1955 RUBLE-DOLLAR PRICE RATIOS FOR INTERMEDIATE PRODUCTS AND SERVICES IN THE US

Created: 6/1/1960

OCR scan of the original document, errors are possible

CIA HISTORICAL REVIEW PROGRAM RELEASE IN9

ECONOMIC INTELLIGENCE REPORT

UBLE-DOLLAR PRICE RATIOS FOR INTERMEDIATE PRODUCTS AND SERVICES IN THE USSR AND THE US

CIA/RR0

CENTRAL INTELLIGENCE AGENCY

OFFICE OF RESEARCH AND REPORTS

ECONOMIC INTELLIGENCE REPORT

UBLE-DOLLAR PRICE RATIOS FOR INTERMEDIATE PRODUCTS AND SERVICES IN THE USSR AND THE US

CIA/RR

CENTRAL INTELLIGENCE AGENCY

OFFICE OF RESEARCH AND REPORTS

KORiVOKD

This report5 ruble-dollar price ratios for selected intermediate products and services produced ln both the USSR and the

US and is partarger project that has the following purposes: (l) to construct the appropriate ruble-dollar ratios for Bakingcomparisons in common currencies of the major end-use sectors

of Soviet gross national product (GNP) and USo assess the value of the ruble in comparison with the dollar for various

commodities and for various commodity groups,o furnish a

catalog5 ruble-dollar ratios.

Tlie ruble-dollar price ratios presented In this reportasis for assessing the value of the ruble in comparison with the dollar for various commodities and for various commodity groups. The ratios also may be useful for comparing the purchasing power of the ruble for selected commodity groups with the trade rate Tor Soviet merchandise or with the rate for tourist expenditure. The ratios may be useful ln costing studies in which econoaic programs are Initially estimated ln either dollars or rubles and thentc the other currency for purposes of international These ratios have only limited application in UJIPfor intermediate products and services formjiall part cf GNP. GNP is concerned primarily with final products and services, whereas intermediate products and services enter only in tbeminor entry for additions to Inventories and,esserconsumption.

COHTEJITS

Fage

J. f

of Pricea and

and Representativeness of Intermediate

Products and

of Ruble-Dollar Ratioa

II. Comparison05 Ruble-Dollar

Apperdixcs

Appendix A.

Ruble-Dollar Ratios

and

c. Construction

and Steel

I. Communications

J. ctric

Ruble-Dollar Ratios

for Weighting

of Aggregate

Appendix 3. Statistical

Appendix C Source

I. USSR and US: 5 Itubl*-Dollar PriceSelected Categories of Internedlate Products

- V -

(Im jiwj?

Page

and US: Median, Unweighted, and5

Ruble-Dollar Price Ratios and FrequencyRuble-Dollar Ratios for Intermediate Productsby Category of Product or Service

and US: Comparison05 Ruble-Dollar

Price Ratioselected Sample of Intermediate

*. USSR and US: prices and Ruble-Dollar Price Ratios for

Solid Fuels,

and US: Specifications, Prices, and Ruble-Dollar

Price Ratios for Petroleum Products,

and US: Specifications, prices, and Ruble-Dollar

Price Ratios for Paper and Paperboard,

7- USSR and US: Specifications, Prices, and Ruble-Dollar

Price Ratios for5

and US: Specifications, Prices, and Ruble-Dollar

Price Ratios for Construction Materials,

and US: Specifications, Prices, and Ruble-Dollar

Price Ratios for Iron and Steel5

and US: Specifications, prices, and Ruble-Dollar

Price Ratios for Nonferrous5

and US: Calculation of Ruble-Dollar Price Ratios

for Rail Freight Transport,

and US: Specifications, Prices, and Ruble-Dollar

Price Ratio for Rail Passenger5

and US: Specifications, Prices, and Ruble-Dollar

Price Ratios fcrervices,

and US: Prices and Ruble-Dollar Price Ratios for

Electric Power,

and US: Aggregate Ruble-Dollar Price Ratios for

Solid Fuels,

if- USSR and US: Aggregate Ruble:-Dollar Price Ratios for

Petroleum Products,

Vf. USSR and US: Aggregate Ruble-Dollar Price Ratios for

Paper end Papcrboard,

v i -

lS. USSB and US: Aggregate Kuble-Dollar Price Ratios for

Chemicals,

and US: Aggregate Ruble-Dollar Price Ratios for

Construction Materials,

and US: Aggregate Ruble-Dollar Price Ratios for

Iron and Steel Products,

and US: Aggregate Ruble-Dollar Price Ratios for

Nonferrous5

and US: Aggregate Ruble-Dollar Price Ratio for

Rail Freight Transport,

23- USSR and US: Aggregate Ruble-Dollar Price Ratios for

Coirmunlcations5

2k. USSR and US: Aggregate Ruble-Dollar Price RatiosPower,. .

USSR; Price Zones for Petroleum5 inside back cover

OLLAR PRICE RATIOSfTERKEDIATE PRODUCTS AHD SERVICES

HE USSR AND THE

Surma ry

5 ruble -dollar price ratios presented ln this report art-basedomparison5 wholesale ruble and dollar prices for intermediate products and services* common to the Soviet and US economies. These price comparisons reveal substantial variations in relative prices between the two countries. As Indicatedeometric mean of the Soviet-weighted and US-weighteduble is worth aboutcnta for intermediate productshole, in regard to the ratios for the variousuble is worthents for solidoents for chemicals, paper and paperboard, non-ferrous metals, and electric power; and abouto PO cents for iron and steel products and construction materials. On the basis ofproducts,uble is worth approximatelyents for tool-steel bars,ts for natural gas, ents for motor fuel, andents .or cadmium. Because tne necessary value weights forean ratio Tor all services were not available, anruble-dollar ratio Is limited to the product sample alone.

The geometric meanor the aggregate ratio for totalproducta is, however, more than twice as high as theratioor rail transport but morehird less than the aggregate ratioor electric power.

5 ruble-dollar ratios for ln-_etnediate products aremuch lower the- those The decreases in thefof Mtoweitt boercent for mercury and

ecreases ir. price, for most Intermediate products in thearing thla period and fro* Increases in Um enrretpondina

*r.nac indleat.fi, tha term Interaeulate productsv--esi;s to' ccrnodliit-s'ar.'! service's

purchased fcr use in produclion.

/

I. Characteristics of Data

In the derivation5 ruble-dollar ratios for the USSR and the US, ruble and dollar wholesale prices have been comparedntermediate products and services. For services, however, prices also have been compared for selected services consumed by the final consumer. Although those final services consumed by households also have been counted in the consumption end-use sector of gross national productt is convenient and of interest to consider household and enterprise rates together in this section.

The following categories of intermediate products and services are represented: (l) solid fuels,etroleum products,aper and paperboard, (k)onstructionron and steelonferrousailommunications services,) electric power. Aggregate ruble-dollar ratios, usually based on both Soviet and US value weights, have been constructed for these categories of intermediate products and services and ore shown in In general, data on value of output have been used as weights for combining theratios into aggregate ratios. The methodology underlying the calculations of individual and aggregate ruble-dollar ratios is given in Appendix A. The calculation of individual and aggregate ratios is given in*

A. Comparability of Prices and Products

The ruble prices used in this comparison ore those establishedith the exception of those for communications services, which are5 prices. Two reasons led to the choice of prices in effect 5 represents the mostdate for which extensive information on wholesale prices bycommodity exists. Second, the prices introduced on this date were established for the period of the Sixth Five. Although the Sixth Five fear Plan was abandoned and although some price changes took place67 and earlyt appears5 prices are Still in effect for moot of the commodities for the Seven Year- The cellar prices are those5 or are5 prices. Tfwe were substantial price changesumber of commodity groups ir. the USut the difference between5 dollar prices5 dollarot generally significant.

Althoughuble prices ussd in this report cameumber of sources, most of such prices were drawn froo tieandbook of prices Of materials und equipment used ir: Or byorganisations,senroitel'nyyt-horiidoyanlye (Handbook of Pricesc Construction Materialsatilbook of prices of commodities

" ollows on p.

** Appendixp. below.

used in the coal industry,borudovanlyegol'noy promyshlennosti: spravociinik (Handbook /of Prices7 l'or Matc-tcrials and Equipment Used in the Coal references to these sources and all additional sources are noted along with the ruble prices in Appendix A.

Once ruble prices were assembled, it was necessary to fix standards of comparison for Soviet and US Items. Generally, items were accepted into the sample on the basis of the following two criteria: (l) comparability of physical characteristicsof the price basis.

In general, Soviet specifications for products werein sufficient detuil to permit the ready designation of US counterparts. The degree of comparability achieved in the reporthole is believed to be good, even though the degree ofvaries by product group and ranges from virtual identity tc rough approximation.

Table ]

USSR and US: ? Ruble-Dollar Price Ratios for Selected Categories of Intermediate Products and Services a/

Rubles per Dollar

Weighted Ratio

Solid fuels Petroleum products Paper and papcrboard

.

Construction materials Iron and Steel products Nonferrous metals Rail freight transport Rail passenger serviceCommunications services d/ Electric power d/

eights

S

^ 0

For data und methodology, seend D.

ratios are identical fcr both? and the USthey represent one item cr.iy.

intermediate and final services.

Usually the ruble prices for products are quoted free on boardepot of sellerthat is, the prices represent those at the manufacturing site or at the freight depot in the city of manufacture and thus exclude all, or virtually all, outbound transport charges. Ibe important exceptions to this practice vere found in iron and steel and petroleum products, the prices of which are. depot of destination or depot of sales. Soviet prices for solid fuels, products, and some construction materiuls as well as rates for electric power are differentiated by salec region. For pricesby region, an attempt was made toationalprice.

Because US and Soviet prices are not always comparable, it has sometimes been necessary to adjust one of the prices. For example, US prices do not include transport charges for petroleum products or iron and steel products. Soviet prices have therefore been adjusted to exclude these charges. US prices for paper and paperboard, however, include transport charges, and the Soviet prices have been adjusted to Include these charges. The ruble and dollar prices for commodities are therefore of two types: most. depot of seller und exclude transport charges, and some are delivered prices and include transport charges. It is believed that in general the degree of price comparability achieved is good.

Petroleum productsroup presented the greatestin the establishment of comparability of products and prices. Whereas, in general, comparability of petroleum products is good, compromises were made in the basic criteria for establishing As to prices of petroleur products, all Soviet prices include transport charges and the cost of operating Sales bases, and the turnover tax and ar. administrative surcharge are included in the prices for some unspecified products. Art adjustment was made in the ruble prices to exclude transport charges. Because tax rates, sales base operating costs, and udministrat-ve surcharges are not available for specific products, however, these components could not be deducted

it is estimated thai ihi turnover tax alone may average as much asercent of the ruble priceivenand tnat the turnover tax and sales costs combined may average as much asercent of the price. The administrative surcharge, which represents operating costs of various organizations of theOl'etroleum Industry, is believed toery small share cf trie pricerobably lessercent.

The preceding discussion of prices and comparability has been confined primarily to prices of products. ew remarks arewith respect to services. For electric power, ruble and dollar rates paid by comparable classes of users have been compared. For coMunlcations services, rates for services with the same generalhave been compared. Soviet ba^ic freight.'or the US average lengths of haul have been compared with US ratesfrom data on revenue for the US average lengths of haul. Soviet

" This percentage applies to the ruble price inclusive of transport

basic passenger fares for an average distanceoviet passenger trip have been compared with US passenger fares for the same distance.

The problems encountered in achieving comparability and the solutions adopted ore discussed ln greater detail, by product andgroup, in Appendix A. The particular products and services and the corresponding prices selected for comparison are given in*

ii. Coverage and Repreaentativeness of Intermediate Products and Services

Because neither Soviet nor US data are available for thevalues of production for Intermediate products and services, it is Impossible to give an arithmetic evaluation of the extent to which the products and services priced in this report cover thesectors of these two economies. Perhaps the best measure of coverage is reflected by an enumeration of the categories that have been omitted. The most important categories of intermediate products and services for which no ruble-dollar ratios have beenare lumber and wood; rubber; leather products; and motor vehicle, water, and air transport. These categories were omitted hecause the necessary information on Soviet prices was not available.

The relative importance of the various products and services for which ratios have been constructed differ in the two countries. Therefore, In order to obtain aggregate ruble-dollar ratios that take these differences into account, the individual ruble-dollar ratios for products and services have been weighted by their relative importance in each country, except In those cases in which data were notfor deriving weights. The aggregate ratios and the Soviet and US data used for combining the individual ratios into aggregate ratios are presented in Tables

'Ihe list of products and services included in this report is less representative of either the Soviet or the "JS economy than one would desire, because the sample is of necessity restricted to those products and services that arc comparable In the two countries. it is believed that theof items selected tothe various categories considered in this report are, in general, fairly representative of both the Soviet and the US economies. representativeness, however, was not obtained for each category,ew comments are necessary regarding certain categories.

The sample of items in the category of solid fuels is more representative Lhe US thai: oi the Soviet economy because Doth and peat, which have been omitted, are produceduel in the USSR, whereas only coke is produceduel in the US. It ishowever, that the over-all ratio for solid fuels as computed in this report is fairly reliable because peat prices are believed to

" Appendix B, pp.elow-Appendixp.elow.

approximate the average of the coal prices considered. It is alsothat the ruble-dollar ratio for coke would closely approximate the aggregate ratio for solid fuels.

The commodity coverage of petroleum products probably is more representative of the Soviet than of the US product nix. For the USSR the coverage is Judged to be good; 3nd for the US, fair. The refined products represented by ruble-dollar ratios account for aboutercent of the total tonnage" of refined products produced in tlie USSR From the US point ofumber of petroleumhave been omitted because of the lack of Soviet counterparts. The most important omissions are USctane) andotor gasolines. These gasolines together accounted for aboutercent of the total tonnage of motor gasoline produced ln the USrercent of the total output of refinedproducts. US aviation gasoline having an octane rating55 and all grades of Jet fuel also have been omitted. 0 and above) aviation gasolines (of which the above-mentioned grade H5ort) accounted for aboutercent of the total ton-nuge of aviation gasoline produced in the US It is believed that the sample includes Items representing the major portion of high-octane uviation gasolines, becauseo l'i5 probably accounted forinor portion of total tonnage produced in this category Even though US Jet fuel has been omitted, the US price for Jet fuel is very similar to the price ofravity water-white kerosine, which has been compared with the Soviet Jet fuels.

Of thegroups of chemicals considered, coverage isto be good only for three groups alkalies and chlorine, cyclic (coal-tar) crudes, and industrial inorganic chemicals. for the remaining groups (industrial organic chemicals, plastic materials and synthetic resins, and fertilizers) Is, at best, spotty. It. is believed that the sample represents Soviet and US production of chemicals to about the same degree. It is interesting to note,that even though the over-all sample appears to be deficient in terms of coverage, the US-veightcd ruble-dollar rutio derived from it is almost identical with the ratio derived by applying theSoviet and US price indexeso0 US-weighted ratio, which was basedample of ritios much superior to5 sample in terms of coverage.

Products of the iron and steel industry are represented only by those products considered to be rolled steel. It is believed, however, that ruble-dollar ratios for forgings and castings would be very close to the aggregate ratios obtained for rolled steel. The

i .JI v

output of rolled steel. Relied, drawn, and all eyed nonferrousnave not been Included In the sar:ple of nonferrous metals, but their ratios probably would closely resemble the over-all ratios for prlaary nonferrous rrx?ta!s.

* Tonnages arc given in aiei.rii: tens throughout this report.

The commodities Included in the comparison of rail freight rates lnre those with the greatest loadings in the U8 It Is believed, hovever, that the sample is fairlyof the bulk of rail freight traffic In both the USSR and the US. Because Soviet and US rates have been cenrpared for US lengths of haul only, the ratios are more representative of US than Soviet rail freight transport.

C. Characteristics of Ruble-Dollar Ratios

Because the necessary value weights forean ruble-dollar ratio for all services were not available, an aggregate ruble-dollar ratio is limited to the product sample alone. About the only general observation relevant to the total sample is the wide dispersion of ratios extendingow valueor tool steel barsigh3 for borax. The distribution of the ruble-dollar ratios within groups of products and services and for the samplehole is summer1ted In"

Although therearked bunching at the low end of the scale, there Is considerable dispersion in the sample of ruble-dollar ratios for intermediate products. The greatest dispersion In tha ratios is found within the categories of chemicals,metals, and petroleum products.

Because of the wide dispersion In the ruble-dollar ratios and the disparity In the number of observations among the component groups of intermediate products, the median and unweighted mean ration were of questionable significancecspuclally inatio for total intermediate products. For this reuson, an attempt was mode to obtain weighted average ratios for total intermediate products. In the absence of information on the value of output, value-added data were used aa velghts for combining the weighted mean ratios of tne component groups! mto aggregate ratios for intermediate products. Tne aggregate ratios obtained ir. this manner, the median ratio, and the unweighted mean ratio for total intermediate products all falleryrange.

J elow.ollows or. p. 9-

Inquiry into the kinds of Items with ruble^!oL_ar ratios of an unusually high magnitude for example, ratios0 and greater-shows them to be various materials within the categories of chemicals and nonferrous metals. Among the chemicals are the following (wlth their ruble-dollar ratios); alciumnd Among the nonferrous metals are the following:, and

t The derivation of weighted ruble-dollar ratios for the component groups is explained in Appendix A.

Table 2

USSR and US: Median, Unweighted, and5 Ruble-Dollar Price Ratios and Frequency Distribution of Ruble-Dollar Ratios for Intermediate Products and Services by Category of Product or Service

Ratio

(Hut let, yer Do..bj)

Itaber of Ratios In Each ClasaMean tJ nC-Ies zer Dollar

haiftar Soviet too 0 to 0 tc 0 to0 to0 aod

Cateaory or HrOlan jfcaa Uelawa 9 9 9 9 cvar

IrteiMUmt* products

Solid fuel*

.6

products

Mtperta+r:

naterlulr.

.9

MMBfulaebi

b/

1 fmalit transport

- .

services cj

power

*

or:ron table. above.

Tor cunpcuent ca'.egone* sonblnad on tie basis of eitlaated value-added valftMa.

nose cr nrivate telephone iubacrlptloAa.

It is shown inhat the weighted mean ruble-dollar ratios based on Soviet weights differ from those based on US weights. The explanation lies basicallyegative correlation betweenprices and relative quantitiesthat is, goods and services that have lower relative prices tend to be produced In greaterquantities. Thus, when the price structure of one country is applied to the output structure of the other country, relatively high prices are applied to relatively large quantities and relatively low prices arc applied to relatively small quantities. The gapthe Soviet-weighted and the US-veighted ratios for totalproducts is larger than the gap for any of the component groups except chemicals. The gaps between the two sets of ratios for both the total and the component groups probably would become larger as the sample number of ratios increases. This increase in size of gaps would be due to the tendency for the relative price structures and the product mixes to become increasingly dissimilar as the output of each country was considered in greater detail.

Some other interesting observations can be made from the weighted mean ratios in Table 2: (l) the lowest weighted ruble-dollar ratios are those for construction materials and Iron and steel products, whereas the highest are those for solid fuels;be weighted ratios for construction materials are about one-half as high es the aggregate ratios for intermediatehe Soviet-weighted and the US-weighted ratios for solid fuels are almost twice as high as the respective Soviet and US aggregate ratios for total intermediate products;he weighted ratios for nonferrous metals are more than twice as high as those for Iron and steel products.

Thus It is clear that tiiere are substantial variations in relative prices fcr intermediate products between the two countries. As indicatedeometric mean of the Soviet-weighted and the US-weighted ratios for the variousuble is worthents for solidoents for petroleum products, paper and paperboard, chemicals, and nonferrous metals; and aboutoento for construction materials and iron and steel products. Forproducts in theuble Is worth aboutents. On an individual productuble is worthents for cadmium,ents" for motor fuel, aboutents for natural gas, and aboutents for tool steel bars.

Although the weighted ratios for intermediate services rangehe dispersion within ruble-dollar ratios foris not as high as in the comparable groups of intermediate products. The weighted ratios for electric power arc moreimes as high as those for communications services and 't times as hiidi as those for rail freight transport. As was the case with intermediate products, relative prices for intermediate Services vary substantially between tbe USSH and the US- For5 ruble is worth aboutents for rail freight transport, aboutents for rail passenger service,ents for conmunications services,ents for electric power.

Yor serially numbered source references, see Appendix C.

-

Comparison05 Ruble-Dollar Ratioa

A large sample0 ruble-dollar ratios has been ccaplied by the RAND Corporation,nd0 ratios have been compiled on the basis of other informationeed for these ratios haa arisen. For purpoaea of comparison with5 ratios constructed in thisample0 ratios has been selected. 0 ratios were selected for comparison5 ratios when the cosssodity specifications and the price basis for an item were considered The results are striking. In the short spanears, aboutercent of the Items in the sample snow decreases in the ratios of Uo toercent; decreases ofercent or more are noted forercent of the sample; and the direction of the change is downward for all commodities except two. The decreases In the ratios rangeercent for anthracite toercent for mercury and calcium chloride (flake). In Tablehe ruble-dollar ratios05 are compared in terms of individual commodities. Although weights are not available Tor calculating the aggregate change in the ratios, the data inubstantial change in price relatives in the two countries0

The computed decreases in the ruble-dollar ratios05 are confirmed independently by other data. Forecent RAND report of Soviet prices of basic industrial goodsecline of aboutercent0/ Prices of basic industrial goods in the US rose aboutercent between the saw years." These data imply that the ratio of Soviet prleos to US prices Tor industrial goods fell by about one-fourth during this period.

As noted In Tableatios for two items, lead and0 Soviet prices for lead lnereercent higher thanhereas US prices for lead increased only aboutercent0 0oviet and US prices for cadmium decreased. The Soviet price, however, decreased only aboutercent, whereas the US price decreased aboutercent.

' ollows on This statement la based onrice indexes produced by the Bureau of Labor Statistics for coal, coke, gas, electric power, petroleum products, chemicals and allied products, rubber products, lumber and wood, pulp and paper products, Iron and ateel, nonferrous netalB, and nonmetalllc minerals froxombined on tbe baaiclgtitii from

- 11

Table 3

USSR and US: Comparison05 Ruble-Dollar Price Ratioselected Sample of Intermediate Products

(Rubles per Dollar]

Decrease by Percent)

fuels c/

Anthracite Bituminous coal Lignite

Petroleum products Af

Aviation gasoline Automotive gasoline Illuminating kerosine Dleael fuel, light Diesel fuel, heavy Fleet touzut

Chemicals f/

Alkalies and chlorine Chlorine

Sodium bicarbonate Soda ash

Caustic soda, liquid Caustic soda, cake

Cyclic (coal-tar) crudea

Naphthalene 3en*ene

Industrial organic. of

Methanol Acetone

Ethylene dlch_oridc

Industrial Inorganic. g/

Hitric acid, weak

Hltrlc acid, concentrated

Ammonium sulfate

310

1

12.

5-0

0

66

/

f

5

9

7

y

38

16

o

2C

forollow on t.

-

Table 3

USSR and US: Comparison05 Ruble-Dollar Price Ratioselected Sample of Intermediate Products (Continued)

a/

Ratio 'Rubles per Dollar,

(Continued)

Industrial Inorganic. g/

nitrate

sulfate (salt cake)

carbide

acid

acid, tower

?.

acid, contact

oxide

ammonia, anhydrous

ammonia

chloride

sulfate

:

phosphate

'-

chloride

peroxide

chloride, solid

6

chloride, flake

b

:

!S9

L3

55

'*2

materials h/

Roofing felt i/ Plat glass Cement, hydraulic

Prick

Iron and steel productsRalls

Rail accessories Suttweld standard pipe Seamless line pipe Seamless casing Angles

Hot-rolled carbon bars Cold-flnlshed carbon bora Wire rua

5-5

i.L

5.3

5-3

5-2

2'-

9

35

"3

Tabic 3

USSR and US; Comparison05 Ruble-Dollar Price Ratioselected Sample of Intermediate Products (Continued)

a/

Ratio (Rubles per Dollar)

mi

Percent

and steel productsContinued)

Hot-rolled carbon sheet Cold-rolled carbon sheet Electrical sheet Hot-rolled carbon strip Cold-rolled carbon strip Forging billets

Nonferrous metals 1/

Copper cathodes Lead ingots Zinc ingots

Aluminum unalloyed ingots Cadmium

I: ;-

Mercury

Antimony

Magnesium

9-3

data ard methodology, see Appendix A.

otherwise indicated, the difference between the ratio -iv '> -' - ratio

:. - Cj

source

ruble prices froa Source0 dollar prices9/

i^eanumber of graces.

t. 0 ruble prices from0 dollar prices from.

elsewhere counted.

for roofingC ruble prices are averages from

. ' : ;;

ruble price from source lU/.

j. Arithmetic mean0 ruble-dollar ratios from source. Arithmetic mean.

1. 0 ruble-dollar ratios from sourcem. Percentage increase.

n. 0 ruble price fron source IJ/0 dollar price from.

1. individual Ruble-Dollar Patios

This sectioniscussion of the methodology used inthe ruble-dollar ratios for Individual commodities andwhich are shown inhrough The four-digit industrial classifications used in the tables are the numbers appearing ln7 edition of the Standard Industrial Classification Manual.**

a. Solid Fuels

uble-dollar ratios fcr anthracite, bituminous coal, and lignite have been computed by comparing Soviet weighted-average prices per unit of energy with the corresponding US unit prices, as shown in It is believed that the price per unit of energyore reasonable basis for comparing prices of coal in the USSR and the US than the matching of prices of similar coals, mines, or producing areas in the Wo countries. Comparisons on the latter basis would fail to take into account significant differences in heat content between coals of the two countries.

For the USSB the average price per 'unit of energy (kilocaloric) for anthracite, bituminous coal, and lignite has been derived5nd heatingy the estimated physical production in all Coal producing areas In order to arriveeighted average priceeighted average heating value. The weighted average price was then divided by the weighted average heating value to obtain an average price per jr.it of energy. For therices and average heating values developed by the Bureau ofere utilized In computing average prices per unit of energy. Soviet and US prices. nine or dispatching point.

b- Petroleum Products

uble-dollar ratios fiave been constructed foretroleum products by5 ruble prices with5 dollar prices. The petroleum products considered in this report include natural gas androducts refined from crude petroleum and coal tars.

The 'JS price forthe wellhead price from source PP/.

Except if. those cases in which Gulf Coast cargo prices have been used,

* Appendixp.elow. ** ublished by the Bureau of the Budget, office of Statistical Standards, Technical Committee on Industrial Classification. Appendixelow.

- 15

the prices for refined petroleum products are sales prices, quotations, general offers, or posted prices of operators of product pipelineand tanker terminals. The prices. refineries, pipeline terminals, or tanker terminals in the particular refining district uhere the product is made. Gulf Coast cargo prices are those of refinersor quoting to other refiners, to export agents, or to operators of large tanker terminals. The US prices do not include taxes or inspection

In the absence of Soviet data on wellhead prices for natural gas, it has been assumed that the price is approximately the same as the estimated cost of producing natural gas. The estimated cost of producing natural gas was calculated byoviet ratio 2kf of cost oftandard fuel unit of coal and natural gas to the average cost oftandard fuel unit of coal. Available Soviet prices for refined petroleum products are wholesale-release. the oil base of the Main Administration of Sales, the stution of destination within the Ministry of Transportationr the port of All of the ruble prices for refined petroleum products include sums that cover the cost of production, the cost of transportation, and the cost of operating sales bases. Prices for some unspecified products include the turnover tax as well ashe administrative surcharge, whichoperating costs of the various organizations of the Ministry of the Petroleum Industry, is considered to be of minor importance. or all petroleum products marketed in the USSR, tax payments* were equal to aboutercent of the receipts from sales; expenses of transportation and expenses of operating sales bases were equal to aboutercent; and. refinery prices combined for all products marketed were equal to only aboutercent of those It follows that, to achieve comparability between the Soviet and US prices, the ruble prices Should be adjusted to exclude transport charges, the turnover tax, and costs of operating sales bases. Because rates of the turnover taxes and expenses of operating sales bases are not available for Specific products, these components could not be deducted from the ruble prices. Soviet freight rates for rail transport of petroleum products5 are available. Rail transport charges for specific producta could therefore be calculated and the ruble prices adjusted accordingly.

For marketing of virtuully all of the major petroleum products, the USSi' is divided into five pricen which prices varyof differences in production costs, the turnover tax, andcharges. The lowest price Is charged ir. Zone T, and ahigher price Is charged In the remaining four icnes as the average distance fromncreases. Prices in Zone I, adjusted to

* Interpreted to include the turnover tax and the administrative The Latter is.usually minor (lessercent of wholesaleo that most of this percentage is assumed to be represented by the turnover tax.

**'* The price tones for petroleum products referred to in this report are those defined and nunbered on the nan, USSR: Price Zones for Petroleum Inside bncH cover-

-

exclude estimated average transport charges, have been used lnthe ruble-dollar ratios because the principal refining centers of Baku and the Ural.Volga Region are located in Zone I. The average length of haul of petroleuc products withinas Judged toiloaetrrs (ion). On the basis of Soviet freight rates for rail transport of tbe appropriate petroleuche transport chargeaulm was calculated and deducted from the ruble price of each product. ransport charge ofubles per ton was deducted from the prices for gasoline, diesel fuel, and lubricants;ubles for kerosine; andubles for motor fuel and furnace oil. These deductions may be overstated somewhat, for only rail, and not water, transport was considered- Charges for rail transport are higher than charges for water transport, which also is used to ship petroleum products. The effect of the omission of any adjustment for waterIn not considered to be significant, however, because it isthat more thanercent of the volume of freight ln petroleum products moves by rail.

Soviot specifications for most petroleum products are available ln enough detail to facilitate the selection of comparable US items. In the instance of aviation gasoline, however,5 the US did notroduct comparable to Soviet gradesr. Synthesized blends of varying proportions of US aviation gasolinendoere assumed and compared with these Soviet The comparability thus achieved ls considered to be only roughly approximate. et fuel comparable to the Soviet Jetndas not produced in the US Certain US high-grade kerosine* are similar In Quality to and have been compared with Soviet Jet fuels. In the US, data for lubricating oils are given for stocks used ln blending final products, whereas in the USSR data are given for rinlsbed products. Nevertheless, comparisons of Soviet and US products have been made even though only rough approximations to comparability may have been achieved. US prices for residual fuel oils vary inversely with viscosity, whereas Soviet fuel oilsiven viscosity areln tbe USSR at different prices depending on tbt aulfur content. The ruble prices thus vary inversely with sulfur content. Comparable apecllicaliona for aulfur content at different viscosities are not available for US fuel oils. Nevertheless, by considering all of the specificationsiven product and assuming various mixtures of US fuel oils, several comparisons have beer, made between 5oviet and US fuel oils. Tba petroleum products compared and their specifications, ruble and dollar prices, and ruble-dollar ratios are shown in Table

c. Paper anl Paperboard

uble-dollar ratios for paper and paperboard are based on four major classes of paper (newsprint, Jook paper, Tine paper, andaper) and two major classes of paperboard (corrugated pa per-board and floerboara).

Appendix R,elow.

-

US prices are average annual wholesale prices. destination as constructed by the Bureau of Labor Statistics. po/ Available Soviet prices are wholesale prices as. the shipper's railroad/ To obtain comparability with the US prices, tbe Soviet prices were adjustedelivered basis as follows. The average length of haul of paper and paperboard products vaa assumed to lie within the rangem per ton. rangport cost was estimated for the median of this range on the basis of the basic rail transport tariff* ruble per ton-kilometer (tkm) for paper and paperboard products for lengths of haul um ofubles per ton was added to the ruble price of each or the paper and paperboard products.

Although Soviet and US products that were matched verecomparable in respect to the available descriptive Information concerning their characteristics, tha information ia not sufficiently comprehensive toefinitive determination of their physical comparability. In general, It la believed that US paper is of higher quality than Soviet paper. The paper and paperboard products compared and tbeir specificatione, ruble and dollar prices, and ruble-dollar ratios are shown in

d. Chemicals

uble-dollar ratios have been constructed forhemicals by comparing Soviet prices ln effect5 with US prices in effect in Tbe ruble and dollar prices. depot of seller. It should be pointed out that tbe products considered are essentially representative of industrial chemicals rataer than the broader group commonly referred to ln the US as chemicals and allied products. The major components of the chemicals and allied products that arc excluded are drags and pharmaceuticals, paints and paintnedible fats and oils, and miscellaneous chemical products.

The comparability of tbe chemicals considered in this section Ll based primarily on standards published in the USSB that state the analysis, purity percentage, and the amounts and types ofiven gradepMlflO product. Where detailedare not available, comparability is based on methods of manufacture and comparable industrial uae. The chemicals compared and their specifications, ruble ond dollar prices, and ruble-dollar ratioo are shovn in*

c. Construction Materials

uble-dollar ratios have beer, constructedaterials by comparing average Soviet and US prices in effect as Tne ruble and dollar prices. depot of seller. Comparability of most of the products in this category is believed to be very good.

" Appendix B,elov. * Appendix B, p. jcf belov.

-

Soviet prices of most of the materials considered in thisare quoted on the basis of specific sales zones within the USSR. Toingle Soviet priceiven commodity, one or thecriteria was used in deriving Soviet prices comparable to US average prices. hen Soviet prices were given for several zones, an average Soviet price was obtained. The average prices for brick and cement are based on zonal prices weighted by physical production. Average prices for construction gypsum, asbestos cement shingles, asbestos cement pipe, and lime have been estimated from the zonal prices. hen only Moscow prices were available, although themight actually be zonally priced, it was assumed that theprices closely approximated the average Soviet prices. This criterion also was used for petroleum bitumen, roofing felt, flat glass, ready mixed Concrete, and mineral wool. The construction materials compared and their specifications, ruble and dollar prices, and ruble-dollar ratios are shown in

f. Iron and Steel Products

Only those items considered to be rolled steel products have been included in this report. 5 ruble-dollar ratios have not been constructed for such items as pig iron, forgings, castings, and electro-metallurgical products. The ruble-dollar ratios for rolled Steelare basedomparison of ruble prices5 and dollar prices in

U5 prices for rolled ateel products arc those constructed by the 3ureau of Labor Statistics and are. mill priceselected number of "ext.-as' added. Extras are added for such things us special shapes, si?.es, classification, chemistry, and order quantity. The Bureau of Labor Statistics, in consultation with the American Iron and Steel Institute, has included extras most typicalategory in its average prices.

To achieve comparability with the US prices, it has beento make twohe ruble pricesne for freight charges and one for extras. Available Soviet prices arc All-Unlon delivered prices and as suchharge for freight. Because tne average Soviet transport charge for ferrous metals is estimated toercent of the delivered price, the delivered price for each type of rolled steel product lias been reduced by this amount. Mostxtras Are included in the Soviet prices because, unlike the USsystem for steel, in which one base price is given for broadof products with extras for each size, the Soviet pricing system is composed of prices for each sizeiven product. For example, in tlie US, prices for carbonre quoted at So much per pound with extras added for each size, whereas in the USSR

- :

In the USSR, extras such as classification, small lot Sizes, and extra testing are rot included ir. the price. The Soviet practice of extras, however, is not as refined as tnat in the US. The only adjustments ln

* Appen-ixelow.

Soviet prices of most or the materials considered ln thisare quoted on the basis of opeeiflc sales zones within the USSR. Toingle Soviet priceiven commodity, one of thecriteria was used In deriving Soviet prices comparable to US average prices, (l) When Soviet prices were given for several zones, an average Soviet price was obtalaed. Tbe average prices for brick and cement are based on zonal prices weighted by physical production. Average? prices for construction gypsum, asbestos cement shingles, asbestos cement pipe, and line have been estimated from the zonal prices. hen only Moscow prices were available, although themight actually be zonally priced, It was assumed that theprices closely approximated the average Soviet prices. This criterion also was used for petroleum bitumen, roofing felt, flat glass, ready mixed concrete, and mineral wool. The construction materials compared and their specifications, ruble and dollar prices, and ruble-dollar ratios are shown in

f. Iron and Steel Products

Only those items considered to be rolled steel products have been included in this report. 5 ruble-dollar ratios have not been constructed for auch items as pig Iron, forgings, castings, and electro-metallurgical products. The ruble-dollar ratios for rolled steelare busedomparison of ruble prices5 and dollar prices ln

US prices for rolled 3teel products arc those constructed by the Bureau of Labor Statistics and are. mill priceselected number of "ext-ns" added. Extras are added for such things aa special shapes, laaalflcatlcn, chemistry, and order quantity. The Bureau of Labor Statistics, in consultation with the American Iron and Steel Institute, hat included extras most typicalategory In Its average prices.

To achieve comparability with trie US prices, it haa been neces-sury to nuike two adjustnentu in the ruble pricesne for freight charges and one for extras. Available Soviet prices are All-Unlon delivered prices and as suchharge for freight. Because the average Soviet transport charge for ferrous metals la estimated toercent of the delivered price, the delivered price for each type of rolled steel product has been reduced by this amount. Moit size extras are included in the Soviet prices because, unlike the "JSiiyattm for ateel, ln which one base price is given for broadof products with extras for eacn size, tne Soviet pricing syster. ta composed of prices for each sizeiver, product. Tor exaapLe, in the US, prices for carton strueturals arc quoted at so auch per pound with extras added for eacn sice, whereas in therices arc quoted for each slieeam, angle, channel, or the like. In the USSR, extras such as classification, small lot sizes, and extra testing are not included in the price. The Soviet practice of extras, however, ia not as refined as tnnt In the US. The only adjustments in

* Appendix B, p. hG, below.

-

the ruble prices believed to be necessary for extras were In the prices of cold-rolled sheet and plate, the prices of which have been increasedubles each to adjust for noncor^arafclllty of size extras. The degree of comparability achieved for extras is believed to be good.

In general, Soviet and US specifications are available in enough detail to permit the matching of products that are reasonably comparable ln all aspects. The Iron and steel products compared and their specifications, ruble and dollar prices, and ruble-dollar ration are shown ln

Metals

uble-dollar ratioa presented Tor nonferrous metals relate only to nonferrous metals products obtained froa primary smelting. Price comparisons have not beer, made for nonferrous metals products obtained from secondary smelting and for rolled, drawn, and alloyed nonferrous metals.

The ruble-dollar ratios ere basedomparlsoo of ruble and dollar prices in effect The ruble and dollar prices. mill prices with the exception of the US pricea for copper cathodes and cadmium, which arc delivered prices. The share of freight charges in the delivered prices for copper cathodes and cadmium is so small, however, that even if these charges could befrom the US price in some practicable manner, the effect on the ratio would be inconsequential. Comparability of the products included ls believed to be very good. The nonferrous metals producte compured und their specifications, ruble and dollar prices, and ruble-dollar ratios are shown in"

Transport

uble-dollar ratioa have been constructed for rail freight and rail passenger transport ln the USSR ana the US Freight and passenger transport will oe dlacusaad in turn.

reight Transport

omparison of freight ebarges, wham freight rates are used as prices, there is introduced an additional dimension tnat is not applicable to price comparisons appearing ln the precedingof tnis report. Because of tho variability of unit freight rates according to length of haul, consideration BUSt ce given toommodity is hauled.

It follows that two oomparlaons of Soviet and US freight rate* should be raade, one based on Soviet and [JS unit rates for US lengths of haul anderon So-let and US unit rates for

Appendix B, p. Up, below. Appendix R, p. Itf, below.

Soviet lengths of haul. Problems in data, principally arising irom differences between the structures of rail rates in the Soviet and US economies, have made it impractical to make both of these compori-

The structure of Soviet freight rates Is complicated by the existence of basic freight rates. Increased rates for transport over specific routes, additional charges for special handling orand exceptional or preferential rates. For example, penalty rates are added to basic rates during the navigation season for rail routes thatunctioning river route, and substantialln basic rates are offered during tbe navigation season on shipments by rail and water combined. In the US the structure of freight rates is complicated by the existence of two basic types oflass rateommodity rate. The class rate prevails for those coontoditles forommodityas not been The class rate, which is generally higher than tbe commodity rate, Is applicableclass" of products for the standard pattern of origins and destinations. Automobile tires may be shipped in classhereas glass jars may be shipped in Thisin rates means that the rate for tires wouldercentrescribed basic charge (class ICO) between the origin andand that the rate for glai.s; Jars would beercent. Theratepecific chargepecific cominodlty movinga specified origin and destination. For example, because of the volume and frequency ofommodity rate may be established for carload shipments uf cement between Richmond, Virginia, and.

Because Soviet base rates can be expressed for US averagef haul, whereas there are no basic or uniform US commodity rutes that can be applied to Soviet lengths of naul,omparison of Soviet and US freight ratesS mix has been made. Soviet basic unit freight rates per toa-kllometcr at US average lengths of haul have been compared with US average unit revenues per ton-kilometer. The Justification for using data on revenue as representative of US rates for this corapurtaon is that such duta take into account both th* class and the commodity ratea applicable In the US. These data alsothe effects of extras and exceptions, whereas the Soviet basic tariff does not.

A sample uf commodities with tbe greatest Loadings in the US product .iilx has been selectedercent saxple oferminations. ercent sample, prepared oy the Interstate Commercerovides an average US length of haul for each ccemodlty and an average revenue par shortile. The Uo average revenue5 forcawiodity was compared with the Soviet basic rate tn effect5 for tne same commodity at the US average lengtn of haul. The calculation of ruble-dollar ratios for rail freight rates Is snown in*

-

assenger Service

The ruble-dollar ratio presented for transport of passengers by rail is intended to represent an intermediate service on thethat travel for business reasons is chargedoot of production. This ratio differs from the consumer-passenger ratio included in the consumption end-use sector of GNPinal service. The primary difference in the two ratios stems from the type of service and theselected to represent the Intermediate and final aspects of the service. The consumer passenger ratio is basedomparison ofand US services and distunces that are believed to be mostof household expenditures. The passenger ratio, vhlch is characterized as an intermediate service, is represented by the services and distances believed to be most representative of business travel.

In the USSB, rail passenger rates consistasic fareype of service plus additional charges for such items as speed, baggage, reclining space, and sleeping cars. These surcharges, as well as the basic fare, vary vith distances and types of service. Tile rate per kilcraeter decreases as the distance traveled increases. In the US, rates consistasic foreype of service pluscharges for such items as reserved seats, pillows, parlor car seats, and pullmun car space. Extra charges are not levied in the US for normal baggage and only rarely for speed. US rates are fairly uniform in regard to distance, but tlie rates vary by geographical region and type of service.

Because of the very nature of rail passenger rates, aof them should take intoariations in ratesboth distance traveled and type of service. Ideally aunit passenger rates in the USSB and the US for each of theservice should be made, one based or. Soviet and US rates fordistances and the Other based on Soviet and US rates fordistances. Differences bet veer, the two economies,in types of service rendered and in traveling habits,difficui- to define and aieasure comparability of passengerto avoid the risk ofide range of errorvarious types of service, rates have been compared fort.iat is believed to be most representative of the 1i each com.U'.v, ji;:

trips has been used. The Soviet rate for the basic fare for "soft Clftss" har> beer, compared with tne US fare for first class plus pull-man car seats,rip distance ofto. The distance represents the Soviet average length of haul for ail passengers other than cjs-swters. gg/ The services compared and ti'.eir specifications, ruble and dollar prices, and ruble-dollar ratios are siiovi: in*

- ervices

ublc-doiier ratios liave been constructed for domestic communications services in tne USSK and the UShat is, the telepitoue,

* below.

telegraph, and postal services. Such special, functionalizedsystems as those maintained by the military, police, and civil air fleet have nob been considered. The ratios are based on aof charges for the various services that are used toaverage charges for the two countries

It should be pointed out that in dealingervice, in comparisonommodity, it is difficult, if not Impossible, to measure differences in quality. Therefore, comparability of theservices selected for comparison has been assumed on the basis tbat differences in quality cannot be measured and adjusted for.

In both the USSB and tbe US, charges for long-distancecalls ore based on distance spanned and time consumed In Ideally, rates for identical calls should be compared for the two countries and the resulting ratios weighted together according to the relative Importance of tbe different calls compared. Soviet data are not available for makingomparison. omparison has been made of the rates in the two countriesinute call for eight comparable distance units. An arithmetic mean of tbe ratios was takenepresentative ratio for long-distance telephone calls.

In the US, subscription rates for home and business telephones vary by locality, numbers of telephones in the exchange, and type of service rendered. The variations in the atructure of US rates and the lack of Soviet data haveomparison of the various types of telephone services rendered in the two countries. Instead, the range of rates ln effect in the US were examined, and average rates were selected by inspection for comparison with the Soviet rates for subscriptions for home and business telephones.

In both the US and the USSR, there arc three types of In the US the types are night letters, day letters, and full rate. In the USSR the types are common, urgent, and lightning. Soviet data relating to telegraph service are so fragmentary, It has not been possible to relate Soviet classifications ofwith those of the US. Instead, common telegrams, which are the most typical sent in the USSR, and lull rate, the most typical lr. the US, have been selected to represent telegraph service in the two countries. The communications services compared and theirruble and dollar prices, and ruble-dollar ratios are shown ir. Table

j. Electric Power

uble-dollar ratioi' have been constructed for two classes of consumers of electric power, as shown ir. Table The ratios are basedomparison of Soviet and US electric power rates for

* Appendix B,elow. Appendix B, p.elov.

industrial consumers and for residentialconsumers. The

industrial class includes industry,and other

energy requirements, snd the residentialclass alsorural and governmental consumption.

In both the USSR and the US, rate structures for electric power sold to consumers vary considerably by geographic area and by type and quantity of power consumed. omparison of Soviet and US power rates is further complicated by differences in methods of boox-keeplng and in defining categories und by the paucity of information related to the Soviet rate structure.

Rates for industrial power in botb countries are based on two types of charges: se charge, based on the Kilowatt-hours of electricity consumedilling period,emand charge, based either on the maximum power demandedilling period or on the maximum capacity of installed electrical equipment- Rates for Industrial power differ for the two countries in that in the US the fate charged industrial consumers decreases as the quantity consumed increases, whereas in the USSR the rate usually remains the sameof the amount of power consumed. In addition, rates in the USSR are often reduced to subsidize certain Industries.

Power rates for residential and commercial consumers in the US vary considerably from area to area and are presumed to reflect actual production and distribution costs. In addition, rates vary in relation to the amount of energy used- ln contrast, rates vary considerably in the USSR by type of cor.su.tier but do not vary from area to area.

The5 rate for utility sales in the category "Large Light and Power" as defined by the Edison Electric Institute has been used to represent the power rate charged industrial consumers in the

US.

For the USSR an average rate for electric power consumed by industry has been derived by weighting industrial ratesor those areas for which power rates werey the estimated volume of energy sold to the corresponding area. In terms of kilowatt hours, it is estimated thatercent of the totalpurchases from powerplants of the Ministry of Electric Power Stations is represented in this calculation. It is estioated that tne Ministry of Electric Power Stations suppliedercent of the total power consxned and that self-generated power accounted for the re'itainingercent.

Each Industrial consumer in the USSR isenalty forower factor5 and isonis forigher power factor. The tendency was for ;onSu.TicrB to permit poor power factors and therefore incur greater charges. Also, special consumers, such us Some nonferroiis :netais plants, get spe-'al lower rates. This fact would tend to depress the total charges on industry. Because data arc not available Cor making adjustments for theseit has been assumed that they would offset each other.

Some industrial plants and municipalities In euch country generate their own power. This power has been arbitrarily priced at the amount thut these enterprises would have paid If the power had been purchased from sources of public supply.

Tne5 power rate for residential and commercial consumers In the US haa been derived by dividing the total Kilowatt-flours consumed by residential, commercial, rural, and governmental consumers into tho total revenue received from these

The average rate for consumption of electric power byand commercial consumers In the USSR nas been estimated at uO kopeks per kilowatt-hour based on prices oviet sourcene rotes for residential and coamerclol consumers in the USSR are divided into nine groups. The first and second groups of rates are basically for residentialwho are chargedopeks per kilowatt-hour unless thefurnishes hlfl own transformer, in which case noargedopeks per kilowatt-hour. The remaining groups includeconsumers, who payopeks per kilowatt-hour; 3treet railroad wnlch puyoopek3 per kilowatt-hour; street and highway lighting, which payndopeks per kilowatt-hour, respectively; public buildings, stores, and office buildings, which payopeks per kilowatt-hour; beauty parlors, cinemas, and the like, whichopeks per kilowatt-hour; and churches, whichopeks per kilowatt-hour. An average rate ofopeks per kilowatt-hour for residential and commercial consumers is believed taalidbecause the largest proportion of electric power consumedls class probably vould be accounted for by consumers in the first arxl second rate groups. Also, the lover rates charged some groups of consumers are offset by the higher rates charged other consumers.

2. Aggregate Ruble-Dollar Ratio-.

a. Pormulos for Weighting Ratio;-

The US-vfighted and5 ruble-dollar ratios for tne various categories and subcategories of intermediate products and services have been computed by weighting the ratio for eachidual product or service with the corresponding value of output of the product or service. When US-value vei^hts are utilised, tieis as follows:

When Soviet-value weights are utilized, tba calculation ls as follow;

p.

In these formulas, P0 and represent US prices and quantities, and P, and Q, represent Soviet prices and quantities.

It should be pointed out that although value weights vere utilized In all calculatlona, they are cxpreased as percentages in Tablea Also, whereas ruble-dollar ratios based ou Soviet weights are presented at various levela of aggregation, dollar-ruble ratios have been used in performing all calculations when Soviet weights vere utilized, as required by the secondabove.

b. Derivations of Aggregate Ratios

5 ruble-dollar ratios have been derived for moBt of the categories of intermediate productB and services on the basla ofovietS product mix. The derivations of the aggregate ruble-dollar ratios for solid fuels, petroleumpaper and paperboard, chemicals, construction materials, iron and ateel products, nonferrous metals, rail freight transport,services, and electric pover arc Lhovn in Tableshrough 2k. Data on value of production5 have been used In deriving aggregate ratioa based on each of tho product sixes for the following categories: solid fuels, petroleum products, paper and paperboard, and iron and steel products.

The aggregate ruble-dollar ratios for petroleum products are overstated because the ruble prices for refined petroleum products used ln constructing the individual ratios include turnover taxes and aaler. costs. Because tax rates and sales costs are not available for specific products, the individual ruble prices could not be ad-Justed to exclude them. The magnitude of taxes is revealed by the fact that for all petroleum products marketed in the USSRax payments were equal to aboutercent of the receipts from/ It is estimated that the turnover taxf the ruble price exclusive of tranaport charges. Soviet data suggest that the tax probably applied to moot petroleum products Sales costs ure conoldered to be minor compared with thetax.

If It is assumed that the turnover tax averagedercent of the ruble price, adjusted to exclude transport charges; that the tax applied to ail refined petroleua products In thend that the tax rate falls equally and uniformly on all products, the aggregate ruble-dollar ratios with the tax removed for all petroleur products for the Soviet and US product mixes would be ko percent of

" Appendix B, pp.elow. In some instances, data on output underlying the Soviet weights have bean estimated froa scattered data in numerous sources. In those instances, rather than citing the nuaeroua sources, the data are noted as estimated.

** The ruble price fcr natural gasellhead price and as such does riot include the turnover tax-

the ratios inclusive of the turnover tux. These assumptions have been made, and the aggregate ratios, adjusted to exclude thetax, are shown along with the ratios that include them in* The adjusted ratios are not considered precise enough to be substituted for the unadjusted one. They are presented,as sn estimate of the impact of an adjustment for the turnover tax.

Because data were not available toatisfactory set of Soviet weights, the individual ruble-dollar ratios forhave not been weighted on the basis of the Soviet product mix. Tt is estimated, however, that the Soviet-weighted ratio would be slightly lower than the US-weighted ratio, or0 rubles per dollar. This ratio would be the result of the fact that items with high ratios (chiefly basic organic chemicals) are, in terms of value, of less importance in the USSB than in the US. Data on value of shipmentsL) have been used as weights for the US product mix because available data on value of production would notomplete set of weights.

Individual ruble-dollar ratios were prepared fortems of construction materials, as shown in Table Because Soviet value weights were not known for alltems,tems basic to both Soviet and US construction practices were selectedasis for the calculation of aggregate ratios. Data on vulue5 have been used in constructing the aggregate ratio for Lhe Soviet product nix. Data on value of shipmentsU have been used as weights for the USix because these dataa more complete set of weights than available data on value of production.

Soviet weights for nonferrous metals were known for only three items in the sampleopper, lead, and aluminum. Theruble-dollar ratios for these items were combined with data on value of productionnd the resulting aggregate ratio was adjusted to take into account the ratios for which weights were not available. For the US product mix, data cn value of productionave been used as weights for copper, lead, zinc, and Data on value of consumptionh have been used for cadmium, tin, mercury, antimony,magncsiur. because In the US relatively large quantities of these items are imported in order to satisfy consumption requirements. Therefore, value ofbetter reflects the bill of purchases of US producers and the relative Importance of the Items composing it than does value of production.

.-u: aggregate ruble-dollar ratio for rail freight transport has been computed for the US product mix only. The individual"ratios, basedomparison of Soviet and US rates for US average lengths

Appendix B, p.

of haul, have been combined with data on US revenue5 toan aggregate ratio. It should be pointed out that theratio is basedomparison of Soviet basic freight rates and US rates derived from revenue data. As notedoviet basic rates do not reflect total charges, whereas the US rates do. Therefore, the aggregate ratio presented for rail freight is

Another reason for the understatement of the ruble-dollar ratio is the fact that the commodities included in the sample of comparisons of rail freight rates are those commodities with the greatest loadings in the US5 and are, by their nature, those commodities carrying the lowest rates in both countries. For the commodities having higher rates that have been omitted from the sample, the ruble rates would be much higher than the rates for bulk goods included in the sample. The variation in rates between these groups, however, is not as great in the US as in the USSR.

It is estimated that if an adjustment could be made for the factors of understatement, the aggregate ruble-dollar ratio might lie within the rangeubles per dollar. It is believed that an aggregate ratio based on US lengths of haul and weighted by the Soviet product mix would be slightly lower and may"ubles per dollar.

Ruble-dollar ratios for rail freight based on Soviet lengths Oi' haul for ibe SovietS product mixes might well be higiier than those based on US lengths of haul because Soviet average lengths of haul are longer than those in the US. in the US the rate per mile decreases as the length of haul increases, whereas in the USSR the rate may well increase as the length increases."*

Ideally, an aggregate ruble-dollar ratio for rail passenger Service should be basedomparison of rates for each of the types of passenger service. It is difficult to define and measure comparability of passenger services, arid it is relievedide range cf error would be introduced b> comparing each type of service rendered ir. the two countries. Also, Soviet and US data are not available in enough detail toatisfactory set of weights for constructing aggregate ratios for the various types of services.atioas constructedype and distance of passenger service characterised as an intermediate service, as; in* This ratio, however, does not represent total rail passenger service. Foratioao been constructed for passenger service characterizedinal service in theend-use sector of CNF. Because the ruble portion of both

See h,,sovc. Soviet freight rates per ton-kilometer decrease as the distance increaees: until some Intermediate length of haul is attained; then the rate increases or remains constant us tne lease block increases. Appendix A,elov.

of these ratios reprttsents Soviet basic passenger rates only, the ratios may well understate the true ratio for the respective types of transport. This understatement would be due to the fact that aore charges are added to basic rates in tbe USSR than ln the US.

Por both the Soviet and US product mixes, aggregate ruble-dollar ratios forservices and electric power result from combining the Individual ratios with data on value ol' revenue5 end data on value of consumptionespectively.

Table 5

USSRS: Specifications, Pricea, and Ruble-Dollar Price Ratioa for Patroleuai Producte

Continued)

nawirii

I'IKofrirjIlri.

-ii

INM

u-ti.tj- -it.

Pp-U.

Willm Cp-fl. Uh-n.

nil V

i*v

Auumili irauMdaalcP oil <iiiMnii.i.

invw-li,

iooil

M wuaki I)

s.)

Ull HI awfellK

It) nr for

Mt* m! In*}

,

i, iuium

V .

al Ml. loy T

'iiraa* a

Aler. Ir*** tev. *liai

mWr, *W- hua,Iw.>ua

>X>aUr. TulM

MOolnr.Bs.lvr, TVlat

I* eler. 1UH

lidlls*.

atar, Mb

aiar. Talaa

alar. tula*

*

s UOI oaior. talH

SCO VU.ar. Tw-

inir,Ui>n. TulM

faf

m

Ma

(7.

a*9

n '

Willi Ins

S

M.TO

tl

M ao

a

jB.ifc

1.7

'.0

a^

u -

l*t>

M

-

Ill

4 s.

D *5

B Ik

;

- n

1

3

o

Table 7

USSR and US: Specifications, Prices, and Ruble-Dollar Price Ratios for Chemicals

fUk&llvr ortl chlurin OUerlM

liKarUiirila

cda

Crtllo (twtl-uw)

ItaftiBtrtsl orcwtlr Hill il Jtdu-ti*

98RUICO3

Uidl

pareeat fcOJl

j*Qj

Drue

Cake. MRamot

5

rn go* .

Wf.rlt Tor. V wtrlc Tor, ft/ (ftrtile*PalUi

tu.6i

IDA

a .

B9

i.iy,

I. too m

5

ttea

Nitric *ci<i. vaar

eld. con-

nit rat*

-lies*-

-liviilnfK

iUr-jric wld. MMr tuinric MM,

OO-ltBVt

HOj6 paramt HBO)

I

maa

arcent

o fa percent33 IMI ICIOjr*

rrc

-

i

to.11

3

5.1

fi.T

...

V

I?

Table 8

USSR and VS: Specifications, Prices, and Huale-Dollar Price Ratios for Construction Materials

er retrlc urn bf

r*tu

(Rj'jlci pfr [Pilar)

t felt

sua]

iex, ooar 1/

enia nl >lar oriel,

. ICO, r> iijnMay.tani

Lin", hydrated, buli-Jirj;,

aaier. cyi*,u. oase -re

per

ntMr3 per square

ae:er

per iqi-sr*

M'.ar fj

er aelrl:

uti y

USeiwlc

3CO J/ XC */

IbM par cuBlc

par aalrlc fl par aatrle

tene/

erper aetrlc

ion3/

i!i :

Table 9

USSR snd US: Specifications, Prices, and Ruble-Dollar Price Ratios for Iron and Steel Products

Continued)

It U

a0 la

ill'- li, M IU

n 1"

iO Ui

r auaaur y

ti*,

o-Ma),

S< ]

rtaMa*

i 1 ip.M u,it>)I'*aa-wnil ilral*.'mi )

Klf>lost (lam,ill nt allay, "

a

1*

lllvi ml*H1>

Udlt0 *o. immhi

U loW.1

111

"ri* aMBaitJaawUil

iiti. fcv i' iniu v.'j-j.

1 '*, la**"

riana

aaa,ran*a

aaaai ur raiaa I*

uibr

nu Hiaa,

tfwial aaallir,KUana. aaaa aaniltf."tfria (li*

mi,twal,

fraaa.aaatja,

aaa

r'-aa.ia. Ilea

n. ,uili. aaa. til

Hi.(ifn* iiv.taaaa.

i -

s

5'

Table 11

USSH and US: Calculation of Ruble-Dollar Price Ratios for Rail Freight Transport

i

C1iction

ftjtatw. (MlI .'

-.

5

,1par

. jet

fafl

Ka

/

c

i.n

mm

)

hi law l* r

iatr

/

c

elC

il

Cualli Ti-i ^

rta" i

Fotrolpat praam

uaa"Mlaaaa,

io.o

pa IrOM

to

o to .oo

O.OOM

0]

*

J

IWriateTTiit Taaiailw rn p. K'.

, BM

iO.JC

0

M

attoo

1.1

- J -

m

hi

mm

I*

l

: -in

r

fovf

IS ic I

E EH

-il a Shi

essks I! I: i; met e

IS:

I

-

a

o

'1

if i' i'HiiT a

II!

E! sssr:Es I!

APPENDIX C

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2. RAND Corporation. omparison0 Wholesale

Pricea ln Soviet and American Induatry, by Herman M. Kaplan and William L. White,ay W-

3- Ibid., Prices of Basic Industrial Goods in the0y Lynn Turgcon and Ab'nur. Berjson, L2

*. Coaoerce, Bureau of the Census. Statistics. Abstract of the United States,--

5- Labor, Bureau of Labor Statistics. Bulletin, Whoie-talc Prices and Price-

6. USSR, Hlnlatcrstvo Kinansov. llya sc.stavlcr.iyarnajenPrice Llat for MnTTTH Eittlaates, ir. Prices, pt-SSR. Spravochnik rretallurga po tavctnym ae tallicnHandbook of Honferrous KeUils) vol I, Hoi cow,.

7- Interior, Bureau of Mines. Kirmrals,.lwrralsW.nformation Circularveragealue* of American Coala by Rank anri ay States^ pecp. g.

8. USSH. sennik na osnovnyye stroltel'nyye,

1U;l'--iyyecnentya, y i_0 goda (Handbook cf Prices of HbsIc Construction nnd TechnicalU, and Auto Swire Parts,0 Pricea), &diu, volt.hereafter referred LO as USSR. li-tsennik )

rice" Hare to a Til-anacUvalan.,

-

Oil. Palr.t. and

P Corporation.

ayaz','-rv-ration. above), p.tt.

16. .

17- USSR, Min'.ntcretvo Ugoi'iiov ProatyalllenaMt 1 Homciikiaturiyy

seny naboruopvar.lyc'^'oi'iiitj nrtw^iler.nosti: i'.rappa JI: tsvatnywHandbookrices for Materialsl Ind'-' p II: rr

.

- -

- VS -

Bureau of Mince Mine rale,

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. Voprosy planlrovanlyagol'noy

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"CoalPennsylvaniaCoalBltuKlnoua and Lignite."

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2h. Probst, A- "Voproay razvitiya toplivnogo khozyaystva SSSR" (Problems in the Development of the USSR Fuelnprosy ekonomiki, no-

25- USSR, Mlnlsterstvo ugol'noy Proayshlennostl. Materialy 1

i-pravicl-^iik (Randbooic fa' Prices/ tor Materials and Equipment Used ln the Coalolaterials pt 2, p.. (hercarter referred to as USSR, Mlnlaterstvo Ugol'noy Promyshlennosti. Spravochnik) USSR, KiniSterStvo Flnansov. Spravci:tir>lk tsen na stroltcl' nyyeborudovanlve (Handbook of Prices for Construction Matvrials and EqulpmeritTTthereafter referred to as USSR, Mlnisteratvo Flnansov. Spn.Yoehr.ih)

. Orgftaiimclyneftyanoy proeyshlcnnostl:

:zdir.iy- vtoroye, tructure of Accounts in the Petroleumd ed, revised- ll1--

.

rkhangcl'skiy,al. Spravochnik po tarifam zheley.no-dorozhnogo transportaTHanibook of Railroad.

29- labor, Bureau of Labor Statistics. Bulletinbove),

1

30. USSR, Hlnisterstvo Finanaov. . above), .

il- Arkhangel'skiy, etn.,..

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Statistics Bureau. ICC Statementarload Waybillics,istributionh-. and Revenueshereafter referred to "CC- ICC Statement KS-i)

ii- USSR Tsentral'noye StatlStlctestoye Upravleniye. vyMl' SSSR: statistlcheskly sbcrr.ik (Transport andn the USSR: tatisticaloscow,.

ro -

iU. Edleon Electric Institute, Statistical Bulletin for theew York,. T.

35- USSR, Kinistcrstvo Elektrostantsly. Shornik tarlfov na

eplovuyu cncrglyu (Coopilatlon of Rates for Electrical and Thermal

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37- USSR, MiniateretYo Elektroatantsiy. Sbornlk tarlfov na

gplovuyu energiyu (Compilation of Rates for Electrical and Thcnawloacov,

38. Broyde,, above).

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us.

USSR. Spnwuchnik . ir.;au-.vt.nyn ae tallea (Metallurgist Handbook ofoloscow,- Interior, Bureau of Mines. Information circularbove/reprint from Bureau of Mines MineralsCoalPennsylvaniaCoal Bituminous and Lignite."

USSR, Minlateratro Ugol'noy Prooyshlennoati. , above).

USSR, Miniate rfltvo Fl nansov.,iatt's Oil Price Handbook and- American Gae Association. b Gui. Facts: tatistical Ite cord

of the Gaa Utility Induatry, Kcv York,' USSR, Hinlateratvo Flnancov. , Labor, Bureau of Labor Statistics^ Bulletin.

kj. USSR. t-

WJ. USSR, Miniatcretvo "Jgol 'noy Promyshlennosti. Spravochni';:

- OU, Paint, and Drug Reporter,

ModernJan 5b,

Labor, Bureau of Labor Statistics. Price and Price Relatives

for Individual CoroxxUtles, p. I'tayaeiir.oat', no o,- eus- Rcco rd,STd.,-

Stroitel'nayn prccysh^-t', no . UO. Engineeringi. Strol tel1 W3 -ftecor-l, . ..

USSR, Gosudarstvennyyoveta MlniBtrov SSSR po Deiac Stroitel'atva. -Tscvay.' tc I: sirdairl'.ietaly i {Price Hando!trarag* Rayon" fcjtiBiHte PriceanJt l, (hereafter referred cc as USSR. Tsenr.ik Engir.^rlng tevs-tecord.-

"SSll, Miniate ratvo propyshUnnosti Stroitel 'nykh Materia! cv. Preys fcurnntcr. na stroiiel 'nyye italerlaly (Price List

- 7i

of Wholesale Prices for Construction, (hereafter referred to as USSR. Preyskurant,)

Engineering Hewa-Bccord,.

Stroitcl'iiaya promyshlennost', no

Engineering News-Record,-

6k. USSR. Preyskurant,,.

65- Commerce and Labor. Construction Review,

USSR. Preyskurant,,.

Commerce and Labor. Construction Review,

USSR, Ministerstvo Promyshlennosti Stroitcl'nykh Materialov.

Preyskurant optovykh tsen na stroltel'nyye materlaly (Price List of Wholesale Prices for ConstructionOA,. 8.

Commerce and Labor. Construction Review,

USSR. Tsennik no Engineering Hews-Record,

Stroitel'naya promyshlennost', no

Engineering Hews-Record,.

USSR, Ministerstvo Ugol'noy Promyshlennosti. Materlaly 1

oborudovaniyegol'noy promyshlennosti, spravochnik: hastl- Handbook of Prices Used in the Coal Industry: Supplement to Volume (hereafter referred to as USSR, Ministerstvo Ugol'noy Promyshlennosti. Labor, Bureau of Labor Statistics. Prices and Price

Relatives for Individual Cofflitodltlcs, Washington,. 5-

Ministerstvo Ugol'noy Promyshlennosti. Dopolneniye

.

.

E.etal and Mineral Markets, New

p. 1.

79- 0. 1.

ICC. TCC Statement,. k,

laid.

Ibid.

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o"}. USSR, Ministerstvo Svyyzi, SpiooK abonentov Moskovskoy gorodskoy telefonnoy scti (Moscov City Telephone, p. 2L.

Federal Cormiunl cations Commission. Interstate Message Toll Telephone Rates Effectivechedule I,

-

86. USSR, Ministerstvo Svyazi. Telefonyy spravochnik (Telephoneoscow,.

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Communications Commission. Statistics on the Communi-

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svyazl,o

.

CoGPunlcations Statistics,. USSR, Mlnieterstvo Svyazi. Spisok abonentov Erunzenskoy

gorodskoy telefonnoy setl (Frunze City Telephonerunze,, Nedolyzhenko,it., above).

93- Interior, Bureau of Mines. Preprint from Bureau of Mines

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the USSR: tatistical. 9o. COffDKrce, Bureau of the Census. Statistical Abstract of the

United. ensus of Manufactures; olndustry

Statistics, pt

Ministerstvo Finansov. . ^.

.

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SSSR: statisticheskly flbornlk (industry of the USSR: A

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-

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p-

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Tbid.

Original document.

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