SOVIET PAMPHLETS IN INTERNATIONAL TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00415R011900060004-9
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 311
• Document Creation Date: December 14, 2016
• Document Release Date: October 31, 2001
• Sequence Number: 4
• Publication Date: June 18, 1952
• Content Type: REPORT

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952 as-Mw .
CLASSIFICATION R&T
SECURITY INFORMATION
INFORMATION REPORT REPORT NO.
CD NO.
COUNTRY USS;
SUBJECT So .et pblets on International ? ? e
DATE OF 25X1 A
INFO.
PLACE
ACQUIRED
25X1A
DATE DISTR. 18 Jae .152
NO. OF PAGES
NO. OF ENCLS.
(LISTED BELOW)
SUPPLEMENT TO 25X1X
REPORT NO.
The following ph ets in Xn 1iah on internaticrai . trade, published. in
connection with the W o r l d ao c Con ence h e l d . in. P l cc April _19 2,.
are available, on. loan from CIA L,ibr yg
.a a ~ t d 1ntp ,t .o Econonic C .:. tionj, L. Fitunij
P s a p b1.iabed. by. Nom; M0 c ; AWil 1952..
iqn of Natio7l in the tESR, .A . U=yera; Foil
Dose; Moec j i . 3. 1 r
international 1ft,.4d.the Improvement off` the Standard or T ivi.ng, in the
West, M. Al ; Foreign Languages blisbiAg House; scow; 1952.
CLAS.` .= I CATI ON
25X1A
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TRADE
PEACE
PROSPERITY
A Collection of Articles
Published by NEWS
Moscow April 1952
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International Trade Should Be Resumed,
by S. Strumilin . . . . . . . . . . . . . . 5
What Is Wrong with International Trade?
by N. Lyubimov . . . . . . . . . . . . 12
Man's Daily Bread, by N. T s i t s i n . . . . . . . . 20
International Trade in Timber, by V. N i c h k o v . . . . 32
Problems of International Trade, by M. S e r o v . . . . 38
Rearmament: Prosperity or Crisis? by A. K a s h k a r o v . 45
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EDITORS N'O'T'E'
Collected, in this booklet are some of the articles
th`at` have appeared in NEWS in the last few months
in connection with the International Economic Con-
ference. They were written by well-known scientists,
economists and other Soviet personalities, and discuss
the vital problem of international economic co-operation
from the practical angle, namely, the need to resume
normal :trade. This is a subject in which people in all
countries are keenly interested, for a. return to normal
world trade would be a big step towards international
economic co-operation in a wider aspect, making for
development of the economic resources of all countries
and higher living standards. I
In the world of today, a. conference with business-
men, economists, trade unionists and co-operative
leaders of different countries seeking together for
ways and means of solving a variety of economic
problems is an event of major importance. And in
presenting the opinions expressed here on international
economic relations to the members of the Conference,
NEWS, is following its policy of promoting understand-
ing and co-operation between nations.
The Editors of NEWS
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CONTRIBUTORS
.Stanislav STRUMILIN, distinguished Soviet econ-
omist, is a member of the Academy of Sciences of
the U.S.S.R. He has written extensively on interna-
tional economic problems.
Professor Nikolai LYUBIMOV (Dr. of Econ.) heads
a Chair at the Moscow Institute of Foreign Trade
and at the Moscow Institute of Finance. He is an
authority on public finance and international commerce,
and has written numerous books on international
credit.
Nikolai TSITSIN, member of the Academy of
Sciences of the U.S.S.R., is widely known for
his work in biology, botany, plant breeding and prac-
tical agronomy. He has evolved several new varieties
of cereals, notably perennial wheat.
Vlas NICHKOV, M. Sc. (Econ.), is President of
Exportles.
Mikhail SEROV is Chairman of the Central Com-
mittee of Foreign Trade Employees Union.
Alexander KASHKAROV, M. Sc. (Econ.), has made
an extensive study of international economic relations.
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S T A N I S L A V S T R U M I L I N
Academician
International Trade
Should Be Resumed
The International Economic Conference, which will
meet in Moscow in April, sets itself very important
and wholly feasible tasks. The appeal of the Initiating
Committee, which met in, Copenhagen some time ago,
and on which various countries are represented, re-
flects the concern felt everywhere over the rupture of
international economic ties. It points out that artificial
barriers are causing the severance of traditional eco-
nomic bonds between states, are hampering exchange
of material and cultural values, undermining interna-
tional credit relationships and are aggravating the
general currency chaos. Needless to say, this is having
a ruinous effect on living standards in many countries_
On the other hand, consolidation and extension of in-
ternational economic co-operation would undoubtedly
help to improve the condition of the people and.. would
ease international tension. The sponsors of the
Moscow meeting proceed from the basic premise that
r>
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the present world cleavage is not so deep as to preclude
co-operation between countries with different social
and economic systems. Nor do they suggest that the
Conference discuss political issues; all they propose is
that it study ways and means of raising living stand-
ards in the second half of this century through the
maintenance of peace and by extending international
economic contacts.
The Conference will bring together economists,
businessmen, co-operators, trade-union leaders . and
technicians of diverse political views . and beliefs.
They are not coming to Moscow to debate
controversial political issues. The prime purpose of the
Conference is to examine, in a concrete and busi-
nesslike way, the problem of economic co-operation-
co-operation in international trade based on full
equality and precluding any discrimination.
In assessing the chances of its success, it would be
naive to ignore the conflicting economic interests that
divide the world today, for they determine the attitude
of various circles towards the Moscow meeting. Some
support the Conference; others are working against it.
But a sober analysis of the international situation
shows that the vital interests of the nations demand
that it fulfil its mission.
An objective and impartial survey of the economic
state of affairs will bear this out. The basic fact in
world economy is, of course, the existence of two
social and economic systems. And though opinion is
divided on this score, the fact itself cannot be brushed
aside. Another key fact that cannot be disregarded is
the possibility of peaceful co-existence of the two sys-
tems which has been proved beyond all doubt by past
experience. Economic competition does not rule out
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mutually advantageous co-operation in world trade
and in technical, scientific, and cultural progress.
In fact, both sides find this co-operation necessary,
notably in such matters as supply of essential materials.
Why, then, has this peaceful co-operation been
disrupted, and its future jeopardized? Why all these
discriminatory measures-the Battle Bill, the embargo
on trade with Eastern and Southeastern Europe and
certain Asian countries, the attempts to blockade the
People's Democracies?
The inference is that the authors of this policy have
lost faith in the superiority of their own economic
system and its chances of coming' out on top in
peaceful competition in the world markets, Theirs is a
policy of economic self-isolation, to be followed by
more drastic methods of extra-economic competition.
This is a cold war tactic, and the attempt is being
made to justify it by pleading "defence" exigencies
and possible "aggression from the East." But there is no
military menace "from the East," and never will be.
Moreover, it is extremely difficult to unleash another
world war when the masses in all countries have so
clearly and determinedly expressed their will to defend
the peace. Consequently, the real menaces facing the
people in many countries are the armaments drive and
continued dislocation of international economic ties.
The cold war strategists have evidently borrowed a
page from Napoleon's book. Their "continental
blockade" is spearheaded against the whole Eastern
half of the world. But when one half of the world tries
to blockade the other half, it is bound to find that it
has blockaded itself. It will be recalled that Napoleon,.
even at the very height of his power, when he had
mustered the forces of the whole. continent against
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Britain, found, great strategist though he was, that
he could not stifle her through blockade. The present-
day advocates of economic blockades against whole
continents maintain that the method can be more
effective in our industrial age than it was in Napo-
leon's time. But even if that were true, it is still a moot
question which half of the industrial world will suffer
most-the blockading or blockaded half. Scientifically
established facts lead us to the conclusion that it is the
countries with planned economies that enjoy the
greatest advantages and are less vulnerable to the
adverse consequences of blockade than countries with
uncontrolled economies which are being constantly
subjected to the ravages of capitalist competition.
There are ample facts to bear this out. The Soviet
Union's planned economy withstood a long period of
foreign intervention and blockade in its early forma-
tive years. The blockade did not lead to economic
decline; the Soviet Union developed at a more rapid
rate than the blockading countries. This first blockade
of the Soviet Union had to be abandoned in 1920 be-
cause the capitalist countries were badly in need of
Russia's raw materials and markets. Only a few short
years later, and the U.S.S.R. had advanced to first
place in Europe in volume of output, and by 1935 it
had outstripped France, Britain and evens Germany.
The Soviet people have drawn a lesson from this
blockade: their planned economy is so organized as
to be practically invulnerable to the periodic upheavals
in the world markets and other contingencies.
In 1935, Soviet industrial output was nearly six
times as great as in 1913, the increase in engineering
being 22-fold, and in power generation -32-fold. In
1913, Russia imported 62 per cent of her machines
and appliances, 27 per cent of her chemicals, 22 per
cent of her cellulose, and so on. By 1935 the Soviet
economy was already able to meet almost all of its
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requirements in these and other products, even though
the demand for them had increased many times over.
The Soviet Union continues to be a market of no little
importance for the West, but no blockade can shake
its economic independence. At the same time the
sweeping development of Socialist economy offers
wide opportunities for trade with other countries.
I have cited these facts of recent economic history
only to emphasize that the future of the European and
world economy, as experience has shown, lies not in
blockading continents and isolating one group of
countries from another, but in ensuring brisk trade
based on equality and mutual advantage.
The belief that nearly the whole of Asia and a good
part of Europe can be effectively blockaded is a sheer
illusion. Even assuming that such a blockade were
possible, it should be borne in mind that the 800 mil-
lion people of this area are united in close fellowship
and have planned economies that are free of crises
and can continue to develop by tapping their own re-
sources. And another factor: what will the West gain
by blockade, considering that no Western country can
develop economically by relying solely on its own re-
sources? Every economist knows that access to the
markets of the Soviet Union, China, the countries of
Eastern and Central Europe is a prime necessity for
the West. Besides, many of the Western countries de-
pend to a large extent on imports of food and raw
materials. Just try to imagine what would happen to
Britain were she to cut off all imports of grain, timber,
cotton, rubber, oil, bauxite, iron ore, copper, nickel
and zinc. Germany is another case in point: she has
always been dependent on foreign supplies of oil, cot-
ton, rubber, manganese ore, bauxite, and imported up
to 45 per cent of her iron ore. The United States has
to import practically its entire supply of .rubber, man=
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ganese ore, nickel and chromite. Much the same can?
be said of every other industrial. country in the West.
For this reason, if for no other, the idea of "blockad-
ing the East" is fallacious in its very conception, and
is : justly regarded by many Western businessmen and
economists as dangerous and fraught with grave
complications for their own countries. Receding trade
brings with it serious difficulties for industry, it spells
lower incomes for the employers and unemployment
for the workers. The publication of a list of 313 items,
whose export to Eastern Europe is prohibited, has not
helped to brighten the business outlook in the West. .
Commenting on Britain's present economic position,
Richard Grossman pointed out that a "complete
blockade" of the Soviet Union and China would ruin
Britain. And Herbert Morrison has been quoted as
saying that such a blockade would damage and
dislocate Britain's economy.
That the economies of many West-European coun-
tries are experiencing severe difficulties is generally
known. It is becoming increasingly obvious that the
country whose rulers have initiated the trade blockade
stands to gain little from its discriminatory policies.
I am certain that sober-minded American economists
and businessmen realize that conversion of the entire
economy to military purposes and abandonment for
purely political considerations of traditional markets
and of trade relations with the Soviet Union, China
and the European People's Democracies can hardly
contribute to a solution of economic problems. The ar-
maments drive is diverting an immense share of man-
power and material resources from productive activity;
the productive forces of the nation are being squan-
dered, with the result that civilian production is head-
ing for a severe crisis. Guns instead of butter, but the
guns have to be paid for, and taxation of the working
classes has increased fivefold in recent years. The
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purchasing power of the dollar has been cut by half,
and, according to. trace-union estimates; the price in-
?dex six months ago was 162 per cent of prewar.`
In his last report to President Truman, Defence
Mobilization Director Wilson admitted that, with the
arms race continuing, 1952 will bring even greater
shortages of civilian goods than 1951. Peace industries
will receive 40 per cent less steel than last year, 66 per
cent less copper and aluminum, and no nickel. Civilian
construction will be drastically curtailed and the
supply of machine tools to firms not engaged on "de-
fence" orders will cease in February. The inevitable
result will be further cuts in civilian production and,
of course, a further increase of unemployment.
These are the fruits of the war boom. The realiza-
tion is gaining ground in Western business circles that
the blockade policy, especially in view of mounting
commodity shortages, is absolutely untenable. The
only ones to gain from it are the arms manufacturers,
who are making billions on military contracts. But be:
sides 'these death merchants there are many people in
every country who prefer to trade in less lethal coin-
modities and who realize that the cold war, while en-
riching the owners of the war industries, is ruining
civilian production, that it means bankruptcy for
employers and starvation for the workers of these
industries.
That is why the forthcoming International Economic
Conference in Moscow should be of interest to West-
ern businessmen as well as to economists:
The resumption of normal economic relations among
the various nations is a matter of cardinal importance,
and we Soviet economists fully support the convoca-
tion of the International Economic Conference, one of
whose aims will be to work out ways and means of.
.attaining that goal.
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N I K O' ~. A l L Y U 13 I M 0 V
Professor
What Is Wrong
with International Trade?
The mechanism of world trade is definitely out of
gear. Exchange rates have lost their stability; fre-
quent currency devaluation has upset the intricate and
extremely sensitive mechanism of international credit
and payments. The machinery of price formation is
likewise not running smoothly as a result of postwar
dumping and arms deliveries on terms that do not
fit in with normal trade practices. This state of
affairs is the outcome of a number of economic and
political factors in the past two decades: the econom-
ic crisis of the 'thirties, the repercussions of World
War II and the discriminatory policies pursued by
certain governments since the war.
The severance of traditional commercial, financial,
transport and other international economic ties is
causing immense material losses to most of the
countries. The situation has deteriorated especially in
the last four years (1948-51) with the introduction
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of, a veritable system of discriminatory measures, the
express purpose of which is to disrupt normal trade
relations between the West and the : Soviet Union,
China and the European People's Democracies.
I doubt whether any precise computation is pos-
sible of the damage caused to the various countries,-
to the industrial, commercial, transport and insurance
interests, by the disorganization of world commercial
intercourse, But even the most conservative and ap-
proximate estimate will show that the financial loss
is tremendous and the economic consequences ex-
tremely grave.
Let us try to estimate, if only approximately, the
direct losses caused by the contraction of East-West
trade, and by the general functional disruption of
commercial and credit ties between the West and the
U.S.S.R., the Chinese People's Republic and the
People's Democracies of Eastern and Southeastern
Europe.
The following figures of the Organization for
European Economic Co-operation cast a revealing
light on the subject:
In 1938 the East-West trade turnover totalled 1,559
million dollars (East-European exports to Western
Europe amounting to 917 million dollars, and West-
European exports to Eastern Europe-to 642 mil-
lion). It should be noted, of course, that for several
countries 1938 was a crisis year, and the volume of
trade consequently was much smaller, than, say, in
1928. Profits of industrial and commercial firms from
foreign trade operations make up approximately 10,
per cent of the cost of merchandise. In other words,
the minimum direct loss caused West-European
business interests by the contraction of West-European
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,exports to Eastern Europe, and imports from the
latter to Western Europe, can be placed at 150 mil-
lion dollars. This covers only one year, and for the
six postwar years (1946-51) the figure is therefore
900 million dollars, and over 1,000 million dollars if
we add the direct losses suffered by American firms.
This calculation refers to West-European trade
with the U.S.S.R., Czechoslovakia, Poland, Rumania,
Hungary and Bulgaria, and does not include China
and several other Asian countries. If these were
taken into account, the loss caused, directly or in-
directly, to West-European and American industrial
and commercial interests would be greater still.
Some periodicals in America and Western Europe
claim that the importance of East-West trade is be-
ing greatly exaggerated. The "New York Times"
(January 13, 1952) carried this computation: in
1949 the Soviet Union and several East-European
countries accounted for no more than 6 per cent of
aggregate world trade, and, the paper asserts, even
if the percentage were doubled and the absolute figure
raised to 3,000 million dollars, even then it would
not be a "decisive factor" in the total volume of
world trade which amounts to 60,000 million dollars.
This line of argument will hardly bear examina-
tion, if only for the reason that statistical "averages"
hardly ever give the full picture. Austrian business-
men, for instance, point out that in 1937, 90 per cent-
of Austria's grain imports, 75 per cent of her coal
imports, and 44 per cent of her tobacco, came from
Eastern Europe. And it would be hard to persuade
the Austrian economists that trade with Eastern
Europe is not important to their country. Or consider
the following figures: in 1938, the last prewar year,
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Eastern Europe supplied Western Europe with more
than 5 million tons of wheat-9.5 per cent of total
imports, barley-889,000 tons or 26 per cent, 500,000,
tons of butter or about 12.6 per cent, eggs-19 per
cent, poultry-54 per cent, and so on.
The record of Soviet foreign trade shows that the
U.S.S.R. is a highly important market for foreign
goods. Now that the country's economy is on the
upsurge, following the healing of the war wounds,
vast opportunities are open to foreign firms, both
traditional suppliers and new entrants in the field.
The 1946 Soviet trade agreement with Sweden, the
1947 commercial and financial agreement with Great.
Britain (the fact that it has not been properly im-
plemented certainly cannot be blamed on the.
U.S.S.R.), and other postwar commercial agreements,,
furnish ample proof of the Soviet Union's desire for
close economic co-operation with other countries and'
of its scrupulous fulfilment of all commitments.
In 1931-33 the Soviet Union was the world's big-
gest buyer of machinery and industrial equipment:
in 1931 it purchased nearly one-third of the world's
export of machines (excluding motor vehicles). In
these past twenty years the U.S.S.R. has achieved a
high degree of industrialization and the nature of its
imports has changed accordingly. But it does not
require much business acumen to realize that far
from reducing, this actually increases the opportuni-
ties for advantageous trade. There is not a grain of
truth in the assertions of certain foreign publications
that the Soviet Union is interested in acquiring only
"special plant for military purposes," "strategic mate-
rials," and so on. Any foreign visitor who looks into
.Moscow's shops can see that the U.S.S.R. imports a
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wide range of merchandise, right down to Austriah
furniture and : Mexican canned fruit. Naturally the
import of foreign~'wares presupposes favourable con-
'ditions for export' of Soviet goods.
In an interview with Walter Duranty, the American
,newspaperman, 'published in the early part of 1934,
J. V. Stalin said: "We cannot import without export-
'ing, because we do, not, want to place orders without
.having the-assurance that we shall be able, to meet
our payments." '
This was, and is; an ironclad rule of Soviet for'
eign trade.
Stagnation, indeed 'recession, of East-West trade
brings in its wake not only greater losses for in-
dividual firms; it spells substantial economic losses
for whole countries
Last December' the London "Economist" estimated
that Western Europe's general payments deficit with
the rest of 'the would in 1950 amounted to about
1,000 million dollars, increasing ' to an annual ~ rate
of about; 2,500 million in 1951. The figures are based
on the returns for the first half of 1951, for Britain's
payments position was less favourable in the second
half. The "Economist" 'remarks that if import and
export prices had remained unchanged, the deficit
would have been no more than 500 Million dollars,
or about one-fifth of the. present figure. 'But the fact
of the matter is that prices of imported items advance
much more rapidly. than prices. of export goods; and
this has cost, Western Europe some 2,000 million
dollars!
One might well ask whether this "additional" loss
was really Inevitable, and whether the unpreeedent-
ed flow of gold and dollars from Britain in the third
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quarter of 195'1; (598 million dolliars),\was. inevitable
as the London "Times" of January!; l' 'tries to Mahe
out.
Had Britain extended her trade, with',the r$'o.viet
Union, the Chinese People's Republic and the Th o
pean People's Democracies, and adhered It' 1-the prin=
ciple of mutually advantageous economic -co-opera-
tion, there is every reason to believe that she could
have avoided these terrible gaps in her balance of
payments.
The "Times" notes that whereas in 1649, Britain
was passing through a dollar crisis, today the ster-
ling area is faced with a general deficit in its'balance
of payments.
And indeed there are numerous facts to show that
last year brought Britain additional difficulties in
international trade and in her financial dealings
with other countries. The trade deficit rose from 814
million pounds in January-November 1950 to 1,'113
million in the same period of last year. The balance
of payments in 1951 showed an official deficit of
.roughly 500 million pounds, whereas in 1950, it had
even registered a small surplus.
Many prominent British economists urge the con-
tinuation of large purchases of grain, cattle produce
and poultry, timber, minerals, asbestos and, other
items, in the Soviet Union, Poland and other People's
Democracies. But at the same time long lists, ,are
being issued of items which may not be exported ;to
these countries. ? There have even been instances of
requisition by the British authorities - of ships, nia-
-chinery and other goods ordered in Britain by
these countries.
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In nearly every issue the "Economist" makes the:
point that trade presupposes bilateral exchange that
meets the requirements of both sides. But Britain's
foreign trade practices seem to be widely at variance
with her national interests and do not adhere to this
simple truth known to the British mexchant long be-
fore Adam Smith.
Early this year the Paris press complained about
the adverse effect of the French government's ruling
of 1950 forbidding French shipyards to accept a
Soviet order for fourteen 5,000-ton tankers (the order
eventually went to Dutch shipyards). Yet, employ-
ment in the French shipyards has dropped from 80,000
in 1948 to 42,000 at the beginning of the present
year, and French shipbuilders have been deprived of
a very profitable order.
Another example: the Chinese People's Republic
wanted to purchase rails and railway equipment from
France. The French government proscribed the deal
and the order was placed in Western Germany and
Britain. Press reports indicate that China is prepared
to place substantial orders for developmental material
in connection with its program for laying 60,000
kilometres of railway within the next five years. The
Chinese government also wants to buy mining,
metallurgical, chemical equipment, and so on.
Perhaps France does not stand in need of these
orders, and can afford to ignore these opportunities
for extending trade with the East? Just the contrary.
The position of France's foreign trade and its pros-
pects are such as to give no grounds for optimism.
Her trade deficit for 1951 stood at 339,000 million,
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francs, as against 102,000 million in 1950. Total im-
ports exceeded exports by 27 per cent, and the
currency reserves of la Banque de France dro~ped`
from 292,000 million francs to 104,000 million at the
end of 1951. France has an adverse balance not only
in trade with the dollar area, but vis-a-vis Western
Europe as well. In the early part of the year the in-
fluential Conseil National du Patronat francais pre-
dicted a further decline of 30-75 per cent in exports
of various electrical and engineering goods. Cannot
some of these goods be sold in the East if there is
no market in the West?-this is a question which
French industrialists are asking more and more in-
sistently.
Business leaders in many countries are persuaded
that the two systems can live side by side and com-
pete in peace-this indeed is a fundamental principle
in our present-day world. There is also widespread
confidence that the International Economic Conference,
which will meet in Moscow in April, will find ways.
and means of extending and normalizing world
trade.
For that is the essence of the subject it will dis-
cuss. Trade must develop and it must be advan-
tageous to all parties concerned. Less politics and
more commerce is a watchword now often repeated
in Western business circles. Such a policy will be
beneficial to all concerned.
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N I K 0 L A I T S I T S I N
Academician
Man's Daily Bread
The December 1951 issue of "Twentieth Century,"
a British journal, carried a lengthy article by
Mr. Werner Klatt "Towards Agricultural Integration
in Europe." The author is recommended by his editors
as an expert on European food and farming. Having
been engaged for a number of years in research on
new cereal varieties which has brought me in close
touch with world agricultural problems, I read the
article with interest. Everyone, I think, will agree
with Mr. Klatt that World War II played havoc with
European farming. This applies to other parts of the
world as well.
Mr. Klatt asserts that acreage and production of
the main crops are still below prewar levels. And
though he tries to prove that the agricultural net
production of Europe has increased-presumably, due
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to some act of magic-his whole line of argument
leads one to the inescapable conclusion that the Euro-
pean and several other areas of world agriculture are
confronted with serious difficulties, aggravated,
moreover, by the rupture of traditional East-West
economic ties.
That, indeed, is the picture. Every observer and
agronomist can cite ample facts to show that the
problem of harvests and harvest yields has now
become one of urgent moment. And it is this problem
that I wish to discuss in the present article.
I am a biologist. Ever since my school days I have
been fascinated by plant life with all its multiformity,
of varieties. But my particular interest is in food
grains, and above all, of course, in wheat. Wheat has,
figured in man's life for thousands of years and he
has worked diligently for many centuries to improve,
the plant, to make it yield more nourishing food. By-
steadily creating more and more favourable environ-
mental conditions, we have learned to increase wheat
yields.
Despite centuries of unremitting effort, however, we
are still a long way from the ideal wheat plant, one
that would come tip to all the present essential re-
quirements. Human genius has done much to im-.
prove our planet, but so, far it has failed to evolve,
varieties of wheat that would yield high harvests and'
at the same time successfully resist frost and heat,,
drought and moisture, arid winds, disease and pests.
It is, -moreover, quite within the potentialities of
modern science to breed varieties of wheat that will
produce two crops a year, and double and even treble
the present harvest yields. There need be no doubt
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that the science of agronomy can help farmers attain
and surpass the prewar level of agricultural produc-
tion, about the state of which Mr. KIatt is so con-
cerned.
In the Soviet Union a large army of scientists and
practical agriculturists are working tirelessly in that
-direction. I shall always remember the encouragement
J. V. Stalin gave me in 1935:
"Be bolder in your experiments, we will support
you.,,
And Soviet scientists are boldly experimenting,
contributing in no small measure to the creation of
an abundance of food and goods which is one of the
most important goals our country has set itself.
For several years now I have concentrated on
perennial wheat varieties, something hitherto un-
known anywhere in the world. Can there be any-
thing more fascinating for the researcher than the
prospect of growing wheat that will produce high and
stable harvests, and, moreover, will not have to be
planted anew every year? A single sowing will
produce crops for several years to come, freeing
millions of farmers from the need to devote so much
time, effort and money to annual ploughing and
planting.
It was in the work of Ivan Michurin, the great
transformer of Nature, that I found the key to my
experimentation. At my experimental field near Mos-
cow I grow wheat which is planted only every other
or every third year, but produces stable annual har-
vests. By distant hybridization we have also evolved
new varieties of one-year wheats. They have passed
the laboratory stage and are now extensively sown
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in our fields where they produce as much as 40 and
more centners of grain per hectare. The new varieties
not only produce high yields; they are also immune to
fungus and can resist strong winds.
Modern science can accomplish much, and there is
every reason to assume that the time is not far
distant when per hectare harvests of 100 centners will
not be a rarity. In other words, already today the
earth can be made to feed even double its present
population, and within the foreseeable future it should
be able to produce food in such abundance as to do
away with man's worries over his daily bread.
Make More Rational Use
of Our Planet
The development of science and normal economic
relationships among all areas and nations of the world
can help to advance considerably living standards in
many countries.
Ours is a century of great scientific discoveries
which can and must become the levers of peaceful
progress. But for all that, we are still a long way
from making rational use of the plant life of our
planet. There are hundreds of thousands of varieties
of useful plants, but only an insignificant fraction has
been wrested from Nature, or has been brought into
cultivation, to use the term of plant breeders. Prop-
erty speaking, man is only now beginning to. recon-
struct and master the world's flora, with its multitude
of hitherto unutilized natural wealth and with its
boundless sources of food, fats, vitamins, medica-
ments, rubber and fibre, tanning materials and dyes.
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A glance at the agricultural map of the world will
show you that the assortment of cultivated plants is
still a very poor one. All in all, it comprises some 15
or 20 varieties-wheat, rice, rye, barley, oats, sugar
beet, cotton, flax, potatoes and several other staple
plants.
In addition, the surface of our planet is being
utilized in a highly irrational way. Orly a negligible
part of the earth's land surface is devoted to agricul-
ture, the rest remaining largely unused and untilled.
Over 36 million square kilometres are still in the grip
of the desert, semidesert and .rid wastes. There is
the great Sahara, stretching from the Atlantic to the
Nile, and its continuation, the vast barren expanses
of Nubia, Arabia, Iran, Central Asia, Mongolia, and
China.
Another case in point is British agriculture. In the
middle of the last century, Nikolai Chernyshevsky,
the eminent Russian philosopher, sociologist and
writer, remarked that given a crop-rotation system of
farming Britain could increase her agricultural output
eight or nine times over within twenty-five years.
Agricultural science has made great strides since
these words were first written, but British farming
remains in a state of stagnation and crop areas in
that country have actually declined since World War II.
Africa, South America and India possess vast
natural resources. Their soil and climatic conditions
favour the rapid development of many branches of
intensive agriculture. Yet between 1875 and 1900
India lived through eighteen famines which took a toll
of 26 million lives, and there has been no change for
the better since then. Famines continue to stalk India,
where the average life span is less than 27 years and
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where 40 per cent of the children die before reaching
the age of five. ,
In such countries as Brazil and Australia the arable
makes up only a small percentage of the territory. All
countries, both the economically advanced and the so-
called underdeveloped nations, have sufficient land
suitable for farming, but only about one-third is ac-
tually being used.
If men's minds were not distracted by wars, just
think how many deserts could be transformed into
fertile fields! Professor Joliot-Curie has remarked that
the effort put into- a single month of World War II
would have sufficed to irrigate the whole of the
Sahara Desert.
That is no exaggeration, for in most countries
nothing is being done by way of a general offensive
against the desert, and some fertile lands are steadily
degenerating into lifeless wastes.
Not so very long ago the United States was famed
for its immense stretches of fertile land. When the
Europeans first set foot on the newly-discovered con-
tinent they found that practically half of it was cov-
ered with dense forests, and that beyond these
stretched the fertile prairies where wheat and corn
could be grown in abundance.
The American farmer put much devoted effort into
the land. Plants were brought here from every conti-
nent and climate.
But what a sad picture American farming presents
today. Large tracts of once fertile soil are being
ruined by erosion which threatens to destroy impor-
tant seats of agriculture.
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Lands That Lose
Their Fertility
As an agronomist and biologist I was deeply per-
turbed to learn that every year no less than three
billion tons of fertile top soils are washed away from
America's fields and pastures. And they carry with
them at least 40 million tons of phosphorus, potassium
and nitrogen. The amount of nutritious substances
washed away from America's farmlands by rains and
floodwaters is equivalent to 150 per cent of the
world's output of chemical fertilizers and is twenty-
one times more than is absorbed by cultivated plants!
Dr. Hugh H. Bennett, the noted American soil scien-
tist, testifying before a Congressional Committee in
1939, said: "In the short life of this country [the
United States] we have essentially destroyed
282,000,000 acres of land, crop and rangeland. Erosion
is destructively active on 775,000,000 additional acres.
About 100,000,000 acres of cropland, much of it rep-
resenting the best cropland we have, is finished in this
country. We cannot restore it."
The American economist McWilliams writes in his
book "Ill Fares the Land" that in Oklahoma and
Texas 75 per cent of the land is affected by erosion,
and that in three states alone, Oklahoma, Arkansas
and Texas, the stricken areas add up to 195 million
acres.
Not being a sociologist or an economist, it is not
my purpose to define the social and economic factors
behind these destructive processes. But judging from
American sources, erosion and soil exhaustion are
increasing progressively, mainly because the Amer-
ican farmer specializes in one definite plant-cotton,
corn, wheat, tobacco, or some other.
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It is not only moniculture, however, that exhausts
the soil and destroys its structure. It has been proved
beyond all doubt that the haphazard cutting down of
forests is detrimental to the soil. Our own Russian
scientists, notably Kostychev, Dokuchayev and Wil-
liams, have shown that land deprived of wood and
grass covering very rapidly loses its nutritious matter,
becomes a prey to and winds, floodwaters and ero-
sion, with attendant droughts and famines.-My in-
formation is that in the United States four times more
woodland is cut every year than is planted. Official
American data reveals that 40 per cent of the coun-
try's timber resources were destroyed between 1908
.and 1938.
It is only natural that all of this should lead to a
decline in crop areas and to diminishing yields. Among
American scientists these facts have given rise to
justified concern and alarm for the future of the
country's agriculture.
France was once famous for her rich crops of
wheat, sugar beet, grapes and olives. History contains
many a glowing record of how heroically the French
peasant toiled to create one of the world's centres of
modern farming. But today crop areas and harvest
yields are diminishing, and whereas only some 50
years ago 53 per cent of the national territory was
given over to ploughlands, vineyards, orchards and
gardens, in 1949 the percentage was only 38. In 1934-
38 the grain area comprised 10.6 million hectares, in
1947-49 the figure was only 8.3 million, and in the
same period the area sown to wheat had declined
by one million hectares. Time was when France sup-
plied grain to other countries; today she cannot even
provide for her own population and has been com-
pelled to increase grain imports by 8 million centners.
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Some Fictitious
"Laws of Nature"
This, in brief, is the general picture of the state of
world agriculture today. Some scientists refuse to
face and analyze the facts and seek to attribute the
destructive processes to "natural causes," to what
they describe as the "laws of Nature." Their reason-
ing is usually based on the fallacious theory of "over-
population," on the assumption that more human
beings are brought into the world than the world
can feed. This sort of "scientific argumentation" is
meant to serve as a "scientific" justification of new
wars and the destruction of millions of human lives.
That is why it is so dangerous and pernicious. Forces
bent on instigating war and provoking international
conflicts are making this theory serve their own ends.
It is from this angle that one should appraise the lit-
erature and science which preach man's impotence
against the elemental forces of Nature. Their only
cure for hunger is restriction of the world's popula-
tion. Professors Frank Pearson and Floyd Harper
of Cornell University suggest that the population of
the world be reduced from the present figure of over
2,000 million to 900 million. Projects of this kind
are repellent and have no scientific basis; they are
usually motivated by purely sordid political considera-
tions.
Some agronomists are trying to explain the exhaus-
tion of natural resources by the law of dimin-
ishing fertility and by what they call the "natural
wearing out of the land." But science and practice
have demonstrated long ago that there is no law of
diminishing fertility, and that man is quite capable
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of regulating, directing and, indeed, changing the
process of natural development to suit his own
purpose. This is borne out by the experience of
several countries, and notably that of the Soviet
Union.
Remaking Nature
and Climate
The Soviet Union has an increasing birth rate and
a declining death rate. The natural increase in the
population is over three million a year, and the death
rate has been reduced 50 per cent compared to the
prewar year of 1940, with an even steeper decline
in infantile mortality. These facts are generally
known, so is the fact that increasing population is
due to higher living standards.
The population in the U.S.S.R. is increasing, but
far from being an impediment, this is a factor making
for larger crop areas, higher harvests, and more food
and industrial raw materials. In the five years since
the war, the grain area of the U.S.S.R. increased
nearly 20 per cent and the technical crop area-59 per
cent. The annual gross grain harvest is now in excess
of 7,000 million poods. The Soviet Union today pro-
duces more cotton than such traditional cotton-grow-
ing countries as India, Pakistan and Egypt taken to-
gether.
It is common knowledge that the United States pos-
sesses a large number of agricultural machines and
implements, but two-thirds of the American farmers
still cannot afford a tractor, and on 60 per cent of the
farms the work is done by hand. In the Soviet Union
nearly all ploughing has been mechanized; in 1950
three-quarters of all farmer crops were sown with
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tractor-drawn seeders, and over 60 per cent of the
grain area was harvested by combines.
Science is an important factor in the development
of Soviet agriculture. It is closely linked with prac-
tice and this combination makes for higher harvests,
greater fertility and the universal application of lea
rotation.
Huge forest shelter belts are being planted through-
out the steppe and forest-steppe areas of the Euro-
pean part of the U.S.S.R.; they will protect over 120
million hectares of our best lands from drought, arid
winds and erosion. If our shelter forests were stretched
in a single belt 30 metres wide they would gird the
equator fifty times. Only 80 million hectares of
land have been irrigated throughout the world. The
Soviet Union is now building the world's largest
hydroelectric stations on the Volga, Dnieper, Don and
Amu Darya. These will help to irrigate over 28 mil-
lion hectares, which is equivalent to 35 per cent of
the world's total irrigated area. Our irrigation
schemes will be completed within five to seven years.
The irrigated areas will not only change the geog-
raphy of large parts of our country, their climates
and soils, but will provide food, clothing and housing
for over 100 million people. Farmers will gather sta-
ble and high harvests, 50 or 75 per cent above present
average yields, and these crops will not be dependent
on the whims of Nature. Irrigation will enable the
country to produce an additional three million tons of
cotton a year, which is equivalent to more than a
third of America's annual total cotton crop. The reju-
venated lands will grow over eight million tons of
wheat, 480,000 tons of rice and six million tons of
sugar beet.
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The refashioning of Nature will eliminate all desert
and semidesert zones. Soviet experience proves the
hollowness of the so-called "law of diminishing fertil-
ity.",
This is also borne out by the experience of other
countries. In Rumania the large Danube-Black Sea
Canal now being built will bring back to life the
scorched steppelands of Dobrudja. Hungary is irrigating
the Hortabagy steppe, and in Poland the swamplands
of Zulawy are being converted into fertile fields. In
Bulgaria, irrigation canals will cut across the Belene
lowland, and in Northeast China a forest shelter belt
of 1,700 kilometres is being planted. These facts go to
show that man is fully able to make Nature do his
bidding, and they furnish the answer to the question
of whether our earth produces enough food to feed its
population, and whether, given unhampered normal
world trade, all nations can enjoy a life of prosperity
and well-being.
I believe that the questions raised here will, in one
form or another, be discussed at the International Eco-
nomic Conference, for they are of cardinal impor-
tance to the development of world economy and living
standards. It should be borne in mind that grain, and
foods generally, hold an important place in world
trade.
I see the future as one of peaceful co-operation of
the nations in the battle to remake the Nature of all
continents, to develop the natural resources of all
countries and to ensure agricultural advancement
throughout the world. This will bring bigger harvests
and a plenitude of food for the world's working popu-
lation.
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A S N I C H K 0 V
President, Exportles
International Trade
in Timber
There are something like eight billion acres of
timber covering the earth as a whole. Out of this
total, however, about five billion acres-the virgin
forests lying mostly in the tropical zone-so far
remain practically untouched. Thus only about a third
of the world's resources is being worked.
Another thing that perhaps not everybody knows
is the different uses to which wood is put. We all
know that timber is used for mine props and tel-
egraph posts, railway cars and sleepers, ships and
furniture, and that it is the most widely used build-
ing material. Then there is wood as a solid fuel and
a source of liquid and gaseous fuels. But what about
the multitude of other products obtained from wood?
Not only resin and turpentine, alcohol and paper, but
artificial silk, wool, and leather, synthetic rubber,
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sugar and yeast, medicines, protein and even animal
fodder. Plastics produced from wood pulp go into the
making of fountain pens and telephones, dishes arfd
automobile bodies. No wonder wood is considered the
most universally used raw. material.
Man has used wood since time immemorial. And
though in more recent times it has in part been su-
perseded as a fuel, the need for wood has not dimin-
ished; on the contrary, with the progress of science and
technology, its sphere of application has grown even
wider, until today there is perhaps no branch of in-
dustry that can do without it. This explains why in the
world output of raw materials, timber in physical
volume shares first place with coal.
Although only about 10 per cent of the total output
comes into the world. market, timber and timber
products are (in physical volume) the third largest
item in international trade (in value they account
for about 5 per cent). This is due not only to the large
variety of uses it is put to, but also to the fact-which
anyone can see by glancing at the map-that timber
resources are very unevenly distributed among the
different countries. Because of this, the world economy
cannot possibly function properly without a regular
trade in timber-between countries which possess
adequate timber resources and countries that lack
such resources.
For the reasons I have given above, the require-
ments in timber are constantly growing. But the re-
sources of most countries are shrinking because for-
ests are being ruthlessly cut down and also because
of fires. Figures given by the U.S. Forest Service
reveal, for example, that the timber resources of the
United States decreased by nearly 40 per cent between
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1-910 and 1940. In the huge forest fire of 1933. in the.
Wilson valley in Oregon, which affected an area of
267,000 acres, 30 million cubic metres of timber were
destroyed. At the present time the United States is
cutting down more timber than is produced by the
annual growth, and this threatens serious difficulties
in the future. U.S. officials have admitted that the
timber supply available for 60 per cent of the sawmill
capacity in Washington and Oregon will only last
another ten years or so. A similar picture is to be
observed in Canada, where resources are fast being
exhausted for the same reason.
As to the European countries, the great majority
of them have long been importers of timber (Sweden,
Finland, and a few others are exceptions), and
their reserves were badly sapped by the war. Brit-
ain, which had few enough forests before, was com-
pelled to cut down about two-thirds of them, for near-
ly fifty instead of the prewar five per cent of her re-
quirements had to be met out of her own resources.
Sweden lacked coal imports in the war years, and to
make up the fuel deficiency timber was cut down in
amounts exceeding the natural growth. The forests
of France and Germany also suffered greatly, and in
general forest areas nearly everywhere have been
rapidly shrinking. Latterly, the West-European countries
have been cutting down about 20 per cent more every
year than is produced by natural growth. And in spite
of this many of them experience an acute shortage.
There are vast stretches of tropical forest in Central
and South America, Africa, and Southeast Asia, but
they are hardly being worked at all, because of the
scanty population and the lack of communications,
skilled labour and mechanization. The Amazon valley,
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for example, with nearly a billion acres of dense trop-
ical forest, has a population of only about 2,000,000
in all. Professor Josue de Castro of Brazil writes:
"Geographically, this is the world's largest equator-
ial forest zone; demographically, it is one of the
world's biggest deserts, comparable only to the trop-
ical deserts of Africa and Australia or to the icy
wastes of Greenland."
In the other tropical areas too, timbering is extreme-
ly restricted: out of the 825,000,000 acres of trop-
ical forest in the colonial possessions of Britain,
France, the Netherlands, Belgium and Portugal, only
about 25,000,000 are being commercially worked, and
the 1950 exports from these colonies amounted to
only 1,200,000 cubic metres.
Such being the case, it is not surprising that timber
should today be a vexing problem for many countries,
the subject of parliamentary debates and of discussions
in international economic bodies.
Very different is the position in the U.S.S.R. The
Soviet Union is one of the world's leading producers
and exporters of timber. Its forest area is five times
the European total and exceeds that of the United
States and Canada taken together. Moreover, these
forests are relatively accessible and consist largely of
softwoods: the Soviet Union's reserves of the softwood
varieties are the most extensive in the world. These
resources are being rationally exploited according to
a sound national economic plan, and in spite of its
vast and constantly growing domestic consumption of
timber and timber products, the U.S.S.R. is able to
supply the needs not only of the European but of many
other countries. It will therefore continue to play a
decisive part in the world timber trade.
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- International trade in timber was greatly affected
by developments during and since the last war, Out-
put of timber and cellulose in most countries has gone
down. Traditional trade ties in timber between the
different countries have been interrupted. Owing to
coal shortages, some countries are using much of
their available supply for fuel. Then, too, the destruc=
tion wrought by the war has greatly increased the
demand for building timber. In Britain alone, about
4,500,000 out of the total of 13,000,000 houses were
wrecked or damaged, and large quantities of timber
are required to rebuild them and mitigate the acute
housing shortage.
That is why many businessmen, both in Britain and
in a number of other countries, urge more vigorous
development of the international timber trade. The
chief European timber importers-Britain, Holland,
Belgium and Denmark-are experiencing an acute
shortage of timber. But despite their crying need these
countries are compelled to reduce their imports under
pressure from certain quarters. This fact is adversely
affecting housing construction and leading to increased
unemployment.
The need for timber is therefore enormous, yet the
volume of world trade in this sphere is not what it
should be. In 1950 the figure for sawn timber reached
only 70 per cent of the prewar level, while wood pulp
and cellulose (of which the United States, for example,
has to import considerable quantities), stood at 92 per
cent.
The consequences of the lag in the world timber
-trade are only too obvious when it is remembered
that more than four-fifths of the globe's population
live in houses built of wood.
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Many economists and businessmen in a number of
-countries point out with truth that the stagnation in
the world timber trade is preventing an- improvement
in living standards and is unfavourably affecting many
branches of economy. For instance, coal mines suffer
from a shortage of props and fuel supply falls off as
a result. Per capita consumption of wood and wood
products, which is quite an important index of the liv-
ing standard, has in some countries dropped to an ex-
ceedingly low level.
Restoration of world trade in timber to its proper
volume has a direct bearing on the conditions of whole
nations, on the national prosperity of a number of
states. As rightly noted by many representatives of
business circles, the present abnormalities react un-
favourably on the interests of the Western countries
themselves.
Removal of the barriers obstructing the development
of world trade, including East-West trade in timber
and. cellulose (discriminatory barriers, currency and
other restrictions) would promote trade of mutual ad-
vantage between countries, irrespective of their social
,and economic systems, and raise the standards of liv-
ing of their people.
The International Economic Conference, to meet in
Moscow in April, will, it is to be hoped, duly examine
this problem.
We here feel that international trade in timber as in
other, branches can be fully restored, and relations
developed under which it will be possible to utilize the
vast "green treasures" of the earth rationally and on
a basis of mutual advantage.
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M I K H A I L S E R 0 V
Chairman, Central Committee of Foreign Trade
Employees Union
Problems
of International Trade
No one will deny that the present condition of inter-
national trade is far from normal.
This state of affairs may best be illustrated by the
American ban recently imposed on the importation of
dressed and undressed furs like ermine, fox, Siberian
mink, marten, muskrat and other pelts, either from
the Soviet Union or Poland. The reason usually given
by governments for their discriminatory foreign trade
policies is considerations of national defence. It is dif-
ficult to see, however, what bearing the prohibition of
fur imports from the Soviet Union and Poland might
have on United States security. A stuffed ermine or
mink would hardly do for a Trojan horse concealing
an "army of invasion." Furthermore, it would be
naive to assume that the American ban on fur imports
could cause any appreciable loss to a leading indus-
trial power like the Soviet Union which has economic
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ties with all parts of the world. If anything, the meas=
ure might cause difficulties for the fur industry in
the U.S.A. and increase the number of unemployed
among the American fur workers, the majority of
whom have been employed as it is for only seven,
eight or nine months in the course of the past year.
The embargo on Soviet and Polish furs is indica-
tive of the foreign trade methods employed by the
United States at the present time. Old and established
,commercial relations are being discarded and sup-
planted by new ones which, as a rule, are artificial
.and unilateral.
Soviet people deplore the talk about "economic war-
fare" which seems to be one of the favourite topics
of overseas government leaders and also the press.
The "New York Times," for instance, in its July 22
issue inadvertently commented that "... the United
States is coming close to regarding East-West trade
as an element in economic warfare."
Indeed, the "New York Times" has aptly described
the present foreign trade policy of the United States.
Its development may be traced through a number of
landmarks: annullment of the trade agreement be-
tween the U.S.A. and the Soviet Union, effective since
1937; the Battle Bill, forbidding financial or economic
aid to countries exporting certain goods to the Soviet
Union and to countries friendly to it; the new rulings
regarding trade with Czechoslovakia, which, accord-
ing to the Associated Press, would practically suspend
trade between both countries; abrogation of the 1930
trade agreement with Rumania, etc. Evi' tly, the ob-
ject is to break off all East-West economic ties.
In other words, the United States is clamping down
more heavily on trade today than was the case during
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the most crucial period of the late world war. Is there
ally need for this?
The economic war waged by the United States is
an entirely one-sided affair. The Soviet Union and the
countries friendly to it are as willing as ever to
promote commerce with all countries wishing to
trade with them on a footing of equality and mutual
benefit.
This willingness was reaffirmed once more by Lav-
renty Beria, one of the leaders of the Soviet state, in
his speech on November 6 on the occasion of the
thirty-fourth anniversary of the Great October Social-
ist Revolution. "We have no objection to considerably
extending business co-operation on the basis of mutual
advantage with the U.S.A., Britain, France and other
bourgeois countries both in the West and the East,
he said. "It is not the fault of the Soviet Union that
the rulers of these states have, to the detriment of
their own countries, taken the course of undermining
and disrupting economic relations with the U.S.S.R."
Even the enemies of the Soviet Union have to ad-
mit that it has always been ready to strengthen eco-
nomic relations with all countries without exception.
No one could cite a single measure the Soviet govern-
ment has taken to restrict or prohibit trade with other
countries. This unquestionably speaks of the Soviet
Union's consistent foreign policy, designed to strength-
en peace and promote international co-operation.
The most incongruous aspect of the unilateral eco-
nomic war today being waged with such zeal by the
United States is that it is causing much more harm
to the West than to the East. The Soviet Union, the
Chinese People's Republic and the People's Democra-
cies of Eastern Europe together possess inexhaustible
40
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t~a,W material resources, a, highly-developed Industry
and big markets. Co-operation with the West,' there=
fore, is.not as essential to this group of countries as
it is to the West.
Trade with the East could greatly stimulate the
economies of the West, which is experiencing a short
age of raw materials and is producing, in' the main,
manufactured goods, machinery and 'industrial equip-
ment. As regards the Soviet Union, it is now in a far
better position to expand its trade with the Western
countries than before the last war.
By artificially limiting the orbit of its trade relations
the Western world is sowing the seed of discord and
contradictions in its own midst. The last few months
have witnessed the struggle for raw materials in short
supply-tin, manganese, rubber and sulphur-grow
more acute among the Western countries. At the same
time there has been sharp competition for markets
among their industrial firms which threatens to as-
sume even sharper forms in the near future. If West-
German industry continues to be cut off from its old
markets in the East, it will have to show increasing
activity on the Western markets. The same applies to
Japanese industry, unless it can resume its traditional
trade with China. Intensified competition will inevi-
tably mean the closing down of a number of West-
European industries and the ominous prospect of in-
creased unemployment.
Such are some of the consequences of the policy
of artificially restricting international trade today by
the Western countries, the United States primarily.
Is it not prejudice that is blinding the ruling circles
of these countries to some of the most elementary
rules of business?
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Picture to yourself a small-town grocer who decided
to do business only with customers whose home life
is to his taste. He would surely be out of business
before long. Yet is this not precisely what the United
States government is doing? The scale of its business
may be bigger, but this hardly alters the substance
of the matter.
Voices of common sense both in the United States
and in Britain can be heard saying that the present
trade practices are nothing but detrimental to these
countries. The enormous importance of foreign trade
in Britain's economic set-up is obvious. As a matter
of fact, the former Chancellor of the Exchequer Gait-
skell declared in a radio broadcast interview, given on
his last trip to the U.S.A., that "to the United States
the break-off in trade with Russia would mean cut-
ting off furs and caviar. To us it would mean the loss
of timber and grain. We believe this trade helps us
more than it helps the Russians."
No less definite on the matter of keeping up trade
with the East was Mr. Eden, the present British For-
eign Secretary, who expressed a similar view when he
said during his recent visit to America: "It is not a
wise principle to cut off trade between East and West."
And yet the British government, however reluc-
tantly, is curtailing trade with the East. Last autumn
it prohibited the export of 250 different items-most
of them of non-strategic value-to the Soviet Union,
China and Eastern Europe. This is what is called cut-
ting off your nose to spite your face. No wonder Brit-
ain's foreign trade balance showed such a large defi-
cit last year.
A striking example of the economic incongruities
rising from such a practice is afforded by the pres-
42
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enthday 'foreign trade of Japan, who too. has now been
listed among the Western countries. Inconceivable as
it might seem that industrial Japan should not be
trading with her neighbour, China, who : possesses vast
economic resources and possibilities, Japanese foreign
trade is now being artificially regeared to America.
Japan has to import coal and ore. from the United
States. Owing to the high cost of' transportation
across the Pacific, Japanese firms now pay three times
as much for their coal and iron ore as they would
had they done their buying in China. This explains the
.Japanese industrialists' demand for government sub-
sidies to cover the tremendous difference. .
Another aspect of international economic relations
that should be dwelt upon is the part they play in pro-
moting peace and co-operation among the nations.
People of the most varied political views agree that
economic co-operation among the different countries
and systems can contribute to the strengthening of
peace, while economic discord can only aggravate
world tension. This is an axiom. Hence those who
want peace are for developing and strengthening
economic co-operation among the nations.
The direct connection between the promotion of in-
ternational economic co-operation' and the strengthen-
ing of peace is becoming increasingly obvious to the
broad public in all countries.
In Britain the national conferences of the Union of
Mineworkers, the Amalgamated Union of Foundry
Workers, and other big trade unions went on record
last summer for promotion of_ trade with the Soviet
Union, the People's Democracies of Eastern Europe,
and the Chinese People's Republic: A ,.great many local
co-operative and Labour organizations have 'taken' a
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similar stand. This demand is also supported by a
number of trade unions in the United States.
Highly interesting in this respect is the book "Two
Worlds in Focus," published in London by the British
National Peace Council and reviewed in NEWS No. 9.
The National Peace Council is an organization
whose members subscribe to the most diverse political
opinions. This is reflected in the book in question. But
all the members of the Council are at one on the mat-
ter of West-East trade. The East-West Commission of
the National Peace Council reached the broad conclu-
sion that trade should be developed between the East
and the West, and that this development would make
a significant contribution to European economic re-
covery and to securing world peace.
It is in the light of the facts mentioned above that
the significance of the International Economic Con-
ference-which is to convene in Moscow on April
3-10, 1952, should be viewed. As was set forth by
the Initiating Committee at its meeting held in Copen-
hagen at the end of October, it will be the object of
the Conference to find ways and means of facilitating
peaceful co-operation between countries of different
social systems, while avoiding any discussion of the
relative merits of the various economic and social
systems. It will be attended by economists, industrial-
ists, farmers, merchants, engineers and labour and
co-operative leaders adhering to various political
views but who have made international co-operation
and the strengthening of world peace their common
goal.
The convocation of such an international economic
conference is a sensible and useful step and one can
but wish it every success.
44
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A L E X A N D E R K A S H K A R O V
M.Sc. (Econ.)
Rearmament:
Prosperity or Crisis ?
Can the arms drive ward off a crisis? The answer
given by a large section of the press, by political leaders
and economists in the United States and Western
Europe is that economic militarization is about the
only way to offset an economic crisis. Many have their
doubts about this. Indeed, the view is gaining ground
that this line of policy is fraught with danger for the
economies of the arms-drive countries and carries the
menace of war for their peoples.
There is no denying that war spending means stock
exchange booms and high profits for the munitions
firms. It is a shot in the arm for some sections of the
business community, and the giant concerns look to
the future with optimism. But is it justified optimism?
Let us turn to the facts. The volume of industrial
output in the United States was 20 per cent higher in
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the first quarter of 1951 than in the same period of
the preceding year. But no advance was made in the
second quarter, and subsequent months registered a
steady decline. The 'industrial production index (cleared
of seasonal fluctuations) stood at 223 in April and
May, dropped to 222 in June, 213 in July, rose. slightly
in August (217), September (219), October (220) and
November (218). The trend is obviously a downward
one, despite the continuous growth of military spend-
ing. Military expenditure in the first half of 1950 was
running at an annual average of 12,500 million dol-
lars; the figure for the fourth quarter was 20,000
million dollars, and 25,100, 33,100 and 38,000 million
dollars, respectively, for the first three quarters
of 1951.
In other words, mounting military output cannot
compensate for the drop in peace goods production.
Highly indicative in this respect is the drop in the tex-
tile production index: from 194 in January 1951, to
170 in August, 164 in September and 155 in October.
Food production has registered a similar decline: from
168 in January to 164 in August and 162 in Septem-
ber. Yet, it would be wrong to assume that these in-
dustries did not benefit from lavish military spending.
They received their share of orders for food and
equipment for the armed forces, but were unable to
raise output. Why? Primarily, because inflationary
price advances and top-heavy taxation had cut into
mass incomes.
The larger the share of material values diverted
from useful production to the manufacture of arms
and war equipment, the greater the impact of inflation
and taxes on the population. This, in turn, means a
steady decline in effective demand for peace goods.
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And these are elements of overproduction, clemetits Hof
economic crisis.
No amount of price control can check the mounting
cost of living. The rulings issued from time to time
by the price stabilization agencies only legalize, reti
respectively, factual price rises. Bureau of Labour Sta=
tistics figures show that in one month alone, from
September 15 to October 15, food prices in New York
advanced 8 per cent on the average. Three additional
taxation bills were enacted in the 1950/51 fiscal year,
adding another 15,000 million dollars. to the nation's
tax bill. The facts show that every new step in eco-,
nomic militarization considerably undermines purchas-
ing power and cuts another segment off the home
market.
This explains a specific feature of the American
economic picture today. Civilian output is contracting
not so much as a result of raw material shortages,
but primarily because of declining purchasing capacity.
Marketing difficulties have forced the automobile in-
dustry and especially the industries producing refriger-
ators, television and wireless sets, washing machines
and other durable goods, to reduce output to a level
where they do not even utilize their allotted quotas of
steel and other materials in short supply. Sales in
these industries are dropping off all the time.
On the other hand, the drop in civilian goods out-
put is not helping to reduce stocks, which continue to
increase from month to month. Gross value of stocks
on hand increased from 53,200 million dollars in July
1950 to 67,400 million dollars in April 1951. In sub-
sequent months, though there was a definite down-
ward trend in production, inventories stood at 70,300
million dollars in July, 70,100 ' million in August and
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69,900 million in September. Obviously, the lag in
sales activity, is greater than the decline in produc-
tion.
The prospect is therefore one of continued reduction
in civilian output, and, consequently, of increased
unemployment. Official American statistics tend to
minimize the number of unemployed. For one thing,
they do not take into account temporary layoffs,
though these involve approximately two million work-
ers a month. If this category is added to the unem-
ployment figure, the number of totally unemployed
will be in the neighbourhood of four million, instead
of the official estimate of two million. In addition,
there are two million part-time workers, engaged
from 1 to 14 hours a week, and the majority of them
should, of course, be classed with the totally unem-
ployed.
New factors making for further production cuts
are bound to come to the surface in the near future.
They include a slowdown in private capital invest-
ments. Though investments increased from 18,600 mil-
lion dollars in 1950 to 24,800 million in 1951, the
American press has all along been predicting that the
upward trend would stop short by the early part of
1952. This is what the "New York Times" wrote at
the end of August:
"The expansion program of private business will
be over by the early part of next year and capital
goods generally should be in fairly steep decline. There
is reason to believe that this stop in private spending
will more than offset the promised increase In govern-
ment defence spending-and will come first."
Private capital investments were to a large extent
artificially induced by increased war orders and only
48
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helped to widen the disparity between the country's
productive capacity and potential markets. Sooner or
later this will be sure to cause still greater marketing
difficulties for. the heavy industries generally, and ma-
chine building in particular.
The financing of war production is encountering
grave difficulties, and inflated taxation has in no way
helped to bridge America's budgetary deficit. From
1,230'million dollars in the second quarter of 1951 it
jumped to 2,620 million in the third quarter-an all-
time high if we exclude certain periods of World War II.
Senator Byrd of Virginia estimates that govern-
ment expenditure in the 1952/53 fiscal year will run at
18,000 million dollars above revenue.
There is one more consideration to be borne in
mind. Financing of war production by new loans is all
the more difficult because World War II has burdened
the United States with an enormous national debt of
257,000 million dollars. The interest on this debt swal-
lows a goodly part of the national budget, and post-
war inflation has cut the value of government war-
time securites by practically one-third. It is hardly,
likely that many Americans will be willing to invest
in new government bonds. Declining incomes are com-
pelling the population to cash in their savings bonds:
beginning with October 1950, for the first time in the
postwar period, monthly sales of savings bonds have
been lagging behind prematurity redemption. This rep-
resents an additional expenditure item for the budget
and, naturally, swells the deficit.
What it all adds up to is that the colossal war pro-
duction can be financed only by further substantial in-
creases in taxation and the inevitable release on infla-
tionary trends. But the huge national debt and mount-
49
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iaig,.inflation hamper the floating of new loans whi'ch'
would increase' the national debt still further.
With the continued expansion of the already exces-
sive fnilitary expenditures, the only way to meet the.
budgetary deficit will be to print more and more
money, which; in turn, will undermine currency cir-
culation and tend to disorganize business activity
generally.
Economic militarization makes for lopsided indus-
trial development, for it inflates war production and
hamstrings the output of consumer goods. The result
is rising taxes and prices, and a consequent decline in
civilian consumption.
It is obvious, therefore, that the arms drive does not
remove the danger of economic crises. If anything, it
accentuates economic difficulties.
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The aim of NEWS is to promote closer un-
derstanding between the peoples of the Soviet
Union and the Anglo-Saxon world. We are firm-
ly persuaded that there is no cogent reason
why nations should not co-operate in peace and
concord no matter what the political structures
or social systems of their countries may be.
NEWS surveys and discusses the major de-
velopments in international life, devoting parti-
cular , attention to the affairs of the Anglo-
Saxon countries, chiefly and primarily with a
view to promoting the cause of peace and
democracy. It endeavours to present as full and
accurate a picture as possible of the leading
events and trends in the political, economic and
cultural affairs of the world..
We believe that one of the most effective
means. of eliminating the present tension is to
give a truthful exposition of the issues that are
vexing relations between states, to provide the
public at large with a broad insight into current
political, economic and other problems.
We do not believe that war is inevitable. We
are firmly convinced that peaceful international
co-operation is possible, and, indeed, essential
for the tranquillity and security of the peoples
of the world.
THE EDITORS
..................... ......................................... 0................
.
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NEWS IS PUBLISHED TWICE MONTHLY
Subscriptions to be addressed to:
AUSTRALIA-A. Keesing, Box 4886, G.P.O. Sydney; Current
Book Distributors, 40 Market Street, Sydney;
CANADA-Progress Publishing Company, 738 Bathurst Street,
Toronto, Ontario;
FRANCE-Nouvelles Messageries de la Presse Parisienne,
111 Rue Reaumur, Paris 2;
GREAT BRITAIN-Collet's Subscription Dept. 411, Great Russell
Street, London W.C.1.;
INDIA-People's Publishing House, 190-B, Khetwadi Main Road,
Bombay 4; Current Book Distributors, 3/2 Madan Street,
Calcutta;
U.S.A.-Imported Publications and Products, Room 1525, 22 East
17th Street, New York 3, N.Y.; Four 'Continent Book
Corporation, 38 West 58th Street, New York 19, N.Y.;
Progressive Book Shop, 1806 West 7th Street. Los Angeles 5,
Calif.
Subscriptions can also be addressed to Mezhduharodnaya Kniga,
18 Kuznetsky Most, Moscow, U.S.S.R.
Editorial Offices: 18b Gorky Street, Moscow,
U.S.S.R.
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 'THIS IS AN ENCLOSURE TO
Appff we?ffe felease 2002/ 900060004-9
M. ALEXANDROV
INTERNATIONAL
TRADE
and
THE IMPROVEMENT
OF THE STANDARD
OF LIVING
IN THE WEST
FOREIGN LANGUAGES PUBLISHING HOUSE
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A C A D E:1I Y 111 SCI I \C1: 4 0 F U.S.S.11
I , IN S 11' 1 T 1; T19 0 P 1.: C O h 0 11 1 c S
M. A.LEXAN1) I1,() Vt
INTERN ,r[ONA L TRADE
and
'I11IF1 1MP1tOVF MINT
OF THE
ST NI)11U) OF LIVIN(
IN THE WEST
FOREIGN LA\GUAUIIs PUBLISHING HOUSE?
Moscow 1952
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Lately, large sections of the public in all countries,
prominent leaders of industry and commerce, economists,
and leaders of trade union and cooperative organiza-
tions, have been eagerly discussing the problem of devel-
oping international economic relations. Most diverse
sections of the public are realizing that the disturbance of
normal commercial relations is painfully affecting the
vital interests of the people of all countries, and that an
expansion of trade can greatly facilitate the development
of world economy, an improvement in the conditions
of life of the people, and the maintenance of peace.
All this explains the universal interest that is being
displayed in the International Economic Conference that
is to be held in Moscow April 3-10, 1952. As is known,
the preparations for the Conference have been undertaken
by the Initiating Committee, which met in Copenhagen
in the autumn of 1951 to define the character, object and
technical organization of the forthcoming international
gathering. In a communique it issued, the Committee
stated: "The object of the Conference is to explore means
for facilitating peaceful collaboration between different
countries and different economic and social systems."
The agenda of the Conference contains only one item,
namely: "Finding possibilities of improving living con-
ditions of the people of the world through the peaceful
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cooperation of different countries and different systems
and through the development of economic relations
between all countries.
The International Economic Conference is not being
convened by governmental bodies. The Initiating Commit-
tee is the only body that is responsible for the organiza-
tion of the Conference. The Soviet Union has made it
possible for the Conference to be convened in Moscow and
has agreed to grant visas without hindrance to all the
participants. As regards the participation of Soviet
representatives in the International Economic Conference,
it, like that of other countries, is organized on a public
basis. In February 1952, on the initiative of the U.S.S.R.
Chamber of Commerce, Soviet industrial and commercial
organizations, cooperative societies, trade unions, the
Institute of Economics of the Academy of Sciences of the
U.S.S.R. and economic research organizations, an Ar-
rangements Committee was set up in the Soviet Union. This
committee includes representatives of different Soviet
public organizations which study problems concerning
economics and trade. The chairman of the committee
is M. V. Nesterov, President of the U.S.S.R. Chamber of
Commerce.
An extremely important feature of all. the measures
taken in connection with the organization of the Interna-
tional Economic Conference is that people of the most
diverse political convictions are participating in the work
of the Initiating Committee, and of the Arrangements
Committees which have been set up in many countries.
These people do not meet for the purpose of engaging in
political and ideological disputes, or to thrust different
views concerning social and economic systems down each
other's throats; they meet in order to work out, in a prac-
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tical and businesslike way, concrete proposals for the
development of international trade, for the resumption
and expansion of long-established economic relations be-
tween countries. This will also be the outstanding feature
of the International Economic Conference itself. Robert
Chambeiron, the General Secretary of the Arrangements
Commission of the International Initiating Committee,
wrote: "This is to be an economic conference, and par-
ticipation in it is in no way bound with the acceptance
of any particular political conceptions. To demand that
a man who regards the capitalist system as the best in
the world should become a Socialist, or that a Socialist
should become an advocate of the capitalist system,
would mean foredooming the Conference to failure..
But I do not think that anybody has any intention of
doing so."*
The communique issued by the Arrangements Com-
mission on February 15, after its meeting in Copenhagen,
again emphasized that the object of the Conference is to
ascertain "how the development of normal commercial
relations between countries and an increase in foreign
trade can help to expand national production, to increase
employment and reduce the cost of living."
The problems to be discussed at the International
Economic Conference are of interest to wide business
circles and to large sections of the people in all countries.
Information is being received from various countries
that the convocation of the International Economic Con-
ference has roused interest among industrialists, commer,
* In Defence of Peace, Russ. ed.,.No, 3, 1951, p. 84,
b
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cial men, economists, trade unions, cooperative societies,
etc. Exceptional interest in the prospect of establishing
contact with representatives of business organizations
of the Soviet Union, China and the European People's
Democracies is being evinced by those circles in the
West which only a few years ago had carried on a fairly
brisk trade with these countries, or had been their regu-
lar suppliers of equipment, machines, textile goods, fruit,
etc. United States business circles are also displaying
interest in the Moscow International Economic Confer-
ence. The New York Times, for example, although trying
to put the object of the Conference in a false light, never
toeless admitted that it opened up real possibilities for
expanding international trade, since the Soviet Union
and China represent indispensable markets which can
keep the industries of the Western countries going for a
long time to come. Another American newspaper, The
Daily Compass, has also reported the desire of a number
of representatives of United States business circles to
open negotiations with the Soviet Union, and it has ut-
tered the warning that the armaments program which the
United States was carrying out could not improve the
economic situation in that country. The newspapers re-
port that representatives of the business world in West-
ern Europe, India, Pakistan, Latin America, Lebanon,
Egypt, Japan and of many other countries, have ex-
pressed willingness to attend the International Econom-
io Conference.
Thus, the initiative taken to improve international
economic relations, primarily to develop trade between
the East and the West, has niet with active support all-
over the world. The Italian journal Notizie Economiehe
wrote in an editorial article: "The object of the Con-
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bronco is to devise measures to raise the standard
of living of the people by moans of peaceful economic
collaboration and the development of international trade
between all countries on the basis of equality.... In con-
nection with the Conference, we would like to emphasize
two important factors: on the one hand, its world-wide
character, since it will be attended by representatives of
capitalist countries and also of the Soviet Union, China
and the People's Democracies, as well as of the colonies
and the so-called backward countries; on the other
hand, the extremely concrete character of the work and
expected results of the Conference. From this we may
conclude that, from the very outset, the Moscow Confer-
ence will mark an important step towards economic
prosperity under the conditions of world peace."
? The wide possibilities the International Economic
Conference opens; and the practical aims it sets itself,
have been very well formulated by the distinguished Cu-
ban economist,. Jacinto Torras, in a long article published
in Noticias de Hoy of February 10. In this article Torras
wrote:
"No delegate is asked to state what opinions he holds,
or where he was born-admittance to the Conference is
not hedged in by any conditions except one, namely,
activity in the economic sphere in some country.
Thus, although the Conference is to take place in Moscow,
for the Soviet Union is the only Great Power which from
the outset gave wide guarantees for visas for all persons
to whom the Initiating Committee sends invitations,
the majority of those attending will be capitalists.
"No delegate will be _ bound by the [e-mail] of the
Conference: his name will not .be, associated with any do-
cision or agreement to which he has not given his unre
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served consent. In addition to delegates, persons will
attend the Conference in the capacity of observers.
"The International Economic Conference that is being
convened in Moscow will concentrate its attention on
studying the present situation in the field of trade, em-
ployment, the standard of living of the people and the
economy as a whole in all countries, and in this will not
be prompted by academic and speculative motives, but
by the desire to find practical solutions for complex
problems in order to benefit the people and to promote
peaceful collaboration between all nations."
There is a ring of conviction in the warning J. Torras
uttered to those who would sacrifice the economic inter-
ests of their country to the self-seeking organizers of
the policy of discrimination in international trade.
"The country which is given the opportunity to sell for
cash a considerable quantity of its products on terms of
absolute equality, and which throws away this opportu-
nity," writes the Cuban economist, "may be regarded as
foolish as a shopkeeper who chose his customers according
to the ideas they held and refused to sell goods to people
who belong to a political party other than his own. Such
a commercial policy in private enterprise must lead to
bankruptcy.... '
The obstacles to trade between the West and the
East that have been created recently by the restrictive
measures imposed by United States ruling circles is
causing palpable damage to the national interests of the
various countries, and this is evoking increasingly sharp
criticism among most diverse sections of the public, in-
cluding industrial and commercial circles in the Western
countries. These restrictive measures inflict exceptional
privation upon- wide sections of the population of West.
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ern Europe and America, Asia and the Near and Middle
East, who are suffering from the armaments drive, the
curtailing of the production of civilian goods, unemploy-
ment, and decline in wages. They harmfully affect
thousands of small and medium manufacturers who are
experiencing enormous difficulties as a result of the
disturbance of free commercial intercourse between coun-
tries, and also the big manufacturers of civilian goods
who are deprived of scarce raw materials, which are
diverted for the manufacture of armaments. For the
broad masses of the people, and for largo numbers of
manufacturers, the resumption of normal international
trade is indeed a matter of life or death. Nobody can deny
now that the armaments drive means ruin and poverty for
millions, that it is leading to a crisis in civilian economy,
to a reduction in the purchasing power of the population.
The possibility of widely developing trade, and eco-
nomic relations generally, between countries having dif-
ferent social systems has been proved by theory and by
practice. It has been proved by the experience of the
Soviet Union during the thirty-four years it has been
in existence. Hardly anybody would dare deny the
economic expediency of commercial intercourse between
the East and the West.
Trade with Eastern Europe has long been an -impor-
tant item in the foreign trade of the majority of West-
European countries. It acquired exceptional importance
for the economy of Western Europe in the postwar. period
for the following reasons: first, the Soviet Union and the
People's Democracies are long-standing exporters of
items of such extreme importance for industrial and
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civilian consumption in the West-European countries as
bread and fodder grain, foodstuffs, timber, coal, fer-
tilizers, oil products, industrial equipment, etc.; second,
the Soviet Union and the People's Democracies do not
demand payment in gold or dollars, the shortage of which
creates an extremely acute problem for most Western
countries, but are willing to accept in exchange for their
goods raw materials, industrial equipment and manu-
factured goods, the export of which is profitable for the
Western countries; third, the Soviet Union, the European
People's Democracies, and also China, are long-estab-
lished extensive markets for many of the commodities
that are produced in Western countries and in the colo-
nial East.
On the one hand, the Western countries are in urgent
need of markets for their goods, and of orders for their
factories so as to be able to reduce unemployment; on
the other hand, they need raw materials for their indus-
tries and food for their people. The Soviet Union, the
countries of Central and Southeast Europe and the Chinese
People's Republic are also interested in expanding their
foreign trade.
The Soviet Union's attitude towards the possibility
of extensive economic collaboration between countries
having different social and economic systems has been
clearly formulated in repeated statements made by the
great leader of the Soviet state, Comrade Stalin. He said:
"Our relations with the capitalist countries are based on
the assumption that the coexistence of two opposite sys-
is possible." * He has also defined the practical
tems
* J. V. Stalin, Political Report of the Central Committee to
the Fifteenth Congress of the C.P.S.U.(B.), Moscow 1950, p. 30.
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basis for agreements between the U.S.S.R. and capital-
ist countries. "Exports and imports," he said, "are the
most suitable ground for such agreements. We require
equipment, raw materials (raw cotton, for example),
semimanufactures (metals, etc.), while the capitalists
require a market for their goods. This provides a basis
for agreement. The capitalists require oil, timber, grain
products; and we require a market for these goods. Here
is another basis for agreement."*
In the speech he delivered on the 34th anniversary of
the Great October Socialist Revolution, Comrade
L Beria, the Vice-Chairman of the Council of Ministers
of the U.S.S.R., quoted the above statements by Comrade
Stalin and went on to say: "This was said in 1927. Today
we have incomparably greater potentialities for business
relations with the capitalist countries. We have no objec-
tion to considerably expanding business cooperation on
a basis of mutual advantage with the United States,
Britain, France and other bourgeois countries both in
the West and the East. It is not the fault of the Soviet
Union that the rulers of these states have, to the detri-
ment of their own countries, taken the course of under-
mining and disrupting economic relations with the
U.S.S.R." **
Elliot Roosevelt once asked Comrade Stalin: "Do you
think, Generalissimo, that an important step towards
general world peace would be the achievement of a wide
economic agreement for the mutual exchange of manu-
factured goods and raw materials between our two coun-
* J. V. Stalin, Works, Russ. ed., Vol. 10, p. 123.
** L. P. Beria, The 34th Anniversary of the Great October
Socialist Revolution, Moscow 1951, p. 29.
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tries?" To this Comrade Stalin replied: "Yes, I believe
that this would be an important step towards the estab-
lishment of world peace. Of course, I agree that it would.
The expansion of -foreign trade would in many ways
promote the development of friendly relations between
our two countries."*
Facts have proved that the Soviet Union and the Peo-
ple's Democracies stand for the development of mutually
profitable trade and of business relations with all coun-
tries, irrespective of their social and economic systems.
It is .a well-known fact that, after the war, the U.S.S.R.
and the countries of Central and Southeast Europe
concluded trade agreements with different countries.
On the basis of these agreements the West-European
countries began to receive goods they need from the So-
viet Union and the People's Democracies and to export
manufactures and raw materials to these countries.
The Soviet Union was the initiator in the setting
up of the Sub-Committee for Developing Trade of the
United Nations Economic Commission for Europe. The
Soviet Government has invariably supported all the
measures proposed by this Committee for the resumption
and development of mutually profitable trade between
Eastern and Western Europe.
The Soviet Union demonstrated its desire to develop
trade with the West-European countries at the confer-
ence of government experts for the development of
European trade that was held in Geneva in August 1951.
The Soviet expert who attended that conference empha-
sized that the U.S.S.R. was willing to maintain the
volume and assortment of its trade with the West-Euro-
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pean countries at least on the 1949-50 level, provided
those countries supplied the U.S.S.R. with approximate-
ly the same assortment of commodities that they had
supplied in 1949-50. If the West-European countries
were able to enlarge the list and offer larger quantities
of commodities the Soviet Union is interested in, the
latter would be willing correspondingly to increase its
supplies.
It is well known that, before the war, exports of
various kinds of raw materials and foodstuffs from East-
ern Europe went a long way to satisfy the needs of a num-
ber of countries in Western Europe. Eastern Europe sup-
plied 35 per cent of the timber imports of Great Britain,
France and Belgium and 47 per cent of those of Germany.
Eastern Europe supplied 20 per cent of all the wheat,
18 per cent of the fodder grains, 20 per cent of the eggs,
etc., imported by Western Europe.
At the present time Eastern Europe is in a position
to export still larger quantities of commodities like
timber, furs, certain kinds of ore, oil products, coal,
wheat, rye, butter, meat, sugar, eggs, etc. On the other
hand, the vast peaceful construction that is going on in
the Soviet Union, the European People's Democracies and
in the Chinese People's Republic opens up the possibil-
ity of placing big and profitable orders with the indus-
tries of the Western countries for equipment for the innu-
merable construction schemes that are being carried out
in a vast area stretching from the South China Sea to the
Danube. Nor are there any business considerations that
can hinder an increase in the export from the Western to
the Eastern countries of the products of the consumer
goods, food and other industries. Even if trade with
Eastern Europe were brought back to the prewar level-
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and in view of the steady improvement in the conditions
of life of the people in the East-European countries
this could easily be exceeded-Great Britain could in-
crease her exports of cotton goods by 80 per cent, woollen
cloth by 50 per cent and worsteds by 24 per cent. It would
enable France to increase her exports of medicaments
by 20 per cent, dyes, pencils and paints by 30 per cent,
cotton yarn by 54 per cent, perfumes and soap by 9 per
cent, canned fish, including sardines, by 36 per cent, etc.
Every sober-minded businessman must admit that
all the necessary conditions exist for the development
of trade between East and West. Numerous facts go to
show that this is possible and necessary; it is proved by
statements in the press, and by the utterances of many
political and business leaders in a number of Western
countries.
It is appropriate to recall here what Lloyd George
once said about trade with Soviet Russia. Having con-
vinced himself of the stability of the Soviet regime,
and expressing the sentiments of British business circles
who were displaying great interest in trade with Soviet
Russia, he, as Prime Minister, stated in the House of
Commons on February 10, 1920, that Europe needed what
Russia could supply. If the members of the House were
familiar with the figures which showed the part Russia
had played in supplying Europe before the war, he said,
they would appreciate the degree to which Russia's drop-
ping out of the supplying countries affected the rise in
prices, the rise in the cost of living, the appearance of
dearth and hunger.
14
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More than thirty years have passed since those words
were uttered, but they are being repeated in different
variations by leading people in present-day Britain.
For example, in August 1951, Sir Hartley Shawcross,
then President of the Board of Trade in the Labour.
Government, stated in the House of Commons that
trade between Eastern and Western Europe had always
been a constant and important feature of European econ-
omy. He said that it was necessary to reckon with the
vast grain resources of Eastern Europe, with the timber
from the U.S.S.R., coal from, the Polish mines and
foodstuffs from Hungary and Poland. In 1950, Great
Britain imported from the East-European countries
690,000 tons of fodder grains, more than a third of her
total imports of these grains. These purchases provided
fodder for a fourth of all cattle in the country. Further,
the purchase of 220,000 standards of soft wood accounted
for a fourth of the total imports of this commodity. Of
bacon imports, 10 per cent came from them. Britain
is interested in many other commodities that are exported
by the East-European countries. In conclusion he said
that for certain commodities, Eastern Europe remains
Britain's sole source of supply.
Several days later, Anthony Eden, the present British
Foreign Secretary, delivered a speech in New York in
which he associated himself with Shawcross's statements.
He said: "Britain needs the materials she is getting from
the Soviet Union, especially timber and coarse grain...
it is not a wise principle to out off trade between East
and West."
The British press has lately contained numerous state-
ments openly admitting that the cessation of trade with
Eastern Europe, which the leaders of the Atlantic bloc. are
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demanding, would cause a reduction in the food supplies
of the British people, a further reduction of housing
operations, a reduction of cattle fodder, etc. The news-
papers emphasize that the commodities of primary im-
portance which Britain imports from Eastern Europe
cannot be obtained from any other part of the world.
In an article entitled "Trade Bar Deepens Crisis"
published in the New Central European Observer, Gordon
Schaffer writes: "1 suggest that we in Britain have now
reached a stage in our postwar story when the condition
of survival of our people, the only chance of preventing
economic catastrophe, lies in our ability to rebuild the
bridge of friendship between East and West." Schaffer
reviews the possibilities of trade between . t he U.S.S.R.
and other countries of the camp of peace, on the one hand,
and Western Europe, on the other hand, particularly
emphasizing the vast development of the national re-
sources in the U.S.S.R., the European People's Democra-
cies and the Chinese People's Republic. He remarks that
"Western Europe-and Britain in particular---cannot live
without Eastern trade. The Economic Commission for
Europe where, it should be remembered, there is an
anti-Communist majority, has issued statistics proving
this fact time and time again." Schaffer adds that "the
fundamental question emerges that only by reducing
expenditure on armaments and by securing markets in
the eastern world for British goods can there be any
radical change" in the steady lowering of standards
of the British people. Schaffer concludes:
"As the crisis grows deeper (and it will grow deeper),
as threats to our standards of living and our social
services become more vicious, we shall find that more
and more people are joining us in our struggle for trade
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and friendship and for peace which trade and friendship
will bring."
The importance for Great Britain of the import of
food, raw materials and other commodities is very
well known. Even with rationing, 60 per cent of the food
consumed in the country is at present imported from
abroad. According to reports in the British press, during
eleven months of 1951, Britain imported from the Soviet
Union grain and timber to the value of #34,000,000. The
entire sum the U.S.S.R. obtains from the excess of
exports to Great Britain over her imports from that coun-
try is spent in the sterling zone, which is obviously to the
advantage of Great Britain herself as well as of her domin-
ions and colonies. The more farsighted of the British
industrialists and commercial men fully appreciate the
mutual advantages of trade and other economic relations
with the U.S.S.R., the European People's Democracies and
with the Chinese People's Republic. They are aware that
the development of trade with these countries would not
only assure for Britain stable and ever expanding markets,
but also a reduction and even the liquidation of the dollar
shortage.
It is appropriate here to mention, in particular, the
importance of the Chinese market for Great Britain.
For a long time, Britain was a constant purchaser of largo
quantities of Chinese commodities, particularly of egg
products, tung oil, bristles, wool, raw silk, tea, etc.
On the other hand, she supplied China with manufactured
goods, equipment, chemicals and fertilizers. By partici-
pating in the economic blockade of China, Britain is
causing herself considerable economic loss by .artificially
reducing the revenues of Hongkong, through which
China imports her goods. By establishing with the Chinese
3 - $562 ]7
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People's Republic normal trade relations based on mu-
tual advantage and equality, Britain could greatly enhance
her exports to China and purchase there the raw mate-
rials and foodstuffs she needs so urgently without having
to spend dollars. This would improve Britain's balance
of payments and enable her to reduce her dollar deficit.
The measures taken by United States ruling circles,
such as the Kem Amendment and the Battle Act, with the
object of utterly paralyzing trade between the Western
and Eastern countries and the threats to cut off United
States "assistance" for those who refuse to submit to these
American laws, are rousing increasingly sharp criticism
in Great Britain, for it is becoming more and more evident
there that the embargo on the export of a. long list of
commodities to Eastern Europe, and also the cessation
of trade with China at the behest of the United States, are
causing great damage to Britain's economy. For example,
The New Statesman and Nation wrote that an economic
union of Western Europe which would demand the isola-
tion of the East is an absurdity, for it would mean a sharp
deterioration of the standard of living of the Western
countries, unemployment in industry, and reversion
to a distinctly agrarian type of economy. The opinion
of the Labour weekly was echoed by the Conservative
Statist, which wrote that a study of intra-European
trade leaves scarcely any doubt that the artificial divi-
sion of Europe into two parts is 'responsible for many of
the. shortages and economic difficulties in the United
Kingdom and the other West-European countries." Amer-
ican pressure on Britain to compel her to stop trading
with Eastern Europe has also been censured by The Times,
which wrote that the problem of the future economic rela-
tions between the Western world and the Soviet Union
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and the People's Democracies cannot be solveli simply
by the hasty passing of a law in Washington.
The Press Association reports that Arthur Bottomley,
Labour M.P., former Secretary for Overseas Trade, said
at the annual rally of the Kent Labour League of Youth
that the most natural markets for Britain and the Common-
wealth countries are in the East and that "we must
not allow political expediency to damage our long-term
interests."
Reynold's News publishes an article by James Harold
Wilson, President of the Board of Trade in the Labour
Government, in which he says that to avert a crisis Britain
should resume her freedom to develop trade with Eastern
Europe and other parts of the world which can send the
goods she needs and will take the goods she can sell.
The United States press is energetically spreading
the story that the U.S.A. is compensating the West-
European countries, and Groat Britain in particular,
for the loss incurred by the rupture of trade relations with
the Soviet Union and the People's Democracies. The
London Economist stated that this claim is groundless,
and it went on to say that there is a sincere desire in West-
'European countries to avoid dependence upon American
charity. In Groat Britain, for example, the resumption
of Marshall Plan assistance would be regarded with
utter disgust, largely because of the unforeseen and often
-unreasonable conditions that are attached to American
assistance, and often introduced when the program is
already being carried out.
There can be no doubt whatever that trade between
the Soviet Union and Great Britain could develop much
more successfully, to the benefit of both countries, if the
British Government abandoned the policy of discrimina-
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tion in trade with the Soviet Union and developed this
trade in conformity with Britain's national interests,
as wide circles of the British public are demanding. Speak-
ing at the Annual Conference of the National Union
of Mineworkers in Blackpool, William Pearson, repre-
senting the Scottish miners, said that expansion of
trade and the strengthening of friendship between Britain
and the Soviet Union are needed now more than ever be-
fore. Everybody realizes that improved relations would
serve as a basis for permanent peace. The revival of trade
would help to reduce prices in Britain. This would help
to solve Britain's economic problems.
The opinion of many representatives of British busi-
ness circles was expressed by The Star, which in an edi-
torial article on the forthcoming International Economic
Conference wrote that the appeal for the revival of trade
between East and West at least on the 1949-50 scale
deserves serious attention. This trade is profitable for
both sides economically and politically. It helps to main-
tain peace.
The representatives of the business world in the West-
ern countries are becoming more and more convinced
that reduction of trade with the East is one of the direct
causes of the aggravation of the economic difficulties
these countries are experiencing. The unsound, one-
sided trend which the advocates of a policy of war are
trying to give international trade is so patently unwise
and profitless that it is rousing increasing indignation
in the Western countries. Indeed, looking at it from the
point of view of economic interest, can anybody fail
to see the utter absurdity of breaking long-established
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and tried international trade relations based on mutual
advantage and of yielding to the American monopoly of
the markets which is forcibly converting the West-
ern' countries into more appendages of the American
market? When the Western countries are compelled, for
example, to import high-priced American coal and
pay, for it in dollars, whereas they have every opportunity
to !buy high-grade coal at a much lower price in the
East-European countries and to pay for it in goods,
is it not obvious that such a policy cannot be regarded
otherwise than as suicidal for the economy of the Western
countries? Can the rupture, as a result of United States
pressure, of interzonal trade between Western Germany
and the German Democratic Republic, or the pressure
that is being brought to bear upon Japan to stop trading
with the Chinese People's Republic, be regarded as
normal?
Unable to justify their policy on business grounds,
United States ruling circles are calling it "economic war."
The New York Times wrote that the United States has
reached the point of regarding trade between East and
West as an element of economic war. Every sound-
minded person will agree, however, that economic war
in peacetime is abnormal, to say the least. Moreover,
this economic war operates to the detriment of precisely
those who are organizing and taking part in it.
But even United States ruling circles cannot deny
that the maintenance of trade relations with the Eastern
countries is a matter of vital importance for the Western
countries. Congressman Battle, who introduced the Act
that bears his name, and the object of which is to reduce
trade between East and West to zero, said in a speech
in Congress that if the West-European countries' imports
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from Eastern Europe were to stop suddenly, most of the
West-European countries would- be faced with a real
crisis. The raw and other materials they import from
Eastern Europe are needed for their normal existence.
In the light of such statements, the demand for a complete
rupture of trade relations between West and East recently
repeated most categorically by Harriman, U.S. econom-
ic dictator of Western Europe, sounds particularly
absurd. It is not surprising that the West-European
countries cannot submit to the demand for the cessation
of trade with the East, a demand which simply flies in
the face of reason.
Wide sections of the public in West-European
countries see no grounds whatever for rupture of business
relations between West and East; they are demanding
that economic relations be placed on a normal footing
with all countries, irrespective of their social systems.
Recently, The New York Times stated that European trade
experts doubt very much whether the United States
Congress, with all the problems facing it, can have a suf-
ficiently clear idea of whether it will be., good or bad for
the West to send, say, ten tractors to Poland in exchange
for 5,000 tons of coal.
Every day brings proof of the fact that the commercial
policy which United States ruling circles are forcing upon
the West-European countries is undermining the very
foundations of the normal economic development of these
countries. The hindrances to trade between West and
East create insurmountable economic difficulties for the
Western countries. Disturbance of normal international
economic relations injures the foreign trade of the West-
ern countries themselves. This trade cannot develop
under the conditions created by the armaments drive and
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the financial crisis which this drive. has intensified; it
cannot develop when the West-European countries are
forcibly bound to the dollar market and are deprived of
the opportunity to solve their economic problems in
conformity with their national interests.
Facts show in particular that the so-called Euro-
pean economic cooperation imposed upon the Western
L countries by the Marshall Plan has proved a failure. The
latest measures taken by the British and French Govern-
ments, and also by the West-German authorities, who
have imposed restrictions on imports from other West-
ern countries, show, on the one hand, that the financial
crisis in these countries is growing more acute owing to
their increasing dollar difficulties and excessive expend-
iture in armaments; and, on the other hand, that the'
struggle for markets is becoming more intense. All this
testifies to the failure of the vaunted West-European
"economic cooperation."
The same is proved by the recent protests of the Scan-
dinavian countries against the unilateral reduction
of the price of cellulose by Britain and France, and
also by the representations made by the Italian and a
number of other governments to the U.S. State Depart-
ment concerning the new restriction of United States
imports.
The American idea of "free trade" is very one-sided,
and has nothing in common with normal economic collab-
oration, which presupposes equality and mutual consid-
eration for partners' interests.
Deterioration of the balance of trade is today char-
acteristic of all the West-European countries without
exception. Efforts to find a way out of this difficult
situation force all practical-minded people to the
23
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conclusion that international economic relations must
take a resolute turn towards equality and mutual advan-
tage, towards the resumption and expansion of trade be-
tween East and West.
It is well known that whereas Britain's foreign trade
deficit is due, in the main, to increased imports, that
of France is due primarily to the drop in her exports,
which from the end of 1950 to the summer of 1951 amounted
to 26 per cent (in volume). This inevitably resulted in
a considerable increase in unemployment and in increased
difficulties in many branches of France's industry.
More often and more loudly are voices being raised
in France demanding the all-round development of
foreign trade. Only very recently a statement in favour
of expanding trade between East and West was made by
Bonnefous, Chairman of the Foreign Affairs Committee
of the French National Assembly. A similar statement
was made at the end of September 1951 by Robert Schu-
man, then Minister for Foreign Affairs. The opinion is
widespread in French business circles that an increase
in exports to the Eastern countries will help to solve the
problem of using the production capacities of French
industry in other ways than by pursuing the antinational
armaments drive policy. A statement in favour of expand-
ing trade with Eastern Europe has been made by the
French National Council of Industrialists, emphasizing
that the restriction of trade with the U.S.S.R. and the
countries in Central and Southeast Europe is harmfully
affecting the development of French industry. Business
circles in Marseilles, one of the biggest ports in France,
know from their own experience how much France is
losing as a result of the shrinkage of economic relations
with the East. Chartron, the manager of a big pipe-roll-
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ing mill in Marseilles, told a correspondent of In De-
fence of Peace: "Our port is suffering from stagnation.
We must have trade with the East; we must resume trade
relations with the Black Sea countries.... Unless we exert
all efforts to make France resume normal trade relations
with all countries, we shall not be able to remove this
stagnation even next year. Regrettable though it be, I am
profoundly convinced of this. "
The forthcoming convocation of the International
Economic Conference has given a strong impetus to the
movement in Franco in favour of expanding trade rela-
tions with the U.S.S.R. and the People's Democracies..
The Paris Presse Intransigeant, in an article on the
International Economic Conference in its issue of Decem-
ber 26, 1951, stated that the development of trade rela-
tions between West and East, which may result from
the Conference, "would enable us to pass from the policy
of armaments to the policy of peace-time economy."
The author went on to say that the expansion of such
trade would provide the Western countries primarily
with building timber and other raw materials in exchange
for manufactured goods. In the middle of December
1951, the French National Prices Committee unanimously
adopted a resolution demanding an expansion of trade
relations with all countries without exception. In Gre-
noble, at a public meeting held to welcome the French
delegation that had visited the Soviet Union, a resolution
was passed calling for the improvement of trade relations
between the countries of Western and Eastern Europe.
In Villeurbanne, the Works Committee of the Fayol
textile-machinery plant, consisting of the represent-
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atives of the management and of the workers, protested
against the plant being prohibited from executing an
order for the Chinese People's Republic and demanded
an improvement in trade relations between France and the
U.S.S.R., the European People's Democracies and the Chi-
nese People's Republic. The Works Committee also called
upon the management to send a delegation to the Moscow
International Economic Conference. The managements
and workers' committees at the paper mills in Roanne,
Department of the Loire, the Municipal Council of
Clermont-Ferrand, Department of Puy-de-Dome, and
the workers' committees of the soap works in Mar-
seilles have passed resolutions calling upon the French
Government to increase trade between France and the
Soviet Union and the People's Democracies. Lefaucheux,
manager of the Renault plant, stated: "I am in favour of
the resumption of trade with the Eastern countries. The
nationalized Renault plants will do all in their power
to have this trade resumed at the earliest date."
American ruling circles ordered the French authori-
ties to prevent representatives of France from attending
the Moscow International Economic Conference, but
considering how strongly French public opinion is in
favour of participation in the Conference, it is not so easy
openly to place obstacles in the way. At the end of Feb-
ruary, Robert Buren, Minister of Economy in the Faure
Cabinet, now resigned, was obliged under pressure of
public opinion to state in the National Assembly that
the French Government was willing to issue passports
to all those who wished to attend the International
Economic Conference in Moscow. He added that, in his
opinion, the International Economic Conference would
help to promote trade.
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In addition to business circles, interest in the Inter-
national Economic Conference is also being displayed
by the French trade unions. For example, the Management
Committee of the Confederation Generale du Travail has
announced its intention to send representatives to the
.Conference. In the resolution that was published in this
connection, the Management Committee of the C.G.T.
said:
"The difficulties that are at present encountered in
the economic life of many countries are largely due to
the disturbance of international trade and the shrinkage
of markets. This applies particularly to France, for the
deficit in her-balance of trade in the dollar zone and in
.respect to the European Payments Union, renders prob-
lematical the importation of commodities that are of the
utmost importance for the economic life of France. It
.would be a mistake to think that French industry can
find the markets it needs in the dollar zone. The shortage
of-raw materials and the shrinkage of markets are already
.causing a rapid increase in unemployment and of its
corollary, poverty.
"Consequently, the resumption of trade between East
and West is in conformity with the vital interests of
French industry...."
The resolution further emphasizes that the convoca-
tion of the Moscow International Economic Conference is
in conformity with "the interests of the whole of France's
,economy, whose position is at present extremely critical,
and which can gain immediate and tangible benefit from
a favourable outcome of the Conference, just as other
countries can."
A big movement in favour of developing trade rela-
tions with the East-European countries is seen in Italy,
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which is meeting with ever-increasing difficulties in ex-
porting civilian goods and, as a consequence, is suffering
from increasing unemployment and a deterioration of
the standard of living of the people. The Milan economic
newspaper Ventiquattro Ore, organ of influential circles
of the General Federation of Italian Industry, after
quoting excerpts from an article by the director of
the Paris newspaper Le Monde, who called for the par-
ticipation of businessmen and economists in the Moscow
Conference, and censured American interference in this
matter, declared that it fully agreed with the French
paper, provided there will really be no political prop-
aganda at the Moscow Conference.
We consider it useful, the paper continues, for our
businessmen to go to Moscow and conclude contracts
there.
Political partitions always upset economic equilib-
rium, breed poverty and eventually boomerang back at
those who are guided by ideological prejudice. No one
who "is worthy of being called a businessman" can recon-
cile himself to such a state of affairs, declares the paper.
Belgium, Holland, Switzerland and the Scandinavian
countries are also experiencing increasing economic diffi-
culties as a consequence of the armaments drive and the
disturbance of international trade relations; they are
suffering considerable loss as a result of the shrinkage of
trade with Eastern Europe. The Dutch newspaper De
Waarheid quoted a statement made by Milius, the direc-
tor of the International Fair in Utrecht, who, after men-
tioning the difficulties encountered in international
payments, expressed the opinion that the only rational
means of surmounting them was to increase exports
and to develop trade with the Eastern countries.
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During the debate in the Belgian Chamber of Deputies
on the budget of the Ministry of Labour and Social Main-
tenance, Deputy Isabelle Blume rightly pointed to the
connection between the development of trade with the
East and the problem of improving conditions of life in
the Western countries. She said that one of the means of
combating unemployment is to expand trade relations
with the East-European countries. "We must not," she
said, "neglect the opportunity to provide work for the
300,000 Belgian unemployed. This can be done by devel-
oping trade with countries which offer favourable terms
for profitable long-term economic relations."
The Swiss newspaper Vorwarts published an article
on the Moscow International Economic Conference under
the significant heading "It Is Necessary to Act Before It
Is Too Late." Pointing to the symptoms of an approaching
economic crisis in the Swiss textile, food and other indus-
tries, the newspaper says: "Switzerland has every reason
to support every effort made at invigorating internation-
al trade. There is hardly another country as dependent
on its imports and exports as Switzerland is. The nation-
al interest requires that our economic circles, in the
broadest meaning of the term, be represented at the Con-
ference. It would be unpardonable if political considera-
tions, now so much in vogue, prompted Swiss circles not
to take a serious view of the Conference, or if suspi-
cion and prejudice gained the upper hand over common
sense.
"The participation of Swiss economic circles in the
work of the Conference," continues the paper, "is in the
interests of our country. It is necessary to act before
it is too late. Moreover, it would he useful to bear in mind
the failure of the policy of nonrecognition of the U. S. S. R.
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which Switzerland conducted for 25 years between the
two world wars....
"Switzerland's interests dictate the reed to follow
the path of multilateral economic relations with all the
countries of the globe.'
Reflecting the sentiments of business circles and
of the general public, the Scandinavian press is more and
more often expressing discontent with the obstacles that
are being artificially put in the way of the development
of trade between West and East, and is speaking in favour
of expanding this trade. The Danish newspaper Berlingske
Aftenavis wrote: "Denmark has to choose between dollar
aid and trade with Eastern Europe. In her present position
she will find it difficult to dispense with trade with
Eastern Europe, to dispense with coal imports from
Poland and commodities from other East-European
countries."
A similar point of view is expressed by the Norwegian
press. The Al tenposten stated that the West-European
countries are disturbed by the restrictions that are being
placed on trade with the East. "This trade," it wrote,
"must not be regarded as the sale of goods for the purpose
of gain. It is a matter of obtaining vitally important com-
modities, which cannot be obtained elsewhere." And the
journal Kontakt observed that "the U.S.S.R., Poland,
Eastern Germany and Czechoslovakia are our most impor-
tant partners in the East." It quotes data showing that
Norway buys from the U.S.S.R. grain and ore in exchange
for salt herrings, hard whale blubber and aluminium. From
Poland Norway obtains coal and grain, and she sells to
Poland ferro-alloys, sulphur pyrites, herrings and fats.
From Czechoslovakia she obtains sugar in exchange for
herrings, ferro-alloys and other commodities.
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Hellmer Holmberg, chief editor of the Swedish Norrs-
kens-Flammen, states in a leading article in that news-
paper that the International Economic Conference had
roused great interest all over the world, including Sweden.
The author writes that it is extremely important for
Sweden to develop economic and trade relations with
the Soviet Union and the People's Democracies. In con-
ditions of American pressure which has caused certain
Swedish industries to suspend production because of the
shortage of raw materials, it is important for Sweden
to trade with the countries of Eastern Europe, where the
market does not suffer from crises. The former Swedish
Minister of Trade Gunnar Myrdal at one time said, Holm-
berg writes, that Sweden should establish relations with
the crisis-immune markets in the East. There were
many, probably including several members of the govern-
ment, who shared this view of Myrdal's. But more influen-
tial forces appeared on the scene. These forces step by
-step impelled Sweden's trade policy onto the path indi-
cated by_ America, and this has resulted in an economic
blockade of the Soviet Union and the People's Democra-
cies. The author points out that such one-sided trade
relations with unstable markets create a big risk and hold
out the threat of catastrophe for the economic life
'of Sweden.
"It would be better for the world," he concludes, "if
the governments of Europe realized that it is in their
own interests to conclude trade agreements with coun-
tries that are not in need of rationing, which are not closing
down factories and mills, but opening new ones, which
are not increasing, but are lowering prices, and which
urge the peoples of Europe to tear down the economic iron
'curtain which the Americans are trying to put up."
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Trade relations with the Soviet Union and the Peo-
ple's Democracies are a matter of vital importance for
Finland, and realization of this has been quickened in
that country by the difficulty she is now encountering in
finding markets for her goods.
The newspaper Tyokansan Sanomat has printed brief
statements by the Director-General of the Bank of
Finland and Foreign Minister Sakari Tuomioja and the
prominent Finnish economists Klaus Waris and Jakob
Julin, who stressed the importance of the Moscow Confer-
ence for Finland. They pointed out that Finland was
at present extremely interested in expanding her markets.
Both from the standpoint of the state and from the
standpoint of the Finnish Government, said Tuomioja,
it is important for Finland to be represented at the Con-
ference by a full-fledged and representative delegation.
Considerable attention to the question of resuming
and developing trade relations with the East is being de-
voted by business circles and the press of Western Ger-
many. Moser, the Chairman of the Society for Trade With
the East, stated: "If German economy as a whole fails
to claim its right to take part in world trade, particularly
with the Eastern countries and the Far East, we shall
certainly be faced with the danger of being largely ousted
from world trade and with the danger of losing one of the
most essential prerequisites for the economic unity of
Germany. "
The Dusseldorf journal Chemische Industrie called for
the normalization of trade with the East, stressing
how extremely necessary this was for the chemical indus-
try of Western Germany. The latest report issued by
the Chamber of Commerce in Bremen notes, for one
thing, that "formerly Germany used to bold first place
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in exports to the countries of Eastern Europe. " In the
opinion of the Chamber of Commerce, only brisk trade
with the East can place the West-German balance of
trade on a sounder basis in 1952. The Dusseldorf Handels-
blatt on January 1 came out against unilateral control
and the disruption of West-German trade with the
People's Democracies and the German Democratic Re-
public. The paper noted that things had reached such
a pitch in Western Germany that anyone who called for
trade with the East was in danger of political persecution.
The newspaper goes on to say: "Development of trade
between East and West is a better guarantee of peace
than an armaments drive," and in conclusion it observes
that whoever earnestly wants the East and West to be
united must be willing to make economic concessions.
The German Democratic Republic's five-year plan for
1951-55 shows how sincerely and closely the Eastern
countries are collaborating in the economic sphere. Al-
ready, in regard to supplying solid goods, the East is
beginning to fill the gap which formerly could be filled
only by the West.
Josef Orlopp, the Commissioner for Internal German
Trade of the Ministry of Home and Foreign Trade of the
German Democratic Republic, stated that the convocation
of the International Economic Conference meets with the
approval of numerous representatives of business circles in
Western Germany, who realize that the economic future
of Western Germany depends on trade with the East
and not on the West-European markets. At the Moscow
Conference, representatives of German business circles
will have the opportunity to address economic experts
from many countries and explain their position on the
question of trading with the East. The object of this Con-
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ference is to establish normal trade relations between
the peoples of East and West, and this is exactly what
Germany's economy needs, said Orlopp.
Numerous comments were also aroused by the state-
ment of Dr. Joseph Wirth, ex-Reichskanzler, at a press
conference in the British sector of Berlin on January 11 to
numerous representatives of the German and foreign press.
Dr. Wirth welcomed the calling of an International Eco-
nomic Conference in Moscow, which, he said, "will serve
to strengthen economic relations between nations and,
hence, the cause of world peace."
The reasons that prompt West-German business
circles to favour the resumption of internal German trade
and the development of economic collaboration with
the Soviet Union and the People's Democracies are quite
understandable. Normal trade with these countries
would enable Western Germany greatly to reduce imports
of those commodities she is obliged to obtain in the West
and thus sink deeper and deeper into debt. It must be said
that many of these commodities are produced in large
quantities in the German Democratic Republic, and they
could be supplied on mutually advantageous terms to
the West-German industrial enterprises, which are
sorely in need of them.
Larger and larger sections of the people in Western
Germany, including industrialists, commercial men and
representatives of trade unions and cooperative societies,
are beginning to realize that the resumption and develop-
ment of close economic relations with the Soviet Union and
the People's Democracies, and unhindered trade with the
German Democratic Republic, would provide employment
for thousands of workers and greatly reduce unemployment
in Western Germany, that it would provide work for the
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industries which produce civilian goods and thus help to
raise the standard of living of the broad masses of the
West-German population.
The announcement of the convocation of the Interna-
tional Economic Conference met with a lively response in
Austria, whose isolation from the East-European mar-
kets has broken long-standing relations, to the detri-
ment of the vital interests of the country.
The newspaper Die Union published by the Austrian
Democratic Union notes the great interest felt in Austrian
economic circles in restoring trade relations with the
countries of Eastern and Southeast Europe, relations
which are of vital importance to Austria. This problem is
now being studied by many independent businessmen.
In conclusion the paper says that the Moscow Economic
Conference will be a "promising beginning in the matter
of establishing world economic equilibrium." Austria in
particular, the paper says, must give its attention
to this Conference, so as not to be late and not to
begin attempts to restore trade with the East when
all her traditional markets will already have been tak-
en over by other states.
A striking illustration of the disastrous effects the
rupture of long-standing trade relations has upon a
country's economy is provided by Japan, which is
groaning under the heel of American occupation.
Japan is obliged to import numerous commodities she
needs from the United States at exorbitant prices, coal,
for example, instead of obtaining them on profitable
terms from China.
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It is not surprising, therefore, that Japanese indus-
trialists and commercial men, not to speak of broad
sections of the general population, are demanding the
resumption of normal trade with China, and also with
the Soviet Union. In this connection they appreciate the
importance of the forthcoming International Economic
Conference in Moscow.
A report from the Tokyo Arrangements Committee
states that great interest in the Conference is being dis-
played by Japanese business circles, particularly among
the members of the Kansai commercial and industrial
associations, who have long had close trade relations
with China.
Arrangements Committees have been set up in Osaka
and in Hokkaido. Among their Members are professors
Kobayashi, Nawa and Fushimi of the Osaka University,
representatives of Hokkaido cooperative societies, rep-
resentatives of the Hokkaido section of the Workers and
Peasants Party, and others. On January 18, 1952, a con-
ference of business circles was held, attended by Member
of Parliament Kitamura of the People's Democratic Party,
the financier Ayukawa, adviser of the Ministry of Foreign
Affairs Minoura, the Left Socialist Member of Parliament
Wada, Liberal Member of Parliament Yamamoto, Hoashi,
of the Japanese Industrial Association, and Hirano,
scientist and writer. The conference decided to set up a
Council for the Study of World Economic Problems.which is
to make preparations for a conference. On January 27 the
Council called a conference in Osaka of representatives
of Kansai business circles, which was attended by eleven
big industrialists and financiers. This conference declared
in favour of sending Japanese delegates to the Moscow
Conference. The Nishi Nippon Shimbun reports that in
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his address, Professor Nawa said: "This conference is of
great importance. I think it will promote the cause of
world peace."
In obedience to orders from Washington, the
Japanese Government is creating obstacles to the par-
ticipation of Japanese delegates in the Moscow Confer-
ence. In spite of this, a number of prominent businessmen
and economists have applied for passports.
Trade with the Soviet Union and the People's Democ-
racies is extremely important for the. countries of Asia
and the Near and Middle East, and for other underde-
veloped countries, as a means of facilitating the develop-
ment of their natural resources, their national indus-
tries and agriculture, and their economic independence.
As is known, industrial and commercial circles in India,
Pakistan, Iran, Egypt, Syria, Lebanon and other Asian
countries, are extremely interested in this trade, as is
evident from the popularity of the pavilions of the
U.S.S.R., the Chinese People's Republic, Czecho-
slovakia and Hungary at the Bombay International
Industries Fair. The merchants and manufacturers
of India want to expand trade relations with the
U.S.S.R. and to strengthen economic bonds with the
People's Democracies. For example, India could sell to
the Soviet Union jute, shellac, tea and pepper, and buy
grain, industrial equipment, machine tools, locomotives,
tramcars, autobuses, automobiles, chemicals, agricul-
tural machines, weaving looms, etc.
The United States, Great Britain and other colonial
powers regard the underdeveloped countries merely as
sources of strategic raw materials and refuse to sup-
ply them with the industrial equipment they need
so urgently for their economic development. Far from
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,promoting social and economic progress in the under-
developed countries, this "aid" retards the growth of
;their productive forces, increases their dependence upon
!foreign capital, and still further forces down the already
low standard of living of the vast masses of the people.
By the very nature of its political and social sys-
tem, the Soviet Union, in its relations with these coun-
tries, pursues aims that are totally different from those
pursued by the colonial powers. The Soviet Union is a
firm and consistent champion of the right of nations to
self-determination and independent development, and is
accordingly willing to promote the development of the
productive forces of the countries that are in need of
economic assistance and to help them to achievepoliti-
cal and economic independence.
It is common knowledge that the Soviet Union treats
the small nations on an equal footing with the big
.nations and concludes mutually advantageous treaties
and agreements with them. At the banquet given in
'honour of the Finnish Government Delegation on April 7,
!948, Comrade Stalin said: "Few great-power politicians
will be found who regard the small nations as equals to
the big nations. Most of them look down upon the small
nations. They are not averse to granting the small nations
one-sided guarantees. But, generally speaking, these poli-
ticians are not prone to conclude equal treaties with
the small nations, because they do not regard them as
partners. "*
All countries, big and small, are interested in the
development of international trade. The Pakistan Sind
Observer reported that at a meeting of business magnates
* Pravda, April 13, 1948.
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and high government officials connected with trade and
industry held in Karachi in connection with preparations
for the International Economic Conference, the concrete
possibilities of developing Pakistan's foreign trade were
discussed. Ahmed Jaffer, M.P., a prominent representa-
tive of the Pakistan business world who had recently
returned from Europe, said that the East-European coun-
tries can offer better and more suitable terms of trade
than the other markets.
The expansion of trade with the U.S.S.R. and the
East-European countries would be extremely beneficial
for Iran, which is encountering financial and economic
difficulties. This is proved by the results of the trade
agreement concluded between Iran and the U.S.S.R.
in 1950. As the Iran newspaper Keyhan observed, the
tremendous advantages of the agreement lay in that it
enabled Iran to purchase commodities vitally necessary
for her economy without having to spend dollars and
pounds of which she was short. On the other hand, she
was able to export a number of commodities, particularly
produce from the northern provinces, which formerly
she had been unable to export in any quantity owing to
the high cost of transportation to the southern ports.
The newspaper added that the expansion of Soviet-Irani
trade has improved the conditions of the peasants in the!
northern provinces of Iran.
Many representatives of the Iran business world
are determined to take advantage of the International.
Economic Conference for the purpose of promoting they
expansion of Iranian trade with the Soviet Union and the.
People's Democracies.
The Italian newspaper Avanti reports that a statement
in favour of participating in the Moscow Conference was
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made by the prominent Iranian public leader Kashani, who
expressed the conviction that the Conference could make
a valuable contribution to the development of economic
and cultural relations between countries and could be
conducive to the establishment of peace and friendship
between them.
Kashani further said that the representatives of
Iranian trade and industrial circles who attend the Con-
ference would have a unique opportunity of establishing
broad business relations with representatives of foreign
trade circles from all over the world. Iran, he added,
must normalize her foreign trade.
"We want to alter the sad state of affairs," Kashani
said, "in which the Western powers and especially the
United States and Britain look upon the Iranian market
as a zone for selling their shop-worn goods. Today
we are resolved to make the Anglo-Americans give
up their selfish trade policy towards Iran."
Active preparations for participation in the Moscow
International Economic Conference are being made in
the Latin American countries.
A conference was held in Santiago, Chile, which was
attended by the distinguished economist Guillermo del
Pedregal, ex-Minister of Finance, engineer La Barca,
and other prominent businessmen. The conference adopt-
ed a resolution stating that "Chile's present economic
situation calls for the immediate expansion of trade with
all countries. To achieve this, peace and normal economic
relations must be restored among all countries, irrespec-
tive of their regimes. Chile's representative at the
Moscow Conference must submit a proposal in favour
of encouraging free trade."
The Uruguayan newspaper Justicia in an editorial
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article headed "Our Foreign Trade and the International
Economic Conference" writes: "We are going through a
really critical moment for our economy. Exports are
falling off, and this gives rise to a deficit in the balance of
trade, which already in mid-1951 exceeded $8,000,000.
The sale of hides and wool abroad has actually stopped.
The reserves of foreign currency in the Bank of the Re-
public are rapidly dwindling. The situation is so grave
that, as the newspaper El Pais recently wrote, we are
`on the threshold of a crisis.... Our economy is suffocating
owing to the fact that in the sphere of foreign trade it
has been subjugated to the dollar."' As a way out of this
state of affairs, the paper points to the need to develop.
unhampered. trade between all countries. The Justicia
points out that the demand for the opening of new mar-
kets is being voiced by various sections of the population
in Uruguay. This view coincides with the aims of the
International Economic Conference, which is "inspiring
all the nations" and will serve the cause of strengthening
peace.
In spite of the fact that owing to the fault of the Bra-
zilian Government there are no diplomatic relations be-
tween Brazil and the U.S.S.R. at the present time, the
convocation of the International Economic Conference has
stimulated the demand among Brazilian business circles
for the expansion of trade relations with the U.S.S.R.
The Brazilian authorities have consented to the request
of Brazilian industrialists, merchants and economists
for permission to send observers to the Moscow Confer-
ence. It was stated in a broadcast from the Rio do Janeiro
radio station that Alberto Lins do Burros, the head of
the Economic Department of the - Ministry of Foreign
Affairs, has again told reporters that-it would be "a poor
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business for Brazil" not to maintain relations with Russia,
China and the countries ofEastern Europe. In geographi-
cal terms, he said, this represents nearly half the world.
He said that "whenever we can sell, there's some interest
involved for Brazil, and that whenever we can make
good purchases, it is also in the interest of the country."
All these statements by business circles and the press
in the countries of Western Europe, the Near and the
Far East and of Latin America provide irrefutable
proof that those who encourage the reduction of trade
with the U.S.S.R. and the People's Democracies in
Europe and Asia are acting to the detriment of the vital
interests of their people and country, interests which
imperatively call for the utmost expansion of trade. The
demand for the development of economic relations be-
tween the countries of Western Europe, Asia and America
on the one hand, and the Soviet Union, China, the European
People's Democracies and the German Democratic Republic
on the other, is being voiced ever more loudly. More and
more representatives of business circles, trade unions
and the cooperative movement are realizing that it is
necessary to resist the forces that want to exclude half
the world from international commercial intercourse.
It must be noted that many businessmen in the United
States are advocating the expansion of trade with Eastern.
Europe, in spite of the fact that the ruling circles in that
country have practically placed an embargo on trade
with the Soviet Union, the European People's Democracies
and with China and are demanding that the countries de-
pendent on America should do the same. Sober-minded
people in the United States cannot fail to realize that
this is a shortsighted policy, detrimental to the inter-
ests of the United States herself. It is common knowledge
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that trade with the U.S.S.R. was always to the
advantage of the United States, particularly as regards
balance of trade; United States exports to the U.S.S.R.
always exceeded imports from that country. In his inter-
view with the American agricultural expert Campbell
at the beginning of 1929, J. V. Stalin said: "The U.S.A.
has more grounds for maintaining extensive business
relations with the U.S.S.R. than any other country."
America's industrial potential is immense, and im-
mense also are the requirements of the Soviet Union,
where peacetime construction is being conducted on a vast
scale. Many representatives of United States business
circles are rightly of the opinion that, although the econ-
omy of the U.S.S.R. has developed to such an enormous
degree that she no longer has to import many of the things
she was obliged to import before, there is still scope for
an increase in the export to the U.S.S.R. of such items
asshe needs for her rapidly developing economy. Commer-
cial and industrial circles in the United States realize
that they are losing a great deal by the rupture of Soviet-
American economic relations. For instance, as far back
as the beginning of 1948, T. Berna, a representative
of the National Machine-Tool Builders' Association,
stated that the United States machine-tool industry
was in difficulties owing to the restriction of trade with
the Soviet Union and the East-European countries.
Since then the situation has become still worse.
?. Aware that the resumption and development of So-
viet-American trade relations would be to the advan-
tage of both countries, many representatives of United
States business circles are displaying great interest in,
a' .J.y. Stalin, T'Vorks, Russ. ed., Vol. 13, p. 154,
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the forthcoming International Economic Conference.
The opponents of international economic collaboration
have not remained quiet during the preparations for the
International Economic Conference. The organizers of
the "cold war" and of the preparation of a "hot war," want
to prevent the resumption of normal economic relations.
Seeing that the idea of an international businesslike gather-
ing of economists and industrialists, commercial men and
trade union leaders for the purpose of finding ways of
improving international economic relations has become
extremely popular, the ruling circles in a number of coun-
tries headed by the United States have resorted to
various countermeasures, both propagandist and admin-
istrative. By way of administrative pressure, efforts
are being made to dissuade people from going to Moscow,
and passports are being refused to those who have declared
their intention to go. Such measures have been taken
in the United States, Great Britain, France, Japan and
other countries.
But these administrative measures are no more effec-
tive than the propaganda measures that are being carried
on against the Moscow Conference. This propaganda has
assumed the standard form for the Western countries.
All those who come out in favour of normalizing relations
with the Soviet Union and the People's Democracies are
denounced as "appeasers" and even "Communists." These
terms have been applied to the members of the Interna-
tional Initiating Committee for convening the Moscow
Conference, in spite of the fact that they hold the most
diverse political opinions and represent diverse business
interests.. Doubt is thrown on the "sincerity" of the inten.
44 .
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tions of the Soviet Union and the People's Democracies,
and lastly, attempts are made to belittle the importance
of economic relations between West and East.
These assertions, however, carry very little weight,
as even people who are hostile towards international
collaboration are forced to admit. For example, Walter
Lippmann, the political commentator of the New
York Herald Tribune, wrote that the attempts to
impose an embargo on trade with the Soviet Union
and the countries friendly to it are causing more harm to
the United States' "weak and stricken allies" than to the
Soviet Union and the People's Democracies. And this,
wrote Lippmann, "we shall be learning more and more,
but in the hard way."
Nor could the London Economist deny the impor-
tance of the forthcoming Moscow International Economic
Conference. A leading article in that journal published
at the end of February stated that many businessmen
and economists in Britain and other Western countries
who have received invitations to attend the Conference,
and by no means all of them hold Leftist views, are repos-
ing great hopes on the Moscow gathering. After mention-
ing that the Conference will not discuss the relative
merits of different economic and social systems, the
journal goes on to say that if this is really the case, then
it should make a favourable impression upon all men
of goodwill all over the world who have no sympathy for
Communism, but are terrified by the prospect of an
atomic war. Further on it says that the Conference
could perform a miracle. It could unite the businessmen,
trade union leaders and economists of all countries,
freely elected by various organizations, and who have
obtained visas to the Soviet Union irrespective of
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their political views. They could discuss the question of
developing international trade in order to utilize available
resources and raise the standard of living everywhere.
No impartial observer can deny that these are exactly
the principles on which the Moscow Conference is being
convened. That being the case, why does The Economist
try to dissuade English businessmen and economists from
attending the Conference? By what motives is it prompted
to do this?
A perusal of the article mentioned shows that they
are not economic, practical motives, but political mo-
tives. They even include the forthcoming presidential
elections in the United States.
One cannot agree with such an approach to the problem
of developing international trade, the problem that is to
be discussed at the Moscow Conference. It will not dis-
cuss political problems, and it is useless for The Econo-
mist to attempt to thrust them upon the Conference.
The Conference will not discuss the relative merits of
different social systems; it will discuss the possibility
of expanding trade between countries, irrespective
of their social systems. And we have every ground for
anticipating that it will not be an academic but
a practical discussion, with the object of promoting
international trade on the basis of mutual advantage.
The resumption and expansion of trade between dif-
ferent countries, the development of international eco-
nomic collaboration on the basis of equal rights and
mutual advantage, will serve to raise the standard
of living of the people and promote the peaceful de-
velopment of economy. That is why all those who want
peace sincerely wish the International Economic
Conference success.
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Printed in the Union of Soviet Socialist Republics
I9q
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 Approved f I aRCIMM11Q4 : C 060004-9
00 NOT DETACH
E. A. DUNAYEVA
The
COLLABORATION
OF NATION S
in the
U S.S.R.
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E. A. DUNAYEVA
THE COLLABORATION
of
NATIONS IN THE U.S.S.R.
W
FOREIGN LANGUAGES PUBLISHING HOUSE
Moscow 1952
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This pamphlet is a translation of an
essay published in the symposium
Soviet Socialist Society prepared by the
Institute of Philosophy of the Academy
of Sciences of the U.S.S.R. and pub-
lished by the Gospolitizdat, Moscow
1949.
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One the greatest gains of the Great October
Socialist Revolution is the solution of the nation-
al problem in the U.S.S.R.
Bourgeois ideologists assert that interna-
tional strife and enmity cannot be abolished, that
they are an eternal law of history. Over and over
again they repeat that the national problem is
insoluble. Actually, however, this problem is in-
soluble only in the old, capitalist world.
The Great October Socialist Revolution in Rus-
sia for the first time showed the ways and means
of successfully solving the national problem.
Armed with a scientific understanding of the
national problem, 'the Bolshevik Party, on coming
into power, put into practice the Lenin-Stalin
theory of the :commonwealth of nations; and
practice, which is the final and most reliable cri-
terion of the correctness of theory, has fully
proved the viability and correctness of Bolshevik
theory and of the Lenin-Stalin national policy.
It is to the Party of Lenin and Stalin that we
are so greatly indebted for the fact that Russia,
which in the past was a hotbed of national op-
pression and tyranny in their crudest and most
inhuman forms, became the homeland of new re-
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1
lations between nations, an examp e of e i
plementation of true equality of nations, a coun-
try in which, for the first time, the national ques-
tion has found solution.
Lenin and Stalin, the leaders of the Bol-
shevik Party, made a most valuable contribution
to social science by elaborating the Marxian
theory of the national problem, thereby laying
the necessary theoretical foundations for the
practical solution of one of the most difficult prob-
lems, i.e., the national problem.
The Bolshevik Party's theory and program of
the national problem are the ideological founda-
tion for the solution of the problem of the collab-
oration of nations in the U.S.S.R. In elaborating
the theory and program of the national problem,
Lenin and Stalin, the leaders of the Party, dis-
closed the connection between the national prob-
lem and the problem of the socialist revolution,
the problem of overthrowing imperialism and
abolishing national-colonial oppression. They
merged the national problem with the colonial
problem.
The Bolsheviks proceeded from the postulate
that it is the direct duty of the proletarian parties
to support the liberation struggle waged by the
oppressed nations, that ". . . there cannot be a so-
cialist proletariat that can in the least degree
tolerate the oppression of other nations by `its'
4
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nation,"* that "... pronouncements about the
`equality ,of nations' which are not :backed by the
direct support of the proletarian parties for the
liberation struggle of the oppressed nations are
meaningless and false,"** that "... he who, does
not recognize and champion the equality of na-
tions and languages, who does not fight against
all national oppression and inequality, is not a
Marxist,,or even a democrat."***
The Bolsheviks showed that the abolition of
na-tional-colonial oppression is organically con-
nected with the revolutionary struggle for the
transfer of political power to the masses of the
working people. The scientific analysis of the .spe-
cific features of the epoch -of imperialism enabled
the Russian Bolsheviks to define the place of the
national problem in the proletariat's general
struggle for power, to disclose the connection
between the solution of the national problem and
the general struggle of the masses of the people
to abolish the rule of capital. Lenin and Stalin
irrefutably proved that imperialism cannot exist
without oppressing and exploiting the peoples of
colonies and dependent -countries, that the peo-
ples of colonies and dependent countries cannot
* V. I. Lenin, Collected Works, Fourth Russ. ed.,
Vol. 21, p. 287.
** J. V. Stalin, The Foundations of Leninists, Moscow
1950, p. 100.
*** V. I. Lenin, Collected Works, Fourth Russ. ed.,
Vol. 21, p. 12.
5
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be liberated without the overthrow of the yoke
of imperialism, without a proletarian revolution,
and, on the other hand, that the victory of -the
proletarian revolution is impossible without the
support of the oppressed and exploited people of
the colonies.
For the first time, the Bolsheviks gave the
slogan of the right -of nations to self-determina-
tion a clear, distinct and consistently revolution-
ary content by showing that this slogan implied
the right of oppressed nations to political seces-
sion, the right to form independent states. The
parties affiliated to the Second International
interpreted the right of nations toself-determina-
tion, at best, only as the right to autonomy.
Their theoreticians on the national problem,
Karl Renner and Otto Bauer, restricted the
concept of political self-determination to the
right of so-called "cultural autonomy," which
meant leaving all political and economic power
in the hands of the ruling nation. This interpre-
tationconverted the revolutionary slogan of self-
determination from a weapon for the liberation of
nations into an instrument for deceiving na-
tions, into an instrument of imperialist policy.
The Bolsheviks urged -the necessity not only
of equality in law, but also of actual equality
between nationalities, which necessarily implies
that the advanced nations must assist the back-
ward nationalities, and is one of the necessary
conditions for the voluntary onion of nations
C'
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and the establishment of friendly collaboration
between them.
The Bolsheviks exposed the false legend that
for ages the world has been divided into "infe-
ri,or" and "superior" races, that the "inferior"
races are incapable of becoming civilized and are
doomed to be objects of exploitation, whereas the
"superior" races are the sole vehicles of civiliza-
tion, whose mission it is to exploit the former.
During the whole course of their struggle for the
liberation of nations, the revolutionary Marxists-
Bolsheviks argued that the economic and cultur-
al backwardness of the oppressed nations is due
not to their national, "racial" characteristics, but
to the historical conditions under which they have
lived and developed, to the intolerable colonial
oppression of the imperialist countries which
artificially retarded the economic, political and
cultural development of the colonial peoples.
The Great October Socialist Revolution proved
by facts that "... the liberated non-European
nations, once having been drawn into the
channel of Soviet development, are no less capa-
ble than the European nations of promoting a
truly progressive culture and a truly progressive
civilization."*
The reformists were of the opinion that the
only way to solve the -national problem is the
* J. V. Stalin, Marxism and the National and Colo-
vial Question, Moscow 1940, p. 223.
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bourgeois method of the .falling away of one
nation from another, their disunion and intensi-
fication of national enmity among the masses of
the working people of the different nations. In
opposition to this, the Bolsheviks substantiated
the possibility and necessity of the international
solidarity of the working people, and elaborated
the question of the necessity of a voluntary state
and organizational-economic union of equal,
national, Soviet republics as a result of the abo-
lition of the capitalist system. The Great October
Socialist Revolution proved in practice that a
new, proletarian solution of the national prob-
lem was possible, a solution under which the
peoples who receive equal rights, far from sepa-
rating from each other, voluntarily unite in order
jointly and more successfully to solve the prob-
lems that confront them. One of the most
important results of the October Revolution is
the fact that it proved in practice ". . . the possi-
bility and expediency of a fraternal alliance be-
tween the workers and peasants of the most
diverse nations based on the principles of volun-
tary consent and internationalism. The existence
of the Union of Soviet Socialist Republics, which
is the prototype of the future amalgamation of
the toilers of all countries into a single world
economic system, cannot but serve as a direct
proof of this."*
s
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e t eore Ica sta s a
Stalin on the national problem gave the proper
direction to the Bolshevik national policy. The
Bolsheviks would not have succeeded in success-
fully solving the national problem and the prob-
lem of the collaboration of nations in a vast
multinational state had they not been armed
theoretically with a precise conception of the
ways and means of solving them, and had they
not been convinced that it was possible to estab-
lish new rellationships between nations.
The Bolshevik theory and practice of the
solution of the national problem is of enormous
international importance. Like a powerful search-
light, it lights up the path of struggle of all
oppressed nations for their freedom and independ-
ence. It has struck and continues to strike heavy
blows at the reactionary theory that it is impossi-
ble to solve the national problem, and that the
division of the world into oppressed and oppress-
ing nations is inevitable.
Of inestimable scientific and practical im-
-portance is the Bolsheviks' exposure of the false
race "theories" that are disseminated in capital-
1st countries.
The fascist party in Germany zealously
disseminated among the German people the
crazy idea that it was the special mission of the
German nation to be the master -nation, and that
all other nations were to be merely the slaves of
the Germans.
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he exposure of the fase; t t f 11
s
race ieory
even before Hitler Germany collapsed was great-
ly facilitated by the experience of the U.S.S.R. The
practice of the peoples of the U.S.S.R., which is
based on the Lenin-Stalin national policy, ex-
posed the s-laveowning, imperialist -character of
the cannibal fascist race "theory" and policy.
In the course of the war the Soviet ideology
and policy of race equality and friendship among
nations achieved complete victory over the
bestial ideology of nationalism and race hatred
preached by the Hitlerites. But race "theories"
are tenacious. The imperialists of the United
States and Great Britain, inspired by Winston
Churchill, Vandenberg and their ilk, are preach-
ing their own version of the race "the-
ory," in which the role of "superior" race is
assigned to the Angl'o-Saxons. Race "theories"
are convenient instruments in the hands of the
reactionary classes for justifying the oppression
and exploitation of colonies and the preparation
and unleashing ,of new imperialist wars. That is
why it is necessary unceasingly and ruthlessly
to expose all varieties of racism, to expose their
advocates as obscurantists, imperialists and dan-
gerous warmongers intent on starting another
war. In. opposition to the misanthropic, canni-
bal race ideology and policy of the imperialists,
the Party of Lenin and Stalin advances the ide-
ology of race equality and friendship among
nations, the ideology of proletarian internation-
ro
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alism, the i eol.ogy an policy o fraternal col-
laboration among the free and equal peoples of
the U.S.S.R.
The political basis for the successful solution
of the national problem in the U.S.S.R. was the
overthrow of the exploiting classes, the establish-
ment of the dictatorship of the proletariat and the
establishment of the Soviet form of government.
J. V. Stalin pointed out that the vehicles of nation-
al oppression are definite classes and strata of
the population. These are, primarily, -the landed
aristocracy and imperialists, who manage to car-
ry with them the petty bourgeoisie, part of the
intelligentsia and part of the labour aristocracy
who also to some extent share in the fruits of na-
tional plunder. As Comrade Stalin said: "There is
thus a whole chorus of social forces, headed by
the landed and financial aristocracy, which sup-
port national oppression. In order to create a real
democratic system, it is first of all necessary to
clear the ground and remove this chorus from
the political stage."*
The Great October Socialist Revolution in
Russia carried out this great historical task. In
the course of the revolution, the chief exploiting
classes, viz., the landlords and the big bourgeoi-
sie, were abolished. Political power passed into
J. V. Stalin, Marxism and the National and Colo-
nial Question, Moscow 1940, p. 55.
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the hands of the working Peo le A newt f
P
ype o
state was set up in Russia, viz., the dictatorship
of the proletariat, with a new form of govern-
ment-the Soviets.
"... The triumph of the Soviets and the
establishment of the dictatorship of the proletar-
iat constitute the basis and foundation on which
the fraternal collaboration of peoples within a
single federal state can be built up,"* said Com-
rade Stalin.
in the shape of the Soviets, a new and higher
form of democracy came into being, viz., Soviet
democracy, democracy for the working people,
which ensured for the people real political rights
and the decisive part in the administration of
the state.
The overthrow of the exploiting classes, the
establishment of the dictatorship of the proletar-
iat and genuine Soviet, socialist democracy
constituted that necessary political basis without
which the successful solution of the national
problem and the establishment of complete equal-
ity and free, voluntary and friendly eollabora-
tion among the nations would have been impos-
sible.
The Great October Socialist Revolution
brought about and secured freedom and equality
for all the nations inhabiting Russia. On Octo-
ber 25 (November 7), 1917, the voice of the
!2
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 Approved
Fog~~edasil2~~y/~~(O~a28?Q51j11900060004-9
out over the whole world, announcing in its
"appeal to the workers, soldiers and peasants"
the transfer of power to the Soviets, and declar-
ing that the Soviet State would ensure for all the
nations inhabiting Russia genuine right of self-
determination. On November 2(15), 1917, "The
Declaration of Rights of the Peoples of Russia,"
signed by Lenin and Stalin, was promulgated.
It declared that the national policy of the Soviet
government was based on the following princi-
ples: equality and sovereignty of the peoples of
Russia; right of the nations inhabiting Russia
to free self-determination, including -right to
secede and form independent states; abolition of
all and sundry national and national-religious
privileges and restrictions; free -development for
the national minorities and ethnical groups in-
habiting the territory of Russia.
These first political acts of the Soviet State
for the solution of the national problem served
as the basis for the actual emancipation of the
colonial and dependent peoples of Russia. The
Soviet State granted all the peoples inhabiting
former tsarist Russia complete independence in
determining their destiny. It granted the right
of free self-determination to all the nations in
Russia. This did not lead to the disintegration
of the state, as the enemies of the Bolsheviks
kept on reiterating; on the contrary, it strength-
ened the state, for the majority of the peoples
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to separate from Soviet Russia. The Soviet State
took shape as a multinational state of a new
type, differing in principle from the old multi-
national states, for it was established on the
basis of new relations between nations. Unlike
the bourgeois multinational states that are based
on violent means of uniting nations, on the -op-
pression and exploitation of the peoples of colonies
and dependent .countries by the ruling classes
of those countries, the Soviet multinational state
is based on the principle of equality of all na-
tions and of their strictly voluntary amalgama-
tion in a single state union. The Soviet Socialist
State is ".. a new type of state, adapted not
to the aim of exploiting and oppressing the la-
bouring masses, but to the aim of completely
emancipating them from all oppression and ex-
ploitation, to the tasks facing the dictatorship of
the proletariat."*
Amidst the conditions of civil war and the
invasion of foreign troops who repeatedly seized
the whole territory of individual republics,
amidst incredible economic difficulties, the peo-
ples of Soviet Land built up their state, strength-
ened their alliance and unity and established
increasingly close and more perfect forms of col-
laboration, while at the same time developing
J. V. Stalin, Collected Works, Russ. ed., Vol. 6,
p. 120.
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course of building up the Soviet State more
expedient forms were worked out for the solution
of the national problem, forms that correspond-
ed to the vital interests and conditions of life of
the peoples inhabiting our country who, thirty
years ago, were in the most diverse stages of
social development. The forms of uniting the
nations and national republics were adapted to
the tasks of protecting their common Socialist
Motherland and of developing her economy and
culture.
In describing the development oaf the state
federation of the Soviet peoples, Comrade Stalin
said that in the first ,period of bhe revolution,
when the toiling masses of the nationalities first
came to feel that they were independent national
units, while the threat of foreign intervention
had not yet become a real danger, -collaboration
between the peoples did not yet assume a fully
definite, strictly established form. In the period
of the civil war, when the requirements of mili-
tary defence in the national republics assumed
prime importance, while questions of economic
construction had not yet been placed on the or-
der of the day, collaboration took the form of a
military alliance. In the postwar period, when
the problems of the restoration of the productive
forces destroyed by the war assumed prime im-
portance, the military alliance was supplemented
by an economic alliance. The amalgamation of
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the national republics into t e nion of ovie
Socialist Republics represents the concluding
stage in the development of the forms of collab-
oration, which has now assumed the character
of a military-economic and political amalgama-
tion of peoples into a single multinational Soviet
State.*
The solution of the national problem and the
building of a stable Soviet multinational state
was a most complicated task. The Soviet State
had before it only the unsuccessful experiments
in forming multinational states in capitalist
countries. Nevertheless, fully conscious of the
enormous complexity of the task, the Soviet gov-
ernment set to work on the experiment of build-
ing a multinational state, for it knew that "... a
multinational state which has arisen on the basis
of Socialism is bound to stand every and any
test."**
The Union of Soviet Socialist Republics is a
new and higher form of collaboration of nations
which history has fully justified. Proof of this
lies in the fact that this Union already exists
for nearly thirty years and is constantly develop-
ing and growing stronger. When it was formed
in 1922, it consisted of four Union Republics;
* Cf. J. V. Stalin, Marxism and the National and
Colonial Question, Moscow 1940, p. 124.
** J. V. Stalin, On the Draft Constitution of the
U.S.S.R., Moscow 1951, p. 24.
ii
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r now consists of sixteen Union Republics. In
1939, the peoples of Western Ukraine and Western
Byelorussia joined the Union of Soviet Socialist
Republics, and in 1940 it was joined by the peo-
ples of Latvia, Estonia and Lithuania who, in the
first years of the revolution, under the pressure of
the foreign imperialists and the national bourgeoi-
sie which served them, had been forcibly detached
from Russia. These people,found genuine national
freedom and independence only after the estab-
lishment of Soviet government in their countries
and their entry into the fraternal family of nations
of the U.S.S.R.
The period the Soviet Union has been in
existence has been marked by enormous changes
in the life of the Soviet peoples. During this
period new Union and Autonomous Republics
have been formed; in a number of spheres the
powers of the Union Republics have been en-
larged, etc. These changes have strengthened the
fundamental principles of the Union's organi-
zation; they have improved and perfected the
administration of the state by adapting it to
the changes in the economic and class struc-
ture of society, to the new relations between
the nations, to the increased communication
and intercourse between them, and to the
increased independence of the republics. These
changes did not, however, cancel the fundamen-
tal principles upon which the state structure ,of the
multinational Soviet Socialist State is based.
2-1310 17
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Thus, the Soviet state system that was estab-
lished in our country as a result of the Great
October Socialist Revolution is the political ba-
sis that is needed .for the complete and real so-
lution of the national problem. And this is the
basis on which the great commonwealth of na-
tions of the U.S.S.R. developed.
The economic basis of the collaboration of
nations in the U.S.S.R. is the socialist mode of
production. After the victory of the Great Octo-
ber Socialist Revolution, the socialist recon-
struction of the economy of Russia was com-
menced. The revolution was not restricted to
granting the nations right to self-determination
and completely abolishing national oppression
and inequality; it also created the necessary eco-
nomic conditions, without which political self-
determination can be converted into a fiction. In
the course of the revolution, in the course of build-
ing Socialism, the private ownership of the means
of production was abolished and public, so-
cialist ownership was established. In th's way,
a firm economic basis was laid for the solution
of the national problem in the U.S.S.R.
The private ownership of the means, of pro-
duction is the economic basis of class and nation-
al oppression, exploitation and of enmity be-
tween nations. The development of capitalism
tends to abolish national insularity and.to estab-
18
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fish economic intercourse between nations. As,
however, mutual intercourse between and the
economic union of nations are established under
capitalism not on the basis of -collaboration but
on the basis of the subjection of some nations
to others, on the basis of the oppression and
exploitation of some nations by others, this
leads to enmity and antagonism between nations.
"Colonial plunder and annexations, national op-
pression and inequality, imperialist violence and
arbitrary rule, colonial slavery and national sub-
jection, and, finally, the struggle among the `civi-
lized' nations for mastery over the `uncivilized'
peoples-such were the ,forms in which the process
of economic amalgamation of peoples took
place."* The big capitalist countries subjugate
small and underdeveloped countries and become
still :stronger by plundering them. Is it surprising
that the imperialist countries are not interested
in the economic development of the -peoples of
colonial and dependent countries? They artifi-
cially retard and distort the development of colo-
nial and dependent countries, subordinate their
economy to their -own narrow imperialist inter-
ests, and transform these countries into mar-
kets for their goods and spheres for the invest-
ment of their capital. Imperialism is inseverably
connected with the exploitation of colonies and
* J. V. Stalin, Marxism and the National and Colonial
Question, Moscow 1940, pp. 121-22.
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dependent countries. Imperialism is inconceiv-
able without economic and political inequality
of nations. Under imperialism, the strugg.e of
the oppressed nations for their liberation, for
secession from the imperialist states that oppress
them, is inevitab:e. Under imperialism, "collab-
oration" of nations actually means the exploi-
tation, robbery and oppression of the peoples
of colonial and dependent countries by finance
capital. National equality and peace and friendly
collaboration between nations are unachievable
and inconceivable under the rule of capital-
ism.
Lenin and Stalin pointed to the two tenden-
cies in the national problem that are inherent
in imperialism: the tendency to internationalize
modes of production and exchange, to bring na-
tions economically closer to each other and grad-
ually to unite vast territories in one, integral
whole; and the tendency to destroy the violent
forms of this union, which tendency finds
expression in the struggle the oppressed peo-
pies of colonial and dependent countries wage
to liberate themselves from imperialist oppres-
sion.
Comrade Stalin pointed out that these two
tendencies are utterly irreconcilable under im-
perialism, because imperialism can "bring to-
gether" and "unite" nations only by force. "For
imperialism," said Comrade Stalin, "these two
tendencies represent irreconcilable contradic-
20
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tions; because imperialism cannot exist without
exploiting colonies and forcibly retaining them
within the framework of the `integral whole';
because imperialism can bring nations together
only by means of annexations and colonial con-
quest, without which it is, generally speaking,
inconceivable.
"For Communism, on the contrary, these tend-
encies are but two sides of a single cause-the
cause of the emancipation of the oppressed peo-
ples from the yoke of imperialism; because Com-
munism knows. that the union of. nations into
a single world economic system is possible only
on the basis of mutual confidence and volun-
tary agreement, and that the road to the for-
mation of a voluntary union of nations lies
through the separation of the colonies from
the `integral' imperialist `whoile,' through the
transformation of the colonies into independent
states."*
The socialist mode of production constitutes
the firm economic foundation for the voluntary
union and collaboration of the naltions of the
U.S.S.R. Under Socialism, the tendency of na-
tions to draw closer together and to unite, coni-
bines harmoniously with the strengthening and
development of the independence of the national
Soviet republics.
* J. V. Stalin, The Foundations of Leninism, Moscow
1950, p. 108.
21
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The national Soviet republics constitute the
form, in the framework of which the constructive
abilities of the individual nationalities are best
developed. At the same time, the socialist mode
of production serves as the basis on which the
nations draw closer and closer together, and
this, in turn, serves to strengthen the entire So-
viet multinational state. The economic founda-
tion of Socialism is the socialist, public (state
and kolkhoz-cooperative) ownership of the means
of production which, far from dividing people
into hostile groups, unites them in the process
of socialist production. Under capita ism,eco-
nomically backward nations naturally strive to
keep separate, because they are subjected to the
exploitation and oppression of the big states;
under Socialism, however, they just as natu-
rally strive to unite with other :nations, because
unity ensures them the economic, political and
cultural assistance of the more developed
nations.
The state amalgamation of the individual
Soviet republics in a Union State resulted in
direct economic benefits for them, since it made
possible the planned development of those
branches of production that were most advanta-
geous from the point of view of internal resources.
This, in turn, enabled the whole country to distrib-
ute the productive forces among the republics
in the most expedient way. The very nature of
the Soviet social system disposes the masses of
22
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in one socialist family, because this system rests
not on the rule of capital, but on the rule of la-
bour, not on private, but on state and kolkhoz-
cooperative property, not on the exploitation of
man by man, but on the abolition of exploita-
tion in all its forms.
The working class in power is the enemy of
enslavement in every form; it is the true vehicle
of the ideas of internationalism and friendship
among nations. Thus, only Socialism can devel-
op, and really has developed and consolidated,
the firm, friendly collaboration of free and equal
nations in economic life, and consequently, in
all other spheres of social life.
* * *
During the short period it has carried out
its national policy, the Soviet State has achieved
results that are unprecedented in history.
The example of the life and development of
the numerous Soviet nations vividly shows how
important is the solution of the national prob-
lem, what mighty productive forces were re-
leased by the Great October Socialist Revolution,
which put an end forever to national oppression
on one-sixth of the globe, what scope for the
development of all the nations was provided by
the Soviet state system, which is based on the
friendship and fraternal collaboration of all na-
tions.
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 Approved For. Iggn,t2q%310j~gj- s P?4.egQij15B011900060004-9
ftICjA
tor in the national consolidation of those-,nation-
alities which at the time of the revolution had
not yet managed to take shape as a ? nation.
Thus, one of the specific features of the develop-
meat and existence of the Soviet republics in
the East was that the peoples of these republics
developed and became consolidated as nations
not under the aegis of the bourgeois system,
but under the aegis of the Soviet State. The so-
cialist industry and the kolkhozsystem that were
created in the non-Russian regions became the
economic basis of this consolidation. On this
basis, the remnants of tribal isolation, of tribal
customs, were abolished; a national culture that
is socialistic in content developed, and a nation-
al intelligentsia grew up. On the basis of the
Soviet system, the nations that had been back-
ward in their development acquired a common
territorial, economic, language and cultural in-
terest. This was the path, indicated by Lenin, of
the non-capitalist development of nations to-
wards Socialism with the aid of the working
class of the advanced countries, in a stubborn
struggle against the exploiting classes. Peoples
like the Turkmenians, Kirghiz, Uzbeks, Ka.zakhs,
Taj.iks, Azerbaijanians, and others, became re-
generated and developed into independent na-
tions only under Soviet conditions. Socialism
created the most favourable conditions for the
establishment and development of all that was
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The Soviet State ensured an unprecedentedly
rapid tempo of consolidation of nations such as is
inconceivable under the conditions of capitalism.
In the Soviet State, the poverty-stricken and
backward outlying regions of tsarist Russia
changed beyond recognition in a short space of
time. In the process of socialist construction, the
backward nationalities, assisted by the advanced
nations, developed and caught up with the latter,
which, in their turn, were steadily developing.
The new relations of friendship between all the
Soviet nations were strengthened.
Looking back on the road the Soviet nations
have traversed during these three decades, we are
proud of the way the national economy of all the
Soviet republics has grown and become strong,
proud of the strength and might of the whole of
our Union of Soviet Socialist Republics.
The friendly collaboration of the masses of
the working people of all the nations of Russia
at first took shape in the struggle they waged
against their "own" and the "alien" bourgeoisie,
against imperialist intervention and bourgeois
counterrevolution, in the struggle to establish
and consolidate the Soviet State. Simultaneously,
as military successes at the fronts in the civil war
were achieved and the invaders were expelled,
the Soviet peoples organized their national So-
viet republics in conformity with the strivings
and interests of the masses of the people.
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 M
si,
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of Me na-
-
tional statehood of the now free and equal peoples
of our country was in the main -carried but by the
Soviet Government in the period of 1917-21. But
this was only the beginning of the solution of the
national problem. On the termination of the civil
war the collaboration of nations that had been es-
tablished in the first period of the Great October
Socialist Revolution and in the period of civil war
had to be strengthened and developed. It was nec-
essary to draw all the Soviet peoples into the
work of socialist construction; to create the condi-
tions under which the military-economic collabo-
ration of the nations could be -transformed into
firm and mighty friendship among the nations; to
destroy the economic and class roots of national-
ism which was sowing enmity and distrust among
the nations; to abolish the actual inequality
of the nationalities which the establishment of
the Soviet system could not by itself abolish.
These tasks were set in 1921 by the Tenth Con-
gress of the Party.
In its resolution on Comrade Stalin's "Report
on the Immediate Tasks of the Party in Connec-
tion With the National Problem," the Tenth Con-
gress made a profound analysis of the conditions
of the nationalities, of the historical causes that
gave rise to actual inequality in the development
of the nations, and precisely defined the Party's
immediate tasks in connection with the national
problem.
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e ongress a rme fa of
no'n-Russian inhabitants of Russia, only about
35,000,000 had to some degree passed through the
ti period of industrial development. These were the
people of the Ukraine, Byelorussia, part of Azer-
baijan and Armenia. About 30,000,000, chiefly the
Turkic population (Turkestan, the greater part of
Azerbaijan, Daghestan, the Gortsi, Tatars, Bash-
kirs, Kirghiz, Kazakhs, and others), had not yet
managed to pass through the industrial stage of
development, did not yet possess or scarcely pos-
sessed, an industrial proletariat, and, in the ma-
jority of cases, still preserved their pastoral hus-
bandry and patriarchal-tribal customs (Kirghi-
zia, Bashkiria, North Caucasus) or else had not
yet managed to abandon their semi-patriarchal,
semi-feudal customs (Azerbaijan, the Crimea, and
others).*
As a result,of the Great October Socialist Rev-
o~lution, however, these peoples had already been
drawn into the general ,course of Soviet develop-
ment. Under these conditions, the Soviet Govern-
ment was faced with the immense task of ensur-
ing for the former colonies of Russia which had
lagged behind their development, the transition to
Socialism without having to pass through the
capitalist stage of development and, in the process
of socialist construction, of abolishing actual na-
* Cf. Resolutions of the C.P.S.U,(B.), Part 1, Sixth
Russ. ed., 1940, pp. 385-86.
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Iona inequaIyinals hereof
' 1tc "Th
s
p
r
aca iic. e
essence of the national problem in the R.S.F.S.R.
lies in abolishing the actual backwardness (eco-
nomic, political and cultural) of some of tie na-
tions, inherited by them from the past, in ena-
b1ing the backward peoples to catch up with Cen-
tral Russia in political, in cultural and in eco-
nomic respects,"* said Comrade Stalin at the
Tenth Congress.
Thus, immediately on the termination of the
civil war, the Soviet Government set to work to
abolish actual inequality and to bring the back-
ward nationalities up to the level of the advanced.
Seething activity commenced to promote the
political, economic and cultural develops meant of
the non-Russian republics. To build up a native
state apparatus, to open native schools, to muster
and by means of different kinds of educational
courses to train a native intelligentsia, to open
recreation clubs, cinemas and theatres, to liqui-
date illiteracy among the adult population, etc.-
such were the urgent needs of the backward na-
tionalities, to the satisfaction of which the young
Soviet State devoted great attention.
In the economic sphere, the Soviet State strove
first of all to raise the productive forces cf the
non-Russian repubi!cs by erecting :factories to
work up the rich resources of raw materials that
" J. V. Stalin, Collected Works, Russ. ed., Vol. 5,
p. 39.
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these republics possess. In con ormi y wi i s
policy of industrializing the outlying regions, the
Soviet Government provided facilities for diverse
exploration operations with the object of organ-
izing new branches of production there. To accel-
erate the industrial development of the outlying
regions, skilled workers,technical equipment and
whole factories were transferred to them. Great
attention was devoted to the agrarian problem, as
agriculture was the chief occupation of the native
populations. In addition to allotting land to the
peasants, the Soviet Government supplied the
non-Russian republics with agricultural machines
and implements. Immense irrigation works were
undertaken to increase the cultivatable area and
to make agriculture more productive. Considera-
ble funds were allocated for building !factories,
railways, roads, canals, electric-power stations,
towns and numerous cultural and welfare serv-
ices in the non-Russian republics and regions.
In all this work of economic and cultural de-
velopment, all the non-Russian Soviet republics
received the disinterested and systematic assist-
ance of the R.S.F.S.R. The Russian people gave
every assistance to all the formerly oppressed
nations of Russia. Exerting incredible efforts to
rehabilitate the ruined national economy of the
Soviet Republic, the Russian people apportioned
the necessary economic resources and finances to
assist the ,fraternal peoples to ,overcome their eco-
nomic and cultural backwardness. This assist-
29
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ance rendered by the Russian people broke down
the historically created distrust of the formerly op-
pressed -nations and helped to develop the new
relationships of friendship and collaboration.
A powerful factor in the abolition of economic
inequality among the nations was the industrial-
ization of the U.S.S.R. During the period of ful-
filment of the Stalin five-year plans, when indus-
trial construction on a gigantic ,scale was going
on all over the country and the whole of the na-
tional economy was being technically re-equipped,
the raising of the economic and cultural level
of the non-Russian Soviet republics proceeded in
all its magnitude.
The collectivization of agriculture drew into
the work of socialist construction the broad
masses of the working peasants of all the nations,
created the conditions for introducing advanced
mechanized production in agriculture, and helped
to strengthen the ties between the broadest
masses of the working people and the working
class, the leading force in socialist construction.
All the nations inhabiting our country joined
in the gigantic work of transforming old, agrar-
ian Russia into a new, socialist, industrial power.
Industrial and agricultural development unprec-
edented in history was launched all over the
country; the numerous nations of the Soviet Union
took part in great construction work such as the
building of the Kuznetsk and Magnitogorsk met-
allurgical plants, the Stalingrad Tractor Works,
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t, e Plant, the Stalin White Sea-Baltic Sea Canal, the
Great Ferghana Canal, etc. All the nations
worked with unprecedented enthusiasm to build
Socialism, to strengthen the forces and might
of their multinational state. In the course of
their common labours and common concern
for the welfare of their Soviet Motherland,
in the process of building Socialism, the for-
mer national isolation and that accursed herit-
age of tsari.sm and capitalism-distrust among
the nations-disappeared. Work in the socialist
industrial enterprises, in the kolkhozes and sov-
khozes drew the working people of the different
nations together, broke down the barriers that
had separated them and brought within the reach
-of those nations which had been most backward
in the past the highest attainments of socialist
economy and culture.
In the process of building Socialism, the So-
viet Government successfully solved the problem
of the economic development of the Soviet
republics and of raising the economy of the back-
ward republics to the level of the advanced. The
Soviet Government successfully coped with the
task of ensuring the non-capitalist path of devel-
opment for the backward regions of the country.
The victory of Socialism put an end to the
multiplicity of economic forms that had formerly
existed in the country's economy. In 1937, the
socialist sector completely predominated in in-
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dustry (the private sector accounted for only 0.03
per cent of output) ; in the rural districts 93.5 per
cent of the peasant households were united in
kolkhozes.* In the same year, the share of social-
ist economy in the total national economy was
as follows: national income 99.1 per cent; gross
output of all industry 99.8 per cent; gross output
of agriculltural produce 98.6 per cent; trade 100
per cent.**
The socialist mode of production became the
economic basis for the development of all the na-
tional Soviet republics. The former economic and
cultural backwardness of the peoples of the non-
Russian outlying regions and the marked differ-
ences in the level of industrial development of
the Union Republics were abolished. The Soviet
Government ensured rapid development for the
formerly industrially backward non-Russian re-
gions and -republics. Thus, from 1913 to 1940, the
average increase in the gross output of large-scale
industry for the Soviet Union as a whole was
12-fold; but that of the Kazakh S.S.R. for the
same period was 19.6-fold, of the Armenian S.S.R.
22.6-fold, of the Georgian S.S.R. 26.9-~folld, of the
Kirghiz S.S.R. 153-,fold, and of the Tajik S.S.R.
* Cf. J. V. Stalin, Report to the Eighteenth Congress
of the C.P.S.U.(B.) on the Work of the Central Com-
mittee, Moscow 1951, pp. 32, 39.
?+ Cf. Fulfilment of the Second Five-Year Plan, Russ.
ed., 1939, pp. 8-9.
32
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own cadres of industrial workers from among the
native population. A native intelligentsia arose
in the republics. For example, before the revolu-
tion there were only twelve Azerbaijanian engi-
neers in Azerbaijan, but in 1939 there were al-
ready over 3,000. In Uzbekistan there were no
educated people among the native population be-
fore the revolution, but in 1939 the republic had
an army of intellectuals numbering 100,000.
In its resolution on Comrade Molotov's report
on the Third Five-Year Plan for the Development
of the National Economy of the U.S.S.R., the
Eighteenth Congress of the Party formulated the
task of promoting the further industrial develop-
ment of the Union Republics as follows: "To en-
sure a further rise in the economic and cultural
level of the non-Russian republics and regions in
conformity with the fundamental tasksconnected
with the distribution of the productive forces in
the Third Five-Year Plan."*
During the Great Patriotic War of the Soviet
Union, the eastern Soviet republics received, pro-
vided sites for and started an enormous num-
ber of large industrial plants that had been evac-
uated from the regions occupied by the enemy.
The important task of supplying the armed forces
with everything they needed rested to a large
* The Eighteenth Congress of the C,P.S.U.(B,), Ver-
batim Report, Russ. ed., 1939, p. 660.
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degree upon ese republics. As a consequence,
their industrial development was still more accel-
erated during the war. The Uzbek S.S.R. may
be quoted as an example. During the period of
fulfilment of the Stalin five-year plans and the
period of the Great Patriotic War, gross Industrial
output in this republic increased more than 10-
fold, and the fixed funds (plant and equipment)
of industry increased 33-fold.
The Soviet Government ensured such a rapid
industrial development for the formerly backward
Union Republics that they were able to catch up
with the developing advanced republics and reach
their level.
The political and economic development of the
Soviet republics served as the basis of an im-
mense growth of the culture of the nations of the
U.S.S.R. After the victory of the Great October
Socialist Revolution, the Bolshevik Party and the
Soviet Government exerted immense efforts to
raise the cultural level of the masses of the peo-
ple. Under Soviet rule a cultural revolution has
taken place in the U.S.S.R.; a new culture, social-
ist in content, and developing in the form of na-
tional cultures, has arisen.
Already in 1938, the number of children attend-
ing school had greatly increased in the respective
republics compared with pre-revolution times; and
in this respect the formerly backward, national
republics had caught up with the advanced and
most cu:tured regions of the Soviet Union.
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elementary, secondary,and high schools per thou-
sand of the population was as follows in the re-
spective republics: R.S.F.S.R. 187; Ukrainian
S.S.R. 176; Byelorussian S.S.R. 192; Azerbaijan
S.S.R. 195; Georgian S.S.R. 196; Armenian S.S.R.
237; Turkmenian S.S.R. 163; Uzbek S.S.R. 176;
Tajik S.S.R. 170; Kazakh S.S.R. 179 and the
Kirghiz S.S.R. 204.*
There has also been an increase in the number
of students attending colleges and universities.
Before the revolution there were higher education-
al establishments only in what is now the
R.S.F.S.R., in the Ukraine and in Georgia, and
not all the republics had even high schools. At
the present time, however, every Soviet republic
has a wide network of colleges and vocational
high schools in which the higher and medium
skilled personnel It needs is trained.
In all the Soviet rep,ubli.cs a national literature
is developing. Before the revo'ution, in republics
like Byelorussia, Turkmenia, Tajikista.n and Kir-
ghizia, no literature whatever was published in
the native languages. In 1913, of the total num-
ber of books published in the Ukraine, only 3.2
per cent was published in the Ukrainian lan-
guage. In 1933, however, 70 per cent of the total
was published in that language.
* Cf. Cultural Development in the U.S.S.R., Russ, ed.,
1940, p. 29.
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n er ovie ru e, oo s have een broug t
within the reach of all the nations of the Soviet
Union.
In all the Soviet republics there is a large
number of big public libraries. In 1939, there were
48,561 libraries in the R.S.F.S.R., 17,018 in the
Ukrainian S.S.R., 3,682 in the Byelorussian
S.S.R., 1,284 in the Georgian S.S.R., 1,441 in the
Uzbek S.S.R., 2,581 in the Kazakh S.S.R., 1,098
in the Azerbaijan S.S.R., etc.
In tsarist Russia, in 1913, newspapers and
magazines were published in 24 languages. In the
U.S.S.R., in 1938, newspapers were already pub-
lished in 69 languages, and magazines in 39
languages. In Tajikistan, Turkmenia, Kazakhstan
and Kirghizia, for example, no newspapers at all
were published in the native languages before the
revolution; in 1938, however, 44 newspapers were
published in the Tajik language, 133 in the Ka-
zakh language, 37 in the Kirghiz language and
36 in the Turkmenian flanguage.*
The flourishing condition of the culture of the
peoples of the U.S.S.R. is also shown by the fact
that in addition to the Academy of Sciences of the
U.S.S.R. and the specialized academies, ten Union
Republics have their own Academies of Sciences.
These are: the Ukraine, Byelorussia, Armenia,
Georgia, Azerbaijan, Kazakhstan, Uzbekistan,
Lithuania, Latvia and Estonia. In the other re-
Ibid., pp. 142, 215, 221, 220.
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publics scientific research work is conducted and
coordinated by branches and bases of the Acad-
emy of Sciences of the U.S.S.R. There are such
branches and bases in Kirghizia, Turkmenia,
Tajikistan, the Karelo-Finnish S.S.R., the Mol-
davian S.S.R., and also in some of the autono-
mous republics,: the Tatar and Komi Autonomous
Republics, and others.
The cultural backwardness of some of the
nations of the U.S.S.R. is now a 'thing of the
past. Today, all the Soviet nations are in the van-
guard of world -culture and progress.
It must be emphasized, however, that the cul-
tural development of the nations of the U.S.S.R.
does not signify cultural progress only for indi-
viduals, or individual groups of the population;
the attainments of culture in all its aspects have
been brought within the reach of the broadest
masses of the working people of all nationalities.
In developing its own national culture-its
own schools, theatres, literature and science-
every nation in the Soviet Union at the same time
enhances the common cultural treasures of all
the nations of the U.S.S.R.
In the Soviet Union a significant process of
the drawing together of the cultures of the differ-
ent nationalities is going on. Ingrained in the
memory of the people are the colourful Nationail
Art Decades that have been held in Moscow, dur-
ing which the art of different nationalities was
exhibited, testifying to the great cultural achieve-
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ments of the fraternal republics. The countrywide
celebration of the anniversaries of the great writ-
ers and poets Pushkin, Shevchenko and Shot'ha
Rust'hveli, and the celebration of the millennium
of the Armenian popular epic David of Sasun,
were red-letter days in the cultural life of the
nations of the U.S.S.R.; they drew these nations
closer together and fostered mutual respect and
sympathy for the history and cultural treasures
of the fraternal nations.
"All the real cultural achievements of the
nations, no matter how far back into the past they
may go, are highly valued in the Socialist State
and now stand forth before their own nations,
and before the nations of the whole of the Soviet
Union in their regenerated, in their true iideologi-
cal brilliance. The Bolsheviks are not among
those who have forgotten their kinship with their
people. We Bolsheviks come from the very depths
of the people, we value and love the glorious
deeds in the history of our nation as well as of
all other nations. We know very well that real
progress, which is possible only on the basis of
Socialism, must rest on the entire history of the
nations and on a'-il their attainments in past cen-
turies, it must reveal the true meaning of the his-
tory of the life of the nations in order to ensure
a glorious future for our own nation, and at the
same t' me a bright future for all nations,"* said
* V. Al. Molotov, XXII Anniversary- of the October
Revolution, Russ. ed., 1939, pp. 14-15.
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Comrade Molotov in his.address on the twenty-
second anniversary of the Great October Socialist
Revolution.
Thus, setting itself the extremely difficult task
of abolishing the economic and cultural back-
wardness of the formerly oppressed nations that
had lagged behind in their development, the Bol-
shevik Party and the Soviet Government achieved
amazing results in acomparatively short space
of time.
We will quote as examples the development of
two formerly backward nations in Russia-the
Kazakhs and the Kirghiz. We will show what they
were like in the past and what they are like now.
Before the revolution, Kazakhstan was one of the
most backward colonies of tsarist Russia. The
chief occupation of the inhabitants was that of
nomad. herdsmen. Of the total land area of
44,000,000 hectares, 15,600,000 belonged to Rus-
sian Cossack settlements; 88 per cent of the good
land belonged to the rich native class, the bal.
Only about 2 per cent of the Kazakh population
was literate. The following is the way the Ka-
zakhs themselves described their life in the past
in a letter they sent to Comrade Stalin on the
twenty-fifth anniversary of their republic: "Before
Soviet rule was established, the,life of our people
was like spring without flowers, daytime without
the sun, a river without water. In the earth lay
hidden precious metals, but man raised the de-
posits of the steppes with wooden shovels. The
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wide banks of lakes and rivers were flooded by
the life-giving waters of mountain glaciers, but
man died of thirst. In the wintertime our pas-
tures were covered with an icy crust and our wan-
dering herds, our only staff of life, perished from
hunger. It took months and years to travel from
border to border across our unexplored land. A
man was born, he lived and died, without know-
inganything about the great life of the world.
Our entire people bent under the burden. of fate,
which was as severe as a snowstorm, in the
steppe."*
The Great October Socialist Revolution deliv-
ered the talented Kazakh people from agelong
exploitation, saved them from extinction and 'put
them on the road to a new way of life. After be-
coming a Soviet republic, the equal of all the
other republics in the Soviet Union, Kazakhstan
made such gigantic progress in economic and cul-
tural development as it was unable to make in all
the long centuries of its history. From a poverty-
backward country with a patriarchal-
stricken,
nomad way of life, Kazakhstan has been
tribal,
transformed into an advanced socialist republic.
Already in 1940, industry -constituted 60 per cent
of its total national economy. By 1939, the output
of large-scale industry had already increased 17-
fold compared with 1913, and the number of work-
ers employed in industry had increased 8-fold.
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Huge industrial enterprises have been built in
Kazakhstan which are the pride not only of the
Kazakh ,people, but of the entire Soviet Union:
the Karaganda collieries, -the third largest in the
Soviet Union;. the Balkhash Copper Smelting
Plant, larger than any non-ferrous metallurgical
plant in Europe; !the Em,ba Oil iCombine; the
Chimkent Lead Works, and many others. Kazakh-
stan holds first place in the U.S.S.R. for resources
of copper, lead, zinc, silver, cadmium and many
other minerals. It is famous in the U.S.S.R. as a
land of large-scale industry and the storehouse,of
rare minerals. Fundamental changes have also
taken place in the agriculture of Kazakhstan. In
1945 there were 6,390 kolkhozes in the republic,
scores of grain and stockbreeding sovkhozes, and
363 machine and tractor stations. Already in 1940,
nearly the entire cultivated area of the republic
was worked with tractors. In ccuiltivated area and
head of cattle Kazakhstan holds third place in the
U.S.S.R. (after the R.S.F.S.R. and the Ukraine)
In 1945, the area of irrigated land amounted to
1,350,000 hectares. In the postwar Stalin five-year
plan period the industrial -capacity of Kazakhstan
is streadily growing. For rate of industrial devel-
opment in the postwar five-year plan period, Ka-
zakhstan holds second place among 'the Union
Republics, and third place as regards capital in-
vestments in the national economy.
The culture of the Kazakh people has risen
immensely. The entire people is now literate, and
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its culture is very high. In 1945 there were in the
republic 7,735 elementary and secondary schools,
attended by over 750,000 pupils. Special schools
had been opened to teach adults to read and write,
and by 1940 illiteracy among the adult population
was already abolished. Before the revolution there
was not a single higher educational establishment
in Kazakhstan, and not a singe Kazakh attended
any such institution in tsarist Russia. In 1946,
however, there were in Kazakhstan 23 higher
educational establishments, attended by about
12,000 students. During the many centuries pre-
ceding the revolution only 120 books had been
published in the Kazakh language, and most of
these were of a religious character. Now, the Ka-
zakh publishing house publishes over 600 titles
every year, in addition to 134 newspapers and four
magazines. Science too has widely developed in
Kazakhstan. The republic has an Academy of
Sciences, which controls 17 scientific research
institutes and scores of laboratories. Twelve hun-
dred scientists are engaged in the scientific insti-
tutions of Kazakhstan, and among them are five
members and corresponding members of the
Academy of Sciences of the Soviet Union, 85 Doc-
tors of Science and professors, and 246 Masters
of Science and lecturers. There are now in Ka-
zakhstan 41 theatres, including a magnificent
Opera House, a tide network of cinemas, art and
music schools, ballet schools, a choir and a phil-
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harmonic orchestra. Kazakh national literature
has developed too.'"
That is how the Kazakh people have developed
under the Soviet system thanks to the applica-
tion of the Lenin and Stalin national policy.
We see the same in the case of the Kirghiz
S.S.R. Before the revolution Kirghizia was one of
the most backward outlying regions of tsarist
Russia. Fertile valleys, excelilent mountain pas-
tures, immense deposits of useful minerals: coal,
lead, zinc, tin, gold, silver, antimony, quicksilver,
etc.-such is the natural wealth of Kirghizia. But
oppressed by tsarism, the Kirghiz people lived in
poverty before the revolution. Cruel want reigned
primarily in the yurtas of the Kirghiz nomads
who were subjected to unbearable exploitation by
the bal, manaps and the tsarist officials. The Kir-
ghiz people pursued a nomadic way of life, were
nearly all illiterate, and were in danger of extinc-
tion. Two small tanneries, an oil press, a cheese
factory and fifty small handicraft workshops with
the most primitive equipment constituted the en-
tire industry of the country.
The Great October Socialist Revolution opened
for the Kirghiz people the road to free national
development and to the building of a socialist way
of life. From a country with patriarchal-tribal
The above facts about Kazakhstan have been taken
from the following sources: Pravda, Nov. 6, 1940; Pravda,
Nov. 17, 1945; Pravda, Dec. 20, 1946; Pravda, June 6, 1948.
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customs, Kirghizia, under Soviet rule, became an
industrial-agrarian country. In 1945, industrial
production accounted for about 70 per cent of the
total national economy of the republic and showed
an increase of nearly 300-fold compared with
1913. There are over 5,000 enterprises in the coun-
try. In 1945, industrial production amounted to
35 times as much as in 1926. During the past
twenty years coal output increased 12-fold. Since
1926, electric-power capacity has increased over
100-fold. Skilled workers have been trained from
among the native population. The factories work
up metals and timber, cotton and wool, grain and
sugar beets; they manufacture silk, cloth, sugar,
tobacco and wine. Coal and oil, quicksilver and
lead, vanadium and sulphur and other rare and
extremely rare metals are mined. Across the
mountains where formerly pack horse tracks had
been the only means of communication, railways,
roads and automobile roads have now been built.
Railway, automobile and air communication, post,
telegraph and telephone, are now part and parcel
of the everyday life of the Kirghiz people.
Under Soviet rule the backward nomadic
husbandry of Kirghizia has been transformed into
large-scale socialist agriculture equipped with the
most up-to-date machines. There are in the coun-
try 1,600 kolkhozes, 42 sovkhozes and scores
of machine and tractor stations. The fields of
Kirghizia are worked with thousands of tractors
and harvester combines. In twenty years the area
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of cotton, sugar beets and of other industrial
crops is extensively developed.
Formerly almost entirely illiterate, the Kirghiz
people, under Soviet rule, obtained wide access
to education and culture. In 1946, there were in
the country 1,531 schools, 25 secondary voca-
tional schools, six higher educational establish-
ments and 23 scientific research institutes. In
1943, a Kirghiz branch of the Academy of Sci-
ences of the U.S.S.R. was,formed and is now the
centre of scientific thought in the republic. The
republic has developed a national literature and
art and has trained a large body of intellectuals
from among the native population. It has ten re-
public, regional and district theatres including
the Kirghiz State Opera and Ballet, which has
been awarded the Order of Lenin. It also has a
philharmonic orchestra, a school of music, a State
Dramatic Theatre, 507 recreation clubs, 271 li-
braries, 109 cinemas and 328 village reading
rooms. Before the revolution the Kirghiz people
did not even have a written language; but today,
89 newspapers are published in the Kirghiz, Uz-
bek and Russian languages, and textbooks, the
classical works of Marxism-Leninism, technical
and other literature are published in the native
language.Such is the path of development the peo-
ple of Kirghizia have traversed under Soviet rule.
"We are proud of our dear, sunny Kirghizia,'
which in its development has surpassed the coun-
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tries of the East contiguous to ours, the peoples
of which are living under conditions of social in-
equality, lack of rights, poverty and capitalist
slavery,"* wrote the working people of Kirghizia
to Comrade Stalin when celebrating the twentieth
anniversary of their republic.
The same path of rapid industrial and cultural
development has been traversed by the peoples of
the Azerbaijan, Armenian, Uzbek, Tajik, Turk-
men and other fraternal republics.
In the great commonwealth of nations of the
U.S.S.R., under the leadership of the Bolshevik
Party, with state power wielded by the working
people, the former backward nations and peoples
have created their own national Soviet republics
and have converted them into advanced indus-
trial-agrarian ?
countries which occupy a worthy
place among the fraternal republics of the Soviet
Union. Such are the fruits of the Lenin and Stalin
national policy pursued by the Party and the So-
viet State.
In the dependent and colonial countries of the
East we see the very opposite of this. Let us take,
for example, the largest of them-India, now
divided into Hindustan and Pakistan, which have
been granted dominion status, but which actually
* The above facts about the Kirghiz S.S.R. have been
taken from the fo:lowing sources: Pravda, March 1, 1946;
Pravda, March 3, 1946; Izvestia, March 1, 1946; Moskovsky
Bolshevik, March 1, 1946.
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continue to be semi-colonies. India is an agrarian
country with a population (in 1931) of about
350,000,000. Sixty-seven per cent of its self-sup-
porting inhabitants are engaged in agriculture
and only 10 per cent in industry. India supplies
60 per cent of the world's rice crop, about 40 per
cent of the tea crop, about 15 per cent of the
cotton crop, 99 per cent of the jute crop and 8 per
cent of the wheat crop. But these figures must not
be taken as evidence of a high level of agricul-
ture. Burdened by the oppression of imperialism
and of the survivals of feudalism, agriculture in
India still drags out a miserable existence, for it
lacks the support of developing industry. The
British imperialists, interested in the production
of the raw materials they need (cotton, jute, oil
seed, rubber, rice and tea), retarded the industrial
development of India in order to keep it as a raw
materials base for their colonial empire. All the
key positions in industry are held by British capi-
tal. Over 80 per cent of the peasant farms are in
perpetual debt to usurers. The growth of indebt-
edness leads to the systematic ruin of the peasant
farmers, most of whose land falls into the hands
of the usurers. Every year millions of people die
of hunger.
Before the second world war about 18,000,000
workers were employed in industry -in India. Of
these, only 2,000,000 were employed in factories;
the rest were artisans or journeymen in handicraft
workshops. The light industries and mining are
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ftpQoped, but these are owned by foreign
t
ity of the inhabitants of India remain illiterate.
According to the 1931 census, less than 10 per
cent of the population over five years of age was
able to read and write. Such are the fruits of more
than a century of "civilizing" activity on the part
of the British imperialists in India.*
Were it not for the Great October Socialist
Revolution, the peoples of our eastern republics
would have been in no better plight than those
of India and other colonies.
The English writer A. Campbell, in his book
It's Your Empire, published in 1945, after paint-
ing a depressing picture of the conditions prevail-
ing in the British colonies, advises Great Britain
to learn from the Soviet Union and in doing so
tries to make it appear that there is no fun-
damental difference between the British "com-
monwealth of nations" and the Soviet Union. He
writes: "But the British and Soviet Common-
wealths can nevertheless learn from each other.
Stalin appears to have solved the quadruple
problems of improving economic and social con-
ditions, preserving distinctive cultures while fitt-
ing them into the new all-embracing Soviet cul-
ture, and achieving a wide measure of political
capi
al, mostly British. The overwhelmin ma'or-
^ Cf. The British Empire, State Scientific Institute
"Soviet Encyclopedia," 1943, pp. 193, 194, 196, 199, 203,
232.
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autonomy by creating what are virtually o i
Dominions."
If there is indeed no difference in the status
of the nationalities in the Soviet Union and of
those in the British "commonwealth of nations,"
why is there such a difference in their develop-
ment? Why have the Soviet republics, during the
three decades of Soviet rule, become regenerated?
Why have they flourished and taken such a gigan-
tic leap forward in their economic and cultural
development, whereas the colonial peoples in the
British Empire lack freedom and independence,
have no rights, are subjected to racial discrimi-
nation, ruthless oppression and exploitation, drag
out a miserable existence, die from hunger and
disease? The answer to this is perfectly clear.
The nations of the U.S.S.R. became regenerat-
ed and were able to take such a gigantic leap for-
ward in their economic, political and cultural de-
velopment because they became really free and
equal; because Soviet rule granted the nations
the right to full and free self-determination and
put an end forever to national oppression. On this
basis, the basis of victorious Socialism, the friend-
ship of the nations of the U.S.S.R., friendly col-
laboration between them in all spheres of econom-
ic, political and cultural construction, developed
and gained strength.
The Soviet solution of the national problem
is no secret. But it cannot be mechanically trans-
planted from socialist to capitalist soil. To achieve
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successes like those achieved b the S
o
t
ie
v re
Y
publics, the nations must be given the same condi-
tions of development as those provided for them
in the Soviet Union. This is what is to be learned
from the Soviet Union on this question. But for
this it is necessary to abolish imperialism, to
abolish national-colonial oppression and exploita-
tion.
The Great October Socialist Revolution, the
establishment of Soviet-rule and the organization
of the national economy on socialist lines-these
are the chief causes of the rapid economic and
cultural development and prosperity of the Soviet
Socialist Republics.
The formerly backward and oppressed nations
of Russia could not have achieved such rapid
industrial and cultural development as enabled
them to catch up with the advanced nations had
they not united their efforts in socialist construc-
tion and had they not received the friendly assist-
ance of the more developed Soviet nations, and of
the Russian nation in particular.
Firm and unshakeable friendship among the
nations was the motive force of the rapid develop-
ment and flourishing condition of all the Soviet
nations. Friendship among the nations is the ines-
timable gain, of the revolution, because thanks to
it the nations of our country are free and invin-
cible. The Soviet State could not have become so
mighty and strong and could not have passed
through all trials had it been torn by national
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strife and enmity. It was possible to build up suc
an economically, militarily and,culturally power-
ful state like the U.S.S.R. in such a short period
because all the nations inhabiting it generously
poured their unstinting efforts into the common
cause of building up and strengthening our Moth-
erland.
Friendship among the nations of the U.S.S.R.
found most vivid manifestation during the Great
Patriotic War of 1941-45. One of the gravest
blunders the Hitlerites committed was their bank-
ing on the breakdown of the commonwealth of
Soviet nations, their hope that the war and its
trials would cause enmity and strife among the
nations in a multinational state like the U.S.S.R.
The war, however, fully confirmed and proved
that the friendship among the nations of the
U.S.S.R. is indestructible because it rests on the
granite foundation of the Soviet Socialist State.
The gravest dangers and trials of the war against
the German invaders could neither break nor even
shake this friendship. On the contrary, -the mortal
danger that hovered over our Socialist Mother-
land united the Soviet peoples more than ever. As
soon as he invaded the Ukraine and Byelorussia
the enemy came face to face with all the peoples
of the U.S.S.R. The finest representatives of all the
nations of the U.S.S.R., fought shoulder to shoul-
der in the ranks of the Soviet Army. They defend-
ed the soil of each separate Soviet republic as
part of their own united Motherland-the
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U.S.S.R. More than ever the Soviet people felt that
they were members of one friendly family and
united their efforts to repel the enemy. During
the war, the fraternal mutual assistance of all
the Soviet republics was strikingly manifested.
The enemy occupied the Ukraine, Byelorussia,
Latvia, Estonia, Lithuania, Moldavia and part of
the R.S.F.S.R all the nations of the U.S.S.R. rose
to liberate these republics. The Soviet republics
and regions far in the interior received and helped
to start the principal industrial enterprises
that were evacuated from the republics occupied
by the enemy. They increased and developed the
productivity of industry and agriculture to the
utmost in order to supply the country and the
armed forces with everything they needed, and in
order, as far as possible, to make up for the part
played in the national economy before the war by
those districts which had been occupied by the
enemy.
Friendship among the nations of the U.S.S.R.
was still more tempered and hardened during the
war. The Soviet Union Republics developed still
more, became still stronger, and coped brilliantly
with the numerous new and complicated tasks
with which the war confronted them. The further
strengthening of the 'Union Republics and of
friendship among the nations in the course of the
war found expression in the expansion of the
rights of these republics. As is known, the Tenth
Session of the Supreme Soviet of the U.S.S.R.,
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held in the beginning of 1944, invested the Union
Republics with powers in the sphere of foreign
relations and sanctioned a law granting these re-
publics the right to have their own national mili-
tary formations. The granting and implementa-
tion of such rights to the Union Republics during
the war is striking evidence that the firmness of
our multinational state had successfully passed
the stern test of war. "The friendship among the
peoples of our country has stood the test of all
the hardships and trials of the war and has been
still further cemented in the common struggle all
the Soviet people are waging against the fascist
invaders," said Comrade Stalin.
Friendship among the nations of the U.S.S.R.
is one of the deepest sources of ardent and life-
giving Soviet patriotism. "The strength of Soviet
patriotism lies in the fact that it is based not on
racial or nationalistic prejudices, but upon the
profound devotion and loyalty of the people to
their Soviet Motherland, on the fraternal coopera-
tion of the working people of all the nations in-
habiting our country. Soviet patriotism is a har-
monious blend of the national traditions of the
peoples and the common vital interests of all the
working people of the Soviet Union. Soviet pa-
triotism does not disunite but unites all the na-
tions and nationalities inhabiting our country
* J. V. Stalin, On the Great Patriotic War of the
Soviet Union, Moscow 1946, p. 122.
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in a single fraternal family. This should be re-
garded as the basis of the indestructible and
ever-growing friendship that exists among the
peoples of the Soviet Union,"* said Comrade
Stalin,
The Soviet people speak different languages
and belong to different nationalities; but all So-
viet people have one thing in common that ce-
ments them in one friendly family, namely, the
fact that they are all citizens of the great Soviet
Union. Soviet people are proud of the fact that
they are living in a free socialist country and
belong to the great Soviet nation. The pride of
Soviet citizens has nothing in common with con-
tempt for other nations. It fully harmonizes with
respect for the rights and independence of other
nations and with the striving to live in peace and
friendship with all peace-loving nations. The pride
of the Soviet people rests on their great achieve-
ments in building a new and higher social sys-
tem, a new, higher and genuinely human culture,
which is national in form and socialist in con-
tent.
The Soviet people, guided by the Bolshevik
Party and its leaders, Lenin and Stalin, for the
first time in the history of human society, carried
out, in 1917, a victorious socialist revolution,
abolished the rule of the landlords and cap-
italists, and built socialist society. Surmounting
* Ibid., p. 165.
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enormous difficulties and the resistance of their
enemies, the Soviet workers and peasants, by
their own efforts, built in place of old, semi-co-
lonial Russia, a mighty multinational Socialist
State based on complete equality and friendship
between nations. The Soviet people have real-
ized the dream of the best representatives of
mankind; in their state they abolished exploit-
ing classes and the exploitation of man by man.
They have established the socialist mode of
production which ensures rapid economic de-
velopment and a steady improvement in the
material and cultural conditions of the masses
of the working people. For the first time in the
history of the world they have built up a most
advanced and stable multinational state in which
the indestructible friendship and the complete
moral and political unity of the entire people, of
the whole of Soviet society, has been achieved.
Now that the economic and cultural back-
wardness of the formerly oppressed nations has
been abolished in the U.S.S.R., the chief content
of the national policy of the Soviet State at the
present time is to draw the nations still closer
together, to promote the further development of
their collaboration and friendship in every way,
completely to overcome all the survivals of nation-
alism in the minds of men, and further to raise
the economy and culture of all the nations; to
educate the working people of all nationalities in
the spirit of Soviet patriotism and. Soviet nation.-
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al pride-pride in our common Socialist Mother-
land, in her great world-historic achievements in
all spheres of culture and progress.
At the Eighteenth Congress of the Party, Com-
rade Stalin said that the task was "...to strength-
en the moral and political unity of Soviet so-
ciety and friendly collaboration among our work-
ers, peasants and intellectuals; to promote the
friendship of the peoples of the U.S.S.R. to the
utmost, and to develop and cultivate Soviet pa-
triotism."
In the Soviet Union, society is completely
united morally and politically, which is unprece-
dented in the history of mankind.
It would be a mistake, however, to believe
that because of this our progress will not encoun-
ter contradictions and conflicts between the new
system and the survivals of the old in everyday
life and in the minds of men. The consummation
of the building of Socialism and the gradual tran-
sition from Socialism to Communism calls for
.the complete elimination of all the survivals of
capitalism from the national economy, everyday
life and the minds of men, including the most
dangerous and tenacious survivals, namely, the
survivals of nationalism. The victory of Socialism
in our country removed the political and econom-
ic basis of all national enmity and distrust, of
the manifestation of nationalism and chauvinism.
But we must not shut our eyes to the fact that the
level of political-mindedness and culture is not
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equal among the members of Soviet society, that
a certain part of our population is still influenced
by the old and obsolete concepts, superstitions
and prejudices. ". . . the survivals of capitalism in
people's minds are much more tenacious in the
sphere of the national problem than in any other
sphere. They are more tenacious because they are
able to disguise themselves well in national cos-
tume."*
The survivals of bourgeois nationalist ideolo-
gy found expression and manifestation in a num-
ber of works on history that were published in
the Kazakh, Ukrainian, and Uzbek Soviet Social-
ist Republics, in the Tatar Autonomous Soviet
Socialist Republic and in some other national re-
publics. If the survivals of nationalism in the
science of history and in literature are not com-
bated, they may revive and cause considerable
harm to the work of communist education. It
must not be forgotten that the reactionary forces
of the capitalist world that surrounds us are
trying by various ways and means to smuggle
the corrupt bourgeois ideology into our country,
to revive and cultivate the survivals of capitalism
in the minds of Soviet people. Soviet people must
be uncompromising in their hostility to all man-
ifestations and survivals of nationalism; they
must ruthlessly expose all attempts to resuscitate
* J. V. Stalin, Report to the Seventeenth Congress of
the C.P.S.U.(B.) on the Work of the Central Committee,
Moscow 1951, p. 106.
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these survivals. It must be remembered that the f
nationalists in our country always have been and f
are agents of foreign capital, vehicles of bour-
geois ideology. Educating Soviet people in the
spirit of Soviet patriotism means educating them
also in the spirit of friendship among the nations,
in the spirit of uncompromising struggle against
all national and racial enmity, against all forms
of reactionary bourgeois ideology.
Soviet people must develop and strengthen to
the utmost the great friendship among the na-
tions, wh?ch is one of the sources of the strength
and might of the Soviet State; they must remem-
ber what J. V. Stalin said about friendship among
the nations of the U.S.S.R. being a great and
important gain, remember that he said that
" .. as long as this friendship exists, the peoples
of our country will be free and invincible. We need
fear nobody, neither enemies at home nor enemies
abroad, as long as this friendship lives and flour-
ishes."
Friendship among the nations is a mighty
driving force of the development of socialist
society, a driving force of our -development in our
gradual transition from Socialism to Com-
munism.
All the nations of the U.S.S.R. must inces-
santly develop the economy and culture of their
respective republics and thereby increase the
might of the whole of our multinational Soviet
State.
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In his address on the twenty-eighth anniver-
sary of the Great October Socialist Revolution,
Comrade Molotov emphasized the fact that all
the nations in our Soviet State have the recog-
nized right to independence and free national de-
velopment, that all the nations are educated in
the spirit of friendship and mutual respect and in
the spirit of recognizing the merits of every na-
tion in developing its own national culture and
in promoting the progress of the Soviet State as
a whole.
* *
The Great October Socialist Revolution
provided the only correct solution of the national
problem. It provided practical proof that national
strife and enmity are not inherent in every so-
ciety, but only in society based on exploitation, on
the private ownership of the means of production,
on the oppression and exploitation of man by
man. There can be no ground for national strife
and enmity in socialist society, where exploiting
classes and the causes which engender the ex-
ploitation of man by man and antagonism arid
conflict between classes and nations have been
abolished.
The historical experience of the U.S.S.R.
shows that only under Socialism does genuine
national freedom, the development and- prosperity
of formerly oppressed nationalities, equality,
peace and friendship among all nations and peo-
ples, become possible for the first time. The na-
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tional culture of formerly oppressed nations can
develop and flourish only under the socialist mode
of production.
After the second world war, the national-colo-
nial problem became exceptionally important and
acute owing to the claim of American imperialism
to world domination, and to the attempts of the
United States to carry the methods of colonial
rule to the sphere of relations with the big capital-
ist states which were weakened by the war.
Taking advantage of the utter defeat of Germany
and Italy, and also of the unprecedented weaken-
ing of Great Britain and France, the United
States is striving to convert Western Europe into
an Americanized continent. A striking expression
of this imperialist striving is the "Marshall Plan,"
which is a direct menace to the sovereignty and
independence of the West-European countries. In
the guise of rendering "economic assistance" to
the countries that have suffered as a result of the
war, the "Marshall Plan" aims at the economic
and political subjection of the West-European
countries to the interests of the American indus-
trial monopolies.
The execution of the American plan for the
enslavement of Western Europe is accompanied
by ideological preparation-an attack upon the
principle of national sovereignty, appeals to aban-
don the sovereign rights of nations and propa-
ganda of the idea of a "world government." To-
day, the bourgeois ideologists are trying to con-
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vince e peoplles t at the strengthening of inter-
national collaboration is incompatible with the
struggle for national sovereignty and the
strengthening of national statehood. "The pur-
pose of this campaign is to mask the unbridled
expansion of American imperialism, which is
ruthlessly violating the sovereign rights of na-
tions, to represent the United States as a cham-
pion of universal laws, and those who resist
American penetration as believers in an obsolete
and `selfish' national ism."*
Thus the bourgeoisie has today abandoned
and is trampling upon the banner of defence of
national sovereignty under which it has always
fought hitherto. Amidst the general crisis of cap-
italism, when the foundations of the. capitalist
system are shaking and the masses of the people
are more and more resolutely rising for the strug-
gle for their social emancipation, for the vic-
tory of Socialism, the bourgeoisie is sacrificing
the national sovereignty and independence of
their countries in order to crush the growing
working people's movement.
This shows that the reactionary bourgeoisie
of the big capitalist states no longer rely on their
internal forces to retain their class rule and to
recover their prewar position. As a result of the
lessons taught by the war, the political maturity
* A. Zhdanov, The International Situation, Moscow
1947, p. 31.
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of the masses has grown immensely. The forces
of democracy and Socialism are steadily grow-
ing. Under these circumstances, in their endeav-
our to retain their class rule, the reactionary
bourgeoisie in a number of countries are placing
their hopes chiefly on assistance from American
imperialism. The more unstable its position be-
comes and the higher the popular anti-imperialist
movement rises, the more quickly and willingly
the bourgeoisie hastens to sell the national in-
dependence of their country to American impe-
rialism and receive from it in exchange assistance
in the struggle against the masses of the people,
Having taken the path of betraying the national
interests in their country, the bourgeoisie is try-
ing to preserve the most reactionary institutions
and organizations, is furiously resisting all dem-
ocratic measures and is vigorously defending
the position of monopoly capital in economics
and politics. In this it is receiving the. direct sup-
port of the Right-wing Socialists, the betrayers of
the interests of their peoples and faithful servants
of American imperialism.
The foremost fighter for national independence
and sovereignty is the working class, headed by
the Communist parties. Mobilizing the masses
for the struggle against foreign imperialism, the
working class is at the same time also fighting
the servants of foreign imperialism in the ranks
of the home bourgeoisie and is thereby creating
the conditions for the abolition of the economic
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and po ~tica~I ru e o capital in the respec ive coun-
tries. At the present time, the struggle for the
preservation of national independence is closely
interwoven with the struggle for lasting peace, for
a people's democracy, for Socialism; for the work-
ing class upholds the national independence of
its respective countries not for the purpose of
ensuring a return to~ the old, prewar conditions
and of preserving the class rule of monopoly cap-
ital, but to ensure their democratic and socialist
transformation.
While upholding their rights and fighting to
preserve their national independence, the peoples
of the world turn their gaze towards the Soviet
Union, which incessantly and consistently up-
holds the principle of genuine national equality
and of safeguarding the sovereign rights of all
nations, big and small.
There are people in the capitalist world who
do not believe that relationships of equality can
exist between big and small nations. "But we,
the Soviet people," said Comrade Stalin, "are of
the opinion that such relationships are possible
and should be established. The Soviet people are
of the opinion that every nation, big or small, has
qualities of its own, specific qualities peculiar to
itself and which no other nations possess. These
specific qualities are the contribution every nation
makes to the treasury of world culture and there-
by augments, enriches it. In this sense, all
nations, big and small, are in the same posi-
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tion, and every nation is equal to any other na-
tion."*
The Soviet Union has set the world an
example of how to solve the national problem. In
the Soviet Union all nations and peoples live in
friendship and are freely developing. Having con-
sistently solved the national problem within the
country on the basis of the Lenin and Stalin policy
of a commonwealth of nations, the Soviet Union
is today heading the struggle of all the forces of
progress for peace and the democratic. collabora-
tion of nations.
The Soviet Union is a mighty, multinational,
Socialist State that is winning the sympathy of
all progressive mankind by its consistent Lenin
and Stalin national policy, by the struggle it i.
waging for progress, for lasting democratic
peace, for friendship and collaboration among
nations.
* From speech delivered by J. V. Stalin at a banquet
in honour of the Finnish Governmental Deiegat'on, April
7, 1948, published in the magazine Bolshev k. No. 7, 1948,
p. 2.
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 I 188 Fk& I 44W82/[T1 /Q4 : 004-9
-D NOT DETACH
A. SMIRNOV
NORMALIZATION
OF WORLD TRADE
and the
MONETARY PROBLEM
FOREIGN LANGUAGES PUBLISHING HOUSE
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ACADJ MY OT SCI ENCES OF U.S.S.R.
INSTITUTE OP ECONOMICS
A. SMIRNOV
N01tMALIZATION
OF WORLD TRADE
AND THE
MONETA RY PROBLEM
wy
FOREIGN LANGUAGES PUBLISHING HOUSE
Moscow 1952
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One of the obstacles to normal economic relations
between countries is the instability of currencies and
other manifestations of the currency chaos in capi-
talist countries, which became more pronounced after
the Second World War.
There is a quite definite relationship and inter-
dependence between the dislocation of international
trade and the dislocation of international currency
relations. On the one hand, the disruption of normal
economic relations between countries upsets the bal-
ance of payments of many countries, and, as a result
of this, causes the fall of exchange rates and other man-
ifestations of currency instability. On the other hand,
the drastic fluctuations of exchange rates, the frequent
devaluations and the currency exchange restrictions
in the Western states in their turn have an adverse
effect on international trade and other forms of
economic relations.
The adjustment of currency relations between coun-
tries, and first and foremost stabilization of exchange
rates, is therefore a substantial factor that can con-
tribute to normalizing and extending international
trade. At the same time the normalization of inter-
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national economic relations and, thanks to this, the
strengthening of peaceful ties between countries would
be a powerful factor in stabilizing currencies and
alleviating the currency chaos in the capitalist
countries.
The currency problem is in its nature and implica-
tions a problem of international significance. The
movements in exchange rates and various currency
restrictions in the Western states to a greater or lesser
degree affect the interests of all the states participating
in world trade. The Soviet Union and the People's
Democracies are likewise interested in adjusting interna-
tional currency relations, for it is their wish to strength-
en and develop peaceful economic relations between
all countries, irrespective of their state or social system.
True, the various manifestations of currency disloca-
tion in the countries of the West cannot affect the eco-
nomic development of the U.S.S.R. or the People's
Democracies primarily because of the state foreign
trade monopoly existing in these countries. However,
the depreciation and frequent devaluation of currencies
in the Western world, as well as the financial discrim-
ination it practises, can in certain cases hinder the
development of the foreign trade of the U.S.S.R. and
the People's Democracies.
Needless to say, the capitalist countries themselves
are far more interested in stabilizing their currencies
and doing away with discriminatory currency poli-
cies. Unlike the U.S.S.R., where price-building does
not depend on the violent ups and downs of prices on
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external markets or on the movements of foreign
exchange rates, in the capitalist countries the alter-
ations of the exchange rates exert, through foreign
trade, an ungovernable influence on the prices of com-
modities on home markets and, consequently, on the
entire economic life of those countries. In the condi-
tions of a capitalist economy the rate of exchange is
the link between the prices of commodities in different
countries. Other conditions being constant, move-
ments in the rate of exchange alter the cost relation-
ship of the commodities exchanged in internation-
al trade.
In estimating how profitable it would be to export
or import a certain typo of goods, the most important
factor to be taken into consideration, along with the
price, is the rate of exchange. For the importer the
cost (in local currency) of a certain typo of goods,
provided other conditions are constant, depends on the
rate of exchange of the currency in which the goods
must be paid for. A rise in the rate of exchange of that
currency, and, hence, the depreciation of the currency
of the importing country, increases this cost, while,
conversely, a fall in the rate of exchange, that is, a
rise in the rate of the local currency, reduces the
cost of the goods for the importer. At the same time,
a fall in the rate of exchange has an effect on the
relationship between the prices of the export and
import goods of a country. As a rule, the prices of
import goods reckoned in depreciated currency increase
more rapidly and to a greater extent.than.the prices
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of export goods. Thus, as a result of the devaluation
of the pound in Britain in 1949, the index of export
prices (1937=100) rose from 249 in 1948 to 269 at the
end of June 1950, i.e., by 8 per cent, while the index
of import prices during the same period rose from 270
to 317, i.e., by 17.4 per cent.
Every more or less considerable decline in the rate of
exchange, such as devaluation, for example, influences
not only the exports and imports of the country
which has depreciated its currency-and, hence, its
economy-but also directly or indirectly and to a
greater or smaller extent affects the interests of all
the other countries participating in international
trade. A change in the rate of exchange benefits some
countries and is detrimental to others. Thus, the
devaluation of the pound and of the currencies of many
other states in September-October 1949 was detri-
mental to the countries that depreciated their curren-
cies and advantageous to the United States of America.
Devaluation altered the relationship between the
prices of the imported and exported goods of those
countries in a direction unfavourable to them. Britain,
for example, after devaluation had to exchange a great-
er amount of her export goods for the same amount
of goods imported from the `United States, because
the prices of the imported goods in sterling increased
more than the prices of her exported goods. At the
same time, the United States took advantage of de-
valuation to buy up at low prices in dollars scarce
raw materials and strategic supplies both in the coun-
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tries which had depreciated their currencies, and in
their colonies.
In this way the instability of exchange rates, their
fall makes for a nonequivalent exchange of goods be-
tween countries, and this cannot but dislocate interna-
tional trade. What is more, sharp movements in ex-
change rates and frequent devaluation also have an ad-
verse effect on international trade and bring about its
curtailment because they cause both importers and ex-
porters to be uncertain of whether their foreign trade
transactions are profitable. When currencies are un-
stable, the conclusion of export and import contracts,
and especially of contracts based on credit, inevitably
involves the risk of losses due to a possible fluctuation
in the rate of exchange.
The instability of exchange rates is, in the final
analysis, due to processes taking place in the sphere
of production, which have a subsequent effect on circu-
lation. The most immediate and direct causes of the
instability of the exchange rates of the capitalist coun-
tries in the postwar period are chronic deficits in the
balance of payments of these countries and continu-
ous internal inflationary processes in their economies.
Marx pointed out that the rate of exchange can
fluctuate:
"1) In consequence of a momentary balance of pay-
ment, no matter to what cause this may be due, wheth-
or it be a purely mercantile one, or the investment
of capital abroad, or government expenditures, wars,
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etc., so far as cash payments are made to foreign
countries.
"2) In consequence of a depreciation of money in a
certain country, whether it be metal or paper money.
This is purely nominal. If one pound sterling should
represent only half as much money as formerly, it
would naturally be counted as 12.5 francs instead of
25 francs."*
These postulations formulated by Marx remain in
force under present-day conditions, despite a num-
ber of factors that complicate the formation of the
exchange rate, owing to the policy of monopoly capi-
tal and various government measures.
Foreign trade is the most important factor in-
fluencing the balance of payments, since the money
income accruing from exports and the payments
for imports are, in the balance of payments of most
countries, the major items. of revenue and expend-
iture.
Since the Second World War most capitalist coon -
tries have had a chronically adverse balance of trade.
One of the reasons for the sharp increase of late in the
unfavourable balance of trade of Britain and a number
of other West-European countries is. the militari-
zation of economic life.
To carry out their colossal armament programs
Britain and the other West-European-countries are
* Karl Marx, Capital, Vol. III, Kerr - edition",
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compelled to restrict the use of certain types of raw
materials and moans of production in the civilian indus-
tries, including enterprises working for the export
trade, and this causes a drop in the exports of certain
goods and makes for an unfavourable balance of trade.
The balance becomes still more unfavourable owing
to increased imports of strategic materials and arma-
ments.
In Britain, France and Holland the adverse balance
of payments is due not only to the unfavourable balance
of trade, but also to large-scale state expenditures
on the prosecution of colonial wars and the mainte-
nance of big armed forces abroad. -
Another reason for currency instability, which
finds expression in frequent devaluation, is the depre-
ciation of the paper money of the Western countries
with regard to gold and, through gold, with regard to
goods as a result of inflation. Owing to the inflation-
ary rise of prices, the purchasing power of paper money
falls lower and lower. As a consequence of this, the value
of the paper money in gold dwindles to a fraction of
its official gold and monetary parity. The main factor
accelerating internal inflationary processes in most
capitalist countries is the enormous government expend-
iture on arms. The exceedingly marked rise of these
expenditures can be seen from the following table,
which shows the growth only of the direct military
expenditures of the U.S.A., Britain, France and Ita-
ly. These are but part of the total expenditures on arma-
ments, since a large share of other items of expendi-
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Lures in the budgets of these countries is likewise
earmarked for military purposes.
Countries
1937/1938
1 1947/1948
1 1951/1952
U.S.A.
(in thous. mill. doll.)
1.0
10.3
81.8
BRITAIN
(in mill. pounds sterl.) .
197.0
854.0
1,1,43.0
FRANCE
(in thous. mill. francs) .
21.2
245.0
743.0
ITALY
(in thous. mill, lire)
9.2
267.0
523.0
Military expenditures are increasing in other capi-
talist countries, as well. The consequent deficits in
the budgets of the U.S.A., Britain, France, Italy and
many other countries are covered by increased taxes,
the entire burden of which falls upon the public at
large, as well as by state loans and borrowing in the
central and commercial banks.
The net d.ficit of the U.S.A. budget for 1945-50
amounted to approximately 46,000 million dollars.
The internal national debt of the U.S.A. at the end
of 1950 reached 222,600 million dollars. Out of this
sum 83,900 million dollars in state bonds were hold
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by the banks. According to President Truman's report
to Congress, the deficit in the U.S.A. budget for
1952/1953 will run into 14,400 million dollars, instead
of the anticipated 8,200 million. The not deficit
of Britain's budget for 1945-50 amounted to 3,280
million pounds. Loans and advances obtained
during the same period reached 2,401 million pounds.
The deficit in the French budget for 1945-50 amounted
to 3,125,000 million francs. The internal national
debt of France increased from 1,823,000 million
francs at the end of 1945 to 2,824,000 million at
the end of 1950. The deficit in Italy's budget for
1946-50 totalled 2, 105,000 million lire. Considerable
sums of the loans floated settle in the banks and,
together with direct loans to the treasury, cause an
increase in note issue and a growth of permanent
bank deposits.
The increase in the amount of money in circula-
tion has been particularly marked in France and
Italy. In France the mass of money, including demand
deposit, increased from 1,013,000 million francs
in 1945 to 3,315,000 million francs in 1951, which
is an increase of 3.3 times; in Italy, it increased
during the same period from 657,500 million lire to
2,521,000 million lire, which is roughly a fourfold
increase.
The effects of inflation in the Western countries
are a growth of prices and the attendant fall in the pur-
chasing power of money. One indication of the rise in
prices, though it does not by any means provide a com-
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plete picture, is afforded by the rise in the wholesale
price index.
Rise In Wholesale Price Index
(1937=100)
1945
Middle of
1951
Price Increase
In %
U.S.A. . .
123
208
70
Britain .
155
294
90
France .
421
2,910
600
Italy . .
2,203
6,097
177
Holland
167
377
126
Sweden .
170
268
58
There is a definite relationship between the depre-
ciation of money inside a country in terms of goods,
that is, the fall in its purchasing power, and the rate
of exchange. In the days of the gold standard and the
free convertibility of money into gold and foreign
currency in the capitalist countries, there could not
be any very considerable gap between the purchasing
power of money inside the country and the rate of
exchange. This, however, should not in the least be
taken to mean that the rate of exchange and the pur-
chasing power of money tended to correspond. In
present-day conditions, when in nearly all of these
countries currency restrictions have been imposed on
foreign trade, a considerable discrepancy is possible
between the rate of exchange and the purchasing power
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of money inside a country. The absence of free convert-
ibility of money into gold and foreign currency has
the result that inflation can push the purchasing power
of money inside a country down very considerably,
although the official rate of exchange remains fixed.
The depreciation of money in individual countries,
entailing a fall in its purchasing power, therefore has
the same adverse effect on international trade that
the instability of exchange rates has.
however, the lengthy existence of an excessively
wide gap between the high official rate of exchange
and the purchasing power of money, falling owing
to inflation, renders exports unprofitable for such
countries and thereby increases the deficits of their
balance of trade and balance of payments. For this
reason countries with currency restrictions are from
time to time compelled to lower their official rates
of exchange in order to bring them as much as pos-
sible into greater conformity with the diminished
purchasing power of their money in terms of goods.
Thus, the devaluation of 1949 was effected in those
very countries in which exchange restrictions were in
operation. It should be pointed out, moreover, that
the mass devaluation of currencies in 1949 failed to
bring exchange rates into conformity with the pur-
chasing power of money, depreciated in terms of goods.
On the contrary, it. gave rise to another wave of infla-
tion and another aggravation of the financial crisis
in Britain and most of the other countries that depre-
ciated their currencies.
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As a result of inflation and a chronic deficit in
the balance of payments, there was a considerable
decline in the official exchange rates of the
West-European and nearly all the other capitalist
countries. This can be seen from the following table,
in which the postwar exchange rates of the West-
European countries are shown in percentage against
their official rates in terms of the U.S. dollar of 1938,
chosen as 100:
1946
1952
Britain .
82.5
57.2
France
29.2
9.7
Italy . .
8.4
3.0
Holland .
68.7
47.8
Belgium
68.6
59.1
Sweden .
108.5
75.8
This drop in the official exchange rates of West-
European countries does not, however, give a full
picture of the actual depreciation of their currencies.
The decline in exchange rates and the fall in the
purchasing power of money as a result of intensified
inflationary processes in the economy of the Western
countries cause the dislocation of international trade
not only because they increase hazards and hamper
the conclusion of foreign trade contracts, but also
because these factors hit at the living standards of the
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broad masses in these countries. Notwithstanding the
enormous growth of prices, especially the prices of
foodstuffs and other consumer goods, as a result of
inflation, wages are either frozen or are increased in
the depreciated currency very insignificantly. Owing
to this, there is a drastic fall in the real incomes of
the working people. The inevitable result of this is a
decline in demand, including the demand for goods
imported from other countries. This causes a curtail-
ment of the foreign trade turnover which cannot be
made good by increasing the share of armaments and
strategic materials in international trade.
In addition to the instability and fluctuations of
exchange rates, other factors that adversely affect
international trade are the various exchange restrictions
practised on a large scale in the countries of the West.
These restrictions, under which private exchange
transactions are abolished and available foreign ex-
change is allocated by the government at the fixed
official rate not determined by supply and demand,
were first introduced in a number of countries
during the world economic crisis of 1929-33, not
to mention their short-lived operation during the
First World War. The Second World War led to
the introduction of exchange restrictions on a wider
scale, and the restrictions became harsher. At the pres-
ent time exchange restrictions have been imposed to
a larger or smaller extent on the foreign trade of nearly
all the countries of the West. With the exception of
the U.S.A. and Switzerland, there are only a few small
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countries that have not subjected their foreign trade
to exchange restrictions.
With the aid of exchange control the governments
seek to limit the impact of market ups and downs on
their economic relations with other countries. The
purpose of these restrictions is to maintain the balance
of payments and to preserve the rate of exchange. But
the mass devaluation of 1949 demonstrated that these
purposes had not been achieved in the countries that
had resorted to exchange restrictions.
Exchange restrictions can have an appreciable
effect on the scope and trend of a country's foreign
trade. In some countries with exchange restrictions
the exchange bodies have been authorized to
issue or not to issue import and export licenses. In
other countries with such restrictions, obtaining an
import license does not yet mean that the importer
will receive from thosebodies the foreign currency nec-
essary to pay for the imports. The exporters' proceeds
in local currency in countries with exchange restric-
tions are usually blocked on their current account and
may be used exclusively for payments within that
country. All this, in conjunction with the complicated
currency regulations and frequent amendments, creates
a number of obstacles for exporters and importers in
their foreign trade transactions.
Some countries, more specifically the countries of
Western Europe, regard exchange restrictions as a
definite means of protecting their economy, as a buffer
to soften the impact of American inflationary trends on
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their economy. This accounts for the fact that American
ruling circles and the International Monetary Fund at
their disposal are doing their utmost to force Britain
and the other West-European countries into lifting
their exchange restrictions.
In practice, however, exchange restrictions are
used not only as a trade barrier, not only as a means
of protection, but also as a weapon of economic expan-
sion. With the aid of exchange restrictions many coun-
tries practise discrimination in their trade relations
with other countries. Such discrimination is practised
by certain West-European countries in the matter
of licenses for transactions with the Soviet Union and
the People's Democracies.
Another form of discrimination is the establishment
of different treatment for different countries in curren-
cy regulations. Thus, on the basis of the currency regu-
lations operating in Britain, the United States of Amer-
ica and certain other countries of the dollar zone enjoy
more favourable treatment than other countries. On
the basis of the Anglo-American financial agree-
ment of 1945, the pounds sterling on the accounts of
American banks and nationals, as well as on the accounts
of dollar-zone countries in British banks, accruing
from trade transactions, can be freely converted into
American dollars, whereas the banks and nationals of
other countries do not enjoy this privilege.
The organization of the so-called European Pay-
ments Union in 1950, directly sponsored and su-
pervised by the U.S.A., was also a measure of discrim-
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ination in the sphere of currency and trade policy.
Leaving aside organizational questions and the pro-
cedure adopted for payments between the sixteen Mar-
shall-Plan countries which make up the E.P.U.,
it must be stated that for the duration of the Union's
existence its members are to enjoy reciprocal free con-
vertibility according to a parity attached to the Amer-
ican dollar, in other words, the foreign trade and
other current transactions of the members of this union
are not to be cramped by currency restrictions. At the
same time the member-countries have undertaken
to effect on a mutual basis a gradual abolition of all
quantitative restrictions on imports. This "liberaliza-
tion" of trade does not extend to other countries which
do not belong to the Union, despite the fact that the
member-countries earlier concluded trade agreements
with most of them on the basis of most-favoured
nation treatment.
One of the aims of the E.P.U. was to foster trade
between its members through a system of multilateral
clearing and the granting of credits to member-coun-
tries with an adverse balance of trade. This was the
purpose of the so-called "liberalization" of trade.
The clearing-house system and the credits were to
have reduced to a minimum the need for the member-
countries to draw upon their gold and dollar reserves.
In practice, however, these aims were not achieved.
In its very first year the E.P.U. had to take the
path of abandoning its earlier-proclaimed principles
of the liberalization of foreign trade, multilateral
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trade turnover and mutual convertibility of currencies.
First and foremost, the Union was compelled to take
steps sharply to reduce the imports of Western Ger-
many, which was using its E.P.U. credits to purchase
strategic raw materials in various countries. Simul-
taneously Western Germany was granted a special
credit of 120 million dollars to enable her to repay
her debt to the Union without resorting to progressive-
ly increasing payments in dollars. The quantitative
imports restrictions established by Western Germany
affected the interests of a number of exporting coun-
tries, especially Holland. Britain, which at the time
of the founding of the Union had been regarded as
a creditor-country, already by mid-1951 became
a major debtor of the Union. The Central Bank in
Belgium had to discontinue the purchase of British
pounds and French francs in order to stop the influx of
British and French capital "fleeing" from the pound and
the franc in connection with the rumours about their
impending devaluation.
According to the A.F.I. News Agency, the French
Government decided to suspend, from February 1952,
the so-called liberalization of trade with E.P.U.
countries and, with a few exceptions, to re-impose
quotas on imports from those countries. On February 19
the French Government extended these import re-
strictions to the other goods which had figured in the
"liberalization" lists. These measures were evidently
caused by the fact that France's debt to the E.P.U.
in January 1952 reached 102,900,000 dollars, and
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in repayment of this debt France had to pay the Union
36,400,000 dollars. The French Minister of Eco-
nomic Affairs in his statement to the O.E.E.C. on Feb-
ruary 9, 1952, pointed out that the measures to "lib-
eralize" trade had not assumed in practice a general
or permanent character, and this had resulted in a
different status for different countries. Seeking to
justify the import restrictions imposed, the minister
declared that this had been inevitable, since other-
wise by April 15 France would not have had a firm
currency to pay for her purchases in the dollar zone or
the E.P.U. countries.
These facts eloquently show that the European Pay-
ments Union does not have a firm economic base to
rest on.
The setting up, in the form of a multilateral ex-
change clearing house, of such a segregated trade and
political alliance as the E.P.U., cannot be conducive
to the development of international trade, and can
only lead to its decline, since it hampers normal trade
relations between the countries of Western and East-
ern Europe. The crisis now gripping the E.P.U. is
proof of the economic impasse its member-countries
have reached as a result of the fact that under pressure
from across the ocean they have taken the path of under-
mining their natural economic relations with Eastern
Europe.
The exchange policy of the United States is another
factor adding to currency dislocation and therefore
hindering the normal development of international
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economic-relations. This policy has resulted in the con-
centration of the overwhelming part of the world's
gold reserves in the United States; it has resulted in the
exhaustion of the gold and currency reserves of the
West-European countries and developed an artifi-
cial dollar famine in those countries. This has accen-
tuated the unevenness of the distribution of gold be-
tween countries that existed prior to the Second World
War. In 1929 the share of the U.S.A. in the world's
visible gold reserves (excluding the U.S.S.R.) amounted
to 37 per cent. The subsequent increase in the share of
the U.S.A. in the world's gold reserves can be seen
from the following table (the figures are given for the
end of each year):
1938 1
1945
1949
1950
Gold reserves of all countries
(excluding U.S S.R.) (in
thous. mill. dollars) . . .
26.9
32.0
33.9
34.2
Gold reserves of U.S.A. (in
thous, mill. dollars) . . .
14.6
20.0
24.6
22.8*
Share of U.S.A. in total gold
reserves (in %) . . . .
54
63
72
67
* The decrease in the gold reserves of the U.S.A. in
1950, which continued in the first half of 1951, was caused
by a temporarily adverse balance of payments due to in-
creased expenditures abroad and increased prices of the grow-
ing quantities of strategic materials imported in connection
with the war in Korea.
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Thus wo see that more than two-thirds of the
world's gold reserves (excluding the U.S.S.R.) is
at present concentrated in the United States, this
being sharply at variance with the share of the United
States in the world trade turnover.
In spite of the absence of a gold standard in the cap-
italist countries at the present time, gold continues
to operate as the world's money and plays an impor-
tant role in international payments as a universal ten-
der for payments and purchases. Therefore, the ques-
tion of the relationship of individual currencies to
gold and the question of the "world price" of gold are
of substantial importance to normal economic rela-
tions between countries.
The financial policy of the United States in this
matter clashes with the interests of normalizing inter-
national trade relations. American ruling circles seek
to turn the dollar into a world-wide currency and
to substitute it for gold as an instrument of interna-
tional payments, so that the currencies of other coun-
tries should be tied to the dollar and so that those
countries should keep their currency reserves not in
gold, but in dollars, on their accounts in American
banks. However, the American dollar is certainly not
a currency that could serve as a firm monetary basis
for the normal development of international economic
relations.
Under the Act of 1934 concerning gold reserves and
the executive order issued by the President of the
United States on the basis of this law, the dollar
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was depreciated to 59.06 per cent of its former parity,
and its gold backing was fixed at 156/21 grains of gold
(hallmark 900), or 0.888671 grams of pure gold. This
parity is, however, purely nominal, since the free con-
vertibility of paper dollars into gold was not resumed
in the United States either for individuals or for other
countries. The United States Treasury is merely
obliged to purchase gold at the official "price" of
35 dollars for an ounce of pure gold, which corresponds
to the new gold parity of the dollar minus a com-
mission of 0.25 per cent. Thus, the relationship of
the dollar to gold is a very one-sided affair.
As a result of inflation in the United States during
and after the Second World War, the value of the dollar
in terms of commodities was greatly depreciated. Even
on the basis of the official index of American wholesale
prices, which more than doubled from 1938 to October
1951, the purchasing power of the dollar at present
amounts to only half of its purchasing power in 1938.
In spite of this, the United States Government does
not wish to increase the official "price" of gold and
lower the gold backing of the dollar fixed in 1934.
The artificial character of the gold parity of the
dollar and the disproportion between the official
"price" of gold in the United States and the real value
of the paper dollar is graphically illustrated by the fact
that on the private gold markets in Europe and in
the East the "price" of an ounce of gold has reached
50-55 dollars, while the official "price" in the United
States is 35 dollars.
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In the U.S.A., too, many admit that this official
price of gold does not correspond to the diminished
value of the dollar. It is noteworthy that all the way
back in' 1945 a bill was introduced in Congress to in-
crease the official price of gold to 56 dollars for an ounce.
Ilowever, this bill came up against opposition from
the Treasury and the Federal Reserve Board and
was therefore dropped. Since then the purchasing
power of the dollar has fallen by nearly 40 per
cent. This obvious discrepancy between the official
price of gold and its real value has the result that
a considerable part of the gold produced is not sold
to the central banks or treasuries, but finds its way
to the private market, where it is bought by indi-
vidual capitalists at a higher price for purposes of
thesaurizing.
Making use of its advantageous position on many
foreign markets and its favourable balance of payments,
which creates a dollar famine in other countries,
the United States keeps the purchasing "price" of gold
low, thus compelling other countries to sell gold to
the United States at this low "price." The net increase
in the gold reserves of the U.S.A. from the end of
1938 to the end of 1950 exceeded 8,000 million dollars.
For this use of gold the U.S.A. paid other countries
in depreciated dollars, whose purchasing power in
terms of goods kept falling throughout the war years
and especially after.
It is perfectly obvious that such a policy is one of
the most substantial obstacles to-the development of
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international trade. The fact that the official "price"
of gold in the U.S.A. is kept at a level which does not
correspond to its real value in terms of goods creates
abnormal conditions for the flow of gold between coun-
tries and hampers them in using gold to adjust their
international payments, which is an inevitable imped-
iment to the extension of world trade. At the same
time the artificially lowered "price" of gold adds
to the chaos in the matter of exchange rates, which
cease to reflect the real value of the currencies in
question.
The International Monetary Fund, whose main
task, according to its statute, .is to promote the stabi-
lization of currencies and thereby contribute to the
normalization of international economic relations,
is not fulfilling the functions with which it was offi-
cially entrusted. Its activities are aimed, for one thing,
at effecting in other countries currency measures de-
sirable to the United States. The Monetary Fund is
infringing upon the sovereign rights of other states in
the sphere of their internal financial policy, compelling
individual countries to fix the exchange rates of their
currencies at levels suiting the interests of the U.S.A.
When, after the mass devaluation in 1949., the Union
of South Africa appealed to the International Monetary
Fund to raise the "world price" of gold because of the
,considerable gap between its official "price"' in the
U.S.A. and its actual "price," a fact which was caus-
ing great discontent among the gold-mining coun-
tries, this proposal was rejected by the Monetary
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Fund because it ran counter to the interests of the
U.S.A. The obvious discrimination practised by
the International Monetary Fund and the Interna-
tional Bank for Reconstruction and Development
towards a number of countries compelled Poland to
resign from both of these financial institutions in
March 1950.
As has already been said above, the adjustment of
currency relations between countries and the relative
stabilization of exchange rates cannot be achieved un-
less normal international economic relations are re-
stored. Furthermore, it must be borne in mind that the
states restricting and undermining their trade rela-
tions with the Soviet Union, the Chinese People's
Republic and the European People's Democracies
are conducting a policy which under present-day con-
ditions is suicidal. Such a policy clearly conflicts
with the national interests of the Western states, since
it leads to a further curtailment of their foreign trade
and a further deterioration of their financial posi-
tion.
In this connection it is appropriate to recall
V.I. Lenin's words: "As to the blockade, experience
has shown that we do not' know who suffer heavier
consequences from it: the blockaded or the block-
aders."* At the present time no blockade or trade
fiscrimination can retard the rapid economic devel-
* V. I. Lenin, Collected Works, 4th Russ. ed., Vol. 33,
p. 126.
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opment of the Soviet state, but it is obviously in-
jurious to the countries resorting to these measures.
The Soviet Union, the Chinese People's Republic
and the European People's Democracies are a vast
potential market for the goods of all the other coun-
tries and a possible source of foodstuffs, various indus-
trial commodities, including equipment and raw mate-
rials. The restoration of normal economic relations
with this vast market would enable the West-Euro-
pean countries and many other countries of the West
considerably to extend their foreign trade turnover.
This would improve the supply of the goods they
require, stimulate production, make for fuller employ-
ment and improve the living standards of broad sec-
tions of the population.
At the same time the normalization of internation-
al economic relations would also be an important
factor in improving the balance of payments of the
West-European countries and other countries of the
West; it would put an end to the dwindling of their
gold and currency reserves and help to stabilize their
exchange rates.
At the present time the financial position of many
countries of Western Europe has drastically deteriorat-
ed. One of the reasons for this is the increase in the
deficit of their balance of trade. In Britain, for in-
stance, the deficit in the balance of trade in 1951
amounted to 1,209 million pounds, which is three
and a half times the figure for 1950. According to
the report of Butler, Chancellor of the Exchequer,
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Britain's gold and dollar reserves at the end of 1951
amounted to only 2,335 million dollars, whereas at
the beginning of the year they amounted to 3,300 mil-
lion dollars. While in the first half of 1951 Britain's
gold and dollar reserves somewhat increased, in the
third quarter they fell by 598 million dollars, and
in the fourth quarter they fell by 934 million dollars.
Reports in the British press about the results- of the
conference of the Empire finance ministers held in
London in the latter half of January 1952 indicate that
unless the governments of these countries take urgent
steps, the sterling area will be gripped by a profound
crisis fraught with dire consequences. In France the
foreign trade deficit in 1951 amounted to 339,000 million
francs, triple the figure for 1950. The deficit in the
balance of trade with the U.S.A. and the dollar-zone
countries reached 125,300 million francs, while the
deficit in the balance of trade with the sterling area
amounted to 139,700 million francs.
Owing to an adverse balance of payments with the
United States and other countries of the dollar zone,
a number of countries of Western Europe were com-
pelled drastically to reduce their import program for the
concluding months of 1951 and for 1952. Threatened
by the complete exhaustion of its gold and currency
reserves, the British Government decided to reduce
its dollar imports in 1952 by 500 million pounds; its
food imports are to be cut by 170 million pounds. In
France, which during the first nine months of 1951 was
importing from dollar-zone countries at an annual
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rate of 635 million dollars, it is intended. to cut down
imports from July 1, 1951, to the end of June 1952 to an
annual figure of 500 million dollars. According to the
A.F.I. News Agency, Belgium decided to reduce her
imports from the U.S.A. in the,first quarter of 1952 by
a third compared with the same period of last year,
and by half in the second quarter.
The facts quoted above show that the dollar fam-
ine artificially created in the countries of Western
Europe is forcing these countries to reduce their
imports, including the imports of food and other vital-
ly important commodities, which is having a most
injurious effect on their economy and on the living
standards of their people.
Thus, by restricting and disrupting their trade rela-
tions with the U.S.S.R., China and the European
People's Democracies, the states of Western Europe
are doing great damage to their economy. The resump-
tion of the former, natural trade relations with the
countries of Eastern Europe would enable them to obtain
the goods they require without spending gold or
dollars.
The fact of the matter is that trade relations be-
tween the countries of Western and Eastern Europe
could be based on barter and clearing arrange-
ments, which would obviate the necessity for for-
eign exchange (either dollars or other currencies).
The development of such mutually-advantageous
trade would undoubtedly help to normalize the balance
of payments of the West-European countries and
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would create the necessary prerequisites for the rela-
tive stabilization of their exchange rates. Normal
international trade would also alleviate the acute
shortage of foreign exchange from which many of
the West-European countries are now suffering, and
would progressively place international settlements,
now severely dislocated, on a sounder basis.
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Printed in the Union of Soviet Socialist Republics
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 TV`S IS AN ENCLOSURE TO
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A. O S I P O V
THE RESUMPTION
AND DEVELOPMENT
OF INTERNATIONAL
ECONOMIC RELATIONS
FOREIGN LANGUAGES PUBLISHING HOUSE
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ACADEMY OF SCIENCES OF U.S.S.R.
? INSTITUTE OF ECONOMICS
A. OSIPO V
THE RESUMPTION
AND DEVELOPMENT
OF INTERNATIONAL
ECONOMIC RELATIONS
FOREIGN LANGUAGES PUBLJSHING HOUSE
Moscow 1952
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TILE INTERNATIONAL ECONOMIC CONFER-
ENCE AND ITS AIMS . . . .. . . . . . . . . . 5
THE PRESENT STATE OF INTERNATIONAL
TRADE ....................... 10
WHAT IS PREVENTING INTERNATIONAL
ECONOMIC COOPERATION . . . . . . . . . . 26
INTERNATIONAL TRADE AND TIIE IMPROVE-
MENT OF THE STANDARD OF LIVING ... 51
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THE INTERNATIONAL ECONOMIC
CONFERENCE AND ITS AIRS
On April 3, 1952, the International Economic Con-
ference opens in Moscow. The capital of the Soviet
Union will be the destination of industrialists, busi-
nessmen, farmers, economists, engineers, trade union
.and cooperative leaders from dozens of countries-
people of the most diverse political opinions but united
by a single desire: to further international economic
cooperation and the development of commercial and
other economic relations between states.
Active preparations for the Conference have been
going on for five months. In Franco, Britain, Italy,
Austria, the Scandinavian countries, Czechoslovakia,
Bulgaria, Japan, China, India, Pakistan, Iran, Argen-
tina, Colombia and many other countries national
Arrangements Committees have been formed to prepare
for the Conference. The aims and prospects of this
Conference continue to be a subject of many -sided
discussion in the world economic and general press.
The idea of calling an International Economic Con-
ference, which came from a group of prominent people
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from various countries meeting in Copenhagen in the
autumn of 1951, aroused great interest and active
support among trade and industrial circles, trade
union, scientific and social workers and organizations
throughout the world. The universal attention that
surrounds the forthcoming International Economic
Conference proves decisively the vital importance of
the problems it is faced with. It also proves that many
millions of people all over the world expect the Con-
ference to solve these problems.
The coming Conference is an economic conference.
The people taking part are assembling not for politi-
cal and ideological dispute, not for discussion of the
corresponding merits of various social-economic sys-
tems and not to impose their social-economic views
on each other. Political and ideological problems will
he left aside. The Conference is to be run entirely on
a business basis for a practical exchange of experience
and for working out concrete proposals concerning
what can and should he done to further cooperation
between countries irrespective of the differences in
their social and economic systems by bringing to light
the possibilities of expanding commercial and other
economic relations, and on this basis improving the
living standards of the people.
The International Initiating Committee has an-
nounced that the aim of the Conference is to discover
means of promoting peaceful cooperation between var-
ious countries and various economic and social sys-
tems. In accordance with this aim an agenda for the
Conference has been formulated which contains one
question: `Finding possibilities of improving living
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conditions of the people of the world through the
peaceful cooperation of different countries and different.
systems and through the development of economic rela-
tions between all countries."
Participants in the International Economic Con-
ference will devote their attention to a free and many-
sided examination of the present situation in world
trade, to furthering the removal of difficulties in this
sphere and to exploring ways and means of expanding
international trade relations and lessening the economic
difficulties many countries are at present experienc-,
ing. The Conference will examine how developing
normal trade relations between countries and increas-
ing the volume of foreign trade can help to expand
national production, increase employment and reduce
the cost of living. Special examination will be
made of the possibilities of. expanding trade between
East and West, between economically developed.
countries and underdeveloped countries, as well as
any other proposals that may be put forward by
participants in the Conference in accordance with the
agenda.
The International Economic Conference is not being
called together by any government body. The sole body
responsible for preparing and conducting it, is the In-
ternational Initiating Committee, which was formed in
Copenhagen on October 27 and 28, 1951, by represent-.
atives of various circles and various countries. At the
Conference full opportunities will be made available
for a free, wide and frank exchange of opinion. More-
over, it has been decided that the Conference will
not pass any resolutions binding the participants, but
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will confine itself to adopting recommendations. The
Conference will also assist in setting up business re-
lations between the representatives of trade and in-
dustrial circles of various countries.
At its session held in Copenhagen between February
10 and 12, 1952, the Arrangements Commission of
the International Initiating Committee took into
account the suggestions received from the representa-
tives of various national Arrangements Committees
to the effect that it would be inexpedient to have
special reports made at the Conference by groups of
countries, as had been intended earlier. Instead, it
decided that it would be more expedient to debate the
question on the agenda of the Conference not on the
basis of one or several reports coming from groups of
countries, but on the basis of speeches made by all
those who may wish to address the Conference. Apart,
from plenary sessions the Conference will organize
sections to deal with individual problems, such as
the development of international trade, assistance in
developing trade with economically underdeveloped
countries, international economic cooperation for
the solution of social problems, and so on. This form
of conducting the Conference will undoubtedly
embrace a wider circle of speakers and enable them
to discuss more concretely the problems they are
interested in.
The Soviet Arrangements Committee for the Con-
ference was formed on the initiative of the U.S.S.R.
Chamber of Commerce, a number of Soviet trade and
industrial organizations, the Central Council of Coop-
erative Societies of the U.S.S.R., the Central Council
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of Trade Unions of the U.S.S.R., the Institute of
Economics of the Academy of Sciences of the U.S.S.R.
and Soviet economics circles. In its announcement
this committee stated that during their stay on the
territory of the U.S.S.R. the participants of the Con-
ference will receive all duo help and hospitality, and
that, if they wish, they will have the opportunity
of contacting representatives of Soviet trade, indus-
trial and cooperative organizations.
The International Economic Conference faces great
and responsible tasks; its aim is a noble one. Mil-
lions of people in all corners of the world expect it to
settle vitally important problems, the solving of which
is long overdue. They hope that those taking part in
the Conference will in an atmosphere of mutual under-
standing and businesslike cooperation be able to draw
up a concrete program for the all-round expansion of
commercial and other economic ties between coun-
tries and thus help to lessen the tension in internation-
al relations; to improve conditions for fair and mu-
tually advantageous exchange of goods between na-
tions; to remedy as far as possible economic ills in
many states; to increase their production of con-
sumer goods; to raise the level of employment. All
this will destroy one of the main causes of low living
standards. It stands to reason that one of the most
important results of removing the barriers artificial-
ly erected in the path of all-round international trade
development will be to improve the conditions of life
of millions and millions of people in Europe, Asia,
America, Africa and Australia.
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THE PRESENT STATE
OF INTERNATIONAL TRADE
Like other economic relations between peoples and
states, world trade is at present in a condition of se-
rious disorder. Studying the objective facts of contem-
porary life, more and more leading people in trade and
industry, economists, leaders of trade union and co-
operative organizations in all countries are coming to
the conclusion that the present condition of interna-
tional trade can in no way be considered normal.
They are deeply convinced of the need to make a deci-
sive change in the situation and develop international
economic relations on the principles of equal rights
and mutual advantage for the good of all the peoples.
Acknowledging the indisputable fact that the steady
worsening of international economic relations repre-
sents a threat to the conditions of life of the peoples
of many countries, and expressing their grave concern
at this state of affairs, the International Initiating
Committee took the decision to call an International
Economic Conference.
The Second World War was a terrible catastrophe.
Not only did it destroy millions of human lives, cause
incredible privation and suffering for the broad masses
of the people, lead to enormous destruction of the ma-
terial and spiritual wealth created by the labour of
many generations, to the annihilation of thousands
of towns and villages, factories, mills. and cultural
establishments. Besides all this, the war tore apart
world economic ties which had taken decades to build
up, undermined international trade, severely curtailed
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the production of goods for civil consumption and
aggravated the disproportion in the economics of
many belligerent countries, adding to the confusion in
their currency and credit and financial systems and
intensifying internal inflationary processes.The end
of the war saw a vigorous and general rise in the
prices of consumer goods, a sharp increase in taxes and
a prodigious growth of internal and foreign national
debts in all countries of the West without exception,
and brought with it a further impoverishment of the
overwhelming majority of the population-workers,
peasants, office employees and other self-supporting
working people. Masses of petty and middle merchants
and industrialists were ruined; the well-being of
many sections of the intelligentsia was undermined.
Over six and a half years have passed since the end
of that war,. the most destructive and murderous war
in the history of mankind. Has the grievous legacy left
by the war been overcome, have the wounds inflicted
on the economy and population in most of the coun-
tries of the world been healed? With a deep feeling of
regret one can give only a negative answer to this
question. One has to affirm that the fundamental eco-
nomic consequences of the Second World War have
not been overcome and are having an extremely un-
healthy effect on the standard of life of many peoples.
One of the most vivid instances of this is the present
state of international trade, which represents the
basic form of economic relations among countries.
It is generally acknowledged that under modern
conditions no nation can develop without foreign trade.
As far back as the end of the last century V. I. Lenin
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pointed out that "it is impossible to imagine a
capitalist nation without foreign trade, and there
is no such nation. " * Capitalist economy's need of
a foreign market is determined by its development on
the basis of expanded reproduction. "... The capitalist
enterprise inevitably reaches beyond the borders of
the village community, of the local market, of the
particular region, and even of the country. And as
the isolation and insularity of the various countries
have already been broken down by commodity circu-
lation, the natural trend of every capitalist sphere
of industry compels it to seek a foreign market."**
International trade is a result of the development of
the capitalist mode of production. The spontaneously
formed international division of labour was determined
by the production relations of capitalism, which
deepened and widened their characteristic division of
labour, making it universal.
The development of human society and its produc-
tive forces in the nineteenth and at the beginning of
the twentieth centuries provides ample proof that
foreign trade played a big part in the industrial prog-
ress of many states, large and small, in the develop-
ment of their industry, agriculture and transport.
Britain, for example, which V. I. Lenin called the
most "trading" country in the world, achieved to-
wards the end of the last century outstanding suc-
cesses in the development of her national economy by
maintaining extensive trade relations with all parts
* V. 1. Lenin, Collected Works, 4th Russ. ed., Vol. 3, p. 43.
+* Ibid., p. 44.
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of the world. This is also true to a largo extent of Bel-
gium, whose economic prosperity at the beginning
of the twentieth century was largely due to the scope-
considerable for this small country-of her trade
relations with the rest of the world. The rapid indus-
trial development of the United States of America in
the second half of the last century also went hand in
hand with an increase in foreign trade turnover, which
grew from 80-90 million dollars at the beginning of
the nineteenth century to almost 2,300 million dollars
in 1900. Taken as a whole the world's trade turnover
increased between 1860 and 1913 over five-and-a-half
fold, and on the eve of the First World War amounted
to 64,600 million dollars at the current rate of exchange.
Before the world economic crisis of 1929-33, and
particularly before the First World War, the physical
volume of international trade tended to increase
more rapidly than production. Thus, according to
the League of Nations calculations quoted by the
American economist Ethel B. Dietrich in her book World
Trade, the physical volume of world trade between
1881-85 and between 1909-13 increased every year
by 3.2%,. while world production increased approxi-
mately by 2.7%. After the First World War the devel-
opment of this tendency slowed down and in certain
.years even gave way to its opposite. In the competi-
tive struggle for markets between certain countries in-
creasing importance was attached to prohibitive tar-
iffs, currency blocs, dumping, etc. However, during
the period between 1913 and 1929 the physical volume
of world trade was increasing yearly by 1.5% and
world production-by 1.7%. Even in the period from
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1925 to 1929 trade in raw materials increased yearly
by 3.6%, and trade in finished goods-by 7.2%,
while the production of these goods increased corre-
spondingly by 2.7% and 6.7%.*
The world economic crisis of 1929-33 and the
Second World War reduced international trade to stag-
nation and decline. The progressive development of
trade relations between nations, which had been
characteristic of the nineteenth and the beginning of
the twentieth centuries, was replaced by a regressive
movement. J. V. Stalin emphasizes this: "The intensi-
fied struggle for foreign markets, the abolition of the
last vestiges of free trade, prohibitive tariffs, trade
war, currency war, dumping, and many other analo-
gous measures which' demonstrate extreme nationalism
in economic policy have made the relations among the
various countries extremely strained."** The break-up
of international economic cooperation was intensified
not only by the introduction of systems of trade con-
tingents, licensing systems and other import and cur-
rency restrictions; it was also due to the formation
on the world arena of regional economic blocs-the
Balkans bloc, the Little Entente, the Ottawa and Pan-
American blocs (the activities of the latter, formed
before this period, increased during it), the so-called
Oslo and Ouchy blocs. The most patent attempts to cre-
ate closed-in autarchical national economics were under-
taken by the fascist states.
* Ethel B. Dietrich, World Trade, New York, 1939.
** J. V. Stalin, Report to the Seventeenth Congress e/ the
C.P.S.U.(B.) on the Work of the Central Committee, Moscow
1951, p. B.
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As a result of all this the disastrous effect of the
world economic crisis on international trade was not
overcome right up to the outbreak of the Second World
War. In 1938 the physical volume of wcrld trade in-
creased in comparison with 1913 by only 11-12%,_whilo
the population of the globe increased during thes
years by over 22 per cent. These figures show that on
the eve of the Second World War the share of intcr-
national trade turnover per capita was lower than a
quarter of a century earlier, on the eve of the First
World War.
In the postwar period, when the most vital inter-
gists of the peoples demanded that the destruction caused
by the war be made good at all speed, the develop-
ment of international trade became particularly impor-
`tans. And indeed, during the first postwar years the
world trade turnover was restored and developed, and
between 1945 and 1947 its value increased more than
twofold. In 1917 the physical volume of the trade turn-
over was already approaching the prewar level. There
was ground for hope that world trade might rise out of
`the depression into which it had fallen before the war.
However, this hope was not to be realized. No sow
lution was found to the tasks put before the United
Nations Organization in Article 55 of its Charter:
'With a view to the creation of conditions of stability
and well-being which are necessary for peaceful and friendly
relations among nations based on respect for the principle of
,equal rights and self-determination of peoples, the United
'Nations shall promote:
?a. higher'standards -of living, full employment, - and
conditions of economic and social progress and development;
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'b. solutions of international economic, social, health,
and related problems; and international cultural and educa-
tional cooperation; and
'c. universal res; ect for, and observance of, human
rights and fundamental freedoms for all without distinction
as to race, sex, language, or religion.'
During recent years the disruption of trade relations
between countries has deepened even further. The
following trouble symptoms can be observed in inter-
national trade: diminution of the volume of foreign
trade (in comparable prices) per head of the population
in comparison with the prewar level and a progressively
increasing lag of the index for the physical volume of
export behind the index for industrial production;
the elimination of the last traces of free trade, made
evident by an intensification of restrictions, prohi-
bitions and discriminations in foreign trade policies, in
the ever-increasing spread of superprotectionism and
a tendency towards autarchy; the breaking-up of
the main streams of world trade, which is completely
without economic justification, and is in crying con-
tradiction to the existing long-established inter-
national division of labour; the rift of traditional
trade and other economic ties between East and
West; the change in the geographical distribution and
commercial structure of the western countries' foreign
trade and the supplanting of their trade in goods for
civil consumption (food and industrial goods for the
population, raw materials and machinery to produce
peaceful commodities) by armaments, strategic raw
materials, machinery and equipment for producing
means of destruction.
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All these and many other factors demonstrating the
further decline of world economic relations arouse a
feeling of great alarm among the broadest sections
of the population in all countries, including to a large
degree trade and industrial circles, economists, trade
union and cooperative leaders, who are striving to
discover ways of improving the conditions of life
through the restoration and broad development of
international economic relations.
Let us examine more closely some of the trouble
symptoms in the international trade of the present
postwar period and their basic causes. Let us first
consider the factual side of the question.
Few people in the world today would deny the fact
that international trade relations are in a state of seri-
ous disorder. Indeed, the present physical volume of
world trade per head of the population rests at a lower
level than that which was attained over twenty years
ago, in 1929, and only exceeds the 1913 level by ap-
proximately 10%, although a number of large countries
have not achieved even that level. The annual aver-
age increase in world trade (in comparable prices) fell
from 20% in 1947 to an average 5% for 1948-49, and
has recently shrunk even more sharply. Moreover, one
must take into account the fact that, according to
United Nations statistics, world population in a mere
ten years between 1938 and 1948 increased by almost
10%. Total export from the countries of,:the capital-
ist world (not counting the U.S.A.) remained below
the 1937 level.
An even more striking picture is obtained from a
comparison of the indexes of industrial production
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with that of export. If formerly, as we have seen, the
physical volume of international trade developed fast-
er than industrial production, during the whole post-
war period a diametrically opposite tendency became
increasingly evident. Thus, during the fourteen years
from 1937 to 1950 the export of goods from the coun-
tries of the capitalist world lagged behind their
industrial production by more than 20 per cent,
although production in these countries has for long
been in a state of depression. Since industries in these
countries operate considerably below their capacities,
the actual gap between the physical volume of exports
and production capacities is still greater.
Mankind has exerted no little effort towards inter-
nationalization of the means of production and ex-
change, towards breaking down national isolation,
towards economic rapprochement among nations. As
a result, the most diverse nations have become bound,
as J. V. Stalin says, "by the ties of international di-
vision of labour and universal interdependence."
Foreign trade is one of the forms of economic
rapprochement among nations and a means of
satisfying their vital needs. In our days the chains
fettering international trade deprive it to a large extent
of this role. The international division of labour,
formed in the course of many years, and the traditional
commercial and other economic ties between different
nations have been grossly violated and disrupted.
This is confirmed by numerous facts.
Mention should be made in the first place of the fact
* J. V. Stalin, Works, Russ. ed., Vol. 5, p. 181.
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that the main world streams of goods move within two
parallel world markets which are actually almost isolat-
ed one from the other. One of them consists of the coun-
tries of North, Central and South America, Western Eu-
rope, the Near and Middle East and certain countries of
the Far East (except China), as well as the economically
underdeveloped colonies and dependencies. The other
market, formed as a result of and after the Second
World War, includes the U.S.S.R., the Chinese
People's Republic, the People's Democracies of Cen-
tral and Southeast Europe (Poland, Czechoslovakia,
Bulgaria, Hungary, Rumania and Albania), the
German Democratic Republic, the Mongolian People's
Republic and the Korean People's Democratic Re-
public.
While trade within the first of these groups of
countries is developing as outlined above, trade
within the second group is growing from year to year.
Already in 1949 the physical volume of the foreign
trade of the Soviet Union was more than twice
the prewar level and it continues to grow at a rapid
pace. Trade and other economic relations between the
U.S.S.R. and the People's Democracies, which in
1949 accounted for about two thirds of the total Soviet
trade turnover, are rapidly expanding. Between 1947
and 1950 the Soviet Union's trade turnover has
increased: with Czechoslovakia-over fivefold, with
Hungary-almost fivefold, with Rumania-four-
fold, with Poland and Bulgaria-more than twofold.
At present trade with the Soviet Union accounts for
an average of over 50% of the trade turnover of all
the People's Democracies in Europe.
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Economic cooperation between the U.S.S.R. and
the People's Democracies is based on friendly mutual
aid and the brotherly help that the Soviet Union, as
the most developed state, is able to offer. It goes beyond
conventional trade relations, including the granting
of credits and loans; joint working and exploitation of
extensive natural resources; the organization and
functioning on equal terms of mixed joint-stock com-
panies; scientific and technical aid; exchange of pro-
duction experience; training of personnel. The varied
economic cooperation between the U.S.S.R. and
the People's Democracies is a new higher type of
relationship between free, independent peoples enjoying
equal rights.
The statistical publications of international
economic organizations and the foreign trade statistics
of various countries show convincingly that world
trade now proceeds along two distinct channels.
Trade relations between the above-mentioned two
groups have, contrary to elementary economic expe-
diency, been radically undermined and virtually
ruptured. During the last five years, beginning with
1946, Soviet-American trade turnover has shrunk to
less than one sixth. The share of the U.S.S.R., the
European People's Democracies and the Chinese Peo-
ple's Republic in United States exports dropped from
11.6% in 1946 practically to zero in 1951.* The share
of these countries in British exports dwindled from
6.0% in 1929 to 0.7% in 1951; in French exports for
* "Statistical Abstract of the United States, 1940;' For-
eign Commerce Weekly, December 10, 1951.
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the same years, from 6.2% to 0.8%, and in Italian
exports from 10.5% to 4.0%, etc.
What is most severely affecting the living stand-
ards of the peoples is disruption of the natural and
traditional relations between the countries of Eastern
and Western Europe. Europe has always been the main
export-import market for countries of the European
continent. Although the countries of the British
Empire play a special part in the British trade turnover,
the European market is also of immense impor-
tance to Britain. Formerly intra-European commerce
accounted for about two thirds of the entire foreign
trade of Europe. In the postwar period and, especially
in 1948-51, trade between the Western and Eastern
parts of Europe contracted sharply and in 1950 was
more than 60% below the 1938 level. * The index of
the physical volume of imports of West-European
countries from East-European countries (1938=100)
dropped to 28 in 1950, while the index of the physical
volume of their exports to the East-European coun-
tries (1938=100) dropped to 63 in 1950.
The situation, however, is not confined to the
virtual cessation of trade between West and East.
International division of labour and world economic
relations have been dislocated to an even greater extent.
This is manifested in the substantial change in the vol-
ume, structure and geographic distribution of foreign
trade within the Western market itself, in the fact
that the circulation of goods within this market is
* Economic Bulletin for Europe, United Nations, Second
Quarter, 1951, Geneva, October 1951:
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proceeding inside relatively isolated blocs and combi-
nations of countries. Evidence of this are the dollar and
sterling zones, the European Payments Union, the
Latin-American bloc, the various customs unions
of the Benelux type, the Schuman Plan group of coun-
tries, etc. All these groupings and blocs are separated
from one another by formidable barriers. These groups,
as well as their member countries, seek isolation behind
customs and foreign exchange obstacles, the system
of export licenses and contingents, discriminatory
export and import duties. All this means that many
countries have in fact wholly abandoned free trade .
and the old and tested principle of the most-favoured
nation.
The militarization of the economy of the Western
world is having an extremely adverse effect on interna-
tional trade. More and more productive power and
raw materials are being consumed by war consign-
ments, and civil, particularly export, branches of
industry are bound to suffer. The subordination of
foreign trade for war purposes is leading to the reduction
of world commercial exchange and to the disrup-
tion of normal economic relations between coun-
tries, aggravating still further their economic diffi-
culties.
Militarization of economy is causing serious
change in the commercial structure of the Western
countries' foreign trade, which has begun to make
itself strongly felt since the conclusion of the Atlantic
Pact and particularly since the outbreak of hostilities
in Korea in June 1950. Armaments, strategic raw
materials, and equipment for war plants and indus-
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tries closely allied with them, are ousting from :foreign
trade goods designed for peaceful purposes, especially
foodstuffs (meat, butter, coffee, tea, etc.), consumer
goods (cotton and woollen fabrics, footwear, etc.) and
means of production for civilian industries. Thus, the
export of rubber from the main rubber-producing
countries increased from 1,440,000 tons in 1949 to
1,785,000 tons in 1950, while the export of crude oil
during the first six months of 1951 reached nearly
24,000,000 tons as against 16,400,000 tons in the first
six months of 1950. On the other hand, the export
of meat from the main meat-producing states of
North and South America and Australia diminished
from 1,500,000 tons in 1949 to 1,300,000 tons in 1950.
World export of coffee also decreased from 2,100,000
tons in 1949 to 1,800,000 tons in 1950; world trade in
tea, butter, tobacco, etc., also shrank.
Intensification of the one-sided nature of foreign
trade in the Western countries, that is, the sharp
increase in the share of war materiel, resulted in a
certain rise of their foreign trade turnover, which
reached its maximum level in 1950. Many of these
countries were unable to regain this level through-
out 1951.
This shows that the stepping up of the output of
armaments and their export cannot compensate for
the falling off of foreign trade caused by economic
militarization, and cannot make up for the reduction
of foreign trade turnover.
The United States, seeking to buy up huge stra-
tegic reserves, has substantially expanded its imports
of rubber, ores and concentrates of ferrous metals,
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chemicals and other strategic materials, while cutting
down on its imports of lumber, hides and leather,
furs, coffee, tobacco and certain other goods. In the
total import of the U.S.A. the proportion of raw food-
stuffs and food products for consumption inside
the country has decreased from 31.5% in 1949 to
28.3%. On the other hand, in 1951 the United States
shipped to other countries tanks, aircraft, guns and
other arms to the value of $1,500,000,000, or about
11% of its total exports; in the 1951-52 fiscal
year it intends to bring up its armament exports
to $6,300,000,000. Simultaneously the share of ci-
vilian goods in United States exports has noticeably
dropped.
A similar situation prevails in the forei n trade of
Britain, France, Italy, Western Germany, Belgium
and many other countries. For example, the value of
Britain's export of armaments and shells, which is
certainly not fully accounted for in the customs sta-
tistics, increased in 1951 by 43% in comparison with
1949, and by almost three and a half times compared.
with the prewar year 1938, while the export of air-
planes during eleven months of 1951 amounted to
# 38,000,000 as against # 31,000,000 in 1919 and
#2,300,000 in 1938. At the same time Britain's
export of cotton fabrics fell by 45% and that of fin-
ished fabrics by 38% as against the 1938 level. The
proportion of food, drink and tobacco in Britain's
import decreased from 4301 in 1949 to 33% in
1951. With the aim of building up strategic stock-
piles, a number of the biggest countries have in-
troduced strict licensing and other rigid restrictions
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on the exports of certain vital raw materials and
metals.
In consequence of the race for raw materials there
was an increase in the flow of these commodities from
the overseas countries of the sterling zone to Western
Europe and the U.S.A., from one West-European
country to another, from Western Europe to the
sterling-zone countries and the U.S.A., from Latin
America to the U.S.A. and so on. Certain other even
more fundamental, irrational changes tools place in
the geographical distribution of international trade,
which we shall examine in basic outline further on.
The artificially created raw material famine has
stimulated, since the middle of 1950, a rapid rise in
the prices of goods circulating in world trade. Accord-
ing to official statistics the world trade price index
(1937=100) rose to 211 in 1949 and 225 in 1951,*
with prices of a number of shortage raw materials
and supplies now being seven and more times above
prewar.
These are some of the facts and figures illustrating
the dire straits of international trade. Hence it is not
surprising that this deep-going and highly abnormal
disorder in world economic relations should prompt
the broadest sections of the population, members of
commercial and industrial circles, economists, and
trade union and cooperative leaders to discover its
causes and find ways and means of overcoming it.
All-round development of international economic
* See Monthly Bulletin of Statistics, United Nations,
issues of August 1950 and November 1951.
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cooperation, founded on the principle of equality and
mutual benefit, is one of the essential and prime req-
uisites of economic progress, rapprochement among the
peoples and an improvement in their living standard.
WHAT IS PREVENTING
INTERNATIONAL ECONOMIC
COOPERATION
What lies at the bottom of the crisis in present-
day economic relations among nations and states?
Why is it that international trade is not a source
of economic progress and national prosperity in the
postwar world? These are questions that agitate the
minds of millions of men and women in all coun-
tries, irrespective of their social status or political
views.
Even the ill-wishers and enemies of the Soviet
Union cannot deny its invariable readiness, ever
since the first day of its existence, to expand and
strengthen business and trade relations with all coun-
tries, provided national sovereignty and the legitimate
interests of the parties are respected, and the princi-
ples of noninterference in internal affairs and honest
fulfilment of commitments, assumed on the basis of
equality and mutual benefit, are observed. It is
impossible to cite a single measure of the Soviet
Government that prohibits or in the least degree
restricts trade between the U.S.S.R. and other
countries, irrespective of their social and economic
system.
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In. a conversation with the Republican leader
S. A. Harold Stassen in April 1947 J. V. Stalin em-
phasized that Lenin was the first to express the idea
of cooperation between the two systems. "Lenin is our
teacher, and we Soviet people are the pupils of Lenin.
We have never deviated from Lenin's instructions
and never shall."*
J. V. Stalin has more than once stated with utmost
clarity that the Soviet Union proceeds from the fact
of the inevitable long-term coexistence of the two
systems-Socialism and capitalism-and steadfastly
adheres to the policy of honourable and peaceful re-
lations with all states that manifest a desire for friend-
ly cooperation, provided the principles of mutual
benefit and fulfilment of commitments are observed.
Outlining the foreign policy of the Soviet Union
J. V. Stalin says: "It is a policy of preserving peace
and of strengthening commercial relations with all
countries.... Those who want peace and seek business
relations with us will always have our support."**
This statement defines the nature and trend of the
Soviet Union's foreign policy, which aims at strength-
ening peace and the security of nations and at
all-round development of international cooperation.
Soviet people fully accept peaceful competition with
capitalism and they strive for the establishment and
development of friendly relations among the peoples
" Pravda, May 8, 1947.
** J. Stalin, Report to the Seventeenth Congress of the
C.P.S.U,(13.) on the Work of the Central Cornmitlee, Moseow
1951, pp. 36-37.
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of all countries. "There is a great desire among our
people to participate in a peaceful competition among
states and social systems, in which individual peo-
ples may not only display their inherent possibili-
ties, but establish closer and more all-embracing
mutual cooperation."*
Defining almost a quarter of a century ago the real
basis of agreements between the U.S.S.R. and the
capitalist countries, J. V. Stalin said that "exports
and imports are the most suitable ground for such
agreements."** This precept retains its full force and
significance today. In the postwar years the Soviet
Union, firmly adhering to its policy of strengthening
international cooperation, has made many new steps
to develop trade and financial relations with all
countries ready to reciprocate and to carry out their
commitments in good faith. It has concluded trade
treaties and agreements with Poland, Czechoslovakia,
Bulgaria, Rumania, Hungary, Albania, the Chinese
People's Republic, the German Democratic Republic,
Britain, France, Italy, Belgium, Holland, Switzerland,
Norway, Denmark, Finland, Sweden and a number of
other countries.
On the initiative of the Soviet Union the Trade
Development Committee was set up at the United
Nations Economic Commission for Europe; the Soviet
Government has invariably supported all measures
proposed in this commission to reestablish and de-
* V. M. Molotov, Problems of Foreign Policy, Moscow
1949, p. 263.
** J, V. Stalin, Works, Russ, ed., Vol. 10, p. 123.
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velop mutually advantageous trade between Eastern
and Western Europe. In August 1951 at a conference
of government experts on the development of intra-
European trade the Soviet expert emphasized that
the U.S.S.R. is ready to keep up the volume and
assortment of trade turnover with the West-European
countries, taking the 1949-50 level as a minimum,
on'the condition that these countries offer in exchange,
in the main, the same goods as in 1949-50. If the
West-European countries can expand the assortment
of goods or will offer a larger quantity of commodi-
ties required by the Soviet Union, the Soviet Union
is prepared accordingly to increase deliveries of its
own goods.
At the sessions of the Economic Commission for
Asia and the Far East held in Singapore last October
and in Rangoon this February, the Soviet representa-
tive spoke of the possibilities for the delivery by the
U.S.S.R. of a wide range of industrial and consumer
goods-and raw materials to countries of Asia and the
Far East. The Soviet Union, he stated, was ready to
consider proposals for the conclusion of trade agree-
ments and compensation contracts on the basis of
mutual benefit. The U.S.S.R. could supply those
countries on mutually advantageous terms: lathes;
power and electrical technical equipment, including
electric stations; transport equipment, locomotives,
rolling stock; mining machinery; equipment for tex-
tile and footwear factories and other branches of
light industry; agricultural machines and instruments
and other machines needed by the countries of Asia
and the Far East for their industrialization and the
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development of their agriculture, as well as cement,
timber, fertilizers, grain and consumer goods in ex-
change for such raw materials and consumer goods
as rubber, jute, shellac, tin, spices, tea, quinine bark,
etc. The high quality of Soviet industrial and other
goods has been demonstrated in the postwar years
at international exhibitions and fairs in Paris,Leip-
zig, Milan, Prague, Helsinki, Bombay and elsewhere,
and has won recognition all over the world.
Similar steps for expanding business, trade and
financial relations with Western countries were taken
by the governments of the European People's Democ-
racies, the German Democratic Republic and the
Chinese People's Republic. The main condition for
the successful expansion of the trade of any state with
the Chinese People's Republic, with the European
countries of People's Democracy and the German
Democratic Republic, as well as with the Soviet
Union, is absolute adherence to the democratic prin-
ciples of equal rights and mutual advantage, respect
for national sovereignty, territorial integrity, the
natural interests of the negotiating parties, and the
fulfilment of commitments.
The Soviet Union and the People's Democracies
in Europe and Asia, developing to the utmost many-
sided economic and cultural relations among them-
selves-relations founded on the Lenin-Stalin prin-
ciple of equality of big and small peoples, friendly
cooperation, fraternal mutual assistance, and econom-
ic and political independence of free and sovereign
nations-have attained notable economic progress,
a rise in living standards and the consolidation and
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expansion of mutual trade. However, they do not
strive to limit their trade and other economic rela-
tions to the group they make up. The U.S.S.R. and
the states friendly to it are in principle confirmed oppo-
rnents of restricted trade, conducted along two isolat-
ed channels, and of all autarchical tendencies. They
have always considered and still consider that autarchy,
the creation of an enclosed national economy, can lead
to no good, that it is senseless from the economic
point of view. It is essential, they hold, to develop
free, multilateral trade on the basis of equal rights
and mutual advantage and to remove all barriers
artificially erected in the path of such trade.
The U.S.S.R., the Chinese People's Republic
and the European People's Democracies have always
manifested, and manifest today, their readiness to
develop trade relations with Britain, France, the
United States and other Western countries. They are
interested in the sale of their surplus commodities-
grain and fodder crops, foodstuffs, timber, coal, oil
products, certain metal ores, fertilizers, furs, indus-
trial equipment and other highly important goods
greatly needed by the population, industry and agri-
culture of the Western countries. In exchange for
these commodities they are interested in the import
of overseas textile and leather raw materials, rubber,
certain nonferrous metals, spices and other groceries,
and equipment from the industrial countries of the
West which are greatly pressed for markets to sell
these goods.
There is talk of the so-called insignificance of
the share of the Soviet Union and the states friendly
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with it. However, official statistics show how com-
pletely unfounded these ideas are. Thus, according to
these statistics, the share of the U.S.S.R., China and
the countries of Central and Southeast Europe during
the most favourable year between the First and Second
World War was as follows: in the export of the U.S.A.-
10.7%, Britain-11%, France-9.0/0, Italy-21.5Q'
Japan-26.4%, Western Germany-28.3%. These fig-
ures, in fact, bear witness to the significant share of
the Soviet Union, the Chinese People's Republic and
the European countries of People's Democracy in the
foreign trade of the major Western countries.
The foreign economic policy of the Soviet state for
more than 34 years, as well as the practical measures
taken by the People's Democracies to develop trade
with other countries, convincingly show that broad
development of international trade relations is fully
possible notwithstanding the difference in social
and economic systems. This point has been proved
both theoretically and practically. The curtailment of
foreign trade between the Soviet Union and the Peo-
ple's Democracies, on the one hand, and the United
States of America and the capitalist countries of
Europe, on the other, is by no means due to the dif-
ference in their social and state systems.
Speaking of the fact that the U.S.S.R. has now
incomparably greater opportunities for business rela-
tions with the capitalist countries than in the past,
L. P. Beria stated in his speech on the 34th anniver-
sary of the Great October Socialist Revolution: "We
have no objection to considerably expanding busi-
ness cooperation on a basis of mutual advantage with
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the United States, Britain, France and other bourgeois
countries both in the West and the East. It is not the
fault of the Soviet Union that the rulers of these
states have, to the detriment of their own countries,
taken the course of undermining and disrupting
economic relations with the U.S.S.R."*
Why then have international economic relations
been so greatly deranged? Every intelligent person
who wishes to examine this question seriously and
find the answer must look to the country across the
ocean; it is from there, to his regret, that he hears
more and more frequently talk of "economic warfare,"
"economic blockade" and "discriminatory measures"
in the interest of what is called there "national defence."
The well-informed New York Times said on July 22,
1951, that the United States has reached the point of
considering trade between East and West as an element
of economic warfare. The economic blockade to which
the United States and, following it, the West-Euro-
pean countries have subjected the Soviet Union, China
and the European People's Democracies; the int.erna-
tional tension caused by the fact that a number of
Western countries have violated their international
commitments, especially and first and, foremost the
commitments assumed at the Potsdam Conference;
the militarization of the economy of these countries,
and the steady decline in the purchasing power of
their population-these are the factors which every
unbiased person regards as the main reasons for
* L. P. Boric, The 34th Anniversary of the Great October
Socialist Revolution, Moscow 1951, p. 29.
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the deterioration of economic relations among the
nations.
It goes without saying that economic war and the
blockade of one part of the world by the other part
during peacetime cannot be considered normal. It
can he said with absolute certainty that no one in the
world would undertake to prove the economic expe-
diency of this absurd and extremely harmful phenom-
enon. It seems as though the economic interests of
the countries and the peoples have been sacrificed to
military-political considerations. It is impossible to
appraise in any other way the fact that certain pow-
ers have gone over in peacetime to the reckless pol-
icy of economic warfare and blockade. In any case,
it is quite obvious that these powers, having rejected
the goodwill and desire for economic cooperation shown
by the Soviet Union and the countries friendly to
it, have reduced international trade to extreme disin-
tegration.
To substantiate this point we refer to the main
stages in the Western policy of economic warfare and
trade boycott of the East, limiting ourselves to 1951.
The United States unilaterally abrogated trade trea-
ties and agreements with the U.S.S.R., Poland,
Hungary, Rumania, and Bulgaria. The participants
in the Geneva customs duty pact 'consented" to re-
lieve the United States of commitments as regards
Czechoslovakia, which means, as the Associated
Press pointed out, virtual rupture of American-
Czechoslovak trade. The United States imposed higher
tariffs on goods imported from the U.S.S.R. and
the People's Democracies. The United States prohib-
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ited, by way of self-defence, no doubt, imports of
-certain types of furs from the Soviet Union, China and
Poland. The United States Congress approved the Kern
Amendment in June 1951 and replaced it in Octo-
ber by the broader Battle Act, designed to put a com-
plete stop to trade between the West and the East and
threatening to deprive United States allies of American
"aid" if they do not comply with its provisions. The
United States, Britain, France, Belgium, Holland
and a number of other countries put an embargo
on exports to the Chinese People's Republic and
the Korean People's Democratic Republic. Britain
prohibited the export to the Soviet Union and the
People's Democracies of more than 250 types of goods,
most of which have no military significance whatever.
The British Government prohibited unlicensed ship-
ments of rubber from Britain and Malaya to all coun-
tries except the United States and countries of the
British Empire. Western Germany prohibited exports
to the U.S.S.R. and the People's Democracies with-
out licenses. Even Switzerland, long known for its
traditional policy of neutrality, introduced licenses
on exports to East-European countries of goods pro-
duced by the machine-building and metallurgical
industries. The so-called Mutual Security Agency
published a new big list of goods, the export of which
from the Atlantic Pact countries to the U.S.S.R.
and the countries friendly with it is forbidden on mili-
tary strategical grounds.
Such is the list-and it is far from complete-of
discriminatory measures taken by the Western pow-
ers in line with their policy of completely severing
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economic contacts with the East. In all fairness one
must emphasize the one-sided character of this eco-
nomic war, since the Soviet Union and the People's
Democracies cannot and do not share this policy,
considering it harmful to the cause of peace, economic
progress and the prosperity of the peoples.
The question arises-whose interests suffer most
from economic warfare: those of the blockaded or
those of the blockading countries? There can be no
doubt that the above discriminatory measures were
meant to retard the rapid economic development of
the U.S.S.R., China and the countries of Central
and Southeast Europe, to undermine and weaken
their economies. However, their unceasing economic
progress and rising living standards clearly show
that to all practical intents and purposes these meas-
ures have yielded no perceptible effect whatever.
Nor could they have produced any perceptible effect,
because, in the first place, no blockade cart shake the
gigantic economic might of the Soviet Union,
which for quite some time now has been capable
of meeting almost all its economic needs with its
own resources, and secondly, because its fraternal
disinterested aid to the People's Democratic countries
enables them, too, to satisfy their basic economic needs.
Evidence of the economic might of the Soviet Union is
provided by facts such as these: that the U.S.S.R. now
produces approximately as much steel as Britain,
France, Belgium and Sweden put together; produces
more electric power than Britain and France put to-
gether; now gathers more cotton than the total harvest
of the famous cotton countries India, Pakistan and
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Egypt. The growth of goods traffic on the railways
of the U.S.S.R. in 1951 alone was nearly equal to the
whole annual goods traffic on the railways of Britain
and France taken together.
The Soviet Union, the Chinese People's Republic
and the European People's Democracies are invulner-
able to economic blockade; they are a combination
of countries that possesses a first-class, modern industry
outfitted with the latest equipment, a highly devel-
oped agriculture, inexhaustible natural wealth and
vast markets. The aggregate resources of this group of
friendly states are so great and diversified that they
fully satisfy their internal requirements and ensure
the constant advance of their industry and agricul-
ture. The planned economy of these countries, which
know neither crises nor unemployment, is not de-
pendent on periodic fluctuations and upheavals of
the capitalist market and is immune to the disastrous
influence of economic blockade. The facts prove that
these countries depend on economic relations with
the West to an incomparably smaller extent than the
West depends on trade with them.
Thus, the countries that initiated the blockade
have landed, of their own volition, in a self-blockade,
in a state of economic self-isolation which augurs them
no good. For the Western countries this policy further
aggravates their extremely complicated problem of
markets. It leads to an increase in idle production
capacities in industry and, consequently, to a further
growth in the army of unemployed, to greater impover-
ishment of the masses and a reduction of their pur-
chasing power. This policy of disrupting normal
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international cooperation inevitably leads also to A
reduction in the commodity resources of the Western
countries. It inflicts incomparably greater damage on
them than on the East, since above all the restoration
and development of world trade is essential to the most
vital interests of these Western states, including Brit-
ain and the U.S.A. The columnist of the New York
Herald Tribune Walter Lippmann acknowledges that
the attempts of the United States to get the Western
powers to impose an embargo on trade with the Soviet
Union and the countries friendly to it will do more
harm to the "weak and stricken allies" of the U.S.A.
than to these countries. Lippmann refutes the asser-
tions of American congressmen that "embargo hurts
the Communists more than it hurts our weak and strick-
en allies." "That is not true," says Lippmann, "and we
shall be learning more and more, but in the hard
way, how untrue it is."
Many sober-minded representatives of business
circles, economists and cooperators of the Western
world rightly consider the policy of shutting oneself
off economically from a quarter of the territory of the
globe absurd, suicidal and fraught with most serious
consequences for the economy and conditions of life
of the population of their own countries, especially
when this territory has a population of 800,000,000,
huge natural resources, unbounded markets and a
developed industry. And indeed, no more legal act
can exclude from the sphere of international trade
such markets as the U.S.S.R., which has the second
biggest industrial production in the world, China,
Central and Southeast Europe, just as no one can
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in practice impose an economic blockade on half of
Europe and nearly all the continent of Asia.
The rupture of natural, traditional trade relations
with the East strikes the West-European countries
first and foremost and hardest of all. The New States-
man and Nation states that "The Eastern countries
could easily find other uses for what they send to the
West.... The Eastern countries can adapt themselves
to a permanent pattern of noarautarky much more
easily than the West." This British weekly draws
the conclusion that if trade with the East is
finally broken off, a sharp. drop in living standards
and unemployment in industry await Western Eu-
rope. "Boycotting trade with the East," writes the
Austrian newspaper Modlinger Nachrichten, "would
mean economic destruction for Austria."
An analysis of the losses sustained by the Western
countries as a result of disruption of the international
division of labour that developed through the centuries
should include first of all the loss of highly important,
and the most profitable, sources of raw materials and
foodstuffs as well, as markets for the sale of means
of production and manufactured articles; aggravation
of the dollar deficit, of the shortage of gold reserves,
and greater chaos in foreign exchange; keener competi-
tion for markets, which adds to their already consider-
able economic difficulties. According to the American
Daily Compass the executive secretary of the UNO
Economic Commission for Europe Muirdale has an-
nounced that Western Europe would soon have to
choose between economic bankruptcy in 1952 or a re-
sumption of trade with Eastern Europe.
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Prior to the Second World War the West-Euro-
pean countries covered by shipments from Eastern
Europe 35-60% of their timber import requirements,
20% of wheat and eggs, 18% of fodder grain, 10%
of sugar and 7% of tobacco. In the postwar years
imports of these goods by West-European countries
from Eastern Europe have contracted sharply.
Compared with the prewar level, imports of timber
in 1950 dropped more than 78%f wheat and sugar,75 ,,,;
eggs, 66%; meat, more than 50% and tobacco, 920/.*
This unreasonable curtailment by West-European
countries of import from countries that are their nat-
ural trade partners has resulted in a swift reduction
of their commodity resources-foodstuffs for the pop-
ulation and raw materials for industry.
Emphasizing the importance of supplies from East-
ern Europe for the West-European countries and
particularly Britain, Sir Hartley Shawcross, former
President of the Board of Trade, stated not so- long
ago that Eastern Europe is Britain's sole source of
supply for many commodities. In his turn, the ex-
Chancellor of the Exchequer Gaitskoll remarked that
a breakdown of trade relations with Russia would
put an end to imports of timber and grain from that
country. He went on to say that the imports in ques-
tion were doing Britain more good than they were
doing the Russians. One must remember in this con-
nection that as recently as 1950, according to Brit-
ish customs statistics, Britain imported from the
U.S.S.R. nearly a fifth of her softwood imports,
* Economic Bulletin for Europe, United Nations, Second
Quarter, 1951, Geneva, October 11951.
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over two fifths of her barley and over a quarter of her
imported maize. *
In order to compensate those losses at least partly
the West-European countries are forced to buy the re-
spective goods from the United States and other dol-
lar-zone countries. This means not only a misshapen
and irrational change in the geographic distribution
of commodity circulation but also entails new economic
losses for the importing countries.
Let us take only one example of this, although
such examples are without number. It is well known
that before the Second World War the countries of
Western Europe kept themselves supplied with coal
mainly from British and German sources, as well
as by importing Polish coal. What is more, they
themselves exported coal. At present, as a result of
their reconversion to a war economy they are expe-
riencing an artificially created and steadily increasing
fuel shortage. For reasons that are well known the
import of coal from Poland is closed for them. Thus
from being exporters of coal they have become import-
ers of it from the U.S.A.
The West-European countries suffer a triple loss
from the import of low-quality coal from the U.S.A.,
paying inflated prices for the coal, paying exces-
sively for freight because of exorbitant freight charges
and the increased number of ships required for
carrying coal, and diverting big merchant tonnage for
these irrational shipments. In 1951, 25,000,000 tons
of American coal were imported into Western Europe
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as against 800,000 tons in 1950. The shipping cost
was $300,000,000. According to Holland's foreign min-
ister Dirk Stikker, coal shipments from the U.S.A.
in 1951/52 will cost the West-European countries
$700,000,000. To this should be added the fact that
in 1951 Western Europe's expenses for shipping grain
bought overseas exceeded $125,000,000.
Trade with the U.S.S.R. and the People's Democ-
racies does not involve, nor could it involve, for
Western Europe the dollar problem, one of the most
acute economic issues confronting it. The structure
of the foreign trade of these two parts of.one continent
strongly differ' and they do not compete for markets.
Looking at the matter from the economic point of
view, one arrives at the conclusion that the West-
European countries stand to benefit doubly from exten-
sion of trade with the East-European countries: it
could help them to reduce the dollar shortage, if not
to eliminate it fully, and, moreover, provide them
with needed goods on the basis of clearing and goods
exchange operations. By renouncing such trade the
countries of Western Europe act only to their own
detriment, showing that they do not wish to reckon
with facts and scientific economic considerations.
As distinct from such trade, the trade carried on
by West-European countries with the United States
and other dollar-zone countries aggravates the crisis
of their trade and payment balances, and intensifies
inflation and the derangement of the monetary, credit
and financial systems. The United States and the'indus-
trially developed countries of Western Europe are
engaged in ruthless competition for foreign markets.
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Their foreign trade coincides in the case of many items.
The United States is not interested in many export
commodities of the West-European countries, and
the latter have less and less opportunity for covering
their growing imports from the United States by
exports to that country. This explains why in three
and a half years alone-from 1948 to July 1951-
the total unfavourable trade balance of the West-
European countries comprised the huge sum of
$ 22,000,000,000-a fact without precedent! In 1951
the unfavourable balance of trade of these countries
with the United States and Canada alone amounted
to $ 2,200,000,000; Britain had in the same year a
foreign trade deficit of #1,200,000,000, or 3.5
times above the 1950 deficit. Needless to say, in cov-
ering their unfavourable trade balance the West,
European countries are completely exhausting their
gold and dollar reserves.
By rupturing trade relations with the U.S.S.R.
and the People's Democracies, that is, by following
the course imposed on them, the West-European coun-
tries are depriving themselves of a stable and vast
market which is not subjected to adverse market
influences. "... Our country represents a vast market
for imports of equipment, while the capitalist coun-
tries need markets for precisely this kind of goods." *
This statement was made by J. V. Stalin in 1927.
Since then the Soviet Union has become a major
* J. Stalin, Political Report of the Central Committee to
the Fifteenth Congress of the C.P.8,U.(B.), Moscow 1951,
p. 31.
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industrial power which produces all types of machine
tools, machines and equipment and exports them
in sizable quantities to foreign markets. However,
even now many types of West-European and American
machines and equipment, diverse technical novelties
produced in Western countries with a highly developed
industry, are of undoubted interest for the rapidly
advancing economy of the Soviet Union: Speaking of
the importance of foreign trade for the U.S.S.R. na-
tional economy, A. I. Mikoyan stressed that it "pro-
vides additional material resources for accelerating
the development of Soviet economy."* Especially
great interest in imported machines and industrial
equipment is displayed by the countries of Central and
Southeast Europe, which have launched upon accel-
erated industrialization and mechanization of agri-
culture, and by the Chinese People's Republic, which
is already beginning the great battle for the industrial-
ization of the country and the reconstruction of the
whole national economy on the basis of new technique.
The rapid economic progress of these states is still
further increasing their importance on the interna-
tional arena as boundless markets.
Official statistics show that industrial production
has always predominated in the export trade of the
West-European countries. The share of manufactured
goods in the exports of Britain has been 88%; France,
55%; Belgium, nearly 70%; Western Germany, 72%;
etc. Formerly Eastern Europe was one of the main
* A. I. i1ikoyan, The Great Architect of Communist
Society, Moscow 1950, p. 12.
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consumers of these goods. The exclusion of this area
deals irreparable damage to West-European economy
and sharply intensifies competition among the Western
countries for foreign markets, thereby creating the
ground for a greater clash of their antagonistic interests.
As a result, various Western countries are con-
fronted by such discomforting facts as the extremely
uneven development of exports and of their foreign
trade as a whole. While in 1950 the United States and
Canada, for example, increased their foreign trade to
almost double the prewar level, the foreign trade of
the West-European countries rose only 13%; in that
year many countries did not even regain their prewar
level of exports. Among these are Belgium, Sweden,
Western Germany, Ireland, India, Brazil, Japan, etc.
Britain is feeling the increasing pressure of compe-
tition in the foreign markets of Western Germany and
Japan, which have been revived with the help of
foreign capital. According to the United States News
and World Report, British exports in the first half of
1951 increased only 14% compared with 1950, while
the exports of Western Germany rose 56% and of
Japan 61%. The magazine points out that Germany
and Japan, cut off by the cold war from their prewar
markets in Eastern Europe and China, are now dumping
their goods on markets which Britain once con-
sidered her own. And indeed, British businessmen can
scarcely be overjoyed at the fact that Germany has
already left Britain behind in export of metals to
Europe, as well as chemical products and many typos
of finished goods, while Japan has already taken the
lead in textile commodities. Japan has invaded the
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sterling zone. She is exporting more cotton fabrics
and goods than Britain to Pakistan, Thailand and
British East Africa. This is the natural result of forc-
ing Japan to sever her traditional trade relations
with nearby China.
The sharp crisis experienced by the Interna-
tional Materials Conference, the collapse of the
program of the so-called liberalization of intra-
European trade between members of the Organiza-
tion of European Economic Cooperation, the dead-
lock reached by the European Payments Union and
other similar phenomena all speak of the intensifi-
cation of competition on the markets.
Public attention has been also aroused by the
virtual disruption of trade relations between the
U.S.A. and the U.S.S.R. This breakdown cannot
be explained by any factors of an economic nature.
There is no doubt that economic considerations are
least of all to blame for it, since Soviet-American
trade has always been directly in the economic
interests of both powers. Moreover, everyone knows
that trade with the Soviet Union was always advan-
tageous to America from the point of view of her trade
balance. Thus in the five years 1926-31 alone Ameri-
ca's assets in trade with the U.S.S.R. amounted to
nearly $400,000,000. As long ago as March 3, 1931,
U.S. Senator Borah said: "In my opinion the greatest
potential, the greatest developing market in the world
for American goods is in Russia." Formerly the United
States exported to the Soviet Union mainly industrial
equipment and imported from the Soviet Union furs,
ores, flax, caviare, and other commodities that did
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not compete with local production on the American
home market. In certain years the U.S.A. satisfied
all her main import requirements for manganese ore
with raw material imported from the U.S.S.R.
In a conversation with Campbell, an American
visitor to the U.S.S.R. at the beginning of 1929,
Joseph Stalin emphasized that the U.S.A. has more
reasons to do extensive business with the U.S.S.R.
than any other country. Construction in the U.S.S.R.,
said Joseph Stalin, was in full swing, and the enthu-
siasm that accompanied it were the Soviet Union's
chief feature at the time. This feature, Joseph Stalin
said, supplied the basis for technical, industrial and
trade cooperation with the U.S.A. * Looking at it
objectively, there are great prospects for Soviet-
Amcrican trade because the U.S.S.R., absorbed as
it is in gigantic works of peaceful construction, has
great demands and is able to pay for what it wants,
while American industry has enormous capacity to
supply it. The disruption of this trade is having an
unhealthy effect on world economy. There is no doubt
that the restoration and development of normal
Soviet-American trade on the basis of equal rights
and mutual advantage would benefit the economic
interests of both states, just as it would benefit the
world economy as a whole and aid in overcoming the
tension in international affairs.
Many representatives of American trade and indus-
trial circles are suffering losses from the disruption
of trade between the U.S.A. and the U.S.S.R. Thus,
* Sce J. V. Stalin, Works, Russ. ed., Vol. 13, pp. 154,149.
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as far back as May 1948, Mr. Tell Berna, the General
Manager of the National Machine-Tool Builders Asso-
ciation, announced in connection with the prohibition
of export of American machine tools to the Soviet
Union and countries of Central and Southeast Europe,
that the Government of the U.S.A. was not ensuring
the machine-tool industry a market for its products.
Berna warned that foreign trade was not something
you could play with.*
The dislocation of international trade is having an
extremely unhealthy effect on the economic position
of the underdeveloped countries. Their trade turnover
remains rou;hly at the prewar level and they are unable
to reap the benefit of the extensive natural resources
they possess. Economically underdeveloped countries
are showing a great interest in expanding economic rela-
tions with the Soviet Union, the Chinese People's
Republic and the European countries of People's Do-
m ocracy.
The population of the colonial and dependent
countries have in the Soviet Union a true defender of
their right to self-determination and independence, as
well as a champion of the rapid and independent devel-
opment of their economy. The Government of the Soviet
Union holds firmly and resolutely to the principle of
equal rights for big and small peoples and the observ-
ance of their lawful interests. The U.S.S.R. regards
small nations as entitled to equal rights with big na-
tions. "Many people do not believe," said J. V. Stalin,
"that there can be relations of equality between a big
* See The New York Times, May 2, 1948.
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and a small nation. But we Soviet people hold that
there can and must be such relations." *
Trade with the U.S.S.R., the Chinese People's
Republican d the European People's Democracies would
bring the underdeveloped countries the vitally need-
ed supplies of industrial equipment, lathes and
machinery which they are virtually unable to obtain
from the industrial countries of the West. In exchange
for these supplies they could export to the U.S.S.R.
and the countries friendly to it a wide assortment of
their own products. This would further the develop-
ment of national industry in the underdeveloped
countries, increase employment and raise the standard
of life, which at present does not even provide the
bare necessities.
Such are some of the causes and consequences of
the disruption of normal conditions of international
economic cooperation. It is fully evident that such an
absurd situation cannot prevail for long. It is neces-
sary to find ways to restore and develop a ramified
world trade on the basis of equality and mutual bene-
fit. This is the conclusion arrived at by many members
of commercial and industrial circles of the West who
understand that international commercial intercourse
must develop along the lines of equal and mutually
advantageous cooperation between continents and
countries, and not along the lines of economic blockade
and isolation, boycott and discrimination. This is
demanded by the vital interests of the peoples. That
is why business circles of many countries place great
Pravda, April 13, 1948.
a9
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hopes on the International Economic Conference,
which will search for ways and means of leading world
trade out of the impasse into which it has been driven
by factors known to all.
A progressive tendency always makes its way. The
all-round development of international economic
cooperation is not only possible, it is essential. As
long ago as 1922, on the eve of the International Eco-
nomic Conference in Genoa, V. I. Lenin said:
"The fact of the matter is that the most urgent,
pressing and practical interests tliet have been
sharply revealed in all the capitalist countries during
the past few years call for the development, regulation
and expansion of trade with Russia. Since such inter-
ests exist, we may argue, we may quarrel, we may
disagree on specific combinations-it is highly prob-
able that we shall have to disagree---nevertheless,
after all is said and done, this fundamental economic
necessity will hew a road for itself. I think we can rest
assured of that. I cannot vouch for the (late; I cannot
vouch for success; but at this gathering we can say
with a fair amount of certainty that the development
of regular trade relations between the Soviet Republic
and all the capitalist countries in the world is bound to
continue. "*
In the same speech Lenin again returned to this
question and pointed out:
"I repeat: we are going to Genoa as merchants for
the purpose of securing the most favourable terms for
* V. I. Lenin, Selected Works, Two-Vol_ ed., Vol, TI,
Part 2, p. 629. - -
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developing the trade which has started, which is being
carried on, and which, even if someone succeeded in
forcibly interrupting it for a time, will inevitably
continue to develop after the interruption."*
These words might have been spoken today: they
are charged with such force and vitality. And just as
history has once already proved their truth-Lenin's
scientific prophesy was completely fulfilled-so
history will confirm the truth of these words a second
time.
INTERNATIONAL TRADE
AND THE IMPROVEMENT
OF THE STANDARD OF LIVING
The problem of improving the standard of living
in the countries of the Western world is one of the
most vitally important questions of modern times.
The direct connection between all-round development
of international economic cooperation and the raising
of living standards is quite obvious. There can be
no doubt that the disruption of normal trade relations
affects the vital interests of all countries, and, as
shown above, hits especially hard the Western coun-
tries, engendering a number of distressing phenomena
in their economy and worsening the working and liv-
ing conditions of the population. One cannot deny
the truth of the statement of the Canadian section of
the United Electrical, Radio and Machine Workers,
which at a conference in Hamilton on February
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16-17, 1952, emphasizing that "Peace means trade,
and trade means work," founded their program of
action on the principle: "Employment, security and
the standard of living depend on trade with all
countries. "
The militarization of the Western countries' econ-
omy diverts a large part of the social product from
productive use, causes a rise in the cost of living and
a shortage of consumer goods. It deforms foreign
trade, disrupts economic relations among nations,
their exchange of raw materials and industrial produc-
tion, and hampers technical progress and internation-
al business cooperation. Militarism and its insepa-
rable companions, greater inflation, higher prices
and taxes and a rise in unemployment in the coun-
tries of Western Europe, America and Asia, bring
distress not only to the workers, peasants and office
employees. The enormous difficulties arising from
the mobilization of industry and the destruction of
free trade relations between countries have also had
their effect on many thousands of small and middle
industrialists and traders, and even big businessmen
in the sphere of civil production. It is common knowl-
edge that owing to militarization of the economy
and disruption of international trade, enterprises
putting out civilian goods are deprived of orders,
.scarce raw materials and other supplies, labour,
credits, etc., necessary for their operation, and that
the proprietors of these enterprises are going bank-
rupt and being ruined. Curtailment of civilian pro-
duction inevitably reduces the utilization of indus-
trial capacities, results in the closing down of many
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enterprises and throws millions. of able-bodied men
and women out of work.
To sum up, the militarization of economy and the
increase of war budgets is imposing a heavy burden
on the population of many countries. Speaking at
the plenary session of the General Assembly of the
United Nations as far back as December 13, 1946,
V. M. Molotov said:
"It is no secret that the military budgets of cer-
tain states today are greatly inflated. The populations
will warmly approve the decision on the general re-
duction of armaments and the reduction of military,
budgets, among other reasons, because this will make
it possible really to ease their tax burden, and will
counteract the forcing up of commodity prices. All
this seriously affects the most vital material interests
of every one of the ordinary people, every one of the
working people. We must therefore hope that one of
the earliest practical conclusions to be drawn from
the decision we adopt today will be a reduction of
inflated military budgets to more normal size, and
an easing of the burden imposed on the populations
by military budgets. This will meet with great approv-
al in all countries."*
The countries of Western Europe find themselves
in a vicious circle owing to the policy imposed on
them, the policy of militarization and virtual rup-
ture of trade relations with the U.S.S.R., China and
the European People's Democracies. Deprived of the
* V. M. Molotov, Problems of Foreign Policy, Moscow
1949, pp. 337 38.
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foodstuffs formerly supplied by Eastern` Europe, they
began to buy them in the dollar zone, which sharply
increased their unfavourable trade balances. Then,
with the object of economizing foreign exchange, they
introduced various import restrictions, a blow hard-
est of all for the working population of these coun-
tries, since these restrictions apply first and foremost
to badly needed foodstuffs. France, according to ex-
premier Faure, who resigned in the end of February
1952, intends to cut imports by $170,000,000 in the
first half of the current year; Britain contemplates
an annual reduction of X500,000,000, with a curtail-
ment of #170,000,000 in the import of foodstuffs.
This policy means a decline in the imports per
capita (in Britain they dropped 13% from 1913 to
1950) and a reduction in consumption. For example,
in Britain the per capita consumption of meat and
butter in 1951 was 40% below the annual average
for 1934-38; the consumption of rice was reduced
38%; bacon and ham, 29%; dried fruit, 28%; tea,
23%; sugar, 16%, etc. The saving on imports of food,
which leads to the continual reduction of already
meagre rations, results in lower living standards for
the population of Britain. In 1951 alone, according
to Daily Worker figures, the standard of life of the
British workers was lowered by a quarter. It has
been calculated that import from China alone in quan-
tities approaching the peak year between 1925-29
would bring Britain's population more than one and
a half times the eggs, particularly preserved eggs,
it badly needs, and 40% more tea, which would make
a big difference to the English people's wretched tea
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ration. * The situation is the same in the other coun-
tries of the West, where the consumption of basic foods
has not reached the prewar level either, which in its
turn could by no means be called sufficient. The
expansion of international trade would be an impor=
Gant means of improving the consuming power of mil-
lions of people in various countries, would allow them
to abolish the rationing and meagre distribution of
essential food and industrial goods, a system which
still exists in many countries in spite of the fact that
six and a half years have passed since the termination
of the war.
Admitting in a review published in August 1948
that "the revival of trade between Eastern and Western
Europe is of decisive importance to Europe," the
U.N. Economic Commission for Europe affirmed that
if the West were materially to support industrial con-
struction of the East-European states by supplying
them with machines and industrial manufactures, the
East would be able to supply the West with more than
a quarter of the latter's total imports of foodstuffs and
raw materials and exceed total prewar imports of
wheat to the countries of Western Europe; on the
other hand, if the countries of Western Europe do
not revise their foreign trade to their own advantage,
the living standard of their population would become.
even lower than the present unsatisfactory level.
. It is quite obvious that the reduction of the pur-
chasing power of the population in these countries
is one of the most serious brakes on the restoration and
* Problems of Economics, No. 3, 1952, Eng. ed., p. 79.
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development of international trade. Export is falling
certainly not because the capacity of home markets
has increased, because a larger quantity of goods is
being consumed in these countries. On the contrary,
internal markets are shrinking at an increasing tempo,
due to the further impoverishment of the broad masses
of the working people, who in the final account
are the basic customers. As has often been empha-
sized at trade union conferences in Britain, the resto-
ration on a broad scale of trade with the U.S.S.R.,
China and the countries of People's Democracy, whose
goods would bring stability and firmness to the mar-
kets, would help to reduce prices and strengthen cur-
rency in Britain and other West-European countries,
and thus increase the buying power of the population,
which would in turn create conditions for the further
expansion of international trade.
Trade with the U.S.S.R. and the countries friendly
to it would not only assure the population of the capi-
talist countries the foodstuffs they need and many
types of raw materials for industry, but would also
provide their industries with mutually advantageous
orders. It is generally known that the Soviet Union
always honestly and undeviatingly fulfils its commit-
ments, including payments for goods ordered and
received. Correct and conscientious fulfilment of
international obligations is one of the basic principles
of the foreign policy of the U.S.S.R., including its
foreign trade policy; this is also true of the People's
Democracies. In the autumn of 1951 Maurice Webb,
then British Focal Minister, commented: "I want to make
it clear that the Russians do carry out their contracts-
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and that cannot be said about everybody with whom we
are trading." All this is of groat importance for increas-
ing employment in the Western countries, in most
of which unemployment has acquired menacing pro-
portions, exceeding 45,000,000 people (fully and
partly unemployed) for the whole capitalist world.
Facts utterly refute the ideas of those economists
who assert that unemployment can be eliminated
or diminished by stepping up the output of armaments.
However paradoxical it may seem, the situation in
the world today shows clearly that in spite of the
conversion of industry to war production the number
of unemployed in the Western countries is actually
increasing. One has not far to seek for an explanation.
In the first place it is due to the whole or partial clos-
ing down of a large number of civil industrial enter-
prises, and, secondly, to the fact that the increase
in production for war purposes is achieved not by
means of introducing now contingents of workers into
industry but mainly by intensifying the labour of
the workers already employed, speeding up conveyer
belts, accelerating metal working, etc. According to
the American newspaper Union, organ of the Inter-
national Union of Mine, Mill and Smelter Workers,
for every worker taken on in war industry, one or
even two remain unemployed in the civilian branches
of industry. That is why employment in the capitalist
countries, in spite of mobilization of industry, is not
increasing but decreasing even further.
The attraction of huge masses of people into in-
dustry to eliminate unemployment can be achieved
not by economic militarization but by the restoration,
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and development of international economic relations,
and above all by trade between West and East. To
prove this it is enough to recall only a few facts from
the past.
Between 1929-33, when the world economic,
crisis gripped not only the industry and agriculture,
of the capitalist states, but also extended .to the sphere
of trade, credit and money circulation, upsetting
accepted credit and currency relations between coun-
tries, only the U.S.S.R. stood apart, like a rock,
continuing its work of peaceful construction and
the struggle for maintaining peace. At that time, in
1931, the Soviet Union bought nearly a third, and
in 1932 nearly half, of the whole world export of
machines.
It is a well-known fact that during those years
of crisis the machine-tool enterprises of the West-
European countries were only able to continue func-
tioning thanks to orders received from the U.S.S.R.
Britain's export to the U.S.S.R. increased from
#4,800,000 in 1928 to #10,600,000 in 1932, that is, more
than double, and let it be remembered that the bulk
of this export was produced by the machine-tool
industry. The Soviet Union's share in British machine-
tool export for 1932, according to British customs
statistics, exceeded 25%, in the export of lathes was
80%, in the export of coal cutters and mining equip-
ment reached 70%, and so on. In Germany 35% of
the production of lathes and over 20% of electrical
goods was exported to the U.S.S.R. in 1931.
The Soviet Union was likewise the only country
which during that period not only did not reduce
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but even increased its volume of trade with the Unit-,
ed States of America. In 1930 the Soviet Union held
second place in American exports of industrial equip-
ment, and in 1931 advanced to first place. In that,
year the United States, according to official U.S.-
statistics, shipped to the Soviet Union 74% of its_
total foundry equipment exports, 70% of crushing.
mills, 68% of forging and stamping equipment, 67%
of agricultural machinery, 65% of its machine-tool.
exports, etc. In those years of economic crisis millions
of workers in the U.S.A., Britain, Germany and many.
other countries were provided with work thanks to
the Soviet orders. In Germany alone over 300,000
workers were saved from unemployment and its re-
sultant hardships, because they were occupied in
producing supplies for the U.S.S.R.
Not only during 1929-33, the period of world eco-
nomic crisis, but also during its aftermath, as well
as in the postwar period until international trade was
paralyzed by restrictions, fulfilment of orders for
the Soviet Union gave work to a large number of
workers in the countries of the West. Trade with the
U.S.S.R. becomes particularly important for improv-
ing living conditions in these countries at the present
time, when the civilian industries of the Western
world are shrinking for lack of consignments, factory
owners in the peaceful branches of industry going
bankrupt and masses of workers being thrown out onto
the streets without means of subsistence. The devel-
opment of normal trade relations with the U.S.S.R., the
Chinese People's Republic and the European countries
of People's Democracy would give work to civilian
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branches of industry in Britain, France, Belgium,
Western Germany, the U.S.A., Japan and many other
countries, thus reducing the army of unemployed. The
American weekly National Guardian wrote that the
American embargo on trade with Russia, Eastern
Europe and new China means the loss of jobs for
3,000,000 American workers who would have employ-
ment if trade between the West and the East were
resumed.
One could quote a host of statements- to this effect
made by representatives of trade and industrial cir-
cles, trade union and cooperative organizations, and
also the economic and general press in the countries
of the West. Let us confine ourselves only to a few.
When in December 1947 the Anglo-Soviet trade agree-
ment was concluded, the Daily Herald wrote that
the carrying out of this agreement could ensure "steady
employment for at least three or four years for large
numbers of British engineering workers. " In its turn
the newspaper of the Belgian Catholic trade unions
Cite announced that, just as a few years ago, when
Belgian artificial fibre factories in Zwijnaerde were
saved by Soviet orders, so now, when the sale of
artificial fibre is encountering considerable obstacles,
Soviet orders are providing work for several shops
of the big Belgian firm Fabelta.
It should also be emphasized that purchases of
raw materials made by the U.S.S.R. and the countries
friendly to it supply their vigorously developing
industry, increase employment in the underdeveloped
countries, particularly in agriculture and the mining
industry, and thus help to raise the exceptionally
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low standard of living of the population in these less
advanced regions.
The disruption of international trade is having
a disastrous effect on the economy of many countries.
Some countries are suffering from shortages of essen-
tial goods and consequent rise of prices; others are
having extreme difficulty in selling their. products,
having to close down factories and whole branches of
civilian industry and suffering from an increase of
unemployment, as well as stagnation and paralysis of
trade. It goes without saying that the primary result
of both processes is to lower the living standards of the
broad masses of the population, whereas even restora-
tion of international trade in civilian commodities
to the maximum level attained in the period between
the First and the Second World War would bring a
considerable employment increase in the Western
countries, improve food and general consumption of the
masses, increase their ability to buy essential goods.
What can be of greater importance than this task,
when in many states the working people whose labour
creates immense material wealth endure a beggarly
half-starved existence and have not the wherewithal
to clothe themselves, when on the boundless territo-
ries of India and other economically underdeveloped
countries millions of people are dying a slow, agoniz-
ing death from hunger?
There is yet another aspect, and an extremely im-
portant one, to the development of economic coop-
eration among all countries on the basis of equality
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and mutual benefit. We have in mind the role and
significance of this cooperation in normalizing the
international situation, for relieving the present in-
ternational tension. It is generally recognized that
the discord and differences which have divided the
world are one of the major factors impeding normal
economic cooperation among the nations. But eco-
nomic cooperation and consolidation of peaceful re-
lations among countries are interdependent. In their
turn, international economic relations have a big
influence on the international atmosphere. The ex-
pansion of trade, economic rapprochement of the na-
tions, without distinction as to their social system,
would undoubtedly contribute much to strengthening
the postwar peace. On this point the views of repre-
sentatives of the most diverse circles of society are
coming more and more to coincide.
The development of international economic cooper-
ation could, of course, be furthered to a considerable
extent by the United Nations Organization and its
various specialized institutions. As a matter of fact,
that is what such U.N. organs as the Social and
Economic Council, the Economic Commission for
Europe, the Economic Commission for.Asia and Far
East, as well as economic institutions attached to
UNO-the Food and Agricultural Organization, the
International Organization of Labour, the Interna-
tional Bank of Reconstruction and Development,
the International Monetary Fund, etc.-were created
for. Not justifying the hopes that attended their
foundation, these organs and institutions have turned
out to be ineffective in strengthening international
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economic cooperation and raising the standard of
living of the population.
It is this- that lends special significance to the
International Economic Conference in Moscow. Even
those opposed to calling such a conference at present,
as for example, the British Economist, cannot help
acknowledging that it will serve a noble and extremely
important and useful aim. Thus, on February 29,
1952, The Economist wrote that the Conference could
perform a miracle. It could unite the businessmen,
trade union leaders and economists of all countries
freely elected by various organizations, and who have
obtained visas to the Soviet Union irrespective of
their political views. They could discuss the question
of developing international trade in order to utilize
all available resources and raise the standard of living
everywhere.
It may be said without fear of exaggeration that
the attention of hundreds of millions of men and wom-
en in all countries is focussed on this Conference.
From it the peoples eagerly await solution of urgent
problems of our times, and, above all, improvement
in their conditions of life by developing international
economic cooperation. People all over the world wish
the International Economic Conference success in
achieving its noble aims.
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 Appr
ECONOMIC
COOPERATION
0
60004-9
ETACH L. FIT U N I
THE SOVIET UNION
and
INTERNATIONAL
rotoGN LANGUAGES PUBLISHING HOUSE
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ACADEMY OF SCIENCES OF U.S.S.R.
INSTITUTE OF ECONOMICS
L. FITUNI
THE SOVIET UNION
AND INTERNATIONAL
ECONOMIC COOPERATION
IQ
FOREIGN LANGUAGES PUBLISHING HOUSE
Moscow 1952
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The peoples of the entire globe are extremely in-
terested in restoring and strengthening international
economic cooperation, in the normal development
of trade relations between all countries, irrespective
of their social-economic systems. Millions of men
and women of different nationality, political opin-
ions, convictions, creed, social standing, representa-
tives of industrial and commercial circles, trade un-
ion and cooperative organizations in all the coun-
tries of the world are expressing their readiness to
help overcome the difficulties in the way of normal
international economic relations, to work for the
all-round development of friendly economic, and
particularly trade, relations between states.
The Soviet Union seeks to extend and strengthen
business and commercial relations with all countries
on the principles of equal rights, mutual advantage
and respect for national sovereignty and independ-
ence. Comrade Stalin, the great leader of the
Soviet people, has said: "Our foreign policy is
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clear. It is a policy of preserving peace and of
strengthening commercial relations with all coun-
tries.... Those who want peace and seek business
relations with us will always have our support."*
J. V. Stalin has on more than one occasion quite
definitely stated that the Soviet Union proceeds
from the possibility of the lengthy co-existence of
the two systems-Socialism and capitalism-and
firmly adheres to a policy of loyal, peaceable rela-
tions with all states that display the wish for friendly
cooperation, observing the principles of reciprocity
and of carrying out the obligations assumed. The
Soviet Union considers the road of peaceful com-
petition with capitalism fully acceptable; the
Soviet people are anxious to establish friendly re-
lations with the peoples of all countries.
From the first day of the Soviet Land's existence,
its foreign policy has been aimed at strengthening
friendly cooperation between the peace-loving
nations in every way. Replying to a question from
a correspondent of the New York Evening Journal
concerning the principles of peace with America,
V. I. Lenin, the founder of the Soviet state, said:
"Let the American capitalists not touch us. We
will not touch them. We are even prepared to pay
them in gold for machines, implements, etc., needed
* J. V. Stalin, Report to the Seventeenth Congress of
the C.P.S.U.(B.) on the Work of the Central Committee,
Moscow 1951, pp. 36, 36-37.
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for transport and production. And not only in gold,
but also in raw materials. " *
In talks with representatives of the business
world abroad and in replies to questions from repre-
sentatives of the foreign press, Comrade Stalin has
repeatedly explained that Soviet foreign policy pro-
ceeds from the possibility and inevitability of the
lengthy co-existence and peaceful competition of
the two systems.
In his talk in April 1947 with S. A. Harold Stas-
sen, a prominent figure in the Republican Party of
the U.S.A., J. V. Stalin pointed out that the idea
.of cooperation between the two systems had first
been expressed by Lenin. "Lenin is our teacher,"
J. V. Stalin said, "and we Soviet people are the pu-
pils of Lenin. We have never deviated from Lenin's
instructions and never shall." * *
In the same talk Comrade Stalin said that "we
.should not be carried away by criticizing each
other's system. Every nation adheres to the system
it wants and can adhere to. Which system is better-
history shall show.... For cooperation it is not nec-
essary for nations to have the same system. It is
necessary to respect systems approved by the
people. Only on this condition is cooperation
possible."***
* V. I. Lenin, Collected Works, 4th Russ. ed., Vol. 30,
p. 340.
** Pravda, May 8, 1947
r** Ibid.
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In September 1946, in reply to a question from
the Moscow correspondent of the British Sunday
Times, Mr. Alexander Worth, who had asked Com-
rade Stalin whether he believed that with the fur-
ther advance of the Soviet Union towards Communism
the possibilities of peaceful cooperation with the
outside world would not diminish, inasmuch as
this concerned the Soviet Union, Comrade Stalin
said: "I do not doubt that the possibilities of peaceful
cooperation, far from diminishing, may even in-
crease." Replying to another question from Werth
as to what would contribute to the establishment
of friendly relations between the Soviet Union and
Great Britain, J. V. Stalin said: "The establishment
of such relations would be considerably furthered by
the development of political, commercial and cul-
tural ties between these countries."*
In December 1946 the same question arose in
J. V. Stalin's conversation with Elliot Roosevelt.
E. Roosevelt asked J. V. Stalin whether he consid-
ered it possible for a democracy such as the United
States to live peacefully side by side in this world
with such a communist form of government as exists
in the Soviet Union, and that neither side would at-
tempt to interfere in the internal political affairs of
the other. Comrade Stalin's reply to this was: "Yes,
of course. This is not only possible. It is reasonable
and quite feasible. In the most tense periods in
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wartime the differences in form of government did
not prevent our two countries from uniting and
defeating our enemies. The preservation of these
relations in peacetime is possible even to a greater
extent. " *
Speaking at an election meeting on March 10,
1950, Comrade Molotov said: We stand wholly for
the Lenin-Stalin principle of peaceful co-existence
of the two systems and for peaceable economic
competition between them."**
The U.S.S.R.'s policy in foreign trade and in
world economic affairs generally is a component
part of its foreign policy, whose peaceful nature
stems from the peaceful foundations of the Soviet
state and social system. The Soviet Union proceeds
on the assumption that trade between different coun-
tries must correspond to their national interests and
be economically advantageous to them. The Soviet
Union's policy in foreign trade and its economic
relations with other countries are based on the demo=
cratic principle of the equal rights of the trading
parties and on the observance of the principle of
mutual advantage. The U.S.S.R. supports the full-
Ibid., No. 1, 1947, pp. 1-2.
V. M. Molotov, Speech at an Election Meeting in the
Molotov Electoral District of the City of Moscow, March. 10,
1960, Moscow 150, p. 24.
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est possible development of international trade on
a basis of normal conditions of economic coopera-
tion, on the basis of the proper respect for the state
sovereignty and national independence of big and
small countries. The desire to impose unequal terms
on other countries is alien to the Soviet Union.
From its very inception the Soviet state re-
nounced the unequal treaties which tsarist Russia
had imposed on Iran, Afghanistan, Turkey, China and
other Eastern countries; the Soviet state handed over
to them gratis the property of the former Russian
establishments on their territory. The Soviet state
has always sought to facilitate trade turnover with
the countries of the East by granting them favoura-
ble terms in matters of transit, customs tariffs and
credit, rendering them technical assistance, etc. The
significance of the Soviet market for the countries
of the East was borne out most strikingly during the
economic crisis of 1929-33. Thanks to normal
trade-political relations with a number of Eastern
countries, such as Iran, Turkey, Afghanistan and
others, the U.S.S.R. 's economic relations with them
grew stronger from year to year. While their trade
with a number of countries which had formerly
been the principal consumers of Eastern goods and
suppliers of their foreign goods ' (Britain, France,
Italy) declined, the U.S.S.R.'s share both in their
exports and imports invariably increased. This
helped appreciably to soften the impact of the
crisis on the economy of the Eastern countries.
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Throughout its history the Soviet Union has been
proving in practice that it regards small nations as
equals to big nations and is prepared to conclude
mutually advantageous treaties and agreements with
them. "Few great-power politicians will be found,"
J. V. Stalin has said, "who regard small nations
as equals to big nations. Most of them look
down upon the small nations. They are not averse
to granting the small nations one-sided guarantees.
But, generally speaking, these politicians are not
prone to conclude equal treaties with the small na-
tions, because they do not regard them as partners."*
Treating small nations as equals is the funda-
mental principle of Soviet foreign ` policy. The
Soviet Union invariably follows this principle,
which determines the entire direction and every
step of the Soviet state in world affairs.
A distinguishing feature of the U.S.S.R.'s for-
eign policy, including its policy in foreign trade,
has always been and is the consistent and unswerv-
ing observance of international commitments.
"Everyone knows," A. A. Zhdanov said, "that the
U.S.S.R. has always honoured the obligations it
assumed."** Other statesmen of the Soviet Union
have likewise repeatedly stressed this circumstance,
* Pravda, April 13, 1948.
** A. A. Zhdanov, The International Situation, a speech
delivered at the Informatory Conference of representatives
of a number of Communist Parties held in Poland in the
latter part of September 1947, Moscow 1947, p. 22.
2-3382 9
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which has evoked the admiration not only of rep-
resentatives of the business world abroad, but also
of statesmen of a number of countries.
Being a supporter of peaceful cooperation with
other countries, even if they belong to a different
social-economic and political system, the Soviet
Union has been able to improve its relations with
many countries and has concluded agreements
with them on trade, credits, technical assistance,
etc., notwithstanding the fact that certain coun-
tries, such as the United States of America, for
sixteen years withheld recognition of the Soviet
Union.
J.V. Stalin stressed, however, that the U.S.A.
"... has more grounds for extensive business rela-
tions with the U.S.S.R. than any other coun-
try.?
In his talk with Colonel R. Robins in 1933
J. V. Stalin expressed his approval. of the plan for
a rapprochement and for cooperation between the
U.S.S.R. and the U.S.A. of which Robins had spoken;
Robins had correctly emphasized that without the
participation of the U.S.S.R. it would be impossible
to establish and develop normal world economic
relations.
It was then, in 1931, at a meeting of the Euro-
pean Commission of the League of Nations, and
later in 1933 at the London Economic Conference,
'" J. V. Stalin, Works, Russ. ed., Vol. 13, p. 154.
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that the Soviet Union, despite the boycott to which
it had been subjected by certain capitalist countries,
including so big a power as the United States of
America, put forward the proposal to conclude an
economic nonaggression pact that would be based
on the principle of the peaceful co-existence of all
countries and the renunciation of all forms of eco-
nomic discrimination, a principle which the U.S.S.R.
had advanced all the way back at the World Eco-
nomic Conference of 1927.
The Soviet Union.'s firm and consistent foreign
trade policy, based on the aforementioned princi-
ples, provided the conditions for the development
of the U.S.S.R.'s trade relations with a large num-
ber of foreign states long before the Second World
War. The Soviet Union concluded trade treaties
and agreements with France, Great Britain, the
U.S.A., Belgium, Czechoslovakia, Poland, Turkey,
China and other countries. In the complicated pre-
war situation and particularly in the years of the
preceding economic crisis of 1929-33 the Soviet
Union was a factor that appreciably facilitated
international economic relations. It was in those
years that the significance of the Soviet market
for such a major capitalist country as the United
States of America became fully apparent. In 1930
the U.S.S.R. ranked second in America's exports of
industrial equipment, while in 1931 it even ranked
first. In 1931 the Soviet Union accounted for 74%
of the U.S.A.'s entire exports of foundry equip-
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ment, for 70% of its exports of crushing mills,
68% of its forging and stamping equipment, 67%
of its agricultural machinery, 65% of its machine
tools, etc.
History shows that despite the difference between
the socialist and the capitalist systems, cooperation
between them in the maintenance of peaceful com-
mercial, financial and diplomatic relations is fully
possible and is in the interests of all the nations of
the world. Throughout its existence the Soviet state
has always made a point of calling for the estab-
lishment of international regulations which, once
accepted by mutual agreement, would govern the
relations between states with different social-
economic systems. The Soviet Union has in this
respect not only expressed a readiness to cooperate,
but has bent every effort to the achievement of such
cooperation with all countries in practice. "There
is a great desire among our people to participate in
a peaceful competition among states and social sys-
tems, in which individual peoples may not only
display their inherent possibilities, but establish
closer and all-embracing mutual cooperation."*
In the postwar period, as throughout its existence,
the Soviet Union has been striving to strengthen
* V. M. Molotov, Problems of Foreign Policy, Moscow
1949, p. 263.
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business, commercial and financial relations with
all countries and peoples.
The whole world knows of the numerous practi-
cal steps taken by the Soviet Government to consol-
idate friendly cooperation with all states that are
prepared to dothe same and conscientiously to honour
their international commitments. After the Second
World War the Soviet Union concluded trade trea-
ties and agreements with Poland, Czechoslovakia,
Bulgaria, Rumania, Hungary, Albania, China, the
German Democratic Republic, Britain, France,
Sweden, Denmark, Norway, Finland, Switzerland,
Italy, Belgium and a number of other countries.
All these treaties and agreements serve the cause
of restoring and developing international economic
connections disrupted by the Second World War
and subsequent events; they are laying the founda-
tion for extensive trade turnover between states and
contributing to the development of the national
economy in various countries, as well as to reducing
unemployment in capitalist countries. .
The aforesaid treaties and agreements establish
a legal basis conducive to mutually advantageous
trade between the contracting parties. Most of these
treaties and agreements are based on mutual
application of most-favoured-nation treatment
with respect to customs duties, taxes and levies,
navigation, transit, the activities of juridical and
physical persons, the granting of preferences and
priorities as well as other matters pertaining
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to trade and navigation between the contracting
parties.
The U.S.S.R.'s postwar trade treaties and agree-
ments with foreign states were welcomed by busi-
ness circles in the countries concerned with great
satisfaction as an important step in developing
economic relations between the U.S.S.R. and those
countries.
The conservative Svenska Dagbladet wrote that
"every Swedish industrialist has become fully alive
to the advantage for our country and for Swedish
industry of extending trade relations with the East,
since experience shows that the Soviet Union has
won complete trust as a commercial partner." In
connection with the agreement reached by the
U.S.S.R. and Norway on trade turnover in 1948,
the Norwegian Dagbladet wrote: "From the purely
political point of view the development of Russian
foreign trade is one of the most encouraging phenom-
ena of today. This development indicates that
the U.S.S.R. intends to base its future on peace-
ful cooperation with neighbouring countries and
the other countries of the world."
The U.S.S.R. is firmly and consistently conduct-
ing a policy of extending and strengthening friend-
ly economic and cultural relations with all peoples
and states. Throughout the postwar period the So-
viet Union has repeatedly rendered and is rendering
magnanimous friendly economic assistance to other
nations. Thus, Bulgaria in 1944-45 received from
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the Soviet Union 11,000 tons of cotton, 73,000 tons
of motalwares and of metal for the production of
agricultural machinery, and 120,000 tons of pe-
troleum products. Soviet deliveries enabled Bulga-
ria quickly to restore the work of its textile industry,
to supply agriculture with the necessary machinery
and adjust the work of transport. The trade agree-
ment concluded between the U.S.S.R. and Hun-
gary in 1945, under which Hungary was able to
satisfy 40% of its requirements in iron ore, 50% in
coke, 100% in nickel and petrol, etc., made it pos-
sible, as the Hungarian Minister of Trade pointed
out, to operate the heavy industry of the country
and stabilize the economy. When, in the spring of
1946, a grave food situation developed in Franco, the
Soviet Government sold it 400,000 tons of wheat
and 100,000 tons of barley from its resources. When
Czechoslovakia suffered a crop failure in 1947, it
obtained 600,000 tons of grain from the Soviet
Union. The President of the Czechoslovak Repub-
lic Clement Gottwald said in this connection that
"the Soviet Union saved us from famine." When in
1951 there was an exceedingly grave food shortage
in India as a result of several years of drought, the
Soviet Union supplied the starving Indian popula-
tion with a considerable amount of grain. The
Soviet Union is rendering truly fraternal economic
assistance to the Chinese People's Republic.
All these and numerous other similar facts
furnish irrefutable proof that the Soviet Union is
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working unflaggingly to strengthen and extend in-
ternational economic cooperation.
The system of economic mutual relations created
on Comrade Stalin's initiative between the U.S.S.R.
and Poland, Czechoslovakia, Bulgaria, Rumania,
Hungary, Albania, the Chinese People's Republic
and the German Democratic Republic is a model of
international economic relations based on equal
rights and mutual advantage, a model of relations
of genuine friendship and fruitful cooperation.
Based as they are on the Lenin-Stalin principle
of the equality of big and small nations, the Soviet
Union's economic relations with these countries
rest on the foundation of economic and political
independence and provide for the development of
the national economies of the contracting parties,
the improvement of living standards and the cul-
tural advancement of the peoples. The economic re-
lations between these states are not confined to
conventional commercial and monetary-credit
operations; they embrace friendly cooperation on
the basis of the formation and successful operation
of parity intergovernment joint-stock companies
in industry and transport, the joint prospecting for
natural resources and their joint utilization, the
exchange of technical experience, innovations and
patents, the arrangement of exhibitions, excursions,
visits of scientists, intellectuals, innovators in
production, etc.
An outstanding role in economic cooperation
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belongs to the Council of Mutual Economic Assist-
ance set up in January 1949, which consists of the
U.S.S.R., all the People's Democracies and the
German Democratic Republic on a basis of equal
representation. The principle of equal rights in this
council is reflected, for one thing, in the fact that
decisions are taken only with the consent of the
party concerned. The Council arranges the exchange
of economic experience, mutual technical assist-
ance, aid in raw materials, food, machinery, equip-
ment, etc. Other European countries wishing to
cooperate with the U.S.S.R. and the People's
Democracies may join the council.
These economic relations are governed by agree-
ments on trade and navigation, commercial and
credit agreements, agreements on technical assist-
ance, scientific and technical cooperation, on gen-
eral terms of delivery and in other types of agree-
ments.
The Soviet Union concluded treaties on trade
and navigation with Poland on July 7, 1945; with
Rumania on February 20, 1947; with Hungary on
July 15, 1947; with Czechoslovakia on December
11, . 1947, and with Bulgaria on April 1, 1948.
These treaties form the foundation for mutual
advantageous trade between the contracting par-
ties.
The trade agreements (on trade turnover and
payments, on mutual deliveries of goods) govern
the trade turnover and the terms of payments
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between the contracting parties. These agreements
are an important factor in the success of the econom-
ic plans of the countries of Central and Southeast
Europe. The Soviet Union has trade agreements
with all these countries.
In 1951 the Soviet Union concluded a number
of new trade agreements with the Euiopean People's
Democracies, the Chinese People's Republic and
the German Democratic Republic; those agreements
provide for the further development of the trade tur-
nover among the countries of the democratic camp.
On January 23 this year a long-term agreement on
mutual deliveries of goods was signed between the
U.S.S.R. and Hungary, as well as an agreement on
the supply of equipment and technical aid to Hun-
gary during 1952-55. On February 9 this year a
protocol on mutual deliveries of goods between the
U.S.S.R. and Bulgaria in 1952 was signed, providing
for a further increase in the trade turnover in 1952
as against 1951. The long-term agreement with Ru-
mania on deliveries of industrial equipment, tech-
nical assistance and the development of the trade
turnover will bring about a further increase in
trade during 1952-55. The average annual trade
turnover during this period will surpass by more
than 50% the average annual figure for 1948-51.
A protocol signed with Czechoslovakia provided for
additional mutual deliveries of goods in 1951 in
excess of the amounts fixed for that year in the five-
year agreement now in force. The total trade turn-
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over between the U.S.S.R. and Czechoslovakia in
1951 was considerably greater than in 1950.
With the German Democratic Republic the
U.S.S.R., in addition to the agreement on trade
turnover and payments for 1951, also concluded a
long-term agreement on mutual deliveries of goods
during 1952-55. Simultaneously an agreement was
concluded on scientific and technical collabora-
tion.
The protocol concluded with the Chinese People's
Republic on trade turnover in 1951 provided for a
considerable increase in deliveries over the 1950
figure. Simultaneously a protocol was signed on
Soviet deliveries of equipment and materials to
the Chinese People's Republic that year on the basis
of the credit granted under the agreement of Feb-
ruary 14, 1950.
Of tremendous importance for the industriali-
zation of the countries of Central and Southeast
Europe are Soviet deliveries of the most up-to-date
technical equipment, including complete instal-
lations for new big industrial enterprises under con-
struction. Here is what the Polish Trybuna Ludu
wrote about the agreement on mutual deliveries of
goods for 1953-58 and the agreement concerning
the delivery of industrial equipment to Poland on
a credit basis in 1951-58:
"The Soviet Union will supply equipment for the
power, metallurgical, metal-working, engine build-
ing, chemical and mining industries. On the basis
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of the U.S.S.R.'s deliveries of equipment a power-
ful new plant is being built near Cracow. Soviet
equipment is boosting and mechanizing coal pro-
duction."
A distinctive feature of the U.S.S.R.'s trade rela-
tions with the People's Democracies is the fact that
both sides assume fixed obligations with regard to
supplies of goods over a specified period of time in
accordance with the lists of commodities appended
to these agreements or to special annual protocols on
mutual deliveries of goods. These fixed obligations
guarantee the supply of the necessary industrial
equipment and raw materials at specified dates,
strengthen economic planning in the People's De-
mocracies and contribute to the development and
technical re-equipment of their national industries.
An important role in the U.S.S.R.'s economic
relations with the countries of Central and South-
east Europe, as well as with the Chinese People's
Republic, belongs to credit agreements.
In 1945-51 the Soviet Union concluded agree-
ments on short-term and long-term loans and credits
with Czechoslovakia, Poland, Rumania, Bulgaria,
the Chinese People's Republic and Albania. The
most common of these agreements are those which
provide for the delivery of industrial equipment from
the U.S.S.R. on credit and agreements on goods
credits. These loans and credits are granted on
highly advantageous terms with regard to duration
and interest, as well as repayment. "... The Soviet
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Union has always taken the stand that the terms
of credit must not be extortionate, and must not
result in the economic and political subjugation of
the debtor country to the creditor country."* The
states repay their credit and the accrued interest
chiefly by deliveries of goods. A country repays
these credits in goods which it usually exports
and at prices at which similar goods are supplied
under trade agreements. For instance, under the
credit agreement of February 14, 1950, the
Government of the U.S.S.R. granted the Central
People's Government of the Chinese People's
Republic a credit which in terms of dollars amount-
ed to 300,000,000 American dollars, to be drawn
within five years starting from January 1, 1950,
in equal annual shares to pay for Soviet deliveries
of equipment and materials, including the equip-
ment for power stations, metallurgical and engi-
neering works, coal and ore mining equipment, rail-
way and other transport equipment, rails and other
goods needed for the restoration and development of
China's national economy.
The Soviet Government took into considera-
tion China's economic difficulties caused by pro-
tracted military operations on its territory and
granted it this credit on the favourable terms of
1% per annum. The Chinese People's Republic is
* A. A. Zhdanov, The International Situation, Moscow
1947, p. 40.
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to repay the credit over a period of ten years in
equal annual shares.
The delivery of goods under the trade and credit
agreements concluded by the Government of the
U.S.S.R. with the Governments of the People's
Democracies, as well as the rendering of Soviet
technical aid, is governed by contracts (transactions)
concluded by the appropriate foreign trade organi-
zations of the contracting parties. The contracts
cover everything connected with the delivery of
goods and rendering of technical assistance (speci-
fications, volume, assortment, prices, delivery
dates, terms of payment, etc.). Highly important
in facilitating the conclusion of contracts are agree-
ments (protocols) on "General terms of delivery."
These include provisions concerning place of deliv-
ery (franco-wagon, F.O.B., C.I.F.), terms and
dates of delivery, quantity and quality of goods,
notice of delivery, packing and marking, transfer
of documents, testing and guarantees, complaints,
terms of payment, sanctions, arbitration, etc.
The remarkable achievements of the peoples of
these countries in industrialization are now evident
to the whole world. During last year alone in-
dustrial output in Poland increased by 24.4%, in
Czechoslovakia (which had a relatively well-devel-
oped industry) by 14.9%, in Hungary by 30.1%,
in Rumania by 28.7%, in Bulgaria by 19%, and in
Albania (which had no industry at all in the past)
by 47.1%.
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This system of economic relations, based on the
principle of equal rights and mutual advantage, as
well as on a stable economic foundation, serves as an
important means of extending and strengthening
economic relations between all states.
The development of trade between the capital-
ist countries and the Soviet Union does not depend
on ups and downs on the market since the Soviet
.Union is not influenced by economic crises;
therefore it creates a firm foundation for eco-
nomic cooperation. The Soviet state runs its econo-
my on a scientific basis, ensuring not only the
planned development of its productive forces, but
also their most rational distribution and utili-
zation.
Its successes in restoring and developing its
economy since the war have enabled the Soviet
Union to tackle a tremendous task-that of the com-
bined utilization of the waters of the Volga, the Don,
the Dnieper and the Amu Darya to meet the power,
agricultural, transport and other requirements of
the national economy. The great construction works
launched in the Soviet Union-the Kuihyshov, the
Stalingrad and other hydroelectric stations, the
Main Turkmen, the South-Ukrainian and other
canals-are widely known. The new power stations
will annually generate 22,500,000,000 kilowatt
hours of cheap electricity, which is equal to the
entire annual output of electric power in Italy. The
length of the canals under construction will run
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into 2,300 kilometres. This is six times more than
the length of the Suez, the Panama and the Kiel
canals, put together. The new irrigation networks
will provide water for over 70,000,000 acres of land.
These great construction projects have the aim
of advancing the peaceful economy of the So-
viet Union and improving the well-being of the
people. The successes of economic development
ensure a systematic improvement in the economic
and cultural standards of the Soviet people, a steady
rise in their requirements and purchasing power,
which is a constantly growing source. of production
and a safeguard against economic crises, unemploy-
ment and poverty. In the U.S.S.R. there is a steady
rise in the national income, the prices of consumer
goods are going down, the real wages of factory and
office workers and the incomes of the farmers are
increasing, and housing construction has been
launched on a large scale.
The Soviet system is inconceivable without the
day-to-day solicitude of the state for the well-being
of the people. This solicitude has been borne out
in a most striking manner in the postwar period.
Suffice it to mention the repeated price reduc-
tions that have been effected in the U.S.S.R. in
the postwar period, or the various state payments
and bonuses to the people, which run into colossal
figures.
As far back as 1929 J.V. Stalin, in his talk with
Mr. Campbell, pointed to two aspects of the possi-
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bilities which create "...a serious basis for trade and
industrial contact both with the U.S.A. and other
highly developed countries,"* notably: the wealth
and variety of natural resources in our country, on
the one hand, and the extraordinary growth of the
purchasing power in the country, on the other.
These words of J. V. Stalin's retain their full signif-
icance to this day. Now the Soviet Union has im-
measurably greater possibilities for business relations
with the capitalist countries. That is why the French
newspaper Aurore, when calling for the restoration
of normal international economic relations not
long ago, stressed the particular significance of the
"Soviet trade area," pointing out that "the U.S.S.R.
possesses not only primary products of which the
industry of Western Europe is short, but also has
the greatest markets in the world as to the volume
of consumption."
The Soviet Union constantly displays a readi-
ness to maintain and extend trade relations with
foreign states, regardless of their social-economic
systems. In its political relations with other coun-
tries the U.S.S.R. supports friendly cooperation, is
opposed to any discrimination and to any artifi-
cial barriers obstructing free contact between the
Soviet people and other peoples, supports friendship
between the peoples.
Throughout the postwar period the Soviet
* J. V. Stalin, Works, Russ. ed., Vol. 13, p. 153.
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Government has repeatedly submitted to the General
Assembly, the Economic and Social Council, the
Economic Commission for Europe and other United
Nations bodies practical proposals for the adjustment
of international trade and for the maximum possible
development of international economic coopera-
tion.
Sincerely wishing to assist the economic activ-
ities of the European countries and to develop
economic relations both among the European
countries and between these countries and the rest
of the world, the Soviet Union has made numerous
concrete proposals aimed at developing and extend-
ing trade among the European countries, and
especially between the countries of Western and
Eastern Europe, with an eye to doing away with
the foreign trade discrimination practised by the
U.S.A. and certain European states. These propos-
als concerned conditions necessary for peaceful and
friendly relations between nations, for improving
living standards, ensuring full employment, in-
creasing the output of the civilian industries, low-
ering the prices of consumer goods, reducing taxes
for the population, increasing allocations to housing
construction, the health service, education and soon
and so forth.
History provides numerous illustrations of how
Soviet proposals have yielded practical results,
given as much as the minimum support of the other
contracting party, of other states, given the least
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desire on the part of the representatives of those
states to achieve real agreement with the Soviet
Union, with the Soviet Government. It is common
knowledge with what interest the Soviet Govern-
ment examined the proposal of the Executive
Secretary of the Economic Commission for Europe
concerning the conclusion of a European grain
agreement. The Western powers under United
States pressure at the time sabotaged this measure
-to the detriment of their direct national interests.
According to official figures, from June 1949 to the
end of July 1950 Western Europe was to have
spent $1,100,000,000 just on import of grain from
the U.S.A. and Canada, and this despite the dollar
shortage which Western Europe is experiencing.
The BBC in this connection had to admit that the
dollar problem in Western Europe, and particularly
in Britain, would become less acute, if it were
possible to obtain more grain from Eastern Eu-
rope and the Soviet Union.
In the present conditions of a broad movement
for the improvement and extension of economic
relations between countries and the improvement of
living standards, groat importance attaches to the
question of technical aid to the underdeveloped
.countries, as well as of financing the economic
development of those countries. This question has
,repeatedly been discussed in United Nations agen-
cies. Proceeding from the Lenin-Stalin principle
.of the self-determination of nations, the Soviet
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Union urges that these countries be helped to
develop towards national self-determination and
independence, which in practice means promoting
the development of the internal resources of these
countries, the development of their national indus-
try and agriculture, the consolidation of their
economic independence. The Soviet Union has re-
peatedly called the attention of the United Nations
member-countries to the fact that this assistance
should not be conditioned by any political, economic
or military privileges for the countries rendering
it. The Soviet Union considers that the tremendous
internal resources of the underdeveloped countries
could be a factor of paramount importance in fi-
nancing programs of their economic development,
provided those resources were worked in their own
interests.
The Soviet Union supports economic cooperation
between nations on a basis of genuine equality,
which would ensure that the efforts of the cooperating
states would be aimed at the progressive devel-
opment of all the productive forces of a given coun-
try, taking into account its actual economic poten-
tial and interests. A striking illustration of this is
afforded by the Soviet Union's activities in the
United Nations Economic Commission for Asia
and the Far East (ECAFE).
For instance, at the Singapore Conference on
Asian and Far-Eastern trade, called by the afore-
mentioned Commission last October, the represent-
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ative of the Soviet Union put forward clear and
constructive proposals aimed at helping the coun-
tries of this area to take the necessary stops to extend
their trade in order to restore and develop their
economies and in the interests of consolidating their
national independence and sovereignty. It is com-
mon knowledge what tremendous importance the
trade of the countries of Asia and the Far East
can have in increasing deliveries of equipment and
technical materials for the purpose of advanc-
ing the industry and agriculture of these coun-
tries and improving the living standards of the
masses.
The Economic Survey of Asia and the Far East,
1950 notes that the production of hydroelectric
power in all these countries in 1949 amounted to
only 7,900,000 kilowatts, which is but 4% of poten-
tial possibilities. The average production per head
is less than 7 watts. India, one of the principal
countries of the area (which is in the sphere of
activity of the Economic Commission for Asia
and the Far East), has a population of more than
300,000,000; in 1950 it produced 1,461,000 tons of
steel, which is only 4 kilograms per capita.
In Pakistan, which, accounts for 80% of the
world's jute crop, there is not a single industrial
jute processing enterprise.
Soviet foreign trade organizations could on mutu-
ally advantageous terms supply the countries of Asia
and the Far East with machine tools, power, electri-
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cal and transport equipment, installations for the
mining industries, for the textile and other light
industries, for agriculture, as well as with the other
machines the countries of this area require for their
industrialization and for the development of their
agriculture, as well as cement, timber, fertilizers,
grain and consumer goods. In exchange for these
deliveries, the U.S.S.R. would be interested to ob-
tain such goods as jute, rubber, shellac, rice, copra,
spices, tea, tin, cinchona bark, etc. The signif-
icance of the Soviet proposals is revealed by local
press comment. Thus, the Straits Times in an edi-
torial on the Russian trade proposal wrote that
while the American delegation had warned that it
was useless to expect certain goods from the U.S.A.
because of the requirements of the war industry, the
Russians had unambiguously announced their readi-
ness to trade on a basis of equality and mutual
advantage. Other local papers wrote in a similar
vein, printing the Soviet Union's proposals under
big headlines such as "Russia Offers to Trade With
All," "Soviet Delegate Offers Aid to All Countries,"
etc.
Sincerely desiring the restoration and develop-
ment of the economy of these areas, the Soviet
Union has repeatedly called attention to the enor-
mous importance of the Asian countries' trade with
the Chinese People's Republic, which is the biggest
country in Asia and the Far East, as well as with
Czechoslovakia, Poland and the other People's
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Democracies, trade with which has always been
known to be highly important to the countries of
this area. It was not by chance that the influential
Hindustan Times, paying editorial tribute to the
friendly intentions of the Soviet Union, wrote that
India accepted offers of assistance from all countries,
including China and the Soviet Union,
International economic relations are at present
in a state of severe dislocation. The transfer of
the Western countries' economy to a war economy
footing and the trade and political expansion of
the United States of America are in an ever-greater
measure upsetting economic relations and the ex-
change of both raw materials and industrial products
between states. This clogs up the main channels
of world trade and has a disastrous effect on the
living standards of many peoples and hampers
economic progress and international business co-
operation.
. The militarization of the economy of a number
of countries is causing damage not only to their
domestic economic life, but also to the external
economic relations of these countries; for one thing,
it is affecting the volume, structure and direction
of their foreign trade. The decline in the export
potential of the civilian industries has caused
the following reduction in the physical volume of
exports for the period of January-May 1951, as
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compared with the fourth quarter of 1950: Britain
3%, France 7%, Sweden (January-March) 9%,
Italy (January-March) 5%, etc. At the same time
a number of countries have increased imports of
strategic raw materials and armaments: aircraft,
tanks, guns, etc. The growing. gap between the ex-
ports and imports of these states had increased the
deficit in their balance of trade and the balance of
payments.
Substantial changes have also taken place in the
geographical distribution of foreign trade. Exports
from Western Europe are falling lower and lower,
owing to the fact that American exporters are oust-
ing West-European goods from the world markets.
At the same time the American monopolies are
increasing their imports of strategic raw materials
from Latin America and Southeast Asia, and, to
a lesser extent, from Western Europe. This direc-
tion of trade turnover is one of the most important
factors dislocating international trade and under-
mining the economy of many countries.
The grave economic difficulties at present beset-
ting the U.S.A., Britain, France, Italy and a number
of other countries are aggravated by the dislocation
of international economic relations.
A particularly pronounced decline has taken
place in the trade between the U.S.A. and the West-
European countries, on the one hand, and the
U.S.S.R., China and the European People's Democ-
racies, on the other. By the beginning of 1951 France
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had already banned the exports - of 300 types of
goods to the countries of Eastern Europe and China.
Restrictions on exports to these countries were
also introduced in Belgium, Italy, Sweden, Swit-
zerland, etc. In Britain and Malaya unlicensed ex-
ports of rubber have been banned, since April
1951, to all countries with the exception of the
U.S.A. and the countries of the British Empire;
early in May 1951 the authorities in Britain and
its colonies enforced a total ban on rubber exports
to China. That same month many states imposed
an embargo on the export of goods to the Chinese
People's Republic and the Korean People's Demo-
cratic Republic. In June 1951 the United States
Congress amended the law on trade agreements,
increasing trade discrimination against a number
of countries. Thus, the United States President was
empowered to cancel any previously granted privi-
leges in trade with other countries, including tariff
reductions.
The American Government renounced the trade
agreement which the U.S.S.R. and the U.S.A. had
concluded in 1937. Following this, United States
ruling circles actually forbid the countries of
Western Europe to trade with Eastern Europe by
passing the Battle Act on discontinuing American
"aid" to Marshallized countries that would export
"strategic" goods to Eastern Europe. It should be
pointed out that the list of prohibited "strategic"
goods includes several thousand items. Early in
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July 1951 the British Government requisitioned two
Polish vessels-Tatry and Beskidy-the orders for
whose construction had been placed with British
shipyards as far back as 1948 in accordance with
the "plan for the extension of Anglo-Polish trade
relations," concluded on June 9, 1947. When in
August 1951 the Egyptian Government concluded
its fourth postwar barter agreement with the Soviet
Government providing for the supply of wheat to
Egypt, the United States began to threaten Egypt
that it would cut off its "aid." Press reports fur-
nish numerous instances of American efforts to
coerce the Indian Government into breaking off
trade relations with the U.S.S.R., China, and a num-
ber of countries of Central and Southeast Europe.
The Americans make special representations,- de-
manding that the West-European countries observe
"caution" in trading with the Soviet Union and other
democratic states. Speaking of the dislocation of
international economic relations it is impossible
not to mention the dislocation of interzonal trade
between Western Germany and the German Demo-
cratic Republic.
The dislocation of peaceful economic relations
between states, and especially the curtailment of
trade between Western and Eastern Europe, is
highly detrimental to the interests of the peoples and
is having an adverse-effect on the national economy
of the countries of the West. The peoples and the
representatives of the business world, of industrial,
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financial and commercial circles are becoming
increasingly convinced that the policy of economic
discrimination, of trade boycott and of placing
artificial barriers in the way of the development of
international economic cooperation is a disastrous
policy that runs counter to their interests and aspi-
rations. They are becoming increasingly aware of
the fact that the development of international trade
on the basis of equal rights, respect for sovereignty
and mutual advantage would facilitate the utili-
zation of production capacity, and reduce unem-
ployment ,which in a number of countries has assumed
threatening proportions. Many states are deprived
of the chance to import goods which are of vital
importance to their industry, agriculture, transport
and construction.
An important role in doing away with this ab-
normal state. of affairs could be played, first and
foremost, by the extension of intra-European trade,
trade between Western and Eastern Europe. Not long
ago the Norwegian newspaperA f tenposten, noting the
drastic decline in trade between Western and Eastern
Europe as a result of American pressure, stressed
that "from the economic point of view such a sit-
uation is a very sad one." More and more frequently
sober voices can be heard in the West, pointing out
the fact that unless the present state of affairs
is altered, Western Europe will be the first victim,
that it might ultimately be completely "Portugal-
ized," i.e., will completely forfeit its economic and
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political independence and at best be able to feed
only half its present population.
The British New Statesman and Nation wrote
recently that if deliveries of goods from Eastern
Europe to Western Europe should stop, the position
of the West would become worse and it would be
still more dependent on the Americans. "The East-
ern countries," wrote the weekly, "could easily
find other uses for what they send to the West, and
cannot be expected to sell except in return for prod-
ucts which they seriously want.... The Eastern
countries can adapt themselves to a permanent
pattern of nearautarky much more easily than the
West." At the Congress of the International Cham-
ber of Commerce in Lisbon in June 1951, the head
of the American delegation Sloan acknowledged
that with regard to certain types of raw ma-
terials the Western countries were dependent
on imports from the Soviet Union and Eastern
Europe.
Very strong discontent with the policy of dis-
rupting trade with the Soviet Union and the other
democratic countries may be observed in Britain,
which is known to be a country highly dependent on
the imports of many goods, including food. Yet
there is every reason for mutually advantageous
trade and economic relations between Britain, as well
as the other countries of Western Europe, with
the U.S.S.R, the Chinese People's Republic and the
countries of Central and Southeast Europe. The
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British people and representatives of business
circles in the country realize that such trade would
reduce or liquidate the country's dollar deficit and
would provide it with vitally needed raw materials,
food, timber and other goods. Britain, in turn, would
be able to supply these countries on mutually ad-
vantageous terms with machinery, coal, ships,
textiles and other manufactures, whose produc-
tion involves the development of the peaceful econ-
omy.
Speaking of the great difficulties which Brit-
ain's foreign trade is experiencing in connection
with. the revival of the industrial war potential of
Western Germany and Japan and their competition
on world markets, Mr. Harold Davies, M.P., said that
the artificial restriction of trade with China, Russia
and Eastern Europe had increased these difficulties
and caused a rise in prices. Sir Hartley Shawcross,
former President of the Board of Trade, said in a
speech of August 15, 1951, how important to Brit-
ain wore her imports from the U.S.S.R. and the
other democratic countries. Shawcross said that
Britain would find it difficult to manage without
these imports. Eastern Europe, he added,
remains the only source of certain supplies for
Britain.
The curtailment of trade with the East is in-
creasing the shortage of raw materials and food,
swelling the ranks of the unemployed and reducing
the consumption of the population in the countries
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of Western Europe. The acute raw materials crisis
in these countries, engendered by their colossal
unproductive military expenditures, is aggravat-
ed by the policy of strategic stock-piling in the
U.S.A.
The coal-mining industry of Western Europe is
in a state of protracted stagnation and decline.
According to the figures of the United Nations
Economic Commission for Europe, the coal shortage
in the European countries in the fourth quarter of
1951 reached an all-time peak for the postwar pe-
riod-11,500,000 tons. In a number of countries of
Western Europe people are coming to the conclu-
sion that one of the reasons for the coal famine is
the absence of normal relations with the countries
of the East. The Austrian Osterreichische Volksstimme
in an article on Austria's coal supplies wrote: "The
only reason for the shortage of coal and power is
the `trade war' against the countries of the East,
which the government is conducting upon the orders
of the Americans. Were it not for Ibis, there would
be no coal crisis." Millions of tons of high-grade
Ruhr coal are being shipped from Western Germany
at an extremely low price by the American monop-
olies, while the Bonn "governmennt" imports low-
grade coal from the United States, paying double
the price of Ruhr coal for every ton of imported
coal.
In 1950 Austria exported 11,300 head of cattle,
while the country was experiencing an acute short-
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age of meat and moat products. Because of this,
the Austrian population is now, more than six
years after the end of the war, compelled to use
American tinned horse-meat, which is, moreover,
rationed.
The Belgian De RoodeVaan, describing American
foreign trade operations, reported that the Belgian
Government had early .in 1951 purchased 400,000
tons of wheat in the U.S.A., paying 2,300,000,000
Belgian francs for it. However, the wheat proved
unfit for use, since it was infested with worms,
"Wheat which cost us such an enormous sum
is unfit for baking," wrote the paper. "Such
is American `aid' in practice) The Americans
demand nearly 2,500,000,000 Belgian francs from
us for grain unfit for use, but forbid us to buy
good wheat in the Soviet Union on favourable
terms. "
Demands for the maximum possible development
of international economic cooperation on democratic
principles and protests against the suicidal policy
of disrupting trade with the Soviet Union,
China and the countries of Central and Southeast
Europe are being put forward more and more
emphatically by the progressive public in the
West, which is fighting for national independence,
and by the representatives of business circles
suffering from the policy of militarism and. Amer-
ican competition. In April 1950, the National
Council of Manufacturers in France asked Schu-
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man to consider the question of extending trade
with Eastern Europe. The leaders of this organiza-
tion pointed out that the limitation of trade
with the Soviet Union and a number of other coun-0
tries conducted upon the "recommendations" of the
U.S.A., were having an extremely adverse effect on
French industry.
Opposition is becoming increasingly apparent in
the industrial circles of the North Atlantic bloc
member-countries to the program of subjugating
all the branches of the economy of these countries
to the interests of rearmament. At a meeting of the
Association of Belgian Manufacturers in the middle
of February 1951, De Staercke, president of one of
the biggest Belgian trusts, pointed out that the
implementation of the Brussels decisions of the
North Atlantic Treaty Council would create a men-
ace to the industry not only of Belgium, but of the
other West-European countries as well. A resolution
adopted by the members of this association protests
against the policy of the Belgian Government, which
neglects the interests of Belgian manufacturers and
undermines the position of industry in the country.
The illusions of commercial and industrial circles
in the West that war preparations would improve
economic conditions are being shattered. Voices
can be heard more and more frequently in these
circles saying that the realization of extensive
plans of economic development in the countries
of Eastern Europe, on the one hand, and the ex-
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istence of grave financial difficulties in the West-
European countries, on the other, create ample.
opportunities for the development of mutual-
trade.
With every passing day it is becoming increasing-.
ly obvious that the countries of the West can
strengthen their national economy only by develop-
ing economic cooperation with the Soviet Union,
the Chinese People's Republic and the countries of
Central and Southeast Europe. That is why insistent
demands are being put forward. to restore normal.
trade relations between countries on mutually advan-
tageous terms that would satisfy the requirements
of the peoples, preclude the possibility of economic
discrimination in any form and ensure the devel-
opment of the national economy of big and small
states.
All this clearly illustrates once again the funda-
mental principle that the reduction of the Soviet
Union's foreign trade with America and the capi-
talist-countries of Western Europe is due not to a
difference in economic systems by any 'means;
it has been proved in theory and practice,
that the extensive development of trade relations
is possible notwithstanding this difference. "The
whole trouble is that the aggressive American poli-
ticians are pursuing a policy of - discrimination
against the Soviet Union, are deliberately sabotaging
trade with the Soviet Union, and are compelling
their West-European satellites, to the detriment-o1
41.
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the latter's economic interests, to refrain from devel-
oping trade relations with the Soviet Union and the
People's Democracies."*
Business circles in Britain, France, Belgium,
Italy and other countries of Western Europe are
anxious to extend economic relations with the
U.S.S.R., China, and the European People's De-
mocracies, with which they maintained a quite
active trade a few years ago or which were their
traditional purchasers of machinery, equipment,
textiles, fruit, etc.
The implementation of the Marshall Plan and
the Schuman Plan, the realization of Truman's
so-called Point Four Program, directed against
the economic independence of the weak and underde-
veloped countries, the setting up of the International
Materials Conference, the extension of the program
of the "liberalization" of intra-European trade, the
convention of tariff and trade conferences in Tor-
quay, Britain, and in Geneva-all this, far from
contributing to the extension of international trade,
is aimed at its further curtailment and at placing
artificial barriers in the way of economic cooperation
between nations.
. * A. Mikoyan, Great Architect of Communist Society,
Moscow 1950, p. 14.
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Thus, the conference in Torquay passed a deci-
sion on prolonging for three years the tariff conces-
sions made prior to the conference to the countries
participating in it. Nevertheless, the American Gov-
ernment on August 10, 1951, announced that it
intended unilaterally to deprive Czechoslovakia
of all the tariff concessions which it had formerly
been granted by the United States. This step,
pointed out the New Statesman and Nation, creates
a precedent which could in a large measure un-
dermine the effectivity of a general agreement
(on tariff and trade-L. F.) and leads to the sad con-
clusion that tariffs are a weapon in the cold war.
.The journal added that Britain had so much to lose
as a result of new tariff wars that the actions of the
United States would inevitably give rise to anxiety
in White Hall.
The program of the so-called liberalization of
intra-European trade (i.e., of relaxing quantitative
restrictions on the mutual trade of the Marshall-
ized countries), put forward in the O.E.E.C.
as far back as 1949, has not produced any results.
Under this program, quantitative restrictions
on the mutual trade of the Marshallized coun-
tries (within 75% of their total imports) were
to have been lifted by July 1951. However, de-
spite the efforts of American ruling circles, this
was not accomplished. Austria, Denmark and
Norway lifted restrictions only. .partly, plead-
ing economic difficulties as an excuse. As #2r
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Western Germany, Sweden and Greece, they even
increased their quantitative restrictions in foreign
trade.
Furthermore, the trade-political points of the
Schuman Plan, under which the European coal
and steel "community" (Western Germany,
France, Italy, Belgium, Holland and Luxembourg)
was formed, provide for the lifting of all quanti-
tative restrictions, customs tariffs, subsidies and
other government measures in the trade in coal,
coke, iron ore, pig iron, scrap iron, steel and steel
semimanufactures. However, the very first months
following the signing of the Schuman Plan revealed
the deep contradictions between its participants.
Owing to the different level of production costs in
the metallurgical industries of the participating
countries and the different share of metallurgy in
their economy and foreign trade, particularly acute
contradictions developed between them in the mat-
ter of establishing minimum prices of ferrous metals
and fixing export quotas.
The efforts of the American monopolies to stock-
pile strategic raw materials account for the neg-
ligible results achieved by the so-called Internation-
al Materials Conference. This is borne out most
strikingly by the competition between the U. S. A.
and Britain in the raw materials market and by the
failure of the plants to set up committees on rubber
and tin within the framework of this organization.
On top of this, there are grave differences between
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the U.S.A., on the one hand, and the countries
producing raw materials-Malaya, Indonesia,
Ceylon, Australia, New Zealand and the Union of
South Africa-on the other. It is not surprising,
therefore, that as a result of the acute contradictions
between its members, the Conference has reached
an impasse. The contradictions have reached the
point that on October 28, 1951, The New York
Times correspondent Belaire had to acknowledge
that the organization was gripped by an acute
crisis.
The sharp differences between the U.S.A. and
Britain in the struggle for sources of raw materials
also became apparent at the raw materials confer-
ence of the ministers of the British Empire countries
and representatives of Britain's colonial possessions
which was held in London at the end of September
1951. Press reports made it clear that at this confer-
ence Britain had hoped to solve the acute problem
of raw materials by mobilizing to a greater extent
the raw materials resources of the dominions and
colonies. Soon after the conference the then British
Minister of Materials Stokes urged that the prices
of raw materials be stabilized "at a reasonable
level" in order to check inflationary trends, and
avoid "loot-and-grab" tactics. The latter words,
according to the foreign press, referred to the
U.S.A.
Business circles in the Western world are dis-.
turbed by the restrictions imposed by the United
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States on the development of the civil economy of
Japan and normal trade relations between Japan,
on the one hand, and China and Japan's neigh-
bours, on the other. Trade and industrial circles
in Britain observe with anxiety that the Americans
are using Japanese exports to remove British and
Australian exporting firms from the markets of
Southeast Asia.
An important step towards strengthening
international economic cooperation is to be made
by the International Economic Conference, which
is being called in April 1952 in Moscow for finding
possibilities of improving living conditions of the
people of the world through the peaceful cooperation
of different countries and different systems and
through the development of economic relations
between all countries. The participants in the
Conference will pool their experience and knowledge
for the single purpose of finding ways and means of
stimulating the restoration of normal economic
relations between countries and contributing to the
improvement of the population's standard of living.
Prominent figures in industry and trade, economists,
trade union and cooperative organizations in the
countries of Europe, Asia and America are displaying
a great interest in this Conference, which will be
attended by people of different views and social
standing, but united by the firm conviction that
close and fruitful cooperation between the nations
must be established.
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The Soviet Union, which is vitally interested in
defending a stable democratic peace and cooperation
between the nations, is a resolute champion of the
peaceful co-existence of the two systems. Just
as always, it supports every initiative that is really
aimed at strengthening peace and the security of
the nations. The restoration. of normal economic
connections between countries would remove one
of the principal causes of the tension in internation-
al relations and would be an important prereq-
uisite for the strengthening of world peace.
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Printed in the Union of Soviet Socialist Republics
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