The basic and new feature, the decisive feature that has affected all the events in the sphere of foreign relations during this period, is the fact that a certain temporary equilibrium of forces has been established between our country, which is building socialism, and the

 
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countries of the capitalist world, an equilibrium which has determined the present period of "peaceful co-existence" between the Land of Soviets and the capitalist countries. What we at one time regarded as a brief respite after the war has become a whole period of respite. Hence a certain equilibrium of forces and a certain period of "peaceful co-existence" between the bourgeois world and the proletarian world.
    At the bottom of all this lies an internal weakness, the weakness and infirmity of world capitalism, on the one hand, and the growth of the workers' revolutionary movement in general, and particularly the growth of strength in our country, the Land of Soviets, on the other.
    What lies at the bottom of this weakness of the capitalist world?
    At the bottom of this weakness lie the contradictions which capitalism cannot overcome, and within the framework of which the entire international situation is taking shape -- contradictions which the capitalist countries cannot overcome, and which can be overcome only in the course of development of the proletarian revolution in the West.
    What are these contradictions? They can be reduced to five groups.
    The first group of contradictions are those between the proletariat and the bourgeoisie in the capitalist countries.
    The second group of contradictions are those between imperialism and the liberation movement in the colonies and dependent countries.
    The third group of contradictions are those that are developing, and cannot but develop, between the

 
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    And so, let us begin with the first series of contradictions, those between the proletariat and the bourgeoisie in the capitalist countries. In this sphere, the basic facts may be reduced to the following.
    Firstly. Capitalism is emerging, or has already emerged, from the chaos in production, trade and in the sphere of finance which set in, and in which it found itself, after the war. The Party called this the partial, or temporary, stabilisation of capitalism. What does that mean? It means that the production and trade of the capitalist countries, which had become terribly low at one time in the period of the post-war crisis (I have in mind the years 1919-20), have begun to make progress,

 
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and the political power of the bourgeoisie has begun to become more or less consolidated. It means that capitalism has temporarily extricated itself from the chaos in which it found itself after the war.
    Here are the figures, if we take Europe.
    Production in all the advanced countries of Europe is either making progress compared with 1919, is growing, reaching in some places 80-90 per cent of the pre-war level, or is keeping on one level. Only in Britain are there some branches of production which have not yet straightened themselves out. In the main, if we take Europe as a whole, production and trade are making progress, although they have not yet reached the pre-war level. If we take the production of grain, we find that Britain has reached 80-85 per cent of the pre-war level, France 83 per cent, and Germany 68 per cent. In Germany, the production of grain is rising very slowly. In France it is not rising, and in Britain it is sinking. All this is compensated for by imports of grain from America. Coal output in Britain in 1925 amounts to 90 per cent of the pre-war level, in France to 107 per cent of the pre-war level, in Germany to 93 per cent. Steel production in Britain amounts to 98 per cent of the pre-war level, in France to 102 per cent, in Germany to 78 per cent. Consumption of raw cotton in Britain is equal to 82 per cent of the pre-war level, in France to 83 per cent, in Germany to 81 per cent. Britain's foreign trade shows an unfavourable balance and amounts to 94 per cent of pre-war; that of Germany is slightly higher than in 1919 and also shows an unfavourable balance; that of France is now higher than the pre-war level -- 102 per cent. The level of European trade as a whole, taking 1921, was

 
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63 per cent of the pre-war level, but now, in 1925, it has reached 82 per cent of that level. The budgets of these countries balance in one way or another, but the balance is obtained by imposing a frightful burden of taxation upon the population. There is a fluctuation in the currency in some countries, but, in general, the former chaos is not observed.
    The general picture is that the post-war economic crisis in Europe is passing away, production and trade are approaching the pre-war level. One of the European countries, France, has already surpassed the pre-war level in the sphere of trade and production, while another European country -- I refer to Britain -- still remains at one and the same, or almost one and the same, level without reaching the pre-war level.
    Secondly. Instead of the period of flow of the revolutionary tide that we observed in Europe in the years of the post-war crisis, we now see a period of ebb. This means that the question of taking power, of the proletariat capturing power any day, is not now on the order of the day in Europe. The period of rising revolutionary tide, when the movement pushes forward and upward and the Party's slogans cannot keep pace with the movement, as was the case in our country, for example, in 1905 or in 1917 -- that period of rising tide still lies ahead. At present, however, it does not exist; instead, there is a period of temporary ebb, a period in which the proletariat is accumulating forces, a period which is giving big results as regards indicating new forms of the movement, as regards the existence and growth of a mass movement under the banner of the struggle for trade-union unity, as regards establishing and strengthening

 
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ties between the working-class movement in the West and the working-class movement in the Soviet Union, as regards a swing to the Left -- the British working-class movement for example -- as regards the disintegration of Amsterdam, the deep fissure in it, etc., etc. I repeat, we are in a period of accumulation of forces, which is of great importance for future revolutionary actions. It is the period in which the conquest of the mass organisations of the proletariat (the trade unions, etc.) and the "removal from their posts" of the Social-Democratic leaders becomes the slogan of the communist movement, as was the case in our country in 1911-12.
    Thirdly. The centre of financial power in the capitalist world, the centre of the financial exploitation of the whole world, has shifted from Europe to America. Formerly, France, Germany and Britain usually formed the centre of the financial exploitation of the world. That cannot be said now without special reservations. Now, the centre of the financial exploitation of the world is mainly the United States of America. That country is growing in every respect: as regards production, as regards trade, and as regards accumulation. I shall quote some figures. The production of grain in North America has risen above the pre-war level; it is now 104 per cent of that level. Coal output has reached 90 per cent of the pre-war level, but the deficit is compensated for by an enormous increase in the output of oil. And it must be pointed out that the oil output of America amounts to 70 per cent of world output. Steel production has risen to 147 per cent -- 47 per cent above the pre-war level. The national income amounts to 130 per cent of pre-war --

 
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exceeding the pre-war level by 30 per cent. Foreign trade has reached 143 per cent of the pre-war level and has an enormous favourable balance in relation to the European countries. Of the total world gold reserve amounting to 9,000 millions, about 5,000 millions are in America. United States currency is the most stable of all currencies. As regards export of capital, America, at the present time, is almost the only country that is exporting capital in ever-growing proportions. The amount exported by France and Germany is terribly small; Britain has also considerably reduced her export of capital.
    Fourthly. The temporary stabilisation of European capitalism to which I referred above has been achieved mainly with the aid of American capital, and at the price of the financial subordination of Western Europe to America. To prove this, it is sufficient to quote the figure of Europe's state indebtedness to America. That figure amounts to no less than 26,000 million rubles. This is apart from private debts to America, i.e., American investments in European enterprises, amounting for Europe to the sum of several thousand millions. What does that show? It shows that Europe has begun to get on its feet, more or less, as a result of the influx of capital from America (and partly from Britain). At what price? At the price of Europe's financial subordination to America.
    Fifthly. In view of this, in order to be able to pay interest and principal, Europe is forced to increase the burden of taxation on the population, to worsen the conditions of the workers. That is precisely what is happening now in the European countries. Already, before the payment of principal and interest has properly started,

 
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in Britain, for example, the burden of taxation as a percentage of the total national income has increased from 11 per cent (in 1913) to 23 per cent in 1924; in France it has increased from 13 per cent of the national income to 21 per cent, and in Italy -- from 13 per cent to 19 per cent. Needless to say, in the very near future the burden of taxation will grow still heavier. In view of this, the material conditions of the working people in Europe, and primarily those of the working class, will certainly deteriorate and the working class will inevitably become revolutionised. Symptoms of this revolutionisation are already to be observed in Britain and in other European countries. I have in mind the definite swing to the Left of the working class in Europe.
    Such are the principal facts which show that the temporary stabilisation of capitalism which Europe has achieved is a putrid stabilisation that has grown up on putrid soil.
    It is very likely -- I do not exclude the possibility -- that production and trade in Europe will reach the pre-war level. But that does not mean that capitalism will thereby reach the degree of stability it possessed before the war. That degree of stability it will never reach again. Why? Because, firstly, Europe has purchased her temporary stability at the price of financial subordination to America, which is leading to a colossal increase in the burden of taxation, to the inevitable deterioration of the conditions of the workers, and to the revolutionisation of the European countries; secondly, because of a number of other reasons -- about which I will speak later -- that make the present stabilisation undurable, unstable.

 
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    Let us pass to the second series of contradictions, those between the imperialist countries and the colonial countries.
    The basic facts in this sphere are: the development and growth of industry and of the proletariat in the colonies, especially during and after the war; the growth

 
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of culture in general, and of the national intelligentsia in particular, in these countries; the growth of the national-revolutionary movement in the colonies and the crisis in the world domination of imperialism in general; the struggle for liberation waged by India and Egypt against British imperialism; the war for liberation waged by Syria and Morocco against French imperialism; China's struggle for liberation against Anglo-Japanese-American imperialism, etc.; the growth of the working-class movement in India and China and the increasingly important role of the working class in these countries in the national-revolutionary movement.
    From this it follows that the Great Powers are faced with the danger of losing their chief rear, i.e., the colonies. Here, the stabilisation of capitalism is in a bad way; for the revolutionary movement in the oppressed countries, growing step by step, is beginning in some places to assume the form of open war against imperialism (Morocco, Syria, China), while imperialism is obviously unable to cope with the task of curbing "its" colonies.
    It is said -- especially by bourgeois writers -- that the Bolsheviks are to blame for the growing crisis in the colonies. I must say that they do us too much honour by blaming us for that. Unfortunately, we are not yet strong enough to render all the colonial countries direct assistance in securing their liberation. It is necessary to delve deeper to find the cause. The cause is, apart from everything else, that the European states, being obliged to pay interest on debts to America, are compelled to intensify oppression and exploitation in the colonies and dependent countries, and this cannot

 
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    I pass to the fourth series of contradictions, to those between the victor countries. The basic facts here are that, in spite of the existence of a sort of bloc between America and Britain, a bloc founded on an agreement between America and Britain against the annulment of Allied debts, in spite of this bloc, I say, the conflict of interests between Britain and America is not being allayed, on the contrary, it is becoming more intense. One of the principal problems now facing the world powers is the problem of oil. If, for example, we take America, we find that she produces about 70 per cent of the world output of oil and accounts for over 60 per cent of total world consumption. Well, it is just in this sphere, which is the principal nerve of the entire economic and military activities of the world powers, that America everywhere and always encounters opposition from Britain. If we take the two world oil companies -- Standard Oil and Royal Dutch-Shell, the former representing America and the latter Britain -- we find that the struggle between those companies is going on in all parts of the world, wherever oil is obtainable. It is a struggle between America and Britain. For the problem of oil is a vital one; because who will command in the next war depends on who will have most oil. Who will command world industry and trade depends on who will have most oil. Now that the fleets of the advanced countries are passing over to oil propulsion, oil is the vital nerve of the struggle among the world states for supremacy both in peace and in war. It is precisely in this sphere that the struggle

 
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between the British oil companies and the American oil companies is a mortal one, not always coming into the open, it is true, but always going on and smouldering, as is evident from the history of the negotiations and from the history of the clashes between Britain and America on this ground. It is sufficient to recall the series of Notes of Hughes, when he was United States Secretary of State, directed against Britain on the oil question. The struggle is going on in South America, in Persia, in Europe, in those districts of Rumania and Galicia where oil is to be found, in all parts of the world, sometimes in a concealed and sometimes in an open form. That is apart from such a fact of no little importance as the conflict of interests between Britain and America in China. You no doubt know that the struggle there is a concealed one, and that very often America, operating in a more flexible manner and refraining from the crude colonial methods which the British lords have not yet abandoned, succeeds in putting a spoke in Britain's wheel in China in order to oust Britain and pave the way for herself in China. Obviously, Britain cannot look upon this with indifference.
    I shall not dwell at length on the opposition of interests between France and Britain arising from the struggle for supremacy on the European continent. That is a generally known fact. It is also clear that the conflict of interests between Britain and France takes place not only over the question of hegemony on the continent, but also in the colonies. Information has got into the press that the war in Syria and Morocco against French imperialism was organised not without Britain's participation. I have no documents, but I think that this information is not altogether groundless.

 
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    Nor shall I dwell on the opposition of interests between America and Japan -- that, too, is common knowledge. It is enough to recall the recent American naval manoeuvres in the Pacific and the Japanese naval manoeuvres to understand why they took place.
    Lastly, I must mention a fact which must surprise everybody, namely, the colossal growth of armaments in the victor countries. I am speaking about the victors, about the contradictions among the victor states. These victors are called allies. True, America does not belong to the Entente, but she fought in alliance with it against Germany. Well, those allies are now arming themselves to the utmost. Against whom are they arming? In the past, when the Entente countries piled up armaments, they usually referred to Germany, saying that she was armed to the teeth and constituted a danger to world peace, owing to which it was necessary to arm for defence. But what about now? Germany as an armed force no longer exists; she has been disarmed. Nevertheless, the growth of armaments in the victor countries is proceeding as never before. How, for example, is the monstrous growth of the air force in France to be explained? How is the monstrous growth of armaments, and especially of the navy, in Britain to be explained? How is the monstrous growth of the navies of America and Japan to be explained? What and whom are Messieurs the "Allies," who jointly defeated Germany and disarmed her, afraid of? What are they afraid of, and why are they arming? And where is the pacifism of the Second International, which shouts about peace and does not see -- pretends that it does not see -- that the "Allies," who have officially called each other friends, are feverishly arming against

 
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    I pass to the fifth series of contradictions, those between the Soviet Union and the capitalist world.
    The basic fact in this sphere is that an all-embracing world capitalism no longer exists. After the Land of Soviets came into being, after the old Russia was transformed into the Soviet Union, an all-embracing world capitalism ceased to exist. The world split up into two camps: the camp of imperialism and the camp of the struggle against imperialism. That is the first point that must be noted.
    The second point that must be noted in this sphere is that two major countries -- Britain and America, as an Anglo-American alliance -- are coming to stand at the head of the capitalist countries. Our country -- the Soviet Union -- is coming to stand at the head of those discontented with imperialism and who are engaged in mortal struggle against it.
    The third point is that two major, but opposite, centres of attraction are being created and, in conformity with this, two lines of attraction towards those centres all over the world: Britain and America -- for the bourgeois governments, and the Soviet Union -- for the workers of the West and for the revolutionaries of the East. The power of attraction of Britain and America lies in their wealth; credits can be obtained there.The power of attraction of the Soviet Union lies in its revolutionary experience, its experience in the struggle for the emancipation of the workers from capitalism and of the oppressed peoples from im-

 
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perialism. I am speaking of the attraction of the workers of Europe and of the revolutionaries of the East towards our country. You know what a visit to our country means to a European worker or to a revolutionary from an oppressed country, how they make pilgrimages to our country, and what an attraction our country has for all that is honest and revolutionary all over the world.
    Two camps, two centres of attraction.
    The fourth point is that in the other camp, the camp of capitalism, there is no unity of interests and no solidarity; that what reigns there is a conflict of interests, disintegration, a struggle between victors and vanquished, a struggle among the victors themselves, a struggle among all the imperialist countries for colonies, for profits; and that, because of all this, stabilisation in that camp cannot be lasting. On the other hand, in our country there is a healthy process of stabilisation, which is gaining strength, our economy is growing, our socialist construction is growing, and in the whole of our camp all the discontented elements and strata of both the West and the East are gradually and steadily rallying around the proletariat of our country, rallying around the Soviet Union.
    Over there, in the camp of capitalism, there is discord and disintegration. Over here, in the camp of socialism, there is solidarity and an ever-increasing unity of interests against the common enemy -- against imperialism.
    Such are the basic facts which I wanted to point out in the sphere of the fifth series of contradictions -- the contradictions between the capitalist world and the Soviet world.

 
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    I should like to dwell particularly on the fact which I have called the attraction of the revolutionary and socialist elements of the whole world towards the proletariat of our country. I have in mind the workers' delegations which come to our country, delegations which carefully probe every detail of our work of construction in order to convince themselves that we are able not only to destroy, but also to build the new. What is the significance of these workers' delegations -- this pilgrimage of workers to our country -- delegations which today reflect an entire stage in the development of the working-class movement in the West? You have heard how leaders of the Soviet state met a British workers' delegation, and a German workers' delegation. Have you noticed that our comrades, directors of various spheres of administration, not only provided the representatives of the workers' delegations with information, but actually rendered account to them? I was not in Moscow at the time, I was away, but I read the newspapers, and I read that Comrade Dzerzhinsky, head of the Supreme Council of National Economy, not merely gave the German workers' delegation information, but rendered account to them. That is something new and special in our life, and special attention should be paid to it. I have read that the directors of our oil industry -- Kosior in Grozny and Serebrovsky in Baku -- not merely gave the workers' delegates information as is done to tourists, but rendered account to these workers' delegations as if to a higher supervising authority. I have read that all our higher institutions, the Council of People's Commissars and the Central Executive Committee of Soviets, right down to the local Executive Committees of Soviets, were prepared to render

 
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account to the workers' delegations, whose visits to us they regarded as the friendly, fraternal supervision by the working class of the West of our work of construction, of our workers' state.
    What do all those facts show? They show two things. Firstly, that the working class of Europe, at all events the revolutionary part of the working class of Europe, regards our state as its own child, that the working class sends its delegations to our country not out of curiosity, but in order to see how things are here, and what is being done; for, evidently, they regard themselves as being morally responsible for everything that we are building here. Secondly, that the revolutionary part of the proletariat of Europe, having adopted our state, and regarding it as its child, is ready to defend it and to fight for it if need be. Name another state, even the most democratic, that would dare to submit to fraternal supervision by workers' delegations from other countries! You cannot name such a state, because there is no such state in the world. Only our state, the workers' and peasants' state, is capable of taking such a step. But, in placing the utmost confidence in the workers' delegations, our country thereby wins the utmost confidence of the working class of Europe. And that confidence is more valuable to us than any loans, because the workers' confidence in our state is the fundamental antidote to imperialism and its interventionist machinations.
    That is what lies at the bottom of the change in the mutual relations between our state and the proletariat of the West that has taken place, or is taking place, on the basis of the workers' pilgrimages to our country. That is the new factor, which many have failed to

 
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discern, but which is decisive at the present time. For if we are regarded as a part, as the child, of the working class of Europe, if on those grounds the working class of Europe assumes moral responsibility, undertakes the task of defending our state in case, say, of intervention by capitalism, the task of defending our interests against imperialism, what does that show? It shows that our forces are growing and will continue to grow very rapidly. It shows that the weakness of capitalism will increase very rapidly. For without the workers it is impossible to wage war nowadays. If the workers refuse to fight against our Republic, if they regard our Republic as their child in whose fate they are closely concerned, then war against our country becomes impossible. That is the secret, that is the root, that is the significance of the pilgrimages to our country that we have had, which we shall have more of, and which it is our duty to encourage to the utmost as a pledge of solidarity and a pledge that the ties of friendship between the workers of our country and the workers of the Western countries will be strengthened.
    Perhaps it will not be superfluous to say a word or two about the number of the delegations that have visited our country. I heard recently that at the Moscow Conference a comrade asked Rykov: "Are not those delegations costing us too much?" Comrades, we must not say such things. We must never talk in that strain about the workers' delegations that visit us. It is disgraceful to talk like that. We cannot and must not shrink from any expense, or any sacrifice, to help the working class in the West to send their delegates to us, to help them to convince themselves that the working class, after capturing power, is capable not only of destroying capitalism,

 
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but also of building socialism. They, the workers of the West, many of them at any rate, are still convinced that the working class cannot do without the bourgeoisie. That prejudice is the chief disease of the working class in the West, injected into it by the Social-Democrats. We shall not shrink from any sacrifice to give the working class in the West the opportunity, through their delegates, to convince themselves that the working class, after capturing power, is capable not only of destroying the old order, but also of building socialism. We shall not shrink from any sacrifice to give the working class in the West the opportunity to convince themselves that our country is the only state in the world that is a workers' state, which they in the West ought to fight for, and which is worth defending against their own capitalism. (Applause.)
    Three kinds of delegations have visited us: delegations of intellectuals -- teachers and so forth; delegations of adult workers, I think there have been, roughly, about ten of them; and delegations of young workers. In all, 550 delegates and tourists have visited our country. Another sixteen delegations, registered with the All-Union Central Council of Trade Unions, are expected. We shall continue to promote these visits in the future in order to strengthen the ties between the working class of our country and the working class in the West, and thereby erect a barrier against any possibility of intervention.
    Such are the characteristic features of the basic contradictions that are corroding capitalism.
    What follows from all these contradictions? What do they show? They show that the capitalist world is

 
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being corroded by a whole series of internal contradictions which are enfeebling capitalism; that, on the other hand, our world, the world of socialism, is becoming more and more closely welded, more united; that because of this, on precisely this basis, there arose that temporary equilibrium of forces that put an end to war against us, that ushered in the period of "peaceful co-existence" between the Soviet state and the capitalist states.
    I must mention two other facts which also helped to bring it about that instead of a period of war we have a period of "peaceful co-existence."
    The first fact is that at the present moment America does not want war in Europe. It is as though she were saying to Europe: I have loaned you thousands of millions; sit still and behave yourself if you want to get more money in future, if you don't want your currency to get into a mess; get down to work, earn money and pay the interest on your debts. It scarcely needs proof that this advice of America's, even if it is not decisive for Europe, is bound to have some effect.
    The second fact is that since the victory of the proletarian revolution in our country, a whole vast country with tremendous markets and tremendous sources of raw materials has dropped out of the world capitalist system, and this, of course, was bound to affect the economic situation in Europe. The loss of one-sixth of the globe, the loss of the markets and sources of raw materials of our country, means for capitalist Europe that its production is reduced and experiences a severe shaking. And so, in order to put a stop to this alienation of European capital from our country, from our markets and sources

 
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    Such are all those factors that have led to a certain equilibrium of forces between the camp of socialism and the camp of capitalism all over the world; that have caused the period of war to be replaced by a period of respite; that have converted the brief respite into a whole period of respite, and have enabled us to carry out a sort of "collaboration," as Ilyich called it, with the capitalist world.
    Hence the series of "recognitions" of the Soviet Union which has commenced, and which is bound to continue.
    I shall not enumerate the countries that have "recognised" us. I think that America is the only one of the big countries that has not done so. Nor shall I dilate on the fact that after these "recognitions" we concluded trade agreements, with Germany and Italy, for example. I shall not deal at length with the fact that our foreign trade has grown considerably, that America, a country which exports cotton to us, and Britain and Germany, countries which import our grain and agricultural produce, are particularly interested in this trade. There is one thing I must gay, namely, that this year is the first year since the advent of the period of "co-existence"

 
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with the capitalist states in which we are entering into rich and wide commercial relations with the capitalist world on a more or less large scale.
    That, of course, does not mean that we have already done away with all those, so to speak, reservations, and all those claims and counter-claims, as they might be called, that have existed and still exist between our state and the states of the West. We know that payment of debts is being demanded of us. Europe has not yet forgotten this, and probably will not forget it, at any rate, not so soon. We are told that our pre-war debts to Europe amount to 6,000 millions, that the war debts are estimated at over 7,000 million rubles, hence, a total of 13,000 millions. Allowing for depreciation of currency, and subtracting from this sum the share of the border countries, it works out that we owe the West-European states not less than 7,000 millions. It is known that our counter-claims in connection with the intervention of Britain, France and America during the civil war amount, I think, to the figure (if we take Larin's calculations) of 50,000 million rubles. Consequently, they owe us five-times more than we owe them. (Larin, from his seat : "We shall get it.") Comrade Larin says that in good time we shall get all of it. (Laughter.) If, however, we make a more conservative calculation, as the People's Commissariat of Finance does, it will amount to no less than 20,000 million. Even then we stand to gain. (Laughter.) But the capitalist countries refuse to reconcile themselves to this, and we still figure in their lists as debtors.
    It is on this ground that snags and stumbling-blocks arise during our negotiations with the capitalists. That

 
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    I pass to the question of our Party's tasks in connection with the external situation.
    I think that here our Party's tasks, in the sense of its work, should be outlined in two spheres: the sphere of the international revolutionary movement, and then in the sphere of the Soviet Union's foreign policy.
    What are the tasks in the sphere of the international revolutionary movement?
    The tasks are, firstly, to work in the direction of strengthening the Communist Parties in the West, of their winning a majority among the masses of the workers. Secondly, to work in the direction of intensifying the struggle of the workers in the West for trade-union unity, for strengthening the friendship between the proletariat in our Union and the proletariat in the capitalist countries. This includes the pilgrimages of which I have spoken and the significance of which I described above. Thirdly, to work in the direction of strengthening the link between the proletariat in our country and the movement for liberation in the oppressed countries, for they are our allies in the struggle against imperialism. And fourthly, to work in the direction of strengthening the socialist elements in our country, in the direction of the victory of these elements over the capitalist elements, a victory that will be of decisive significance for revolutionising the workers of all countries. Usually, when speaking about our Party's tasks in the sphere of the international revolutionary movement, our comrades confine themselves to the first three tasks and forget about the fourth task, namely, that our struggle in our

 
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country, the struggle for the victory of the socialist elements in our country over the capitalist elements, our struggle in the work of construction, is also of international significance, for our country is the base of the international revolution, for our country is the principal lever for expanding the international revolutionary movement; and if our work of construction here, in our country, proceeds at the proper tempo, it means that we are performing our work in all the other channels of the international revolutionary movement precisely in the way the Party demands that we should perform it.
    Such are the Party's tasks in the sphere of the international revolutionary movement.
    Now about the Party's tasks in the sphere of our Union's foreign policy.
    Firstly, to work in the direction of fighting against new wars, in the direction of maintaining peace and ensuring so-called normal relations with the capitalist countries. The basis of our government's policy, of its foreign policy, is the idea of peace. The struggle for peace, the struggle against new wars, the exposure of all the steps that are being taken to prepare a new war, the exposure of those steps that cover up actual preparation of war with the flag of pacifism -- such is the task. It is precisely for this reason that we refuse to join the League of Nations, for the League of Nations is an organisation for covering up the preparations for war; for, to join the League of Nations, we must choose, as Comrade Litvinov has rightly expressed it, between the hammer and the anvil. Well, we do not wish to be either a hammer for the weak nations or an anvil for the strong ones. We want

 
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    I pass to the second part of the Central Committee's report. This part deals with the internal situation in our state and with the Central Committee's policy on questions concerning the internal situation. I should like to quote some figures. Although quite a number of figures have been published in the press recently, we cannot, unfortunately, avoid quoting some here.

    But, before passing to the figures, permit me to set out several general propositions which define our work in the building of a socialist economy (I intend to start with our economy).
    The first proposition. We are working and building in the circumstances of capitalist encirclement. That means that our economy and work of construction will develop in the contradiction, in conflicts, between our system of economy and the capitalist system of economy. We cannot possibly avoid this contradiction. It is the framework within which the struggle between the two systems, the socialist and the capitalist systems, must proceed. It means, furthermore, that our economy must be built not only amidst its opposition to the capitalist economy outside our country, but also amidst the opposition between the different elements within it, the opposition between the socialist elements and the capitalist elements.
    Hence the conclusion: we must build our economy in such a way as to prevent our country from becoming an appendage of the world capitalist system, to prevent it from being drawn into the general system of capitalist development as a subsidiary enterprise of this system, so that our economy develops not as a subsidiary enterprise of world capitalism, but as an independent economic unit, based mainly on the home market, based on the bond between our industry and peasant economy in our country.
    There are two general lines: one takes as its starting point that our country must for a long time yet remain

 
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    If, further, we take the questions that directly concern the interrelations of industry and agriculture now and in the immediate future, they can be reduced to the following points.
    Firstly. We are still an agrarian country: agricultural output predominated over industrial output. As regards industry, the main thing is that it has

 
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already approached the limit of the pre-war level, that further steps in industry mean developing it on a new technical basis, with the utilisation of new equipment and the building of new plants. That is a very difficult matter. To step across this threshold, to pass from the policy of utilising to the utmost all that we have had in industry to the policy of building up a new industry on a new technical basis, on the basis of building new plants, to cross this threshold calls for large amounts of capital. As, however, we suffer from a considerable shortage of capital, the further development of our industry will, in all probability, proceed at a less rapid tempo than it has done up to now.
    That is not the case in agriculture. It cannot be said that all the potentialities latent in agriculture on its present technical basis are already exhausted. Unlike industry, agriculture can make rapid progress for a certain time even on its present technical basis. Even simply raising the culture of the peasant, literacy, even a simple thing like cleaning seed, could increase the gross output of agriculture 10-15 per cent. Just reckon up what that means for the entire country. Such are the potentialities still latent in agriculture. That is why the further development of agriculture does not, for the time being, encounter the technical difficulties that our industry does. That is why the discrepancy between the balance of output of industry and the balance of output of agriculture will continue to grow during the next few years, because agriculture possesses a number of inherent potentialities which are far from being utilised yet, and which are due to be utilised during the next few years.
    What are our tasks in view of this circumstance?

 
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    First of all, to raise our large-scale state industry at all costs, overcoming the difficulties that confront us. Next, to raise the local type of Soviet industry. Comrades, we cannot concentrate only on the development of Union industry, because Union industry, our centralised trusts and syndicates, cannot satisfy all the diverse tastes and requirements of a 140,000,000-population. To be able to satisfy these requirements, we must see to it that life, industrial life, is pulsating in every district, in every okrug, in every gubernia, region and national republic. Unless we unleash the forces latent in the localities for the purpose of economic construction, unless we lend local industry every support, beginning with the districts and okrugs, unless we unleash all these forces, we shall not be able to achieve that general upswing of economic construction in our country that Lenin spoke about. Unless we do this, unless we link the interests and benefits of the centre with the interests and benefits of the localities, we shall not solve the problem of stimulating initiative in the work of construction, the problem of a general economic upswing in the country, the problem of securing the speediest industrialisation of the country.
    Secondly. Formerly, the problem in relation to fuel was that of over-production. Now we are approaching the problem of a fuel crisis, because our industry is growing faster than the fuel supply. We are approaching the level on which our country stood under the bourgeois system, when there was a shortage of fuel and we were obliged to import it. In other words, the position is that there is a discrepancy between the balance of fuel output and the balance of output of industry, the requirements

 
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of industry. Hence the task of accelerating the development of our fuel industry, of improving its technical equipment, so that its development should overtake, should be able to overtake, the development of industry.
    Thirdly. There is some discrepancy between the balance of output of metals and the balance of the national economy as a whole. If we calculate the minimum metal requirements and the maximum possibility of producing metals, we shall find that we have a shortage running into tens of millions. Under these conditions, our economy, and our industry in particular, cannot make further progress. That is why this circumstance must receive special attention. Metal is the foundation of foundations of our industry, and its balance of output must be made to correspond to the balance of industry and transport.
    Fourthly. The discrepancy between the balance of our skilled labour power and the balance of our industry. A number of figures have been published in the press and I will not quote them; I will merely say that the additional skilled labour power required for the whole of industry in 1925-26 amounts to 433,000 people, and we can supply only a fourth of the number required.
    Fifthly. I should like to mention one other defect and discrepancy, namely, that the standards for using railway rolling stock exceed all limits. The demand for rolling stock is so great that next year we shall be obliged to use locomotives and freight wagons, not to 100 per cent of their capacity, but to 120-130 per cent. Thus, the fixed capital of the People's Commissariat of Transport will be subjected to excessive wear and tear, and we may be faced with disaster in the near future if we do not take resolute measures.

 
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    Permit me now to pass to questions concerning trade. The figures show that in this sphere, as in the industrial sphere, the relative importance of state-based trade is increasing as compared with trade on a private capitalist basis. If we take the total internal trade turn-over before the war as being equal to 20,000 million commodity rubles, we find that the turn-over for 1923-24 amounted to 10,000 million, i.e., 50 per cent of pre-war, while that for 1924-25 equals 14,000 million, i.e., 70 per cent. The general growth of the internal turn-over is beyond doubt. Speaking of the state's share in that turn-over, we find that in 1923-24, the state's share amounted to 45 per cent of the total internal trade turn-over; the share of the co-operatives was 19 per cent, and the share of private capital 35 per cent. In the following year, i.e., in 1924-25, the state's share amounted to 50 per cent; the share of the co-operatives, instead of 19 per cent, was 24.7 per cent, and the share of private capital, instead of 35 per cent, was 24.9 per cent. The share of private capital in the total turn-over is falling; the shares of the state and of the co-operatives are rising. If we divide the turn-over into two parts, wholesale and retail, we shall see the same trend. The state's share of wholesale trade in 1923-24 amounted to something over 62 per cent of the total turn-over; in 1924-25 it amounted to 68.9 per cent. An obvious increase. The share of

 
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the co-operatives shows an increase from 15 to 19 per cent. The share of private trade was 21 per cent; now it is 11 per cent. In retail trade, the state's share in 1923-24 amounted to 16 per cent; in 1924-25 it was almost 23 per cent. The co-operatives' share of retail trade last year was 25.9 per cent, and in 1924-25 it was 32.9 per cent. The growth is beyond doubt. Private capital's share of the retail trade in 1923-24 amounted to 57 per cent; now it is 44.3 per cent. We have obviously crossed the threshold in the sphere of retail trade. Last year, private capital predominated in retail trade; this year, the state and the co-operatives predominate.
    The growth of the importance of the state and the co-operatives in the procurement of raw materials and grain is shown by the following figures: oil seeds in 1924-25 -- 65 per cent; flax -- 94 per cent; raw cotton -- almost 100 per cent; grain in 1923-24 -- 75 per cent and in 1924-25 -- 70 per cent. Here we have a slight drop. On the whole, the growth of the state and co-operative bases in the sphere of internal trade is beyond doubt, both as regards wholesale and retail trade.
    Although the state's share of grain procurement is preponderant, nevertheless, it is not growing as much as it did last year, and that points to mistakes committed in the procurement of grain. The fact of the matter is that the miscalculation in regard to procurement was a miscalculation not only on the part of the Soviet bodies, but also of the Central Committee, for it is the latter's duty to supervise the Soviet bodies, and it is responsible for everything they do. The miscalculation consists in the fact that when planning we failed to take into account that this year the state of the mar-

 
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    The development of the national economy in the country has led to an improvement in the material conditions primarily of the working class. The declassing of the working class has become a thing of the remote

 
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past. The restoration and growth of the working class are proceeding at a rapid rate. Here are the figures according to data of the People's Commissariat of Labour: on April 1,1924, counting all workers, in all forms of industry, including small-scale industry, including seasonal workers and agricultural labourers, we had 5,500,000 workers, of whom 1,000,000 were agricultural labourers and 760,000 unemployed. On October 1, 1925, we already had over 7,000,000 workers, of whom 1,200,000 were agricultural labourers and 715,000 unemployed. The growth of the working class is beyond doubt.
    The average monthly wage per worker in industry as a whole, in chervonets rubles, amounted in April 1925 to 35 rubles, or 62 per cent of the pre-war average. In September 1925 it was 50 rubles, or 88.5 per cent of the pre-war average. Some branches have exceeded the pre-war level. The average daily real wage per worker in commodity rubles amounted in April 1925 to 0.88 ruble and in September 1925 to 1 ruble 21 kopeks. The average output per man-day worked in industry as a whole amounted, in pre-war rubles, to 4.18 in April 1924, but in 1925 it amounted to 6.14, i.e., 85 per cent of the pre-war average. If we take the relation between wages and productivity of labour month by month we shall find that they run in parallel lines: when wages rise, productivity of labour rises. But in June and July wages rose; productivity of labour, however, rose less than wages. That was due to holidays and to the influx of new strata of workers -- semi-peasants -- into the mills and factories.
    Now as regards wage funds. According to data of the People's Commissariat of Labour, wage funds

 
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(I have in mind industry, leaving out other branches) amounted in 1923-24 to 808,000,000; in 1924-25 they amounted to over 1,200 million; the estimate for 1925-26 is 1,700 million rubles.
    I shall not, comrades, speak of the needs for which the social insurance funds are used, everybody knows that. Permit me to mention one general figure to enable you to judge how much the proletarian state spends on workers' insurance. The total number of insured workers in 1924-25 was 6,700,000; the estimate for 1925-26 is 7,000,000. The average assignment calculated on the wage budget amounted in 1924-25 to 14.6 per cent; the estimate for 1925-26 is 13.84 per cent. Expressing this in gross figures, the amount expended on this in 1924-25 was 422,000,000 rubles; the estimate for 1925-26 is 588,000,000. Perhaps it will not be superfluous to inform you that from the fund that was allocated last year a certain sum was left in the social insurance coffers, amounting to 71,000,000 rubles.
    As regards the peasants, the increase in the output of agriculture was naturally bound to be reflected in an improvement in the material conditions of the peasant population. According to data of our planning bodies, the personal consumption of the peasant population, the percentage increase in this consumption, is higher than the percentage increase in the consumption of the urban population. The peasant has begun to feed better, and he retains a far larger share of his production for himself, for his personal consumption, than was the case last year.
    What assistance did the proletarian state render the households of the poor peasants, those who had

 
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suffered from the crop failure? The People's Commissariat of Finance calculates that financial assistance to poor peasants in 1924-25 amounted, in preliminary figures, not quite exact, to 100-105 million rubles, of which tax and insurance exemptions constituted about 60,000,000 rubles; furthermore, disbursements from the fund for combating the consequences of the crop failure amounted to 24,000,000 rubles, and credits to 12,000,000 rubles. Assistance to victims of the crop failure in 1924 covered an area with a population of over 7,000,000. The total spent for this purpose amounted to 108-110 million rubles, of which 71,000,000 came from the state budget and 38,000,000 from the funds of public organisations and banking institutions. In addition to this, a fund of 77,000,000 was set up for combating drought. Such was the assistance that the proletarian state rendered the poor strata of the peasantry, inadequate assistance, of course, but such as deserves a word or two of comment.
    Improvement of the material conditions of the working class and of the peasantry is a fundamental premise of all progress in the sphere of our construction work. We see that this premise already exists.
    A few words about the increase in the activity of the masses. The chief thing in our internal situation, that which strikes the eye and which one cannot possibly get away from, is that as a consequence of the improvement in the material conditions of the workers and peasants there has been an increase in their political activity, they have become more critical in their attitude towards our shortcomings, they are speaking more loudly about the defects in our practical work. We have entered

 
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a period of greater activity of all classes and all social groupings. The working class has become more active, the peasantry, with all its groupings, has become more active, as also the new bourgeoisie, its agents in the countryside (the kulaks) and its representatives among the intelligentsia. This fact served as the basis for the turn in our policy which is expressed in the decisions of the Fourteenth Party Conference. The policy of revitalising the Soviets, the policy of revitalising the co-operatives and the trade unions, the concessions to the peasantry as regards precise regulation of questions of renting and leasing land and hiring labour, the material assistance for the poor peasants, the policy of a stable alliance with the middle peasants, the elimination of the remnants of war communism -- it is these, chiefly, that express the Party's new course in the countryside. You are well aware what the situation was in the countryside at the end of last year and in the beginning of this year. General discontent among the peasantry was growing, and here and there even attempts at revolt occurred. Those were the circumstances which determined the Party's new course in the countryside.
    Such are the foundations of the Party's policy towards the peasantry in the period of the rise in the activity and organisation of the masses; a policy calculated to regulate relationships in the countryside, to raise there the prestige of the proletariat and its Party, and to ensure a stable alliance of the proletariat and poor peasants with the middle peasantry.
    You know that this policy has fully justified itself.

 
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Department of the Central Committee, and another handb