The Economy in 1934

Abstract

In Chapter 1 we saw that after much discussion in the course of 1933 the second five-year plan, approved at the XVII party congress, included an investment figure which assumed that the average annual investment during the last four years of the plan would be over 50 per cent greater than actual investment in 1933.¹ This implied a very substantial increase of investment in 1934, but it would nevertheless have been too small to contain the ambitions of key sectors of the economy. The discussions of the plan for 1934 which took place in 1933 simultaneously with the discussions about the five-year plan were strongly influenced by pressure from key sectors of the economy, particularly the army and the armaments industries. Their expenditure had been severely restricted in 1933, a year of economic crisis – it had even been reduced as compared with 1932. In June 1933, a commission headed by Ordzhonikidze, cutting across the discussions about the five-year plan, concluded that it was essential to expand the capacity of the armaments industries very considerably. Investment in these industries in 1933 amounted to 604 million rubles. The commission proposed that it should amount to as much as 3,650 million rubles in the two years 1934–35. This enormous figure excluded investment for defence purposes in the civilian sectors of the economy. According to the commission, the bulk of this total must be concentrated in the single year 1934. The defence sector of Gosplan reduced the 1934–35 claim to 2,250 million, of which 1,400 million would be invested in 1934, and itself proposed a much lower figure than this.² Curiously, all these drafts revived the ‘attenuating curve’ of investment, notorious in the discussions about the first five-year plan in the 1920s.³ Meanwhile, the organisations responsible for different types of armament had prepared their own draft investment plans for 1934. Even after these claims were reduced by the chief militarymobilisation administration of Narkomtyazhprom, they still amounted to 2,034 million rubles, plus 461 million in civilian industry.⁴ This temporarily revived the over-optimistic planning characteristic of 1929–31.