BUDGETS OF SOVIET SATELLITES IN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00039R000200080030-9
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 33
• Document Creation Date: December 22, 2016
• Document Release Date: May 7, 2012
• Sequence Number: 30
• Publication Date: July 17, 1952
• Content Type: REPORT

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THE EU DGETS O tip .. +r lla UU ROP r 1V WYIA~
I. Didinskiy
The peaceful, creative, con& ractive character of economic
development of the European countries of the peoples' democracy is
seen graphically in their state budgets. Having for its economic
basis public ownership of the basic means of production, the budgets
of these countries draw together all the threads of the national
economy and become a mirror of its peaceful, manifold development.
In the character and structure of the budgets, in the rates of in-
crease of budget receipts, in the trends of budget expenditures the
policy of peoples' democratic regiine finds its full expression,
leading to the construction of the groundwork of a socialist society.
In the state budgets of the peoples' democracies is reflected the
great superiority of the progressive system of socialism being built
in these countries on the basis of utilization of USSR experience
and its fraternal assistance over the reactionary, rotten-to-the-
core, dying capitalist system.
The budgets of Poland, Czechoslovakia, Bulgaria, Rumania,
Hungary, and Albania are based on a rapidly growing socialist
industry in the city and a solidifying collectivized segment in the
country.
The workers of the countries of the peoples' democracies at
the head with the working class, led by the Commi.nist and workers'
parties, are successfully developing their national economy, attain-
STAT
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p advances in all phases of economy and culture, dave1op-
ing further
xt
vent of productive capacities, and increase in the material welfare a
of the mass of people.
Succestaful completion of the first short-term two and three-s
having as their main objective the restoration
year economic plans, ,a
of the e conoznof the peoples' democratic countries destroyed by the
~'
errnan-fascist plundering, afforded opportunity for the
war and G
workers of these countries to enter in an historically short time
upon socialist reconstruetion of the national economy on the basis
of industr n , Socialist industrialization, whose nature,
~.alx.zata.o
as Comrade Stalin pointed out, consists not simply of a growth of
industry, but on development of heavy indstry and mast of all its
care _.. machine ine building -- is the main link in the future plans
pment of the countries of the people& democracy.
for economic develoL
The realization of socialist industrialization is transforming the
appearance of t he people& democratic countries, creating, in them a
basis for socialisra. Industrialization promotes the
stable economic
of the position of the working class -~ the leading
strengthening
force in the peoples' democratic regimes; it leads to unity between
the working class and the peasantry under the leadership of the
working, class, to still far greater solidarity of the toilers axou.nd
the Carm ' parties? it guarantees the rapid and steady
rnlnist and workers ~
rise of the entire national economy, strengthens in it the position
of the socialist gray of life to the detriment of the capitalist
system, creates the basis for the technological equipping of agri-
culture and its socialist transfotion, and a necessary condition
for raising the living standards of the worker. By means of industrial-
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the C4L1ntr~.E?a o:C the r~eoples ' democracy are
izat~.c~n, the workers o countries,
ovexcoming the technical and economic backvaardncss of their
ensive capacities, and are buldin~ the
are strengthening their def
The year 19~1 is the third year of the
foundata~ons of socialism. ~ ~m.
reality of the f ive~year plans for dcvelopmen~ of
transla?rion ii~ta J
~laria and C zechaslovalcia, the second
Bi1a
the national econoX>~' o
.: he SixM",~cax' Plan for Poland and the ivew
year of fulf.~l~ent of t
Year plan for Hungary, and the first year of accolnplisYunent of the
Five-Year Ply for Rumania. The national economic plans worked
e of the ConDTD fist and workers' parties have
out on the initiat1v
been taken up by the workers of the countries of the peoples
enuine vital affair, and are devoting all
democracy as their own g ~
and early translation of these plans
their ever ~Y to the successful
into life.
The first real successes in the field of industrialization
eo ales' democracy were the fulfillment and
of the countries of the p ~.
roulfillment of the assigned national economic plans of these
overt
in their economy and cultuxe is guaranteed
countries an over-all rise
the Communist and ~,yorkers 1 parties and the
by the correct policy of
peoples' dernacrabic governments, by the labor enthusiasm of the
workers, the laboring peasants and intelligentsia of the peoples'
by the manifold, friendly, dis~terested
democratic republics, and ~'
and the utilization of its rich experience
USSR
assistance. of the US~I~
in economic constructlon.
ion in the countries of the peoples'
Industrial product
ev~ar level. In the first half of
democracy ling ago exceeded the pr
191 in all the countries of the peoples' democracy industrial
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4t 1~ J t~ ~d i . ~ Tni ~ .~
y. r
',{'7tF~i~C;1~ a m
production as compared with 1938 comprised, in Poland 268 percent,
Czechoslovakia 16 percent, Hungary 271 percent, Bulgaria 33,E percent,
and Rumania 208 percent. The economy of the countries of the peoplest
democracy is being restored on the basis of new, up-to.datc techniques.
Especially feat successes have been attained in these countries in
the field of the development of heavy industry. In a short time,
the working class has founded new industrial cities, built a large
number of new enterprises for smelting and rolling of ferrous
metals, for production o: nonferrous metals, modern equipment,
machine tools, tractors, and automatic machinery. The industry of
these countries began production of hundreds of types of products
never before manufactured here.
The workers, employees, and teckrnical intelligentsia of the
countries of the peoples' democracy, applying the experience of Soviet
innovators in production, are expanding socialist competition and
obtaining increasing volume and improved quality of manufactured
products. In the plants and factories of the peoples democratic
republics the productivity of labor is growing, the utilization of
equipment is improving, raw materials are being utilized economically,
and the circulation of money in the economy is on the increases On
this basis the net cost of manufactured products is dropping and the
profitableness of state enterprises is increasing.
The working classes of the peoplest democracies have also
achieved great successes in the development of agriculture. In
comparison with the prewar period in these countries, the sowing
area has been extended, the crop yield of basic agricultural products
has been rEstozted, The peoples' democratic governments are giving
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regular, resourceful assistance to the working peasants. More
tractors combine harvesters and other complicated agricultural
machines are being sent to the villages from the rapidly growing
contributing thereby the ma'tcrial-technological basis for
industry,
the reorganization of agriculture. Agricultural production coopera-
tives are developing, and with the experience of Soviet collective
farms are strengthening relationships in agricultural organization;
the number of MTS's in the state-owned farming sector is growing.
In the process of socialist construction, the class structure
of the peoples' democracies is undergoing profound alteration. The
socialist way of life prevails in large-scale and medium industry,
in the banking system, and in foreign and internal wholesale trade.
In the current year the proportion of socialist management in pro-
duction industries amounts to 99 percent in Bulgaria and Rumania,
98 percent in Czechoslovakia,, and almost 97 percent in Hungary.
Socialist management plays a dominant role in retail business. The
collectivized segment in agriculture occupies a significant place.
The people's democratic regime is pursuing a policy of restriction
and displacement of the Kulak wealthy peasant7 class -- the most
nwnerous exploitative class still remaining in the countries of the
peoples' democracy.
The mighty upswing of the national economy of the countries
of the peoples' democracy and the steady growth on this foundation
n material
of their national incomes assure a rising prosperity and
level of cultural life for the working people. In those countries 4
the real wages of the workers and employees and the real income of
the working peasants has risen, the national consumption has risen,.
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the volume of dwe1iing cons txucta,on has expanded, and the amounts
paid out by government authorities for social insurance and social
welfare in they form of scholarships and other advantages have
increased.
? e *
The rapid rates of economic development in the countries of
the peoples' democracy have stipulated a precipitate increase in
their state budgets, the most important link in the entire financial
system.
ee next page for table7
From the table is seen first of all the unusually rapid
increase in state budgets of the countries of the peoples' democracy.
Far the past 3 years (19L9-191), which in the main might be viewed
as the beginning years of the reconstruction period in these countries,
the budget of Poland increased 3-fold, the budgets of Bulgaria and
Hungary 1.~-2 fold, the budgets of Rumania and Czechoslovakia, almost
2-folde At the basis of the growth of the state budgets of these
countries besides the brisk rise in their economies, lie the changes
in the character and functions of these budgets.
A deep abyss separates the present budgets of Poland, Czecho-
slovakia, Bulgaria, Rumania, and Albania from the budgets of these
countries in the prewar period, when they were capitalist budgets.
Comrade Stalin at the Eighteenth Congress of the VicP(b)
pointed out that under capitalism, just as under the serfdom regimes
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Bulgaria
0
billion levs
Hungary
(mill.. forms)
STATE BUDGETS E G~ ~ C E ET'RO i t'J COUNTRIES OF ` dE PEOPLES ' D MCC
F 11 Th. .~~
1949
Income Expenditures
165.7 152.h
12, 8tj3 12,809
Poland
(oill.zlotys(2)) 18.12 17.2Lt
Rumania
(bill .leis)
Czechoslovakia
a cro -ns
(bill
>
272.0 235.0
89.32 89.?8
1950
Income Expenditures
207.3 1?8?0
17 , 537 17,1i51i.
25.3 25.3s
353?? 350.7
131.93 131?56
1951
Income xpendi tur es
271.8 267.9
2Q,623 29j16
, .
55.97 51?89
X33.9 429.9
166.17 166.2
E
1 Data from y ~, ~, han 1 Soviet ruble equals 71.
~- an-~rDyed budgevs, Accora_ng to the official rate of exc g e , _
Bulgarian lens. 2.93 0 Hungarian forins, 1 Polish zloty
37.
Rumanian leis.12.E Czechoslovakian crowns.
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the new, post-revaluation zlotys.
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and feudalism, "two basic functions characterized the activity of
governments the internal (main) one of holding the exploited
majority in check, and the external (lesser) one of extending the
territory of its own ruling class at the expense of the territory of
other states, or to defend the territory of its own state from
invasion by other states." (I.. Stalin, Questions of Leninisr~, 11th
edition, p. 60Z~) In a talk with the English writer H. G. Wells,
Comrade Stalin, speaking of the functions of the state in the
bourgeois world, emphasized that it was an apparatus of collecting
taxes.
In conformance with the basic functions of the bourgeois
government, the main task of the state budgets in the countries of
central and southeastern Europe until the victory in their peoples'
democratic regimes came down to beating excessively heavy taxes
out of the working mass for the maintenance of the apparatus of
suppression and oppression of the exploited majority, for the
enrichment of an indigenous handitl and foreign monopolists, and
for the maintenance of the armed forces. The state budgets did not
have any direct relation to the economy, and indeed could not have,
since inasmuch as the economy "in the real sense little concerned
the capitalist government, it was not in. its hands. On the contrary,
the government found itself in the hands of the capitalist economy. t'
(I, Stalin, Questions of Leninism, 10th edition, p. 602,)
During t he bourgeoisie--landowner regime, there were for
decades in succession deficits in the budget of Hungary. Only in
isolated, single cases were there budgets without deficits in
Rumania, Czechoslovakia, and Bulgaria. For covering the enormous
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budget deficits, the governments of the countries of central. and
southeastern Europe drained ofinternal loans, concluded external
loans, and increased the quantity of paper money in circulation.
With every passing year, the Financial and generai economic
dependence of these countries on foreign, imperialist robbers
increased, the burden of inflation and taxation grew, laying all
their weight on the shoulders of the people. Only the victory of
the peoples' democratic regimes gave the opportunity to the working
classes to throw forever from their shoulders the financial-
economic and political domination of the imperialists and to be
free from age-old poverty.
Under the conditions of the peoples' democratic regime, which
is successfully fulfilling the functions of the dictatorship of the
proletariat, the class character of the state budgets of the countries
of central and southeastern Europe has radically changed, and the
budget has begun to assume another principal role in the state
economic system. The peoples' democratic government guides and
directs the economy of the country on the basis of a plan in the
interests of a vrorking class which is free from capitalist pressure
and. exploitation. In keeping with the scale of development and
strengthening of the economic--organizational activity of the peoples'
democratic government, the main objective of the budgets of 'the
countries of the peoples' democracy becomes assistance of every kind
for the development of the national economy in constructing the
foundations of a socialist economy.
The budgets of the countries of the peoples' democracy were
i
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drafted to secure in conformity with the national economic plans the
uninterrupted financing of all branches of the national economy, as
well a~ the accompJ,ishanent of the enormous program of social and
cultural measures, the stockpiling of resources, sufficient for the
normal functioning of the central and local organs of the peoples
democratic regime and for strengthening the defensive capacity of the
country. A rapid procesr3 of converting state budgets of the peoples
democracies into budgets covering the entire national economy is now
under vay. In l9Z~9-1950, there was set up a direct connection between
the budgets and all branches of the national economy, both in the
accumulation of'funds and in their expenditure in the interests of
further complex development of the peacetime economy.
The budgets of the peoples' democracies for 1951 were, to a
considerably greater extent than the budgets of the preceding years,
connected with the realization of the political and economic
objectives of the peoples' democracy and with the plans of develop-
ment of the national economy. The basis of the recent budgets are
the financial plans of the branches of the national economy, based
in turn on the financial plans of the individual enterprises. The
total deductions from profits of state self-supporting (Khozraschetnyy)
enterprises are linked with the industrial financial plans of enter-
prises in all branches of industry, while the total receipts from
turnover taxes is in keeping with the turnover of merchandise, The
expenditure part of the budgets of the peoples' democracies is
determined entirely by the objectives and the ,volume of the work envisaged
in the 1951 plans for all sections of state, economic, and cultural
construction, The present budgets serve as the basic instrument for the
F
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n and redistribution of the national income in the
da.strabuta.o
interests ..eres ,~ts of the working class and in the interests of building
.
socialism in the peoples' democracies,
The budget 5 of the peoples+ democracies clearly reflect
the great warp done ? hese countries on the basis of utilization
in t
of the experience of the Soviet Union in the centralization and
tints of the financial system with the aim
perfecting of all segmx
of its better utilization for the needs of building socialism. In
19L9190 in the peoples' democracies the centralization of budgets
c'
-
'ticular they abolished every type of separate
was carried out, in pax
budget and autonomous funds either by pouring them into the state
budget or liquidating them on the basis of their uselessness. In
the 191 budget was an extended statement of the principle of unity
of state finances. s . Also included in the unified state budget were
organs of authority -- the local soviets in
the budgets of local
Bulgaria and Rumania, the national committees in Czechoslovakia, and
so forth. This guaranteed a stable income basis for the local budgets
and served as an important factor in the development of local organs
and the strengthening of their authority.
The budgets of the peoples' democracies are developing a
income over expenditures. In 1951 the
considerable excess of
income of the budget in Bulgaria was larger than the expenditures by
3,9 billion levs, in Poland, by 1~.1 billion zlotys; in Rumania, by
L billion lei., and so forth. The planned non-deficit of the peoples
democracies laid dawn by law in drawing up their budgets testifies
eloquently to the stability of all their financial systems,
....
- 11
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The basis for this stability,' which is unkrtown to capitalist
countries, and for the non-defeat budgets are the planned, crisis
free economy of the peoples' democracies, which is rapidly developing
along the path of socialism, and the gen.ine interest of all the
working peoples of these countries in consolidating the peoples'
democratic regime and strengthening its financial might. The
development of economic ties with the USSR and its brotherly,
disinterested aid are of tremendous significance for consolidating
the budgets of the peoples' democracies and for the success of all
the socialist construction performed under them. The stability of
their financial systems is also predicated on the delivery from the
Soviet Union of highly important types of material, complex machines
and machine tools, whole batteries of equipment for plants and
factories, and the extension by the USSR of commercial credits and
other forms of economic cooperation and aid which facilitate and
accelerate the socialist industrialization of the peoples' democracies.
At present the main objective of the budgets of the peoples'
democracies is the mobilization of finds for to creation of a heavy
industry and the reconstruction of all branches of the national
economy on the basis of this heavy industry. The budgets of the
peoples' democracies for 191 were budgets for socialist industrial-
ization. The objectives of industrialization were clearly reflected
both in the sources of the funds mobilized and in the direction of
the expenditure of the accumulated funds.
r
F .
In the USSR the State budget is one of the main levers with
which the Soviet regime mobilized funds for the creation of heavy
industry. In 1926 in his report The Economic Position of the Soviet
_ 12-
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ti~,i, .. .. ._~i...~.... ~... ...,o ~.~,.,_~..,, . _.,,~i~.~f,.. ,. ~.~~~,. . r..~., ~. a. .~. .,,~. _....~il ._i. ,, .. ~ _. ~a
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Union and the Policy of the Part, Comrade Stalin, in painting out the
possibility of Soviet industrialization on the basis of socialist
accumulation, states that "we have such a weapon as thy: state author-
ity which controls the state budget and which manages to get a little
money for the further development of the peoples' economy in general,
and for our industry in particula,r." (l. V. Stalin, Collected Works,
Vol 8, p. l2)
This Stalin dictum lies at the basis of the utilization by
the peoples' democratic authority of state budgets for purposes of
industrialization.. Through the budgets in the countries of the
peoples' democracy the bulk of accumulations of socialist industry,
transport, and internal and external trade is being mobilized for
the work of industrialization, while a considerable share of their
profits is being taken away from the capitalist elements. Part of
the income of the working people enters into the budgets, too, in
the form of taxes which, in turn, go for the expansion of socialist
production and. other general state and social needs, for social
insurance, for raising the material welfare and cultural level of
life for the mass of people.
The role of budgets as a source of accumulation is steadily
growing in the peoples' democracies. iNhere in the first years of
existence of the peoples' democratic regime the proportion of
budget capital in the total of investment finance amounted in these
countries to 20-30 percent, whale the remaining 70-80 percent were
covered by the private resources of the enterprises, by 190 and
i91 the budgets had been converted into the basic and decisive
source of financing for the entire national economy of the 'peoples'
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democracies including capital construction.
In 191 the incomes of state budgets increased to comparison
with the preceding year as follows: Poland, more than 100 percent,
Hungary, 70 percent, Czechoslovakia, Bulgaria, and Rumania, 2-30
percent. These rates of increase in budget incomes mirror the
steady upswing of the economy of the peoples' democracies. The
increase of budget incomes assures a steady consolidation in these
countries of the position of the socialist sector, increase in
labor productivity, the introduction of cost accounting, reduction
in the net cost of manufactured products and a raising on this
basis of the earning capacity of socialist enterprises.
In the income parts of the prewar budgets of the countries
of central and southeastern Europe, enormous taxes levied on the
working groups played a central role; taxes on everyone increased,
notwithstanding the continuously increasing poverty of the masses. i"
In contrast to the capitalist system, the decisive source of income a
i'
Nr
in the peoples' democracies is the income and accumulation of the
~t
socialist economy. The basic means of production 'belong to the
peoples' democratic government, and it concentrates in its hands .. ti
the major part of the social product. Therefore the accumulations
Y
o
of the socialist sector comprise the overwhelming part of the income
of the budgets of the peoples' democracies and primarily the
accumulations of state industry. In 1951, the receipts of the
socialist sector in:.CZechoslovakia and Rumania comprise about 90
?
percent of the total budget. income; in Poland, almost 80 percent;
.. ~ , accounts ,
Hungary,.about 7~ percent; in Bulgaria, the socialist sector
for about 60 percent of the total sum of budget receipts. The receipts
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of the sociaJ.ist economy in the state budget are steadily increasing,
and the relative volume of this source in the total sum. of budget
receipts is rasing still further. In Poland, for example, the
relative volume of accumulations of the socialist sector in the
budget receipts increased from 60 percent in 1919 to 75 percent in
190 and 79,6 percent in 191.
The accumulations of the socialist sector enter into the
state budget of the peoples' democracies through two basic channels in the form of turnover taxes and in the form of deductions from
profits. The system, set up on the model of the Soviet Union, of
payments of state enterprises into the budget of the people's
democracy government was drafted to assure on the one hand regularity
of budget receipts, and on the other, a strengthening of cost
accounting by state enterprises.
Payments of state enterprises through turnover taxes was
established so as to guarantee the influx to the budget of the bulk
of capital over and above that directly needed for the fulfillment
of assignments for reduction in net-cost of products. In the course
of collecting turnover taxes, the financial organs of the peoples
democratic government exercise control over fulfillment by the
enterprises of their plans for realization of production. The
share of turnover taxes in total budget receipts increased in the
Rwnanian People's. Republic from. L~2.7 percent in 1950 to 50.7
percent in 1951, while the annual amount of income from these taxes
for the period indicated rose 29,3 percent, The total of turnover
taxes in the budget of the Hungarian People' s Republic rose from 7.8
billion forms in 1950 to 13 billion forms in 1951 and comprised Lii.
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percent of all the budget incomes. In the Czechoslovakian Republic,
the receipts from general taxes, fulfilling the functions of turn'-
over taxes, in 1951 reached to 6 percent of all incomes of the
state budget.
Deductions from profits -- the next most important payment
made bY enterprises of the socialist sector into the budget -W were
established in the peoples' democracies in such a way as to put
into the hands of the financial organs of the peoples' democratic
state an effective instrument for checking on the fulfillment by
industry of the established production-cost reduction targets. The
ministries of finance conduct a careful examination of the economic
activity of state enterprises relative to the disbursement by these
enterprises of payments into the budget of deductions from profits.
In the course of these examinations shortcomings in the functioning
of the enterprise are brought to light and steps are designated
whereby their profitability can be raised, cost accounting strengthened,
and infra-industrial accumulations increased. Deductions from profits
in a majority of the peoples' democracies in 1911 amount to about
10.15 percent of the total receipts.
The basic source of groi thh in income to the state` budgets from
profit deductions is the steady lowering of production cost. In the
State budget of Poland for 1951, for example, an income of 10.2
billion zloty from production-cost reduction was envisaged; this
amount is almost equal to half the planned capital investment of the
country for the whole year. It is natural, therefore, that measures
for cutting production cost, and on that basis raising profitability
of the socialist enterprises, are acquiring particularly great
6
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Declassified
his res act the peoples1 democracies still posssss
sign
great uncXplaited passe.'bila.ties by way. of raising praducta,va.ty of
of la,nt and factory' equipment, cal~siderably
labor, improving the use p
lowering; the xaW material consumption norms, cutting the size of
industrial reserve stacks, and speeding up the turnover of capital.
bhe receipt by the budget of deductions
To the. dynaina.es of
f n added the reorganization of the system of
from profits can also be
istributa.ng pro.. f"a.is of state enterprises, carried out with the
d
of coat accounting and raising the interest
purpose of strengthening
of the enterprises the results of them' economic activities. In
in ~h
Rumania, for example, in l9~l the total planned profits of state
enterprises comprise 102 billion lei or 68 percent more than in the
from this total there tivill come into the
preceding year, Meanwhile,
budget b in conPy arison with 60.6 billion lei in 194?
billion billion lei i
Thus, a considerable pact of the profits remains at the disposition
of the enterprises to meet their needs as specified in the finance
plan,
In 191 in the budget incomes of several peoples' democracies,
~.
ticularly aria, the receipts from machine-tractor stations
par in Bulgaria,
acquired cans e Lnportallce. In keeping with the development
~.dera al
of machine-tractor stations, the increase of mechanization of
agriculture, the improvement in economic organization, and strengthening
of production cooperatives, this source of income will play a still
,
greatrale.
Rapid rates of increase in budget receipts being obtained
.
in all peoples' democracies from state and.cooperativc enterprises
:
comprising the socialist sector: have been made possible because of
p t"
n~
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the expansa.vv~ , ths tivhvlesals
e a,ncrease in vvluie o~ productaan,
th .
novera and the increase of earning capacaty of
and retail trade tux tax rate or
and were not due to any increase in
socialist industry'
volume of deductions
In contrast to the ps;yments of the socialist sector, the
taxes paid by the popu:~ation
five amount of budge' receipts from ..
r eta yield approa~~.
is steadil~t being reduced. In 191 these taxes wtli Y
mately ~-10 percent of all receipts of the state budgets of the
peoples' democracies, The peoples' democratic regime uses these taxes
ii Zing zing' capital, but as an instr~~nent for
not only as a method of mobj
regu1at1n6 the incamc of separate groups of the pap111at10n an con-
s of ~ socialist constructions In all the
formance T~vit,h the taa.~c taxation
was a radical reorganization of the
peoples' e's+ democracies there iderably
r rogressive rates of taxation which cons
system le~.da.ng to p
creased the taxes
the tax birden on the b~lrgeoisie and de
increased the ~
on the working classes.
of restriction and displacement of
Through a gradual poi-icy
the in class of the peoples' democracies
. capitalist elements, the ~~o~Mk g
other measures is restricting ever more
with the aid of taxes and national
insignificant cua^rent share of the
effectively that already
i d cif bourgeoisie snatch for
income which the wealthy peasants an y
'lment of parasitic incomES in the peoples+
themselves. Further curta~.
the stiff resistance of the
cracies is being carried ouagainst
demo
ditions
..
shed exploitative class under con
broken 1-~ut still not aboli incomes
le the complete elimination of these
of tense, class strugg ~ together with t s being
he liiidation of these capitalist eledent is
completed.
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While previously in the central and southeastern European
countries, the holders of loan notes were foreign monopolists,
local bourgeoisie, landowners, and highs-paid members of the
government apparatus, the bonds of mass loans in the peoples'
democracies are now distributed among millions of workers, working
peasants, and intelligentsia. The success of the loans floated
in peoples' democracies in the preceding periods permitted the
inclusion in the budgets for 195l of a large volume of receipts
from subscription to loans. In Hungary, for example, in the 191
budget the total of the "Peace Loan" was set at 7~O million f'orins.
The loan was floated with enormous success. The actual amount
subscribed was 1,032 million zorins, which exceeded the total
of the previous loan by 280 million forms.
The experience of preceding years shoi'rs that budget receipts
in the peoples' democracies as a rule exceed the planned figures.
Experience also affirms the fact that successful fulfillment of the
income phase of the budget demands much intensive economic, political,
and organizational work by the organs of State authority.
The collection of tax payments in the peoples' democracy takes
place under circumstances of class struggle. The peoples' democratic
goverrmlent conducts the struggle not only against the capitalist
elements, which attempt by all means to evade tax assessments, but
likewise against people who by their unconscientious, negligent
attitude toward the work entrusted to them damage the work of
strengthening state finances and socialist construction as a whole.
There are relatively few cases in the peoples' democracies where
individual managers are captives of the survivals of capitalism and
ified in Part - Sanitized Co
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oppose the interests of private enterprises to the general ste
interests For example, in the report of the Ministry of Finance
of Czechoslovakia on the 191 budget, facts were brought to light
the concealing of surplus capital in budget accounts in a nwnbor
on
of organizations at the end of the expiring year, with the purpose of
evading the inclusion of this capital in the State budget. The
communist and workerslparties and governments of the people st
democracies are running a resolute and unyielding campaign for the
liquidation of survivals of capitalism in the consciousness of 'the
people; and a particularly important condition for the victory of
socialist construction is the successful fulfilment of the state
budget.
Budget expen,ditur. es, like budget receipts in the people t s
democracies, have undergone radical- alteration in structure,
character, and orientation. The State budget assures the further
vigorous growth of the peaceful economy of the peoples' democratic
republics.
The 191 national economic plans of the peoples' democracies,
as a component pant of their over--all plans for development of the
national economy, specified rapid rates of economic development.
The gross production volume of industry in accordance with the plans
well rise 30,7 percent in Hungary during 19,1; in Rumania,
pcrcent; in Bulgaria, 22,1 percent, etc. A still more rapid increase
is envisaged for heavy industry in the peoplest democracies. The
capitalist world has never known such rates of economic development
even in its best times, not to mention the present period of the
general crisis of capitalism. For example, industrial production in
r; Declassified in Part - Sanitized Coy Approved for Release 2012/05/07: CIA RDP82 00039R000200080030-9
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' ~ except in
hall Plan countries increased only 8. p
eleven Mars
comparison ~r~i th 191t.9, whereas in the five peoples' democracies -
Czechaslovs,l~a.a, Po landa Hungary, Rumania and But garia --- it rose
26.Li. percent in that same period.
and ever-rasing rates of development in
For sean~5 zopa.d an
all branches of the economy of the peoples1 democracies, their
budget expenditures on financing of the national economy are lncrc:asing. In the 19~1 budgets, allotments for the development
of the national economy in these countries comprise approximately
half of all budget expenditures. In Poland, expenditures in the
r
;Mate 'audgret for f~nanclng national economy are increasing to 21.7
.
billion zlotys against 11 billion zlotys (post revaluation)
J
in 1g51 as provided for in
the budget of 190; in Czechoslovakia, to 87 billion
cro'rms comparison ir~ith 42.1 billion crowns, etc.
~.n
The budgets of the peoplest democracies have been characterized
not only by a precipitate, absolute increase in investments in the national economy,
but likewise a relative increase in the proportion
of these disbursements in the total budget expenditures. The specific
amount of expenditures for financing the national economy in the
total of budget expenses in Rumania is rising from 37.E percent in. 190
,
choslovakia, from 32 percent to ~2
to 6.L percent in 191, in C ze
percent.
The socialist industrialization of the peoples' democracies'
is accompanied by an enormous construction program. The national
economic plans for 191 are an important. stage in the fulfillment
of the vast construction proa1113 they require a colossal amount of
_22
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23-
capital, largely provided by the state budgets
Based on the principle; s of the Lenin-Stalin national policy
and satisfying the demands of socialist distribution of productive
power, the plans for development of the national economy of the
peoples' democracies specify a rapid industrialization of remaining
districts and provinces _w Slovakia in the Czechoslovakian Republic,
Dobrudzha in E3ulgaria, the territory between the Tisza and the
Danube in HW1gary, the eastern districts in Poland, and so forth.
Appropriating large-scale capital for the rapid growth of the
national economy and culture of the remaining districts and provinces,
the budgets of the peoples' democracies emerge as a powerful factor
of friendship between socialist nations and as an instrument for
liquidation of the deformed distribution of productive forces and the
disproportion in their development inherited from capitalism.
In the 191 budget of the Polish Republic, capital, construction
is receiving 23,1 billion zlotys, which is 30 percent more than in
191, About half of this amount is earmarked for the development of
industry, viith heavy industry getting the lions share, This capital
guarantees first of all continuous financing of the main objectives
of the Polish Six--year Plan -- the large-scale Nowa-Huta Metallurgical
Combine. Among the enterprises the construction of which is being
finished in Poland in 1951, are the largest cement plant in the
country, the Dykhod Hydroelectric Station, the Yavozhno Thermo-
electric Station, the steel-casting furnace at the Chenstokhov
Metallurgical Plant, the Sokolov Sugar Plant, and several textile
mills. Capital construction in Polish agriculture is increasing
28 percent. in comparison with the preceding year. State organs
' 1
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are giving specLal attention to bolstering the factor fleet, which
is to increasa Li percent in 191.
In the 191 budget of the Czechoslovakian Republic, more than
?7 billion cro'~lns were assigned to capital investment, which corn-
prises )46 percent of all budget expenditures. Iviore than half of the total capital investment is for construction and reconstruction
of industrial objectives. This capital guarantees the rapid
reorganization of Czechoslovakian industry. In the specified tasks
the Five-Year Plan, and in particular the plan for 191, basic
of
support was given the development of heavy-machine building, which
in turn requires rapid rates of increase in the raw material and
power base of the country -- coal minirtg, production of ferrous
metals electric power capacity. Considerable capital is being
allotted in the 1951 Czechoslovakian budget for the transformation
of nature - planting of protective forestation belts, and
amerlioration. Among a?number of other 1951 objectives is building
an irrigation canal, the opening of which will solve the problem
of irrigating Southern I'iioravia,
In the 191 budget of the Bulgarian Peoples, Republic,
expenditures for capital construction are reaching 7 billion 1ev
(more than 1/2 of all budget expenditures). In November 1951,
construction was started on the most important objective of the
Five-Year Plan -- the Nitrate 'Fertilizer Combine imeni Stalin, the
equipment for which was sent from the USSR. This year in Bulgaria
construction of a boiler plant and the Red Star Construction-Machine
Building g Plant is being completed. Starting operation in 191 are
two electric power stations,-- the "Republika" TBTs and the "Maritsa
; ?' t:?,, . ;~ ;, , Declassified in Part - Sanitized Coy Aproved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
1I1n TETs, These will considerably reinforce the power base of the
country. Th6 budget of Bulgaria was likewise dxafted to
sts,te
financial resources for organizational~econemic
guarantee adequate
strengthening of existing productive cooperatives and for their
further expansa.an, The total 191 capital investment in the
Ministry of Agriculture rising in comparison with 19O more than
is 6, .. lar, the 191 budget specifies appropriations
Danes. . In particular,
the creation of 20 new MTS. 11.9 billion lev are
necessary far
designated for construction of farm workers' cooperatives and for
'S1 'tion of agricultural machines, which is almost 3 times more
dCgL11
than the previous annual appropriations for these purposes.
In the Rumanian an Peoples' Republic, the amount of capital
investment in l9l projected a total of 193 billion lei, which is
a
exactly !percent of all budget expenditures. ~6 percent of this
capital is to go to -industry. Expenditures for immediate construe-
tion works comprise 82,3 billion lei. In the current year constric-
of asteel-molding and an iron-molding plant,
tion was started
several coal mines, a petroleum refinery,two petroleum fractionating
columns, three large-scale thermoelectric power plants, a plant for
electric insulating materials, plywood and millwork plants, etc.
the building of three large hyclroel.ectrIC stations is being continued,
including the largest electric power station in the country, the
o1er of 210,000 kilowatts. Capital investment
irneni Lenin, with a p
in Rumanian agriculture is reaclLing l~? billion lei in 191. This
year according to plan, 0 new MTS are being built, and the irrigated
~
area as compared with 190 is increasing 22 percent, Mechanization
of agricultural operations, improvement in the use of fertilizers,
I
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 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
introduction o' advanced methods of Soviet agro-biological science and
technology are making possible a 19'1 increase in volume of gross
agricultural production of 29 percent in comparison with 1950.
. In the 191 budget of the Hungarian Peoples' Republic
appropriations for capital construction amount to 11.7 billion.forths
or 140 percent of all budget expenditures. Capital investment in 191
increased 1/3 in comparison with 1950, with appropriations for the
development of heavy industzy increasing 73 percent. Among the many
industrial installation: being constructed in Hungary, one of the
main ones is the Danube Metallurgical Combine. Y'~rith the completion
next year of this enormous construction project, the metallurgical
base of the country will be fundamentally strengthened.
Raising the material welfare and cultural level of life is the
economic law of socialism. In the budgets of the peoples democracies
are clearly reflected the concern of the Con~nunist and workers'
parties and the peoples' democratic governments for the masses of
people. Appropriations in state budgets for social and cultural
measures steadily are rising and comprise in 191 approximately 1/Ii
of the total budget expenditures. This year the expenditures for
social and cultural measures in the budget of Bulgaria amount to 69
billion lev or 13 billion lev more than in 190; in the budget of
Hungary, almost billion forms, or 1.1 billion forms more than
sn 190; in the budget of Rumania, l0 billion lei in comparison with a
k~
88 billion lei in 190; in the budget of Poland, 16,3 billion zloty,
i.e., I~ billion zloty more than in .190, etc. In, the buc.gets of the
local organs of authority in the peoples' democracies, the share of
a1and cultural measures is still greater than
expenditures for loci
- 26-.
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Declassified in Part - Sanitized Cor v Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
the ~ a.t amounts to ~g?Faq percent Qi their
general. state budget;
total budge?l, expenditures. Through capital from state budgets in
an enormous program of building new
the peopies? democracies
? a.onal a.ns?ta-tut~.ons, clubs, k?~.ndf~rgar~',ens,
schools, higher ed
in -in homes is being cax'ried out.
sana,tr~riums, hospitalea and ly
' e$ f or education, the amounts earmarked
In state budget expenda.tur
' r which is helping the peoples'
for scholarshi~as is greatly a.ncz'easa.ng
democracif.s work out more qickly the problem of creating a new
from ~~ the 1vorking class and laboring peasants,
intelligents~.a fro~l1 a?mori~,
development of science, the creation of
Expenditures for the
, ' ti ter experimental stations and other
sca.entif a.c~-research an,, ~ta.ti, ~
~
occu a large place in the budgets of ?~ the
s ~
cien~lific estala~.a.slunenta pY
,c'1 E~ enditures for the needs of social.
peoples 1 democracies a.n 19>
security, including assists Ce grants to
in.~.lrancc-; and of social
mothers ~riith many children arc rising. Appropriations for the
construction of residential housing and coiuirilunal enterprises are
ancreasin;.
I
d 2,2 percdnt; in ~ul;~ai^ia, 72.1 percent;-
expenditures, in ~ olanj ?
etc. The structure, character, and
in I~ums.nia, 70.7 percent;
Expenditures for the development of the national economy and
measures in the peoples' democracies take
for social and culturaa
up the overwhelming; part of the budget .funds.. Designated for these
urposcs in 1951 in Czechoslovakia is 80,8 percent of all budget
arapha.callyflect the peaceful, constructive character of the
re A
economic role which the budgets of the ?eoples' ..democratic republics
p
? inn of sociala.st reproduction, in raising
`are pl~.yng in the e,~pans ,
direction of budget expenditures in the people s t democracies
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
the material and cultura7, level of life of the tivorlcing class, and
in f oriiting the socialist consciausnes s ?
com~arati'T -Y small and with every year' a relatively A ~
funds in the peo~ples+ democracies is ex-
lowered share of budget
~s,ra'~u.s. In Poland ^.
pendecl for maintenance of the government app
191 app adrrtinistrative expanses comprise 7
~ rapriaticyns for covera.ng q
about 13 percent of all budgrt expendits~ in. Czeahaslovakia,
etc? In contrast to the
ercent; in Rumania, 7.2 percent, t
g?~ p
government represent
e overnmenta, where expenditures for
bourgeon.si g
i ainin in farce the apparatus of
its parasitic expenses for ma' ~.nt
over the oppressed majority of the.
the exploitative minority
pop or o session of the masses. of people,
ulation, the apparatus for pp a
the financing neo_ple s' democracy as -of gover17.nent expenses an a l
s
ulfil~ment of the functions of the people s
mainly lin~.ced w~.th. the f
onal and cultural-educational work;
democracy in economic-orgs,n~.~,ati.
l~.kcVii the resistance of the
se it serves the purposes of crushing ;F
exploitative classes.
The budgets of the peop1e5+ democracies are budgets for
economy. The financial polio' of these
conatfltiction of a peaceful
countries nated to a peaceful foreign policcountries is complc;tely subard'~.
countries in the camp of democracy and
pursued step by step by all
iet Union. The peoples' democracies,
socialism, headed by the Sov
of building socialism, spend for
confidently moving along the path
pare of their budget capital. 1'~~1
defense needs only a small sl
I3u1 Maria comprise 7 ? 7 percent
a propriat ions for the armed forces in _
p
of the state budget in Poland, 7.2 percent
. of all expend~.tures o .
se ec enditures were so earmarlfed
in 1ti~m.ania, 1~8 percent; etc. The p
ified in Part - Sanitized Co
I1! It
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
to secure the dafense of the peaceful work off' the peoples/ democracies
in their creation of a new, socialist society,
However loud the imperialists may rattle their swords, it will
not succeed in frightening the working classes of the peoples'
democracies, joined around their Cornraunist and workers parties and
peoples democratic governrnents, leaning on the indestructible
friendship and assistance of the Soviet Union, and preparing . with
all their strength to stand up for their freedom, independence
: ,
and state sovreignty against attempts on the part of the imperialist
aggressors,
The peaceful, productive character of the budgets of the
European peoples' democracies is especially striking in comparison
with the current budgets of the imperialist states, a lion's share
of which comprises expenditures for the debauchery of militarism
and the armaments race, The ruling circles of the US E+n
gland,
France, and other aggressive states are openly conducting pre
para~
Lions for a new ware These criminal objectives completely dominate
the budgets of their governments. The overwhelming part of budget
capital is expended in the countries of the imperialist camp for
the preparation of a new world war, a furious armaments race, the.
bloodstained imperialist aggression against the peace-loving
Korean people, for the conduct of the colonial war in Viet
Natn,
Malaya, Surma, and Indonesia, The armaments race and rnilitarjzjtion
of the econom~r o.f the capitalist countries supgrim pose incredible
burdens on the broad masses of working people, and destine them for
new suffering, endless poverty and hunger,
29
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Wr
Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP82-00039R000200080030 9 f 7 ~~i In i ?e
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
The budgets of the peapl.as democracies are mobilizing
enormous capital for the purposes of peaceful construction Yet for
successful fulfillment of the main tasks of those budgets q- socialist
industrialization it is still not enough to accumulate necessary
capital, Comrade Stalin teaches that "the work is not
done and
cannot be done just through accumulation, It isstili necessary
to know how to use accumulated reserves intelligently,
so that not
one kopeck of the peoples property is lost to no purpose, that the
use of the accumulation follows the basic line of satisfying a
the most
important demands of the industrialization of our country, u I, V
Stalin, Collected Woks, Vol 8, pp 129-13x)
In all the peoples' democracies, rich has already been done
toward better utilization of accumulations. Resting on the universal
historical experience of the Soviet Union, the state
~ authority of
the peoples' democracies uses the bud ets as an '
~ ~.nstnuinent of active
influence over the national economy for purposes of
successful and
early fulfilment of the production plans and the universal raising
of productive capacity, In confor;nity with the present tasks before
the budgets of the peoples' democracies, the system of dis
trjhutjon
of budget funds is established in such a era as to
y stimulate the
strengthening of cost accounting, to induce thrifty, economic
expenditure of budgeted funds and mobilization of internal reUources.
In the process of executing approved budgets, strict maintenance of
financial plan discipline is necessary, Regulations an force in the
peoples' democracies governing financial plan disci
. pline do not
permit `expenditures of budget capital for purposes not specified in
the estimates, offhand transfers of capital from one subdivisian of
30
Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
the estimate to another, or expenditures of capital above approved
limits. Enterprises, institutions, and organizations receive
~,
capital from the state budget only as they Ji alf ill the plans before
this reckoning the use made of capital assigned earlier and
them; in
mobilization of their natural resources is taken into account.
Nevertheless, there are still inadequacies an the expenditure
of budget capital in the peoples' democracies. In some of these
countries there was recently disclosed the after effect of certain
harmful activity tivity on the part of the enemies of the people. The
agents of Ang1o_American imperialism and the Tito clique -- Traycho
Kostov in Bulgaria, Laszlo R,ajk in Hungary, and other spies and
traitors -- chose the finance sector as one of the basic objectives
in their undermining activities against to peoples' democratic
regimes. The enemies of the people applied considerable effort to
sapping state a1, thus hampering the planned rates of socialist state cap' ~.t
democracies. Ignoble saboteurs - agents
development in the peoples' endeavored
of f internal, and international imperialist reaction ---,' ith all their
might 1 ,ht to snarl up financial planning and accounting, to dissipate
capital on many unimportant objectives and freeze progress on the
most important constructions. Thanks to the vigilance of the Communist
and workers' parties and organs of the peoples' democratic authority,
the enemy's intrigues in the peoples' democracies ended in a fiasco.
In that connection, as was mentioned in the reports of the
ministries finance of the peoples' democracies on the projects of
the l9~1 budgets and in other documents, cases of extravagance in
expenditure of state capital still take place as a result of weak
their utilization, cases of distribution of budget funds
control over
31-
Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9
for capital construction in the absence of tGehnological documentation
objective being instaiJ.ed, etc. The rapid overcoming of
for the ~
existing kinks in the expenditure of budget funds is a necessary
condition for further strengthening of the financial system and
the entire economies of the European peoples' democracies.
These facts and their analysis conclusivelY show that state
budgets are a mighty tool for socialist construction in the peoples
democracies and actively serve 'to strengthen the peace and safety
of the people.
Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP82-00039R000200080030-9