Gareth Jones

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The Financial News,  Tuesday,  April 11th, 1933



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By Gareth Jones 


It is difficult to gauge the industrial achievements of the Five-Year Plan.  It is true that on paper for­midable results can be produced, such as the increase of coal production from 35 million tons in 1927-28 to 62 million tons in 1932, the increase of iron production from 3,283,000 tons to 6,206,000 tons, and the increase of oil from 11 million tons to 21 million tons in the same period.  Official statistics also show great achievements in the building of tractors, the annual production of which rose from 1,279 five years ago to 50,000 last year, and in the building of motor lorries, the production of which increased from 677 in 1927-28 to 24,000 in 1932.  In light industry, gigantic figures are also produced.  On the other hand, in 1932 less rolled steel was made than two years previously, and the production of steel has remained almost stationary since 1929-30.  One is justified, however, in having very little confidence in Soviet statistics.


White Elephants


            The giants of Soviet industry, Dnieperstroy, Magritogorsk, the Nijni-Novgorod factory, and the Kharkoff Tractor Works, can also be regarded as great achievements, but achievements of the order of Wembley or the Crystal Palace rather than well-functioning organisations.  Difficulties of production are so great that they will long continue to be white elephants.


            Through the Five-Year Plan the Soviet Government has succeeded in creating many factories for the construction of machines, which were never made before in Russia.  This was part of the autarchic aim of the Five-Year Plan, namely, to make the Soviet Union independent of the rest of the world.  This aim has not been reached.  In spite of all the various objects, which can now be made in the Soviet Union, such as motorcars, aluminium, hydraulic turbines, which were formerly imported, their quality is so bad, and the lack of specialists is so great, that the Soviet Union can never be regarded as independent of the capitalist countries.  Autarchy has not been achieved in so brief a span as five years.  The shortage of foreign currency will render the render the import of machinery difficult, and recent cutting down of orders from abroad points to a slowing down of Soviet industry.  The number of foreign specialists in Russia grows less month by month and when most of them have gone., the plight of the machinery will be grave.


            According to experts, the Five-Year Plan has succeeded in its munitions side, and, from the point of view of ammunition, large gun, rifle and tank factories, there is reason to believe that it was a great success, for it was first and foremost a military and not an economic plan.  Its primary aim was to render the Soviet Union powerful in defence against capitalist aggressors.


            Another achievement is the great increase in the production of cotton in Central Asia.


            In spite of colossal achievements, however, on paper the difficulties facing Soviet industry are greater than ever, and are likely to increase in the future.  They are mainly hunger, lack of skill and fear of responsibility, transport and finance.


            In some factories, especially in the big Moscow factories, the first difficulty, hunger, does not yet exist, for there solid meals with meat are still given each day.  But in the majority of factories, especially in the provinces, there is undernourishment.  In a Kharkoff factory the male worker received the fol­lowing rations: 600 grams (about 1.3/4 lb.) of black bread per day, a pound of sugar per month, a quarter-litre of sunflower oil per month, and 800 grams (about 1.3/4 pounds) per month of fish, which was usually bad.  In Moscow the worker receives 800 grams (about 1.3/4 lb.) of bread per day, together with a meal at the factory.  If he is a skilled worker, he will have sufficient to eat.  There is every prospect of food conditions worsening, which will lessen the productivity of the workers.


Disastrous Negligence


            Lack of skill and fear of responsibility are other great enemies of industrialisation.  The damage done to good machinery through clumsy handling and negligence is disastrous.  Much of the skill and brains of Russia has disappeared through shooting or imprisonment, while the successive trials have led to a condition of fear among many engineers, which is not conducive to good work and responsibility.


            Transport difficulties are still uncon­quered and are responsible for most of the bad distribution in Russia.  Last summer, according to “Pravda,” perishable goods had from 30% to 95%, losses en route; potatoes sometimes took sixty days to come to Moscow from a village about forty miles away.  The result of these difficulties has been a rapidly growing unemployment, which is a striking contrast to the shortage of labour one year ago.  There have already been many dismissals throughout the country.  In Kharkoff, for example, 20,000 men have been recently dismissed.  Unemployment is a problem, which will attack the Soviet Union more and more and lead to increasing dissatisfaction, for there is no unemployment insurance, and the unemployed man is deprived of his bread card.


What are the causes of unemployment in the Soviet Union?


            The first is technological.  A director of the Kharkoff Tractor Factory explained why his factory had dismissed many workers: “We dismissed them be­cause we had improved our technical knowledge, and thus do not need so many workers!”  an admission that technological unemployment is not confined to capitalist countries.


Lack of Raw Material


            The second cause of unemployment is the lack of raw material.  A factors, has to lie idle, because the supply of coal or of oil has failed.  Such is the synchronisation in the Plan that when one supply fails there are delays in many branches of industry. “Pravda” of March 10 contained the following item, which throws a light upon this cause of delay: “In the storehouses of Almaznyanski Metal Factory 13,000 tons of metal are lying idle, intended mainly for the agricultural machine factories; 550 tons are waiting to be sent to the Rostoff Agricultural Machine Factory, 1,500 tons to the Kharkoff Factory, 2,000 tons to Stalingrad Tractor Factory.  The Southern Railway is only sending 12-15 wagons of iron per day, instead of 35.  On some days absolutely no wagons are despatched.”


            The third cause of unemployment in the Soviet Union is the food shortage.  The factory is now made responsible for the feeding of its workers, a given a certain agricultural district or certain State or collective farms from which to draw supplies.  A director is made responsible for the supply department.  When the food supply is not sufficient for the total number of workers, the surplus men are dismissed.  Some experts consider this the chief cause of unemployment.


            The final cause of unemployment is financial.  This will be dealt in my next article, which will appear in tomorrow’s issue of The Financial Times. 



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