861.50 Five Year Plan III/1: Telegram

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

45. My 37, January 27, 2 p.m.9 Yesterday’s Soviet press carries a detailed draft (theses) of a report on the five-year plan of development of the national economy of the Union of Soviet Socialist Republics which is to be presented by Molotov at the 18th Party Congress and which has been approved in the main by the Political Bureau of the Central Committee of the All Union Communist Party.

The plan as outlined in this draft indicates that during the period 1937–1942 relatively less capital is to be invested in industries producing consumers goods than was invested during the second five-year plan and in this respect the new plan is similar to the first five-year plan.10 Whereas the second five-year plan provided that 23.2% of total capital investments were to be placed in the consumers’ goods industries and 18.1% actually was placed therein, under the new program it is planned to devote 16% thereto. During the first five-year [Page 736] plan which had as its primary aim the building up of a heavy industry along modern lines 85.9% of total capital investments was devoted to producing means of production as compared with 84% planned under the new program. Total capital investments under the new plan are to amount to 180 billion rubles, of which 116.6 billion rubles are to be placed in industry alone. Of the latter sum, 86.8 billion rubles are for enterprises manufacturing producers’ goods and 16.6 billion rubles for those producing consumers’ goods. Transport is to receive 85.8 billion rubles. One branch of the national economy, namely, agriculture, is to receive even less capital in absolute figures than was planned under the second five-year program, the figures being respectively 10.6 billion rubles as compared with 14 billion. By the addition during the period 1937–42 of these amounts of capital to the existing industrial plan, it is planned to produce in 1942 goods valued at 180 billion rubles (prices of 1926–27) of which amount 112 billions are to be in the form of means of production and 68 billions in the form of articles for consumption. The machine building and metal workers industry alone are to produce in 1942 goods valued at slightly less than the total value of consumers goods, that is 62 billion rubles as compared with 68 billion. Consequently the value of the articles of consumption in 1942 should be 37.8% of the total value of production as compared with 46% actually achieved in 1937 and 43 as planned for the year 1938.

Emphasis is placed throughout the draft on the necessity of strengthening the defense industry and in this connection the third five-year plan is launched under the slogan that it is designed for “special steels” and “for chemistry”. Furthermore the figures in the draft on production in kind planned for 1942 which call for the largest percentage increases relate to electric energy, rolled metal, cement, automobiles and similar goods and the smallest called for increases with the exception of canned goods relates to cotton and woolen cloth, leather, shoes and other consumers goods. Consequently the draft indicates that the Kremlin does not intend to take effective measures to overcome the lack of equilibrium in the national economy pointed out in the Embassy’s despatch No. 1435, June 30, 1938 and 2048, January 27, 1939,11 a lack which is caused by the excessive disproportion existing between the industrial forces devoted to manufacturing articles for consumption and those directed toward turning out war materials and means of production for heavy industry. Editorial comment so far is devoted merely to explanations of the various items of the draft without introducing any significant interpretations.

Kirk
  1. Not printed.
  2. The third five-year plan was presented by Stalin and Molotov in speeches to the XVIII Congress of the Communist Party, and adopted by it during its sessions in Moscow, March 10–21, 1939. The Chargé wrote in his despatch No. 2247, April 12, 1939, that unlike the first and second five-year plans, which contained detailed programs for separate branches of industry, this third plan was an outline of a most general nature. It made “no adequate provision for the correction of the maladjustment in the Soviet Union which exists between consumers’-goods production on the one hand and capital-goods production on the other, and which prevents a stabilization of wages and prices and consequently a proper balance between monetary circulation and the production of goods.” (861.50 Five Year Plan III/4)
  3. Neither printed.