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ECONOMIC
FUTURE
By

C. G. R A K O V S K Y
(Official Agent of the Union of Socialist
Soviet Republics in Great Britain)

Reprinted

from

I n f o r m a t io n

and

RUSSIAN
R e v ie w ,

October 27,1923, by courtesy


of the proprietor*

41

SP

toned by the National Hand* off Russia"


Committee, 3 Adam Street, Adelphi, London, W .C 2

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1867

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10. P6 ;

Th e Union of Soviet R e
publics m ight give w ork to
thousands o f workers abroad
if
between
It
and
the
Capitalist States there was
restored
norm al political
and economic relations.*'
C. G. R A K O V S K Y

RUSSIAS ECONOMIC FUTURE


In order to view in correct perspective the
economic development of the Union o f Soviet
Republics it is necessary to remember how the
Union stood two years ago as compared with the
position to-day.
Agricultural Progress since 1921 (Fam ine Y e a r)
Only two years ago the most fertile provinces
o f Russia and the Ukraine were scourged by
famine. Russia, who, prior to the war, exported
annually more than twelve million tons o f grain,
was compelled to import foodstuffs from across the
seas in order to save its population from the
pangs of hunger. In spite o f help rendered by the
Russian State, and foreign (especially American)
humanitarian organisations, a part o f the popula
tion perished. Y e t, even in 1922, only a year
after the awful famine, the Russian people suc
ceeded in sowing such an area o f ground that the
new harvest not only covered their own needs but
provided a surplus for export. U p to the tim e of
the harvest o f the present year there has been
exported some 810,000 tons o f grain. Last year's
harvest inspired our peasantry with a renewed
energy, so that they have sown this year an area
greater by 18 to 20 per cent, than the area sown in
1922. The general total, however, o f the harvest
this year, owing to unfavourable weather con
ditions in Northern and Central Russia, will
approximate to that of last year.
T aking into
account existing stocks from the last harvest, the
U.S.S.R. In the com ing period w ill be able to
export abroad from 3,250,000 to over 4,000,000
tons o f grain. It is already known that an agree
ment has been signed with Great Britain fo r the
export of a m illion tons.
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Industrial Progress.
Turning now to our industries, their production
may be characterised by the following figures. In
1920 the output was valued at 511,000,000 gold
roubles, in 1921 at 528,000,000, in 1922 at
829,000,000, and in 1928 at 1,118,000,000. (The
Russian economic year is calculated from October
1 to September 80.)

Output of Coal and Oil.


The recovery o f our industry may be judged
also from the following figures.
For the coal industry, in the Donetz basin, I
will take the three summer months, July-September, of the last three years, when, owing to the
exodus of the peasants to work in the fields, the
output is generally lowest o f all. F or these three
months the output was, in 1921 618,000 tons, in
1922 815,000 tons, and in 1923 1,744,000 tons.
In the oil industry the yield during ten months,
October, 1921, to June, 1922, was 8,700,000 tons;
for the same period to June, 1928, it was 4,200,000
tons. Oil exports abroad were last year 2,770,000
tons, and this year at least 4,900,000.

Heavy Industry.
In general, our heavy industry is already pro
ducing thirty per cent, of the pre-war output.
W orst o f all is the production o f iron (seven per
cent, o f pre-war output), and o f steel and rolled
steel (in all thirteen per cent, o f the pre-war
figure). Compared with last year, the production
o f iron this year has increased tw o and a-half
times, while that o f steel and rolled steel has multi
plied five and a-half times. These figures speak
for themselves.

Trade Balance.
Our trade balance for the year, October 1, 1922,
4

to September 80, 1923, shows, in round figures, an


export oi 8.88 million tons, and an import of 2.85
millions, that is to say, a favourable balance of
more than 80,000 tons.

BudgetFinancial Recovery.
Our financial recovery is already well known to
all, especially now that the chervonetz is quoted
on a number o f foreign stock exchanges.
Of a
total expenditure in
September, 1923, of
170,000,000 gold roubles, only 15,000,000 is
covered by the issue of Soviet roubles. W e are
advancing rapidly to the creation o f a balanced
State budget. To this end enormous economies
have been effected in State accounts. Our army,
which numbered 5,000,000 men in January, 1921,
was reduced to 1,600,000 in January, 1922, and
to 600,000 in January, 1928. Corresponding re
ductions were made in all the State apparatus, the
number o f Soviet workers being greatly cut down,
a process which is still continuing.
W e are not, however, ourselves so carried away
by excessive optimism as not to be aware of the
great gaps still existing in our economic structure.
I will here indicate some o f these.
Beginning with our finance, it must be
mentioned that o f the total 170,000,000 gold
roubles o f estimated expenditure in September,
19*28, only 110,000,000 are covered by ordinary
State
receipts. 15,000,000 are
covered
by
emissions, while the remaining 45,000,000 are
covered by various credit operations, by the six
per cent, internal gold loan, and by the bread
loans which are making gradual progress.
Our
chervonetz occupies an honoured position along
with the dollar and pound sterling, thanks only
to the extrem ely lim ited quantities which have
been issued, and because there still exists the
5

Soviet rouble, which has so heroically endured


blockade and intervention and which is still
the ordinary currency o f the country. In some
degree, the chervonetz exists at the expense of
the Soviet rouble.
Although, lo r the financial
year from October 1, 1922, to September 80,1928,
the yield from State taxes has increased more than
sevenfold, in comparison with the previous year,
it is not a matter for inordinate jubilation, seeing
that increase in taxes is at the expense o f the buying power of our population, and we must regret
that our taxes are too heavy a burden both on
peasants and on workers, on agriculture as on
trade and industry.
Intensive Agriculture Needed.
Speaking o f agriculture, it must be mentioned
that it remains extensive in the fullest sense of
the word, and that we must be prepared to exert
colossal efforts in order to teach the Russian
peasantry to cultivate their land in such a way
that their rich, black earth, the most fertile in
Europe, should give at least as great a yield as the
peasants o f Germany, Belgium, or England receive
from their much poorer soil.
Both Sides o f Shield Presented.
Industry still remains our weakest spot.
Its
products are too costly, the relation between agri
cultural and industrial prices being four to five
times as great as before the war. Industrial goods
are too dear for the peasants, and their grain is
valued too cheaply in our markets.
Finally, I have to mention that the strict
economy which we are introducing in the State
accounts has as its consequence, not only a
restriction in the unproductive staffs o f State
officials, but unfortunately also a restriction in the
6

carrying out o f the cultural tasks of the State, in


particular a restriction in the number o f schools,
which cannot in any way be regarded as normal.
Thus I have presented both sides o f .the shield
both that amongst us which is worthy o f praise,
and that which is still of a negative character.
The latter we, more than anyone, are aware o f and
are striving with all our strength to remove.
Lack o f Loans Effects.
Our present economic crisis is primarily a price
crisis, presenting many political difficulties for a
W orkers and Peasants Government. Its causes
are twofold.
On the one hand, we have not yet succeeded in
organising well our economic apparatus and the
control o f our industry. Both our financial and
our administrative institutions stand in need of
thorough-going reorganisation, that they may
represent the height o f our performance, that they
may be at the same time cheap and responsive to
the needs o f our population. The prices o f our
goods still bear the weight of excessive adminis
trative machinery.
The second cause lies in absence of circulating
capital for our industry, the absence of crcdit
capital for the peasants, the absence o f any chance
for the State to conclude loans which would allow
it to restore order in its finances.

Russia's Needs and Unemployment Abroad.


Naturally, not possessing capital, industry is
forced to sell d ear; not possessing loans, the State
is forced to increase the taxes; and not possessing
credits, the peasant is forced to curtail his needs.
The absence of capital and credits compels the
State in its trade policy to enact the most cruel
7

restrictions. W e cannot afford to import all


we require.
Meanwhile, the needs of our in
dustry and economy, which we ought to have
satisfied by the import o f goods from abroad, are
huge and insistent. They are to be reckoned in
milliards o f gold roubles.
The Union o f Soviet
Republics m igh t ftlve work to thousands of
workers abroad if between it and the capitalist
States there was restored norm al political and
economic relations.
Russia Econom ically and Politically Stable.
They err who say that the cause o f this lies at
the door of the internal organisation o f Russia.
Our internal economic organisation is sufficiently
pliant, while retaining the fundamental con
quests o f the great Novem ber revolution
nationalisation o f the land, control o f industry by
the State, complete labour legislation, State mono
poly o f trade, State control o f the whole economic
life o f the country yet to be able to adapt itself
to the conditions o f the international capitalist
market. During the last two years o f its econo
mic history the Soviet republics have given suffi
cient proof that they represent a world factor in
economic development. I t is even possible to say
without exaggeration that, looking at the economic
chaos prevailing in all Europe, as a result o f the
world war, the Union of Soviet Republics can be
pointed out as that part of Europe with the most
stable economic and political situation.

L o n d o n C m js o n u h

S m

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74 Sw im oa StrM t, W .C . i . - t tO M