Beginning: "Soviet industrialization - to the 90th anniversary of the beginning."
Exotic versions and some statistics
One of the most mysterious aspects of industrialization in the USSR, which began 90 years ago, is the sources of its funding. In anti-Soviet journalism, such sources are usually called: free labor of the GULAG; almost free labor of peasants herded into collective farms; church property plundered by the Bolsheviks; the royal gold they inherited; works of art sold to the West from the Hermitage and other museums, etc. Sometimes other exotic items are added. Once upon a time I also perceived such versions until I began to understand statistics. This is better than the writings of historians, not supported by numbers.
During the years of industrialization before the start of the Great Patriotic War (only 12 years!), 364 cities were built in the USSR, more than 9 thousand enterprises were built and put into operation, and all this is well documented. There were enterprises of various sizes. Large, like the Stalingrad Tractor Plant or Dneproges in Ukraine, and small, such as flour mills or tractor repair stations. In the first five-year plan, according to the documents of the government and the Central Committee of the All-Union Communist Party (Bolsheviks), the number of large enterprises put into operation was 1500.
And what is an enterprise in terms of capital costs for its creation? The object of capital investment consists of passive and active elements of fixed assets. Passive elements - buildings, structures, communications. Active elements - machines, equipment, tools; in short, instruments of production. If passive elements could be created by the labor of local workers, then this option does not work with active elements.
Even before the revolution, Russia produced very little of its own instruments (means) of production, importing them from Germany, to a lesser extent from England and the USA. And at the end of the 1920s, there was almost no domestic production of means of production in the country. Industrialization could only be carried out through large-scale imports of machinery, equipment, special equipment, and tools. All this required currency. I made rough estimates of what capital investments were needed for the Soviet Union to build more than nine thousand enterprises. Those who are interested in the "kitchen of calculations" can refer to my book: "The Economics of Stalin" (Moscow: Institute of Russian Civilization, 2016). The result of my evaluations is as follows:to provide industrialization with imported machinery and equipment, the minimum required foreign exchange resources should have amounted to 5 (five) billion "Roosevelt" US dollars (the gold content of the dollar after its revaluation in 1934 was reduced by about one and a half times and was determined by the proportion: 1 troy ounce of precious metal = $ 35). This is no less than 500 billion US dollars today (at the beginning of the current decade). On average, one enterprise accounted for foreign exchange costs in the amount of slightly more than 500 thousand "Roosevelt" dollars. On average, one enterprise accounted for foreign exchange costs in the amount of slightly more than 500 thousand Roosevelt dollars. On average, one enterprise accounted for foreign exchange costs in the amount of slightly more than 500 thousand "Roosevelt" dollars.
And what currency resources did the Soviet Union have at the start of industrialization? According to the State Bank of the USSR, as of January 1, 1928, the country's gold and foreign exchange reserves amounted to only slightly more than 300 million gold. rubles (1 gold ruble = 0.774 g of pure gold). Roughly, this is about 150 million "old" US dollars, or 260-270 million Roosevelt dollars. Sounds good. It is possible to purchase machinery and equipment for 500-550 medium-sized enterprises. However, it should be borne in mind that in the same year the external debt of the USSR was equal to 485 million gold rubles. It was extremely difficult to start industrialization from such a position, especially considering that the country was in a trade and economic blockade.
And yet industrialization began. And purchases of machinery and equipment were carried out. So how did the Soviet Union pay for these purchases? Of course, not by the labor of the inhabitants of the GULAG. The currency was given primarily by Soviet merchandise exports. Most often, historians talk about the export of wheat and other grains, but statistics show that grains were not the main export item (in 1928, they accounted for only 7% of the value of exports). As a result of collectivization, the production of grain increased markedly, but the bulk of the output of the collective farms went to the cities and to the construction sites of the five-year plans. Collectivization not only provided an additional amount of agricultural products, but also freed up millions of workers needed at industrialization sites.
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Oil and oil products (16%), timber and lumber (13%) occupied more significant positions in commodity exports than grain. The largest commodity group was furs and furs (17%). In the second half of the 1920s, the annual volume of exports of goods ranged from $ 300 to $ 400 million.
Yes, export volumes began to increase from the end of the 1920s, but this was not an increase in value, but in physical volumes. There was a kind of running on the spot. The fact is that an economic crisis began in the West, which led to a fall in prices on commodity markets. Some authors note that the wind blew into the sails of Soviet industrialization: they say, we were lucky, we bought means of production at low prices. It's right. But the fact is that the fall in prices also occurred in the markets for raw materials, and to an even greater extent than in the markets for finished goods. Foreign exchange earnings were given to us at a high price. If in the period 1924-1928. the average annual physical export of goods from the Soviet Union was 7.86 million tons, then in 1930 it jumped to 21.3 million tons, and in 1931 - to 21.8 million tons. In subsequent years, up to 1940, the average physical volume of exports was approximately 14 million tons. However, according to my calculations, export earnings were enough to cover only half of all those foreign exchange costs that were made during the years of pre-war industrialization.
Another source is gold, but not gold, which was allegedly inherited from tsarist Russia. By the mid-1920s, this gold was completely gone. It was exported from the country through different channels and under different pretexts. There was "gold of the Comintern" (assistance to foreign communists), there was also "steam locomotive gold" taken out of the storage facilities of the State Bank for the purchase of steam locomotives and rolling stock in Sweden. The operation with the "locomotive gold" was carried out by Trotsky, who, in order to crank up this scam, temporarily took over the post of People's Commissar of Railways. The Soviet Union did not receive steam locomotives from Sweden, and the gold disappeared without a trace (most likely, it settled in the banks of Sweden, Switzerland and the USA). The reader can learn about the vicissitudes of tsarist gold in the first years after the October Revolution of 1917 from my book "Gold in the World and Russian History of the XIX-XXI Centuries." (Moscow: "Rodnaya strana", 2017).
Yet gold was used to finance industrialization. It was gold that was mined in the country. By the end of the 1920s. The Soviet Union is reaching the pre-revolutionary level of production (28 tons were produced in 1928). The mining data in the 1930s has not yet been declassified, but from secondary sources it can be understood that by the middle of the decade, mining reached the level of about 100 tons of metal per year. And by the end of the decade, some say the annual production figure is about 200 tons per year. Yes, not all of the gold mined was used to pay for the import of machinery and equipment; the country was preparing for war, a state reserve was needed, and gold was viewed as a strategic resource. The minimum estimates of the gold reserve of the USSR accumulated by the beginning of the Great Patriotic War is 2,000 tons. "Currency shop", created beyond the Urals,especially in the Far East, he continued to work during the war years. The Americans, by the way, made a positive decision on the lend-lease program to the Soviet Union, taking into account just such an argument as an effectively functioning "currency shop" in the Far East.
Finishing the topic of gold, I want to say that such a source of precious metals as the Torgsin chain of stores (buying up precious metals and foreign exchange values from the population and foreigners in exchange for scarce consumer goods) also played a certain role. The maximum volumes of gold accepted from citizens were recorded in 1932 - 21 tons and in 1933 - 45 tons. True, after a significant improvement in the food supply of cities since the mid-1930s, the purchase of precious metals through Torgsin stores began to fall sharply.
A disproportionate amount of attention is paid to such a source of currency as the sale of art treasures from the Hermitage and other museums in the country. A special organization "Antiques" was created (under the jurisdiction of the People's Commissariat for Foreign Trade), to which 2730 paintings from various museums were transferred. According to experts, the Antikvariata Foundation did not have the most valuable works of art. The sales took place in the context of the global economic crisis, when demand was low. Less than half of the fund was sold - 1280 paintings, the rest returned to their places. In total, the proceeds from the sale of art treasures of museums amounted to about 25 million gold. rubles.
There is a version designed for not very literate people that industrialization in the Soviet Union was carried out by foreign companies - first American, then British and partly French, and a few years before the start of the war - German. Some believe that Western business came to the Soviet Union with their investments. There was no such thing! Westerners came to our country not with money, but in order to earn money. They acted as suppliers of machinery and equipment, carried out the design of enterprises, carried out construction, installation and commissioning works, taught Soviet people to operate equipment, etc. Of particular note is the American company Albert Kuhn, which was the first to enter the Soviet market, designed and built 500 large and largest industrial facilities, including such giants as Dneproges,Stalingrad and other tractor plants, Magnitogorsk metallurgical plant, Nizhny Novgorod (Gorkovsky) automobile plant, etc. The leading trade partners during the first five-year plan were the giants of American business General Electric, Radio Corporation of America, Ford Motor Company, International Harvester, Dupont de Nemours and others … However, I will emphasize again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or circumvented numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade). The Nizhny Novgorod (Gorky) Automobile Plant, etc. The leading trade partners during the first five-year plan were American business giants General Electric, Radio Corporation of America, Ford Motor Company, International Harvester, Dupont de Nemours and others. However, I will emphasize again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or circumvented numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade). Nizhny Novgorod (Gorky) Automobile Plant, etc. The leading trade partners during the first five-year plan were the giants of American business General Electric, Radio Corporation of America, Ford Motor Company, International Harvester, Dupont de Nemours and others. However, I will emphasize again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or circumvented numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade). Dupont de Nemours and others. However, I will emphasize again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or circumvented numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade). Dupont de Nemours and others. However, I will emphasize again: they did not come to us with money, but for money. An economic crisis was raging in the world, and Western companies openly violated or circumvented numerous prohibitions of Western governments on cooperation with the USSR (until the end of 1929, the trade and economic blockade of our country was more severe than the current Western sanctions against the Russian Federation; the crisis weakened the blockade).
The West gave almost no long-term bank loans to the Soviet Union. There were only short-term money, trade credits. Since 1934, the Export-Import Bank of the United States has been crediting about 2/3 of Soviet purchases in the American market, but again these were short-term loans, the recipients of which were American exporters. America, despite all its dislike for the Soviet Union, was forced to allow such lending to support American businesses, which found themselves in dire straits. There were also commercial loans - deferred payments, which were provided for by contracts for the supply of equipment, construction and installation work, etc.
There is a version that the West did give Stalin a lot of money for industrialization. They say that Soviet industrialization is a project of the world behind the scenes, which was preparing Germany and the Soviet Union for a military clash. West Anglo-Saxon capital did finance Germany. For example, there is a book about this by the American E. Sutton "Wall Street and Hitler's rise to power." In it and in works similar to it, there is much documentary evidence that the West financed Hitler, brought him to power, and then injected billions of dollars and pounds sterling into the German economy, preparing it for a military thrust to the east. However, there is not a single documentary evidence that the West helped to industrialize the USSR!
The article does not list all the circulating versions of sources of foreign exchange financing of Soviet industrialization. Some of them are fantastic, others are plausible, but still have no documentary evidence (not all archives have been disclosed). Those who wish to get acquainted with this issue in more detail can refer to my book “Russia and the West in the XX century. The history of economic confrontation and coexistence”(Moscow: Institute of Russian Civilization, 2015).
Continuation: "Soviet industrialization - how the economic machine worked"
VALENTIN KATASONOV