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Real sponsors of Soviet industrialization
Real sponsors of Soviet industrialization

The tasks outlined in the May 2018 presidential decree ("On national goals and strategic objectives for the development of the Russian Federation for the period up to 2024") boil down to ensuring an economic breakthrough and overcoming Russia's lagging behind many other countries of the world, reducing its role in the world economy.

And in this, Russia should rely on the world experience of solving similar problems. In the history of the twentieth century, there is a lot of what was called an economic miracle. There was a Japanese miracle, a German one, a South Korean miracle. The accelerated development of the manufacturing industry has been at the heart of the economic miracle everywhere.

However, we sometimes forget that the main economic miracle of the 20th century is industrialization in the USSR. We have a lot to learn from ourselves. The most valuable experience lies underfoot.

2019 marks 90 years since the start of industrialization. Most historians consider the decision of the XVI Conference of the All-Union Communist Party of Bolsheviks in April 1929 to be the point of its beginning.

Let me remind you of the main milestones in Soviet socioeconomic history. War communism became its first stage. Since 1921, the New Economic Policy (NEP) began, and industrialization came to replace it. There is no single point of view on the time of completion of industrialization. Some believe that this happened on June 22, 1941, when Hitler attacked our country. Others believe that it continued into the first post-war decade. With the coming to power of N.S. Khrushchev, and especially after the XX Congress of the CPSU (1956), industrialization ended.

In this article I want to outline what can be called preparatory events that preceded the decisions of the 16th Party Conference of 1929. The NEP of the 1920s was a time of respite for the country. The position of the state in the economy was weakened, commodity-money relations gained wide scope, the private capitalist structure began to revive, which posed a threat to the political power of the Bolsheviks.

Added to this were external threats from Russia's former allies in the Entente. First, the Soviet Union was in a trade and economic blockade by Western European countries and the United States. Secondly, there was a threat of military intervention. Several times the country was in the balance of a military invasion.

The West issued a series of impossible ultimatums to the Soviet Union. Among them - to recognize the debts of the tsarist and provisional governments. The amount of debts was about 18.5 billion gold. rubles. Back in January 1918, the Bolsheviks issued a decree announcing the refusal of the new government from these debts. Other requirements are to return the nationalized property to foreign owners or to pay compensation for it. Another demand for the USSR was the abandonment of the monopoly of foreign trade.

For all these positions, the West received a categorical refusal from the Soviet state, as announced at the 1922 Genoa Economic Conference. However, the West continued to put pressure on the Soviet Union with the help of sanctions, as it is doing now with respect to the Russian Federation. All this prompted the Soviet leadership to think about the need to create a self-sufficient economy. An economy that would not depend on either imports or exports, depriving the West of the opportunity to use trade and economic sanctions against our country.

The threat of war also forced people to think about strengthening their defenses. The country's military industry was weak. In addition, the party and state leaders remembered the lesson taught by the First World War. Russia turned out to be ill-prepared for it, many types of weapons, ammunition, military equipment had to be purchased from the allies. There were long delays in deliveries, often the conclusion of contracts was hedged with conditions of a political and military nature. In the 1920s, the situation became even worse, the former allies turned into enemies.

And in the mid-1920s, the word "industrialization" appeared in the lexicon of Soviet leaders. At first, an analogy was drawn with what the European states experienced in the 18th-19th centuries, turning from agrarian to industrial countries. The industrial revolution in England was most often recalled, but the Bolsheviks could not literally borrow the English experience.

First, the English industrial revolution was carried out at the expense of the gigantic capital received from the plundering of the colonies. For the USSR, this was ruled out. Secondly, the Soviet Union did not have those nearly a hundred years during which Britain carried out its industrialization. “We are 50-100 years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they will crush us … "Stalin said in his speech at the First All-Union Conference of Socialist Industry Workers on February 4, 1931.

To many in the Kremlin, industrialization seemed like a pipe dream. One of the main ideologues of the party, Nikolai Bukharin, protested against industrialization, in particular, advocating the continuation of the NEP. He relied on the magical power of commodity-money relations and the market, which would make it possible to create first a light industry, and when sufficient capital accumulates in it, move on to creating a heavy industry. According to Bukharin's version, industrialization could take a century, and the intervention could begin at any moment.

There were also radicals in the Kremlin. Trotsky advocated ultra-high rates of industrialization. His idea of ​​superfast industrialization was combined with the idea of ​​a permanent revolution, which can only be global. Trotsky relied on quotations from Marx and Lenin, while Stalin dared to put forward the thesis about the possibility of the victory of socialism in one separate country. This thesis contradicted the postulates of Marxism-Leninism about the world revolution, but it prepared the ideological ground for industrialization.

Omitting the details of heated discussions about industrialization (its feasibility, sources, rates, algorithms, external conditions), which were conducted in the Central Committee of the All-Union Communist Party of Bolsheviks, the Council of People's Commissars, the Council of Labor and Defense (STO), the State Planning Commission under the STO and other organizations, I will say that by the beginning of 1928 all discussions were over. No, the discussion of technical issues continued - the discussions on fundamental political and ideological issues ended. In order to move from discussions to business, Stalin had to liquidate - not in a physical, but in an organizational sense - the internal party groups that held extreme positions on industrialization: the "Left Opposition" (Trotsky, Zinoviev, Kamenev, Rakovsky, Radek, Preobrazhensky, etc..), "Workers' opposition" (Shlyapnikov, Kollontai, etc.), "new opposition" (Bukharin, Tomsky, Rykov, etc.). Without ideological and political consolidation in the top party and state leadership, it was unthinkable to launch industrialization.

The most active opponent in the person of Trotsky had to first be removed from all posts (1927), then expelled from the USSR (1929). After that, by the way, Stalin took a more "left" position on the issue of industrialization (higher rates in a short time).

Now about some of the official events that were directly related to industrialization.

December 1925 - XIV Congress of the CPSU (b). It was the first time the word "industrialization" was heard from a high rostrum. A general decision was made on the need to transform the USSR from an agrarian country into an industrial one.

December 1927 - XV Congress of the CPSU (b). On it they finally put an end to all types of opposition. It was announced that preparations for industrialization were beginning on the basis of five-year plans for the development of the national economy of the USSR. Directives were adopted for drawing up the first five-year plan for the development of the national economy of the USSR. It was pointed out that industrialization should be carried out on the basis of "intense plans", but not at an ultra-high rate, as called for by Trotsky.

April 1929 - XVI Conference of the CPSU (b).It approved the draft of the first five-year plan, developed on the basis of the Directives of the XV Congress of the CPSU (b). The plan was calculated for the period from October 1, 1928 to October 1, 1933 (then the financial year began on October 1). However, the procedure for approving the five-year plan did not end there, it still required its approval by the All-Union Congress of Soviets.

May 1929 - V All-Union Congress of Soviets. The congress heard and discussed the report on the work of the Council of People's Commissars of the USSR and fully approved the government's policy. The congress adopted the first five-year plan for the development of the national economy, at the congress the whole country sounded: "the first five-year plan of industrialization."

So, the start of industrialization can be counted either from October 1, 1928, when the first five-year plan actually started, or from April-May 1929, when the five-year plan went through the procedure for its approval by the highest party and state authorities. Both at the XVI conference of the CPSU (b) and at the V All-Union Congress of Soviets, two main goals of industrialization were clearly formulated:

- achieving full economic independence of the state by creating a self-sufficient economy (not dependent on exports / imports);

- creation of the material and technical base of a powerful defense industry, ensuring the military security of the state.

And the main means of achieving the set goals was called the mobilization of all types of resources - material, financial, human, scientific and technical. That is, economic mobilization. About the methods and forms of Soviet industrialization, about its mistakes and achievements, about its concrete results - in our next articles.

Exotic versions and some statistics

One of the most mysterious aspects of industrialization in the USSR, which began 90 years ago, is the sources of its funding. In anti-Soviet journalism, such sources are usually called: free labor of the GULAG; almost free labor of peasants herded into collective farms; church property plundered by the Bolsheviks; the royal gold they inherited; works of art sold to the West from the Hermitage and other museums, etc. Sometimes other exotic items are added. Once upon a time I also perceived such versions, until I began to understand statistics. This is better than the writings of historians, not supported by numbers.

During the years of industrialization before the start of the Great Patriotic War (only 12 years!), 364 cities were built in the USSR, more than 9 thousand enterprises were built and put into operation, and all this is well documented. There were enterprises of various sizes. Large ones, like the Stalingrad Tractor Plant or Dneproges in Ukraine, and small ones like flour mills or tractor repair stations. In the first five-year plan, according to the documents of the government and the Central Committee of the All-Union Communist Party (Bolsheviks), the number of large enterprises put into operation was 1,500.

And what is an enterprise in terms of capital expenditures for its creation? The object of capital investment consists of passive and active elements of fixed assets. Passive elements - buildings, structures, communications. Active elements - machines, equipment, tools; in short, instruments of production. If passive elements could be created by the labor of local workers, then this option does not work with active elements.

Even before the revolution, Russia produced very little of its own instruments (means) of production, importing them from Germany, to a lesser extent from England and the USA. And at the end of the 1920s, there was almost no domestic production of means of production in the country. Industrialization could only be carried out through large-scale imports of machinery, equipment, special equipment, and tools. All this required currency. I made rough estimates of what capital investments were needed for the Soviet Union to build more than nine thousand enterprises. Those who are interested in the "kitchen of calculations", I can refer to my book: "The Economics of Stalin" (Moscow: Institute of Russian Civilization, 2016).The result of my estimates is as follows: to provide industrialization with imported machinery and equipment, the minimum required foreign exchange resources should have amounted to 5 (five) billion Roosevelt US dollars (the gold content of the dollar after its revaluation in 1934 was reduced by about one and a half times and was determined by the proportion: 1 troy ounce of precious metal = $ 35). This is no less than 500 billion modern US dollars (at the beginning of the current decade). On average, one enterprise accounted for foreign exchange costs in the amount of slightly more than 500 thousand "Roosevelt" dollars.

And what currency resources did the Soviet Union have at the start of industrialization? According to the State Bank of the USSR, as of January 1, 1928, the country's gold and foreign exchange reserves amounted to only slightly more than 300 million gold. rubles (1 gold ruble = 0.774 g of pure gold). Roughly, this is about 150 million "old" US dollars, or 260-270 million Roosevelt dollars. Sounds good. It is possible to purchase machinery and equipment for 500-550 medium-sized enterprises. However, it should be borne in mind that in the same year the external debt of the USSR was equal to 485 million gold rubles. It was extremely difficult to start industrialization from such a position, especially considering that the country was in a trade and economic blockade.

And yet industrialization began. And purchases of machinery and equipment were carried out. So how did the Soviet Union pay for these purchases? Of course, not by the labor of the inhabitants of the GULAG. The currency was given primarily by Soviet merchandise exports. Most often, historians talk about the export of wheat and other grains, but statistics show that grains were not the main export item (in 1928, they accounted for only 7% of the value of exports). As a result of collectivization, grain production increased markedly, but the bulk of the output of the collective farms went to the cities and construction sites of the five-year plans. Collectivization not only provided an additional amount of agricultural products, but also freed up millions of workers needed at industrialization sites.

Oil and oil products (16%), timber and sawn timber (13%) occupied more significant positions in commodity exports than grain. Fur and furs were the largest commodity group (17%). In the second half of the 1920s, annual merchandise exports ranged from $ 300 to $ 400 million.

Yes, export volumes began to increase from the end of the 1920s, but this was not an increase in value, but in physical volumes. There was a kind of running on the spot. The fact is that an economic crisis began in the West, which led to a fall in prices on commodity markets. Some authors note that the wind blew into the sails of Soviet industrialization: they say, we were lucky, we bought the means of production at low prices. It's right. But the fact is that the fall in prices also took place in the markets for raw materials, and to an even greater extent than in the markets for finished products. Foreign exchange earnings were given to us at a high price. If in the period 1924-1928. the average annual physical export of goods from the Soviet Union was 7.86 million tons, then in 1930 it jumped to 21.3 million tons, and in 1931 - up to 21.8 million tons. In subsequent years, up to 1940, the average the physical volume of exports was approximately 14 million tons. However, according to my calculations, export earnings were enough to cover only half of all those foreign exchange costs that were made during the years of pre-war industrialization.

Another source is gold, but not gold, which was allegedly inherited from tsarist Russia. By the mid-1920s, this gold was completely gone. It was exported from the country through different channels and under different pretexts. There was "gold of the Comintern" (assistance to foreign communists), and there was also "locomotive gold" taken out of the storage facilities of the State Bank for the purchase of steam locomotives and rolling stock in Sweden. The operation with the "locomotive gold" was carried out by Trotsky, who, in order to crank up this scam, temporarily took over the post of People's Commissar of Railways.The Soviet Union did not receive steam locomotives from Sweden, and the gold disappeared without a trace (most likely, it settled in the banks of Sweden, Switzerland and the USA). The reader can learn about the vicissitudes of tsarist gold in the first years after the October Revolution of 1917 from my book "Gold in World and Russian History of the XIX-XXI Centuries." (Moscow: "Rodnaya strana", 2017).

Yet gold was used to finance industrialization. It was gold that was mined in the country. By the end of the 1920s. The Soviet Union is reaching the pre-revolutionary level of production (28 tons were produced in 1928). Production data in the 1930s has not yet been declassified, but from secondary sources it can be understood that by the middle of the decade, production reached the level of about 100 tons of metal per year. And by the end of the decade, some say the annual production figure is about 200 tons per year. Yes, not all of the gold mined was used to pay for the import of machinery and equipment; the country was preparing for war, a state reserve was needed, and gold was viewed as a strategic resource. The minimum estimates of the gold reserve of the USSR accumulated by the beginning of the Great Patriotic War is 2,000 tons. The "currency shop" created beyond the Urals, especially in the Far East, continued to work during the war years. The Americans, by the way, made a positive decision on the Lend-Lease program to the Soviet Union, taking into account just such an argument as an effectively functioning "currency shop" in the Far East.

Finishing the topic of gold, I want to say that such a source of precious metals as the Torgsin chain of stores (buying up precious metals and currency values ​​from the population and foreigners in exchange for scarce consumer goods) played a certain role. The maximum volumes of gold accepted from citizens were recorded in 1932 - 21 tons and in 1933 - 45 tons. True, after a significant improvement in the food supply of cities since the mid-1930s, the purchase of precious metals through Torgsin stores began to fall sharply.

A disproportionate amount of attention is paid to such a source of foreign currency as the sale of art treasures from the Hermitage and other museums in the country. A special organization "Antiques" was created (under the jurisdiction of the People's Commissariat for Foreign Trade), which received 2730 paintings from various museums. According to experts, the Antikvariata Foundation did not have the most valuable works of art. The sales took place in the context of the global economic crisis, when demand was low. Less than half of the fund was sold - 1280 paintings, the rest returned to their places. In total, the proceeds from the sale of art treasures of museums amounted to about 25 million gold. rubles.

There is a version designed for not very literate people that industrialization in the Soviet Union was carried out by foreign companies - first American, then British and partly French, and a few years before the start of the war - German. Some believe that Western business came to the Soviet Union with their investments. There was no such thing! Westerners came to our country not with money, but in order to earn money. They acted as suppliers of machinery and equipment, carried out the design of enterprises, carried out construction, installation and commissioning works, taught Soviet people to operate equipment, etc. Of particular note is the American company Albert Kuhn, which was the first to enter the Soviet market, designed and built 500 large and largest industrial facilities, including such giants as Dneproges, Stalingrad and other tractor plants, Magnitogorsk Iron and Steel Works, Nizhny Novgorod (Gorky) Automobile Plant and others. Giants of American business General Electric, Radio Corporation of America, Ford Motor Company, International Harvester, Dupont de Nemours and others became the leading trade partners during the first five-year plan.However, I will emphasize once again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or bypassed numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade).

The West gave almost no long-term bank loans to the Soviet Union. There were only short-term money, trade credits. Since 1934, the Export-Import Bank of the United States has been crediting about 2/3 of Soviet purchases in the American market, but again these were short-term loans, the recipients of which were American exporters. America, despite all its dislike for the Soviet Union, was forced to allow such lending to support American businesses in dire straits. There were also commercial loans - deferred payments, which were stipulated by contracts for the supply of equipment, construction and installation work, etc.

There is a version that the West still gave Stalin a lot of money for industrialization. They say that Soviet industrialization is a project of the world behind the scenes, which was preparing Germany and the Soviet Union for a military clash. West Anglo-Saxon capital did finance Germany. For example, there is a book about this by the American E. Sutton "Wall Street and Hitler's rise to power." In it and in works similar to it, there is much documentary evidence that the West financed Hitler, brought him to power, and then injected billions of dollars and pounds sterling into the German economy, preparing it for a military thrust to the east. However, there is not a single documentary evidence that the West helped to carry out industrialization in the USSR!

The article does not list all the circulating versions of sources of foreign exchange financing of Soviet industrialization. Some of them are fantastic, others are plausible, but still have no documentary evidence (not all archives have been disclosed). Those wishing to get acquainted with this issue in more detail can turn, in addition to the already mentioned "Stalin's Economy", to my book "Russia and the West in the XX century. The history of economic confrontation and coexistence”(Moscow: Institute of Russian Civilization, 2015).

(To be continued)

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