SOVIET PLAN FULFILLMENT, 1954 (RR IM-411)

Created: 7/5/1955

OCR scan of the original document, errors are possible

^ ^ INTELLIGENCE MEMORANDUM

A*

SOVIET PLAN4

CIA/RR5

warning

tthin the 'itle lS>ugc, secs. revelation

which in any frohib;

law.

this material containshatiohal defense of the united st meaning of thehe

to ah unauthorized person

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

BLANK PAGE

Summary and

I.

II.

A. General Trends in

D- Producer Goods Industries

Basic Material and Service

Engineering

Goods

Production

Reductions and Technological Progress Agriculture -

and

V.

Force and Labor Productivity

VI. Capital

A. General

3-

C- Housing

Costs

VTI. Transport

Trends

Transport

and Sea

Appendix A. Rotes on Capital Investment in the USSR .

Appendix B. Source References

Tables

in Industrial Output and Rational Income

in the USSR,

in the Production of Selected Basic Industrial

Materials In the

J. Increases In the Production of Selected Industrial

End Items In the

I*. Indexes of State and Cooperative Retail Trade Turnover

for Selected CowxtLtlu In the

Indexes of Production and Sales of Consumerthe USSR,

19

in TotaJ Cost of Industrial Production

in the USSR,

In the faproveoent of Production Efficiency

In Certain Key Industries In the

Page

8. Growth of Industrial Labor Force and of Industrial

labor Productivity In the USSR,

9> Civilian Labor Force in the USSR,

10. Official Soviet Index of Volume of Grose Investment,

U. Planned and Actual Dlutribution of Investment

Expenditures in the USSR,

Increases in the Productivity of Constructloo

Labor in the

of Freight Turnover in the .

1U. Increases in Railroad Freight Turnover in the USSR,

in Ton-Kilometeru of River and Sea Freight

Traffic in the

in Ton-Kilometers of Motor Freight

in the

of Annual Increase in Capital Investment

In theM9 and

16. Increases in the Volume of Capital Investment

in the USSR,

SOVIET PIJUH FUi:-'IL^KW

Summary and Conclusions

The implications of Soviet plan fulfillmentk should be assessed from two points of view: that of the Soviet leaders and that of the great ease of Soviet citizens. Soviet leaders aro concerned with furthering the developmentodern industrial economy, with maintaining and improving the position of the Soviet Bloc with respect to the West, and with creating the conditions considered necessary for the eventual transition to Communism. Soviet citizens in the mass are more interested in their ownwelfare, although the extent of their willingnessimiting factor on the decisions of the leadership.

For the Soviet leadership,U plan resultsixture of gratifying successes and persistent failures. The increase in total industrial output was sufficient tolight over-fulfiOlmont of the 'ambitious goals of the Fifth Five Year, ifodest rate of growth is achievedBy the end of this year the Soviet index of industrial production will show an increase ofercent Output of coal, petroleum, steel, and electrical energy is rapidly approaching the levels which Stalin designated in6 election speech as the material basis for Communism. Evenhe first full year of the "newutput of producer goods rose more rapidly than output of consumer goods.

* The estimates and conclusions contained in this memorandumthe best Judgment of ORB as

A number of the top-priority industries, however, will barely makeear targets and then only by straining capacity to thewithout the slack that has usually been available at the endlan period. The investment plan foreriod probably was assured of success by the achievements, but because of inefficient construction, the cost of the program appears to behigher than had been anticipated. High costs, low labor

productivity, and inefficient organization in the construction industry are come of the most serious chronic problems in the Soviet economy. Cost reductions in industry were slightly behind the plan on the whole, and there may have been cost increases in the extractive industries, where the Immediate benefits of cost reductions are the greatest. The volume of rail transport planned5 was exceededft, but this overfulfilljoent resulted from longer-than-planned length of haul for fuel, timber, and other basic materials rather than from the early completion of over-all production plans. The economyhole reflected the stresses and strains of the superimposition of the "greatogistical support of the Korean War; the general uncertainty, relaxation, and reassessment which followed Stalin's death; and, finally, the consumer goods program.

The principal problems facing the Soviet leadership at the endere lagging labor productivity and agricultural production. By the middlet was apparent that the Fifth Five Year Plan goal for laborcould not possibly be fulfilled. of production and investjnent targets is being purchased at the price of above-plan increments to the industrial labor force. The effectiveness of this expedient has been sharply reduced as the Soviet leadership returned large numbers of skilled workers to agriculture, thus reversing the trend of the pastears. The wage fund has been overexpended, thereby exerting pressure on the limited supply of consumer goods. Various forms of propaganda and prestige rewards are losing their effectiveness and must be augmented by more material incentives. The deficiencies in agricultural production are primarily deficiencies of those food products which would improve the diet and provide incentives to both the urban and rural workerslivestock products and fats and oils. Failure to achieve the desired rates of erowth in labor productivity and in agricultural production retards the growth of total output, thus constricting the investment .surplus and lowering the rate of growth of the economyhole.

The Soviet citizen also must viewU achievement with mixed feelings. It undoubtedly was the best year for the Soviet consumer78 and possibly the best year since the onset ofand industrialization. Retail prices again were reduced butuch smaller percentage thannd the volume of trade turnover Increasedercent instead ofercent as planned- The output of manufactured consumer goods exceeded the original Fifth Five Year Plan goals, and some improvement was made in the quality and variety of consumer goods. U,ost of the

increase in trade turnover resulted from increases in production rather than from inventory clearances, repricing, releases from stockpiles, and the channelingreater portion of total goods Into the state trade network. ercent of Soviethowever, could afford many of the luxury consumer goodssuch as refrigerators, washing machines, automobiles, and television sets, and only shock workers could afford the radios and motorcycles produced. The increased production of textiles, pots and pans, footwear, and furniture, to be sure, benefited the broad masses of the population, but many of these items were relatively expensive, and their quality remained, on the whole; poor. Much excess purchasing power still remained at the end of the year, however,esult of the rapid growth in the labor force, the reduced state loan, and the increased procurement and purchase prices paid for form commodities. Queues were still chronic, and long. While few households could afford the luxury goods, many were willing and able to purchase larger quantities of lessgoods which were in short supply. This was particularly true of quality foodstuffs (meat and dairy products and vegetables) and housing. Housing is quite cheap in the USSR, but it is of very ^oor quality and is extremely crowded.

/ Popular raoral<^obably .improved considerablyU; but the improvement resulted*as much from the general relaxation of tension as from the improvement in the material well-being of thehe ordinary Soviet ^citizen at the end of the year(may have felt some pride in and^'may* have derived some satisfaction from the continuation of industrial growth, but/his more immediate personal desires were far- from-oatisf ied. Much of the effect of the consumer goods program probably "as negated by the continued shortages of housing and of^aallty foodstuffs. These ore the products which most Soviet consumers, jjould like to purchase in Increased volume, and these are the products for which the gap between output and plan was greatest.

In the final analysis, of course, the decisions are made by the leadership; most citizens can do little more than hasten the program or drag their feet. The Soviet leaders at the endjU hadcause for satisfaction in the rapid industrial growth of the country, the improvement in its military posture, and the initial success of the "new lands" program. The problems which they faced, however, were serious, persistent, and deeply rooted in thestructure of the regime. Awareness of the problems was indicated

by the public attention devoted to housing construction, the long-range growth of animal husbandry, and the relatively low rates of growth of industrial production and investment plannedhe latter apparently reflected the increased defense expenditures and the desire of the Soviet leaders to consolidate their economic position and toirm and flexible base as the point of departure for the Sixth Five Year Flan.

I- Introduction.

The results of Soviet plan fulfillmentI1 are particularly interesting for several reasons. U was the first full year of economic activity after the death of Stalin, who hadthe pattern of economic growth in the USSR as well as its political development for so many years. I1 was the first complete year of the "new3 was occupied largely with making the adjustments necessary to implement the new emphasis on the production of consumer goods. Events such as these are to the Soviet economy what changes in secular trends arearket economy. Third, as the fourth year of the Fifth Five Year,ear of unusually low rates ofI4 produced results which, in large measure, were to determine the successes and failures of the Fifth Five Year Planhole.

The principal objectives of this memorandum are to relate actual achievements to planned goals, to indicate areas of activity where difficulties are either being encountered or anticipated, and to point out the general causes of the difficulties. Economic policies are not the primary focus of this memorandum, but they will he introduced throughout as the necessary framework for understanding current activities. Brief comparisons with developments in the Fourth Five Yearill be introduced in order tonecessary perspective.

II- Industry.

A. General Trends In Production.

/ having made the necessary adjustments to the shifts in the order of priority which were announced after Stalin's deathhe Soviet economyapid rate of growth which virtually insured the fulfillment not only of the original Fifth Five Year Plan goals for total industrial output but also of the original and revised goals for the production of consumer and producer goods. Total Industrial output increasedercent, andercent increase planned5 will raise the cumulative indexsee. The output of producer goods roseercenthe first full year of the "newompared withercenthe year of The estimated planned increase ofercent5 will bring the cumulative Index ^or producer goodst, compared with the originally planned lBO. Production of consumer goods increasedercentn accordance vlth the "newespite the lag of agricultural production. Theercent planned increase5 will raiae the cumulative indexather than, as originally planned. It must be remembered, however, that the base is muchamollcr for consumer goods than for producer goods, the former accounting for no more thanercent of total Industrial production la any given year.

The Fifth Five Year Flan was somewhat more ambitious than the Fourth Five Year Plan and did not have the benefit of quick return from reconstruction and reconversion. It is still worthy of note, however, tltnt In the Fourth Five Year Flan the planned growth of industrialas exceeded substantiallyhe actual increase ofercent reported contrasts withpercent Increase planned. On the other hand, production of consumer goods fell far abort of the Fourth Five Year Plan goals, whereas in the current plan even the revised goals (excepting quality foodstuffs) will be reached in most

ollows on p. 6.

Table 1

Increased in Industrial Output and National Income In the USSR a/

Percent

Planned5 over It

b/

/

b/

b/

* forand the original cumulative goals are from year-ly plan fulfillment reports and from the Fifth Five Tear Planrespectively. The one figure given5 and the revised cumulative goals are from Bulgonln's speech to the Supreme Soviet in FWmiary. Although the weighting system employed is unknown, Bovict statlatlca on gross industrial production and national incomeough measure of the direction and magnitude of change. Moreover, these statistics are useful because they represent one of the principal yardsticks by which economic growth is planned and measured in the USSR.

b. Parentheses indicate interpolations..

e- %J Computed from actual increases* and5 Plan, d. ew words on some of the problems encountered in using theoutput statistics are in order:

First, yearly increases apparently have been rounded down in plan fulfillment roports, inasmuch as both Bulganin and one Soviet press reportndicate that the cumulative index of gross production stood

fiL atendV^k' The Producer goods series also falls slightly short if the Interpolated rates5 are kept consistentcrcent increase In gross production, indicating that the subtotals also have been rounded downward. Actually, an increase of about Uin producer goods is required to reach the cumulative goal of id* on the basis of the announced annual increases-

For seriully numbered source references, see Appendix B.

Table ]

Increases in Industrial Output and National Income in the USSR

Continued)

ontinued)

Second, there are some problems of consistency between the original plan for total production and the planned rates of increase in theas stated in2 Plan directives - The original Fifth Five Tear Plan directivespercent increase in totaloutput and an average annual rate ofercent. Producer goods output was scheduled to grow atear, and consumer goods output atercent. Theear goal was not consistent with the average annual increase, whichpercent increase for the period. If the official ratio of capital to consumer goods productions applied,percent total rate is too low.

B. Producer Cocis Industries.

1. Basic Material and Service Inputs.

Judging from the results achievedumber of the top-priority industries, the so-called "leading links"coal, petroleum, metallurgy, and electric powerbarely will reach, and in some cases may even fall short of,5 production goals

A partial exit from this dilemma is provided by Malenkov's allusion toercent as the original increase planned for consumer goods. This is equivalent to an annual rateercent- Even if it is assumed thatear increase for total output has some validity, it must be recognized that it is lesspercent annual rate of Increase because the consumer goods yearly increase has been rounded upward byercent. ounding upward of the producer goods goal by half asercent,earin this category would amount toercent. Applyingatio to the computed consumer and capital goods increasesotal industrial output incrementercent.

(seehroughout the postwar period these industries haveroportionately larger share of available resources than

Table 2

Increases In the Production of Selected Basic Industrial Materials

In the USSR

over

Year

Increase

red

Material

0

iron

steel

steel

petroleum

power

soda

5

soda

fertilizers

rubber

Overfulfilled^

Ln the prewar period. Q-h$ therearked shift in Investment allocations in favor of these industries,urther shift was made in the Fifth Five Year Plan. esult of this emphasis, the production goals of the Fourth Five Year Plan for these industries were substantially exceeded, and the goals for the Fifth Five Year Plan (announcedequired further growth at very rapid rates, despite the already expanded base to which the increases

would apply. For example, the Plan calledpercent Increase in production of crude steel andpercent increase in production of crude petroleum, which contrast with the comparable increases of aboutndercent planned,uch smaller base, for theeriod.

The5 petroleum goals apparently have been revised downwardumulative increase of aboutercent above0 level by the end* tearly increments have been exactlyercent per year (which represented,n actual overfulfilament of the yearlyhereas an average rate of growth of aboutercent is required. There Is no evidence of planning forpercent increase which would be necessary5 to salvage the original plan. The condition which led to the implied downward revision of the crude petroleum production plan is not known definitely, but refiningeems toreater limitation than the availability either of extractionor of oil deposits.

The cutback in crude petroleum production plans apparently has brought about an upward revision of the coal production plan such as to maintain the planned level in the fuel balance. Output of coolercentimilar rise5 would be sufficient to provide the cumulative planned increase ofpercent foreriod. Investment allocations to the coal industry, however, increased notably last year, and recent reports indicatepercent increase in output is planned/ An additional increment to coal output of this magnitude probably will more than compensate, in terms of energy equivalents, for the anticipatedin the production of crude petroleum.

Projection of* rates of increase in ferrousindicates that the Fifth Five Year Plan goals Tor output of pig Iron probably will not be achieved but that5 goal for output of crude steel still may be reached. Output of pig iron increasedercentonsequently, output5 mustn order to reach the level planned for the end ofear

* This statement assumes that there has been no change in theof petroleum components included for the purpose of calculating percentage increases. These components arc crude oil, natural gas liquids, and natural gas. ,kf

** Production of oil equipment in general seems to be far behind plan. See III, B,nd Tableelow.

period. k, output of crude steelercentless than the rate of growth3 but still sufficient to meet the cumulative planned goal, if maintained The problem is whether the USSR can achieve the requisite rate of growth in crude steel if pig iron output continues to lag. Increased inputs of scrap could be substitutedear or two, but the supply of scrap will not suffice to maintain current rates of growth in steel output5arked Increase in output of pig Iran.

Although the generation of electric power increased less4 than1 percent compared withear goal will be reached if there is like gainSuch success, however, apparently will be at the price of .using existing equipment to the limit, with little reserveerious lag in the production of steam turbines and generators. It is estimated that Installed electrical generating capacity by the end5 may be as low asercent0 insteadercent, as'originally planned.

A projection* trends in the production Df chemicals and nonferrous metals leads to the conclusion that several commodity production objectives of the Fifth Five Year Flan probably are now out of reach. 5 production of caustic eoda, calcined soda, and synthetic rubber probably will fall far short ofargets. The production of mineral fertilizers roseercent)nd if5 goalU-percent increase is* achieved,he cumulative growth forear period will be more thanercent. Although this will be less than the original target or, the result Is still impressive and Important because of requirements for more mineral fertilizers in agriculture.

roduction of aluminum at the endxceeded0 level by lUo percent, and the modest8 percent) planned5 is slightly higher than needed to meet the ambitious planned Increaseercent foreriod, jj The production of other nonferrous metals, however, is considerably behind the original plan. The production of copper is lagging far behind plan, and copper is believed to be generally in short supply. Although the production of lead doubled by the end*, and output of zinc was more thanercent above0 levels, thelan for these metals has been abandoned. Theplanned5 are75 percent, respectively.

whereas increases ofnd li> percent would have been required in order to meet the original Fifth Five Year Plan goals.

2. Engineering Industries.

Plan fulfillment for the engineering industriesA indicates both great achievement and substantial failure (see. The whole pattern of development of the engineering industries is considerably different in the Fifth Five Year Plan from what It woo in the Fourth, in which almost every majorindustry0 coal of from two to four timesj0 rate and in which much of the increase was to come from new plants In the relatively less industrialized areas of the country. In the Fifth Five Year Plan, many engineering industries had relatively small projected rates of increaseboutercent for theand tractor industry, for example. Indeed, many industriesthe locomotive Industry, for exampleere so disrupted by shifts in output mix during the Korean War period that production declined substantially. On the other hand, those engineering industries which provided the capital equipment for the "leading links" and for the "great projects"the oil and electrical equipmentfor examplewere scheduled for great expansion.

I1 plan fulfillment indicates that theercent increase in large hydroturbines already has been achieved but that the goal for steam turbines may not be reachedThe metallurgical equipment industry will achieve only about one-half of thepercent, and production at worst may be only aboutercent above0 level The production of equipment for the petroleum Industry looks hopelessly behindercent cumulative increase planned, with the almost certain result that the USSR will be withoutpcrcent reserve refinery capacity desired at the end Indeed, the cutback in the petroleum production plan may have been dictated by the lack of sufficient refinery capacity.

Production of steam locomotives, which dropped to less than one-thirdevelhen the plants were switched over to capital equipment for the "leading links" and for the "greatrobably regained thelevelV- The USSR has,ubstantial reserve inventory of older steam locomotives,

3 follows on

Table 3

Increases in the Production of Selected Industrial End Item

in the

Percent

End Item

Steam turbines large hydroturbinea Electric locomotives Steam locomotives Freight care Trucks

Passenger cars Antifriction bearings Petroleum equipment Metallurgical

Metal-cutting machine tools

Large heavy andtools

Chemical equipment

Looms

Spinning machines Tractors Grain combines Sugar beet combines

10

d/

d/

Overfulfilled, when the cumulative Index foreriod reached

is estimated that output of metallurgical equipmentnd that the index at the end

of Machine Tool Industry only.

original goalpercent increase is believed to be in termswhich is estimated to be equivalent topercentin terms of physical units. Revised goals under the "newforpercent increase (physicalhichbe achieved. 8/

and current production consists largely of new, larger, more efficient models. The production of electric locomotives shows some increase, but the production of dlesel locomotives appears to be lagging so badly as to go unreported. The production of these types probably is still far short of the volume required for the extensive dieecllza-tion and electrification program outlined by Kaganovicb inrogram comparable to that outlined by Kaganovich apparently was proposed in one of the original versions of the Fifth Five Year'Plan but was dropped because of the magnitude of requirements for the great projects, the accelerated expansion of the "leadingndthe requirements for logistical support of the Korean War. In any event, the USSR has yet to expand current production rates of dlesel and electric locomotives in order to implement the program outlined by Kaganovich. The production of freight cars wasnd production probably was somewhat below0 level. The production of freight cars, particularly gondola types, probably will have to be substantially increased in the near future.

ercent increase in output of metal-cutting machine tools was reportedut the general trend In the production of machine tools is difficult to ascertain. Unlike the emphasis In the first four Five Year Plans, the main emphasis on the production of machine tools ineriod has been on heavier, more complex tools rather than on rapid expansion of unit output. Soviet reporting In the Fifth Five Year Plan has not been consistent either in terms of categories or in terms of subordination of the producingunits. It isafe assumption, however, thatoals will be reached.

The production of row-crop-type tractors almost tripled* and was very close to the "new course" goals. Output of heavy, general-purpose tractors has been stable for several years and is ample to support the current expansion of the sown area.5 goals for output of tractors should be achieved, or very nearly so, indicating that the defense industries are successfullyajor contribution.

In summary, the resultsndicate that the major basic commodity production goals in the producer goods sector will be approximately fulfilled. More of the items subject to specific annual reporting will fall somevhat short of plan than will exceed it, which is in sharp contrast to the results of the Fourth Five Year Plan. Evenlight shortfall In the present plan,the increase in production is Impressive because of the larger

or the Fifth Five Year0 for the Fourth) and the virtual exhaustion of unusual sources of growth available during the Fourth Five Year Plan, such as reconversion and reconstruction, looted capital equipment, and the retention of skilled prisoners of war. On the other hand, production capacity will be considerably taxed.

C. Consumer Goods Industries.

1. Production.

In assessing the growth of the production of consumer goods in the USSR it is desirable to distinguish between those items which are processed agricultural raw materials and those goods which are produced from raw materials of Industrial origin. Thisroughly corresponds to the standard categorization of nondurables and durables. The USSR, by shifting distribution priorities and by Increasing investment allocations, can increase substantially the output of Industrial consumer goodselatively short time. The situation Is quite different, however, if an increase in the output of agricultural raw materialsrerequisite.

Historically3 to thehe rather limited investment in agriculture has had an almost negligible effect upon agricultural output; greater capital intensity has been largely negated by migration of large segments of the youthful rural labor force, forced collectivization, and other forms of political and ecdnomlc pressures. The peasant has been bled by state acquisition of most of his collective output at artificially low procurement prices and then bled again by the requirement that what little cash income accrues to the collective be used in large part to augment state investment in agriculture. onsequence, the dynamic factora affecting the growth of Soviet agricultural production are peasant incomeincluding availabilities of manufactured consumer goodsnd peasant reaction to political pressures in the villages. Increases in these pressures have produced additional peasantto the state's agricultural program. In addition, agricultural production hae certain innate characteristics, particularly dependence upon adequate rainfall and the time required to build up livestock herds, which make it very difficult to secure Increments to output merely by shifts In distribution priorities and in investment

- Ih -

The production of consumer goodshole showed aincrease't, In accordance with the "new course" goals, but In many Instances It fell short of the plan. The production of automobiles apparently reached the5 level The production of radios Is probably somewhat behind schedule, but thepercent Increase means that the rate of increase necessary5 is much less, aboutercent. The production of bicycles, which was fairly large in past years. Increasedercent and may reach the5 level. Television sets were reported as below plan; nevertheless, output increased moreercent. In this case, however, the base Is fairly small. It is difficult to judge the prospects for household refrigerators and washers (where output also has been meager In theecouse the final goals arc not known, but output is rising rapidly. The same is more or less true for vacuum cleaners, cameras, watches, and clocksthere may be some shortfalls, but substantial gains have been marie

Output of textiles and leather products probably will meet the plan, with the exception of such things as linen and of certain kinds of knitwear. In general, some raw materials arc in short supply throughout the textile industry, although raw cotton may be plentiful. The silk Industry has already exceeded the Five Year Plan, probably because of Increased production of synthetic fibers. The growth of the production of leather footwear is very definitely affected by leather shortages, but rubber footwear does not seem to lack raw materials- Inthere apparently was aimprovement in the quality and style of textiles, but the range of choice still leaves much to be desired.

The producer cooperatives. Uhlan are small enterprisesew artisans and operating largely with scrap and local raw materials, have already reached5 goals for total production

Lagging agricultural production shows up quite clearly in the plan fulfillment reports for processed foodstuffs- Goals for meat and dairy products, vegetable oil, and canned foods all will be substantially underfuLftiled at the end of the plan. Sugar and sugar products are probably the only major categories in which success is likely. The failures In meat and dairy products are not, of course, very surprising, inasmuch as Western observers have generallythe plans to be unrealistlcally high. Soviet concern with the problem was evidenced at the beginninghen Khrushchevast animal husbandry program for the

Like all Soviet plans. It is quite ambitious, and it is heavilyupon the success of the "new lands" program. Together with increased procurement prices, Khrushchev's livestock plan is, however, more likely to resultubstantial increase inof meat and dairy products than any other program of the postwar period, particularly the abortive Three Year Livestock-

2. Distribution.

It is evident from the announcements of retail trade-turnover that. In* was the best year the Soviethas had since thes- Significant increases were reported in sales of many consumer goods, although there vere official admissions that the demandumber of Importantcommodities was not fully met. Asubstantial release* of foodstuffs from state reserves occurred* in order tothe slow growth of agricultural production. The shoddlness of many items, especially clothing and footwear, continued to plague the Soviet consumer. Retail prices for food and industrialremain Ik andercent, respectively,ut this has been more than compensated for by increased aggregate wage payments and other forms of monetary income which have given the consumer surplus purchasing power despite the above-plan output and sale of consumer goods.

* Output of consumer goods in the second half3 increased byillion rubles over the first half

tate and cooperative retail trade turnover increased lfl percent (in comparable priceo) This increaBe was sufficient not only to overfulfill the annual plan (an increase5 percent/0verfulfill the orlRlnal Fifth Five Year Plan goalpercent increaseears. The success of the "newnaugurated in the latter half3 and designed to provide more and better consumer goods to the populace, is Impressive. Although an Increase ofercent was reported in the first half* over the first halfhe base of comparison was relatively low. In the second halfowever, retail trade turnover was swelledizable increase in consumer goods production* and by imports, mainly of food products, from Western countries. Thus In the second halfhe increase

over the second halflthough somewhat smaller than for the first half,reater absolute Increase because of the expanded base of comparison.

The5 goalercent increase0 in retail traderobably will be attained easily, since an increase of onlyercent is necessary5 tothis plan. As indicated in Tablehe sale of most individual food and manufactured commodities appears to be progressing as scheduled during the Fifth Five Tear Plan. I1 the greatest

Table 4

Indexes of State and Cooperative Retail Trade Turnover for Selected Commodities a/ in the/

Fish Butter

Vegetable oils and other fats

Sugar

Clothing

Furniture

Bicycles

Scvlng machines

Watches and clocks

percentage Increases were reported for consumer durable itemswashingercent; vacuumercent; television sets,ercent; and radio sets,ercent. These commodities, however, are high-priced luxury items which were not sold in large quantitiesonsequently, large percentage Increases In sales do not reflect very large absolute increases.

Ostensibly,percent Increase in retail trade turnover reported*ignificant achievement and one which reflects the desires of the Soviet government to provide the people with more consumer goods. This increase, however, is the reoult not only of increased supplies but also of several other factorsa) the upgrading and repricing of goods, (b) greater weight of more expensive commodities, (c) emphasis on higher quality production, and (d) funnellngigher percentage of total trade through state trade channels than in the pastwhich would notabsolute commodity increases. Cumulatively, those factors which result in the marketingroportionately greater percentage of more expensive goods probably are responsibleignificant portion of the reported increase- As shown inhose factors were probably especially significant in the first halfhen production of many commodities was noticeably below sales. Deficits in many commodities, foodstuffs in particular, were made up through imports and releases from state

he USSR has attempted to channel more

trade through the state trading network. Commission soles were begun In an effort to induce farmers to sell more of their surplus produce to cooperatives rather than through the collective form market at higher prices than obtained for contract and obligatory deliveries. This move wan intended to neutralize the collective farm market by narrowing the spread between the prices received by the farmer from the state trading system and in the "free" market. This plan has not been successful, and trade organizations have been severely criticized because of it. Further inducement was offered to farmers to market their produce through state trade channelsecree raising the prices of potatoes, fruits, and vegetables In the off-season. This decree was intended not only to obtain more equal distribution but also to stabilize prices on the collective farm market during the Interim harvest period.

ollows on

Table 5

Indexes of Production

Sales of

in the

100

of Year

and meat products

products

oils

fabrics

fabrics

fabrics

footwear

receivers

receivers

cleaners

machines

and clocks

Omission of references to sales on the collective farm market in4 report is unprecedented in the Fifth Five Year Plan period. This may bo indicative that (a) sales have stagnated because of the effects of the measures taken to funnel more trade through state channels and because of the drought in major producing areas, which has decreased food supplies, or that (h) prices have risen considerably, perhapsesult of the drought.

Id general, production increases have been largest in those Items purchased by the upper economic strata of Soviet societythe managers, engineers. Party and state bureaucrats, and possibly the StaJthanovites. Greater availabilities of textiles, clothing,and furniture benefit the bulk of the people in greater or less legree, but the most Important things for the average. Soviet citizen ire food of better quality and more and better housing. It is in precisely these areas that production lags most, and the obstacles to ruture growth are most

D. Cost Reductions and Technological Progress.

There are several measures of efficiency which are quitetant in assessing Soviet plan fulfillment. All Soviet production tchedulee are based upon anticipated cost reductions and Increased iroductlvlty of capital as well as on the planned allocations from urrent account. percent increase in the volume of invest-ent, for example, was to be achievedpercent reduction in >nstruction5 comparedpercent lcreose in allocations from current account. Probably the most lra-irtnnt efficiency measure is the reduction in sebestoimost' (totalf industrial production, which includes the value of raw iterials and semifinished goods, fuel and power, wages; anamortiza-onnd certain administrative expenditures. This cost duction is made up of the difference between the actual total cost

production (sebestoimost') in year II and the total cost of produc-on in year II calculated on the basis of cost per unit in year I. ch reductions in the cost of Industrial production increase the jnomic surplus available for investment and provide the basis for Ice reductions in producer Together with reductions in

* he accounting category which is the basis for it Soviet pricing and cost accounting, cannot be properly trans-.ed. The closest approximation is our concept of total cost withqualification that under the Soviet system there are no fixed its which are acconnted for if the plant Is not operating.

The Soviet amortization allowance includes repair andof capital equipment but does not contain an obsolescencereductions in consumer goods are derived primarilyof the turnover tax, although reduction of theof processing may haveactor. In general, the ratedecreed by the state is higher in consumer goods than In

construction costs, price reductions for producer goods, rawand semifinished goods makereater increase in real volume or investment than is indicated by the allocations from current account. The yearly decline in the aggregate sebcstoimost' of industrial production Is shown In Table 6.

Table 6

Reduction in Total Cost of Industrial Production in the USSR

Percent

Cumulative

Percentage Reduction from Preceding Year FourYear

l^1 2 1 , 5

a/ plan)

a. The total reduction1 was not reported in percentage terms. The Soviet press, however, did report that savings from costexcluding the savings from the reduction in wholesale prices of raw materials and semifinished goods, amounted toillion rubles. t Apparently most of the savings1 price reductions were passed on to provide the unusually large reduction

* Comparison with reductions in sebestoimost' achieved in the Fourth Five Year Plan Is not possible, because of inclusion of subsidies

As indicated above, planned cost reductions foreriod were to amount toercent (aggregate production in actual costs compared with aggregate production0 costs). 1 is excluded from consideration and if it is assumed that5 yearly plan will be met, the cisnulative cost reductions foreriod alone will amount to aboutercent. On the other hand, the savings1 probably were large enough to insure that the economies planned foreriod will be achieved but probably will not be exceeded." The wage component certainly will be larger than planned. Soviet writers have shown considerable concern over the fact that most cost reductions arc occurring in the engineering industries, where

economies are realized over the life of the machine, instead of In the extractive industries, where the economies usually are realized in the current, or immediately subsequent, time period.*-

Several measures of utilization of capital equipment are considered sufficiently important to be reported in the annual plan fulfillment announcements. Production plans for the capitalinputs necessary to achieve output goals are based upon the anticipated economies in the use of materials and of the existing inventory of capital equipment In each time period. Among the most important efficiency measures are the production per cubic meter of blast furnace volume and coal inputs per kilowatt-hour of electricity. Efficiency trends for the Fifth Five Year Plan are indicated In Table 7.

Table 7

Trends in the Improvement of Production Efficiency in Certain Key Industries in the

Increase in Yield per Unit of Input

This assumes that the decline In sebpstoimost' is passed on in the form of price reductions.

Cumulative Increase Target RequiredL 5

Production of pig iron

cubic meter of blast

volume

of crude steel

square meter of open-

furnace area

of coal com-

of drilling in proven

of electric power

unit of coal input

With the exception of construction costs and the utilization of capital equipment in the coal industry, most of the efficiency indexes indicate reasonably satisfactory progress. There is,no indication of economies in excess of those previously planned. The failure1 to report improvement in the utilization of coal combines probably indicates that in fact no improvement occurred. In general, the coal industry seems to be operatingathermanner, although gross output goals are being met.

IV. Agriculture.

A- General Trends.

It was perhaps indicative of the continued poor production performance of agriculture* that, in the discussion of the plan results, less than one-sixth of the space was used to describe actual production results. An over-all increaseI* of 3in the production- ofmportant agricultural commoditiesa continuation of the very slow secular growth characteristic of the Fifth Five Year Plan period. The production index^ Ibercent above the average for theears of the plan period. Fiber output (represented by cotton, hemp, and wool)the increase of the postwar period and hasemarkable increase over prewar levels. On the other hand, the generalIndex has remained relatively staticesult or the poor production performance for the more important food products, output of which has failed to reach prewar levels. The failure of this index (weighted by grains, potatoes, vegetables, meat, and milk) to rise probably provides the basis for most of the official concern about the lag in output.

B. Grains and Fibers.

The production of the most important food commodity, grain,ercent, but as the plan announcement states, the increase resultedercent Increase in acreage, the largest annual increase In acreage during the current Five Year Plan. Ironically enough, an excellent crop on the grain acreage of the "new lands" area of Northern Kazakhstan, Western Siberia, and the Uralsad drought in the Ukraine, the traditionalof Russia. This change in the regional production pattern of grain probably resulted in government procurementarger proportion of the grain harvest than in recent years, thus allowing

the atate moreo increase stateo divert grain to local shortage areas or to areas that are scheduled to convert acreage from grains to other crops;hich is less likely, to increase exports.

Slight to moderate increases in the production of other crops, such as potatoes and vegetables, were also the result of acreage expansion rather than increased yields.

The production of the raw materials of two quality foods, sugar and vegetable oils, may have been slightly loweresult of drought in important growing areas.

The greatest success In crop output was in the production of fibers. The USSR improved its fiber positionercent Increase in the production of raw cotton andli-percentin the production of flax,rend of theearsharp decrease in the production of flax. -

The announcement of an over fulfillment of the plowingthe "new lands"arge increase .in grain acreage Although the degree or success will depend mostly onthere also willreat strain on organization and onresources available for thiSi region. Much disruptionlast year, when the acreage sown was only one-fifth5

6 the planned expanded acreage ofillion toillion hectares, equal to the total sown acreage of Canada, will have absorbed large investments and, which is more important, apparently will be an integrated portion of the Soviet agricultural program uponalanced production program will rest. arginal region Into production seems toamble that, Bhould it fail, might cause political and economicthat woulderious limitation to Soviet capabilities.

C. Livestock.

In the livestock economy there were no significant changes in the trend either of numbers or of productivity per animal. An incre-oentercent in hog numbersownward trend in theof increase of theears, hut increases in cattle and ihcep numbers continuedow rateercent). Despite

measures to encourage rapid increases in privately held livestock, gains in this sector were small and uneven during the firstf the "newhe rates of increase in the first halfear for the privately held herds yore greater than for thehole, indicating that above-normal slaughtering may have occurr in the third quarter because of lock of fodder in the drought area:

An indicator that the peasant has not changed his attitude toward the socialized holdings of livestock is Implied In the sheej statistics for collective farms. The plan announcement gives the reasonercent drop in sheep on collective farms asmaintenance of sheep on pasture during4 winter." Although losses may have been Inevitable because of the severe winter, the long record of peasant indifference to communal herds becomes especially evident when adverse natural conditions create greater demands for personal care. This antipathetic attitu on the part of the peasant is usually expressed in official press jargon as lack of "maintenance" or "poor organization andof socialized herds.

It appears that the already low output of meat, milk,other products pernot only did not Increase duringeven may have fallen in the important meat and milkcontinuation of low animal productivity certainly waslow feed-grain and fodder supplies duringhe severe winter of, and poor pasturemany areas during the summer and falleffects of

the drought that reduced pasturage will continue to be feltthis winter and springesult of low feed-grain and fodder supplies. It is not suggested, however, by these commentsto the peasant's attitude that the new incentive program has failed. The year that has paseed since the initiation of the "new course" is not enough time to show the impact of the incentive measures on peasant attitude or labor productivity.

V. Labor.

A. Labor Force and Labor Productivity.

The growth of the industrial labor force and of industrial labor productivityather marked contrast in trendB, although it is such as might reasonably have been expected. The Increase3 was almost the same in both cases6 percent

for the labor forceercent for labor productivitybut whereas the planned growth of the labor force foreriod was achieved by the endhe index ofas- If the laborplan for this year is art, the index will stands compared with the targetet out in the Fifth Five Year Plan directives. Year-by-year increases in labor force and labor productivity are indicated in Table 8.

Table 8

Growth of Industrial Labor Force and of Industrial Labor Productivity

in the*

Percent

over Previous Year

over

labor force a/

b/

labor productivity

,

from industrial output and industrial productivity figures which indicated that the Fifth Five Year Plan goal was achieved by the end- Based on original planpercent increase} see Table.bove-Since the output goals have been revised upward, the labor force goals would also be Increased somewhat-c. Overfulfilled.

The goals for the growth of the labor force also were reached in the middle of the Fourth Five Year Plan, but the government managed tothe plan for labor productivity with the aid of inflated measures of industrial production and with the use of prisoner-of-war labor. To exceed the planned growth of the labor force, moreover, means that the wage bill has been exceeded, placing additional pressure on the supply of consumer goods. The Fifth Five Year Plan directives Tor labor productivity in effect have been abandoned. Because It isthat lagging labor productivity was one of the most important

considerations in the adoption of the "newny cutback in the production of consumer goods should tend to keep the rate of growth at the present low level. Continued growth of the industrial labor force also will require more consumer goods in order toincentives.

B. Industry.

The fulfillment of production and investment goals in the current Five Year Plan has required above-plan increases in the labor force to compensate for failure to meet labor productivity targets. Soviet labor force figuresre shown in Tablewhich indicates that5 goal ofillion workers andin the national economy already has been surpassed. art of this increase was the resultookkeeping transfer of collective farmers to the category of state agricultural workers, butear target was exceeded4 even after deduction of this group. The Fifth Five Year Plan goals for the industrial labor force already had been exceeded

The Fifth Five Year Plan calledpercent increases in both the industrial labor force and the total labor force. Since this rate of increase is less than the rate of increase in working-age population during the sameeclining rate of labor participation by young and old persons and by women evidently was intended. Expanded educational programs indicate declining partici-' nation by young persons. The overfulfillment of labor force goals3 and the first halfherefore, must have been achieved by heavier employment than foreseen of women and older persons. These unplanned "increases" are enabling the USSR to meet industrial output targets, despite failure to Increase output per worker according to plan.

* ollows on Soviet annual plan fulfillment reports regularly give absolute figures for the numbers of workers and employees in the national economy but not for those in industry alone- Changes in theemployment are computed from data on changes in totaloutput and industrial labor productivity.

As has been noted, the over-all plans for labor productivity will not be reached either in industry or in construction.4eneral trend of the Fifth Five Year Plan in that the worst failures in industrial labor productivity were in the extractive industries, particularly the coal and timber Industries. In the latter, labor productivity was actually less than

Table 9

Civilian Labor Force in the

Millions

Collective farm workers a/ Workers and employees by

Nor.agrl cultural c/ State agricultural a/

Total labor force

gl.2

8

6

July January July January

O

7

5.4

fa

4 figures are estimatedecentnd from plan fulfillment data. For these data, see Introductory remarks in Appendix b.

b. The July figures are obtained from sources listed in introductory remarks in Appendix B. For the seasonal adjustments required, see source

C- Obtained by subtracting the number of state agricultural workers from the number of works-and employees.

-

despite greatly increased mechanization of cutting and hauling, which probably is why the timber industryhole is operatinghe planned increase In labor productivity in the coal industry foreriodercent, but by the end3 the Increases totalled2/ The engineeringgenerally have shown much more favorable results.

From the point of view of the Soviet leaders, laboris one of the most important measures of economic progress and growth. They consider increments to labor productivity to be the most important source of accumulation fof future growth. Lagging labor productivity is, therefore, one or the most serious economic problems, if not the most nerlouu, facing the Soviet leadership at the end estern observer It appears that the solution to the problem lies in greater material Incentives to replace in part the medals and slogans of the past, and this solution means primarily more and better food and more and better housing. agriculture- and housing construction are the areas in which it is most difficult to transform resource allocations into the end products desired.

C.

The most important changes in the agricultural labor force were the following: hift ofillion Machine Tractor Station (MTS) workersemporaryermanentuantitative and qualitative rise in the managerial and technical personnel in agriculture that reversed the trend of recent years,he beginningegional shift or agricultural employees to the "new lands."

An important result of the changeermanent status of peasants working for the MTS's willore clear-cut stratification of the rural labor force and rural social patterns. Heretofore, several million collective farmers temporarily worked for thes tractor drivers and other machine operators and assistants during the crop season, returning to the kolkhozes even during the crop season, when their services are needed In the MTS's. In order to instill "discipline" during the crop season and to provide the MTS's with an off-season labor force, the government changed the status of this fluid labor force to one of permanency. This action mayegative effect on the mass of collective farmers, as theyarge corps above them on the agricultural labor ladder enjoying what undoubtedly willigher standard of living.

-

It is too early to detect the resultsovement of moregronomists, zoologists, engineers, and other specialists to the farms and tractor stations. This rise in the quality of the upper managerial and technical strata may strengthen one of the weakest links in the organization of agriculture.

VI. Capital Investment.

A. General Trends.

The volume of capital investment increasedercentnd this increase probably was sufficient to meet theercent increase in volume foreriod, as compared witheriod. 3 the volume of investment Increasedercent, probablyesult ofeneral reassessment or the construction program,umber of the large Stalinistprojects were suspended or abandoned,hifts in the pattern of resource distribution in accordance with the upwardof consumer goods production schedules. Thetate budget provides for an outright decrease In planned capital investment, although the5 outlays may in fact exceed4 outlays for Investment. The trends in gross Investment for the Fifth Five Year Plan are presented in

Table 10

Official Soviet Index of Volume of Gross Investment a/

Percent

Increase over Previous Year

a. The volume of investment is measured in real terms: that is, it is expressed in pricesase5 in this Instance.

The increment required5 is relatively smallr flut the current cost of the program for the period will be higher than anticipated because of failure to reduce construction costs as much as planned. Information presently available indicates that the planned increase in volume of capital investmentike the goal for industrial production, is relatively modestbarely sufficient to reach the Five Year Plan goal.* The cost of the investment program in the Fourth Five Year Plan was also greater than planned, but the volume goal for the period was exceeded byercent.

Aside frompercent increase in the volume of grossvery little information on the distribution of investment was released in the annual plan fulfillment report. * contains the available estimates of actual investment in the various areas of activity. 4 plans were very ambitious in all areas of activity, in heavy industry as well as in light industry and agriculture, and the actual achievements are impressive, even if short of the original goals. On the basis of the Information available, the distribution5 will not be substantially different Although the share of heavy industry in the total will increase somewhat,V, investment allocations to light industry5 will be approximatelyercent above3 level.

B. Industry.

The distribution of investment among various branches of heavy industr; is difficult to determine because the annual plan fulfillment report did not repeat the detailed breakdown provided in the midyear. If the data for theonths are assumed to apply to the entire year, several interesting trends appear. Investment in the coal industry, which leveled off and may even have declined, increased substantially and probably is the basis for the above-plan increment to production scheduled in the iron and steel Industry, which had risen rapidly in previous years, increased only slightly, probably less than would have been required if all commodity production goals in this sector were to be

* See Appendix A. ** Tableollows on* The capital requirements estimates were derived as follows:

1. Changes in iron and steel production were computed fromestimates. (The production estimates3 are based

The engineering industries probablyizable increase in investment for the expanded plant and additional equipment required tothe agricultural and consumer goods programs. Investment in the

Table 11

Planned and Actual Distribution of Investment Expenditures

in the

Heavy industry Light and food industry Agriculture Trade and cooperatives Transport andHousing

Increase In

3

e-l

Estimated.

electric power Industry increased by aboutercent, despite thedownward revision of5 goal for installed generating capacityercent0 toercent.

C. 'Housing.

on official Soviet announcements. roduction estimate was derived by interpolation between3 estimate and the forecasthich is slightly below the Fifth Five Year Plan goal.)

2- The estimate of increases in iron and steel production due toproductivity was subsequently confirmed in the half-year planreport. They were then deducted from the total increases in The remainder was taken to be production for which new capital was required-.

The estimates of output from new capital were multiplied by capital-output ratios derived from US data. The resulting figures are estimates of requirements for new capital in the Soviet ferrous metallurgy industry, expressed2 US dollars-

Estimated replacement capital requirements were added to thefor new capital to obtain total capital requirements.

As expected, theperccnt increase in investmentfor state urban housing was not achieved. It is estimated that

approximatelyillion rubles actually were spent, as compared with5 billion rubles planned4 and as against actual outlays4 billion The amount of living space built was expected to increase fromillion square meters38 million nquare metersbut this goal probably was not met- Many industrial ministries, the communal bank (which Is responsible for loansnd local municipalities were criticized frequently Tor failure to fulfill the housing plun.

D. Construction Costs.

Construction costs were not reduced according to planailure characteristic of all the previous years of the Fifth Five Year Plan. Indeed, official reports indicate that, in the Ministry of Construction, costs actually Increased2 and again In fact,ear goal for labor productivity in construction, calling for an output per construction worker5 ofercent more thanas been abandoned. Tablendicates that in order tothe lags, labor productivity would have to increase by aboutercent both4 and5 in order to meet this target. Instead, however. Finance Minister Zverev in his4 budget addresslanned Increaseercent for the

Tuble 12

Annual Increases in the Productivity of Construction Labor

in the/

Increase 5

a. For sources. See introductory remarks in Appendix B.

ndicating that no hopes were entertained of recovering the ground already lost. The4 increase was even less than the revised goal. onsequence of the failure to meet planned cost reductions, the cost ofoviet investment program probably will exceedlan by at leastercent rather than tlic plannedercent. At the end4 there was considerable evidence

eneral reappraisal of construction projects was under way in order to insure the most effective use of available funds.

planned state expenditures on urban housing5 amount toillion rubles, less thanI1 plan although above theactual outlay. in view of khrushchev's emphasis on housing in hie construction speech published in, Vj/ it is somewhat surprising that allocations did not increase this year. on the other hand, the experience^ indicated that theunits were incapable of absorbing larger allocations;5 appropriation probably is ouch more realistic and more likely to be used fully. judging from the criticisms leveled by khrushchev against frilly, nonutilitarian design and small, atomistic, and inefficient construction units, soviet builders may be faced with severeconstraints upon the scale of housing construction which may be undertaken.

e- agricultural investment.

although investment in the agricultural sector did not reach4 planned levels, there were large increases both in state-financed investment for mts's and sovkhozcs and in kolkhoz, investment from internal funds. otal estimated investment ofillionhich includes increments to socialized herds, amounted to an increase of nearly kO percent over the previous year. although this is an impressive increaseear, the absolute amount remains small'in view of the large disinvestment in the agricultural sector resulting from collectivization, the destruction of world war ii, and the continual "under-investment" common toear plans.

* state investments, amounting to nearly one-half of the total, ore made at wholesale prices, whereas those of kolkhozes probably are valued at retail prices. thus some degree of distortion is involved in aggregating the two types.

- ik -

state investments in the mts's and state farms are estimated to beercent above the previous year, the greatest increases coming in long-needed mts construction and in increased allocations ofto the mxs's. most of this increase in machinery allocation reflects large increases in series other than the usual two major machine items, large track-laying tractorB and combines. this change in the pattern of machine allocations is in line with the announced planore balanced mechanization of agriculture. the "new lands" programthe major share of new machinery, especially large tractors and combines.

Investment by kolkhozes rose sharplyesult of increased money income and added pressure free the state toreater pro-portion of this income to investment and to accept long-term government credits. Since the kolkhoz organization does not purchase mechanized field machinery, most of the increase in machinery, as is indicated in the plan report, probably vas in the form of trucks and machinery for the mechanization of animal husbandry.

Vll- Transport.

A. General Trends.

As shown In, the volume of freight traffic In the USSR has risen consistently during the Fifth Five Year Plan period, and5 goal for rail transport, the chief means of transport, has been overfulfilled. In general, the Soviet transport system has kept pace with the growth of the economy.

Table 13

Growth of Freight Turnover in the

2

Total transport

B. Rail Transport.

Overfulfillment of5 goal for rail transport was achievedut this is in fact illusory, for the high level of traffic resulted in some considerable degree from failure to decrease the average length of haul, as planned, and only in part from an actual increase in the volume of freight hauled. The physical volume of freight has grown consistently, however, during the Fifth Five Year Plan period, and most rail transport plans are being met. Economic growth does not appear to be hampered seriously by limitations on rail transport, although rail-loading plansumber of important ccamodlties, including timber, scrap iron, and

building materiala, have not been met for several years. operating efficiencies and economies have not been effected as planned in rail transport, and curtailment of capital investment in the early years of the fifth five year plan has resulted in some pressure upon the freight-car park necessary to transport bulk commodities. motor transport may be taking some of the load off the railroads in the highly industrialized areas, but not in the long-haul, intercity traffic. the capabilities of the soviet rail system are beingby increased outlays for equipment and new and improved lines. extensive investment in heavy locomotives, especially dlesel and electric equipment, is scheduled in the near future but probably will not be felt to any great extent before the end theof freight cars continues to be an uncertain quantity, although it is certainly behind both the annual and the long-range plana. substantial additions of new line (largely narrow-gauge] are to be laid to facilitate the "new lands" program.

it is estimated that aboutercent of all freight is moved by railroads in the ussr. the fifth five year plan for railroad freight traffic, which calledodest increase ofo Uohas been overfulfilled in't years. as shown infreight traffic at the end4 hadercent

table 14

increases in railroad freight turnover a/ in the ussr

increase

)

b/

plan

(freight turnover) is believed to re-fer to traffic, measured in ton-kilometers. thereportedowever, may have reflected tons originated.

b. Calculated from the total reported at the end

-

Ostensibly, preterm fulfillment of the Fifth Five Year plan goal nppcarH toajor achievement and most certainly reflects the capabilities of the Soviet railroad system to supply the nceda of the country. Increases in ton-kilometers can be achieved, however, by two methodsy loading more tons of freight per car, holding the average length of haul constant, or by loading the same amount of freight per car and transporting it over greater distances. The tonnage of freight moved has Increased in the USSR during the; average dally car loadingsxle car units) Increased aboutercent during this time. Some increase also took place in average loads per car, but cars now are loaded nearly to capacity, and future significant increases could not be expected from increasing carloads. What the overfulfillment of the Soviet rail transport plan probably indicates is that the USSR planned great reductions in the average length of haul for specific bulk commodities. Such reductions would havedemands for increases in motive power and in the freight-car park. Foilure to achieve planned reductions in the average length of haul has resulted In premature fulfillment of planned traffic increases and in additional pressure upon transport equipment.

The increase in rail traffic in the Fifth Five Year Plan period was to be made possible not only by an increase in capitalbut also by increasing operating efficiency and economiesan increase in the freight-carrying capacity ofeduction In freight-car turnaround time,ecrease in the average length of haul. Although rail traffic increasedercentoading plans were underfulfilledumber of ImportantIncluding timber, scrap iron, building materials, chemical, and mineral fertilizers, and certain industrial consumer goods. These deficiencies are believed to be attributablehortage of freight cars, especially cars suitable for carrying bulk commodities. This shortage is believed to stem from cutbacks in output of freight cars several years ago, which reduced new car deliveries2The freight-car production plan was not fulfilledA, but It is believed that4 plan reference isevised plan with higher goals, adopted

At present, over half of the freight-car pool in the USSR is composed ofxle cars. It is believedargeof lald-up cars exists in the USSR, but these arc mainlyxle boxcars which are Ill-suited for transporting bulk commodities. Pressingxle cars into service would help alleviate the shortage, but the average load per car would be reduced because of

theize of the earn. Furthermore, maintenance costs, already high, and stoppages due to breakdowns would increase with the use of thexlc cars.

The apparent shortage of freight cars Is aggravated by the fact that the desired economies and increased efficiencies in freight-car operation have not been effected. lans for reducing freight-car turnaround time and for increasing economic speed of trains were not fulfilled. The average length of haul for basic commoditiesores, fuels, grains, and timberhas not decreased significantly, as planned, but instead has increased slightly. Increased movement of quantities of consumer goods* further complicated the rail transport picture because these goods require more careful handling and weigh less per carload than do raw materials.

Soviet leaders seem well aware of the Inadequacies of the rail transport system and are taking measures to insure that the railroads will notottleneck In the growth of the Soviet economy. Extensive investment in heavy dlesel locomotives and fa-axle freight cars is scheduled for the near future, together with improvement in traffic-control equipment. Electrification of many lines Is planned. Delivery of needed equipment in quantity,will not take place before the endnd until then heavy

bulk commodities may not move in the desired amounts, ate of growth of atercent in railroad freight traffic

may be expected

C. River andransport.

River and sea transport contributeercent, respectively, of the total ton-kilometers of traffic annually carried in the USSR. Despiteeek delay in* opening of several principal river arteries, including the Volga, an well as some sea lanes, freight turnover plans for both river and seawere overfulfilled. River shipment plans, however, for several important commoditiesmetals, grains, cement, and fruits and vegetablesere not fulfilled. As indicated in5 goal for sen freight traffic was virtually fulfilledut it is doubtful that the planned goal for river freight movement will be reached by the end

Tabicollows on

Table 1^

Increases In Ton-Kilometers of River and Sea Freight Traffic in the USSR

Increase over Previous

Planned Increase Required

0

transport 13

transport 8

Kot reported.

1

D. Motor Transport.

* Tableollows on p. Uo.

Lessercent of all Soviet freight is carried by motor transport, but this type of transport is extremely important in its own right. Motor transport is confined primarily to use in highly industrialized areas and to the movement of agricultural products to the nearest railhead. Trucks are being used in increasing numbers to replace rail movement for short-haul transit, thereby releasing railroads for long-haul transport. An increase ofoercent in motor transport was planned for the Fifth Five Year Plan, but this goal has already been dwarfed by the reported increase in motor carriage, as shown inB

table l6

annual

- ico)

/

a^ the index postulated in the fifth five year plan.

- ao -

increases in ton-kjloaeters of motor freight in the

NOTES OH CAPITAL INVESTMENT IN THE USSR

Inomparison of annual and midyear rates of increase in the volume of capital investment is shown in order toasic for judging the probability that half-year rates willannual rates. In Tablehe midyear increase is within 3points of the annual increase in about one-half of the cases andercentage points of the annual increase in more than three-quarters of the cases.

The Fifth Five Year Plan for capital investment is as follows:

o Increase the total volume of state capital constructionpproximatelyercent, but to increase state allocations for this construction only approximatelyercent, as compared with the Fourth Five Year Plan, covering the differencehrough lowering the cost of construction by way of increased labor productivity, lowered overheadand lowered prices of building materials and

Since increases in the volume of investment, as given in theplan fulfillment reports, are measured in constantnnual and cumulative investment volumes can be related. The results are presented inhich shows that, total investment in the years of the Fourth Five Year Plan; that the goal for the Fifth Five Year Plan is; and thatercent of this goal had been accomplished by the end The increase required5 to reach thegoal is relatively small but cannot be measured precisely, because of certain statistical problems.

Tableollows on

Tableollows on

Changes in Soviet Investment accounting practices during theyears make precise comparisons of investment levels betweenyears or periods difficult. During the Fourth Five Year Plan

table 17

bates of annual increase in capital investment in the ussr a/

i9fa7-fa93

percent

year andof year

total

electric

light and

19fa8

total

electric

light and

machine

19fa9

total

electric

machine

construction

- for sources, see introductory remarks in appendix b.

- US -

totaland food

Table Jfl

Increases in the Volume of Capital Investment in the USSR a/

qq^

sources, sec introductory remarks in Appendix B.

Five Year Plan.

period the fulfillment of the investment plan was measured in terms Of investments in the state plan of capital Investments. "Extra-limithich were outside the Investment plan, were notin computations of plan fulfillment. 0 the category of "extra-limit investments" was eliminated, and investments which formerly fell in this category were included in the investment plan and the investment budget. Consequently, during the Fifth Five Year Plan the state plan of capital investmentroader category of investments than It did in the Fourth Five Year Plan.

During the Fourth Five Year Plan the volume of state investmentillion rubles5/ which would amountillion rubles0 prices. This total excludes "extra-limit investments" made during the period. In theears of the Fifth Five Yearillion rubles (presumably0

annual increase

Year

12

b/

^

.

Plan

prices) were invested. This amount includes investments that would have been in the category of "extra-limit investments" prioromparisonillion rubles with the Fourth Five Year Plan figureillion rubles Indicates thatillion rubles of investment are required5 to meet the Fifth Five Year Plan goalpercent increase- Shortrastic under-fulfillment of5 investment plan, the goal should be met. It should'beowever, that the figures are not strictly comparable, because the concept of state investment0 Is broader than the concept of state investment in the Fourth Five Year Plan. trict comparison could be made, it probably would show that the USSR will notpercent Increase In investment during the Fifth Five Year Plan period, although the degree of under-fulf illment would not be large.

APPENDIX B

SOURCE REFERENCES

This memorandum is based on Soviet plan fulfillment reports, issued quarterly2 and semiannually thereafter, and on CIA analyses of theeport.

All data in this memorandum, unless otherwise indicated,from the annual and semiannual Soviet plan fulfillmentreports appeared in the"'Soviet press on the8,8937nd these reports, beginning with the annual, reportthe following numbers of the Current Digest of the Sovietannual: Vol. I, No.9 annual^ Vol. II, No.ll, Ho.1 annual: Vol- IV, Ho.2 annual; 3 semiannual: Vol. V,annual: ,. . .

All Soviet newspapers, books, and Journals are considered to be highly reliable sources of economic information. The FBIS publications are primarily translations, and.slight errors inintercept as well as In subsequent translation make them slightly less reliable sources than the originals.

Evaluations, following the classification entry and designatedave the following significance;

Source of

ocumentary

Confirmed by other sources

-

reliable

Probably true

-

reliable

Possibly true

-

reliable

Doubtful

-

usually reliable

Probably false

-

reliable

Cannot be Judged

-

be Judged

45

Evaluations not otherwise designated are those appearing on the cited document; those designated "RR" arc by the author of this Ita "RR" evaluation is given when the author agrees with the evaluation of the cited document-

A- Zasedaniya verkhovnogo Soveta SSSR, chctvertogo sozyva, vtoraya fiC ssSt"enografichenkiy otchetf" (Stenographic Report ofthe Meetings of the Supreme Soviet of the USSR, Fourth Meeting, Second,. Eval. RR 1.

2. Ibid.

3- Pravda,. .

Daily Report (USSR and Easterno 9,

.R 2.

4- CC-U, Eval. RR 2.

6. -- Eval. RR- Ibid.8.

9- PravdaT. Eval. RR 2.

Daily Report (USSR and Eastern5 OctAA-3, Eval. RR 2.

5

Moscow .- R

FJJiansy SSSR,- Eval. RR 1.

"Za pod^eo proizvoditel'nostigol'noy promyshlennosti" (For on Upsurge in the Productivity of Labor in the Coal Industi ufiQ"no. U. Eval. RR Pravda,. 8. Eval. RR 1.

18. Grulicw, Leo, ed. Current Soviet Policies, New

. Eval. RRy- qnoiHijti, no, U- Eval. RR 1-

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