few years.

It seems to me that we do not yet sufficiently realize the successes attained by the USSR in the sphere of Socialist construction.

Imports during the Second Quinquennium: Their Prospects

Having invested 50 billion rubles in its basic industries during the First Plan, the USSR imported equipment to a sum of almost 2 billion rubles.

During the second quinquennium 133 billion rubles have been allocated for capital investments. Should we retain the same ratio of imports as d the First Five Year Plan, the foregoing program of investments would call for the importation of more than 5 billion rubles' worth of equipment. However, we can carry out the plan of the second five year period without importing on such a wide scale.

To fulfill the Second Five Year Plan there is no necessity to import equipment to the amount of 5 billion rubles, or even to the amount of 300 million rubles for that matter. We can complete the Second Five Year Plan with imports scaled down to an insignificant amount.

This is one of the concrete expressions of our technical and economic independence of the capitalist world which we have already achieved in considerable measure.

During the second quinquennium, the Soviet machine-building industry must provide all the basic modern equipment required by our national economy; the development of the economic life of the country must, at same time, depend, fundamentally, on its own resources of raw materials. This signifies one of the greatest victories of the policy laid down by Lenin and Stalin for economic independence.

The capitalist world is still unable to realize what has happened. The German bourgeoisie, which set up a special Russian Committee, is everywhere considered to be the best informed on Soviet affairs. One of the leaders this Russian Committee, Kremer ("the best expert on matters Soviet"), said in 1929: "Were it possible to complete the Five Year Plan in fifty years, that would be grandiose enough. But it's all moonshine."

That was the estimate of the capitalist world at the beginning of the First Five Year Plan.

It is not without interest to recall that our enemies--Trotsky, Kondratiev, Groman and others--also contended that the Soviet Union would become more and more dependent on the world market-on capitalism. Kondratiev, leader and ideologue of the rich peasants-the Kulaks-wrote, for example: "We cannot change the fundamental character of the USSR's international relations or the character of the country which is essentially agricultural."

Nor did the position of Trotsky-that notorious champion of a capitalist restoration in the USSR-differ materially when he said:

Directly or indirectly our Socialist state is always relatively controlled by world market. Here we have reached rock bottom. The tempo of development is not arbitrary. It is ruled by the whole world development, for in the last analysis the world economy controls each of its component parts even though one of them is under a Dictatorship of the Proletariat and is building up a Socialist economy.

How ludicrous these prognostications proved to be!

We are now in a position to fulfill the Second Five Year Plan with an insignificant range of imports. What, then, will be our policy with regard to the distribution of orders abroad? This is receiving the closest attention on the capitalist countries. Indeed, the Soviet Union's import policy has become a riddle for the whole world. Everywhere a lively interest was displayed in the transactions of the Seventeenth Congress: What was the business outlook? Would the Soviet Union continue to be a big buyer? This attitude is not surprising when we remember that Soviet orders, especially orders for machinery and equipment, and particularly in a time of crisis, have been very welcome indeed.

The engineering industry has been the hardest hit of all by the crisis. In some countries, the output of this industry dropped 80 and even 90 per cent in 1932-33 in comparison with 1929. Soviet orders for equipment comprised in certain cases 70 to 80 per cent of the productive capacity of various plants and even of entire branches of industry. The importation of equipment by the USSR consequently had a decisive influence on the world's trade in machinery. Suffice it to say that in 1928-29 the USSR took up 17 per cent of machinery exports of nine of the biggest countries; by 1932 this percentage had increased to 45 and even 50. In certain countries and in certain lines of equipment the USSR frequently bought from 80 to 100 per cent of the exports of the given country. In 1932 the USSR purchased 70 per cent of Germany's total export of lathes and machine tools; 85 per cent of her cranes and 70 per cent of her excavators. The USSR's share in Italy's export of electrical equipment increased in 1932 to 65 per cent. In the British machinery export trade the USSR's share increased from 1.5 per cent in 1928 to 80 per cent in 1932, while for coal-cutting machines the percentage increased from 2.5 to 70. Many similar examples could be cited.

One can therefore well understand how deeply concerned the capitalist world must have been when, especially beginning with 1933, our orders abroad were so drastically reduced, being completely suspended in some cases. For example, orders were curtailed for coal-cutting machines, excavators, cranes, pumps, electrical equipment, turbines, machinery for the textile, printing, food, building and other industries-a huge range of many classes of equipment on the importation of which we had at one time expended scores of millions of rubles.

What then are the prospects of our economic relations with the capitalist world?

We do not stand for "autarchy," but we definitely will not place any extensive orders if there is not a radical change and improvement in the terms and conditions of these purchases. If long-term loans with a small normal interest are proposed we shall weigh the conditions and possibly agree to an extension of imports. But we will not admit any price increases or high charges for credit as happened in the past when we were frequently charged by artificially raised prices.

Even if these conditions do not materialize, we shall, nevertheless, be able to carry out our program, for undoubtedly we have every possibility of completing the Second Five Year Plan with insignificant purchases abroad.

The Soviet Union has achieved considerable successes in the realization of its First Five Year Plan, at the same time drastically reducing its foreign liabilities.

Source: Alfred Senn, ed., Readings in Russian Political and Diplomatic History. Homewood, Ill., Dorsey Press, 1966.