ECONOMIC SITUATION IN FNR YUGOSLAVIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00415R010100150003-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 108
• Document Creation Date: December 14, 2016
• Document Release Date: June 20, 2001
• Sequence Number: 3
• Content Type: REPORT

SE RE
Approved For Re eaA0W/9 uQ &-RDP83 4ft0 JIM=
U. S? OFFICIALS ONLY
25X1A
TABLE OF CONTEr-TS
of the 11 It I ; study
"ECONOMIC SITUATION IN FNR YUGOSLAVIA"
Page
A) Communist doctrine in Yugoslavia . . . . . . . . ? 1
X, The activity of Comrunists in Yugoslavia before and during the war
1941-1945 . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 1
II.The activity of Communists after their taking of power in Yugoslavia. . 3
III, Tactics of Yugoslav - Communists in connection with the Cominform-Tito
controversy . . . . . . . . . . 5
B) Legal system . . . . . . . . . . . . . . . . . . . 6
C) Five-year Plan r . . . . . . . . . . ? . . . . ? 8
I, Technical side of the Plan ? . . . . . . . . S
II. Economic goal of the Plan ? ? ? ? 9
III. Politics]., military, and propaganda aims of the Plan . . ? ? . ? ? 10
IV. The efforts for the fulfilment of the Plan . . . 11
i
D) Labor problem . . . . . . ? . . . . . . . . . . . 13
ent for high productivity of labor . . . . . . . . . . . . . . 15
M
I
ovem
,
II, The basis law on j ill III 1=1 1W 11 -x the administration of
State economic enterprises and higher economic institutions by wor-
kers' collectives . . . . . ? . . . . . . . r ? ? ? ? ? ? ? ? ? ? ?
III. The decree about the professional qualifications and ranks of the 18
workers . ? ? ? ? ? ? ? . ? ? r ? ? r ? . ? ? ? r ? ? ?
E) Yugoslav economy . . . . . ? ? ? ? . . . ? ? ? . . 19
I. Industry ? ? ? . ? 20
II. Electrification . . . . ? ? ? ? ? 022
III. Mining . . . . . . r . ? . ? . . r . ? ? ? . ? . . ? ? ? ? . . . ? 23
a)Min "wealth of Yugoslavia . . . . . ? . . 23
b Petroleum . . . ? . . ? ? . . ? ? a ? ? ? ?
c )Workers in mines ? . . . ? ? ? ? ? ? ? ? ? 24
d) Conclusion about the mines . . ? . . . ? . .25
IV. Agriculture and forest ? ? ? . 25
a,Peasants' cooperatives (kolkhoze*s)? . ? ? . 26
2
b) Individual peasants . ... . . . . . . ? . . 26
~L q c) Forestal production. . . . ? . . ? . ? ? ? . 29 28
V, Ti affic ? ? ? ? ? ? ? ? ? ? ? . . ? ? r ? . . . ? ? ? ? ? ? ? ? ? ?
a) Railroad traffic . . . . . . . . . . ? ? ? 29
b) Road traffic . . . . . . . . . . . . . ? ? 29
SECRET CONTR.OLc maritime traffic ............. 30
ire . . . r ? 30
* : ppr~o~rlt rWL el O f/ i -1~D~83- 0415R0101 90) 5QOQ3;9 , 31
 -2 w
Approved For Release 2002/01/04 ;1e, tDP83 Page
b! gpf l 1j&OO150003-9
VI. Trade ? ? a) Foreign trade . ..U. g. ,O - i'A:. ~ ' . ? 32
1) Export and import articles in Yugoslavia . . . 32
2) Commercial relations of Yugoslavia with USSR
and other Cominform countries . . . . . . 33
3) Commercial relations of Yugoslavia with the
non--Communist countries 34
b) Internal trade . . . . . . . . . . . . . . . . . .34
VII, Finances ? . . a ? ? . . ? ? . ? . ? ? ? ? . . . ? . ? . ? . . ? . . r .36
a) Yearly budgets . . . . . . ? . . . . . . ? . . . . . .. .36
b ) Investments . . . . ? a r 37
c) Loans . . . . ? ? . r 38
F) Saving . . . . . . . . . . . . . . . . . . . . . . . 38
G) The need for the reformation of society and state . . 41
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
II, The discontent of workers . . . . . . . . . . . . . . . . . . . . . . . 42
a) Socialist economic doctrine . . . . . . . . . . . . . . 42
b) Does the man's labor have to be treated as merchandise? 43
c "Exploatation" of workers by Capitalism . . . . . . . . 44
d Conclusion a ions- the discontent of
.,
4l
workers . . . . . . ? . . . ? . . ? . . . ? . , ? . . . 44
III, Inability of the present state institutions to solve tke social pro-
blems in (their) roots . . . . . . . . . . . . . . . . . . . . . . . . 45
IV., A proposal for the reorganization of the society and the state . . . . 47
V. Regenerated ideas in the new social life . . . . . . . . . . . . . ... 50
a) Capital and private property . a . . . . . IF * . . 50
b) Labor . . . . . . . . . . . . . . . . . . . . . . . . . 52
c) New economic doctrine ? ? . ? . . . . . . . . . . . . ? 54
VI, Conclusion about the reformation of society and state . . . . . . . . . 55
H) General conclusion about the economic sitmation in
FNR Yugoslavia . . . . . . .. . . ? ? . ? . . . . . . . . . . . . . . . . .57
"' (-:3 TIROL
U. S. ,; - ...A1.S ONLI,
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 SUUDJECT: Economic Situation in Yugoslavia
Approved For R I e e LCIA-RDP83-00415R010100150003-9
i LS ONLY
The economic utf6a4 irc A Yugoslavia is inter-connected with the Communist
order which is in power in that country. The Communist planned economy
is the workmanship of the Communist political-legal system. This dictatorial
system,on the other,hand is the raison d'etre of maintaining such an
to be the best b
economy, which is considered those men who are convinced of the justifi-
cati,)n of the Marxist-Lenin/ Doctrine. Because of this it is necessary
compare
to XQi the economic situation with-=$e'xecution of the new Communist social
order in Yugoslavia.
1. Communist Doctrine in Yugoslavia
Prior to this war of 1941, Yugoslavia had approximately 12,000 Communist
Party members who were headed by Josip Broz-Tito. They were trained in
the iTarxist-Lenin Doctrine.As great fanatics they took active part in the
struggle against the occupiers after the entry of the Soviet Union into
war in 1941, and also in the Civil War which was incited by them against
th:s National Resistance i'F ovement which was headed by General t;ihailovic.
According to official data, approximately 10,000 Communists perished in
this struggle, while the remaining 2,000 of the pre-war Party members,
upon assuming power in the later part of 1944,resorted to crude and bloody
im:ilomentation of the Communist Doctrine in Yugoslavia. This small
Communist group led by Tito o d" power with the assistance of the RPd
Army which occupied Belgrade in October 1944, skrrC'e Tito was greatly
assisted both morally and materially before and after this time also
by the Western allies. These Yugoslav Communists who consider themselves
to be~Alp~d = easiad2 SORelieve
11. S. O M LS ONLY
 Approved For Release 2002I01'4
: 0 9
SECRET eftmuln,
U. S. OFF I ALTS1 1OF F 1CIALS ONLY
that they will successfully re-educate the entire Yugoslav Nation in
the spirit of Communist, if they successfully maintain themselves in
sufficient
power by force for a //4Xy1 period of time.
a. Cor..:munist Activities in Yugoslavia irior to and During the War
from 12_41 until 1945.
The majority of the population of Yugoslavia have been and still
are sddAt peasants - agrarians, who cultivate their small farms.
To the extent that theta were peasants who had no land, or who
have insufficient land for cultivation, it was not difficult for
these peasants, especially in the areas of Serbia, to easily attain
land thanks to the agrarian reforms which were garried out in various
forms since the 19th centurary. These peasants, as well as the
tradesmen and shopkeepers in the cities, all of whom were pious,
modest people satisfied with very little, represented the large
element which stood in opposition to the spreading and strengthetlt3Ag
of Communism and Socialism.
In the early years after World War I. the new Communist Party made
great strides and began its revolutionaly activities through political
attacks on life, and other illegal methods. It was at this time that
all the Democratic political parties 1X 1WM combined efforts in
order to abolish the Communist Party as a Party opposed to the Govern-
ment, and in order to condemn the constructive activities of this
party through legal measures. This was the first measure undertaken
against Communist -/aAWWWp(/throughout the world and AVVWI
- _Y .
A070 applied in Yggosl,CAti'1J JP,;S r.byif-M11ed
/04j t0l4A1lP83-004158010100150003-9
Approved For Release 20 /~.
lT.
 Approved For Release 20"//JTIP4j5R010100150003-9
U. S. 0FFIGIALS ONLY
the so-called advanced elements in other nations. As a result, the
financed in large
Communist Party turned to covert and illegal activities, ~1 1~4 M/
sums
/by the Soviet Union. The Communists, however, were greatly despised
by the majority of the Yugoslav population. Not even the free
Socialist Party of Yugoslavia which was based on the Marxist theory
could take rontp in the population, and at most elections did not
even have one representative in the Parliament. As a result the
Communist Party concentrated its major attention to the educating
in the Communist spirit the youthful intelligentsia, comprising
Due
students, teachers and even pupils of the gymnasium. fy ~J to the
Chmbling of the government, the Communists were fairly successful
in the implementation of their doctrine among the youth, and in
the infiltration of finished Communists into other parties, and into
government administration. These young intellectuals were the main
pilars of Communist ideology, and they were the commanding officers
cadre in Partisan units.
In ``'orld War II between 1939 and 1941, until the entry into the war
of the Soviet Union, Yugoslav Communists were always on the side of
the German aggressors, even at the expense of their own country when
the later was attacked by t)(/Germany and her axis partners on 6 April
1941. The German attack on the Soviet Union on 22 June 1941 brought
about a change in the policy and tactics of Yugoslav Communists in
accordance with instructions obtained from Moscow. Bearing in mind
the greatly developed patti ,, lWNT dom of the Yugoslav
population, and at the sanU.1Smet?jJ&JL6i sSoP4JXctly assisting
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For Release 2002/01/04 ; CL 415R010100150003-9
lCRE?
U. S. ur; 4AhLS ONLY
the Soviet Union, the Yugoslav Communist Party upon instructions
from the Cominturn and Moscow organized in July 1941 armed revolt
against the occupier - the Germans, Italians and others. These
local armed activities were neither sufficiently equipped technically
1 ,oe p
or dmm*6 tactically for any hopes of great success. These activities
were organized hastily out of purely propaganda reasons dixgNtiad
primarily
intended/for the Allies and for the destinction of Communist leaders,
particularly Tito. These armed activities were not popular with the
Yugoslav population, and -particularly after bloody reprisals of the
enemy against the Serbs, who suffered enormous unnecxessary losses in
lives. The established belief among the Western Allies, and particularly
among the British, was that from a military standpoint these diversionary
enemy
activities were necessary, in order to engage and stall as many/troops
(Russian)
as possible which otherwise would have been employed on the/Soviet front,
This belief was an illogical fiction and ordinary (commons or plain)
mistake, because these non-serious Communist military operations were
easily suppressed by the smaller local police units, and detracted nothing
from the main Russian front, all the more so because they were at the
disposal (arx fttxg at the service) of the Bulgarian and It^lian troops.
At this time and prior to this time nationalist resistance of the
"Yugoslav Army in the Fatherland" was organized and operating under the
command of General Draza Mihailovic. This resistance was directed against
the enemy for the liberation of the nation and of the government, and
with this aim in view the necessary armed forces capable of successful
L
activities were organiFoTehcw3c~ w d be able to fight in
Approved For Release 2f02?).l/ei :t(ZW 3QJ&118R010100150003-9
 Approved For Release 20 ~q-CIR15R010100150003-9
U. S. Off `.:. U A LS ONLY
decisive battles for the liberation of the country, in coordination with the
military operations of the Allies in the Balkans or in Central Europe. The
Germans =xs? xad and other occupiers considered this nationalist resistance
movement to be a very great menance (dancer) for them, and as a result they
undertook against it a large scale and extremely severe military and other
types of measures as late as the middle of 1944.
The military aims of Tito and the Communist Party of Yugoslavia were centered
on the spreading of Communism and on gaining a firm foothold for it in Yugo-
slavia, through the annihiliation of the nationalist resistance of General
Wihailovic and true democratic anti-Communist factions. The battle which
was directed against the occupier was merely a means of propaganda. Tito
in
was under no condition interested cooperating with the nationalist
resistance and in the later part of 1941 his armed units attacked the units
of General Mihailovic, and provoked thereby an internal Civil War during
enemy occupation which lasted until the end of the war. This is the unique
# case of this type in history. Al]. attempts on the part of the allies
to reconcile the two armed factions of resistance so that they may cooperate
with one another as was the case in other occupied countries, i dti' / iix
failed as a result of the obstructions of Tito, and the intrigues of
Communists, who on top of it shamelessly threw the blame for these
very facts on NTihailovic. As a matter of fact, the Communists
in Yugoslavia have always directly assisted the occupiers and were the real
traitors of the Yugoslav population, as has been proven since by claims of
the Cominfomm. Particularly in the large inhabited areas and cities., the
Communists who were smuggled into the intelligence services and other services
of the occupiers XX were cE dTwi`OJ
RO ahk of denounc t
I~ s1.2QPF2/ ;1(Qq t4 ? A4N -00415R010100153-e nationalists
Approved For Rea
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
SECR?T -CONTROL
U. S. O.E t ,.,iALS OILY
and accusing them even during 1944 at the time when the Germans commenced
to persecute the Communists, ale/$ %i that these very nationalists were
Communists, so that they would be punished and killed putting them in the
authority of moralizing to their oponents that/;'x/~H/A10H/ one should
not collaborate with the Germans and accusing them of treason, the Communists
were successful in spiritually breaking up the fighting democratic factions
of the population, and by means of other types of ruses and through foreign
propaganda }particularly through radio propaganda on the BBC from London
forced themselves upon the Yugoslav population as the authoritative leaders
and the so-called national army of liberation against the occupation. The
masses of the Yugoslav population deceived, misled, and headed by the
fanatic Communists gave and suffered enormous losses in the belief that they
were fighting for their liberty and the idei1s of democracy. All during
this period of war this small number of Communists were carrying out skilfully,
cautiously and in stages "the reeducation of the population" in the Communist
spirit employing in the process appropriate mottos and thus.preparing and
creating a favorable ground for assumption of power.
Communist Activities after their Rise to sower in Yugoslavia.
After Tito rose to power the Communists immediately set about to organize
the Government after the Soviet system, applying thereby the political and
economic principles of Marx and Lenin. All democratic parties which fictiously
made up the so-called "popular front" were abolished, in spite of the fact
that they did not even begin to exist as parties, and the dictatorship of
the Communist Party was thus instituted. The Tito-Subasic agreement was
neither carried out in deed, spirit or word. The corresponding regulations
of the Yalta
Agreement weri,~lhcdjiscite for a monarchy 6r
w4r Approved For Releasf'pp 4 . ~~`P''8'"3~-- 4158010100150003-9
ur ~ i;;tALS ON"
U+S
 ~n TROL
Approved For Release 20 h 4 ClA RDP83-0041 8010100150003-9
U. $, o ~LUALS o~1L1~
a republic under allied control, which was provided for by Ailied agreement,
was not held, and the decree abolishing the monar r was proclaimed by the
decision at the First National Assembly which was made up of Communists and
Communist sympathizers - who were chosen by undemocratic methods.
In the economic domain, the Government, by abolishing the idea of personal
property, took possession without, any reimbursement, all means of production
(factories, mines, large agricultural estates) all means of communications,
commerce and trades Pnd crafts,apartments and other properties of the
citizens, allowing them only what was of utmost necessity for living and
the cultivation of land through their own individual labor. Through the
a
introduction of ,~economic system, a systematic
proletarization of the entire Yugoslav population was begun. Oppression
thus becomes the principle of the Government and 4maintainance of the Party.
Yugoslav foreign policy was voluntarily placed under the leadership and
guidance of the Soviet Union. Political and military agreements were made
with all Communist Governments in which the so-called "popular democffacy"
was in power. Tito became the champion of Moscow in the Balkans ==nd %)iX
a challange to Western allies,. downing sadistically even the planes of
the United States. Oppression was being carried out by the most inhuman
methods. The dignity and worth of the human being by degrees were disappearing,
and man became jJ / tool, Only in this way could the Communist regime
maintain itself in power and strengthen that power with the purpose of
creating a new socialist world.
The official "f'ivejrear s&mmary of ur iNTjftutor of Yugoslavlk,"which
was publ \dad Reel#&s6r2?WT -0 yCT P
 Approved For Releas6 G ?cIiiJ' 4 Al ;00415R010100150003-9
information from which it can be seen that between 19,65 and 1950 approxi-
mately 6,000,000 men and women passed through the prisons of the present
Communist Yugoslavia. This figure represents 80% of the adult population.
The struggle of the people of Yugoslavia to free themselves from this
dictatorial regime was brutally suppressed by the Communists who made it
impossible for the people to oppose them in any way by doing away with all
their internal enemies.
The Yugoslav Communists headed by Tito gained such power that they became
disobedient and undisciplined even toward the Soviet Union which had
organized them and brought them to power. It first started with an internal
Communist family squabble which later led to an official break between the
Cominform on the one hand and Tito, Rankovic, Djilas, and Kardelj on the other.
This break basically was of a personal nature and was not founded on lllxia~
doctrinary principles. After the official Tito Cominform break the
and has
situation in Yugoslavia changes W X politicalX/ and economical/il conse-
quences. Tito remaining further a Communist, skilfully maneuvers between
the two opposing political blocs and takes advantage of economic and
political benefits offered to him by the Western powers. This clever play
of Tito will continue until the Vest has been convinced that it can have
little use (assistance) of Tito and the Yugoslav Communist. In spite of
this situation Tito and his Communists have concentrated more than ever
their energy on the socialization of Yugoslavia, particularly in the
industrial and agricultural field. The "building of socialism" as a motto
becomes the RV bible of the Communist religion in Yugoslavia, depriving
the population of political 1',~1,fs' 6396, 9.,ist development is
o ction r k'Ith 4A Hof e Communist order in the
actuallAp t av ~ or elease IMAM CIA-RDP83-00415RO10100150003-9
country. The development of socialism 1 as a result warrants the
 .r ~ ~ I'S Y
SECRET e? . i J 4.
Approved For Release 200 /0 04 : plQ-RDP8.3- ti5R010100150003-9
U f`{ ~1 iti rr X-4 j ~ l.0 '~ a
elimination of political liberties and the reign of terror. In regard to
this, Tito made the following statement in a speech delivered in Skoplje
on 4 August 1949? "This is consequently the issue of all things, and at
present the question to be asked is who is for socialism and who is against
socialism. He who is against socialism is an enemy and must be dealt with."
Tito believes that the Test will assist him in this socialization, and
particularly England to whom he has been intimating special economic
adventageor awg assistance.
C. Yugoslav Communist Tactics in Connection with the Tito-Cominform Conflict
Tito and his close entourage after being expelled from the Cominform in the
middle of 1948, endeavored to have the resolution withdrawn so that they
could be accepted back into the Cominform. The*r attempts, however were not
successful, and they thereupon turned to de8endinm themselves, switching over
with caution, and by degrees to a doctrinary attack against the Soviet Union
and her Satellites. The Tito Communists brought forth and are now standing
in the defense of the doctrine on the equality of Communist States, and of
their independence of the Soviet Union - in compliance with the principles of
Marx and Lenin. On 27 April 1950 in a speech delivered to the National
Assembly, in disoussin~-- the history of the conflict with the USSR and other
Cominform countries, among other things, Tito made the followine statement:
"....because these are aotivites of the USSR in opposition to the Marx doctrine.
These activities are fully oomprcmiisinv the essence of the revolutionary
socialistic development in the Viorld, and of Socialism in general".
Yugoslav Communists publicly claim that their doctrine is the most accurate
one for the strengtheninsr of Interne J.on d. tT~TAnd for the creation of
5 L L h
favorabljkpr3~e R&e0 100!/ 40. 6-P0MB 001906$3 or of the
3. 1-
 10 -
Approved For Release 2002/ :TCl4 15R010100150003-9
U.S. Ut'riLIALS O1LY
Communist regime. At secret Communist Party conferences (meetings) and in
confidential conversations amonT Communists, the following. idias are mainly
being propagated:
- The Soviet desire for World dotnation, and the Soviet degenerated
kaazy bureaucracy beoomeSfatal with regard to the apreadinr; of Communism
throughout the World because many socialists and supporters of the Marxist
theory in capitalist countries will not join the Communist partiesI bwowtss
the latter havebecome a "weapon of Soviet imperialism" to the World public.
The mistaken diplomatic tactics and international policies of the current
Kremlin leaders hag6caused a reaction in capitalist States in the West, and
ha' resulted in their coalition amainst Communism (the Marshall Plan, the
Atlantic Pact, and others).
The Armed Communist attack in $au x Korea upon the orders of Moscow creates
a war disposition and embitterment against Communism in the democratic
countries of the West.
The threats of revolution and war by the Soviet Union, no matter how they may
be camouflaged, greatly damage and can easily compromise the Communist World
Revolution, which is the ideal of Yuroslav Communists, and through which only
the latter can establish themselves in the Yur*oslav population, aocording
to their opinion.
- The xxa3 oampaiffn of Communism against the demoorad:ies, beforea the current
Communist 7overnments kxxax are sufficently strong economically, and sufficiently
armed, is provocated by the degenerated old men of the Kremlin. This premature
UVorldi
war will be a sure defeat of/ Communism x , particularly and primarily in
Yuaroslavia.
These authorities in the Kremlin, particularly Stalin, are nearing the end of
their lives, and after Stalin's death het 6~ e tt UAW n in the
Approved For Release 2002/01/04: CIA-RDP -R0~ 0 0100150 3-
 SECREffliGOINT TRU L
2~/0 1/04: hCIt4:,RQP,$ p0415R010100150003-9
Approved For Release 00r Of
personal structure of the Politburo of the USSR, which will at that time be
fully aware of the rrreate blunder and mistake in breaking of relations V& th
Yugoslavia, and the injustice which was done to Tito and the Yuroslav Communist
Party, and they will be then sure to request that peace be made.
- Tito and the Yugoslav Communists will do nothinp- which will compromise the
interests of International Communism. The acceptance of materiel aid from the
West for purposes of economic strengthening of the Communist Party of Yugo-
slavia Tito publioally explains as follows: " There are intelliuent people *h o
offer us assistance without any political conditions in return, and we
r;ladly accept this aid for the development of Sooialism."
All these ideas and many other measures maintain the majority of Yugroslav
Communists on the side of Tito, who neither can or will ever give up Communism.
Ideologically Tito dtf rx does not differ from Stalin. The only difference
is in the methods of implementinc: Communism, and one must not forget that with
retard to a World Revolution, the Communism of the Tito type is far more
danrrerous for the free peoples than the Communism of the Stalin order.
It is easy to understand why to date the hopes of the Cominform for the
overthrow of Tito's regime by means of a reffolution of Yugoslav Cominformists
could not be materialized. The reason is because of activities as described above,
which are directed toward the maintenance of the Communist spirit, and because
ofisevere measures undertaken in Yugoslavia to suppress all opposition in the
Communist Party in Yiarroslavia, which contains numerous competitors and unconvinced
Communists.
Yugoslav Communists who supporSEFiRF'PrcofoROLpider him to be a very
oapa!lo m pp veld ~ F~l e p 91/. ai i~ 5R09 18~~ ~~9319 conjectures,
 Approved For Release 2002/0Qq-,:TC~P~$~T0y6} IR010100150003-9
U. S. Or
and whose greatest Communist moral is that to date he was successful in
fooling all and even the clever Stalin, and that he will be able in the future
to fool the Western Statesmen who are currently greatly assistinp, him,
and with great satisfaction
Tito will easily/withdraw his elastic statements and eventual obligations
of cooperation with the West, as well as various concessions made by the regime
toward the Yugoslav population, as soon as the existing economic and political
difficulties have been overcome, and he has strenn.thened his power, just as he
has done in the past.
SECRET CONTROL
U. S. ur r LIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 to in hApproveeFor Release ~4 ~iA 8 ~0 ?I3K0 1~0'ISUO s other things
said also the following:
r"T CONTROL
"The realization of the Plaza**ii'change our country completely, i.e. not
only it the country) U r r A i A LS material goods, but these goods
will also permit a fast cultural development. We shall have many more factories, mi-
nes, railroads, various machines, good ccunicationft means, cattle and foodstuffs
of all sorts, and at the same time middle and higher schools, various institutes
of learning, reconstructed towns and villages, etc? At the same time the conditions
will be created which will facilitate the future large scale development. The well-
being of people will increase considerably. At the end of the fifth year the natio-
nal income will attain an enormous increase. Compared to 1939 the situation will be
almost the following: 235 billions of dinars of national income in 1951 as compared
to 132 billions in 1939, or an increase of 193%. Besides of this, the worth of the
total material production in 1951 will be 366.6 billions as compared to 203 billions
in 1939, or an increase of 180%."
III. POLITICAL,MILITARF, AND PROPAGANDA AIM OF THE PLAN
When the Five Year Plan had been projected and proclaimed Tito was in the
greatest love with USSR. Then Stalin considered Tito as the most convenient person
to communize Balkans, and a strong military Yugoslavia, with Tito on the top, as
an excellent military base and avant-guarde for the offensive penetration of inter-
national Communism into Italy and Mediterranean. Because of this USSR, immediately
after the end of operations in Germany in 191+5, started to arm, fast and in great
measure, Yugoslavia first,when other countries in the West began to de obilize their
armed forces,
The Five Year Plan was supposed to serve military aims in the first place,
while the economic side was supposed to be only the means and the material basis.
The so-called "national wellbeing" was an'remained only the camouflage.
The following factors prove that milt derations were above the eco-SECRIF-T nomic considerations: ~~, gy~pp{{~ QQ jj,.
Approved For Release 20021)1 4 : 1/ -RDP83;04 8010100150003-9
The quick adoption of the Plan without sufficient time-constaaing technical
 - 10 - SECRET CONTROL (2)
prep arat W? r Me&;QO /y/ 1( : WV%I%WrWIAAch Boris
Kidric, the member of Politburo, in the National Assembly on April 26, 1947, openly
called "The mobilization of all the available forces of the country."
The quick creation of a relatively strong military industry by pushing for-
ward heavy and other industry, by using metallurgical raw materials on the spot, etc.
The speeded and planned construction of cor-?unications (RRs and motor roads)
towards the Italian frontier and towards the Adrq,atic ports from the Danube area.
The Five-Year Plan is an excellent propagandistic means for the so-called
"building of Socialism."
An impression was being made abroad that in the "Socialist Yugoslavia" there
was more under construction in five years than in the pre-war Yugoslavia,
SECRET CONTROL
t1. S. u L H G I A LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 11 - SECRET CONTROL
where thy` $ 5 ~ ~ ? i to P9/ $ g)5 t4' 8 ALS ONLY
In Yugoslavia self this pla Si % biut i iTtR.4Laintaining and strengthe-
ning of the Communist regime whic1J is A ' l1 is and crimes with the
well,,being which it was preparing for the broad masses, An average man who reads
the plan and compares its impressive data comes to the conclusion that the produ-
ction will be much higher Jatannm7 indeed and that it will satisfy all national
needs. And the expert propaganda of the regime, other sources of informations being
absent, was building castles in the air bast' upon the untruthful data of the
Five Year Plan, and thus began to educate the masses of the people in the Communist
spirit,
IV,. THE EFFORTS FOR Tfl FULFII1 ENT OF THE PLAN
All neutral observers, who knew the situation and the possibilit*es of
Yugoslavia, were sceptical about the fulfilment of the Plan on the decreed scale.
TNany official organs of the Cominform countries were declaring in 1948 and
later that the Yugoslav Five Year Plan was fantastic, unrealistic, and that it
was impossible to realize it on the same scale as projected,
Yugoslavs -- economic specialists and anti-Communists in Yugoslavia -- did
not believe the material results and even less the basis of this Plan. A*E he peo-
ple in Yugoslavia,, under the influence of Communist propaganda, wished to trust
that their physical efforts, as well as other efforts, requested from them, might
produce certain results usefull to all.
Communist agitators and the whole Yugoslav propaganda apparatus were de-
claring and are still declaring that this Plan of the "building of Socialism" will
lead people to great wellbeing and real happiness, and that then, according to the
national proverb, cx "milk and honey will flow" in Yugoslavia although now there
are great difficulties and great obstacles.
In this connection Hebrang stated the following in the National Assembly
on April 26, 1947: SECRET CONTROL
A'Wprc 9901 04 18 1 '0 '&5 3t ,at neither the
 remainderi4 'ro%el ~ a s 2 /09*,,f-tIAn-- bb $R 15 are able to
prevent its fulfilment,"
The President of the Cabi ' Cr .EX d Q R that occasion:
"From all this it follow =t .t ~eidr is nQ b Tour country who are contra..
rious to its industrialization are in reality the opponents of the wellbeing of the
people, the enemies of peasants, workers, people in generals whatever their manner
of masking their struggle against the industrialization.
Besides of this, various reactionary elements will try to prevent the x ful-
filment of the Plan in various ways,...,,,,Our opponents abroad also recognize this
(certain economic results),, which makes reactionary elements in the country even
more ridiculuous and lamentable when they often babble th,t Yugoslavia cannot pros-
per without the aid
SECR;wT CONTROL
U.. S. Ur,r .r i 41,A Ls oat
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 if we do not subject ourselfeg to An
lo.-Saxon forces ineconomic
"I am deeply convinc
all the obstacles."
Meanwhile, all the efforts did not produce the results expected by the Yu-
goslav Communists. The Yugoslav Cabinet had to ask the National Assembly, through
Boris Kidric, Chairman of the Federal Planning Commission, at the end of December
for
1950 at the occasion of the discussion of the budgets, that the term of the fulfilment
of the Five Year Plan be extended for another year -- until the iced of 1952. With
a
thisthe so-called Five Year Plan has become in reality, six-years plan.
This has been the first Mblic wmm= failure.
Kidric mentioned the following official reasons: economic blockade by
Cominform countries which had promised and stopped credits in the amount of about
$ 400 million; new means for strengthening of the defense strength of the country
"in order to protect the independence and the building of Socialism"; the increase
of prices on the Soviet market, especially of those articles which are the most im-
portant to Yugoslav import. It is interesting to note however that the "line of the
building of Socialism and of the execution of the basic strategic tasks set forth
by the Plan"/Borba, Dec. 31, 1950/ has been retained by the Plan.
The second unsuccess of the Plan, which manifested itself already earlier'
is the demand of the Tito's Yugoslav Govt. to the Government of U.S.A. for food aid
to the people of Yugoslavia because of the threat of starvation during the winter of
1950/1951. The drought, which took place in Yu al v during the summer 1950, has
s ~ W. C T961
been given as theme cause of t ; of food,,1V fesms that the projected grain
Ilk j?4 1`1
elevators and food reserves, which were 11 1 also planned by the Plan just for such
cases where the re w dr1elease4.~tTOZ1DV0ff Glao-FZDWtlff4 5R~fiQa&%%ffithbeen built
and prepared.
as well as in political aspect, These words evidently are the expression ft of the
wishes cultivated by this reactionary clique, The aid which Greek and Turkish reactio-
naries have to receive from Am ' @4W s 't~!.*t lique) happy, "Etc.
 .. 12 SECRET CO RR rj'~ (2)
A~p roved For Release 2002/01/04: CIA-RDP83-004 R010T00150003-9
l ie third public failure isIj . u@1fefDtCa; sejl' t 1cipated by the Plans,
that the ration cards for foodstuffs and other essential goods would be abolished
some time up to 1951 because according to the Plan these articles have been sup-
posed to be produced in much larger quantities than before the war when there
was a sufficient quantity of them on the free market at normal prices.
The principle of Communist propaganda and tactics is to throw the guilt
for their 't failures always at their enemies. Just as the Marxist-Leninist
theory is faultless so also the Yugoslav Five Year Plan is faultless for Yugoslav
Cann nists, Its carrying out will be stubbornly continued although -- from the
objective point of view -- this is harmful to national economic interests and
the6eal cause of the arisen economic crisis.
For the details of the Five-Year Plan see Annex 1, 2, and 3,
SECRTT CONTROL
U.S. wrr; iALS OIH.(
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For Release 2002/01/04 :CIA-RDP83- 01 1AW00~GL
D) L ORPFCB U- S- UHH L 1ALS OIYLr
According to the Coinn?unist doctrine, which is now being carried out in Yugo-
slavia, all able citizens, male and female, must be workers /intellectual and physi-
cal/ or rather "ardent workers for the building of Socialism." With this, the State
has obtained the maximum labor force possible out of human society. The people are
ordered to all the works necessary to the planned state economy by the state organs
which do not take into consideration their interest and will for various economic
branches but which only keep in mind their abilities in order to obtain greater pro-
ductivity.
There are prizes for works money bonuses, coupons for various foodstuffs=
of greater or smaller worth in calories, coupons for industrial articles, and other
smaller benefits, For those workers who cannot find proper work, who are not able
enough for the given work, or who cannot accomplish ordered work quotas, there
is no need for the maintenance of life within the so-called "assured subsistence"; be-
sides of this, for them there are also cemeteries and inhuman means: prisons, con-
centration camps, and mttk death. Tito drastically expressed it in the following
manner: "That who does not work does not eat under the Socials
All thEinhabitants, except Communist leaders, have become proletarians. From
the slavery of the Old Age through the serfdom of the Feudal Era we have arrived to
the proletarians--Communist laborers who in a certain sense have become greater slaves
than those in the earlier periods. Since the slaves in the old times were nevertheless
worth something, they could be sold and, therefore, they were well fed in order that
their owner would not lose something if they would die; however, citizens-workers now
cannot be sold and therefore do not need to be well fed because their death does not
represent anything for the Communist regime because they are in reality considered to
be consumers' goods.
The workers in Yugoslavia have no right to strike because "there can be no
 ppr ved F r Release 2002/01/041 CIA-R4$30MRO~IQA7900~3 9 (2)
pressed b5the uniost theoreticians. Synth rVp3,onp a organs and
instead of safeguarding the interests of the workers they in reality exploit the wor-
'kern taking care of the maximum utilization of the labor force and of the re-education
of the workers in the Communist spirit by the so-called "economic education,n "labor
discipline,," and "cultural uplifting of the workers-members of Syndicates." Syndical
organizations in factories, towns, districts, and higher territorial-administrative
units organize "socialist competition" between single workers, departments, factories
and other higher units, pushing, in such manner, the production and carrying out the
agit-propagandistic action for obtaining personal and collective pledges for the increa-
se of work.
Wages, overtime payments and bonuses for workers are minimal; they are being
paid more with propagandistic promises that they will attain a complete material se-
curity when, after the setting up of Socialism, the prosperity will cone to Yugoslavia.
The secret aim of
A the principle of the shall work t money bonuses together with the gua-
ranteed supplying of workers as long as they work is to keep them attached to the work
-impel by
without interruption these contemporary slave chains as once the slaves were
attached by physical force. If the bonuses would be high/ which it would be
easy to make for Communists in their internal market/
SECRET CONTROL
U.S. Utt..LtALS OI
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 _14-
then the w*~eor+sedffimlydRetdsaeseb]MOA .1d?d ~i18~ ~ ~~ IIQB-9f small savings
Un this the state
and work dtirinpthe Year much less and when Rh otuld w
planned economy would lose much not utilizing comulete the cheap labor force
and fluctuations which would follow without doubt.
During the war and the first year after the war the Yugoslav Communist
propagandists succeeded to make believe workers in industry., craft, and agriculture
that the factvvies, workshops, and larger agricultural estates will be theirs,and
not of their former masters, because they (are those who) work. After the I sociali-
zation of these means of production the workers found out that their former masters
became proletarians as they themselves and that the workers did not receive the pro-
mised goods while their standard of life deteriorated. This was the first disappoint-
ment.
The secon fissM intent of workers was when then have found out that in the
new state their human dimity is not taken into consideration and that their labor
force is being. throsn ruthlessly and very cheasly, on the labor market as consumers'
Mod. State labor organs are now often being attacked, even openly in the press., that
they are using the labor force wrongly and unjustly., throwing It according to the mo-
nentary needs from one economic branch to the other as well as to other places.,
as cattle, not taking into account personal and family circumstances of the workers.
Iiany enterprises, when they hire abler workers in order to carry out the Plan betters
fire without any regard the surplus workers with decreased working strength., wen
with children, and nursing mothers; this labor force is then thrown into other s
these
branches of economy, where there is the greatest scarcity of labor, and Jddx steadily
are: mining, agriculture, forestry, and building.
The result of all this has been the deterioration of the productivity of work
keys who lost their "Socialist love" for work,and a formal apathy cane into'being.
Fluctuation of labor force or the migration of workers from one ensterprise to ano-
ther more agreable enterprise becomes the regular nhennomeno On order to make this
between the enterprise and the worker for a longer period of times issued the Decree
impossibleA ova VVR eMHOOth i?: -`f' D -Off -c'f contracts
 -14-
to r1?z o F~c z ~~e n (~1 ' ~ txr with the
on making
plan of the wages fund and with the planro1 g~uaranteeAAU p y ng, The measures and
penalties against the fluctuation of workers are introduced by this Decree.
Piece work, which was rejected in the factories five years ago as "the re-
mainder of the Capitalist exploitation of workers," was re-introduced in industry
by the Decree of the Federal Govt, in 1951. Instead of it there were the so-called
"quotas" before. The worker who would not accomplish the quota qz would lose part
of wage and would receive less coupons for foodstuffs. Now the Corr-:nists began to prai-
se the piece work asserting that the productivity of work has been con-
siderably increased and production expenses lowered by the introduction of this sys-
tem of work,
Yugoslav Goverrnnent, besides of the known method of "shockworkers"(udarnik)'
undertook also the following measures in order not to let diminish the productivity
of workers but to maintain and eventually to increase it on the basis of the satis-
factory morale of workers: propagandizing the "Nbvement for high productivity of
labor," the administration of economic enterprises by workers: collectives, and
giving workers the ranks,
SECRET CONTROL
I.S. UYH.LIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 15
SECRET Appr3ve[01Ea`( W 2O t2/'D ED4[I(( PPRIMV2- CONTROL
Q1 OO03-9
U. S. OFFICIALS GNU'
This ;noveent was born in the first half of 1949 on the initiative of
motorized
Ali j a Siro tanovi c, a miner in the co al -nine "Brezatt, who, without help,
and together with 8 assistants dug out 152 bm metric tons of coal in 8 hours ,
m thus beating the record of the known Russian worker Stahanov.
This new method of work consists of the distribution of work in a group and
it is based on the so-called "brigade aystemlt of work on the working posts, mainly
in mines, and each worker -- controlled by the process of work itself -- is compelled
not to lose a minute in improductive activity on the basis of the distribution of
work. Sirotanovic began to dig the coal at three places at the same time: he and an
assistant digger were preparing the coal, another assistant digger was preparing the
construction material and helped with the constructing of supports, while other six
assistant workers divided themselves into two groups and each vasrof them was loading
and taking away the coal from one working place. Later some other "brigad?,ers" began
to work at four working places at the same time, and also on the large whole with the
brigade of 36 workers, and achieved greater results/ 862 metric tons of coal in one
shift of 8 hours/,
This in reality is the chain system in the mine which exhausts the force
of the worker and which replaces mechanization to a large extent.
In 191+9 and 1950 the whole propaganda apparatus took lead of the action to
make this method as much popular as possible,, claiming that this Yugoslav invention
was of the epochal value and glorifying the initiators of the movement.
The Central Committee of the Union of Syndicates of Yugoslavia ordered on
Sept. 7, 1941 to all of its dependent syndical organizations to undertake "tall the
political and organizational measures" in order to spread this movement for the high
productivity of labor to all the branches of economy and to make it the mass move-
ofthe class of workers,
Svetozar Vulczanovic, Minister for Nines, declared the following in his inter-
view of SeMpprove~d91or Release 2002/01?4 CIA- DP 9-111ARO 0100150003-9
U. S. Of ILIALS ONLY
 -15 - FCRLT CONTROL (2)
Approved For Release 2002/01/04: CIA-R 3-00415R010100150003-9
"The N:ovement for the higher productivg-pfo-I1*,sirQtg, especially
in the coal mines, makes a faster development of the raw material base for our incha.-
stry possible...,,.....
It is a known thing that the Socialism can be built only under conditions of
such productivity of the labor which is higher of the productivity of the labor in the
Capitalist society.......
To take part in this movement, to attain high work effects every day-this
is the Socialist and patriotic duty of every worker towards our Socialist fatherland.
On the other side, the movement for the high productivity of labor in mining
solves, even if only to a small extent, the problem of the mechanization of our mines...
The movement for the high productivity of labor in mining developed from the
conscious struggle for the fulfilment of the Plan, which (the struggle) is being carried
on by our working class and by thu working people of our country under the leadership
of the Communist Party and Comrade Tito,"
SECR1,T CONTROL
U. S. uk. 1.LIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 16 -
AND HIGF R ECONOITTIC INSTITUTIO IVES
The National Assembly approved this 1
ag~ ^~c~z oSJt nn e 1950. :Ix The fol-
lowing slogans were brought out in connection with the debate about the law:
"I on convinced that the working class and all the working people will enthu-
siastically greet and accept this law because it represents the new historical revolu-
tionary acquisition of our peoples in the building of Socialism."/Djuro Salaj--Chairman
of the Central Committee of the Union of Syndicates of Yugoslavia./
"This is one of the most revolutionary laws in our history, important not only
for our working class and for the building of Socialism in our country, but also for
the working class of the whole world."/ Representative Viktor Ropret/
It"Our working class acquired the x great role in the international 3ahmm workersg
movement to take over as the first the direct menagem.ent of enterprises and factories."
Already in the beginning of 1950 the Yugoslav Government ordered that in all
state economic enterprises /factories, mines, etc./ the workers' councils be set up
as the advising organs to the menagements of enterprises in order to propose various
measures for the advancement of the production.
The members of the workers' councils were elected by secret ballot by all wor-
kers and employees of an enterprise in such a manner that 1-5 members of the council
were elected for each 100 workers, and in such a way that in the case of a great enter-
prise with meme thousands of workers the council should not haveAmore than 108 members.
Director of the enterprise in question was also in the composition of such council, The-
se workers' councils had the same role and jurisdiction as the socalled "factory coun?.
cils" in USSR. These councils, altogether about 205 of them in gk enterprises, did
not make the Yugoslav workers enthsiastic because they were not order.snaking bodies and
their recommendations and proposals were not binding for the directors in question who
acted only according to the directives received from above from the higher state organs.
These workers' councils were fow is c '( d- rs1 councils and administra-
Approved For Release 2002/01/04 ? CIA-R P, 0 S U'00150003-9
tive committees established by the amar. ~}
ff rO1~~E~t~E~AI22
IVII ENTERPRISES
 - 16 - (2)
Ki ld F 0 1 IA- 83-00 1 y5R0 0 0015 039
e~i~3e4n't~one~1 0 i, 1950, "the
workers' collectives administer factories, miff s t a ir,~ tr -commercial,
agricultural, forestal, communal., and other state economic enterprises, within the
frame of the state economic plan, AND ON THE BASIS OF RIC ITSAND OBLIGATIONS ESTABLIM
SHED BY LAWS AND OTHER LEGAL DECREES,"
"Workers! collectives realize this administration through workers' councils
and administrative committees of enterprises, and through workers' councils and
administrative
SECRET CONTROL
Ur S. tj ttIUiALS QNL!
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 17 -
c o i m n i +.tees ABpFfl f cweReleaase 298MII @AY ACF94o-
U%P . r w.Luu.L.L1 oQJ U. S. OFF" U I A L S F
ices are uni-
Workers' Council is elected for one year by the workers who concluded xm&x
labor contracts with the enterprise /permanent workers/, by engineers and technical
n
personal, and by other employees of the enterprise, by secret ballot on the basis of
a single list of candidates proposed by the syndical organization /Communist state
organ/ or by a certain number of workers and employees. It is composed of 15-120 m-
bers. Workers' Council elects its chairman, meets at least once each six weeks, and
the director and members of the administrati7committee of the enterprise must be pre-
sent at its meetings.
Workers' Council elects and dispenses the administrative committee and carries
out other rights established by law?
Administrative Conunittee which is composed of 3--17 members administers eco-
nomic enterprise or higher economic institution according to the laws and decrees and
"is responsible for its work to the Wozi-ers' Council and to higher state organs, and
the administrative committee of the enterprise also to the administrative committee
of the higher economic institution." It can suggest the change of director.
The director of the enterprise or higher Institution directs the production
and menagement of the enterprise or higher institution and he is, by duty, a member
of the administrative committee. He makes the contracts and disposes of the means of
craft within the frame of the projected plan,, he hires workers and employees and is
responsible for his work /theoretically/ to the administrative committee of the enter-
prise and to the director of the higher economic institution, as well as to the com-
petent state organ, and the director of the higher economic insita4ion is/responsible)
to the administrative committee and to the competent state organ.
"If the director believes that a decision of the administrative committee
is contrary to the law, legal decrees, Plans, or the degrees of the competent STATE
ORGANS, he is obligated to wait tempor j 1 II yon until the administra-
tive cormnit~t~recbr~eerls~"RDM WAPEb6Jte organ decides
 - 17 - . (2
about the ~10icle~~e/08#~h~~19~i ~S4ii IAS~~b~x9is appointed
by the Presidium of the National Assembly 4 M Tr fpidium of the National
Assembly of the Republic in question or 1* Le Q' c~klreia 4 me . Also director of
the enterprise is appointed by the state authority. The position and the authority
of directors are regulated by special law."
It is characteristic that the law presupposes that at least 3/4 of the members
of the administrative committee must be workers who work directly in the production
and that they have no salary as well as the members of the workers' council haveitno
salary.
In connection with the promulgation of the a/m law the foll&wing slogans
were used by the Communist regime:
"Factories-to workers"/from Paris Carcmune/;
"Direct producers administer social production"/ the thought of Karl
"This law, together with the law of nationalizations represents the most re-
volutionary act brought about in Yugoslavia and such step forward in the development
of the Socialist democracy as until now has not been realized in any Socialist coun-
try"
SECRET CONTROL
U. S. U f t L C I A LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 lg
po1oPscI7A~fn#?g8@~k111E5}9 theegime
that all the state enterprises are passing into the hands of the workers and that they
1-1 T-
admMister them, in reality the workers
=x'eXi'4Fe T enterpirises nor can
they administer them.
U. S. OFFI(;UALS ONLY
For the following reasons:
--Because the state syndical organization presents at the elections one single
candidate list for members of the workers' council of the enterprise,, and because the-
se members of the workers' council are very probably good Communists or Communist sym-
pathizers.
--Because the administrative committee has to work according to the fixed plan
of production and in conformity: the legal decrees issued by the state.
--Because the administrative committee has no independent economic role and
no initiative in the essential business of the enterprise, and its decisions in se-
condary problems can be stopped by the director of the enterprise, appointed by the
state authority, until they (secondary problems) are resolved by the competent state
organ.
The elected administrative committee can always be curtailed in its actions
anticipated by the law,
If the economic enterprises would be really handed over to workers for the
purpose of administration, then they should receive a proportional profit from the
enterprises, and would operate freely on the basis of the economic principle of supply
and demand and not according to the economic plane and legal decrees of the political-
juridical state, changing the director and the members of the administrative committee
when they would deem
Therefore it
economic enterprises
but a propagandistic
-To deceive
it necessary,
is fiction and the greatest deceit that workers administer the
in the manner as it has been =tx made public, This law is nothing
injection which has a doublt a'
(MU
workers ten CRE NTROL
~rarily
by raisI q CTXJ s JLftcance, that they are
AT 8
no longer merely a working force but alsoKthe administrative force, and
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 18 (2)
--T?Af*fB&e oiBlCe 2$Al' C47Q PB00G41 1flM601fifl?03 q to f s Yugosla-
via went on the right.,by giving workers moiTt rve in other countries.
In reality, the workers' counc3lstj4r , a i)i tj3 8veonlttees are not the
organs of the workers but unpaid aux1.liary state organs of the directorgof the en*er-
prises and of higher competent state organs, while the owner of all the
enterprises continues to remain the state,
III. The decree on professional qualification and ranks of the workers.
In conformity to this decree of the Federal Government, promulgated in the
second half of 1950, giving of ranks to all industrial workers was carried out until
the end og 1950.
This decree establishes 9 steps of qualification:
--Assistant Worker--..-after a traineeship of 3 months
- HIalfskilled Worker---after a traineeship of 9 months
--Skilled Worker--after a minimum of 15 months of traineeship
--Learned Worker---wwith traineeship of 18 months
-Independent Worker )
--Specialist ) In order to obtain these ranks it is necessary
to pass practical and theoretical examinations,
--Senior Specialist )
-Master )
-Master in more fields
SECRET CONTROL
'U.S. Of f lUUALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 19 -
step
In 13d1R2i~I}RE 3-9i.e. of worker
who does general manual labor and Ammooerk J1~ C F. T ~ with The administrative committees of tie ent~et DIALS ?~IL~ assistance of spe-
cial commissions, carried out the categorization Vof workers who until then were called
unqualified, half-qualified, and qualified workers.
Higher professional skill of workers, which they will be able to attain in
special professional} schools, will draw higher ranks which will carry the corresponding
higher wages.
The character of professional skill of workers ? has been raised by this
decree and they have become some sort of state employees (civil servants), and this,
in-eo with the law on workers' pensions, is a very favorable reform fres the
moral point of view,
The new ranks were given to a total of 906,094 industrial workers until the
end of 19501 277,40 in Serbia, 266,411 in Croatia, 147,231 in Slovenia, 161,305 in
Bosnia and Herzegovina, 41,500 in Macedonia, and 12,239 in Montenegro.
Artisan workers are not included in this number as well as some workers who
according to the character of their occupation cannot be considered neither artisan
nor industrial workers. The decree on ranks and professional qualification of arti-
san and other workers is under way.
Veceslav Holjevae, Minister of Labor of FNRY, declared to the press on Jan,6,
1951 that the categorization of workers according to the ranks is especially useful
and important Ja for the structure of the new wage system and for the plan of working
force.
It can be concluded that the moral status of the great majority of Yugoslav
workers is very bad because the wrong economic basis of the cinallag.regime cannot give
satisfaction to workers, who are the most important economic factor of the contempo-
-- SECRET. 0049 ailing somewhat their posi-
racy collective life, in spite of the re a ions o
and guaranteed sub-
tion in so et (in spite) of all propagandistic measures
pprov'ecior Release 2002/01/04: CIA-RDP83-00415R010100150003-9
si stence (supplying).
 Approved For Release 2002/01/04: CIA-R 3'-AE} 'N5RG6*jR"3-9
E) YUCDSIAV EOONOii S. OFFICIALS ONLY
The hole Yugoslav economy, instead of free economic life, is directed and con-
trolled by the Juridical State through collectivization.
The right to private property does not exist; even if individuals temporarily
possess minimal material means for individual life, these means can be taken away
by the state at any time.
Tito declared on April 26, 1947 at the occasion of the presentation of the
Five Year Plan to the National Assembly the following in the very beginning of his
speech:
"Planned economy and its success are, naturally, tied tnseparably with the
existing new social order in the new Yugoslavia.
SECRET CONTROL
U. S. of iUALS ONL!
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04 : - 3- 0 1 61 0
Without this order, without the transfer n Pprivate pro-
perty to social property, without new derUp j,cOFf I rA eSlMfets democracy --, such
..r planned economy would be impossible to realize. In our country it can be realized
due to the simple reason that industry, mines, and the basic wealth of the country
are in the hands of the people. This is why the state can and must exercise its influ-
ence also on the private sector of the economy, and this is why also this sector has to
be included into the general planned economy."
Due to such economy there was a great penury in almost everything at the end
of 1950 and later. If ``'here would have been no American aid in food and other needs,
economic breakdown would have surely taken place in Yugoslavia.
It can be concluded that the economic crisis, in weaker or acuter form, will
la4 without interruption as long as the present Communist regime with the existing eco-
nomic system will be in power,
I. INDUSTRY
At the time of voting the Five Year Plan by the National Assembly on April 26,
1947, Premier Tito sIa-d the following about the importance of industry a?ong the other
things: destitute
It Industrialization will permit hundreds of thousands of our citizens
and our landless peasants to make their living without being forced to leave their
country and to wander around the world looking for work. Industrialization of our coun-
try therefore represents a very important factor in the solution of social problem
which is full of difficulties,
And the industrialization of the country, on the basis of the introduction
of a planned economy in the new Yugoslavia, representssure and direct improvement of
the standard of life for our peoples, for our workers and peasants, for our citizens
in general. While in the Capitalist lands the industrial rationalization and the in-
crease of profit by the utilization of i"-i reantlla reLLal defeat for the working
o C1ALS,ONLY to profits takes
WkM0A,t .1
- 1R[ 1341( 9
class -- - eIS 6otsed2
 - 20 - (2)
Approved For Release 2002/01/04: CIA-RDP83-00445RO10100150003-9
away the bread fron a large part E mykiCn, ca 0 burning large quantities of
foodstuffs oz~~drowning them whi7,e,. e ngerl s among the working masses ---,
1u ! ' I L ALS ONLY
in our country exactly the opposite will take place and the prosperity of our peoples
will only increase. 11
Andre] Hebrang, then the chairman of the Federal Planning Commission, said
at that occasion on April 26, 1947:
"The economic and defensive strength of every country depends from heavy in-
dustry, and especially from metallurgy and from the machine industry. Because of this,
our main task, the fulfilment of which will permit the fulfilment of all other tasks,,
and
is to build a sufficiently strong heavy industry,with modern technical equipment."
The development of the industry, especially of the heavy one, has been indeed
given the greatest push, and in comparison with all other branches of economy, especial-
ly with crafts, has been especially favored.
For industrial investhents a credit of
uv-T CONTRA
U. S. vc r IALS ONL1
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 115.7 billid&pMM" Pryaio~~~0e0~re~ear Plan. The
projected worth of the y%r ? iA4 ;)rQ ,b-Lon was supposed to amount to 126
law' billion dinars.
During 1950 and 1951 a special attention has been given to the armaments indu-
stry and th+ntention of the regime is to make it independent in order that it would
be able to produce the most important weapons and other military material as soon as
possible.
Special attention is given to the construction of new factories and to the
modernization of the old industrial enterprises.
The fabrication of certain products which had not been produced earlier has
started: trucks, tractors, heavy locomotives, heavy machines for public constructions,
cranes, hydraulic turbines, big steam boilers, work machines of heavy and middle capa-
city, electric machines and high tension transformers, agricultural machines of large
capacity, etc.
The worth of the industrial production in 1951, according to the Five Year
Plan, was supposed to be five times the one of 1939, i.e. 10,625 dinars per inhabitant
as compared to 3,378 dinars in 1939.
Economic blockade by the Cominfoxm countries caused great difficulties in Yu-
in
goslav industry, andAcertain industrial branches caused catastrophe. Yugoslavia was
oriented 90% towards the Cominfoxm countries as far as investment purchases in the
Plan were concerned. From the contracted purchases, 20 billion dinars worth -- mainly
for the needs of industrialization, one billion dinars worth k was delivered until the
blockade (began). The following shouldthave been delivered from those countries accor-
ding to the contracts concluded: a complete metallurgical combine for Zenica, complete
equipment for aluminum combine in S'trnisce,~ tractor factory, various equipment far
large-scale chemical industry and for light industry, a large part of drilling equipment
for the exploatation of petroleum, mining SF a eTt,C TI% uipment for thermoelec-
tric and hydroelectric stations, etc. H ,v9Ai ~i aA) been received.
Awr
Besic op?&A F* f ge 2b62 1Aa t41908t-r*K+F0 0 kg?BB'cussions n
 (2)
Approved For Relea 2 P8 4 0
the main factor of industry: e I VP I Ja ;~ l2q4rs. They could
, SE~R JONT Q
no be created in the parallel wayan WAT e ?ed as the factories are built
U. S. OFfs IAL$ -NI
and machines purchased. The creation of the skilled cadre of workers represents the
greatest concern to the Comrunist regime; to make,besides of all other measures,
prepared industrial workers with speed. This is the weakest point of the quick
Yugoslav industrialization which cannot be overcome for a certain longer period of time.
The total number of industrial workersx,mainly not sufficiently prepared and
qualified for their work-- hastily taken from the agriculture, was 906,094 at the end
of 1950, of which 70,000 employed in metal13trgy. There were and are great difficulties
ls: cotton, wool, and hides. textile
in transforming industry due to the lack of basic meat via
Because of this every year almost ib~ all factories have not been working for
some months.
Yugoslavia has no coke for heavy industry and this must be imported from ab-
road which represents%big financial burden; two large coke factories ies are under con-
struction now which will produce metallurgical coke from derk coal and lignite which
will completely replace the real coke.
SFC T CONTROL
U. S. yr ? .:.tALS ONL ;
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Beforep neewar,r Yiezgossla4a2was/Ovv g ~g8 fi~0OU iR 1 1S t1RR8033%tematic but
secure and favorable industrial development. Together with agriculture, the principal
branch of production, she represented ffo*C*cTrL whole.
Although an unnaturally epee g %e* hilt , k fi" cannot produce the
expected results, the Yugoslav industrialization itself is very popular among the people
and many uninformed persons still expect a quick -, prosperity of the people
and the increase of the standard of life from it, as the Communist propaganda p con-
tinuously and particularily suggests,. This is the Communist ace for maintaining the po-
wer, and the success or unsuccess of the industrialization is fatally tied with the
Communists remaining in power or losing it.
On this basis the temporary flirting of Tito with the West can be understood
in the best way; from it (west) he demands help for the industrialization of the ountry,
because this for him and for his Comunist reZime is the matter of life and death.
See details in the annexes: I, ii, 28, 29, 30, and 31.
II. ELECTRIFICATION
Especially great attention is given by the/.egime to the electrification of
Yugoslavia. This electrification, according to the opinion of Yugoslav Co nunists,
is supposed to become, besides of the mines, the source of wealth of the country and
of the increase of the standard of life of the inhabitants. The official propaganda
emphasizes this especially to the working masses.
The conditions for electrification are really very favorable because in Yugo-
slavia there are many waters which are not yet used for this purpose. Besides of this,
the faraway coal and lignite mines could be explored better and more economically with
thermic electrification. New hydro- and thermoelectric stations have been and are being
built with great speed, and the electric stations existing from before have been partially
d -.,,.,mom-A SECRET CONTROL
an
U o f~ i C I A LS ONLY
All this has been done unarsta aSically and with an insufficient number of
specialists because of which there were many errors and enormous damage, Without
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
doubt all this could haver een constructed better and more economically if this work
 would ha tecbFs 'i lent ZO I O.*A t1
: (1 8-& d without
haste. The reason for all this is propL6SdaO -F1CIW ii Ltalace -- which was and
which is so much needed by the regime also in connection a with the probl&a of electri-
fication.
The production of the newly built and of the reconstructed power stations
amounted in 1950 to 350,000,000 kw krs.
The production of electric energy was moving in the following way on the
yearly basis:
1939 r . r 1,100,000,000 kw hrs.
1946 . . . . . . . . . .. . . . . . . . 1, 144, 157, 000 kw hrs.
1947. . . . . 1x455,551,000 kw hrs.
1948 . . . . . . . . . . . . .. . . . . 2,007,000,000 kw hrs.
1949. ? ? . 2,186,000,000 kw hrs.
1951-according to 5-Year Planck should be4,350,000,000 kw hrs. This quan-
tity cannot be produced in any case.
SFCRFT CONTROL
L. S. jfi . _IALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 23
Approved For Release 2002/01/04: CIA-RDP83-00415R1110100150003-9
According too the latest estimidl stations with the total
capacity of 122 million kw kz= coup' ?e -IUUELdsof -,rivers of Yugoslavia;
they could produce about 60 billion kw hrs, of electric energy per year,
New hydro- and thermoelectric stations and other electric installations, as
well as long-distance electric conduits (trunk-lines), the 5 -year investments for which
were anticipated to be of 30 billion dinars, are I x==1 If n being constructed)
The action itself and the work on the electrification of the country are po-
pular and this may be the greatest success of the Cwin.unist regime' .n Yugoslavia,
For electric stations see Annex 15, for the organization of the transportation
off 3t tric energy see tnnex 14,
III. MINING
a) Mineral wealth of Yugoslavia.
With regard to other European countries Yugoslavia is mainly a mining country.
Before the World War II, the mining in Yugoslavia was developing very satis-
factorily, systematically, and uninterruptedly, because all the necessary conditions
were present, After the Com.itunists took power, the exploitation of the wealthy mineral
goods.Amaximm in the first place of strategic metals, has been impelled.
As far as the entity of production is concerned Yugoslavia occupies the
following places:
Copper: the first in Europe and the eighth in the world.
Lead: the first in Europe and the seventh in-the world.
Chrome: the sixth in the world.
Mercury: the third in the world,
Yugoslavia has not been investigated enough yet as far as her mineral wealth
is concerned, Short time ago new beds of rare minerals have been discovered: of moly-
bdenum, wolfram, cadmium, boracite, celestite (selit ?),copper, antimony, lead, zinc,
Alse"reh work
manganese, and chromium. There is gold #erCQ R is going on,
There is especially enough o fIlbl dcuSOU; i4 Q lf and lignite for the
needs of indus , The quality of the black coal is not good enough for x*Z producing
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 _, 23
Approved For Release 2002/01/04+8Lp(pX~ cal coke
coke this is why special coke factori$sS or e P OFFICIALS (}
from brown coal and lignite are being built. L
There is enough iron ore for the needs of industrialization.
The production off strategic metals -- copper, lead, chrome, zinc, aluminimi,
antimony --- is sufficient for the present needs of the country and a great quantity
of these strategic raw materials is being exported abr6ad,
SECRET CONTROL
U. S. or f ICIALS ONLY
(2)
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 (2)
Approved For Release 2002/01/0 , >y' P14
?PiedQN 110100150003-9
Svetozar V u k m a n o v i c , 'Minis terUfo~' Z 9i tJ Cd*J , oO y Tess a statement in
this regard on Sept. rj, 1949, when he said among other things:
"The lack of labor forces-with ?e could at least t emporarily r p1a ce the lack
of mechanization, during the time until our heavy industry will be able to supply
JJym to the mines the neces;,ary machines in sufficient quantities, alsn represents a
i3reSts often irrep.yrabledi?'ficult~r. Accordingly, the low level of t,re mechanization
of our mines requires -- inasmuch as the production is increasing more and more --
an always larger number of workers, and we are not always in the position thxh to
satisfy all these needs for labor force quickly and in harmony with the growing pro-
duction. Therefore we find ourselves generally in the permanent xt scarcit9 of labor,"
"The movement for the high productive of labor in still has noun..
valved all the workers in the mines where it an eared, The movement rot only the best
brigades which work according to the new method and attain high productivity, while
the other brigades wor according to the old method and
SECRET CONTROL
U. S. UU IGIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 -24-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
b) Petroleum
The production of petroleum started especially on the oilfields of Lendava
SECRET CONTROL
and Go3ilo, U. S. 0 F F I {,1
Explorations and drilling in four oil ar"b~ iavodina~ as well as in other
places weere the petroleum was found to be present, have begun.
However, in s +ite of the presence of the petroleum, large quantities of it
could not be discovered and exploited until now.
In 1949 the exploitation of oil shales for the acquisition of petroleum deriva-
tes has begun. The reserves of oil shales known until now surpass 1 billion tons.
yearly by
450,000 tons of petroleumAshould be produced /' 1951 according to the 5 -Year
Plan. This quantity, however, could not be reached in spite of all the efforts until
now,
c) _ 4/orkers in mines
New mines have been opened, and the old ones have been enlarged.
In spite of all the measures undertaken by the authorities a large number of
mines do not fulfil their yearly plans. The reasons for this are: bad organization of
labor for systematic and planned exploitation of mines, insufficient labor force,
fluctuation, and especially weak will of the workers. Before the xax war, when the mines
were in private hands, they were exploited faster, better, and more profitably, and
the workers were much more siz satisfied.
The present workers are not qualified for the work in mines to a large extent,
and sometimes they came directly from egriculture and are coerced to go as working
force. A large percentage of those who arrive, even up to 39%, do not go to work re-
gularly using various "unjustified" excuses and this is the real cause zftldw for the
lack of the labor force. All the promises and privileges given to workers in order
to raise their eagerness for work, ersonal and collective pledges of workers for the
?ECRET CONTROL
increse of production) shock work s brigade system in connection with the movement
for the high productivity of labor and other measures did not give satisfactory re-
sults. Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 do not atttPPrjg@d,t%2jP14 L;RDP83-00415R010100150003-9
On the question of the Tan3t ico nce -kt are the reasons for this
situation?':, Minister V u k m a n o v i c an a edrd t t iAL ONLY
"Before all, techni_calmensserrent of mines and Partrand s idical or aniza-
Lions still have not enough obstinacy to break the conservative orinions of some
conservative r,enagers who stubbornly persist that the work should be done according to
the old method. Technical menag rent and the Party and syndical organizations still
have not enough obstinacy to get all the workers into brigades and to carry out the
new organization of work on all working places, etc. To overcome these weaknesses, i.e,.
to strengthen the brigade system of work -- this is the task of our rinersx collectives;"
d) The conclusion about the mines
With the relatively low wages the mines have become a big source of income
for the Communist regime in a double sense:
-For the acquisition of foreign currencies by export of minerals, and
--For the industrialization of the country with cheap domestic raw materials.
Howeveri unsystematic exploitation and quick draining od the mines is becoming
less and less popular among the masses of the people since they see and feel that by
the socialization of mines their standard of life is not becoming better by any means.
For details about the mines and petroleum see annexes: 16, 17, l?, 19, 20,
21, 22, 23, 24, 25, 26, 27, and 33.
TV. AGRICULTURE AATD FORESTRY
Before the World War II,Yugnslavia was notably an agricultural country. Agri-
culture represented her greatest wealth. Agricultural products/wheat, corn, lumber,
etc./ were her most important articles for export.
After the war and after the Coraminists took over, Yugoslavia, produces less and
less in agriculture every year,in oarT h',f9.,nt, at the end of 1950, had
to ask the Govt. of USA for aid inUUc3dsQkl
I Idkd avoid the catastrophic hun-
ger which VpMd#o e 20021 O4 '2 WfO0415 1 i-1gJ003-9
 rrf,; G A, Td n?era' 7b ~~~ 4 ~ ~ @A45~@@ 3%s of Yugo-
The drought, .rhich reigned in 1950 in the southern part of the country, is not
the only and the main cause for the lack of food, beca3x3e the same drought took place
more or less also in the neighboring lands.
The main reason for the lack of foodstuffs is the Coin= unist-Soci mist economic
policy in Yugoslavia, and especially the direct and obligatory delivery of foodstuffs
at very low prices.
A.i C MM
U. S. U S Our.
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 _26..
Approved Fora I ps______ __ `ZQ
'
tl~v.~tuxv~a~~
Already in 1945,after takinorpower, the Coununist regime watnted to introduce
the Soviet system of kolkhozes in order to put peasants completely under the Communist
control although in Yugoslavia there were no favorable conditions for such mmzt an
agricultural system as they were in Russia.
In Yugoslavia the agricultural proletariat in the true sense of the word was
non-existing because every village family had its own farm and if it did not have it
in a sufficient extent it was able to obtain it easily thanks to the gzmd= agrarian
reforms which were carried out 1 13- earlier in the pre-war Yugoslavia in favor of
Vz%motts those people in agriculture who cultivated their land directly. On the other
side, Yugoslav peasants -- especially Serbs -are greater individualists than pussians
and each one of them wishes to have his own property and to be free on it regardless
of profitability of the union of more fam. s, Because of its this the system of forced
collectivization (kolhozation) met the greatest resistance of peasants in the very
.r beginning.
Then the Communist regime undertook the so-called "voluntary" creation of
peasants' working cooperatives applying all the camouflaged coercive measures on
one side and facilitations for members of cooepratives on the other side, and especially
I'myUg e3mneration from taxes, supply benefits and other advantages, and especially
police protection for members of cooperatives in order that they would not be sent to
concentration camps, forced labor, and similar. In the period of five years until June
30, 1950, the regime succeeded to set up in this manner only 6,971 cooperatives inclu-
ding 45,398 1 members with 2,157,7$6 hectares. Communists hoped to get gradually
and with time the majority if not all the peasants into these cooperatives.
Every farmer who becomes member of the cooperative has to give to the cooperative
his whole property: land, buildings, cattle, and tools He comes an agricultural wor-
CC RF"T CO1 TROL
?r ker on this cooperativ roperty and he i5' mos., in every ?yL bjeeted to the chief
F E1CIALa U1V
of the coopA~g@drl?21Gi~3P?~~~0~~1Of3etionary. All the
Yid E
 (2)
members work on this 'or?'esee11~~~j1di$506bg-profit
themselves but the lions share is taken Fie Stt()TROL
In reality, the life and the coercive Ya;bor'~N 1& t ty has been causing
various disagreements,., discontent, and quarrels. Since the members can no longer return
to free work and life., a certain apathy and a tendency to work as little as possi-
ble and to live better arose among them. This phenomenon of non-workers--parasites is
becoming a rule and a regular appearance in the cooperatives, and from this type of peC-
ople Communist agitators and controllers in villages are mostly recruited.
Generally taken, the main thing is that the cooperatives produce less than the
formerly independent farms where there was love for own land, cattle, and personal work.
But this was not and is not important to the regime, the main thing to which is to keep
by it a better control over the peasants and to carry out their so-called "Socialist
re-education." Convinced Communists believe still now that the insufficient economic
effect of the socialized peasants' working cooperatives, in spite of all the favoriza-
tion by the Communist regime, is the result of the lack of Socialist conviction,
which will necessarily be created in time and on the basis of coercive organization,
as they suppose.
SECRET CONTROL
U. S. urw!wIALS ONLFY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 -27-
Tito 2BVdF i1,e~&q1g0 /E. out. fl, IAs prPoblem4in his statement about the
tasks of the Federal Government to the National Assembly on April 27, 1950:
"In order to strengthen the S .arlr3i, sqe d it ageiculture it is not enough
to set up the highe possible numb Bf FPF ' '0 1kJ it is necessary to supply
them as soon as possible with tools and machines, and it is necessary to strengthen
them organizationally, economically, and politically. The consciousness of the members
of cooperatives must be Socialist, i.e. their relationship towards the state and the
Socialist collectivity must be different from,that which is still prevailing today
among many independent peasants, It is necessary to help the cooperatives with credits
in order that they may raise as many pigs, cattle, etc, as possible. In one word, it
is necessary to increase the cattle fund as much as possible because thefre are all
.the conditions for it in our country. Our cooperatives must really become the Socia-
list aLricnltural erduction enterxorises. The cooperatives have to be founded on the
voluntary basis, In tn+e cast there were some mistakes made in this direction in some
places, but now they are heading towards the other extreme and the founding
coooperatives has been com_pletelZ M~ abandoned in some areas. It is necessary
to do more political work in this direction and to continue Jmccbmxd the founding of
cooperatives.,"
In spite of negative results the Yugoslav Communist regime continues with the
socialization of villages. The labor force in the cooperatives is utilized very badly
i that in 1949 the members gave only an average of 104 working days. Therefore
it has been projected now to use people during the winter, when there is no work on
the cooperativeeroperty, for crafts, for cuttings' woods, and for other works.
The present duties of the state and CP organs in regard to the peasantst working
cooperatives are:
1)Yore Intensive political and agitatorial work for the creation of new co-
operatives;
2) Economic aid to the exist&"c TreiD sTD1WQL
3) Af ~8 dqfort &asV~ /04k: ]H~ 83 QA'I'9'R010100150003-9
 (2)
Uqr%
in
Fi? q@JpqM 3$g? i q$ t PeBLog~1c ~~~~~ 0o23-veil, aye proper-?
Although lately the measures fo rt a D)JJI~t
lzation the agrocultpre have
been temporarily and publicly stopped, the policy and the tendency of the regime have
not changed and they will be realized later at the first (opportune) moment.
b) Individual peasants
The peasants who did not want to join the cooperatives represent the enormous
majority.
The measures of. the Communist regime to coerce them indirectly to join the
cooperatives "voluntarily" had no success in the case of the majority of the farmers.
These measures were mainly the following ones:
--High, disproportional and unjust taxes in order to make the individual culti-
vation of farm unprofitable;
-Very low prices for the obligatory deliveries of agricultural and animal
products which caused k great discontent among the peasants;
-To make it difficult (for individual peasants) to obtain the necessary
tools, fertilizers, and other means;
--Threats with forced labor, prisons, or concentration camps-- and the reali-
zation of these threats for the smallest, sometimes subconscious and not intended,
faults.
SECRET CONTROL
U. S. U F k I I,IALS ONLY
V I'KO
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 All AgR&? iS eF orr t s ptneoret~cal' pre ssDurres up n5 tne0peasants3have found
their echo in the case of few, morally weaker AL" i14 QL join the coope.-
Wratives. But the great majority of peasants r tR'Fd t943Yivate& their
old inherited land themselves to the extent left to then btr the Communist potentates.
These peasants are today the greatest and the most dangerous enemies of Communism
together with - in spiritual and moral aftect the Churches.
They are being ridiculed as "kulaka", chicaned and punished by the regime in
all pa the possible manners.
When they have not enough grain, meat, and other foodstuffs, which they have tto
deliver to the state at low prices, they buy these foodstuffs at ten times higher prices
on the black market in other areas in order to fulfil the ordered quotas, which are
disproportionally high, and in order not to be punished. Those who cannot do it, MM
go into prisons and concentration camps, but not into cooperatives. These peasants
like to suffer hunger if they can work on their native wand which they love c
on the basis of this love will perish the Communism in Yugoslavia.
It is natural that there is sabotage and pasiivefresistance due to such stabe
on
of affairs. One of the usual types of sabotage is that4a certain superficie of land,
for which the peasant# receives tie corresponding quantity of seed from the people's
committees not all of this seed is - sown but Much lessl with the consequence that
that the harvested product is proportionally smaller.
Special quotas are set up for cattle. Foe each cow, goat, or sheep there is
a special quota of milk which the owner has to give to the state.
The quota for a hen is normally 200 eggs per year. If these animals cannot
produce these quotas they are killed and the meat is given to the state or they are
given to the cooperatives as sterile because these quotas are not required from co-
operatives.
There were and there are many-jokes and stories made up by the enemies
...~ of Communism in regard to these quot (IR rtM s - at visible places - dead
hens were see~jopheaagiho~'le~ie 2#/"Bo111,3-~znong which the
 - 28 (2)
folltwing F0gA.use I cannot
fulfil the quota," This joke was very successful and a?&GR.Tic I m *Out Yu-
goslavia, naturally through the so called oral press.U` S. O F' t L IA LS O
c) Forestal productAon
Yugoslavia is rich with forests.
Wood. articles represent now one of the strongett items in the Yugoslav export.
Exploitation of woods is very intensive, it cannot reach, however, the one from
before the war, mainly because of the lack of working force.
It has been projected and ordered that cb.arcocl or wood be used for fuel for
motor vehicles -- for at least 30% of all motor vehicles in the country. This mainly
because there is not enough gasoline for motor vehicles.
The measures for the growth of new forests have been undertaken. According to
the Five Year Plan new forestation of 100,000 hectares and regeneration of the abGndo-
ned forests of 150,000 hectares have been projected,
The tendency of the1egime now is to export finished and half-finished
SECRE' CO1TROL
13.S. Uttlu&LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 29 -
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
wood articles, This is why lumber mills are bel'EccTte(C4W1 areas. Also
other forestal industry is developing qui cklA. S. 0 F F I C I A LS ON L Y
Form details see Annexes I and 12.
V. TRAFFIC
Special attention is given to the development of traffic and to the constru-
ction of means of traffic.
In this sector money, ma. ,erial and labor means are not spared, The old pre-
war means of co'-municationx, which were destroyed during the war, have been recon-
structed and the new ones have been built. Strategic reasons prevailed upon the econoo
mic reasons -- which were mainly satisfied in the prewar Yugoslavia -in the constru-
ction of the new means of corrrrunication.
a) Railroad traffic
Railroads are considered to be the basis of the communication system,
820 km of RR lines were constructed from 1946 to 1949, and 302 km of double
lines were reconstructed, not courrbing mining and industrial lines. The construction
of 1, 500 km of RR lines is projected by the Five Year Plan,
1%414,000 metric-tons of poodswere carried on RRs in 1946, and L6 155,000
tons in 1949; according to the FiveYerz Plan 53,200,000 tons should be carried in
1951.
78,443,000 passengers were transported by the RRs in 1946, and 150,549,000
passengers in 1949, while
sported In 1951.
according to the 5 -Year Plan 90,000,000 should be tran-
) Road traffic
In 1950, 324 md km of modern roads have been constructed, 357 km of stone-
paved roads; and 4,062 km of roads wer r! !Oluodernized, and repaired.
The first automobile hiahwa n Yu~ e
r , W PW' F "Brotherhood and Unity,"
Approved For Release 2002/01704: CIA-RDP83-00415RO10100150003-9
 -29- (2)
Approved For Release 002 01/04 : CIA-RDP8 gYQ4t1~ 91 %91593] 1950
connecting Belgrade =d Zagreb' Wmxmm was opened , . The
speeded construction of this first greatest object of the Five Year Plan took 2-~F years,
and the following participated in the work: 250,000 youth in working brigades from all
parts of the country, '70,000 soldiers, and aba~-g1r 1d09btechnicians, and
specialized workers. The length of the highs g s 9#944AAW-asphalt and call
stone-cube paveme nt ,
The traffic on this modern highway is very weak and averages a few motor vehie
cles daily. There are days when no motor vehicle passes for the following reasonst
SECRET CONT L
U, S. OFFILIALS
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
--Because the highway is parallel to the strongest of double track,
cOTR I
-Because for heavier and slower t'tationnthe~~T , the river Sava
~ ~~ Utf~~l 1`t
from Belgrade to Sisal: below Zagreb, ?
-- ecause there are no private cars and gasoline and other field are limited
to the state-owned automobile.
--Because for quick transportation there is the regular air traffic on
the line Belgrade-Zagreb.
In reality this highway was projected as a strategic object in 1946 for mo-
torized and axored units, in the first place those of the USSR, and as a strong sup-
ply line for the Corulunist troops in the case of the projected future conquest of
Trieste and Italy, and because of this an extension was projected to Ljubljana and
Trieste.
1,706,000 metric tons of goods 'rere transported in public autarnobi le traffic
000 tons in 1
17,679,000 passengers were trams
ortedin 1946 in public automobile traffic
and 24,201.000 passengers in 1949, while according to the plan 36,150,000 should be
transported in 1951.
c) Maritime traffic
Ierchant navy was destroyed for the major part during t'-.e war 1941-1945,
The merchant navy of the Kingdom of Yugoslavia had 390,000 tons in 11?39 with
a total strength of 220,000 BP, and 600,000 tons with 400,,000 HP are projected for
1951 by the Five Year Plan.
After the war new ships were made and bought, and a part of the old ships
were reconstructed and modernized. A great effort is being made to reach the prewar
tonnage and to surpass it, ;j~t~~F~ C'a0~
3,332 000 tons of goods were transUqi&o(l0tr 4;"?,, 34Ua 00 tons of goods
were IranWrtb c hh an $ 00 n in 1 According to the Five-Year Plan
olrRe-l~a VkSJ-UU41 5R010100150003-9
 t2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
6,200,000 tons should be transported i
Sftff~ CO ... ,.
2,064,000 passengers were ra ao et d, n+~G11b,~p 36,000j2assen ers in 1949L
while 3,$00,000 are supposed to be transported in 1951,
d) River traffic
The river merchant navy of the pre-war Kingdom of Yugoslavia had 10,,175 I
of passenger ships, and 55,260 AP of cargo ships.
During the war 87.5% of passenger ships and 73.6% of cargo ships were de-
stroyed,
At the end of 1949 there were in Yugoslavia 3,900 HP of passenger ships,
and 30,425 HP of cargo ships. According to the Five-Year
SECRET CONTROL
, 4. O f f lCIALS ON4
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
Plan 5,700 13P of passenger ships and 50,900 of cargo ships were supposed to be in
1951.
The transport of goods in the river traffi ' c` wras the>following; 1939--
oNl according to the
,995,000 tons; 1946--1,155,000 tons 1 9L100v OF F n1G1ALs CONTROL
pN whiL~(
Plan 3,500,000 tons should be carried in Y9.
922,400 passengers were transported in 1946, and 1,753,000 in 1949,
e) A_i. traffic
Before the war there was the priv^te air transportation company "Aeroput"
in Yugoslavia which was partially subsidized by the state. It progressed constantly
insofar as the flying personnel, pl6nes, and security of travel were concerned.
12,070 passengers were transported in 1939.
This traffic is now in state hands under the name of "Yugoslav Aero-Transport."
10x000 passengers were transported in 1946, and 33,00 in 1949.
10 a3 rpla:knes were serving the traffic in 1946 with 9 air lines; the follow
has been projected by the Plan for 1951; 4 airplanes,10 airports, 26 air lines,
8 of which for traffic with other countries?
A total amount of 72.6 billion dinars is projected by the Plan for new in-
vestments in traffic and for the purchase of the means of transport.
VI. TRADE
The whole trade is in the hands of the state..
The system of trade, foreign as well as internal, was completely identical
to the existing trade systems in USSR and her satellites.
This situation lasted until the end of 1950 when certain minor reforms and
changes introduced, in order, q ?~sa r~ ~gconomic life in Yugoslavia
INAW to a complete standstill, but never es, jn~lp1~i , ?s basic Communist principle
of trade.o& A?eleaeiOZRl~1 /s Gr2ed83 o0415R010100150003 gads in order
~
 31 ? (2)
Approved For Release 2002/01/04: C D VAR010100150003-9
that single import-export enterprise re or legs independently, however,
$ OFFICIALS OI'L'
according to the instructions of th ' F'e'deral i? inistry of Trade and of the directora-
tes for foreign trade existing at the Republican Governments. Until the end of 1950
relations
the XWOUNjamm among the enterprises in the country were made through the Plan
which killed the initiative and any useful work; now the reciprocal contracts
between producers' and consumers' enterprises can be made, however sill always on
the basis of the quotas of the state plan,
,CFFT CONTROL
U. S. ~rt:LIALS ON
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 -32-
Approved For Release 2002/01/04: CIA-RDP83
1 010100150003-9
'n extent, Otherwise all
@Clin by which these enterprises became ~.
re"Tt
the enterprises are mainly 'AWTUXMSRIM be, Jl,pngit - tQ te, but this year a
small number of enterprises such as hotels, restaurants, handicraft shops,, were
given XMM private operation, but always under the state control.
a) Foreign trade
1) Export and import articles in Yugoslavia
Before the World War II, averagely the lie I largest Yugoslav export
were the f6bdstuffsxx -- especially corn,, wheat, and meat products, Lumber pro-
ducts also occupied an important place in the Yugoslav export. Also the export
of copper occupied a very important place, The trade balance of Yugoslavia was
active.
In spite of the biggest efforts the present Yugoslavia could not and cannot
yet reach the prewar export level due to the introduction of the Communist
economic system.
Relatively speaking the export of wood articles remained behind although
great efforts to increase exploitation were and are being made, A special tendency
now is to further the wood industry in the country in order to increase the export
of finished wood articles because of greater profitableness.
The export of foodstuffsx went down considerably in comparison to the pre-
war export, and some foodstuffs, as fats, etc., are now being imported. Wheat could
not be exported in 1949 and later, while before the war 193,000 metric tons of wheat
yearly were exported.
Among the industrial plants, more tobacco is being exported now
than before the war because, due to its profitableness, more tobacco is being pro-
duced now and its areas of cultivation have been ? enlarged; this year, however,
there was a bad crop of tobacco, and it w ffintolN? b1e to export the projected
SE . 11~~ ~`'
CjuaTl tlty, U w7 V i i k ~- !A it
The e3 o of strategic metals -- lead and copper -is especially being
Apprves t or Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 32 -
(2)
Aproved Foreleas 210e0UP4fiF~M 1
fostered now, a produc ono MORTR so was its
export which amounted to 53,000 tons ir196j.F ftjW9LV G ftipency to export also
''copper in greater and greater quantity because it is very much we 1 in demand and
more and more expensive on the world markets. 21,000 tons of crude copper have been
exported in 1948, while the prewar Yugoslavia exhorted an ayeratre of 34,1500 tons of
this copper (yearly).
41 1*
The most important import articles are: machines, equipment, ships, wool,
rubber, coke, and petroleum,
In the state trade of the present regime in Yugoslavia the necessary financial
means for purchasing abroad the lacking indispensable eomodities can be secured only
by the favorable export, and this export is of vital character for the regime. Tito
declared in this connection in his speech to the National Assembly on April 27, 1950:
"Therefore, this and the next year /1950 and 195] our main task ie to execute
our export plan and this must be one ohe
-,-T Ci~1T~01.
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 33 -
Approved For Release 2002/01/04: CIA-RDP83-((00415R 100150003-9
principal cares of the Federal and Repu
R ve tt~S;~ 4
G,CIALS ONLY
N%NW 2)Coirnereia1 relations of Yugoslavia with USSR and x other Cominform
countries.
During the 3- years the economic help of USSR to Yugoslavia,
which lasted until the second half of 1949 when the trade and other economic agreements
were interrupted and the economic blockade of Yugoslavia proclaimed., was not great
as it is generally thought by the people. This help consisted mainly in the delivery
of the military material for about 72 million dollars.
Instead of giving help it could be rather said that the Soviet Union exploi-
ted Yugoslavia. After the conclusion of the armistice with German in 1945 the Soviet
Union began sending to Yugoslavia airplanes, tanks, guns, and other military equipment--
mainly of U.S, origin. Yugoslavia was paying for it with minerals and foodstuffs which
she was giving to Russia at ten times lower prices than those on world markets, Thus,
for example, molybdenum which costs $5.00 a pound was sold to Russia for 45 cents. The
wine which cost $1.20 liter was given to Russians for 14 cents. cassia on the other
for
side c ~ harrgedgher shipments the prices which were 2maddmmx a few times higher than
,world poeM* /u,,-~
The trade balance was mainly in 10, balance. Yugoslavia imported during
that time from USSR, military orders not counted, for 105,426,000 dollars of goods,,
and exported to USSR 116,954,000 dollars worth of articles.
Economic structures of USSR andYugoslavia are similar. The exception was this
that the Soviet Union exported to Yugoslavia more cotton than it corresponded to her
possibility of export, while Yugoslavia was sending (to USSR) more copper and lead
than it corresponded to the Yugoslav structure of export.
After the agreement on the inve~.EC!t j re0M'Q5 million, USSR
was supposed to ship to Yugoslavia the follgw,i m a heavy industry: complete
metallurgical combine together with the coke factory, equipment for the exploitation
.r
and transformation of petroleum.,, and for the electrolysis of zinc, a factory for sul-
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For Release 2002/Q1_fflfi;.CIA-RDP83-00415R010100150003-~2)
plant
phuric acid, copper and aluminum mill, eta ' , WVVt m, etc, From all this
USSR shipped &)0,000 dollars worth of mU eria .. 1hq ltd Lt +ie erection of plants
according to this agreement were very long and were mainly unable to secure the inves-
tments 2wddix for the first Five Year Plan.
The economic structure of Yugoslavia was supplemented to the greatest extent
with the structure of Czecho-Slovrkia, and then with the structure of H ngary and Poland.
With the interruption of the trade, and other economic agreements with the Co-
minform countries 1Yugoslavia suffered economic damages not only because the investment
orders, IT M1 orders for machines, equipment, etc, were stopped but also because,
the
as inAexample of Hungary, also the shipping of those machines was stopped which were
already paid for by Yugoslavs,.
The Comrunist Yugoslavia, therefore, had to orient herself in her purchases
towards the Western countries in order not to be
-.71 COjjjnOL
ONLY
U
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 34
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
economically suffocated by the Cominform blockade.
For the details about trade rsg1, 9, and 10.
S. LtFtC1ALS O1UX
3) Trade relations between Yugoslavia and non-Communist countries..
After the economic break with the Conform countries, the cormmercial and
economic relations of Yugoslavia with the i Jestern and w trans-oceanic countries
reached such a degree during 1950 and in this year that it has surpassed what Yugo-
slavia had with the USSR and the Satellite Crnninform countries,
Besides of the manipulative credits in 13 Western countries, Yugoslavia ob-
tained smaller and higher cone:orcial and bank credits, and middle-term and long-term
loans.
Already in 1949 Yugoslavia attained the pre-war level in the import and export
with USA. It is calculated that the export in 1950 surpassed 1,300,000,000 dinars and
that the Yugoslav import was much higher, which was possible im due to the
agreement on necessary loans*
Yugoslavia has been saved from a direct economic breakdown by the economic
intervention of Western countries, especially Great Britain and USA.
For details see Annex 5.
b) Internal trade
Tito destroyed W call free trade in Yugoslavia immediately after the taking
over the power and organized the trade which was in the hands of the government.
The UNRRA material / mainly USA assistance/ began to arrive in 1945 after
the liberation of the country, amounting totally to 2,539,137 metric tons. These
gratuitous goods were sold by the state, in the state stores, to the people at pri-
ces which were from 3 to 30 times higher than the material was v;orth. The people were
systeriatieally robbed in this way, and the Communist regime strengthened itself with
tkrjqm this profit feeding and clothing E tOROMU Cw purists -- members
,%w of its political-military apparatus. ONLt
Iimediately afterwards the governmental. economic plans and the Communist eco-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 34 -
Approved For Release 2002/0'CRIE TD?01$TR10100150003-9
nonic system producer the fall of tIV.1 'pcUFIl9i(vft8e-OILY
It can be asserted that there was not one enterprise which worked with orofit
With this a justified question could be asked: who pays for the loss? The answer is
simple: on one side the people who live in great misery and workers WHO HAVE ABSOLU
T51Y INSUFFICIENT WAGES, and on the other side, in the later times the forein assis
Lance- !erican in the first place,
The salaries range averagely from 3,000 to 5,OW dinars monthly and are slightly
higher than those before the war. The= salaries remained steady but the prices to
various articles jtnped and are jumping many times higher than were the pre-war prices,,.
Today a monthly salary corresponds to the worth of 300 to 500 boxes of matches.
SECRET CONTROL
"Q. S. j~! MALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 35
-
Approved For Release 202I4 :iCI6 $3 Qb~415R010100150003-9
Because of this, in ordeb*ts. c~~~ 14,.~~t e workers, 4 types of pri-
ces were introduced: prices on free market, fixed prices for rationned articles,
-? ricer for the possessors of industrial and agricultural coupons, and prices for
foreigners.
The reason for the direct economic sickness, which first manifests itself
in the trade, consists In the fact that die to the autarchic efforts and speeded
industrialization there are not enough goods on the internal market to satisfy the
most urgent needs of the people.
,he governing regime had to undertake certain treasures to soften somewhat
the crisis,,which could become catastrophic, promulgating a few decrees which by their.
form, could leave abroad the impression that the present ar d st economic system is
gradually being abandoned and that there is a gradual r:ovement towards the Western
Capitalist system.
On Lay 5, 1951 the Yugoslav gotierrnr,ent issued a decree with which the obli-
gatory delivery of neat, milk, potatoes, beans, wool, and oats among the cattle food/
was abolished. The delivery of other foodstuffs continues to be obligatory. The state
guaranteed the continuous delivery of bread, lard, sugar, and soap at much lower pri-
ces to the consumers who were receiving the "guaranteed food supplies,',
On 11ay 15, 1951 the decree of the Federal Govt~rnment on the new system of the
trade was published -- the system of t e sale and the prices of the a ge consuunp cion+
11-inister Osman K rabegovic, Chairman of the Council for the Traffic of Goods/ trade/,
made a statement about it in which he said among other things t
"In the first place it is necessary to Point out that in the present system
our traffic of Foods is being limited, developed and directed ix br the adrm nistra-
tive line in various manners The consm er cannot buy the ods which he wants and
Approved or Release 2002/01/04 ~J
MIV D 10100150003-9
*:nora lip wants. The moods are distri ou ie a strative line and the
?v A~.
 Approved For Release 2002/(S111~ -Rb-k010100150003-9
that L
consequence of this isAthere is --Ubic ~o ~u e lack- of certain articles
r
/textiles/ which care about due to the difficulties in the import of raw materials also a relative lack of goods which often -- disposed in the cities and districts --
lie unsold at the various s4a~w of of the traffic /in the closed stores for the guaran-
teed food suppliev in the stores for the tied trade, etc.,/,
,he producer 4 the industrial goods is not enough stiri1ated in the present
system neither as far as better nuelity is regarded nor as far as diverse assortment
and sells
is'regarded because he producesnthe bulIz of the consumers' goods at fixed prices
and according to the so-called distributive plan. Thus.haimensthat certain goods go
there where there are not in demand and often do not go there where consumers want
there. Thus the stocks of the so-called non-current goods are created at certain clo-
sed stations of the traffic, while elswhere there is a lack of this material . . . . .
As far as the traffic with industrial goods, or with the articles of monopoly.,
is concerned, it is necessary to point out the following: all industrial 'roods inten-
ded for the consumption at large will be Dut on free market and sold at freely formed
f h
prices, and consumers of guaranteed supplies /with money coupons/ and peasants
/with coupons/ will be able to x buy the goods on free market with discounts The
consumers of guaranteed supplies with 80% of discount., and peasants with 65% of
discount from the freely formed prices,
SEORLI CONTROL
U Y t l t,& LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For ReleaseSMM%4M RDF8300415R01 010015000b3-99
.9
"All the differences ti iklEa ' ategories are a o thhed. Cate-
gorization of consumers is rejoined mainly in 3 basic categories R, D, and G,
Besides of other things,this system makes it possible for us to ef'eate-per_-
sonal interest of the worker for the trade, to free the net of distributorism which
was conditioned until now by fixed pricew and the plan of distribution, it makes it
possible that the commerce follows with more attention the wishes and the taste of
the consumers in order that it becomes the living connection of production and con-
ing
sumption. And this means that the rewards in proportion to the traffic or supplying
carried out - only in addition to the part of the fixed salary - becomes the econo-
mic stimulus for the progress and better car n out of the traffic of goods in e-
enterprise and in eve
which
store s was not the case until now. This will make
edite, more cultural
etc.
will free itself of the too lame
number of people,who will be needed lM other branches of econoI ,
of unprofitable operations and of an
This shouu& lead in the near future to such, a relationship in the exchange
of goods - or in the delivery to the state of grain, lard, and other articles needed
for food - that the toiling pet:_sant would not feel it as a burden but as the only pro-
fitable business for him and as a normal way of exchanging goods or as the possibility
to purchase the necessary quantitir of the industrial goods. This would at the same
time refuse all those consequences which today's obli tort delivery produces in
agricultural production and would make it possiblefor the state-to retain x$ for
obligatory delivery a smaller and smaller number of articles.4'
There is no need for a better comment to such statement about the present
unsuccessful commercial experiment in conne ction with other economic factors.
For the important export articles see Annex 7.
VII. FINANCES ((~~~~jj '('
W
Communist Yugoslavia undergoes a fin ~ ~g " s"'~7n ~ f ~ 1~ ~~~s ONLY lead to catastrophe
tt- will nob Be un er en,
if the nel3rWi~~disgmo~_ZOH/64 gs CIA-RDP83-00415R010100150003-9
 - 36 - (2)
Approved For Release 2002/01/04: CIA-RD614520C3-9
a) Yearly budgets T
U.S. OFFICIALS ONLY
Coimiunist budgets are colorless and the most, interesting in them is that
which is not seen at the first moment. These budge66 are only a mask and a sort of
curtain behind which the highest C6rvIluni0t chiefs, according to Tito's instructions,,
use and dispose the mentioned credits according to their will. Therefore it is not
possible to know if the budgetary entries, either under income or under expenses,
have been really used for what it has been projected or stated.
Corununist budget can never be considered as an expression and a mirror of the
real economic situation of the country.
The budget for the budget year 1951-1952 anticipates:
-Income in the amount of 172.662 000, dinars, and
0
_- enditures in the amount of 172,662, 0001cUnars.
SECRET CONTROL
13 S j t~ L' 1A LS ON Ly
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 - 37 -
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
Dobrivoje Radosayljevi~, 14inister of i ~ i y i ) dal Government, de-
clared in connection with this budget ]d Jim during the','JcWdPtf'the National Assm..-
bly the followings
TTThe plan of production anticipates ank increase in production for 8% over
the last year's production. The increase is related to the basic branches of the pro-
duction; the construction of e power and metallurgical plants, the construction of
machines, military industry, transport, and transforming Industry,"
1-iinister Radosavljevic stated the following about the taxation=
T"The income from inhabitants xulammudN amounts to 15,110,000,000 dinars in the
budget proposal or to 65.1% of according to realization, mainly due to the fact that
the income tax on workers and employees was abolished in 1950 and because the transi-
tion to the net salary has been made,, As far as the taxation of agriculturers is con-
cerned, it remains mainly on the same level as in 1950,11
b) Investments
A total of 278,300,000,000 dinars of invettrnents are foreseen by the Five Year
142,057,000,000 dinars of inves1a-ients or 5l. T% have been carried out from
1947 to 1949, without military investments. The plan of investments for 1950 amoun-
ted to 87, 536,000,000 dinars.
According to the 5 -Year Plan the total investments of 551000000000 are fore-
seen for the building of the objects of hti.an standard. From this amount,36,295,000,000
dinars or 66% of the total plan have been invested during the first three years /1947-
1949/.
21,527,000,000 dinars or 58% of the amount foreseen by the 5 -Year Plan for this
purpose have been invested until April 1950 for the reconstruction and construction
of apartment buildings and co:? unal buildings. Z:ainly the reconstruction of the apar-
about 60,,000 new
,. tr?.?.ent buildings destroyed during the war, 1~ ?s~
apartments lAtppVOWA oriRe sLg,-i1 yo1' n6~3v004 100150003-9 this was fax
 - 37 - SECRET CONTROL (2)
Approved For Release 2002/01/04: CIAff-rrRDP83-00415RO10100150003-9
A~S
lw~l
from satisfying the needs for apartment buYi hg' r
a ONLY
lack, is felt
especially in^eities.
8,4U1,000,000 dinars or 96% of the amount anticipated by the 5 -Year Plan
have been invested A* the construction of objects for culture and
education until April 1950.
There are no data available about the investments in the military industry.
They have been especially increased since 1948 when USSR stopped arming Yugoslavia.
Some of the military industrial enterprises worked totally or partially for the needs
of economy because their capacity was not fully utilized, mainly due to the lack of
raw materials.
In the last time larger investment projects have been given up, as e.g.:
Danube-Tisa-Danube Canals the construction of "New Belgrade"., because there are no
material means and other possibilities available. This has been postponed for the
later time. Conriunist regime does not understand yet that these grandiose invest-
ments, which are not productive and the aim of which is megalomaniacal propaganda,
are one of the reasons a the economic crisis.
SECRET CONTROL
U. S. i t " ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 -38-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
c
internal loans were floated in Yugoslavia:
1948--at the rate
-7 heTRUL
of interest of 10% Wich? result of over
U.& i F1C1ALS ONLY
billion dinars, and in
1950-at the interest of /3%--premi with the result of over 5- billion
These internal loans had no particular importance for ate finances and their
main reason was that of propaganda.
Foreign loans, however., and credits, and especially financial assistance, are
of vital importance for Yugoslav finances,
When Tito understood that he mould not be able to commentooterms with Com.in-
tur
form, in spite of all is previous efforts., he began to the West --
especially to Great Britain and USA -- for assistance and credits in view of the loans,,
He was successful. His special success consists in this that he gave conditions to the
West that., for gratuitous financial assistance and for extraordinarily favorable loans.,
.r
he would not be abed for any political conditions by the West, in which the British
policy., secretly and publicly, helped him most efficiently.
Nevertheless, in the beginning of 1951, the Yugoslav trade deficit amounted
to around 75 million,
officially
On October 12, 1951 it k was Xdx1da&7 announced that the International Bank in
Washington approved a loan of $ 28 million to Yugoslavia. This loan will be amortized
in 25 years beginning with April 1954 and will serve for the purchase of machinery
and the material for railroad and river installations. This is the first part of a
long-term loan, as it was announced, but its total amount is not yet known; it will
serve, however, to finance the Yugoslav industry
U. S. Of F 1CIALS Q.N
It can be concluded that.under the present circumstances the financial sitth,-
ation cannot z[ be repaired by itself and its breakdown is --9,0 Mkudft unavoidable it
unless Yugoo~gRXejsF ogR*@jqA~Qq~MVW 4WPWsW445RO4040B156Ob&Jb7 U.S.
 - 38 - (2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
F. SAVING SECRET CONTROL
iInsufficient saving and the dissipation. L -4 rd$ ?tjd T1ist economy
ands is one of its negative characteristics and consequences.
Tito in his statement of April 27, 1950 to the newly elected "'ationai isseribly
used many words in order to point out the importance and the need for saving in the
state economy and generally. He severely criticised the system of the state house-
keeping until then because of which the state 4as lost and is losing many billions of
dinars. He mainly mentioned the following causes for such wdmg status of non-
saving: insufficient sense for saving, insufficient e perience, bad organization of
labor, non planned utilization of labor force, insufficient bookkeeping, bureaucratism,
insufficient Socialist
SECRET CONTROL
1J. S. utFICiALS QNLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
consciousness, etc.
The following excerpts from the TiC eTchC octeristic:
"Until present days there were p nt pi "ints coming from various
sides that there is a lack of labor force and that the plans for the labor force are
1 nY( 7L Cfk4" X
too low i~ that the impression is that we shall not be able to find workers and
employees for the new factories which are being put in motion every day. Butit it
isn't just so, Because of this the government had to appoint co missions which began
to investigate the utilization of the labor force in the enterprises and factories
and it has been found out that in mary factories and enterprises the utilization
of the labor force is not carried out according to the plan,, T_any directors were
keeping and hiding a larger number of labor force -- whi was not foreseen by the pix
plan and whwas not necessary -- in order to secure themselves in such manner
from fluctuo.tion, sickness, and similar things. This piling of the too high number
of workers needed for the normal process of work, or production, ennurmuously increae
sead production costs and at the s me time the gVanteed supplies were over used.
In the majors of factories and enterprises the working places were not organized
systematically at all. In one word, some factories really lacked the labor force,
but others had a surplaus of workers and employees iAio are now being distributed
there where the labor force is insufficient. Commission investigations showed tbvti
that in various factories and institutions there were 100,000 workers and employees
too many."
"It is not a rare case that various administrations of enterprises xmlm-iK
keep more raw materials and. other means than it Is neces nc the point of view
of economic calculation and prof; tableness, VIV-91n the ooh ' e there is a lack
of t! ese means. Because of bad bookkeepin;tBo#ln. happens that in many warehouses
the material which is worth one billion dinars and more lies there for a long time
while on t'-e other side such material lacks in consumption; Such was, for examtle,
Approved For Release 2002/01/04: CIA-RQP83-0041?R01Q10h0150003-9
the case with footwear, 500,000 pairs of which were oun sort t xe ago in the
 R NLY (2)
r AoP,ro ed For Release 2002/01(04 CIA-RDP83'0041 010100150003-9
warehot,.ses, a these days iron goods i~ror'th about 100 Million were found in an enter-
it
prise. There are similar cases with textile anc Cher goods,
..................
11 'r
shall give you only one example of many,for the illustration, characteristic
of this carelessness about the material.AControl Com~ission found out in an enterprise
that coke, which we import from abroad for dollars, was unloaded and left in pile, and
later other material was unloaded over it which covered it. Only few months later,
when that other material was lifted, the coke was found underneath,"
A In connection with saving and ditsipation I shoi.,ld like to say a few
more words about careless and often heartless relation towards machines and mechani-
proportion here
zation in general. Non-saving and waste coma to expression to a. lesser , indeed,
various
but they are very extensive. It is offer -possible to seeAindustrial and agricultural
machines and tools lie in rain and snow exposed to rust and perishing, while we lack
them and make great efforts in order to obtain foreign currency in order to import
theen or to produce them ourselves, Further, transportation means, trucks and antomo.
bus and fuel, are wasted much and unnecessarily. One can see every day a cons -71.dertnble
number of empty trucks and automobiles running so ,ewhere; I Dm em convinced that most
often they x1or travel xkjdumzk (go) without need whatsoever, especially automobiles.
People who act in suchfiaay have = sense neither for saving
S. t t t;IALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - =fir- -
fuel nor for preservation of vehicles, which coat; us so -much, Very often the automo-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
bile is used for the shortest distances although such distance could be very ea-
oily made on foot also by those who have right to the vehicle because of '.heir official
cluty.
-------------------
- rs t
"And one more ea-_ ple of non-saving. i %. e i-~ is known is
very necessary to us for the industrialization, and we still lack it to a largo extent,
lt.o-v~Z
nevertheless you can often see throughout our country that the ~rermises) ranain illumi-
nated by a large number of bulbs without any need. And not only this, but we can see
the bulbs burning on the streets also during the dayt_i e, without need whatsoever, '(
It Thousands of such and similar examples of non-saving could? be counted. All which
1 have mentioned above as non-saving and dissipation is of purely subjective character
and we have to fight against it and undertake the most ehergic measures. naturally there
are also many objective reasons for the impossibility of saving, but they are dispro-
n
girl' ` ortionally fewer
"The present neasIlres to prevent this did not give results because of which
the severest measures will have to be taken in the future,"
It would be more correct and just if T to would have looked for the real
causes of non-saving and waste it the Con-nunist system., which is headed by him, rather
than to have c:iticised the consequences of such situation, throwing the faults for it
on px7qdxz persons who are only the executors and the selected functior:aries of this
regime.
'Vian saves his property which he loves, guards, and tends to increase constantly.
Iowever, man cannot save and guard foreign or state property as his own -- espe-
cially if he does not like it and hates it.
SCR,E1 CONTROL
1WR 1 UWW'A1~"'3
This is in the :van's nature and all the cave and se e, cures of the po-
litico-juridical system cannot change this into zi Sc-hn"ra'C'te'r'i'stiq of his and they can
Approved For Release 2002101/04: CIA-RDP83-00415RO10100150003-9
attain and produce negative results only.
 Approved For elease2002/01/04: CIA-RDP83-00415RO10100150003-9
G. 'f- TEED FOR THE R 'OPfATION OF SOCIETY' Ar'D STATE
I. INTRODUCTION
Industry and Capitalism, theh etors of the E~QnV6 pT tconoric life, created
the resent working class., which o (; l~
p g , gives a ne ~tSRew to ~ c~~oblem,
u~ s. OFFILLU
The vindications of workers, in connection with the conditions of modern life,
exist and must be treated and satisfied as a factor of social life, because their unsay.
tisfaction caused, is causing, and will cause pernicious consequences.
Tragical weakness of contemporary states, especially of the European ones, was
and is that they fail to solve the social problem which at the same time is economic,
politico-juridical, and moral-intellectual /spiritual/. This came about in the first place
because of misunderstanding of the real aspirations of the proletariat. The solution of this
social problem according to the mzinti= principles of Marx has already been undertaken kV
practically by the. Communist states, and by their Com^unist and Socialist parties in the
free Capitalistcountries theoretically and propagandistically. These Marxist parties,, put-
ting themselves on the top and making themselves leaders of the proletariat, are pretending
to be solving most rightly all the workers' problems and to be organizing the social life,
These Marxist state and party organizations, giving to this social problem an al-
most exclusively economic character and exploiting the proletariat as an instrument for gi-
ving a negative impulse to the social movements have created an even greater social confu-
sion in single states and in the whole humanity of today.
Because the contemporary events are discovering great illnesses in the social, orga-
nisms of all the nations and not the superficial unrests as it appears to many.
This created social crisis exists now in the world with the following first conse-
a) Discontent of workers in general,
b) Incapacity of the now existing state insitutions to solve correctly the
burning problems of the social life in their root,,
c) The conviction of the clearly minded statesmen. and ale of the good will that
W LUI
something has to be done in order
A IF check the c.-S3;& c fa -&b ,} m pity, if necessary even
1~ L
changing the present olitico-uricical a ~~ ~ 1i a tjj 6 ? 3
Approved or Release 200 /01 4 : I 8 RU4T5RU - a maintaining of
 -41- (2)
which at all crl~I~~r~M rr ~l @o + 1/4 t# ~1QQ 1@~1 8 their tasks
in the newly created contemporary cir& L,CONTROt
U. S. OFFICIALS ONLY
The main ideas of this part are taken from the works of Dr. Rudolf Stajner (Steiner ?)
the founder of the antroposop1 DORNAc9 Sw,T3 R1.A1VD
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 -42..
Approved, For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
II. THE DI,13001TTENT OF WORKERS
The discontent of the contem ora " 0191M these
p roduced by :ba factors:
--Socialist econonic doctrine x,te-Qtf kfik44LON
outlook on life;
-The contemporary opinion that the labor of workers is a good which is paid for
as any other consumers' good; and
-Exploitation of workers by the contemporary Capitalism,
a}Socialist economic doctrine
The following slogans were thrown among the working masses:
"The proletariat is becoming class conscious,"
"Bourgeois classes are exploiting the working class."
"Proletarians of all the countries unite."
The propagandized "class consciousness" of workers is cultivated according to the
so-called "scientific ideas and thoughts" of the materialistic doctrine. Materialistic out-
look on life, its influence on economic life, and its reaction on the destiny of people
already established a deep root in the souls of workers.
In the new era, the scientific thinking separated itself from the religious thin-
king. Religions were kept on the side, and were becoming isolated in a certain direction
where the soul of the proletarian could not penetrate. The old ruling classes mainly re-
tamed the old way of believing.
The modern proletarian, however, drawn out of the old cadres of society, began to
built up its own thinking and emotional life under the influence of the atheistic materia-
listic doctrine which was being given to him as manna because he was eager for knowledge,
Educated in such ideas, the worker is fatally subjecting all his feelings and activi-
ties to the materialistic economic doctrine, which to him became a religion, and which he
otherwise does not understands sufficiently,,
The worker proletarian is persuading himself about the non-reality of the spiritual
life and this is increasing his internal NUT ispos + Not knowing it, the -?
~~
.tIALS C
emptiness of the worker's soul causes sp{r~ ins which surpass in their seriousness
all the accusations, justified howposition in an
Approved For Release
 (2)
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
egoistic society. Therefore, considering ass i re tf "- 'nowle but also Science
Religion, :orality, and Right (Law), the cis
U rel1rf c ft or salvation in something
real for hiii, and this is the Marxist Socialist economic doctrine, only which, according to
his opinion, can secure for him a satisfactory existence and feeling of his human clip ity.
The strength of the proletarian movement is not to be found, basically, in the
material vindications about which so much is being spoken but especially in thoughts (ideas').
More than any other movement in the w*orld, the proletarian movement was born in the domain
of thoughts. A construction of Marx's ideas was able to produce terrific impulses in the
xx mass of workers.
Today the proletarian believes that he has understood a basic force of his being
when he talks about his class consciousness. But in reality, since he was drag into the eco-
nomic current of Capitalism, he is really looking for a
CONTROL
U.~ ,~-ZL1AI. ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 -43-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
spiritual life which would sustain him and give him the consciousness of his human dignity.
Meanwhile his class consciousness, create%ft~ecMVL , is his great aberration
1 which cannot give him this spiritual conteen ezd,~ F ICIALS 0111-1
The worker / Sociplist or Communist / is hypnotized by the economic problem and now
he does not believe any more that he can find the lacking elucidations on the social pro-
blems at some other place. He simply believes that from the evolution of the economic fac-
tors, (which are) without soul and spirit., such state of affairs will result 2x which his
feeling of dignity is longing for. He is convinced that the economic reform will abolish
all injustice caused by private enterprises, by egoism of contractors and by work-
givers, because it is impossible ggfek-them to satisfy the worker's care for dignity.
In such a way the proletarian reaches the understanding of his liberation from the
"Capitalist chains" in the form of the transformations of any private ownership of the means
of production into a collective exploitation or even into a collective ownership. The con-
temporary worker,, who is educated in the Marxist doctrine, believes in materialistic eco-
nomic progress from which new rights for the people and new juridical system will core.
He therefore struggles for these rights.
b)Does the man's labor have to be treated as merchandise?
The economic regime of Capital mainly knows in his domain about the merchandise
(goods) and about the worth of these goods. In the present Capitalist system also the la-
bor force acquired the character of merchandise. In the eyes of worker, however, his Work
should not be and could not be merchandise.
The worker feels in his instinct and in his subconscience the disgust
for seeing his labor force sold to the master as a slave on the market. His disgust to
see his energy exposed to the current of supply and demand, i.e. to see how the labor for-
ce is being thrown on the market, will be understandable.
This is the second important impulse x ofd t ructive social rioverient
after the first impulse which is the aberra G Gh wor]erQ f, the non-reality of the
lL1A
spiritual life. 13.5. 'J t t
,be old age had its slaves. Then the whole man was ? being sold. In the feudal
era the econortael~o~11eg/~O~e~.YAc14D$4~1~3t9the whole human
 Approved For Release 2002/071043 CIA-RDP83-00415R010100150003-9 (2)
being but a part of this being ncverthe~, eM Gffp3 IOLme the force which still now
imposes commercial character upon sUpa t 0f PJVWJAtnQM Q1 ng -- upon his labor force.
Today every man, who is interested in social problems, feels, consciously or sub..
consciously, the great importance of the factor of labor force. He grasps that the labor for-
ce acts in the contemporary social life with all its weight. However, the majority of people
consider it usually only from the economic point of view and believe that the economic li- .
fe will know how to create conditions on the basis of which Work will be liberated from t
its present humiliating character of commercial value.
However, economic activity necessarily gives to all that which it includes a commer-
cial value, because it consists of production and circulations of goods. It is impossible,
therefore, to take the cornercial character away from the labor force, if the means to tear
it x out OF THE ECO1OI IC CURRENT is not found, i.e. if the Work is not liberated from the
economic mechanism,
CONTROL
u. s. u t f G iALS ONL!
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 } -
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
Col
or rather if the Work is left under the influence of f p c s which give it the character
of comli ercial value.
n,N I,
FICIALa
The proletarian is longing V 5, onomic regime where his productivity has a le-
gitimate position, He forms this wish not noticing that the htuniliating of this productivi-
ty is caused just by the influences which economic needs have upon it. By giving his energy
to these needs ka the worker becomes completely absorbed by than. And as far as the econo-
mic process is concerned, its character itself induces it to exploit the manual labor of
the worker, in the same way as it exploits raw materials, i.e. for the maxthnimi benefit of
the enterprise.
In this manner the means to free the Work from its commercial character will never
be found.
Socialism and Communism will not be able either to solve in a sattissfa ttoory manner gin it
the essence of this problem of work, in spite of the fact that now they gmmxxt, for
moral and political reasons, the fictitious and propagandistic formula that in the Socialist
society the Work is not in the service of the hated Capitalist but in the service of the
c) "E_ploita.tion" of workers Caital%
When one speaks about Capital and Capitalism, the proletarian humanity sees in it
the causes for its oppression.
"Exploitation of man by man in the Capitalist state" has become a very spread slo-
gan among the workers. The question has been moved what to do in order to make cease the
oppression of workers by Capitalists in the non-8oTriunist /non-Socialist/ states. The lo-
a
gical answer to this wrongly posed premise was to abolish Capital and that all the means
of production Motto pass from private ownership into collective state ownership.
For such socialization it is necessary, according; to the Communist theory, to over-
throw the existing democratic regime of 0 olution with the previously
well organized minority, the democratic rege !*' c AJEMs on the principles of private
property and freedom of Idw Capital, and to set up the Co?Lmunlst regime with the
aim "to free the working people fron Capitalism."
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
Thus the proletariat is preparing _iM t ",7Y publicly, and recklessly
for the revolutionary movements which it ,g s OF F 111 -,der necessary and just for "good
and salvation of humanity."
d) nclus Ion in connection wi;h the discontent of workers.
The proletarian, who is ideologically educated in the atheistic .materialistic doc-
trine, who is emotionally inspired by the hate for Capitalist and for his state if it is
not a Socialist, i.e. a Communist 6ne, is thus ready for any negative work and for the re-
volutionary activity against his own state.
Thusly animalized Co*m unists, in whom all love towards their fellow-ten has been
killed, are now becoming, in all the countries, a strong instrur:ent of USSR for the world
conruest. Yugoslav
SECRET CONTROL
U S. OFF1CLALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01y4 :CIA-RDP83-00415R010100150003-9
Con, iun_ists are much more cruel than Russien Corry unists in the carrying out of Cc munisz
and terror which they proved during the revollS C a C NT D ook power. They are even
-RE
publicly boasting about it saying that as CoU . n -f ;J~,1A#$ roTf're and more orthodox
than other Communists in the world. Such Cams-uuni.st fighters are being syste r.ntically pre-
pared. also ini: other countries,
"Vith such cadre of fanatics in s l the countries, for the use as fifth colt mi,
and utilizing the discontent of workers and indolence of other mass of the people, the
leaders of international Co:=;rlunisn hope to defeat world derocracy,or "Capitalism" as they
call it, in a quick massacre or world revolution which they are feverishly preparing, if
they will be given enough time for material and. moral preparations.
T_II, INABILITY OF 771IE PRESE17T STATE I''SITTJTIOITS TO SOLVE SOCIAL P7,0FLE1S IN
THEIfl O ROTS
From the very beginning of the organized ht an society or state this had three
functions:
-Judicial or spiritual-intellectual or moral.
- Politico-juridical.
_-Economic.
These three functions of the social life had snecific roles and various ma.~ ii'e Yta-
tions according to the occasions and reeds in various historical times, and each one had a
certain prevalence upon other two which were even suffocated when unhealthy social relations
appeared.
In lath, 19th and in the very beginning of the 20th century the politico-juridical
role was prevailing in the states 1# which was giving to the states alr.ost an exclusive politico-
juridical character.
In newer times democratic states were forced to intervene also in economic problems
and their economic function$ is manifesting If irC
T,RLon the side of the poll tico-
juridical. And in the Corr,unist states ei with the appropriated
axxist economic doctrine receives an explicit preponderance that the politico-juri-
decal state serves. only as an instrument of economic policy. It could be even said that the
,' 1( 7%t c. n.seay., Q,,. a1r _
whole state has been transformed into an enormous economic enterprise that the
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 SECT` CONTROL
Approved For Release 2002/01/0}}4: CIA-RDP 3- 1 010100150003-9
politico-jur:i_dical and the judici ictlons are A L,
in the service of the economic state,
People see the state or gan5_si today to be uniform and they believe that in
such unity of the state structure lies the survival of the state itself and the assurance
of its progress, When in the new times the economic problems appeared then appeared also 2
the tendency among the ruling bourgeois classes of democratic states -- especially in Eu-
rope -- that the state should be given monopoly in certain branches of economy Mails,
railroads, etc. ; this was introduced into reality (life) with the consequence that the po-
litico-juridical state began to operate those economic bunches.
Certain thinkers, especially Comrunist and Socialist theoreticians, deducted from
this a - for them - logical conclusion that the socialization of all the neans of produc-
tion should be carried out
SECRET CONTROL
U. S. OFFICIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/0 0 FA RDF83' TU 010100150003-9
under politico-juridical state whic a ,r ~~ ~ry .n the Co:_ unitt countries.
it is characteristic in this that the bourgeois states themselves are in a certain
sensd the forerunners of socialization in the negative way because they put certain bran-
ches of economy under the tutorship and the exploitation of the politico-juridical state
which was mostaken and fatal: so ::.such more because the branches became unprofitable under
the state economy.
Inability of democratic states to solve the appeared econciic problems efficiently,
in relations with the created labor problem and the 2Earxist economic doctrine, caused, first
in Europe and then in Asia, reactions: to the right towards Fascism and i3Tazism, and tom
the left towards Com;unism. These reactions which are based on force created and are cre-
ating even a greater confusion and chaos in the social body of the state with the increased
centralization of power and jurisdiction of the politico-juridical state re econarli.e pro-
blems,
In rea=lity, the natural evolution tends to the opposite: to the autonomy of the
economic life and to politico-juridical state able to introduce harmor_iuovs regulations
in its economy.
Politico-juridical life makes today, especially in the Communist states, bad influ-
ence on the economic life, by which the health of the social organism is being mined, when
the politico-juridical state itself administers industrial branches and issues economic
laws,
If the people transfer their economic interests to Law and its politico-juridical
organization, then this Law is the expression of economic interests, If the juridical state
conducts the trade then it loses specialty and capacity to regularize the juridical life of
people, because its measures and insitutions will have to develop according to the conmer-
cil interests and will have to drive away from the suggestions of juridical order.
The three different branches of life cannot be centralised without damage and. in a
skillful manner in a theoretical and abstract unity of one parliament as this is today mainly,
regulated. The unity of the social body, as the res~u~(l originate only from the fruitful
activities of the three roles n E(~ R COQ U
_ f the s ;a#e wifiich eol_abRR collectively and in a parallel
manner. These U. S. t F F I C 1 A LS U~
AOO?Md r h -200 /4'l T Gf FfbR83a0dSP RO1O biSq0O3t9 hurting each other.
 _46-
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
(2)
Our era falsely believes that all the measures ro er for the betterment of the
&ffT CCNT
SE O'
ve life of the people will originate from. pal state or economic life. If this pre-
Ux S. OFFICIALS ONi
sent way will be continued instead of realization of the wishes of humanity its evils will
become worse to the unlimited proportions,
Absolutely nothing exists in the cycle of the economic life, by itself, which can x
create the impulse necessary for the regulation of the relationsof justice among the people.
And if these relations are regulated by economic interests, as tiximnm they are now in
the Communist states, man with his work and means of work puts himself under the yoke of
the economic life and becomes its.slave..
Whatever social class is in power, it will not be able to overcome the present
evils, which in some places already came out and which in some places stand at the embar-
kation point, of the motives for its ac-lions do not originate from the regenerated social
ideas. Here the spiritual-intellectual function of life must intervene which has to be
based on moral and religious moving forces, which have to be felt in the everyday life.
Because the life is the synthesis of the spiritual-intellectual,
SECRET CONTROL
U* S. OFFICIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/0I/& :-CIA-RDP83-00415R010100150003-9
politico-juridical, and economic interebts, the need and the manifestation of humans
in the state community, SECRET CONTROL
Therefore the social probl rnQ1s Wf" eQ' cial problems, which should be
solved, and these are:
The first one regards a normal form of spirituel life;
The second one tries to establish a balanced juridical relationship between the
work of the human beings and the collective life;
The third one studies the economic activities within the frame of this life.
It can be concluded that the todayts chaotic disorientations of people and the
incapability of the state to solve favorably the social problems have been created main-
by
ly because it has been thoughtand wished that vkkk the centralistic institutions of the
.politico-juridical t organization of the state also the other two different functions,
economic and spiritual-intellectual, be administered.
IV, A PROPOSAL FOR THE REORGANIZATION OF THE SOCIETY AND THE STATE
Economic life, xm maintained by industry and fused with Capitalism,
forced upon the contemporary society a certain internal order which rules over this so-
ciety.
at
The attention of the people is so much concentrated the results obtained by
technical means and the Capital, that it has moved away from other social domains.
Therefore, today there is much talk about the socialization as an indispensable
thing of the modern era.
Such socialization will not bring about any healing or recovery from the illnesses
of the state and national organisms. It will even not be a palliative measure, but it
will be a destructive process until statesmen and the majority of nations do understand,
at least in main lines, that it is necessary to divide the body of the state into three
organisms which xift shall collaborate hl-- I g~ ?t+~p OL
Dr. Rudolf Stajner. (Steiner
~VC the q?l,1tU~ posophy, proposes a triple
organization of the social life in the state. Tn the state there should be three auto-
nomous organisms wit
Ftor el ~~~~ 1/ ex~ LAP ~ P~ 0 13 3 trative insti-
 - 47 - (2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
tutions, which will collaborate reciprocally:
a) Economic, SECRET CONTROL
b) politico-juridical, and U. S. OFFICIALS ONLY
c) Spiritual-intellectual organisr,
Economic life should form in the social body an independent organism with a relative
autonomy the jurisdiction of which is: production, exchange, and consumption of goods,
which the man satisfies with the production of nature and his own work.
Politico-juridical life should be limited Jm purely to h=an interests which
are tying man to man, or human groups and higher conarunities /states/ with other
himian groups and higher conmiunitiea ,/states/.
SECRET CONTROL
U. 5. j o.U A LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 48 - V
Approved For Release 2002/0 i L ;` 94 10100150003-9
The domain of the spiritual-i ?e t ,soQM , the natural capabilities
of men, either zbmxRmxk~m characteristics and c ,alities of the spirit or of the physical
body. It would decide about the contribution of the human personality to the social body,
Collective life of human beings, therefore, is norrally founded upon these three
systems or organisms.
Thanks of industry and Capitalism, the economic life became bery strong and is de-
veloping so quickly that it began to absorb the other two systems of life, which were not
able of develop so much and in the parallel manner.
The independent politico-juridical lufe of the state, parallel to the economic
life, is therefore absolutely necessary in the well constructed juridical society.
In the autonomous economic organise the most favorable insitutions for production
and exchange will develop by themselves. On the other side, at the same time, the corres-
podding insitutions will be born in the politico-juridical domain in order to conduct the
Right
reciprocal relations between individuals and groups of individuals, having the km for its
basis.
Politico-juridical state organization will have one legislative and one a&iini.s-
strative body on the basis of the present democratic principles, as this is mainly the
case among the free Western Democracies, while in the economic domain special legisla-
tive and administrativeorgans would be created.
Thanks to the radical separation of these two domains, the economic life will not
exercise a bad influence upon the juridical life and viceversa, as it is going on now.
With the complete separation of economic and politico-juridical organization, in
each of these two organizations the best system for the election of their legislators
and administratord would appear (by itself),
In all the contributions of the Economy and La$ in the organized society also the
following third factor appears: individual, nTesC4T Luran being, which in every-
days's practice are called the1iinitiativet. s. OF n C IALS ONLY
This domain includes the highest spiritual products as well as all human achievements
originating fr
[g IctTr igij e 0:i00Je0t, (C! SF DP83-004z5Rri 1 10015D0 3-
good, g to socie or utilization.
 - 48 -
(2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
In a healthy society all these achievements must have a completely different current
which differs considerably from t] i~ is and toct politico-juridical chara
cter. Me only way to gj= get . (7"1% 1& oontribation is to entrusts it to
free evaluations and impulses which originate from individual abilities.
If the economic or politico-juridical life skillfully influences the spiritual
products, as it is the case now in the Communist states and in a milder form in some non-
Communist dictatorships, it makes even their basic development,' which consists
in the free flourishing of their individual forces, impossible. Besides, if these products
are taken under the direct control of Economy and Juridical State they lose their spontaneous
character of fruitful Interest in society. There is only one means for the correct evolution
of spiritual activity, and this is the administration according to its on creative
D-T LSES and the establishement of the perfect relations of understanding with those
who RECEIVE ITS SERVICES.
S'CRET CONTROL
U.S. uFF LIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
The life of the spirit must develop freely and this can be carried out in pradtice
only if the representatives of the intellecini. a life have their own legislative and admi-
R jT ,,`QN
nistrativeorgans. Sciences, philosophy ar. o e s iri~i "1 sgIdge ask for their own
F
Is ? 4' tt
independent place in the human society. Because in the inteli4 ' l domain everything is
so reciprocally connected that the freedom of one of its elements cannot be used without
the freedom of others.
Religious life of the new humanity will unite its forces with the forces of all
other liberated spiritual-intellectual branches in order that a strong force, which will
uplift human souls, may be created.
Professors, artists, and other spiritual-intellectual workers will be in direct
contact with the legislative and administrative organization of the spiritual-intellectual
domain and they will have every possibility to develop among the people the necessary in-
terest for their works.
Politico-juridical state and economic organism will receive from this third spi-
ritual-intellectual dmmdaur- autonomous organism the influence of spiritual life which they
need.
The worker will no longer remain outside of any intellectu.^lity, having until now
only one confused idea about the role of his work in the human society. Only then he will
understand that the &cial Body can uphold him only if the organization of the r anual
labor is directed by impulses which originate in the spiritual-intellectual organisms: then
he will grasp the reciprocal responsibility by which it his work is tied and organizations]
forces which originate in the individual abilities. On the politico-juridical and economic
exercise
terrain, the worker will =mgoamck his rights which will assure him also the corresponding
part of the profit of the produced goods; but for this he will give the part of his abili-
(which is)
necessary for his existence freely 'to the spiritual-intellectual domain br- which he al-
ties
A
so benefits.
SCI CONTROL
1
L
d
A FiCIMLS Q
The triple social organiz ! he state is becoming a need of the present ti-
mes and the evolution of humanity proceeds unavoidably towards this new organization. This
also correspc,-re/0~~AeFP>0~~5OEica1 body-, to
 - 49 - (2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
souls and to spirit Ito will, erotion, and thought/. Therefore man will be able to satisfy
much better and much more easily also the needs of physical body, soul,, and spirit
in the suitable insitutions of thus/ ,E `.fecC]BTRQ ety and state.
Earlier, before the appears Ijgf).ofQ I A4hL-iSveONYalist-Ca n:zunist ideas, the need
for the organizational separation of. the three mentioned functions of state was not felt
so much because the great majority of people was still led by the healthy force of the social
instinct which was able to unite into one single current all human activities originating
from the three different sources. 1arr people do not see that man already maintains social
relations, in the outward manifestations of life, with each one of therm three still unde-
veloped branches, which can be usefully developed if these branches are organized autono-
mously.
Although it is utopian to think that the public life of the state can change quickly;
the the
neverthelessArefom andnreorganization, a` least gradual, present themselves as the most
efficient means for the solution of the social crisis which is appearing and which ix is
in some places already producing the destructive results.
One could begin, for example, in the first step with the separation
CONTROL
Ij: s. u lCIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 C s'~x
Approved For Release 20,AP9a''.IA`-12{8`x`-~dd15R010100150003-9
of Ministries into three autononrouj+t;,,u :FICLALS ONLY
of
The economic sector would be formed by economic Ministries: finances, industry,
agriculture, eonmunieations, mining, and others;
--The politico-juridical sector would be formed by the following i,;i.nistries:
of foreign affairs, Arr!y, Tiavy, Air, internal affairs, and police;
-- The3piritual-intellectual sector would have the following ministries: of justice,
education, religion, arts., propaganda, and other spiritual-intellectual institutions.
V. R: GEINERt TED IDEAS IN 1EE }TEW SOCIAL LIFE
After the reform will be carried out the regenerated ideas will flourish in all
the domains of the new Social Life in Freedom. Equality, and Bvtherhood for all mer.:.
and nations.
These regenerated ideas -- based upon Christian Love and Justice --will bring
salutary fruits for the whole humanity.
The exposition of the facts which could appear as natural and very favorable
consecuences of the triple social organization would take us far. We shill limit our-
selves here to the most important problemu of Economic Life -- especially to the capital
and private property, labor, and the new :economic doctrine,
a) Ca ital and privTa.te xaroner
The people began to tarn their attention to the capital when this one
created unhealthy derangerlents In the society. The people suffer because of these derange-
ments. They already tnd.erstand that these derangements must be overcome in order to make
the Socialist-Communist slogan;:" Exploitation of man by man in Capitalism" impossible also
in_
? the sTwllet wdwx form,
gun
A great mistrust has bey to reign in the present time also in regard to the pri-
vate property, under the influence of the Socialist-Communist teaching. Mars people would
want to change it radically into the c c ,1 1 PLM Not the natural i.xapul.ses,
NLY
which rake the private ownar; .nS.a0itei C . sSoP production dear (liked)., should
be taken into consideration in the first place in solving this problem it the factor;
NkKtx Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 - 50 (2)
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
what fAvorizes more the production and the lift of nism., free enterppise
SCRTC ^
.or collective administration of the means of prod:4 t'
The request of the contemporary Socialism that the present methods of Capitalism,
in which the aim of the production is the profit of the individual., should be cir .aged. for
other methods which .could serve consumers is justified. The conclusion, however, which they-
the theoreticians of Socialism -- are drawing from this, i.e, that the Capital and the means
of production must pass from private ownership into state owr rship, is not correct but
harmful for the production* itself. The correct conclusion would be: whatever originates
from privy to individual production must normally be directed to the himian collects v?t col.-
?.ectivity of the people). And. this so much more because also the economic tendency of the
new times is oriented towards the mass production, in order that great profits may be ob-
tained, favorizing the present form of Capitalism,
SECRET CONTROL
U. S. OF FICIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 51
Approved For Release 2002/01CREIkDT4Rj10100150003-9
Private ownership of the mean sUofs fe Q Yto capital, which favorite
production much more and better, should not be and must not be abolished i n a healthy
social life,. To deprive the man of the free disposition of these means would mean to
paralyze spontaneous capacity of an acouiro 7. ability to the damage off so cia 1 life. Because
private property, based on individual abilities and initiatives , always was the expression
of the most useful social activity.
individual abilities must freely uphold themselves on the capital; the right of
property, which is tied in with this, must be transferred to the other in the instant when
it would become the instrument of the unjustified power.
Today this is only Jftmmn= partially the case in connection with intellectual
abilities: this is the author's right (copyright), A certain time after the death of the
author the right of property passes to the human community. With this a principal idea
of the collectivity of life is expressed. Although this intellectual production depends
from an individual's gift, this good is at the same time also the good of collective life,
and it has to be returned to it at a certain moment.
Isn't it the same in the case of other abilities? The person who produces for the
benefit of all succeeds in it only with the help of the human community. A right cannot be
looking for
exercised outside of the interests of corraunity. We are concerned with Pi J1 g a means,
all
and not with abolishment of z ownership of capital., by which to administer this owner-
ship in the best interest of community.
The correct administration will care that a production enterrpise remains in the
hands of one persons or a group of people only until this is justified by their individual
abilities. The means of production, instead of being owned by the state collective, will
circulate according to necessity, going into the hands of new persons whose abilities will
be able to offer the greatest services to the community.
Director /owner/ of the enterrpise and hi his ass ftftssociates/ will receive,
according to these means of production, an income which roportior .l to their
~
U. S. OFFICIA~O F
rights. They will tend permanently to increase production to the highest degree. Although
this increase does not bring them the total profit /which goes mainly to the co munity of
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
workers/, they will nevertheless be allotted nf^_r0 i t in proportion to such
increase. Otherwise, it is clear, that if tlv sro c ~ VlV the income of the pro-
ducer /owner--director is becoming proportionally smaller. His income, however, originates
in every case in his intellectual-organizational abilities and work, and not in the profit
which, not taking in consideration this intellectual work, would originate from the work
given in by other people in the enterprise.
It is not the freedom of the disposition of the capital which is able to cause so-
it is because of
cial damages by itself, butAthe stubborneas of the present regime that this disposition ta-
kes place also when the individual abilities, which were justifying this ownership, do not
exist any more.
While the individual or the group continues to create or to justify the use of
the capital, he has to be given the right to dispose also with the higher profits under the
condition that this increased capital serves for the enlargement of his enterprise. As soon
as this individual ceases to further it., the capital has to pass to another individual or
another group wht a will exploit it in a similar or in another enterprise (which is) useful
to the service of society.
If an administrator caxmot or does not want to take care of his enterprise, the
initial capital with all the obligations passes to the new administrator, or it is returned
to the possessor /owner/ if such is his wish,
SECRET CONTROL
u. S. o j f I c i A-LS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 _52_ (2)
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
b) Labor SECRET CO1 T 1L
The labor is what becomes unitedW I"4# ~fD=sterials offered by the na-
ture and with the capital in order to create econakic values and to give worker the consci-
ousness about his social role.
The worker has to take a position which corresponds to his feeling of hi an di-
gnity. This is possible only if the doubin relationship of his labor .s taken into con-
sideration: the development of his
SECRET CONTROL
'U" S. o~ F rCIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 - 53 -
Approved For Release 2002/01/04: CIA;~Q~883ET 415RO10100150003-9
individual abilities and the feeling of right. ,,~~J CONT
RQT
..,
The problem of labor cannot find its qr c ex0 f7 , Iy*~i g a oci^1 problems unless
it is accepted that Production, Exchange, and Consumption have to obey the laws and serve
Nwe
on
the interests which, by law, must not exercise their control zq*a the labor force. In
connection with this it is necessary to separate two completely different factors which col-
laborate in the economic activity: from. one side the productivity of labor which depends
from human being, and from the other side, values which, independently from rian, follow
their own natural ways which, in accordance with the needs of Economy, goes from Production
to Consumption.
In the unification which takes place between the Capital and the human labor
it is necessary to distinguish the following three factors:
--The activity of the entrepreneur which rests on the personal abilities of an
individual or of a group of persons;
-The relationship between the entrepreneur and worker, which has to be a relation&
ship of Law; and
--Production of an article which will take its place in the economic cycle as
a co< mercial. value.
Under the present Capitalis system the labor force indeed has the value of mer-
chandise which is being bought from the worker by the master.
In reality, the producer receives goods made by the labor force of the worker,
This receives part of the value of the article made in the form of wage, and the master
receives the other part. The production of the goods therefore originates in the colla-
boration of the master and the worker, and this product enters the economic cycle.
In order to produce the article it was necessary to ? establish the relationship
of legal character between the worker and the master, The present Capitalist system, howe-
ver, transformed ,this natural relationship into another one in which the worker is put
under the economic power of the master, In a regenerated social organism this relationship
should be regularized according to the following moral principle: the labor is not paid,
because the labor is not the merchandise but (eQu yT CO TROL
U.S. OFFICIALS O.L!
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002/01/04 "W83-Q?fk5RJqJ00150003-9
value of a finished
Q
product, Only the article produced by labor,.hss the ecco~nAo fo 0val , Therefore, the nature
and the limits of the work. necessary for the good functioning of the social orga-
nism must be regulated according to the abilities of the man and in accordance with an
existence worthy of him, Politico-juridical state can carry out this regulation of labor
only if it is independent from the economic social organization.
Thus, on one side the value of an article increases according to the possibility
of acquisition of the raw material needed, while on the other side this value will depend
from the legal regulation by which the evaluation of the nature and the conditions of
labor necessary for the fabrication of this article will be expressed.
From then on the ecpnomic life would depend from two factors:
--Raw materials which must be received in such ; stage as the nature gives them, and
--Legal position /gain of contractual percentage, prizes/ which originates in the
feeling for justice and which has to be analyzed within the autonomous jurisdiction of
the politico-juridical state?
SECRET CONTROL
U. S. OFFICIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 Approved For Release 2002? 4448IA-FNi fJ$R010100150003-9
It is clear that such regal iWffAAG~ seanal 3hcregse or lowering of the ge-
neral wellbeing I In 14 due to the time limits of labor which will be established
11
by the politico-juridical state. But this dependence is unavoidable because otherwise
workers could become exhausted by economic needs. Such exhausting would lead the workers
to believe that their live is unworthy of nan. And indeed, this feeling of the htman de-
gradation is the cause of all the social derangements.
If the wellbeing of a nation would become 'oirer then the nature and the limits
of labor should be changed. However, such decision should not be brought about under the
direct influence of economic circles but according to the judgement of the inderendent
judges of the politico-juridical state,
Normally, in each production enterprise the free contracts will be Made between
the director /owner/ of the enterppise and the workers who will have agreed from their
own free will that he will be theirr boss in the enterprise, being the ablest and the most
undertaking. Director will have the right to declare what he zmwidmm believes it has
to be legally obtained from -the invested capital, buildings, material, and time used.
The gm profit will be proportionally distributed among all the people according to the
functions and the effort put in by director, his assistants, and other workers of the
enterprise.
In this manner all the workers together with the director-owner become some sort
of shareholders or associates in the enterprise.
in
The contracts concluded, therefore, will not consist only M2 the exchange of goods
/in the form of money for labor force -- for one day, we, or month but also in the
establishment of the just gain in an established proportion, which will have the persons
interested in production on both sides.
In a healthy social organism the worker will have to collaborate in every matter of
his enterprise and understand the role held by him in the collectivity on the basis of his
producing labor,
~'~! T ,~;n gable
NTR fLl hon~$ workers will be -ble
In this manner} and in a rela 1'tf+~4--Es~tio it
Approved For Release 20II(5 jO,0fq ft jC P -OQA15RO10100150003-9
 54 - SECRET CO~ j~ (2)
Approved For Release 2002/01/04: CIA-RDP 041 100150~U3'
to become smaller or bier owners, which will dep5t1
c ` T o i+ ab lines
and thus the proletariat will gradually but surely disappear -- this contemporary factor
1% of social troubles (derangements),
c) New economic doctrine
The economic doctrine of Dr. Rudolf Stajner (Steiner ?) is in Its basis antagonistic
to the Socialist-Corp-muni.st econonic doctrine, but it also rejects the negative sides of the
contemporary Capitalism and the abuse of labor, as it has been exposed already earlier.
New insitutions in the triple social organization will automatically abolish the
so-called sty ge of the struggle of the proletariat, which is taking place because of the
workers' wages which will lose their present unnatural and exploitative character,
SECRET CONTROL
U. S. OFFICIALS OUT
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 SECRET CONTROL
Approved For Release 2002/01JD4 CL.Q:,RDPC j3--00415 ~R0011001100150003-9
The money will acquire the role of credit for the merchandise produced 177 the other
fellow, and it will be, in the new triple organization of society, the means of exchange
and not the means of power against those who haven't got it.
The monetary value is supposed to be the measure of the evaluation
of the goods purchased or of the service rendered.
The, present states could never solve the financial problem satisfactorily with
the aid of the law unless they entrust its solution to the new autonomous economic orga-
nization of society.
The corrjunity, which will have sufficient financial means, will take care of the
social care, in the following way:
--Children will have the right to free schooling and education;
--?Father of the family will be able to get for his work higher recompensat?on
than the bachelor;
--Old people, invalids, widows., and Pick people will. have right to necessary subvention:
and assistance.
This doctrine of the economic life in a triple organization of state, permeated
by spirituel-intellectual impulses, excluda s egoism, which from an economic viewpoint
exists in the form of class rrivile^es frog m which an unsustenable situation is born -
leading sooner or later into the revolutionary perturbations of society.
VI. THE CONCLUSIO . ABOUT _WOPI ATION OF SOCIETY STD STATE
Ca^?r_unist-Socialist ideolopr created and is creating in the world a terrific diso-
rientation which unavoidably leads to Chao;.
This negative ideology has a strong root among the free nations of t1e West,
especially an3omg the working masses, and it will certainly produce negative fruits. De.-
nocracy is still on defense before the Connunist ideological offensive which is infiltra-
legs
ting from all the directions. An ideology, even if false and on(feet)of ;.ass, cannot be
defeated by other means, even if it is the most zutwazrude -nd terroristic. It can be de-
feated only by a stronger and regerSE6RE1hOOa! , which would also begin to give
Approved For Release bo0g/0bn,4F:1cJfA~~833--000415R010100150003-9
 - 55 _ (2)
Approved For Release 2002/01/04: CIA- =4GONTAM0003-9
useful and obvious results in practice, thM 34A C LS'e,0Vw,,,y all the argwnents
of adversaries.
An ideological offensive of 8temocracy imposes itself unavoidably, reforming
Capital and Labor as it has been already done to a certain extent in USA, and joining
the carrying out of the triple socic.l organization of the state. Because the tragic of
Democracy is still in the fact that its forces of the 'tgood", although STRONGER AND
E NhJA' SOUS, are not yet ideologically so strongly organized as the FEW CO 1U NIST
MACES OF "EVIL".
SECRET CONTROL
U.S. UFO;',:IALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R 00150003-9
 Approved For Release 2002/0'1 --C 46ftr-0~~ 01 0150003-9
in the Cow unit states, howeverpUtl c O f. FkigtSed-a ion the national
ONLY
masses,on the basis of hate for Canitslis ? and democracy, - in the well knoim terroristic
way, - will leave a deep trace, especially with the :Tooth, also after the liberation
of these enslaved pm n~itions from the Comninist yoke. It would be necessary
social
to come also before these nations with the regenerated ideas and defeat ideo-
logocally the Connnunist opinions and ideas idthin them, This is especially important in
case of Yugoslav Gorir-~unists and national masses in Yugoslavia, which were mmkaddJ&
educated and still always are being educated in the Con r.lunist spirit,
On the basis of the proposed triple state organization it could be held in the
first moment and even reproached that this reorganization is against the democratic eaua
orders
lity of citizens and that they are divided into the fouler three classes or : Eiorkers,
army, and teaching cadre. On the contrary. The people will not be divided into classe
or orders: only the Social Body will be divided.
Ian will,then become the real man because the triple social organization w,-rill
permit him to live it three areas x freely at the same time. He twill,
naturally have a special interest, in the area of his profession, 2 In the other two
areas he will maintain the relations full of life thanks to their insitntions with which
he will be in contact,
THE FOUNDATIONS OF 7,T-F, SOCIALI I !UI;IST TDEXDLOGY WOULD BE OV^ iROW N in their
very life by this proposed reorganization,
SECRET CONTROL
U. S. O F F I C I A L S ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9
 - 5"r -
H. GEN RApA%i f ii2 Z ~2 T ~ ~0 3
U. S.. OFFICIALS ONLY
Yugoslavia is a typical example of an unsuccessful Communis economical experiment
which has been discovered most ouickly. .,
Yugoslavia is, relatively speaking, the richest country in the Southeastern Europe.
The fertility of her land permitted before the war (took place) in 194-1 a permanent
export of kz the products of her soil, Great raineral wealth of the interior of the country
the minerals were exported in crude and transformed state - together with the slow but
natural industrialization made the continuous economic progress of the country and the
increasing standard of life of her citizens possible. On the other side,the people of
Yugoslavia ? are worthy, satisfied frith little, brave, and very undertaking,
The xxJaca& logical question is asked therefore, why is Yugoslavia now undergoing
such a terrific economic crisis which may be catastrophic.
It can be answered with conviction that the reason for it id the Communist
economic doctrine which furthermore is being carried out through. politico-juridical
oppression,
The wealth above the ground or underneath it of a country cannot serve any purpose
if the people who exploit this wealth are not free, equal, and satisfied, The Comiunist
police regime, directed by a handful of people headed by Tito, abolishing freedom, euga-
lity and human dignity of its citizens, transformed the MA.N, this most important economic
factor, into a real slave of 20th century, The whole production in Yugoslavia has dimini-
shed and it has a tendency to diminish more and more because of such disregard for man. .
The weakest point of the Co munist state dictatorship is not its political and
juridical system as xmudd7 it is usually thought. The sickest of its sides is its econo-
mic system s3dMvnzgk in spite of the fact that the Edo-nmainists consider it their strongest
ace and expert from it the salvationx and the justification of their bloody dictatorship.
Sooner or later, of coursei the Communist economic experiment leads the state to the sure
ruin.
Because the economic body of the nation, or the economic organism of the state,
is a being which lives by itself, whic ftYs C ows in harmony with the proper in-
 (2)
Approved For Release 2002/01/04: CIA`-RDP8 - 4 1L50003-9
direction, Its actions and manifestations cane t' ~correctl tly regulated and
A,& oflIC1ALS '
directed for the general good of society in oitrary way by a political dictatorship
or by some theoreticians-fantasts if they are called either raarxists or Leninists.
By such an action this living economic organism would gradually retreat, becoie ill~
fade, and finally die.
The food for the healthy social economic organs: in which
SV.CRET COT TP 0
!U.S. pFfICIALS ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415R010100150003-9
 -5B-
individual caA'MBWRAWeW : ptr 5PAWt9A*1A0QPAn and according
RR `T~ CU1VIMUL
to his specific individual abilitis%W-'Le spiri~-intellectual creating, -
,C1ALS
juridical equality and brotherly 7F? TJ DSOCIATING of people. This food does not and
cannot exist in the Communist society.
The Yugoslav economy faces sure catastrop1 if the present economic system will
continue and if it will not be receiving constantly important material means from abroad,
Halfeasures which had to be undertaken during the last time will not be able to save it
from the ruin, because thebasic syste_i is bad and because also the = causes of the
crisis can in no way be of "objective" but of "subjective" nature, although the present
day economic leaders of Yugoslavia make all the efforts to prove the opposite. It would be
wrong to cinsider these half-neasures of the mostate regime for the "signs of its good
will" to "democratize the economic life of Yugoslavia," as it is often mentioned in the
Western press -- most often in the British one. Ix Jd1&-&H?wgiWVmJt The I recent economic assistance from the West, as natural-fi-
nancial injections, was able and is able to prolong the life of the sick man only for a
certain time; this is not the real medicine, however, so much less so because these inje-
ctions cannot and will not be given permanently.
The real medicine consists in not helping economically the present Coniunist
regime in Yugoslavia without political conditions, preached by Democracy, Fnd which have
among
to be carried out equally i)q all the nationalities. And this so much more, because the
break bwteen Tito and Cominform is definitive.
to strengthen
Otherwise, helping Tito economically, it is helping morally and politically, his
bloody dictatorship over an unfortunate people xbdmNx who -- disappointed --wish direct
war and the change of this hated regime at any price.
Greece, October 17, 1951
%two
SECRET CONTROL
s 4!-,,S ONLY
Approved For Release 2002/01/04: CIA-RDP83-00415RO10100150003-9