Comrades, since the Fifteenth Congress two and a half years have passed. Not a very long period one would think. Nevertheless, during this period most important changes have taken place in the life of peoples and states. If one were to characterise the past period in two words, it could be called a turning point period. It marked a turning point not only for us, for the U.S.S.R., but also for the capitalist countries all over the world. Between these two turning points, however, there is a fundamental difference. Whereas for the U.S.S.R. this turning point meant a turn in the direction of a new and bigger economic upswing, for the capitalist countries it meant a turn towards economic decline. Here, in the U.S.S.R., there is a growing upswing of socialist development both in industry and in agriculture. There, among the capitalists, there is growing economic crisis both in industry and in agriculture.

    Such is the picture of the present situation in a few words.

    Recall the state of affairs in the capitalist countries two and a half years ago. Growth of industrial

page 243

production and trade in nearly all the capitalist countries. Growth of production of raw materials and food in nearly all the agrarian countries. A halo around the United States as the land of the most full-blooded capitalism. Triumphant hymns of "prosperity." Grovelling to the dollar. Panegyrics in honour of the new technology, in honour of capitalist rationalisation. Proclamation of an era of the, "recovery" of capitalism and of the unshakable firmness of capitalist stabilisation. "Universal" noise and clamour about the "inevitable doom" of the Land of Soviets, about the "inevitable collapse" of the U.S.S.R.

    That was the state of affairs yesterday.

    And what is the picture today?

    Today there is an economic crisis in nearly all the industrial countries of capitalism.

    Today there is an agricultural crisis in all the agrarian countries. Instead of "prosperity" there is mass poverty and a colossal growth of unemployment. Instead of an upswing in agriculture there is the ruin of the vast masses of the peasants. The illusions about the omnipotence of capitalism in general, and about the omnipotence of North American capitalism in particular, are collapsing. The triumphant hymns in honour of the dollar and of capitalist rationalisation are becoming fainter and fainter. Pessimistic wailing about the "mistakes" of capitalism is growing louder and louder. And the "universal" clamour about the "inevitable doom" of the U.S.S.R. is giving way to "universal" venomous hissing about the necessity of punishing "that country" that dares to develop its economy when crisis is reigning all around.

    Such is the picture today.

page 244

    Things have turned out exactly as the Bolsheviks said they would two or three years ago.

    The Bolsheviks said that in view of the restricted limits of the standard of living of the vast masses of the workers and peasants, the further development oi technology in the capitalist countries, the growth of productive forces and of capitalist rationalisation, must inevitably lead to a severe economic crisis. The bourgeois press jeered at the "queer prophesies" of the Bolsheviks. The Right deviators dissociated themselves from this Bolshevik forecast and for the Marxist analysis substituted liberal chatter about "organised capitalism." But how did things actually turn out? They turned out exactly as the Bolsheviks said they would.

    Such are the facts.

    a)  In studying the crisis, the following facts, above all, strike the eye:

    1.  The present economic crisis is a crisis of overproduction. This means that more goods have been produced than the market can absorb. It means that more textiles, fuel, manufactured goods and food have been produced than can be purchased for cash by the bulk of the consumers, i.e., the masses of the people, whose incomes remain on a low level. Since, however, under capitalism, the purchasing power of the masses of the people remains at a minimum level, the capitalists keep their "superfluous" goods, textiles, grain, etc., in

page 245

their warehouses or even destroy them in order to bolster up prices; they cut down production and discharge their workers, and the masses of the people are compelled to suffer hardship because too many goods have been produced.

    2.  The present crisis is the first post-war world economic crisis. It is a world crisis not only in the sense that it embraces all, or nearly all, the industrial countries in the world; even France, which is systematically injecting into her organism the billions of marks received as reparations payments from Germany, has been unable to avoid a certain depression, which, as all the data indicate, is bound to develop into a crisis. It is a world crisis also in the sense that the industrial crisis has coincided with an agricultural crisis that affects the production of all forms of raw materials and food in the chief agrarian countries of the world.

    3.  The present world crisis is developing unevenly, notwithstanding its universal character; it affects different countries at different times and in different degrees. The industrial crisis began first of all in Poland, Rumania and the Balkans. It developed there throughout the whole of last year. Obvious symptoms of an incipient agricultural crisis were already visible at the end of 1928 in Canada, the United States, the Argentine, Brazil and Australia. During the whole of this period United States industry showed an upward trend. By the middle of 1929 industrial production in the United States had reached an almost record level. A break began only in the latter half of 1929, and then a crisis in industrial production swiftly developed, which threw the United States back to the level of 1927. This

page 246

was followed by an industrial crisis in Canada and Japan. Then came bankruptcies and crisis in China and in the colonial countries, where the crisis was aggravated by the drop in the price of silver, and where the crisis of overproduction was combined with the ruination of the peasant farms, which were reduced to utter exhaustion by feudal exploitation and unbearable taxation. As regards Western Europe, there the crisis began to gain force only at the beginning of this year, but not everywhere to the same degree, and even in that period France still showed an increase in industrial production.

    I do not think there is any need to dwell particularly on the statistics that demonstrate the existence of the crisis. Nobody now disputes the existence of the crisis. I shall therefore confine myself to quoting one small but characteristic table recently published by the German Institute of Economic Research. This table depicts the development of the mining industry and the chief branches of large-scale manufacturing industry in the United States, Britain, Germany, France, Poland and the U.S.S.R. since 1927; the 1928 level of production is taken as 100.

    Here is the table:

page 247

    What does this table show?

    It shows, first of all, that the United States, Germany and Poland are experiencing a sharply expressed crisis in large-scale industrial production; in the first quarter of 1930, in the United States, after the boom in the first half of 1929, the level of production dropped 10.8 per cent compared with 1929 and sank to the level of 1927; in Germany, after three years of stagnation, the level of production dropped 8.4 per cent compared with last year and sank to 6.7 per cent below the level of 1927; in Poland, after last year's crisis, the level of production dropped 15.2 per cent compared with last year and sank to 3.9 per cent below the level of 1927.

    Secondly, the table shows that Britain has been marking time for three years, round about the 1927 level, and is experiencing severe economic stagnation ; in the first quarter of 1930 she even suffered a drop in production of 0.5 per cent compared with the previous year, thus entering the first phase of a crisis.

    Thirdly, the table shows that of the big capitalist countries only in France is there a certain growth of large-scale industry; but whereas the increase in 1928 amounted to 13.4 per cent and that in 1929 to 9.4 per cent, the increase in the first quarter of 1930 is only 3.7 per cent above that in 1929, thus presenting from year to year a picture of a descending curve of growth.

    Lastly, the table shows that of all the countries in the world, the U.S.S.R. is the only one in which a powerful upswing of large-scale industry has taken place; the level of production in the first quarter of 1930 was more than twice as high as that in 1927, and the increase rose from 17.6 per cent in 1928 to 23.5 per cent in 1929

page 248

and to 32 per cent in the first quarter of 1930, thus presenting from year to year a picture of an ascending curve of growth.

    It may be said that although such was the state of affairs up to the end of the first quarter of this year, it is not precluded that a turn for the better may have taken place in the second quarter of this year. The returns for the second quarter, however, emphatically refute such an assumption. They show, on the contrary, that the situation has become still worse in the second quarter. These returns show: a further drop in share prices on the New York Stock Exchange and a new wave of bankruptcies in the United States; a further decline in production, a reduction of wages of the workers, and growth of unemployment in the United States, Germany, Britain, Italy, Japan, South America, Poland, Czechoslovakia, etc.; the entry of a number of branches of industry in France into a state of stagnation, which, in the present international economic situation, is a symptom of incipient crisis. The number of unemployed in the United States is now over 6,000,000, in Germany about 5,000,000, in Britain over 2,000,000, in Italy, South America and Japan a million each, in Poland, Czechoslovakia and Austria half a million each. This is apart from the further intensification of the agricultural crisis, which is ruining millions of farmers and labouring peasants. The crisis of overproduction in agriculture has reached such a pitch that in Brazil, in order to keep up prices and the profits of the bourgeoisie, 2,000,000 bags of coffee have been thrown into the sea; in America maize has begun to be used for fuel instead of coal; in Germany, millions of poods of rye are

page 249

being converted into pig food; and as regards cotton and wheat, every measure is being taken to reduce the crop area by 10-15 per cent.

    Such is the general picture of the developing world economic crisis.

    A most important result of the world economic crisis is that it is laying bare and intensifying the contradictions inherent in world capitalism.

    a)  It is laying bare and intensifying the contradictions between the major imperialist countries, the struggle for markets, the struggle for raw materials, the struggle

page 255

for the export of capital. None of the capitalist states is now satisfied with the old distribution of spheres of influence and colonies. They see that the relation of forces has changed and that it is necessary in accordance with it to redivide markets, sources of raw materials, spheres of influence, and so forth. The chief contradiction here is that between the United States and Britain. Both in the sphere of the export of manufactured goods and in the sphere of the export of capital, the struggle is raging chiefly between the United States and Britain. It is enough to read any journal dealing with economics, any document concerning exports of goods and capital, to be convinced of this. The principal arena of the struggle is South America, China, the colonies and dominions of the old imperialist states. Superiority of forces in this struggle -- and a definite superiority -- is on the side of the United States.

    After the chief contradiction come contradictions which, while not the chief ones, are, however, fairly important: between America and Japan, between Germany and France, between France and Italy, between Britain and France, and so forth.

    There can be no doubt whatever that owing to the developing crisis, the struggle for markets, for raw materials and for the export of capital will grow more intense month by month and day by day.

    Means of struggle: tariff policy, cheap goods, cheap credits, regrouping of forces and new military-political alliances, growth of armaments and preparation for new imperialist wars, and finally -- war.

    I have spoken about the crisis embracing all branches of production. There is one branch, however, that

page 256

has not been affected by the crisis. That branch is the armament industry. It is growing continuously, not withstanding the crisis. The bourgeois states are furiously arming and rearming. What for? Not for friendly chats, of course, but for war. And the imperialists need war, for it is the only means by which to redivide the world, to redivide markets, sources of raw materials and spheres for the investment of capital.

    It is quite understandable that in this situation so-called pacifism is living its last days, that the League of Nations is rotting alive, that "disarmament schemes" come to nothing, while conferences for the reduction of naval armaments become transformed into conferences for renewing and enlarging navies.

    This means that the danger of war will grow at an accelerated pace.

    Let the Social-Democrats chatter about pacifism, peace, the peaceful development of capitalism, and so forth. The experience of Social-Democrats being in power in Germany and Britain shows that for them pacifism is only a screen needed to conceal the preparation for new wars.

    a) I have spoken above about the contradictions of world capitalism. In addition to these, however, there is one other contradiction. I am referring to the contradiction between the capitalist world and the U.S.S.R. True, this contradiction must not be regarded as being of the same order as the contradiction within capitalism. It is a contradiction between capitalism as a whole and the country that is building socialism. This, however, does not prevent it from corroding and shaking the very foundations of capitalism. More than that, it lays bare all the contradictions of capitalism to the roots and gathers them into a single knot, transforming them into an issue of the life and death of the capitalist order itself. That is why, every time the contradictions of capitalism become acute, the bourgeoisie turns its gaze towards the U.S.S.R., wondering whether it would not be possible to solve this or that contradiction of capitalism, or all the contradictions together, at the expense of the U.S.S.R., of that Land of Soviets, that citadel of revolution which, by its very existence,

page 263

is revolutionising the working class and the colonies, which is hindering the organisation of a new war, hindering a new redivision of the world, hindering the capitalists from lording it in its extensive home market which they need so much, especially now, in view of the economic crisis.

    Let us pass to the internal situation in the U.S.S.R.

    In contrast to the capitalist countries, where an economic crisis and growing unemployment reign, the internal situation in our country presents a picture of increasing advance of the national economy and of progressive diminution of unemployment. Large-scale industry has grown up, and the rate of its development has increased. Heavy industry has become firmly established. The socialist sector of industry has made great headway. A new force has arisen in agriculture -- the state farms and collective farms. Whereas a year or two ago we had a crisis in grain production, and in our grain-procurement operations we depended mainly on individual farming, now the centre of gravity has shifted to the collective farms and state farms, and the grain crisis can be regarded

page 270

as having been, in the main, solved. The main mass of the peasantry has definitely turned towards the collective farms. The resistance of the kulaks has been broken. The internal situation in the U.S.S.R. has been still further consolidated.

    Such is the general picture of the internal situation in the U.S.S.R. at the present time.

    a)  In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, the gross output of agriculture as a whole, including forestry, fishing, etc., amounted in pre-war rubles to 12,370,000,000 rubles, i.e., 106.6 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 107.2 per cent, in 1928-29 it was 109.1 per cent, and this year, 1929-30, judging by the course of development of agriculture, it will be not less than 113-114 per cent of the pre-war level.

    Thus we have a steady, although relatively slow, increase in agricultural production as a whole.

    In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, the gross output of industry as a whole, both small and large scale, including flour milling, amounted in pre-war rubles to 8,641,000,000 rubles, i.e., 102.5 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 122 per cent, in 1928-29 it was 142.5 per cent, and this year, 1929-30, judging by the course of industrial development, it will be not less than 180 per cent of the pre-war level.

page 271

    Thus we have an unprecedentedly rapid growth of industry as a whole.

    b)  In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, freight turnover on our entire railway system amounted to 81,700,000,000 ton-kilometres, i.e., 127 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 134.2 per cent, in 1928-29 it was 162.4 per cent, and this year, 1929-30, it, by all accounts, will be not less that 193 per cent of the pre-war level. As regards new railway construction, in the period under review, i.e, counting from 1927-28, the railway system has grown from 76,000 kilometres to 80,000 kilometres, which is 136.7 per cent of the pre-war level.

    c)  If we take the trade turnover (wholesale and retail ) in the country in 1926-27 as 100 (31,000,000,000 rubles), then the volume of trade in 1927-28 shows an increase to 124.6 per cent, that in 1928-29 to 160.4 per -cent, and this year, 1929-30, the volume of trade will, by all accounts, reach 202 per cent, i.e., double that of 1926-27.

    d)  If we take the combined balances of all our credit institutions on October 1, 1927 as 100 (9,173,000,000 rubles), then on October 1, 1928, there was an increase to 141 per cent, and on October 1, 1929, an increase to 201.1 per cent, i.e., an amount double that of 1927.

    e)  If the combined state budget for 1926-27 is taken as 100 (6,371,000,000 rubles) that for 1927-28 shows an increase to 125.5 per cent, that for 1928-29 an increase to 146.7 per cent, and that for 1929-30 to 204.4 per cent, i.e., double the budget for 1926-27 (12,605,000,000 rubles).

page 272

    f)  In 1926-27, our foreign trade turnover (exports and imports) was 47.9 per cent of the pre-war level. In 1927-28, however, our foreign trade turnover rose to 56.8 per cent, in 1928-29 to 67.9 per cent, and in 1929-30 it, by all accounts, will be not less than 80 per cent of the pre-war level.

    g)  As a result, we have the following picture of the growth of the total national income during the period under review (in 1926-27 prices): in 1926-27, the national income, according to the data of the State Planning Commission, amounted to 23,127,000,000 rubles; in 1927-28 it amounted to 25,396,000,000 rubles -- an increase of 9.8 per cent; in 1928-29 it amounted to 28,596,000,000 rubles -- an increase of 12.6 per cent; in 1929-30 the national income ought, by all accounts, to amount to not less than 34,000,000,000 rubles, thus showing an increase for the year of 20 per cent. The average annual increase during the three years under review is, therefore, over 15 per cent.

    Our national economy is growing not spontaneously, but in a definite direction, namely, in the direction of industrialisation; its keynote is: industrialisation, growth of the relative importance of industry in the general system of the national economy, transforma-

page 273

tion of our country from an agrarian into an industrial country.

    a)  The dynamics of the relation between industry as a whole and agriculture as a whole from the point of view of the relative importance of industry in the gross output of the entire national economy during the period under review takes the following form: in pre-war times, industry's share of the gross output of the national economy was 42.1 per cent and that of agriculture 57.9 per cent; in 1927-28 industry's share was 45.2 per cent and that of agriculture 54.8 per cent; in 1928-29, industry's share was 48.7 per cent and that of agriculture 51.3 per cent; in 1929-30 industry's share ought to, by all accounts, be not less than 53 per cent and that of agriculture not more than 47 per cent.

    This means that the relative importance of industry is already beginning to surpass the relative importance of agriculture in the general system of national economy, and that we are on the eve of the transformation of our country from an agrarian into an industrial country. (Applause.)

    b)  There is a still more marked preponderance in favour of industry when regarded from the viewpoint of its relative importance in the commodity output of the national economy. In 1926-27, industry's share of the total commodity output of the national economy was 68.8 per cent and that of agriculture 31.2 per cent. In 1927-28, however, industry's share was 71.2 per cent and that of agriculture 28.8 per cent; in 1928-29 industry's share was 72.4 per cent and that of agriculture 27.6 per cent, and in 1929-30, industry's share will, by all accounts, be 76 per cent and that of agriculture 24 per cent.

page 274

    This particularly unfavourable position of agriculture is due, among other things, to its character as small peasant and small-commodity agriculture. Naturally, this situation should change to a certain extent as large-scale agriculture develops through the state farms and collective farms and produces more for the market.

    c)  The development of industry in general, however, does not give a complete picture of the rate of industrialisation. To obtain a complete picture we must also as certain the dynamics of the relation between heavy industry and light industry. Hence, the most striking index of the growth of industrialisation must be considered to be the progressive growth of the relative importance of the output of instruments and means of production (heavy industry) in the total industrial output. In 1927-28, the share of output of instruments and means of production in the total output of all industry amounted to 27.2 per cent while that of the output of consumer goods was 72.8 per cent. In 1928-29, however, the share of the output of instruments and means of production amounted to 28.7 per cent as against 71.3 per cent, and in 1929-30, the share of the output of instruments and means of production, will, by all accounts, already amount to 32.7 per cent as against 67.3 per cent.

    If, however, we take not all industry, but only that part which is planned by the Supreme Council of National Economy, and which embraces all the main branches of industry, the relation between the output of instruments and means of production and the output of consumer goods will present a still more favourable picture, namely: in 1927-28, the share of the output of instruments and means of production amounted to 42.7 per

page 275

cent as against 57.3 per cent; in 1928-29 -- 44.6 per cent as against 55.4 per cent, and in 1929-30, it will, by all accounts, amount to not less than 48 per cent as against 52 per cent for the output of consumer goods.

    The keynote of the development of our national economy is industrialisation, the strengthening and development of our own heavy industry.

    The keynote of the development of our national economy is industrialisation. But we do not need just any kind of industrialisation. We need the kind of industrialisation that will ensure the growing preponderance of the socialist forms of industry over the small-commodity and, still more, over the capitalist forms of industry. The characteristic feature of our industrialisation is that it is socialist industrialisation, an industrialisation which guarantees the victory of the socialised sector of industry over the private sector, over the small-commodity and capitalist sector.

    Here are some data on the growth of capital investments and of gross output according to sectors:

    a)  Taking the growth of capital investments in industry according to sectors, we get the following picture. Socialised sector : in 1926-27 -- 1,270,000,000 rubles; in 1927-28 -- 1,614,000,000 rubles; in 1928-29 -- 2,046,000,000 rubles; in 1929-30 -- 4,275,000,000 rubles. Private and

page 276

capitalist sector : in 1926-27 -- 63,000,000 rubles; in 192-7-28 -- 64,000,000 rubles; in 1928-29 -- 56,000,000 rubles; in 1929-30 -- 51,000,000 rubles.

    This means, firstly, that during this period capital investments in the socialised sector of industry have more than trebled (335 per cent).

    It means, secondly, that during this period capital investments in the private and capitalist sector have been reduced by one-fifth (81 per cent).

    The private and capitalist sector is living on its old capital and is moving towards its doom.

    b)  Taking the growth of gross output of industry according to sectors we get the following picture. Socialised sector : in 1926-27 -- 11,999,000,000 rubles; in 1927-28 -- 15,389,000,000 rubles, in 1928-29 -- 18,903,000,000 rubles; in 1929-30 -- 24,740,000,000 rubles. Private and capitalist sector : in 1926-27 -- 4,043,000,000 rubles; in 1927-28 -- 3,704,000,000 rubles; in 1928-29 -- 3,389,000,000 rubles; in 1929-30 -- 3,310,000,000 rubles.

    This means, firstly, that during the three years, the gross output of the socialised sector of industry more than doubled (206.2 per cent).

    It means, secondly, that in the same period the gross industrial output of the private and capitalist sector was reduced by nearly one-fifth (81.9 per cent).

    If, however, we take the output not of all industry, but only of large-scale (statistically registered) industry and examine it according to sectors, we get the following picture of the relation between the socialised and private sectors. Relative importance of the socialised sector in the output of the country's large-scale industry: 1926-27 -- 97.7 per cent; 1927-28 -- 98.6 per cent; 1928-29 -- 99.1

page 277

per cent; 1929-30 -- 99.3 per cent. Relative importance of the private sector in the output of the country's large-scale industry: 1926-27 -- 2.3 per cent; 1927-28 -- 1.4 per cent; 1928-29 -- 0.9 per cent; 1929-30 -- 0.7 per cent.

    As you see, the capitalist elements in large-scale industry have already gone to the bottom.

    Clearly, the question "who will beat whom," the question whether socialism will defeat the capitalist elements in industry, or whether the latter will defeat socialism, has already been settled in favour of the socialist forms of industry. Settled finally and irrevocably. (Applause.)

    c)  Particularly interesting are the data on the rate of development during the period under review of state industry that is planned by the Supreme Council of National Economy. If the 1926-27 gross output of socialist industry planned by the Supreme Council of National Economy is taken as 100, the 1927-28 gross output of that industry shows a rise to 127.4 per cent, that of 1928-29 to 158.6 per cent and that of 1929-30 will show a rise to 209.8 per cent.

    This means that socialist industry planned by the Supreme Council of National Economy, comprising all the main branches of industry and the whole of heavy industry, has more than doubled during the three years.

    It cannot but be admitted that no other country in the world can show such a terrific rate of development of its large-scale industry.

    This circumstance gives us grounds for speaking of the five-year plan in four years.

    Above I spoke about the state of agriculture as a whole, including forestry, fishing, etc., without dividing agriculture into its main branches. If we separate agriculture as a whole into its main branches, such as, for example, grain production, livestock farming and the production of industrial crops, the situation, according to the data of the State Planning Commission and the People's Commissariat of Agriculture of the U.S.S.R. is seen to be as follows:

    a)  If the grain crop area in 1913 is taken as 100, we get the following picture of the change of the grain crop area from year to year: 1926-27 -- 96.9 per cent; 1927-28 -- 94.7 per cent; 1928-29 -- 98.2 per cent; and this year, 1929-30, the crop area will, by all accounts, be 105.1 per cent of the pre-war level.

    Noticeable is the drop in the grain crop area in 1927-28. This drop is to be explained not by a retrogression of grain farming such as the ignoramuses in the Right opportunist camp have been chattering about, but by the failure of the winter crop on an area of 7,700,000 hectares (20 per cent of the winter crop area in the U.S.S.R.).

    If, further, the gross output of grain in 1913 is taken as 100, we get the following picture: 1927 -- 91.9 per cent; 1928 -- 90.8 per cent; 1929 -- 94.4 per cent, and in 1930

page 283

we shall, by all accounts, reach 110 per cent of the pre-war standard.

    Noticeable here, too, is the drop in the gross output of grain in 1928 due to the failure of the winter crop in the Ukraine and the North Caucasus.

    As regards the marketable part of the gross output of grain (grain sold outside the rural districts), we have a still more instructive picture. If the marketable part of the grain output of 1913 is taken as 100, then the marketable output in 1927 is found to be 37 per cent; in 1928 -- 36.8 per cent, in 1929 -- 58 per cent, and this year, 1930, it will, by all accounts, amount to not less than 73 per cent of the pre-war level.

    Thus, it follows that, as regards grain crop area and gross grain output, we are reaching the pre-war level and slightly exceeding it only this year, 1930.

    It follows, further, that, as regards the marketable part of the grain output, we are still far from having reached the pre-war standard and shall remain below it this year too by about 25 per cent.

    That is the basis of our grain difficulties, which became particularly acute in 1928.

    That, too, is the basis of the grain problem.

    b)  The picture is approximately the same, but with more alarming figures, in the sphere of livestock farming.

    If the number of head of livestock of all kinds in 1916 is taken as 100, we get the following picture for the respective years. In 1927 the number of horses amounted to 88.9 per cent of the pre-war level; large horned cattle -- 114.3 per cent; sheep and goats -- 119.3 per cent; pigs -- 111.3 per cent. In 1928, horses -- 94.6 per cent;

page 284

large horned cattle -- 118.5 per cent; sheep and goats -- 126 per cent; pigs -- 126.1 per cent. In 1929, horses -- 96.9 per cent; large horned cattle -- 115.6 per cent; sheep and goats -- 127.8 per cent; pigs -- 103 per cent. In 1930, horses -- 88.6 per cent; large horned cattle -- 89.1 per cent sheep and goats -- 87.1 per cent; pigs -- 60.1 per cent of the 1916 standard.

    As you see, if we take the figures for the last year into consideration, we have obvious signs of the beginning of a decline in livestock farming.

    The picture is still less comforting from the standpoint of the marketable output of livestock farming, particularly as regards meat and pork fat. If we take the gross output of meat and pork fat for each year as 100 the marketable output of these two items will be: in 1926 -- 33.4 per cent; in 1927 -- 32.9 per cent; in 1928 -- 30.4 per cent; in 1929 -- 29.2 per cent.

    Thus, we have obvious signs of the instability and economic unreliability of small livestock farming which produces little for the market.

    It follows that instead of exceeding the 1916 standard in livestock farming we have in the past year obvious signs of a drop below this standard.

    Thus, after the grain problem, which we are already solving in the main successfully, we are faced with the meat problem, the acuteness of which is already making itself felt, and which is still awaiting solution.

    c) A different picture is revealed by the development af industrial crops, which provide the raw materials for our light industry. If the industrial crop area in 1913 is taken as 100, we have the following: cotton, in 1927 -- 107.1 per cent; in 1928 -- 131.4 per cent; in 1929 -- 151.4

page 285

per cent; in 1930 -- 217 per cent of the pre-war level. Flax, in 1927 -- 86.6 per cent; in 1928 -- 95.7 per cent; in 1929 -- 112.9 per cent; in 1930 -- 125 per cent of the pre-war level. Sugar-beet, in 1927 -- 106.6 per cent; in 1928 -- 124.2 per cent; in 1929 -- 125.8 per cent; in 1930 -- 169 per cent of the pre-war level. Oil crops, in 1927 -- 179.4 per cent; in 1928 -- 230.9 per cent; in 1929 -- 219.7 per cent; in 1930 -- no less than 260 per cent of the pre-war level.

    The same, in the main, favourable picture is presented by the gross output of industrial crops. If the gross output in 1913 is taken as 100, we get the following: cotton, in 1928 -- 110.5 per cent; in 1929 -- 119 per cent; in 1930 we shall have, by all accounts, 182.8 per cent of the pre-war level. Flax, in 1928 -- 71.6 per cent; in 1929 -- 81.5 per cent; in 1930 we shall have, by all accounts, 101.3 per cent of the pre-war level. Sugar beet, in 1928 -- 93 per cent; in 1929 -- 58 per cent, in 1930 we shall have, by all accounts, 139:4 per cent of the pre-war level. Oil crops, in 1928 -- 161.9 per cent; in 1929 -- 149.8 per cent; in 1930 we shall have, by all accounts, 220 per cent of the pre-war level.

    As regards industrial crops, we thus have a more favourable picture, if we leave out of account the 1929 beet crop, which was damaged by moths.

    Incidentally, here too, in the sphere of industrial crops, serious fluctuations and signs of instability are possible and probable in the future in view of the predominance of small farming, similar to the fluctuations and signs of instability that are demonstrated by the figures for flax and oil crops, which come least under the influence of the collective farms and state farms.

page 286

    We are thus faced with the following problems in agriculture:

    1)  the problem of strengthening the position of industrial crops by supplying the districts concerned with sufficient quantities of cheap grain produce;

    2)  the problem of raising the level of livestock farming and of solving the meat question by supplying the districts concerned with sufficient quantities of cheap grain produce and fodder;

    3)  the problem of finally solving the question of grain farming as the chief question in agriculture at the present moment.

    It follows that the grain problem is the main link in the system of agriculture and the key to the solution of all the other problems in agriculture.

    It follows that the solution of the grain problem is the first in order of a number of problems in agriculture.

    But solving the grain problem, and so putting agriculture on the road to really big progress, means completely doing away with the backwardness of agriculture; it means equipping it with tractors and agricultural machines, supplying it with new cadres of scientific workers, raising the productivity of labour, and increasing the output for the market. Unless these conditions are fulfilled, it is impossible even to dream of solving the grain problem.

    Is it possible to fulfil all these conditions on the basis of small, individual peasant farming? No, it is impossible. It is impossible because small-peasant farming is unable to accept and master new technical equipment, it is unable to raise productivity of labour to a suf-

page 287

ficient degree, it is unable to increase the marketable output of agriculture to a sufficient degree. There is only one way to do this, namely, by developing large-scale agriculture, by establishing large farms with modern technical equipment.

    The Soviet country cannot, however, take the line of organising large capitalist farms. It can and must take only the line of organising large farms of a socialist type, equipped with modern machines. Our state farms and collective farms are precisely farms of this type.

    Hence the task of establishing state farms and uniting the small, individual peasant farms into large collective farms, as being the only way to solve the problem of agriculture in general, and the grain problem in particular.

    That is the line the Party took in its everyday practical work after the Fifteenth Congress, especially after the serious grain difficulties that arose in the beginning of 1928.

    The turn of the peasantry towards collectivisation did not begin all at once. Moreover, it could not begin all at once. True, the Party proclaimed the slogan of collectivisation already at the Fifteenth Congress; but the proclamation of a slogan is not enough to cause the peasantry to turn en masse towards socialism. At least one more circumstance is needed for this, namely, that the masses of the peasantry themselves should be convinced that the slogan proclaimed is a correct one and that they should accept it as their own. Therefore, this turn was prepared gradually.

    It was prepared by the whole course of our development, by the whole course of development of our industry, and above all by the development of the industry that supplies machines and tractors for agriculture. It was prepared by the policy of resolutely fighting the kulaks

page 289

and by the course of our grain procurements in the new forms that they assumed in 1928 and 1929, which placed kulak farming under the control of the poor- and middle-peasant masses. It was prepared by the development of the agricultural co-operatives, which train the individualist peasant in collective methods. It was prepared by the network of collective farms, in which the peasantry verified the advantages of collective forms of farming over individual farming. Lastly, it was prepared by the network of state farms, spread over the whole of the U.S.S.R. and equipped with modern machines, which enabled the peasants to convince themselves of the potency and superiority of modern machines.

    It would be a mistake to regard our state farms only as sources of grain supplies. Actually, the state farms, with their modern machines, with the assistance they render the peasants in their vicinity, and the unprecedented scope of their farming were the leading force that facilitated the turn of the peasant masses and brought them on to the path of collectivisation.

    There you have the basis on which arose that mass collective-farm movement of millions of poor and middle peasants which began in the latter half of 1929, and which ushered in a period of great change in the life of our country.

    What measures did the Central Committee take so as to meet this movement fully equipped and to lead it?

    The measures taken by the Central Committee were along three lines: the line of organising and financing state farms; the line of organising and financing collective farms; and lastly, the line of organising the manufacture of tractors and agricultural machinery and of

page 290

supplying the countryside with them through machine and tractor stations, through tractor columns, and so forth.

    a)  As early as 1928, the Political Bureau of the Central Committee adopted a decision to organise new state farms in the course of three or four years, calculating that by the end of this period these state farms could provide not less than 100,000,000 poods of marketable grain. Later, this decision was endorsed by a plenum of the Central Committee. The Grain Trust was organised and entrusted with the task of carrying out this decision. Parallel with this, a decision was adopted to strengthen the old state farms and to enlarge their crop area. The State Farm Centre was organised and entrusted with the task of carrying out this decision.

    I cannot help mentioning that these decisions met with a hostile reception from the opportunist section of our Party. There was talk about the money invested in the state farms being money "thrown away." There was also criticism from men of "science," supported by the opportunist elements in the Party, to the effect that it was impossible and senseless to organise large state farms. The Central Committee, however, continued to pursue its line and pursued it to the end in spite of everything.

    In 1927-28, the sum of 65,700,000 rubles (not counting short-term credits for working capital) was assigned for financing the state farms. In 1928-29, the sum of 185,800,000 rubles was assigned. Lastly, this year 856,200,000 rubles have been assigned. During the period under review, 18,000 tractors with a total of 350,000 h.p. were placed at the disposal of the state farms.

page 291

    What are the results of these measures?

    In 1928-29, the crop area of the Grain Trust amounted to 150,000 hectares, in 1929-30 to 1,060,000 hectares, in 1930-31 it will amount to 4,500,000 hectares, in 1931-32 to 9,000,000 hectares, and in 1932-33, i.e., towards the end of the five-year plan period, to 14,000,000 hectares. In 1928-29 the crop area of the State Farm Centre amounted to 430,000 hectares, in 1929-30 to 860,000 hectares, in 1930-31 it will amount to 1,800,000 hectares, in 1931-32 to 2,000,000 hectares, and in 1932-33 to 2,500,000 hectares. In 1928-29, the crop area of the Association of Ukrainian State Farms amounted to 170,000 hectares, in 1929-30 to 280,000 hectares, in 1930-31 it will amount to 500,000 hectares and in 1932-33 to 720,000 hectares. In 1928-29, the crop area of the Sugar Union (grain crop) amounted to 780,000 hectares, in 1929-30 to 820,000 hectares, in 1930-31 it will amount to 860,000 hectares, in 1931-32 to 980,000 hectares, and in 1932-33 to 990,000 hectares.

    This means, firstly, that at the end of the five-year plan period the grain crop area of the Grain Trust alone will be as large as that of the whole of the Argentine today. (Applause.)

    It means, secondly, that at the end of the five-year plan period, the grain crop area of all the state farms together will be 1,000,000 hectares larger than that of the whole of Canada today. (Applause.)

    As regards the gross and marketable grain output of the state farms, we have the following picture of the change year by year: in 1927-28, the gross output of all the state farms amounted to 9,500,000 centners, of which marketable grain amounted to 6,400,000 centners; in

page 292

1928-29 -- 12,800,000 centners, of which marketable grain amounted to 7,900,000 centners; in 1929-30, we shall have, according to all accounts, 28,200,000 centners, of which marketable grain will amount to 18,000,000 centners (108,000,000 poods); in 1930-31 we shall have 71,700,000 centners, of which marketable grain will amount to 61,000,000 centners (370,000,000 poods), and so on and so forth.

    Such are the existing and anticipated results of our Party's state-farm policy.

    According to the decision of the Political Bureau of the Central Committee of April 1928 on the organisation of new state farms, we ought to receive from the new state farms not less than 100,000,000 poods of marketable grain in 1931-32. Actually, it turns out that in 1931-32 we shall already have from the new state farms alone more than 200,000,000 poods. That means the programme will have been fulfilled twice over.

    It follows that the people who ridiculed the decision of the Political Bureau of the Central Committee fiercely ridiculed themselves.

    According to the five-year plan endorsed by the Congress of Soviets, by the end of the five-year plan period the state farms controlled by all organisations were to have a total crop area of 5,000,000 hectares. Actually, this year the crop area of the state farms already amounts to 3,800,000 hectares, and next year, i.e., in the third year of the five-year period, their crop area will amount to 8,000,000 hectares.

    This means that we shall fulfil and overfulfil the five-year programme of state-farm development in three years.

page 293

    According to the five-year plan, by the end of the five-year period the gross grain output of the state farms was to amount to 54,300,000 centners. Actually, this year the gross grain output of the state farms already amounts to 28,200,000 centners, and next year it will amount to 71,700,000 centners.

    This means that as regards gross grain output we shall fulfil and overfulfil the five-year plan in three years.

    The five-year plan in three years!

    Let the bourgeois scribes and their opportunist echoers chatter now about it being impossible to fulfil and overfulfil the five-year plan of state-farm development in three years.

    b)  As regards collective-farm development, we have an even more favourable picture.

    It follows, therefore, that the progressive growth of the socialist sector in the sphere of industry and in the sphere of agriculture is a fact about which there can not be the slightest doubt.

    What can this signify from the point of view of the material conditions of the working people?

    It signifies that, thereby, the foundations have already been laid for a radical improvement in the material and cultural conditions of the workers and peasants.

    Why? How?

    Because, firstly, the growth of the socialist sector signifies, above all, a diminution of the exploiting elements in town and country, a decline in their relative importance in the national economy. And this means that the workers' and peasants' share of the national income must inevitably increase owing to the reduction of the share of the exploiting classes.

    Because, secondly, with the growth of the socialised (socialist) sector, the share of the national income that has hitherto gone to feed the exploiting classes and their hangers-on, is bound henceforth to remain in production, to be used for the expansion of production, for building new factories and mills, for improving the conditions of life of the working people. And this means that the working class is bound to grow in numbers and strength, and unemployment to diminish and disappear.

    Because, lastly, the growth of the socialised sector, inasmuch as it leads to an improvement in the material conditions of the working class, signifies a progressive

page 300

increase in the capacity of the home market, an increase in the demand for manufactured goods on the part of the workers and peasants. And this means that the growth of the home market will outstrip the growth of industry and push it forward towards continuous expansion.

    All these and similar circumstances are leading to a steady improvement in the material and cultural conditions of the workers and peasants.

    a)  Let us begin with the numerical growth of the working class and the diminution of unemployment.

    In 1926-27, the number of wage-workers (not including unemployed) was 10,990,000. In 1927-28, however, we had 11,456,000, in 1928-29 -- 11,997,000 and in 1929-30, we shall, by all accounts, have not less than 13,129,000. Of these, manual workers (including agricultural labourers and seasonal workers) numbered in 1926-27 -- 7,069,000, in 1927-28 -- 7,404,000, in 1928-29 -- 7,758,000, in 1929-30 -- 8,533,000. Of these, workers employed in large-scale industry (not including office employees) numbered in 1926-27 -- 2,439,000, in 1927-28 -- 2,632,000, in 1928-29 -- 2,858,000, in 1929-30 -- 3,029,0.00.

    Thus, we have a picture of the progressive numerical growth of the working class; and whereas the number of wage-workers has increased 19.5 per cent during the three years and the number of manual workers 20.7 per cent, the number of industrial workers has increased 24.2 per cent.

    Let us pass to the question of unemployment. It must be said that in this sphere considerable confusion reigns both at the People's Commissariat of Labour and at the All-Union Central Council of Trade Unions.

page 301

    On the one hand, according to the data of these institutions we have about a million unemployed, of whom, those to any degree skilled constitute only 14.3 per cent, while about 73 per cent are those engaged in so-called intellectual labour and unskilled workers; the vast majority of the latter are women and young persons not connected with industrial production.

    On the other hand, according to the same data, we are suffering from a frightful shortage of skilled labour, the labour exchanges are unable to meet about 80 per cent of the demands for labour by our factories and thus we are obliged hurriedly, literally as we go along, to train absolutely unskilled people and make skilled workers out of them in order to satisfy at least the minimum requirements of our factories.

    Just try to find your way out of this confusion. It is clear, at all events, that these unemployed do not constitute a reserve and still less a permanent army of unemployed workers of our industry. Well? Even according to the data of the People's Commissariat of Labour it appears that in the recent period the number of unemployed has diminished compared with last year by over 700,000. This means that by May 1, this year, the number of unemployed had dropped by over 42 per cent.

    There you have another result of the growth of the socialist sector of our national economy.

    b)  We get a still more striking result when we examine the matter from the point of view of the distribution of the national income according to classes. The question of the distribution of the national income according to classes is a fundamental one from the point of view of the material and cultural conditions of the

page 302

workers and peasants. It is not for nothing that the bourgeois economists of Germany, Britain and the United States try to confuse this question for the benefit of the bourgeoisie by publishing, every now and again, their "absolutely objective" investigations on this subject.

    According to data of the German Statistical Board, in 1929 the share of wages in Germany's national income was 70 per cent, and the share of the bourgeoisie was 30 per cent. According to data of the Federal Trade Commission and the National Bureau of Economic Research, the workers' share of the national income of the United States in 1923 amounted to over 54 per cent and the capitalists' share to over 45 per cent. Lastly, according to data of the economists Bowley and Stamp, the share of the working class in Britain's national income in 1924 amounted to a little less than 50 per cent and the capitalists' share to a little over 50 per cent.

    Naturally, the results of these investigations cannot be taken on trust. This is because, apart from faults of a purely economic order, these investigations have also another kind of fault, the object of which is partly to conceal the incomes of the capitalists and to minimise them, and partly to inflate and exaggerate the incomes of the working class by including in it officials who receive huge salaries. And this is apart from the fact that these investigations often do not take into account the incomes of farmers and of rural capitalists in general.

    Comrade Varga has subjected these statistics to a critical analysis. Here is the result that he obtained. It appears that the share of the workers and of the working people generally in town and country, who do not ex-

page 303

ploit the labour of others, was in Germany 55 per cent of the national income, in the United States -- 54 per cent, in Britain -- 45 per cent; whereas the capitalists' share in Germany was 45 per cent, in the United States -- 46 per cent, and in Britain -- 55 per cent.

    That is how the matter stands in the biggest capitalist countries.

    How does it stand in the U.S.S.R.?

    Here are the data of the State Planning Commission. It appears that:

    a)  The share of the workers and working peasants, who do not exploit the labour of others, constituted in our country, in 1927-28, 75.2 per cent of the total national income (including the share of urban and rural wage-workers -- 33.3 per cent); in 1928-29 it was 76.5 per cent (including the share of urban and rural wage workers -- 33.2 per cent); in 1929-30 it was 77.1 per cent (including the share of urban and rural wage-workers -- 33.5 per cent).

    b)  The share of the kulaks and urban capitalists was in 1927-28 -- 8.1 per cent; in 1928-29 -- 6.5 per cent; in 1929-30 -- 1.8 per cent.

    c)  The share of handicraftsmen, the majority of whom are working people, was in 1927-28 -- 6.5 per cent; in 1928-29 -- 5.4 per cent; in 1929-30 -- 4.4 per cent.

    d)  The share of the state sector, the income of which is the income of the working class and of the working people generally, was in 1927-28 -- 8.4 per cent; in 1928-29 -- 10 per cent; in 1929-30 -- 15.2 per cent.

    e)  Lastly, the share of the so-called miscellaneous (meaning pensions) was in 1927-28 -- 1.8 per cent; in 1928-29 -- 1.6 per cent; in 1929-30 -- 1.5 per cent.

page 304

    Thus, it follows that, whereas in the advanced capitalist countries the share of the exploiting classes in the national income is about 50 per cent and even more, here, in the U.S.S.R., the share of the exploiting classes in the national income is not more than 2 per cent.

    This, properly speaking, explains the striking fact that in the United States in 1922, according to the American bourgeois writer Denny "one per cent of estate holders owned 59 per cent of the total wealth," and in Britain, in 1920-21, according to the same Denny, "less than two per cent of the owners held 64 per cent of the total wealth " (see Denny's book America Conquers Britain ).

    Can such things happen in our country, in the U.S.S.R., in the Land of Soviets? Obviously, they cannot. There have long been no "owners" of this kind in the U.S.S.R., nor can there be any.

    But if in the U.S.S.R., in 1929-30, only about two per cent of the national income falls to the share of the exploiting classes, what happens to the rest, the bulk of the national income?

    Obviously, it remains in the hands of the workers and working peasants.

    There you have the source of the strength and prestige of the Soviet regime among the vast masses of the working class and peasantry.

    There you have the basis of the systematic improvement in the material welfare of the workers and peasants of the U.S.S.R.

    f)  In the light of these decisive facts, one can quite understand the systematic increase in the real wages of the workers, the increase in the workers' social insurance budget, the increased assistance to poor- and middle-

page 305

peasant farms, the increased assignments for workers' housing, for the improvement of the workers' living conditions and for mother and child care, and, as a consequence, the progressive growth of the population of the U.S.S.R. and the decline in mortality, particularly in infant mortality.

    It is known, for example, that the real wages of the workers, including social insurance and allocations from profits to the fund for improvement of the workers' living conditions, have risen to 167 per cent of the pre-war level. During the past three years, the workers' social insurance budget alone has grown from 980,000,000 rubles in 1927-28 to 1,400,000,000 rubles in 1929-30. The amount spent on mother and child care during the past three years (1927-28 -- 1929-30) was 494,000,000 rubles. The amount spent on pre-school education (kindergartens, playgrounds, etc.) during the same period was 204,000,000 rubles. The amount spent on workers' housing was 1,880,000,000 rubles.

    This does not mean, of course, that everything necessary for an important increase in real wages has already been done, that real wages could not have been raised to a higher level. If this has not been done, it is because of the bureaucracy in our supply organisations in general, and primarily and particularly because of the bureaucracy in the consumers' co-operatives. According to the data of the State Planning Commission, in 1929-30 the socialised sector of internal trade embraced over 99 per cent of wholesale trade and over 89 per cent of retail trade. This means that the co-operatives are systematically ousting the private sector and are becoming the monopolists in the sphere of trade. That, of course, is

page 306

good. What is bad, however, is that in a number of cases this monopoly operates to the detriment of the consumers. It appears, that in spite of the almost monopolist position they occupy in trade, the co-operatives prefer to supply the workers with more "paying" goods, which yield bigger profits (haberdashery, etc.), and avoid supplying them with less "paying," although more essential, goods for the workers (agricultural produce). As a result, the workers are obliged to satisfy about 25 per cent of their requirements for agricultural produce in the private market, paying higher prices. That is apart from the fact that the co-operative apparatus is concerned most of all with its balance and is therefore reluctant to reduce retail prices in spite of the categorical instructions of the leading centres. It follows, therefore, that in this case the co-operatives function not as a socialist sector, but as a peculiar sector that is infected with a sort of Nepman spirit. The question is, does anyone need co-operatives of this sort, and what benefit do the workers derive from their monopoly if they do not carry out the function of seriously raising the workers' real wages?

    If, in spite of this, real wages in our country are steadily rising from year to year, it means that our social system, our system of distribution of the national income, and our entire wages policy, are such that they are able to neutralise and make up for all defects arising from the co-operatives.

    If to this circumstance we add a number of other factors, such as the increase in the role of public catering, lower rents for workers, the vast number of stipends paid to workers and workers' children, cultural services, and so forth, we may boldly say that the percent-

page 307

age increase of workers' wages is much greater than is indicated in the statistics of some of our institutions.

    All this taken together, plus the introduction of the seven-hour day for over 830,000 industrial workers (33.5 per cent), plus the introduction of the five-day week for over a million and a half industrial workers (63.4 per cent), plus the extensive network of rest homes, sanatoria and health resorts for workers, to which more than 1,700,000 workers have gone during the past three years -- all this creates conditions of work and life for the working class that enable us to rear a new generation of workers who are healthy and vigorous, who are capable of raising the might of the Soviet country to the proper level and of protecting it with their lives from attacks by its enemies. (Applause.)

    As regards assistance to the peasants, both individual and collective-farm peasants, and bearing in mind also assistance to poor peasants, this in the past three years (1927-28 -- 1929-30) has amounted to a sum of not less than 4,000,000,000 rubles, provided in the shape of credits and assignments from the state budget. As is known, assistance in the shape of seeds alone has been granted the peasants during the past three years to the amount of not less than 154,000,000 poods.

    It is not surprising that the workers and peasants in our country are living fairly well on the whole, that general mortality has dropped 36 per cent, and infant mortality 42.5 per cent, below the pre-war level, while the annual increase in population in our country is about three million. (Applause.)

    As regards the cultural conditions of the workers and peasants, in this sphere too we have some achievements,

page 308

which, however, cannot under any circumstances satisfy us, as they are still small. Leaving out of account workers' clubs of all kinds, village reading rooms, libraries and abolition of illiteracy classes, which this year are being attended by 10,500,000 persons, the situation as regards cultural and educational matters is as follows. This year elementary schools are being attended by 11,638,000 pupils; secondary schools -- 1,945,000; industrial and technical, transport and agricultural schools and classes for training workers of ordinary skill -- 333,100; secondary technical and equivalent trade schools -- 238,700; colleges, general and technical -- 190,400. All this has enabled us to raise literacy in the U.S.S.R. to 62.6 per cent of the population, compared with 33 per cent in pre-war times.

    The chief thing now is to pass to universal, compulsory elementary education. I say the "chief" thing, because this would be a decisive step in the cultural revolution. And it is high time we took this step, for we now possess all that is needed to organise compulsory, universal elementary education in all areas of the U.S.S.R.