Mikołajczyk Papers
No. 1389
Memorandum by the Polish Deputy Prime
Minister (Mikołajczyk)1
Economic Conference With the American Delegation Held on July 28, 1945
(Present on our side: Messrs. Mikołajczyk, Mine, Modzelewski, Rajchman; on the American side: Clayton, Harriman, Bergson, and two experts.2)
Minister Minc proposes to present a brief exposition for orientation purposes about our economy.
Agriculture: With regard to grain, we shall manage to make ends meet this year, however difficult it may be. On the other hand, the question of livestock presents very serious difficulties. The number of cattle was reduced to 25% as compared with the prewar period; the number of horses is even below 20% of the prewar figures. As to food, we should expect a certain unsteady balance in the supply of grain. We have a catastrophic deficit in the supply of meat and fats. We shall have a certain small surplus of potatoes and sugar. That is the situation in the entire area which is actually under Polish administrative control.
With regard to forests, we have suffered serious losses. It was principally the Germans, and partly also armies in transit, who depleted the forests to such an extent that for 16 years we shall not be able to do any substantial lumbering.
Mr. Harriman points out that the armies had to build bridges. Then he asks about the situation in Poland before the war with regard to lumber.
Minister Minc explains that Poland exported lumber, and now it will have to import it to cover the requirements of the reconstruction of the country. We shall have considerable difficulties in rural reconstruction; there is a shortage of industrial wood, beams for mining, and cellulose for the manufacture of paper and artificial fibers.
This picture represents the prospects for one year. It is to be assumed that there will be a balance in the supply of grains in the following year, but the problem of meat and fats is going to be a protracted affair.
Industry: We are reaching 50% of the prewar production within old boundaries. As far as coal is concerned, the daily production amounts to 81,000 tons according to data received in the past two days. That [Page 1533] is the production in the entire area, including the western territories, with the exception of the Waldenburg coal basin, where the production amounts to from 7,000 to 8,000 tons daily. The production figures for German Silesia are: February—40,500 tons; March—92,000; April—123,000; May—258,000; June—473,000. The number of workers in that territory was: February—3,900; March—6,900; April—20,000; May—21,000; June—25,500. I point out that all workers employed there are Poles. In December we expect a monthly production of 3,750,000 tons, so that the monthly average for the five-month period up to December will be around 3 million. During those five months we expect a total production of 15 million tons.
Mr. Clayton asks whether it will be possible to export any of that amount.
Mr. Minc explains: During those five months Poland will need 6,250,000 tons. To cover export contracts to all countries, i. e., to Russia, Sweden, and those countries with which we are negotiating (Denmark, Finland, Rumania, and Norway), we shall need 5,500,000 tons. If we add the domestic requirements to the export obligations, we get the figure of 11,750,000 tons. That figure is incomplete, because it does not include reserves, which amount to 1,500,000 tons. The total coal balance sheet is therefore 16,500,000 less the requirements of 11,750,000. Our coal production is limited by (1) insufficient food supply for the miners and the resulting difficulties in hiring labor; (2) shortage of young people in the coal-mining industry (the average age of coal miners is over 45 years); and (3) transportation, shortage of freight cars and locomotives, shortage of motor vehicles, which is felt even more acutely because of the shortage of horses that were used before the war.
Mr. Clayton, in connection with the age of coal miners, asks about the decrease in productivity.
Mr. Minc says that, in spite of all, productivity is increasing. In previous months it was 0.4, and in the first ten days of June it was 0.84. These figures do not represent the actual productivity, because the productivity below surface is not very different from the prewar productivity. It is due to the disproportion in individual qualifications between miners working on the surface and those working in the mines.
The 4 to 5 million tons which we have available for export can be used only if we get additional transportation. At present the supply must be considered available only at the mines.
Mr. Clayton asks what the price of coal would be f. o. b. Gdynia or Danzig in dollars.
Mr. Minc: On the basis of Swedish contracts, $8.42 per ton.
Mr. Clayton asks whether the decrease in the productivity of the miners affects the quality of the coal.
[Page 1534]Mr. Minc replies to this that the grading of the coal is very accurate.
Mr. Harriman asks whether the widening of railroad tracks makes transportation more difficult.
Mr. Minc says that, on the contrary, it makes it easier. The broad-gauge Breslau–Katowice–Kraków railroad line can transport coal to Russia on wide Russian freight cars. On the other hand, railroad lines running to the seashore have normal gauge. The broad-gauge line which was revamped by the Russians has lines of both gauges, and it can be easily shifted to normal gauge. Since we have only a few freight cars of our own, and the wide freight cars can carry more, we find ourselves in the paradoxical situation where we are in no hurry to rebuild the tracks and return to the normal gauge.
Mr. Clayton asks whether the present condition of the Polish transportation system warrants a discussion about exporting the surplus of coal.
Mr. Minc explains that the railroad lines do warrant it, but that the railroad rolling stock does not.
Mr. Clayton expresses his doubts as to whether the situation will permit an increase in coal production.
Mr. Minc points out that if we cannot export the surplus coal because of the lack of transportation, then we can use it in Poland in view of the fact that the internal consumption figures were determined rather modestly, and that we can use it especially for industrial purposes. Transportation for internal purposes should be sufficient, since the distances are short and industrial establishments are located within a radius of 150 to 200 kilometers.
Mr. Harriman: Are the port installations for loading coal in Gdynia and in Danzig in good condition?
Mr. Minc: The loading capacity before the war was 40,000 tons daily. Today it has decreased to 4,000 tons in both ports. We expect, however, that it will increase to from 16,000 to 17,000 tons by the middle of August. At present our cranes are destroyed, and not all power plants are working. The situation would improve considerably if the number of our ports were increased. Stettin is important, especially since the ports of Gleiwitz and Cosel are now active. We have more barges than before the war. There is also the port of Elbing, which can load from 10,000 to 15,000 tons daily provided we make minor investments. But Elbing can be used only for cabotage to Riga, Tallin, possibly to Denmark, to the Soviet Union, and to ports in southern Sweden during certain seasons of the year. The port of Elbing is rather shallow.
Mr. Harriman: How many freight cars would Poland need to [Page 1535] export the 5 million surplus [tons]? Is it true that Poland is to receive freight cars from Sweden?
Mr. Minc: We are to receive 1,600 freight cars of 20-ton capacity. Whether we need freight cars for transportation depends on the destination.
Mr. Clayton: To the nearest port.
Mr. Minc: Have you considered transporting coal by railroad through western Europe?
Mr. Clayton: Unfortunately, nobody in Europe has a sufficient number of freight cars today.
Mr. Minc: Given the present condition of the railroads, we would have to figure 7 days to Danzig one way, which means 14 days both ways—in other words, 14,000 to 16,000 freight cars. If we calculated the figures through the whole year, we could reduce them by some 20%, because then we could organize the railroad transportation appropriately. I also point out that with regard to transportation to the west by railroad we are limited only by the number of freight cars, while with regard to ports we have to take into consideration the loading capacity of the ports, not counting the tonnage of the ships.
Mr. Harriman: Do you have enough locomotives? Could you get more locomotives and freight cars from Sweden?
Mr. Minc: Sweden says that we cannot.
Mr. Bergson: Are there freight cars from Germany in the rolling stock used in Poland?
Mr. Minc: Only in transit to Russia. We do not have any such freight cars.
Mr. Harriman: How many of your freight cars are damaged?
Mr. Minc: We have a certain percentage of incapacitated freight cars. The proportion is not much higher than before the war. The trouble is that we do not have the means to make repairs.
Mr. Clayton: How much coal could Poland produce in 1946 if it had means of transportation at its disposal?
Mr. Minc: The total production would be around 5 million tons a month. Of that total we could export from 2½ to 3 million.
Mr. Clayton: That would be 30,000 [30 million] yearly.
Mr. Minc: At least.
Mr. Clayton: Quite a considerable amount for export.
Mr. Minc: We say in Poland that coal is our foreign exchange.
Mr. Clayton1: Is coal perhaps the most important item of Polish export?
Mr. Minc: It is the first item, but not the only one. Other important items are zinc and cement. In June we produced 21,000 tons of zinc ore, 3,501 tons of zinc concentrate, and 4,300 tons of zinc. These figures represent 35% of our capacity, and they apply to the [Page 1536] Polish territory as of 1939. With regard to the new territories, zinc is found only on the very border, and the quantity is small. From August 1945 through December 1946 we shall have 40,000 tons of refined zinc according to estimates of our export capacity. In addition we have a rare metal—cadmium. In the same period, between August 1945 and December 1946, we shall have at our disposal for export purposes 200 to 300 tons of cadmium, 7 million tons of coke, 350,000 tons of cement, 160,000 tons of steel and iron (the total production of steel and iron within the boundaries of the old Poland amounts to 40,000 tons a month). The production capacity of Upper Silesia before the war was 100,000 tons a month.
Mr. Harriman: Is the synthetic rubber industry greatly damaged?
Mr. Minc: It is destroyed in Silesia. In Poland it did not exist at all.
Mr. Bergson: Has Poland yet sold any steel and iron?
Mr. Minc: I am not informed as to how much has been sold.
Other export items are: glass panes for windows, ½ million meters; soda, 50,000 tons. Then there are various small items, which together can bring in a large amount of money, but it would take a long time to discuss them.
Mr. Harriman: How is your textile industry?
Mr. Minc: In December the industry worked at full capacity of the looms.
Mr. Clayton: What about the raw material?
Mr. Minc: Our supply is secure. The Soviet Union has a large quantity of cotton. On the other hand, we are very short of wool. The output of the looms represents about 60% of the prewar production. The Germans destroyed the textile industry to a great extent.
Mr. Clayton1: I am amazed that you can import cotton from Russia, because Russia itself had to import cotton before the war.
Mr. Minc: The Soviet Union imported a certain amount of cotton before the war, but they did not use up the cotton during the war.
Mr. Harriman: They received a large amount of ready-made clothing through lend-lease. And how is the problem of footwear in Poland?
Mr. Minc: That is the darkest spot in the picture of our industry. We do not have leather and we do not have tannin. Our tanneries are undamaged and we have a labor force, but because of the shortage of raw material we have the largest deficit in this respect. I can see clearly today how to provide clothing for the people in Poland, but I do not know how to get footwear for them. We do not have rubber to use as a substitute. In some cases it affects us very painfully. In industry, where shoes wear out fast—for example, in coal mining [Page 1537] and in those industries where acids are used in production—workers go around half barefooted.
Mr. Clayton refers to our requirements as regards farm machinery, factory equipment, trucks, etc., as well as raw material.
Mr. Minc reads an import program for the period from August 1945 to December 1946, not including UNRRA or long-term investments, and not specifying from which country the material is to be imported:
The approximate value of imports will be 380 million dollars (not including long-term investments on credit). The problem is to maintain current production and to satisfy the elementary needs of the economy and reconstruction.
| Rubber | 8,000 tons | Transmission belts | 60 tons |
| Automobile tires and other tires | 5,500 tons | Wool | 20,000 tons |
| Woolen rags | 15,000 tons | Cotton | 60,000 to 70,000 tons |
| Scrap iron | 300,000 tons | Copper | 30,000 tons |
| Aluminum | 2,500 tons | Nickel | 1,000 tons |
| Gasoline | 100,000 tons |
Foodstuffs:
Meat—100,000 tons; fish—50,000 tons; butter—20,000 tons; lard—[blank]; fat back—20,000 tons
As for machinery, we must import steam boilers and parts, combustion motors, motorcycle and automobile engines, traction engines, water and steam turbines, pumps and springs, hydraulic presses, ventilators, wood lathes and metal lathes, moulding machines for foundries, textile machinery, sewing machines, road steam-rollers, excavators, and crushing machines, in a total amount of from 30 to 35 million dollars. River boats, dredges, and barges, and tugboats (not including seagoing vessels) in the sum of 10 to 15 million dollars. Potassium salts, 750,000 tons. Agricultural implements in the sum of from 10 to 15 million dollars, including tractors, of which we shall need about 5,000.
The imports indicated above represent the most indispensable needs, which should be covered by normal foreign trade, through our exports and credit in goods.
Mr. Minc, in answer to Mr. Harriman, explains that we shall have difficulties with regard to lumber for only eight or nine months and that in spite of these difficulties we intend to cover our needs through local production. We have made important experiments in that respect by replacing wood with cement, for example, in the production of railroad ties.
Mr. Clayton: Has not a large part of Polish exports been earmarked for the Soviet Union?
[Page 1538]Mr. Minc: Our agreement with the Soviet Union3 is effective until January 1, 1946. As to the coal for export, the figure which I gave is free of any obligations.
Mr. Clayton: I do not see here capital investments for the construction of plants, railroads, ports, water-supply systems, sewage systems, etc.
Mr. Minc: Our foreign relations in the field of economics are divided into three parts: (1) trade; (2) assistance; (3) credit. I speak only about trade and credit.
Mr. Bergson: How much of the figure of 380 million dollars is to be covered by exports?
Mr. Minc: About 50%, and the rest by credits for about five years.
Mr. Clayton: And should the long-term credit cover only investments?
Mr. Minc: With regard to the normal trade turnover, we expect that the exports will increase, mainly with regard to coal and textiles. On the other hand, we figure that credit for reconstruction will be considerably higher. Furthermore, we have every reason to expect reparations.
Mr. Harriman: I suppose that after these 18 months the imports will decrease and the exports will increase.
Mr. Minc: Our imports will not decrease, but they will be covered by our exports in a higher proportion.