Editorial: Russia also juggles with finance (1948)

Editorial from the January 1948 issue of the Socialist Standard

The more the Communists proclaim how different everything is in Russia the more events disclose how much that country resembles the other Capitalist States. The latest example is the decision of the Russian Government to issue a new currency in place of the old, thus doing what Belgium did in 1944 and what rumour says the British Government has been contemplating for some time past.

The Russian Government’s scheme, though rather complicated in detail, is simple enough in its broad intention. Wherever there is rationing and the sale of rationed goods at controlled prices a “black market” is bound to arise as those with enough money try to supplement their rations and get scarce high-priced luxuries. Russia was no exception though the “free” market in that country was officially recognised and anyone rich enough could buy what was offered at the enormous prices ruling there. The government’s scheme is to abolish rationing, reduce the prices of a few foodstuffs while raising the prices of other goods so that the new price level as a whole is raised to a point somewhere between the present low “rationed” prices and the present very high “free”market prices. At the same time they aim at a drastic reduction of the amount of money available to be spent, by the simple device of giving fewer new rouble notes in exchange for the old ones. If you have 100 roubles in cash in your pocket or at home you get only 10 in exchange. If you have 10,000 roubles deposited in a savings bank you get the full rate for the first 3,000 and two-thirds for the remaining 7,000 roubles. We can illustrate the effect by putting 10,000 roubles into pounds at the rate of exchange (32 to the pound) allowed to foreign diplomats in Russia. It means that a. man with £312 in a savings bank will find it reduced to £240. If his £312 was invested in a State Loan (except the most recent loan in 1947) he will have it cut to one-third of its value, £104. Wages are not being reduced but the workers, in addition to losing some of their cash and savings will be hit by the higher prices.

Of course the Daily Worker had to rush in and say what a fine thing it all is—”a step forward,” “a triumph for the Socialist economic system,” but the article (published on December 16th) indicated a certain amount of uneasiness. The writer, Mr. Andrew Rothstein, had to admit that “everyone will inevitably be affected to some extent because the new prices must lie somewhere between the ‘rationed’ and ‘off-rationed’ prices.”

Some other interesting points are thrown up by the new policy and by the Daily Worker comment on it. Just as Sir Stafford Cripps, at a time when prices are rising, tells the workers it will soon be all right because harder work will increase supplies and bring down prices, so the Daily Worker says “the existence of ample supplies . . . will soon more than compensate for the temporary difficulties.” This is printed in the “Worker” alongside the reproduction of a Russian “plenty to eat” poster which tells how much meat, fats, sugar, etc., etc. will be produced “in the five-year plan to be completed in 1950.”

During the war when news came out of Russia about the rouble-millionaires the Communists hastened to explain that this was a good thing and natural to a “socialist” country, and that we should note that it was all earned money and there were no speculators able to accumulate fortunes by speculation and black market operations as in Britain and U.S.A. Now we learn that the new policy is designed to hit “speculators, who amassed considerable sums ” and were, able to “buy up stocks, create artificial shortages and lower the purchasing power of the rouble.” (Daily Worker, 16/12/47).

It should be observed incidentally that the new policy, while reducing the big fortunes, does not by any means wipe them out. The speculator or other wealthy person with 1,000,000 roubles in State loans will still possess 333,000 roubles of investments and will, of course, gain to the extent that he can now buy goods at much lower prices than he formerly had to pay in the “free” market, prices which ranged up to ten and fifteen times pre-war prices. (Manchester Guardian, 15/12/47).

One wonders, too, how the Communists are going to wriggle out of their claim that the Russian Government, unlike other governments, does not descend to slick tricks in its dealings with workers’ savings. It is going to be very difficult to square what has just been done, with the claim made in 1946 that “money put into the State loan is, of course, absolutely secure” and that holders of bonds “can redeem them at their nominal value at any time within the 20-year period.” (Article by S. Grigoryev in Soviet News, published by the Soviet Embassy in London, 16/5/46.)

Readers of the Daily Worker (15/12/47) who read that “the new rouble of full value will be much stronger that the old,” will perhaps recall how the Communists jeered at the late Lord Snowden when he defended the economy cuts of 1931 on the ground that they would enable the pound to be strengthened and “look the world in the face.”

Doubtless one of the reasons for the new policy in Russia is to back up the campaign to capture the support of the European workers by pointing out that the West European governments, notwithstanding loans from U.S.A., are behind Russia in abolishing rationing. If the British Communists try to push the same policy over here they will be in the same position as those Conservatives who press for the abolition of controls and who argue that it would be better for the workers in the long run even though it would mean higher prices immediately. The truth is that for the workers it would be merely a choice of evils and so far, judging by results of by-elections, the majority of workers prefer the evil of rationing that they have got used to and are not enamoured of the Conservative alternative.

Socialists, of course, are not in favour of Capitalism anyway, whether with or without controls.

Notes by the Way: The Purchasing Power of the Pound (1948)

The Notes by the Way Column from the October 1948 issue of the Socialist Standard

The Purchasing Power of the Pound

At the T.U. Congress, in order to lead the delegates away from the policy of repudiating “wage-freezing” and pressing for higher wages, members of the General Council laid emphasis on the idea that lower prices would be more advantageous than higher wages. Mr. Arthur Deakin crystallised the view in the remark “I want to see £1 buy a pound’s worth of goods.” (Daily Express, 10/9/48.) Accurately speaking, the statement doesn’t mean anything, because what a £1 will buy is “a pound’s worth of goods” ; it can’t be anything else. The delegates, however, knew what he meant. It was a way of saying that he wants prices to stop rising and if possible he wants them to be reduced. Many workers think the same but what they have in mind is that they would like to see prices back to the level of 1939, or better still back to 1914, but without any fall in wages. If they kept the present level of wages and could spend them on goods at the much lower 1914 price level they would indeed have got something. It will, however, not happen, and the Government has never even suggested that they have any hope of seeing it happen. If prices came down by half, wages would soon follow, closely enough.

If the question is asked why are prices so much higher than in 1914 the greater part of the increase is easy to explain though the explanation is overlooked by many people.

In 1914, and again from 1925 to 1931, the British pound represented a certain weight of gold (113 grains of fine gold) and it was kept at that level automatically because, by law, Bank of England notes were convertible into gold or gold into notes. The American dollar also represented a fixed amount of gold, and the relationship of the weight of gold in the pound and dollar respectively was such that one pound equalled about 4.86 dollars. Now there is no convertibility of the pound into gold but, by agreement between the two governments, the pound is fixed at 4.03 dollars instead of the former 4.86 dollars. Also, since 1914, the dollar has been devalued and it too represents a smaller weight of gold than formerly; 59 per cent. of what it was in 1914.

The effect of these two changes taken together (i.e. that the dollar represents less gold, and that the pound represents fewer dollars) is that the pound now represents just under half the weight of gold it represented in 1914.

If we assumed that the value of gold itself had kept unchanged and therefore one ounce of gold would buy as much as in 1914. the effect of reducing the weight of gold represented by the Pound to one-half of what it used to be would naturally be that the pound would purchase only half as much as it did in 1914. There have been other factors also at work but by comparison with this they are of relatively small importance.

Incidentally it is worth noticing that those who believe that “we are no longer on the gold standard” are very wide of the mark.

* * *

The Russian Concentration Camps

Two exiled opponents of the Stalin Regime, Dallin and Nicolaevsky, wrote “Forced Labour in Soviet Russia,” giving a terrible picture of the conditions they allege exist in the Russian concentration camps. In our February issue we published a comment made by the Manchester Guardian in which the editor, while questioning some statements, accepted the description as convincing evidence of the inhumanity of the system of forced labour imposed on political and other prisoners. The Communists and their supporters deny the truth of the allegations. The Anglo-Russian News Bulletin (June 28th) published a review of “Forced Labour in Soviet Russia” by Mr. Rothstein, who is Lecturer on Soviet Institutions at the University of London School of Slavonic and East European Studies. Because Mr. Rothstein is presumably familiar with conditions in Russia, and able to obtain whatever information the Russian Government makes available, his review is interesting—but chiefly for what it does not say. He argues that the book contains contradictory statements and figures, that the authors are weak on arithmetic, that their estimates of the numbers in the camps could not be correct, that they make some statements “without a shred of evidence,” that they are guilty of distortions and malicious gossip and so on. The obvious intention of this line of attack is to cast such doubts on the reliability of Dallin and Nicolaevsky that the reader will conclude that he cannot believe anything they say. But before coming to any such conclusion it is necessary to notice that Mr. Rothstein stops short just at the point where he should be telling us something positive. We naturally expect him to tell us that there are no forced labour camps, or alternatively, give us some evidence that conditions in them are not inhuman. Why this silence on the part of Mr. Rothstein? Can it be that this “authority” on Soviet Institutions does not know about the institution of forced labour?

Further examination raises other doubts about Mr. Rothstein. He starts off by dismissing the whole book as being “largely a rehash of what Mr. Dallin . . . was writing in 1921, with some recent ‘documentation’ which will not stand up to serious analysis.” Later he brushes aside charges about contingents of forced labour raised since 1930 from the collective farms. Then he ridicules the idea that forced labour could have been used for the purpose of accumulating gold, on the ground that in the years 1934-1938 Russian foreign trade showed a huge favourable balance ”and therefore did not depend in the least on such accumulation.” The whole trend of Mr. Rothstein’s phrasing is to convey that at no time, from 1921 onwards, were the charges true. Unfortunately for him, those admirers of the Soviet regime, Sidney and Beatrice Webb in their “Soviet Communism” admitted and deplored the existence of concentration camps in which political prisoners, and peasants who resisted being forced into collective farms were “set to hard labour in return for a bare subsistence.” The Webbs were often eulogised by the Communists and as recently as 13th July, 1948, the Daily Worker praised their “power of objective observation and judgment” shown in another book on Russia. This is what the Webbs wrote in “Soviet Communism” (1937 edition, p.581) about one of the concentration camps :

“The miseries of a rigorous climate were aggravated by a cruel administration by brutal jailers, in which every kind of torment seems to have been employed.”

The matter was placed beyond question by the fact, as related by the Webbs, that after an outcry outside Russia, an official inquiry took place by the Russian authorities which resulted in the shooting or dismissal of many of the jailers. The camps were reorganised, but even then, said the Webbs, “the conditions, we fear, continued to be inhuman” (p.584).

So it seems that although Mr. Rothstein scoffs at the charges they were so well-founded up to 1937 that they convinced the Webbs.

About gold production Mr. Rothstein’s curious argument can be shown from official Russian figures to be entirely wrong. He argues that it cannot be true that forced labour was needed for gold production, because Russia at that time, 1934-1938, had no need of gold for foreign trade. Mr. Rothstein should tell this to the Russian Government, they would he surprised. In the Moscow publication “U.S.S.R. in Construction” (May, 1937) it is shown that gold production in Russia was rising at a stupendous rate during the years in question. Whereas in 1934 production was 157 per cent. above the 1930 level, by 1930 it had reached 340 per cent. above 1930.

So much for Mr. Rothstein. As his implied denial of the existence of forced labour camps in the years before 1937 is found to be worthless it is not unreasonable to be very suspicious about anything he says of present conditions.

* * *

What Nationalisation does for Tilling’s Shareholders

Thomas Tilling, the bus and road transport firm, with an issued capital of £4,420,000, have agreed to sell out to the Government for £25 million, and the purchase price ”will be paid in Transport stock, or cash, or partly in one form and partly in the other.” (Daily Mail, 9/9/48.)

A year ago the Company’s £1 shares were selling at 53s. 3d. When negotiations began they jumped to 75s. 3d., and when the agreement was announced they rose to nearly £6. As the City Editor of the Daily Express remarks (9/9/48), “For shareholders—State ownership with a smile.”

The Daily Herald’s City Editor (10/9/48) writes: 

“The generous purchase price of £24,800,000 offered by the Transport Commission for Tillings road transport and haulage interests started a boom in bus shares in the Stock Exchange yesterday. Prices soared to high record levels which added about £10,000,000 to market values.” 

The Daily Mail (9/9/48) still thought, however, that it was a hard bargain for the company and that the price agreed upon "is probably well below the real value.”

The company will still continue in business as it has other interests in addition to those sold to the Government.

* * *

The Law says it is preposterous

A man who took seriously the statement that under nationalisation the railways become “our” property was fined £1, with 15 guineas costs. He had refused to leave Kings Cross Station and was charged with trespassing. The magistrate said:

“The proposition that the railways are now nationalised and that any member of the public is entitled to go on their property and cannot be requested to leave is really a preposterous one and one that cannot be accepted for a moment.” Star (18/9/48).

* * *

The Lucky Tories

The following report of a speech by Mr. Cyril Osborne, Conservative M.P. for Louth, at Castle Donington on Saturday, 11th September, was published in the Star (12/9/48) :

“Fate has played a dirty trick on the Socialists. They have come to power just at the worst time; instead of being able to give everybody more the war has so impoverished us that they are compelled to force austerity down our throats. Soon they will have to enforce industrial discipline, harsher than the Tories ever dared in pre-war days. It will be bitter medicine for their supporters, but it will do them good. The Conservatives are lucky to be out of office during these days of bitter pill-taking, and the nation should be grateful to the Socialists for having provided such a willing doctor in Sir Stafford Cripps to administer such unpalatable medicine.”

Mr. Osborne here says that impoverishment due to war compelled the Labour Government, to do as they have done; but this certainly won’t prevent the Tories from trying to catch votes at the next election by laying the blame on the Labour Government and claiming that it would have been better under the Tories. We also remember that under long years of Tory Government there was always some excuse to hand to explain working class poverty and unemployment and we never remember any Tory Government that gave anything to the workers.

The truth is that capitalism run by Tories and capitalism run by the Labour Party are both unlucky for the workers.

* * *

Communist Defence of Russian Dictatorship

In the Daily Worker (24/8/48) Mr. J. R. Campbell answered a letter from a correspondent who wrote pointing out that Russia is “without democracy, without the right of criticism, ruled by a single party. You call this freedom. I call it slavery.”

In his lengthy reply Mr. Campbell does everything except meet the real criticism, which is that the Russian workers are forbidden by law to form political parties of their own choice. Unless they are members of the Communist Party they cannot belong to any political party. At elections, unless they want to vote for the candidate approved by the Communist Party, all they could do would be to vote against him; they are prevented from running opposition candidates. The membership of the Communist Party is only a very small minority of the population, and the overwhelming majority are not in a political party and cannot be.

What Mr. Campbell does is to argue as if the critics of the dictatorship are concerned solely with the right to form avowedly capitalist parties. He confines his statement to giving reasons why the workers in Russia do not need parties of the “capitalist opposition.” It may look to Mr. Campbell that this is a clever way of dodging the issue, but it only lands him in another awkward spot. The Russian Government doesn’t have to forbid the formation of capitalist parties like the Liberals and Tories unless there are in Russia people who want to form such parties. Now who would want to form capitalist parties in Russia today? and why would they want to form them? Obviously the capitalists would want to form parties of their own ; but are there capitalists in Russia? Here Mr. Campbell is in a dilemma. For the purpose of claiming that Socialism has been established in Russia he would have to maintain that there are no capitalists there; but in order to justify forbidding them to form political parties he would have to maintain that they do exist.

If he plumps for the former position and denies the existence of capitalists in Russia, then he is left to explain that it is some other groups of people who want to form capitalist parties and have to be prevented. So we have to assume that it is peasants or workers, who, knowing all the benefits of life in the Soviet paradise nevertheless want to organise Liberal or Tory capitalist parties and would do so if the law did not forbid it.

Having thus got himself into difficulties by pretending that it is only capitalist parties that are illegal in Russia perhaps Mr. Campbell will try to find time to deal with the real question which is why the workers are forcibly prevented from forming their own political parties; and how this can be squared with the claim that it is democratic.

Incidentally Mr. Campbell should take his courage in both hands and offer to tell British workers why he thinks it would be good for them, too, if they were allowed to belong to a political party only by permission of the Executive Committee of the C.P.G.B. and be thrown into concentration camps if they objected.

Edgar Hardcastle

Editorial: Private Ownership in Russian Agriculture (1949)

Editorial from the July 1949 issue of the Socialist Standard

Communists attack the Labour government’s nationalisation policy on two grounds, that the compensation to former owners is too generous and that the government instead of going in for wholesale nationalisation is leaving most of industry and agriculture to private capitalism. It is therefore interesting to observe to what a large extent agriculture in Russia is in the hands of individual farmers. Farming in Russia is organised in three main groups, the State farms; the farms worked by individual peasant-owners relying on the labour of themselves and their families without hired help; and the collective farms. Some of the latter are on the basis that the whole of the land, buildings, implements and stock are owned by the organisation, and others are merely voluntary associations of individual farmers, each of whom retains ownership of his entire holding; but the great majority of the collective farms are a mixture, part of the farm is owned and worked collectively and part is owned and worked individually by the farmers. On these standard type collective farms the farmers receive produce and monetary income partly from the collective farm and partly from their private holdings. They work part of their time on the collective farm and the rest of the time for themselves. Their income from their private holding is their own but they also receive a share in the collective farm income varying in amount according to the number of labour-days they have worked. The collective farm has to give a certain part of its products to the State, and pay taxes, before the balance is divided up. According to H. A. Freund (“Russia from A to Z,” 1945, p.316), from whom the above details are taken, there is a great difference between the amount of produce and money received by members of the richest collective farms and the amount received on the poorer farms.

As regards the land and stock owned individually by the farmers Freund states that it varies in amount and kind according to the district and the type of farming. The farmer has his own house, and an allotment which ranges up to 2½ acres. In some districts he may also own privately one cow, two calves, one sow with sucklings, up to 10 sheep and goats, 20 beehives and an unlimited number of fowls and rabbits. In more developed stock-breeding districts he may have two or three cows, also calves, two or three sows, up to 25 sheep, also fowls, rabbits and beehives. In districts where stock-breeding is the all-embracing branch of industry he may have 8 to 10 cows, up to 150 sheep or goats, up to 10 horses and 8 camels, with unlimited poultry.

Some further information has been given by Mr. Andrew Rothstein, who is Lecturer on Soviet Institutions at the School of Slavonic Studies and a defender of the Russian system. Recently he has written to the Times correcting correspondents who have inaccurately quoted figures relating to Russian agriculture. In a letter on 19th May, 1949, he made the point that at April, 1949, the 30 million head of cattle that are "the personal property of collective farmers, workmen, employees, and individual peasants" considerably exceed the herds of cattle on the collective part of the collective farms. In addition to the 30 million cattle these private holdings include 26½ million sheep and goats and over 7 million pigs, but these private holdings of sheep, goats and pigs appear to be considerably less than the collective holdings. The overall picture would therefore appear to be that rather more than half of the total stock is owned by the State farms and the collective part of the collective farms, and rather less than half is owned privately.

As a footnote to the above we learn from the Moscow correspondent of Reuters (Manchester Guardian, 27/5/49) that the authorities have been criticising the collective farms because they have been sending lean cattle as the compulsory quota they have to deliver to the State. As the quota requires a certain weight the farmers have been making up the weight in the form of a large number of lean cattle instead of a smaller number of fat cattle, and thus depleting the collective herds.

The collective farm system bears an obvious resemblance to the serfdom that existed in Europe before the rise of capitalism and experience of that system suggests that the individual farmers are likely to be more interested in their private farms than in the collective part.

Inequality in Russia (1943)

From the January 1943 issue of the Socialist Standard

Sir Rowland Evans, a Liberal politician, in a letter to the Times, stated that 

Whereas statistics indicate that in Britain before the war the upper 10 per cent, of the population received 45 per cent, of the national income, an authoritative analysis of statistics published in the Soviet Press in 1939 showed that the upper 11 per cent, or 12 per cent, of the Soviet population then received approximately 50 per cent, of the national income.—(Times, December 15, 1942.)

One correspondent challenged the figures on the ground that the rural population ought to be excluded as it is impossible in rural areas to find members of an upper category. He claimed therefore that what the figures would really show would be that in the towns

every third worker or employee or member of their families . . . belongs to an upper category, similar to the upper 10 per cent, of the population in Great Britain.—(Times, December 16, 1942.)

The figures were then challenged by Andrew Rothstein, Chief Correspondent of the Russian Official Tass News Agency (Times, December 21, 1942). His principal ground of objection was that the estimate came from "an article by a counter-revolutionary terrorist, anti-Soviet propagandist and agent of Hitler." This is relevant, but it does not settle the real question, which is "was the estimate accurate?" Rothstein had the opportunity of answering Sir Rowland Evans's demand for his own figures. Rothstein is in a position to give the Russian Government’s own figures about inequality of income, but though he gave various other pieces of information he did not answer the question. Instead, he dwelt on the point that “in the Soviet Union the share of the national income which comes to the individual depends exclusively (unless he is a criminal) on the work which he does."

He did not question that artists, scientists, engineers, factory managers and State officials, etc., receive larger incomes than the mass of the population, but maintained that this group is certainly not large enough to account for 50 per cent, of the national income or anything like it.

One significant feature of Rothstein's letter was that it nowhere even mentioned the fact that millions of Russian citizens draw income from their investment in Government bonds. Rothstein may, of course, argue that income derived from interest on such investments is indirectly the result of the work orginally performed, but why did he not mention it? At January 1, 1934. the amount of Government loans outstanding was about 14,000 million roubles (about £560 million at 25 roubles to the £—Whitaker's Almanack, 1942, page 944). This figure will have been greatly increased since 1934 as thousands of millions of roubles are raised each year. In April, 1942, a new War Loan of 10,000 million roubles (£400 million) was raised (Soviet War News, April 16. 1942, and Evening Standard, April 15, 1942). The interest is 2 per cent, but in addition each holder of a 100-rouble certificate has a chance of winning a prize of 50,000 roubles (£2,000), or smaller amounts.

It was also announced (People, December 7, 1941) that the Russian Government were to run a lottery to help the war effort, tickets being issued to the amount of £40 million.

With regard to inequality of income, it was stated in the Sunday Dispatch (August 17, 1941) that the “average minimum wage is 250 roubles monthly, though specialists may receive an average as high as 2,000 roubles a month." (This article was shown to the Soviet Ambassador before publication.)

Other ways of obtaining large sums of money are indicated by the announcement that Ilya Ehrenburg, the Russian journalist, received the Stalin prize of 100,000 roubles for his book, “ The Fall of France" (Evening Standard, May 19, 1912).

With regard to the Russian Income Tax, Mr. J. C. Jagger, Honorary Secretary of the British Association of Officers of Taxes, who visited Russia in 1936, made the following statement:—

Earnings up to 250 roubles per month are exempt but sums in excess of that figure are charged at progressively increasing rates, commencing at 80 kopecs per 100 roubles (100 kopecs—1 rouble) to a maximum of 260 kopecs per 100 roubles at 800 roubles a month. Tax is not charged on earnings in excess of 800 roubles and, in these days of output or sales in excess of the “plan" many of the citizens escape taxation at a point for which we have no legal parallel."—Taxes, October, 1936.)

In conclusion here ore two statements which throw further light on inequality in Russia. One is from the American journalist. Negley Farson, cabling from Moscow in Feb., 1942 (Daily Mail, February 28). He remarked on the “ beggars, the halt, the blind, mewling their woes and thanks " in gratitude for gifts obtained from a queue of people waiting to go into the Cathedral.

The second is from the Daily Worker (September 25, 1942) from the pen of John Gibbons, writing from Moscow. He explains that in addition to the ordinary vegetable ration at fixed pre-war prices, workers in factories and offices buy extra vegetables from their place of work. There are, however. other markets of tin rationed goods “ for those who have money and inclination "—

For those who have money and inclination, collective farm markets, of which there are dozens in Moscow, contain a rich and varied assortment of un-rationed farm products. Here prices are higher, varying according to the season. Potatoes, for instance, now cost less than half what they did six weeks ago.

It certainly seems that Mr. Rothstein might usefully have added many things to his statement made in answer to Sir Rowland Evans.

Edgar Hardcastle