861.51/2722: Telegram

The Chargé in the Soviet Union (Henderson) to the Secretary of State

21. Last night, at the session of the Central Executive Committee, Grinko spoke on the budget for the current year. The total budget is 82,900,000,000 rubles. The consolidated state budget is 78,500,000,000 rubles, representing an increase of 21.5 per cent over last year. Military expenditures are to be increased enormously rising from 8,200,000,000 rubles in 1935 to 14,800,000,000 rubles this year. Nearly one-half of the total increase falls to purely military items, which will constitute 17.9 per cent of the total budget in 1936, as compared with 14.8 per cent last year. Furthermore, many of the expenditures classified as economic (civil aviation, railway construction, capital investment in munitions industries, et cetera) are of course partly military in character.