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The Industrialisation of Soviet Russia Volume 7: The Soviet Economy and the Approach of War, 1937–1939 pp 157–202Cite as

Palgrave Macmillan

The Partial Recovery of the Economy in 1938

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Abstract

This chapter reviews developments through 1938. The narrative starts from the collapse of the state’s capacity to plan the economy under the pressure of purges and continues through the subsequent rebuilding of the planning process. The economy’s main branches and activities are considered, especially the growth of industrial production and rearmament efforts; the allocation of efforts to capital construction projects, many of them built by forced labour; and the state of imbalance and shortage in the retail market. Consideration of agriculture is postponed to the next chapter.

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Notes

  1. 1.

    RGAE, 4372/36/203: 43–45.

  2. 2.

    For Yakimovich, this was his only private meeting with Stalin. Mikoyan also attended, but did not arrive until the main economic officials had left, and was present for only ten minutes. See Stalin’s meetings day by day, at the Melbourne Gateway to Research on Soviet History, http://www.melgrosh.unimelb.edu.au/.

  3. 3.

    Smirnov’s memorandum, from RGAE, 4372/92/88: 136ff. The Directives, from GARF, 5446/22a/1092: 142–136 (September 1937).

  4. 4.

    A professional economist, Smirnov had worked in Gosplan since 1930, as head first of its Capital Construction Department and then of its Department of Comprehensive Planning. He was placed in charge of Gosplan in February 1937, when Mezhlauk was appointed commissar of Heavy Industry, following the death of Ordzhonikidze. In a statement to the NKVD on July 1, while under arrest, A. I. Gaister, who worked in Gosplan in 1931 to 1935, claimed that he had attended informal evening meetings of Gosplan staff, including Smirnov. He alleged that these discussed and criticised the party line on industrialisation and rural policy (Shikheeva-Gaister (2012): 234–235). This evidence would have been sufficient to condemn Smirnov.

  5. 5.

    N. A. Voznesenskii (1903–1950) was from a white-collar family; his father had a post in a timber office. As a young man, Voznesenskii worked as a carpenter and printer. Joining the party in 1919, he became an organiser of the Komsomol. He graduated from the Sverdlov Communist University in 1924 and worked as a party organiser in the Donbass from 1924 to 1928. He entered the Economic Institute of Red Professors as a student in 1928, graduated in 1931, and continued to teach there until 1936. He worked in the Leningrad planning department from 1935, moving to Gosplan in 1937. For much of the 1930s he also worked in Rabkrin (the government inspectorate) and KSK (the Commission of Soviet Control), two of the organisations responsible for curbing corruption, abuses, and (of course) ‘wrecking’. He was arrested in October 1949, and executed in September 1950; A. G. Zverev (1900–1969), was the sixth of thirteen children; his father was a peasant and worker in a small village in the Ivanovo textile region. Zverev worked in the textile industry before the revolution, joined the party in 1919, and after service in the Red Army as a cavalryman, he held local financial posts in the 1920s. He studied at the Moscow Financial Economic Institute from 1930 to 1933 and headed the financial department of Moscow’s Bauman district from 1932 to 1936. He was the people’s commissar of Finance from 1937 to 1960 continuously, but for a short break in 1948.

  6. 6.

    SZ (1937), no. 75: art. 364 (November 29, 1937). A secret decree on the same date specified that the production of the Commissariat of Defence Industry would amount to 10.5 billion rubles out of the total for the heavy industry group of 43.9 billion rubles (GARF, 5446/1/496: 151–152, art. 2090).

  7. 7.

    SZ (1938), no. 1: art. 6 (December 20, 1937).

  8. 8.

    GARF, 5446/1/142: 205 (art. 86).

  9. 9.

    RGASPI, 17/3/995: 1–2; this was item V on the agenda.

  10. 10.

    In 1937, investment had amounted to 27,519 million rubles (excluding extra-plan and above-limit outlays), but this figure was calculated on a somewhat different basis from the 1938 plan. Voznesenskii later reported that that capital investment in 1938 would amount to 28.4 billion rubles, and this was 13% greater than investment realised in 1937, implying that in 1937 investment in comparable terms was 25.1 billion rubles. RGAE, 4372/57/243: 1–2 (not dated but October 1938).

  11. 11.

    RGASPI, 17/3/996: 1, 42–46; GARF, 5446/1/143: 266–273 and 5446/1/498: 101–102 (art. 239). The plan did not include investment in the electricity industry, or defence industry investment in the Commissariat of Heavy Industry, so the total investment planned would be higher than these figures.

  12. 12.

    For Kasatkin’s dismissal, see RGASPI, 17/3/1004: art. 177.

  13. 13.

    For the Politburo session and the Sovnarkom decisions, see RGASPI, 17/3/998: 2, 60–69; 17/162/23: 1–2, and GARF, 5446/1/499: 12–56 (art. 582/120ss).

  14. 14.

    GARF, 5446/1/142: 286–295. The statute was published at the time.

  15. 15.

    GARF, 5446/1/142: 6. A year later, 14 had been established, each with a staff of 10–14 (Harrison, 1985: 20).

  16. 16.

    RGAE, 4372/37/95 (memorandum of Gosplan’s department of the comprehensive national-economic plan, dated August 16, 1939).

  17. 17.

    RGASPI, 17/162/23: 15–16 (art. 184III).

  18. 18.

    RGASPI, 17/162/23: 142 (art. 96).

  19. 19.

    RGASPI, 17/162/24: 14 (art. 108).

  20. 20.

    RGASPI, 17/162/24: 17 (art. 182). In his diary A. G. Man’kov, a Leningrad postgraduate and teacher, described how he learned about a ‘concealed mobilisation’ on September 29. He was called up on October 2, and demobilised on October 24. Students from his faculty were called up, and a large number of workers from Leningrad factories. According to his account, their uniforms and footwear were poor and they slept in tents; during the night the rain soaked their blankets, but they merely reported this to the authorities, ‘half-joking, half serious’: ‘The submissiveness, tolerance and patience of the Russian soldier is a pledge that he is unconquerable.’ The young lieutenants were limited in their knowledge and competence, leading to confusion and disorder (Man’kov 2001: 191–196).

  21. 21.

    GARF, 5446/1/498: 111–112 (art. 278/52s).

  22. 22.

    GARF, 5446/1/498: 116–119 (art. 287/54s).

  23. 23.

    RGASPI, 17/162/22: 157 (art. 256).

  24. 24.

    RGASPI, 17/162/22: 154, 165 (art. 231).

  25. 25.

    RGASPI, 17/162/23: 127–128, 131 (arts. 19 and 39).

  26. 26.

    RGASPI, 17/3/1002: 18–20 (art. 20).

  27. 27.

    RGASPI, 17/162/22: 14 (art. 184II, dated April 20).

  28. 28.

    RGASPI, 17/162/23: 86–90, 115–118 (art. 77, dated June 17), which lists 13 items of new military-related investment.

  29. 29.

    RGASPI, 17/162/23: 101, 102 (dated July 5).

  30. 30.

    RGASPI, 17/162/23: 148–150 (art. 191, dated September 3).

  31. 31.

    GARF, 5446/1/501 (art. 1179/290ss).

  32. 32.

    RGASPI, 17/162/22: 15 (art. 195, dated April 21).

  33. 33.

    RGASPI, 17/162/23: 135–136 (art. 67).

  34. 34.

    GARF, 5446/1/501.

  35. 35.

    GARF, 6757/1/7: 13–56.

  36. 36.

    Glavnoe upravlenie lagerei (2000): 709–712; GARF, 9414/1/2947: 71–79. Railway construction was assigned to no less than six camps in the Far East (GARF, R-5446/22а/89, 255).

  37. 37.

    Glavnoe upravlenie lagerei (2000): 770–771.

  38. 38.

    Glavnoe upravlenie lagerei (2000): 772.

  39. 39.

    Upadyshev (2007): 167, 168, 172.

  40. 40.

    GARF, 5446/1/498: 76–78.

  41. 41.

    GARF, 5446/1/498: 80.

  42. 42.

    GARF, 5446/1v/500, 159.

  43. 43.

    This is the difference between 730 million rubles, the value of all railway construction carried out by the NKVD in the Far East in 1938 (reported in February 1939 by Beria, GARF, 5446/24а/2332, 59), and 410 million rubles, the value of Far Eastern railway construction carried out in 1938 within the budget of the NKVD itself (GARF, R-5446/24а/18, 111).

  44. 44.

    As of November 1936, the plan for the value of capital works by the NKVD in that year, including work funded from the budgets of other commissariats, amounted to 3.57 billion rubles (GARF, 5446/20a/461: 40; also R-5446/20/62: 170), and the comparable outcome anticipated at that time (in estimate prices of 1935) was 3.38 billion (GARF, R-5446/20а/461: 1).

  45. 45.

    GARF, 5446/22а/134: 17.

  46. 46.

    GARF, 5446/22а/134: 41.

  47. 47.

    GARF, 5446/24а/18: 69; 5446/22а/142: 5.

  48. 48.

    GARF, 9414/1/368: 124.

  49. 49.

    Based on GARF, 9414/1/1155: 20–22. In May 1938 the Ukhta-Pechora camp was subdivided into four separate camps for oil (Ukhta-Izhma), coal (Vorkuta), timber (Ust’-Vym), and railways (the Pechora railway). These were all included within the Ukhta-Pechora complex, although the Ust’-Vym camp should be counted as a timber camp.

  50. 50.

    GARF, 5446/22/36: 1–2.

  51. 51.

    GARF, 5446/1/497: 56 (decree of Sovnarkom and the Central Committee, February 11, 1938).

  52. 52.

    Tragediya, 5(2) (2006): 567–568 (A. Roginskii and N. Okhotina).

  53. 53.

    Otechestvennaya istoriya (1997), no. 4: 77 (V. N. Zemskov).

  54. 54.

    Lubyanka (2004): 469–470.

  55. 55.

    Camps, from GARF, 9414/1/1155: 2. Colonies and prisons, from GARF, 9414/1/2740: 41, 50. On the deficient coverage of these figures, see the note under Table B.4.

  56. 56.

    GARF, 9414/1/19: 412–414; also 9414/1/17: 20–21.

  57. 57.

    GARF, 9414/1/1140: 83. The figures for 1938 here and below exclude the North-Eastern camp, which supplied labour to Dal’stroi. They are most likely understated. In April 1939, Beria reported to the government that the camps held a further 150,000 prisoners classed as ‘weakened and less than fully fit’ (GARF, R-5446/23а/76: 6–7).

  58. 58.

    GARF, 8131/37/145: 24, 26–28.

  59. 59.

    On the settlers in the Ukhta-Pechora trust, see Okhotin and Roginskii, eds., Zven’ya, 1 (1991): 349 (Kaneva).

  60. 60.

    GARF, 5446/30/1742: 28.

  61. 61.

    GARF, 9414/1/1140: 83.

  62. 62.

    GARF, 5446/22а/41: 5–6.

  63. 63.

    Poor quality of GULAG construction: GARF, 9414/4/3: 25–26. Financial losses of GUSHOSDOR projects: GARF, 5446/23а/134: 4–7.

  64. 64.

    Zaklyuchennye (2008): 190–192.

  65. 65.

    GARF, 5446/30/1742: 28.

  66. 66.

    Calculated from GARF, 9414/1/1155: 20. Railway investments: 533.7 million rubles in 1936, 730 million in 1938. Prisoners held in BAMlag: 157,500 and 252,800.

  67. 67.

    Gregory and Lazarev, eds. (2003), 115–116 (Nordlander).

  68. 68.

    Chemically pure gold: 51.5 tons in 1937, 62 tons in 1938 (Shirokov, 2014, 141). Prisoners held in the Far Eastern camp: 138,200 on January 1, 1939; 90,700 one year before; and around 70,000 one year before that (GARF, 9414/1/1155: 20); the implied change in annual averages for 1938 over 1937 is 40%.

  69. 69.

    The information here and below is taken from the report of work by Dal’stroi for 1938 (RGAE, 7733/36/99: 1–12).

  70. 70.

    Shirokov (2000): 116–117.

  71. 71.

    Polyakov, ed., Naselenie, 1 (2000): 321 (V. N. Zemskov).

  72. 72.

    RGAE, 7733/36/99: 12.

  73. 73.

    GARF, 9401/1а/20: 284–285 (NKVD Order no. 00518, August 11, 1938).

  74. 74.

    GARF, 9414/1/17: 162–164; also 9414/1/18: 343–346.

  75. 75.

    RGAE, 4372/36/256: 1–2, 14.

  76. 76.

    The Sovnarkom decree was approved on June 4 and endorsed by the Politburo the following day (GARF, 5446/1/146: 72–138 (art. 720); RGASPI, 17/3/998: 5). The brief announcement of the quarterly plan to the public, before it had been approved by Sovnarkom and the Politburo, seems to have been without precedent. This practice was repeated with the plan for the fourth quarter.

  77. 77.

    GARF, 5446/1/146: 78.

  78. 78.

    RGASPI, 17/3/1000: 31 and 17/162/23: 96 (decision of July 4); GARF, 5446/1/500: 48–49 (decree of July 5, art. 813).

  79. 79.

    Izvestiya, September 4, 1938.

  80. 80.

    Pravda, September 24, 1938.

  81. 81.

    GARF, 5446/1/500: 163–178 (art. 989).

  82. 82.

    Industrializatsiya 1938–1941 (1973): 145 (report by Voznesenskii, dated October 4, 1940).

  83. 83.

    The publication of these previously top-secret figures was an anomaly in a time when the appearance of any statistics in the press was increasingly restricted. Only two years before this, Kraval’, then head of TsUNKhU, had protested vigorously because the Commissariat of Heavy Industry had issued figures from which it was possible (using methods familiar to Western Sovietologists) to deduce the amount of armaments production. The incident is described in Barber and Harrison, eds. (2000): 23 (Barber, Harrison, Simonov, and Starkov). That the Soviet authorities had decided to reveal the rapid expansion of the industry as a warning to the aggressive powers is possible, although unsupported by evidence.

  84. 84.

    Industrializatsiya 1938–1941 (1973): 135.

  85. 85.

    Planovoe khozyaistvo (1940), no. 1: 12.

  86. 86.

    For these figures, measured in value terms, see RGAE, 1562/329/2383: 7, 9.

  87. 87.

    Europe-Asia Studies, 49(3) (1997): 375 (Davies and Harrison).

  88. 88.

    Reprinted in Nevezhin (2003): 174.

  89. 89.

    Byushgens, ed., Samoletostroenie, 1 (1992): 142–143.

  90. 90.

    RGASPI, 17/162/24, 20–21 (art. 250). The first flight of this fighter did not take place until January 21, 1940; it crashed in January 1941, and Tairov himself was killed in an air disaster in October 1941.

  91. 91.

    Byushgens, ed., Samoletostroenie, 1 (1992): 238–241.

  92. 92.

    Glavnyi voennyi sovet 1938–1941 (2004): 151–152.

  93. 93.

    Chuev (1998): 87.

  94. 94.

    On the eve of the war Pavlov was placed in charge of the Western front. Made a scapegoat for the catastrophic failures of the first weeks of the Nazi invasion, he was executed on July 22, 1941. His conduct at that time is discussed in Voprosy istorii (2010), no. 5: 41–51 (I. A. Basyuk).

  95. 95.

    Glavnyi voennyi sovet (2004): 336–341.

  96. 96.

    Glavnyi voennyi sovet (2004): 37–40.

  97. 97.

    Glavnyi voennyi sovet (2004): 47–49.

  98. 98.

    Glavnyi voennyi sovet (2004): 160–163.

  99. 99.

    Glavnyi voennyi sovet (2004): 335–344.

  100. 100.

    Recorded by his stenographer A. A. Khatuntsev, and reprinted in Nevezhin (2003): 176–177. Other records of this passage are reprinted in Nevezhin (2003): 179, 183.

  101. 101.

    Glavnyi voennyi sovet (2004): 35.

  102. 102.

    Glavnyi voennyi sovet (2004): 22–23 (Мarch 29–April 1).

  103. 103.

    Glavnyi voennyi sovet (2004): 21.

  104. 104.

    Glavnyi voennyi sovet (2004): 199.

  105. 105.

    Glavnyi voennyi sovet (2004): 400–402.

  106. 106.

    Glavnyi voennyi sovet (2004): 394–398.

  107. 107.

    Glavnyi voennyi sovet (2004): 398–399.

  108. 108.

    Bakulin had joined the party in February 1918, and he followed this with a varied career in the army, graduating from the Far East Military Academy in 1929. In September 1933 he became a political commissar on the railways, and served on the railways in various political capacities until his appointment as a people’s commissar.

  109. 109.

    GARF, 5446/1/142: 57 (art. 26).

  110. 110.

    GARF, 5446/22a/402: 42–1 (sent to Molotov on May 23).

  111. 111.

    GARF, 5446/22a/408, 17–1. We have not found out what happened to these railway workers and their families.

  112. 112.

    Zheleznodorozhnyi transport (1970): 413. Measured in ton-kilometres, the volume of freight increased by 4.4%. This was because of the continued increase in haulage over longer distances. The volume of passenger traffic increased slightly.

  113. 113.

    Zheleznodorozhnyi transport (1970): 351, 412–413.

  114. 114.

    Zheleznodorozhnyi transport (1970): 311.

  115. 115.

    Zheleznodorozhnyi transport (1970): 309.

  116. 116.

    There is some uncertainty about the value of private-sector transactions in 1938 shown in Table 9 (for explanation, see the note to Table B.43). This depended largely on the value of trade in the kolkhoz market, where collective farm households sold private produce to urban households at unregulated prices. Other sources suggest that the value of kolkhoz market trade in 1938 could not have been less than in 1937. Correcting this figure would not change the point made in the text, however: the source of inflationary pressure in 1938 was the excess of purchasing power created in the public sector. Recording a higher value for kolkhoz trade in 1938 would increase the sums of private sector incomes and outlays by the same amount; it would reduce the share of the public sector in retail transactions, but not its role as the origin of retail shortages.

  117. 117.

    Garros et al. (1995): 214–215 (diary of Galina Shtange, wife of a professor of railway engineering).

  118. 118.

    Man’kov (2001): 186, 207.

  119. 119.

    GARF, 5446c/22a/424: 1–3.

  120. 120.

    RGASPI, 17/162/23: 1–2 (Politburo session of April 25, item V); GARF, 5446/1/499, 12–56 (Sovnarkom decree of April 28, art. 582/120ss). There were small changes betweeen April 25 and 28.

  121. 121.

    For the import figures see GARF, 5446/1/499: 17–20.

  122. 122.

    The Soviet Union sought negotiation of a new 200-million-mark credit from Germany, but this came to nothing (Moskva-Berlin, 3 (2011): 254–259. 261–262, 265–266).

  123. 123.

    RGASPI, 17/162/22: 116 (art. 60).

  124. 124.

    RGASPI, 17/162/22: 124 (art. 30).

  125. 125.

    RGASPI, 17/162/22: 132 (art. 133).

  126. 126.

    RGASPI, 17/162/22: 151 (art. 167).

  127. 127.

    RGASPI, 17/162/23: 4 (art. 1).

  128. 128.

    RGASPI, 17/162/23: 13 (art. 184).

  129. 129.

    GARF, 5446/1/499: 106–107 (art. 694/152ss).

  130. 130.

    GARF, 5446/1/499: 108 (art. 695/153ss).

  131. 131.

    GARF, 5446/1/499: 110 (art. 697/155ss).

  132. 132.

    RGASPI, 17/162/23: 84 (art. 69).

  133. 133.

    RGASPI, 17/162/23: 90 (art. 77).

  134. 134.

    RGASPI, 17/162/23: 101–102.

  135. 135.

    RGASPI, 17/162/23: 104.

  136. 136.

    RGASPI, 17/162/23: 120 (art. 223).

  137. 137.

    RGASPI, 17/162/23: 125 (art. 10). Ustinov (1908–1984) later became the People’s Commissar of Armaments; in 1965 he became a candidate member and in 1976 a full member of the Politburo, and Minister of Defence of the USSR.

  138. 138.

    RGASPI, 17/162/23: 127 (art. 17).

  139. 139.

    GARF, 5446/1/500: 182–185 (art. 1008/242ss).

  140. 140.

    GARF, 5446/1/500: 189 (art. 1010/244ss).

  141. 141.

    GARF, 5446/1/500: 182–185 (art. 1018/246ss).

  142. 142.

    RGASPI, 17/162/24: 17 (art. 176).

  143. 143.

    GARF, 5446/1/501: 58–64 (art. 1038/277ss).

  144. 144.

    GARF, 5446/1/501: 65 (art. 1139/278ss).

  145. 145.

    RGASPI, 17/162/24: 32 (art. 93).

  146. 146.

    GARF, 5446/1/501: 184 (art. 1325/313ss).

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Authors and Affiliations

  1. Centre for Russian, European, and Eurasian Studies, University of Birmingham, Birmingham, UK

    R. W. Davies

  2. Department of Economics, University of Warwick, Coventry, UK

    Mark Harrison

  3. National Research University Higher School of Economics, Moscow, Russia

    Oleg Khlevniuk

  4. School of Historical and Philosophical Studies, University of Melbourne, Melbourne, Australia

    Stephen G. Wheatcroft

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  1. R. W. Davies
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Davies, R.W., Harrison, M., Khlevniuk, O., Wheatcroft, S.G. (2018). The Partial Recovery of the Economy in 1938. In: The Industrialisation of Soviet Russia Volume 7: The Soviet Economy and the Approach of War, 1937–1939. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-36238-4_6

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