ECONOMIC CHARACTERISTICS OF THE NEW COURSE IN THE USSR AND EAST EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A003200020003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: September 19, 2012
• Sequence Number: 3
• Publication Date: September 29, 1953
• Content Type: MISC

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SECURITY INFORMATION
4S~P ti :5 'i~53
Economic baradteristids,of the New Course
in the IISSR and East Europe
Following the death of Stalin the leaders of the Soviet Union announced
important changes in economic policy apparently aimed at raising the standard
of living of the people., raising productivity and at relieving some of the
strains which have developed in the economy. Similar announcements have
followed in the European Satellites and East Germany. Although not announced
for all countries there appears to be some cutback in certain large construction
projects. The announced changes in economic policy do not contradict long-
range Communist objectives.
Some of the salient features which the announcements have in common are:
-Avowal to raise living standards by increasing agricultural and
consumer goods production.
-Amnesties.
-Cancellations of certain taxes and debts.
-Planned increases in housing construction.
-Lowered compulsory quota deliveries for farmers., with collective
farms receiving greatest benefits.
More detailed analyses of changes for the USSR., East Germany and
the East European Satellites are included herewith.
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SECURITY INFORMATION
Bconoaie Characteristics of the New Course in the
I ? General
A new attitude toward the consumer is one of the most significant character-
istics of Soviet policy following Stalin's death. The Fifth Five Year Plan called
for an increase in consumer's goods, including agricultural products, roughly com-
parable to the rate for heavy industry. However, prior to March 1953, the inter-
ests of the Soviet consumer actually were subordinate to the goals in heavy
industry and-defense. Both the five-year plan for agriculture and the production
of non-agricultural consumer's goods were hopelessly behind. Deliveries of agri-
cultural machinery to farms in 1952 were less than the delivery levels in 1950
and 1951. Housing, for which the plan carried elaborate specification, was not
being constructed on schedule. The problem of consumer goods was mentioned in
such important documents as Stalin's Economic Problems and Malenkov'a speech to
the 19th Party Congress, but the regime was not making a serious effort to imple-
ment this part of the Five Year Plan. Shortcomings which would not have been
tolerated in the heavy industries segment of the economy received scant attention
in the consumer's goods industries.
The new emphasis on consumer goods is evident in decrees, promises made to
the population, and actions taken on behalf of the consumers. However, the extent
j-,which these programs will increase the output of consumer's goods or require a
k-_.nge in the Fifth Five Year Plan is, as yet, undetermined. There is no firm
vidence that the goals for industrial investment or arssments in the Fifth Five
.ear Plan have been abandoned even though two sessions of the Supreme Soviet have
taken place without ratifying the plan. Nothing so far promised the people would
require a significant reduction in any field connected with Soviet capability to
wage general war. Present information does not even indicate that the five-year
goals for consumer's goods have been seriously prised,. In agricultural pro-
duction, where the most detailed information on one nauuce of the change is
available, the program will still not achieve the goals of the original plan,
although the gap between the plan and its fulfillment will probably be smaller.
II. General Characteristics of the New Course in the USSR
The events and policies that show the new importance of consumer goods in
the Soviet economy since March 1953, are listed below:
-Since March, purchasing power in the USSR has been considerably increased.
On 27 March an amnesty was announced. Persons released. under this decree will
draw higher wages on a scale commensurate with the general level in the USSR.
On 1 April, the largest consumers' price decrease in four years was announced.
It included a reduction of 50% in the prices of potatoes and vegetables sold at
the state stores. On 28 June, the 1953 state loan was announced late and re-
duced the required subscription from the contribution of four-wooke' pay in 1951
and 1952 to a contribution of two-weeks' pay. If inflationary pressures or MW
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:axe:, ;ca to be av.:_~ded these moves require an increase in ,he output c. t;rm*.
`,umOrs t Gods ;'t.e , budget did not. carry new taxes and, i.nde;d had so t
relief for par is of the economy.
--Changes have occurred in the distribution system of the R. On IS N4Wl
wheat flour was placed on continuous sale in the Moscow; State Stares end , t
four.-dad -_-a?-year ;ales system in effect since 'orld W.3a, IT. Aiaov on 1,8 I &V,, a
bargain-clearance sale was announced in Moscow's State Stores, a nmea.s re .
dented in the USSR. Beginning about this time 'a piecer;~eal series of orders ex-
tended ? the hours of most of the stores, shops, and rest r nt.s. On 30 August, the
Upper Raw, a building on Red Square which had been the pre-revolutionary mercantile
center of Moscow, was emptied of government offices and turned into a depart-
ment store.
-On 17 July, the results of the operation of the Soviet Economy in the first
half of.1953 were announced. The data recorded an exceptionally high increase
in the of consumers goods to the populace over the same period in 1952.
ZAJ& The increase in the sale of consumers goods also exceeded the increase in the
production of consumers goods by a significant amount. This could have been
achieved by one or more of the following means:
-releases from State Reserves
-decreases in allocations to State Reserves
-imports
The use of these methods would '_)e a significant departure from past practice.
-On 5 August, Zvere,, preaenten the 101* overdue budget to a meeting of the
~,.preme Soviet. His 3peecn and the figures contained therein did not reveal
any important changes in the pattern of allocations. It did, however, list an
expenditure of 43.2 billion rubles for lowering State retail. prices for foodstuffs
and industrial goods as of 1 April 1953. (Analysis of the budget immediately
following this announcement did not produce conclusions that the present Plan
had been abandoned though it did produce controversial conclusions that con-
sumers. goods were to received increased emphasis.)
-On 7 August, Chairman of the Council of the Union Budget Commission,
L. R. Korniets made a report in which 3t was stated:
The 12 et . Commisalon studied the 195 3 S .ate Budget- In
Fib Marv this ve ra At present, the Budget (, i sai en
has agaf n reviewed the MR S .ate, B?d get, taking into
consideration the reduction of State retail prices on
consumers goods, the reduction in the sum of the state
loan, the law on the reorganization of the USSR Ministries,
and the
4rodnQ ^v CEp anmars good
This statement is considered to be public acknowledgement that the budget and
those items mentioned in the statement have been revised since February. Ott'
information supports this view.
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SECURITY INFORMATION
-On 8 August, Malenkov spoke to the Supreme Soviet. His speech was
the first of a series stating that the USSR was n= in a position to turn
to the task of catching up in the production of consumers goods. The
precise details were not revealed. It was stated that 32 billion rubles
worth of goods would enter trade this year above the 312 billion rubles first
assigned for sale to the population from April to December of 1953- One goal
of the Fifth Five Year Plan, an increase of 70 percent over the 1950 level
of output in consumers goods by 1955, was the only long range goal presented.
He stated, "We possess the means to fulfill 'this goal by 1954," but he did
not state that they will fulfill this task by 1954. It was stated:
The urgent task Iies in raising sharply in two or three
years the populations supply with foodstuffs and manu-
factured goods, meat and meat products, fish and fish
produce, butter, sugar, confectionary, textiles, gar-
ments, footware, crockery, furniture, and other cul-
tural and household goods; in raising considerably the
supply of the population with all kinds of consumers goods.
In summary, Malenkov promised an unspecified increase in consumers goods
production, stated that this will be of prime concern during the next two or
three years, and in his speech he devoted far more emphasis to the subject
than any leading Soviet figure has in policy speeches in the recent history
of the USSR.
Following the conclusion of the meeting of the Supreme Soviet of the
USSR, the Union Republic and Autonomous Republic Supreme Soviet began their
meetings, which are still in progress. They have repeated the new line an-.
nounced by Malenkov. For example, on 22 September a speaker before the
Tadzhik SSR's Supreme Soviet referred to "the task set by the party and the
government for the maximum development of production of household goods . "
Thus, these promises, still vague as to volume and time schedule, have
received the widest possible internal Soviet distribution.
-On 15 and 16 September, the USSR announced the creation of nine
ministries; seven of these were directly related to the program for rais-
ing the output of consumer goods. These were:
Ministry of Agriculture and Procurement
Ministry of State Farms
Ministry of Internal Trade
Ministry of Foreign Trade
Ministry of Food Goods
Ministry of Consumers Goods
Ministry of Road Transport and Highways.
Some of the men placed in charge of these units are among the top production
specialists in the USSR. In March, these organizations had been combined
with other units +o form larger ministries and their reappearance has reversed
the trend toward co=olidatian of administrative overhead in the USSR.
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SECURITY INFORMATION
-A new agricultural program was announced in the Agricultural Decision
of September 12, 1953, and Khrushchev's speech of September 15, 1953. It
represents a significant effort to fulfill the goal of more consumers' goods.
The failings in the field of agriculture announced by Khrushchev were not
new. But, the publication of the fact that livestock herds in the USE
are no larger today than in 1916, that 18 per cent of the cows were
slaughtered in 1952, and that harvesting of potatoes and vegetables has de-
creased in past years was probably intended to stir people into action. To
increase incentives for agricultural production, the program envisages re-
duction of the ammount of obligatory deliveries to the state by the
kolkhozes, an increase in state procurment prices for these obligatory deliv-
eries, and number of measures to facilitate the sale by the kolkhozes of
the resuluiiw, burpius produce. The present program to increase agricultural
output does not include any chanvPs in the hasic farm policy of the USSR.
For example, it was announced that collective farms will be consolidated even
further. It was stated that although the private plots are usefui as long as
agricultural output is lagging, eventually they will be unnecessary. In addi-
tion, Soviet leaders claim that as soon as possible they will attempt to build
agrogorods in the rural areas. Nevertheless, the program to increase agri-
cultural output is very comprehensive:
(1) The policy of discouraging the private ownership of livestock
has been reversed. Khrushchev admits that, compared with the prewar level,
the number of cows personally owned by the population decreased by 6,500,000,
Not only has the state announced a change in its point of view toward pri-
vately-owned livestock, but it has attempted to help the peasants to
cows by raising state delivery prices of dairy products, reducing norms, chase
and lowering the agricultural tax on household farms.
(2) Another change in policy concerns state controls over the
allocation of labor between industry and agriculture. Whereas the state
previously attempted to shift persons such as tractor drivers from agriculture
to industry, the present program attempts to shift them back to the farm.
Khrushchev states that "from 20 to 35 per cent of the tractor drivers drop out
of tractor teams annually". The present program includes an "appeal" to
tractor drivers to return to the M TS (Machine tractor stations), higher
guaranteed pay to induce tractor drivers to return readily, and a warning to
directors of enterprises not to hinder the release of tractor drivers who
desire to return to the MTS.
(3) A third change is the allocation of "additional" funds through
the budget to agriculture. Khrushchev announced that these funds would
amount to over 15 billion rubles in 1953 and 35 billion rubles in 195t1. Over
13 billion rubles of the total amount in 1953 are to be paid to the collective
farms and collective farmers because of the higher procurement prices of
cattle, poultry, milk, butter, potatoes, and vegetables. The objective of
this additional income is to provide the "material incentives" to expand the
output of these products. The remainder of the additional allocation is for
capital investments in agriculture by the State. The funds will provide
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the farms and MTS with funds to increase considerably the size of their herds,
the number and quality of their farm buildings, garages, and repair shops, and
the amount of farm machinery. An incidental point here is that local pro-
duction of building materials is now encouraged. This had been a comrnonert
part of the abandoned agrogorod program of 1950 and this practice vas sharply
criticized by Malenkov as late as October 1952.
(4) The new program outlined in the Agricultural Decision and
Khrushchev's speech provides for several local organizational changes:
-One hundred thousand agricultural experts - agronomists
and zootechnicians - are to be transferred from their present jobs in the
Ministry of Agriculture and Procurement to the MTS.
-Tractor drivers who were formerly on the staff of the
collective farms and assigned to the MTS when necessary are to be placed under
the direction of the MTS.
-The former post of Deputy Director for Political Matters will
be eliminated. However, the party organization in agriculture is to be ex-
panded to include a Bureau in the rayon communist party organization headed
by a First Secretary in each rayon, a group of Instructors in each MI'S headed
by a Secretary of the rayon communist party organization , and enough Instructors
to provide one for each collective farm. To obtain the necessary Communist
Party members for this organization, the state is going to appeal for 50,000
volunteers from the cities.
(6) The new program provides for several changes in the techniques
of agriculture, farm management, and marketingt
-The beginning of the economic year - date of inventory'-
for animal husbandry is changed from January 1 to October 1 in order to pre-
vent the retaining of large herds.through the difficult winter months.
-Seedlings must be grown in peat humus pots.
-Farms must supply their own perennial and annual grass seeds.
-Farms must not plan to replace local fertilizers with mineral
-Violations of the per hectare principle of compulsory de-
liveries are to be eliminated.
-A policy in which the state purchases the surpluses of col-
lective farms by contract is to be expanded.
(7) The program emphasizes the need to replace many collective farm
managers and MTS directors with better trained personnel
-Incumbent chairmen of :oliective farms who are not compe-
tent are to be ~r~a~ emu. acirusnchev reports that nearly one-third of all
collective farm chairmen work in this capacity for less than one year.
-The program includes plans to send mechanical engineers. frog
industry and Other branches of the econoW to )C8 as direc-
tors, chief engineers and repair-shop superintendents.
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SECURITY INFORMATION
Economic Characteristics of the New Course in East Germany
I. General
A. The "new course" in East Germany, first outlined on 9 June 1953,
followed a 12-month period of intense effort. to communize the country
rapidly. On top of an overly ambitious 5-year plan (goals of which had
been advanced one to two years in many cases) and a high level of repara-
tions; was imposed a rapid remilitarization program and a poor crop year.
The impossibility of fulfilling these combined tasks was obvious, but
given no official recognition, and long after Stalin's death, East
Germany continued to be a conspicuous exception to Soviet tactics of
conciliation. Through the end of May, Party leaders, in vituperative
and uncompromising speeches, emphasized rapid socialization of the GDR,
describing this as the means by which German unity would be accomplished.
Bs In a very real sense, therefore) the "new course" was a reaction
to and a modification ::f the prepostereous demands being made of the East
German economy. Even though the chief aim of the new course was described
as the restoration of German unity, essential features of the program such as
C the curtailment of investment in heavy industry, the curtailment of
military construction. and production programs, and more realistic planning
in terms of material. and labor resources are likely to be retained as
economic and political necessities,
C. On 31 July Deputy Premier Ulbricht justified the "new course" in
the following interesting statement:
Because of the existence of the USSR and "great Socialist peace
camp, there is no need for us to speed up the rate of building heavy
industry, transforming agriculture, and raising national armed
forces..." such as the USSR was forced to do in the early stages
of its building of socialism when it was surrounded by hostile
forces. It is well to learn from Soviet experience'but "the SED
made a mistake in attempting mechanically to transfer Soviet forms
and methods of work to the GDR. . .without paying attention to historic
national and economic peculiarities of Germany."
II. General Features of the New Course in East Germany
A. On 11 June, the announcement of the decisions of 9 June by the
Politburo of the Central Committee of the SED stated in part: "The
Politburo recommends to the government the carrying out of a number of
measures which will contribute to the marked improvement of the standard
of living of all sections of the population." These measures are designed
7.
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"to correct mistakes reflected in past ordinances that showed insufficient
regard for the independent peasants, retail traders, and craftsmen... as a
result of which many people left the republic."
B. Major recommendations were:
-Amendment of the plan for heavy industry, with a view to improving
living standards. In this connection, the following 9 June release
from the President's office is of interest:
"In the budget for 1953 ((passed 5 February)) considerable funds
had been taken into account not earmarked in the 5-year plan ((ie,
military expenditures)). Moreover, tasks which-were earmarked for
the coming yearly plan in 1954 have been included in the 1953 plan
and certain parts of the 5-year plan were shifted in favor of the
development of heavy industry from 1955 to 1952 and 1953."
-Cane.:ell_a`; nn 1s - arr s through 1951 of private peasants,
private industries and irf.vate trading firms and the extension
of credit to these groups.
-Full restitution of confiscated peasant, small business, and private
properties to returning refugees or full compensation therefore.
-Amnesty for all those charged with damaging state owned property
and restitution of full. legal rights to returning refugees.
-Non-discrimination in matters such as schooling opportunities
and issuance of ration cards.
C. The 1'T June riots evoked a rapid series of additional promises and
implementing decrees in the ensuing 10 days. Most significant among these
were:
-Cancellation of the compulsory 10% work norm increase decreed in
late May which touched off the riots. "Future work norm increases
will depend on workers' voluntary consent." Reversion to norms
effective 1 April 1953.
-Additional 600 million DME appropriated for housing. (Est inc. 85%)
-Numerous measures relating to social insurance, annual leave,
sanitary facilities:
-Cancellation of the daily power cuts for domestic consumers.
(Power cuts have continued despite this order).
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-Reduction of peasant delivery quotas and cancellation of or
respite in delivery arrears.
-Permission for peasants to "slaughter at home
Bqu
And one calf, irrespective of whether delivery quotas have hav pig
met or not." quove been
-Release of large amounts of foodstuffs, clothing, and industrial
goods from state reserves "because of the reduced requirements
of the armed forces." (By mid-August state reserves of meat
were virtually exhausted, with 4,o w tons remaining.)
D. Planning Revisions
1. A 28 July resolution of the Central Committee of the SID
stated: "So as to fulfill the new course, it is necessary to alter
the 5-year plan and the economic plan for 1953 by restricting invest-
ments in heavy industry." Specifically, investments in the following
industries were to be curtailed: "metal production, ore mining, machine
building, chemicals, and building." Investments in the following
industries will be maintained or increased: electric power, coal,
transport, housing and agriculture. Evidence is now becoming available
which confirms that such investment changes are being made.
2. On 31 July, Ulbricht made the following reNealing statement:
"As a result of the division of Germany and the existence in the west
of almost all Germany's metallurgical industry, we were forced to set
up such costly plants as the J. V. Stalin Iron and Steel Works. Our
friends in Moscow have nbw assured us that the GDR will receive the
help it needs in the supply of metals, raw materials and manufactures
from the comity of friendly states, in order that there will no longer
be any need for such excessive development in heavy industry."
3. As if to dispel any illusions, however, officials now hasten
to add that heavy industry "will continue to develop" although at a
slower pace. It appears, as in the rest of East Europe
ment
develop-
ment of those industries in which East Germa
in enjoys n that comparative
advantage within the bloc will continue to be a stressed as
much as possible while other, less rational projects, will be curtailed
or abandoned.
4. There is some evidence thatproduction goals for the second
half of 1953 are being adjusted to a more realistic level based on
sctaal performance during the first half of the year rather than on
existing plans.
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E. Military Production and Construction
1. Military constructicon on Rue?;en Island ceased, apparently in
2. Construction "firms concerned with military construction have
::een disbanded.
.'Airfield con9t.r uct:ion :.~n,d :i;-rovement which had been parti-
cularly extensive during the. past year has been suspended.
4. Plans for rebuilding an aircraft industry in the GDR which
were being carried out rapidly until June have been shelved and
plants concerned turned over to other work.
Three srccial departments in the covert armaments ministry
(Mi. try f rr _ .cnsk crt Med::t and Agricultural Machines) are reported
to have been .i iss lve these are: Naval Construction, Weapons and
~~mnu:_ lion, apd Aircraft construction.
ti, Although intensive Y-VP recruiting was sL_ :,:ea n n_', r June
:u.t,i s~eLective release- eff~ cted subsequently, recrui-,ng wt,:: ... umed
early Seritemi;er, reportedly on th':y day Col-louring; nest. G 'r.^an
le - tons.
i. in - a?ui ; :icing sweeping i'Lnanc=.a1 -(--n cessions for East Germany
on 2? August, i :, USSR pr omised to carr;; t t2 proposals contained in their lj August note to the Western powers. These proposals
called for termination of reparati' no, cancellation of post-war German
debts and reduction of occupation costs, all to become effective 1
January 1954.
2. In addition, the concessions r v for return without compen;
sation to German ownership all remai.ninr: d.'viet-owned corporations in
East Germany, with the exception of the Wi oo:uth Uranium mining combine
which is to be set ur. ?:.ss a . ci nt firm. The GDR was also
relieved of debts incurred as compensation for the return last year
of 66 Soviet owned firms.
3. Additional credits are offered, oartly inthe form of foreign
exchange. Promises of additional large food shipments were made and
food demands of the occupation forces or, the GDR economy were greatly
reduced.
. ' R I; 'IT
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4. If imp le:mented, (there is as yet no concrete eridei-ce *LOW
way) these concessions will provide a cpnsiderable financial accretisS
to the GDR economy. They may be calculated to bring East Wdrea livin(
standards up to pre-war levels and if carried out would acct plish
this end within two years. In any case, it is dotfitful that this MOM
was merely a pre-election tactic.
III. Conclusion
A. The new course sets forth remedial measures for each of the three
basic problems of the East German economy:
1. In rapid socialization: there is mounting evidence that
plan goals are being set more realistically, and that planned
investment in heavy industry is being reduced. Uneconomic, autarchic
projects will probably be limited.
2. In military development: there is considerable evidence that
ambitious plans to expand and equip the Bast German armed forces have
been shelved, at least temporarily.
3. In reparations and other uncompensated deliveries: the
concessions of 23 August would provide significant relief if carried
out.
B. These measures do not compromise the basic process of socialization
of the East German economy; they represent only a more realistic appreciation
of the economic and political capabilities of East Germany for carrying
this process out.
1. There it reliable evidence that soap of the o'+gina). '.owing
promises djade to :refugees -.rho rgtUrn, to entrepreneurs .and to private
treA.ers, are not being:carried out.
2. There is repreated reaffirmation of the "correctiness" of
government and party support for agricultural producer cooperatives
"which arose in the GDR at the initiative of the working peasants."
3. The campaign to raise work norms has been resumed with great
emphasis. As usual, demands for this "coos froslhe workers."
[, r/1D V r
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Econotic Characteristics of the New Coarse
In The East European Satellites
I. General
A. All Eastern European Satellites have, since 4 July, announced their
intention to modify their economic plans for the avowed purpose of im-
proving living standards. An important feature of each program is the pre-
dominant emphasis on the need for increasing agricultural output, and
probably for this reason, announced modifications of past policy have been
most pronounced in Hungary, Rumania, and Albania. Czechoslovakia, although
expressing the general line of the program, emphasizes the continuity of
the planned investment effort in the raw materials, power, and heavy in-
dustrial sectors. Bulgarian and Polish modifications to date are token ones
in the direction of improving living standards, and little dissatisfaction
with past performance in the economic sphere is evidenced. Symptoms of
economic stress in these two countries during 1952 were not as profound as
elsewhere.
C
B. The questions arise: Is the "new course" really new? Will the
economic plans of the satellites be significantly or basically altered to
raise the local standard of living above its present low ebb? At this
point, two general observations can be made:
Too little time has passed since the announcement of the "new
course" for accumulation of sufficient detailed material from the Satellite
area in order to evaluate implementation of the various programs.
However, the policy speeches in Eastern Europe have been re-
vealing and indicative of the magnitude of the "new course." Generally
speaking, as a minimum, the "new course" involves significant plan readjust-
ments partly in the opposite direction from the extraordinarily ambitious
plan decisions taken in the latter half of 1951, which resulted in a multi-
tude of symptoms of serious economic stress in the area throughout 1952. As
such the present re-adjustments at least reflect more realistic economic
planning in comparison to the past 2 years. Furthermore, there is no ap-
parent reason why a realistic revision of 1952 economic goals could not at
least reachieve 1951 levels of consumer goods turnover within a short period
of time. At most, the "new course" appears not to reflect any basic moderation
of past techniques in the economic sphere. By a "basic alteration," is meant
a considerable relaxation of collective farm policy in order to increase.
farmer productivity or a considerable relaxation of piece-work wage systems with
exhorbitant norms, and so forth, in order to boost industrial productivity and
worker morale.
cPePF.T
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II. General Features of New Course in Eastern dope
The primary purpose of attempting to improve living standards, w ioh
by admission declined during 1952.9 is to achieve a higher total ecowmio
output by providing greater incentives for the worker and the pwant.
Generally speaking, this is being attempted in the framework of a more
realistic relationship between plans and capabilities in raw materials clad
'existing industrial and skilled labor capabilities. Specific categories
are discussed below: (A chronological list of events in some of the more
important categories is appended).
Agriculture: There are two basic aspects of the "now courses in
agriculture" Firsts output is to be increased through sore-investment
(land recovery, increased availability of agricultural machinery and equip-
ment, increased use of fertilizers, and so forth) and greater labor pro-
ductivity. Farmer productivity is to be increased by more incentives in the
form of reduced crop surrender quotas and generally higher crop delivery
prices. The second aspect of the program is that all the above will take
place in the traditional collective farm framework. Not only will the col-
lective sphere be favored "administratively" (by tax and credit advantages,
first priority on use or purchase of agricultural equipment, fertilizers and
seeds, more moderate crop delivery legislation, and so forth), but expansion
and atrenghtening of the collective sector is called fad in each country.
C The beneficial effect of the limited liberalization on agricultural output
may be partly cancelled out by the apparently unnecessary doctrinal rigidity
in collectivization policy; the factor most destructive of farmer productivity
in Eastern Europe has been the imposition of the Soviet collective farm
system, whether the farmer has joined a collective farm or maintained his
private status with consequent discrimination.
Extractive Industry: The "new course" provides for a substantial
increase in the exploitation of raw materials and fuel and power in the
Satellites. This is to be achieved by more mechanization, increased pro-
specting, and higher productivity. Reports received during the past year
and a half reveal, for example, that as much labor turnover and unrest, ab-
senteeism, and so forth, have occurred in the mining industries of Czecho-
slovakia and Hungary as in any industry in the Satellites. This sector of
extractive industry, in fact, has most epitomized coercive Soviet economic
exploitation in East Europe in that it has been of little value to the
particular Satellite, in that compensatory prices, in the case of exportp
do not refl..t costs, in that labor conditions have been extraordinarily
harsh, and in that utilization of labor in this sector in Czechoslovakia and
Hungary had, along with military service, created by 1952 a serious over-
employment situation. Therefore, the absence of retrenchment in this sector is
a significant 'hard' aspect of the "new course." Several Satellite leaders
have characterized expansion of activity in this sector as the very toss
of the program to improve the standard of living. Looked at in another w`y,
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lies a uoere realist rely"4
emphasis on indigenous to availablerar usterial sad or raso e"s
of industrial activity
which also characterises the program.
Internal Trade: In order
t satellite measures call t anent'
a higher leve o ernal trade, abe price reductions, increased credit, more and better consumer goods, and rs
moval of bureaucracy in the distribution mechanisa.h~ been edroutpu Of MA
staples and textile raw materials s,, suggesting that satellite leaders are
creased output of consumer durables, bil to expand consumer durable pro-
either less concerned about their capability ion duction and import, or that there less
val
intent nttevidena0 to e ua the
consumer durable field- There is not yet
Satellite progress in this area.
'tithe c selectiv
A related aspect of the "new course" has been
foretca terser on
or reduction of tax arrears and current taxes, p
and home owner. Since turnover tax has not been reduced, it is possible that o net 1069 satellite governments belhduett~the will suffer increasednturnrnror aioeonrevenue sumer W
a result of tax liberalizations
goods.
eduction in over-all investment
A
r
I Investment and Construction:
'has generally been called or; the percentage of reduction, where stated,
d trfae tdi a ~
suggests that the reduction may amount to a negation of theanex
high accelerated investment goals undertaken in late 1951
throughout 1952 and early 1953. There is good evidence that so such invest-
ment was attempted during this period that beneficial effect from same in-
vestaaent suffered as a result of~ief here they are idntitied,ithere4a~
planning. Present investment goals.,
appear to approximate 1951 goals*
Cuts in construction that have already been reliably reported in
long-range groat projects," most of which
Eastern Europe involve primarily
are of questionable economic necessity.
curtaileeat ofo i~nv~u~ nt o inia
havesanirrally related htructioon, xrhich hap boon pr&docd in all. tho
urbr.:s and rural housing in8 c nocasar~ry?
a4,el? itsv, and is very
tif:np&::':Ir* IndiccrU-Annto draf'tin3 oft hl?14~d ~Y.e ^~s 1tb(~.' wt~'
n~.1i r:;t 4=4(" C C=n ~ia"f~.G' 'i j Lj00 v"?^i
;or.z 1952 bo
au-1 ;~az ;r.~r ci = jill
Of ~ZSfI r ~
i.i.' lid? t v-.1 S...ltt~.~'`. t
e:
i
r
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s mr R RMATION
Area is reduction: There is as yet no reliable evidence to
suggest a cnr a n araaaent production goals in any Satellites, al't ce -
rams rationalisation of productive effort in this sector may be taking place...
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of devela is is stern europe
, ` yartaa ermmnt announced price reduction of
em I& articles of clothing by as such as 1/3.
944 Laa Aft OMMLIAM NW*rmmt moved to ease lot of peasants;
rsco m ded collective farms depart fz'i recently
adopted model statutes by allowing members to draw
15% of grain harvest for personal needs before sarren-
'tug quotas to State and asking pgasnt in kind to
WSJ permitted now peasants, depending on need, to
mill, 50 kg. of grain for ova needs before meeting
quotas.
?shoring meat reorglnisation Hoary, Premier
NW, n 'w],y appointed gor+trmont head, made first major
Satellite policy speech defining "new course." Program
is as described in attached analysis with major exception
that the collective farm structure "as an end in itself"
is practically blasphemed. )larked slow-up of collectivi-
sation policy called for and statement categorically made
that peasants will be permitted to withdraw from collectives.
This real moderation in agricultural policy was specifically
reversed in Aakosi's policy speech of 3.1 July which called
for the strengthening and expansion of the collective, and
indicated the degree of discrimination that would be brought
to bear on those peasants who attempted to withdraw from
collectives. A fawning speech by IAagyr on the supremacy of
the Party in Hungary immediately followed Rakosi's address.
Rumanian Council of lmnisters increased the quantity of
bread and pastry on be free market. As of 16 July
increased quantities of breed were to be distributed
throughout the country and increased quantitiesof sugar
were to be made available on the free market in July.
Zm4prian govessent ordered a reduction in Lane! tA? Find crop
delivery obligations of farmers vho suffered damage due to
unfavorable weather.
' Improvement in Emdapest food supply noted by US Legation.
large quantities of cold storago pork and butter, potatoes
and vegetables have appeared in stores, indicating that
reserves have been released to launch the program.
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11 July Rmanie modified CCWVs0r7 s tcult . tI s .
Rumaniann govern ent - ca shad a ica3 l debts Dead
bb collective ftmo joint village ee$ 4ati
individual holdings of, every catege27,f snltiT4 frM
compulsory quotas.
Harr3priam decree cut crop delivery'q * +ao`` a-
tives but not for indIVId *l PWUAA'iss Md"Od a
fines for son-fulfi]iaent of crop de to t*r ets of
individual peasants and collectives, emd Cyst tY 200 '
delivery quotas of all types of collectives Ut mot of
individual peasants and also cancer last year's
arrears in grain deliveries.
17 July Cominform Journal carried summaries of r:'s k J1,
speeck and FaMils Il ZWI speech/ osittift +a23
refer eases in Nagy's speech to the all.eviatics of
strict police measures and permission for peeseste
to withdraw from cooperatives in Ringaly. The tome of
Nagy's speech, through significant onissicros, was
Bede to conform more closely to the PAkosi speech
which stressed plans for improving production and 'wczk
discipline and continuing support for the colleativi-
zation program. _
19 July. 2000 former Bucharest shop owners 'were rec*%t3,y called
together to discuss a return to private enterprise
according to source of ES Legation.
21 Jhly Albanian editorial chmstized "administrative orbs
of State economic enterprises" for neglecting welfare
and standard of living of industrial wo kers.
22 July Polish Premier Pierut in a major policy speech e -
sited that achievements in industrialization wow permit
regime to give full attention to problem of raioi:26
level of a5riculture. Government will provide more
t scuts ace, eciuipr*nt and ouppliec to irividual POSOMt,
r-nd mid eta pcoa tc in fimncial d.i fica tiec.
I n.-yirien Govor at ciottcd 60 r illiou fort s (