NEW SYSTEM OF FREE SALE IN YUGOSLAVIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700030031-2
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: October 17, 2011
• Sequence Number: 31
• Publication Date: November 8, 1951
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/10/17: CIA-RDP80-00809A000700030031-2
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
CLASSIFICATION RESTRICTED
CFNTRAL INTEL GENCEE AGENCY RRESTRIC LJ
COUNTRY Yugoslavia
SUBJECT Economic
HOW
PUBLISHED Monthly periodical
WHERE
PUBLISHED Belgrade
DATE
PUBLISHED Sep 1950
LANGUAGE
DATE OF
INFORMATION
1950
NO. OF PAGES
3
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01 Ill CO MTI MI/ IM ANT NAMnA !0 AM UNAUTMONIMIO n1ION II INO?
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Substantial changes in the former system of free sale, which was in effect
in Yugoslavia until 1 May 1950, have been made by recently issued regulations.
Pe, principles have been adopted to commercialize retail trade as much as pos-
sible, and allow the most extensive initiative in procuring and distributing
merchandise.
Formerly, there were various kinds of prices. Under the new regulations,
excep*, for the prices of certain standard items, there is only one kind of
price.
The new system of free sale has completely decentralized price fixing.
Instead of republic and federal administrations determining prices, local
agencies of the srezes and cities will determine prices. Prices will be de-
termined by the production agencies which supply the market with goods, and not
by administrative authorities. Priccs for the same articles at free sale may
vary in different parts of Yugoslavia, providing they are in accordance with
existing supply and demand and the purchasing power of the consumer in the
market concerned. Consequently, prices will be determined not only by produc-
tion agencies but also by commercial agencies.
The following goals are to be achieved by these measures;
1. Greater elasticity in price administration. The lack of elasticity in
the former system led to gross irregularities, especially in the prices of
agricultural products on the free market. These prices were constantly chang-
ing, while the prices of industrial goods (with the exception of a few) remained
at the same level for years. This system of administering prices had an unfavor-
able-influence on the exchange of goods between rural and urban areas, causing
agricultural producers to lose interest in increasing their production and
delivery -f large quantities of products to the market, for by selling a minimum
quantity o? his products a farmer obtained suffici,,nt money to buy the indus-
trial goods he needed. This resulted in an abnormal flow of money from urban
to rural areas.
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2, A balance between production volume and financial power. The former
system made it difficult to achieve any kind of equilibrium between goods
available and money in circulation.
3. Increase in production, quality, and variety of consumers' goods.
Participation in market profits will encourage workers to produce more goods
of the quality and type in greatest demand, and offer an incentive to producers
to 'tecover and utilize local sources of raw materials to increase production.
4. increase and speed-up in turnover of goods in circulation. The former
system of procurement and distribution of goods through wholec,alers was a brake
on the initiative of retail enterprises, and resulted in an accumulation of
certain types of goods not in local demand, while specific demands for these
types were not being satisfied elsewhere. Because prices were fixed, there was
an ever-increasing group of consumers for only low-pricet goods, while high-
pri.ced goods, unsuitable for the area concerned, did not move at all and
deteriorated,
Most commercial and production enterprises have understood the basic
ideas of the new system and have adopted them. However, there have been cer-
tain deviations by come enterprises because of misunderstanding and improper
application of the new system, as follows:
Restrictions have been placed on the free' circulation of goods, from
direct blockading of production reserving it for the local market'.to secret
redirecting of goods through existing trade agencies. This has been done
especially in Slovenia and Croatia. Many commercial enterprises complain it
is absolutely impossible to procure any salable goods in these republics.
Pr,Aucers in these republics advise prospective buyers to contact the agency
to whom they have granted sole rights to conclude sales contracts, while the
ag?rcy answers that goods on hand and even incoming goods are already sold.
This results in many difficulties in achieving a proper equilibrium be-
tween goods available and consumer buying power, especially in Macedonia,
Montenegro and Bosnia-Herzegovina,
Some production enterprises have tended to create and exceed profits
planned solely through price increases on goods produced, instead of increas-
ing their production capacity, or improving the quality and assortment of
goods, Such establishmeLts are obsessed by the idea that profit is an end
in itself and not, as it should be, a means to an ultimate goal.
It also happens that individual production enterprises firmly maintain
production as first planned, without regard for consumer demand for other
goods, or for assortment In the goods concerned.
Other agencies go to another extreme. They sell their goods to certain
trade enterprises at con-iderably less than current narket prices. This is
especially true among services for the supply of workers, and enterprises of a
restricted type where goods are sold to their consumers at very low prices.
It often happens that purchasers resell such goods at almost double the price,
thus making the profit the production and commercial entcrpriee has given up.
The same is true in commerce conducted by unions, especially in those
unions which ore in direct or indirect contact with production. Such organiza-
tions obtain free sale goods at a low price because of certain managers, who
believe they will thus raise the standard of living. However, this causes a
?'crease in purchasing power, violates financial discipline, and oft^n results
in fluctuation of manpower.
These instances of selling goods at considerably less than market prices
er~? tspeciaily prevalent in Slovenia.
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Sore commercial enterprises are not at all interested in market conditions
anl, consequently, are indifferent to prices. Their prices are inconsistent
as they neither reflect the actual relationship between demand and supply, nor
do they serve to balance existing production and financial conditions. These
prices only hamper the circulation of goods.
Some commercial enterprises do not modify their prices according to supply
and demand, but rather by a predetermined plan. Such action hampers the circu-
lation of goods, contributes to an accumulation of increasingly obsolete goods,
impedes work, and makes for improper utilization of credit.
Some enterprises set high prices not in accord with market conditions, thus
increasing inventories and deterioration.
Commerce and supply and finance commissions often content themselves with
the Lalance shown after a change in prices but are not interested in knowing
whether the inventory on hand consists of more high-priced or low-priced goods.
Srez people's councils which fail to check balances monthly, may find at the
end of the year that, although some enterprises have shown a positive monthly
balance throughout the year, they actually have a negative annual balance, for
only the low-priced merchandise was sold, while high-priced goods did not move.
The new regulations authorize commerce and supply people's councils in the
erezes to establish a mark-up for free sale goods to cover operating costb,
which vary among enterprises and depend on their organization, location,'etc.
However, some of these councils have understood this regulation to give them the
right to place excessively high mark-ups on free sale goods, in complete dis-
regard of actual procurement and selling costs. For example, the commerce and
supply representative of a srez people's council in Croatia approved mark-ups
of 20 percent, which cannot be allowed (especially on free sale goods).
Fearing that their commercial enterprises will not be eligible for
subsid.ies from the budget to cover their negative balances at the end of the
pear, some of the srez people's councils have forbidden their commercial
enterprises to cut prices on out-of-date Goods until they have a positive
balance, This slows down and makes difficult the sale of such goods and de-
creases the turnover of the enterprise, which has a large part of its funds
invested in such goods.
In certain republics, commercial enterprises do not display the prices of
free sale goods on display or on the shelves.
In small srezes, there are still commercial enterprises, especially
agricultural cooperatives, which are not sufficiently active in procuring goods
needed by their consumers, although the goods are available locally.
Recently, a tendency has been noted among some intermediary agencies to
14 become monopolies with exclusive selling rights, even denying producers the
possibility of selling their goods to those who come directly to them. Such
Practices are directly contradictory to the purpose for which these agencies
we-e created, for they prevent the development of commerce and production.
The opposite extreme is shown by producers who do not wish to use the
services of the agencies concerned, They prefer to dispose of their goods on
t%e local market or in their own immediate vicinity, without regard for the
fact that prices are often not realistic there. They, therefore, inflict
losses on society for goods should be directed where the demand is greatest,
and on themselves, for they do not get the highest prices possible, thus losing
the profit in which they should have a share.
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