Sergey Tsakunov
The People's
Commissariat of Finance
Most studies of the
history of Soviet financial and credit policy stress the important changes
which took place in the role of the People's Commissariat of Finance (Narkomfin or NKFin) in the management
of the national economy at the beginning of the 1930s.[1]
We know a great deal about the financial system of the 1930s and about its
major institutional shifts. The official journal of NKFin
Finansy I sotsialisticheskoe
khozyaistvo ('Finance and the socialist economy'),
which was in 1934 renamed Vpomoshch' finrabotnika ('For the help of a
financial worker'), published articles about state finance, including official
documents and instructions of NKFin. NKFin's activities were discussed annually by the Congress
of Soviets in its deliberations concerning the state budget for the next year.
The people's commissar (narkom) of finance
NKFin from 1921 to 1926,
under G.Ya. Sokolnikov, enjoyed enormous power
as the dominant economic agency of the early NEP years, when priority was
accorded to monetary stabilisation. In 1926 Sokolnikov,
discredited by his association with the defeated Zinoviev and Kamenev, was
replaced as narkom by N.P. Bryukhanov.
Thereafter, NKFin's power was eroded with the growing
influence of Gosplan and Vesenkha.
As NEP went into decline the primacy of financial and monetary stabilisation
was supplanted by a commitment to forced industrial development.
The financial
system in 1930s was highly politicised in character. It was under great and
decisive influence of the leading party bodies, the direct instructions of
party congresses, conferences and decisions of the Politburo. As a result many
important financial questions were decided not in NKFin
and not even in Sovnarkom, but primarily in the
Politburo. Here we examine to what extent NKFin could
influence decisions concerning the financial system, particularly concerning
the drawing up of the financial and investments' plans for the Second Five-Year
Plan, the fight against inflation, the struggle for a 'healthy' non-deficit
budget, and the battle against the excessive financial expenditures.
In the 1930s NKFin achieved considerable success in restoring, at least
partially, the influence which it had enjoyed under
1. 1930-32, when
the financial system underwent major transformation. NKFin's
efforts were concentrated in two directions: the strengthening of its influence
among the economic commissariats and on the political leadership itself, and
the struggle for the stabilisation of the financial system and strengthening of
the ruble.
2. 1932-33, when
the new macroeconomic role of NKFin as a pure state
budget body, which was responsible for the public revenues and spending of the
state budget, was established.
3. 1934-37, when
with the abolition of rationing and the proclamation of 'the victory of
socialism', renewed efforts were made to further simplify and reduce NKFin's functions in the economic system.
NKFin's slow recovery as a financial
institution 1930-32
NKFin under Bryukhanov: weakness and uncertainty The
changes in NKFin's position were determined
essentially by the large-scale transformations of the economic system which
took place in this period. The direct investment of money resources into the
national economy as part of the industrialisation drive and the sharp expansion
of the sphere of direct state control at the end of 1920s generated among the
country's political leaders enthusiasm for 'a leap into socialism' and the
rapid elimination of market relations.[2]
In this period it was anticipated that finance would no longer play the role it
had played under NEP, and with the shift to planning and commodity exchange the
abolition of money could again be contemplated.
The changes in the
external economic environment, based on political actions of the Central
Committee and the Politburo, disorganised NKFin and
weakened its influence in the financial and economic sphere. This stemmed from
the fact that NKFin, during the industrial drive and
fast curtailing of the market, appeared to be simply redundant. During that
period Stalin and his group believed that they simply no longer needed a
financial regulator.
However, the growth
of economic difficulties, uncontrolled spending of huge resources and high
inflation, compelled the country's leaders to attempt to find a place for
finance in the new planned system. The resolution of the joint Central Committee
- Central Control Commission plenum of December 1930, on the report of
The decision to
link financial and industrial planning, which subordinated the former to the
latter, stimulated a radical reorganisation of the financial system during
1930-32. The wave of large-scale reorganisations which took place at this time
covered state credits and the accounts of the national economy, capital
investments, the system of public revenues, state
social insurance, tax collecting, state property insurance and financial
planning. Among the most significant changes we might single out the following:
the 1930-31 credit reform, the adoption of a new mode of formation and usage of
circulating funds of the enterprises, the reorganisation of the financing and
crediting of capital investments, the creation of a special bank network for
long-term investments, and the 1930-31 tax reform, which unified the system of
enterprises' payments to the budget and strengthened tax control functions,
changed the rules of formation and usage of reserve and insurance funds of the
state enterprises and the reorganisation of the state social insurance system.
In the literature
there are detailed accounts of how the financial management of the country was
reorganised in this period.[4]
However, so far nobody has analysed the question, who was the initiator of
those changes, and whether or not they were approved by NKFin.
N.P. Bryukhanov, who headed NKFin
from January 1926 until 18 October 1930 and was a member of the Central
Committee, lacked the political weight of his predecessor Sokolnikov,
and was unable to resist attempts to change the financial system without taking
into consideration the opinion of the experts. Moreover, the large-scale purges
of NKFin's staff in 1930-31 considerably weakened it.
The new tax system
for socialised industry The relative weakness of NKFin in the period of the First Five-Year Plan is
illustrated by its role in the debate concerning proposals for the development
of a new system of taxation for state-run industry.
After the Central
Committee resolution on 'Reorganising of the management of industry' issued on
5 December 1929, NKFin was compelled to elaborate a
new unified tax system for the socialised sector. Two basic points were
advanced in that resolution. Firstly, enterprises were granted considerable
freedom in determining prices for their products. Secondly, it established
'deduction from enterprise's profits' as the main principle of the tax reform.
These two points, which had been approved without consultation with NKFin, contradicted NKFin's
interests. A point which was repeatedly expressed in memos to
the higher bodies.
In fact NKFin received instructions 'from above' on how it should
construct the new tax system. Consequently there was little room for any debate
regarding the reform inside NKFin. The chief of NKFin's tax reform commission M.I. Lifshits,
with hardly concealed bitterness, as can be judged from the stenographic
report, said at the meeting ofNKFin's collegium:
These circumstances
and instructions of the Central Committee resolution concerning the right of enterprises
to preserve in their hands part of their profits and of the decisive role of
the ob"edineniya in the field of price control
and elsewhere could not have no effect on the
character of the proposals, which we make.[5]
The Central
Committee's intervention into NKFin's sphere of
competence badly dented the professional pride of the specialists of the state
revenues' management department, headed by Lifshits.
In 1929 NKFin repeatedly submitted various proposals
to the top state bodies concerning the reconstruction of the tax system, but
met with little success, as Lifshits conceded: 'We, NKFin, put forward a number of proposals to the legislative
bodies; some of them were accepted, some were not, but if we summarise all that
was done, we should say that all decisions [Lifshits
here hints of the adopted CC decree - S. Tsakunov] having been undertaken were
far from solving the question.'[6]
However, NKFin was not going to surrender or simply
shrink before the decisions of the powerful Central Committee.
The Central
Committee's variant suggesting the unification of profit taxation, made the
state budget's income dependent upon the enterprises' profitability. In the
early 1930s for many enterprises, and even whole branches of the economy, that
condition was frequently not fulfilled. That meant that under this variant of
the reform the non-realisation of the state budget became more than probable,
hence NKFin's specialists' resistance to the adopted
variant. The experience of 1930-33 showed that the collection of taxes was
quite separate and serious task which could not be executed automatically after
the subject for taxation was defined.
NKFin's variant of tax
reform differed from that suggested by the Central Committee but accorded with
its own departmental interests. NKFin's commission,
which comprised 16 experts, prepared two variants of the reform. The first
variant envisaged two channels of taxation: the first and main channel - tax on
the turnover of capital, and the second and auxiliary channel - deductions from
profits. For NKFin this variant was the most
advantageous. In his report to NKFin's collegium on 10 April 1930, Lifshits
declared that the suggested variant 'enables us to ensure that the budget is
firmly realised', 'the revenues are completely supplied', 'the system becomes
much more simple both for us and for the whole of
industry'. The most important point was to ensure 'large independence of
revenues' flow to the budget, large independence of the state budget separate
from the results of the whole industrial-financial plan's (promfinplan)
fulfilment, from the results of fulfilment of all parameters of the promfinplan.'[7]
Naturally NKFin's main aim was to implement the reform with the
maximum warranty for itself. Therefore, NKFin staff
and heads, in contravention of the Central Committee's resolution, continued to
support the variant with the turnover tax. Besides, acceptance of the Central
Committee's variant, threatened to deprive NKFin of
part of its powerful rights in the field of price control, and through price
control the profitability of enterprises and the level of state receipts.
According to Lifshits:
If you consider the
total sum of withdrawals, which is rather a significant part of the general
receipts, you will see that these withdrawals are established by the government
according to NKFin's submissions. What is the role of
NKFin under these conditions in the field of price
control? Enormous. This was its role till now and it
should remain the same. And do we preserve any role under the acceptance of the
second variant [i.e. the Central Committee variant, unified tax on the
enterprises' profits - S. Tsakunov]. No, on the contrary it will involve the
complete disarmament of NKF. We cannot agree to this.[8]
Looking forward to
securing its interests with the help of the turnover tax, NKFin
still had to implement the Central Committee's directive on the transition to
one-channel taxation, though in 1929 NKFin continued
its opposition, considering that 'this half step, this half-measure will not simplify
to any extent the system in general but will only make it more complicated' .[9]
In 1930 the only way out for Lifshits's
commission concerning the new system of taxation was to find some kind of a
compromise. And this is what they suggested. According to the Central
Committee-Sovnarkom resolution on 2 September 1930,
two main taxes were devised for the state enterprises:
(i.)
turnover tax which accorded with NKFin's
proposals and
(ii.)
profit deductions (otchisleniya otpribyli) which
were the main points of the Central Committee's variant.
The majority of
commissariats did not participate in drawing up the draft tax reform which as
we have seen was dictated by the Central Committee resolution. Only the
People's Commissariat of Workers' and Peasants' Inspection (NKRKI or Rabkrin), which was given an order to prepare a draft
parallel with NKFin, was engaged in working out the
reform. At this point a dispute between these two governmental bodies for
priority in preparing the draft of the tax reform emerged. NKRKI proposed to
introduce a tax based on gross income, whilst NKFin
favoured a tax based on production turnover. As noted by one ofNKFin's specialists in a memorandum to Lifshits 'the dispute is about words "turnover"
and "gross income", other "essential" arguments are
"far fetched"' (are pulled by hair - prityanuty
za volosy)[10]
The Sovnarkom resolution of 21 July 1930, signed by Rykov, put an end to this inter-departmental struggle. The
resolution took the materials of NKRKI, rather than those ofNKFin,
as the basis of the draft of the tax reform. Bryukhanov
sent a strong letter of protest. NKRKI sarcastically noted how NKFin's representatives in 1929 had resolutely opposed the
idea of a unitary tax, but in 1930 had justified it vigorously after the
Central Committee resolution. According to NKRKI's representatives their
variant was submitted in 1929, long before NKFin
presented its variant.[11]
However, Bryukhanov in his letter to Rykov insisted that 'the NKRKI USSR draft was submitted to
SNK 18 days later, and not a month earlier then the NKF's draft as the
representative of NKRKI sought to pretend at a meeting of SNK'.[12]
Comparison of the two variants shows that there were no essential
differences between them. Thus their struggle did not reflect the struggle for
a definite concept of the reform but was rather a trial of strength between NKFin and NKRKI.
The situation
sharply changed in August 1930 when Rykov was
replaced by Rudzutak as head of the Sovnarkom commission on preparing the reform. Afterwards at
the next meeting of the commission, chaired by Rudzutak,
on 16 August 1930 NKFin's project was accepted.
The case with the
tax reform drafts shows vividly that in order to re-establish its position as a
powerful administrative body NKFin had to undertake
various efforts in different directions. First, it had to seize the initiative
in advancing proposals on key questions of national finance to the Politburo
and Sovnarkom. The major objective was to prevent
decisive questions concerning the construction of the new financial system
being solved either without consultations with NKFin
or even by another non-financial body like TsKK-NKRKI.
Second, it had to demonstrate to other commissariats that it held in its hands
powerful instruments of regulation and control over state finance.
The dismissal of Bryukhanov
The relationship
between NKFin and Gosbank
and their ambiguous position vis-a-vis the party leadership was highlighted by a development
in the summer of 1930. On 19 July 1930 Pyatakov, head
of the State Bank and a former supporter of Trotsky, came to the conclusion
that inflation was getting out of hand and sent a memorandum to Stalin arguing
that the state budget for the following year must be in surplus and that no
further currency should be issued. He proposed also to drastically reduce
imports, and to cut to the minimum the export of food products. In his
memorandum Pyatakov sought to assure Stalin of his
political loyalty and that the proposed adjustments stemmed from necessity, not
for political disagreement with the 'general line'.[13]
In successive
letters to Molotov, Stalin claimed that Pyatakov was
being manipulated by bourgeois specialists, notably by supporters
ofKondrat'ev and Groman,
whilst policy in NKFin was being shaped by Yurovskii. He called for these specialists to be dismissed.
He described Pyatakov as a 'truly right-wing Trotskyist'. He informed Molotov that within NKFin and Gosbank 'two or three
dozen wreckers from the administration must be executed, including a dozen
cashiers of various kinds' and that 'Kondrat'ev, Groman and another couple of scoundrels must certainly be
executed'. This letter initiated a general campaign against bourgeois
specialists within the apparatus, although Groman and
Kondrat'ev were temporarily spared.[14]
Stalin demanded a
renewal of the leadership ofNKFin and the State Bank
(Gosbank), based on reports from OGPU and NKRKI. In
October both Pyatakov and Bryukhanov
were replaced. The appointment ofG.F.
Grin'ko to head NKFin on 18
October 1930, brought the commissariat closer to Sovnarkom and Gosplan, the
principal agencies of economic management. The task for Grin'ko
was to carve out a distinctive role for NKFin within
this new relationship.
NKFin retained its close
links with Gosbank. In October
Having seemingly
established a political framework for further inflation Stalin then initiated
or acquiesced in an abrupt change of policy. Even before the
new appointments had been made the Politburo decided to tighten the financial
screw. And in December the economic plan for 1931 proposed that the
state budget should be in surplus and that no further currency be issued.[16]
NKFin's new image: financial planning
and the collecting of state revenues 1932-34
Grigori Fedorovich Grin'ko, a former SR
and a member of the party since 1920, worked throughout the 1920s in the
Lacking experience
in financial affairs, Grin'ko relied heavily on his
deputies in NKFin. A significant role was played by
R.G. Levin, who enjoyed great authority within the commissariat and in Sovnarkom, and who effectively conducted the day to day
work of the commissariat. Levin presented drafts of the most important
documents, including those passed to higher authorities, to Grin'ko
for his signature. Frequently Levin himself sent to Sovnarkom
documents on financial policy, in breach of the principle of subordination.[17]
It is significant that the NKFin commission for
working out the financial plan for the Second Five-Year Plan was headed by Ya.A. Teumin, deputy narkom, and not by Grin'ko himself.
Defining NKFin's role within the planned economy The
elaboration of a common financial plan under the growing administrative role of
NKFin was the key point of Soviet financial planning
of 1930s.[18] The
drawing up of the five-year and annual financial plans for all branches of the
national economy, as well as carrying out the function of collecting taxes for
the state budget increased NKFin's authority vis-a-vis the economic
departments and gave it the levers to pressurise the latter. Whilst there were
no attempts to restore the NEP functions of NKFin in
regulating the economy, its participation in drawing up the perspective
financial plans allowed it at least occasionally to analyse the main
macro-economic parameters of the national economy and to achieve a certain
economic equilibrium in the process of fixing the planning parameters and
fighting against unrealistic approaches to the development of the economy.
In 1931 neither
Grin' ko, as recently appointed narkom
of finance, nor his staff, still disorganised by the purges of 1930-31, were
able to prepare their own variant of the financial programme. In the autumn of
1931 Levin, who at that time frequently chaired the meetings of the collegium, expressed shock at the poor quality of NKFin's work:
For a long time I
did not participate in the drawing up of the plans, and budgets in particular,
but I must say quite frankly that I am astonished at the low level of knowledge
of the subject on the part of our workers, in comparison with the level which
was known to me 4 or 5 years ago. We now know damn all, know scandalously
little.[19]
Recovery took NKFin almost
the whole of 1932.
NKFin did not play a
serious role in elaborating the proposals for the five-year plan, advanced in
1931 first by Kuibyshev and then by Molotov, although Grin'ko
himself would certainly have been aware of the preparatory calculations in Gosplan or discussions of these questions at Politburo
meetings.[20] NKFin began drawing up the financial plan for the Second
Five-Year Plan immediately following the XVII party conference of
January-February 1932. The variant of the financial plan which emerged in 1932
was called in NKFin's documents 'the initial plan'.
On 19 May 1932 NKFin's collegium issued its
resolution 'On the organisation of work on elaborating the common financial
plan and state budget for the Second Five-Year Plan period (1933-1937)'.[21]
It outlined a detailed and compressed schedule for drawing up the plan. The
preliminary variant of the financial plan and state budget was to be prepared
by 20 May, the final variant by 5 August. The commission charged with this task
was to submit the preliminary variant of the common financial plan, state
budget, and control figures of the local budget to NKFin's
collegium by 1 August and to Gosplan
As preparatory work
NKFin intended to collect voluminous information
concerning the fulfilment of the financial plan for the First Five-Year Plan,
to analyse the main financial flows in the economy and the incomes of the main
groups of the population. It was necessary also to obtain data on the dynamics
and structure of prices in the socialised and private sectors for the period
1928/29 to 1932, the dynamics of the wages funds and the levels of wages broken
down by the branches of the economy, the dynamics and structure of trade
turnover and distribution costs. Other independent items of preparatory work
included the processes of accumulation in the First Five-Year Plan, dynamics of
profits, amortisation, turnover tax, incomes and accumulation of collective
farms.[22]
The seriousness of NKFin's approach to this work reflected its revival under
its new chief. To resist the investment appetites and budget requirements of Narkomtyazhprom, NKPS, NKSovkhoz
and NKLes, NKFin needed
precise information concerning the results of structural shifts in 1928-32, the
condition of the finance sphere, the tendencies of prices, costs, wages and
profit dynamics. Taken together these economic parameters gave a reasonably complete
picture of the macroeconomic situation in the country and served as a
foundation for the substantiation of NKFin's
position.[23]
In May 1932 'The
main instructions on drawing up of the common financial plan and state budget
of the
The key factor here
was the understanding ofNKFin's staff that the policy
of forced investment during the First Five-Year Plan had caused financial
instability and had fuelled inflation. The brilliant quantitative results of
the first years of the plan had been achieved by an 'inadmissible' deterioration
in many qualitative indicators and above all in the profitability of these huge
investments. The real expenditure for construction appeared to exceed their
budget targets considerably. A serious financial crisis loomed. Budgetary
expenditures, driven by the burgeoning investment in industry, especially in
1932, exceeded all stipulated indicators. The mass of money in circulation
increased greatly, while the population still could not afford the prices for
necessities. The ruble's strength was threatened with
a crash.
Therefore, in the
prepared methodical 'Instructions' great prominence was accorded to NKFin' s
attempts to emphasise the importance of strengthening of money and financial
methods of management, and general equilibrium of the financial system after
the investment drive of the First Five-Year Plan. One of the major points of
the 'Instructions' was the idea of 'a vast role' of the monetary system in the
immediate future.[24]
NKFin in its desire to
revive 'the dictatorship of finance' could not, however, contradict official
policy, which was based on forced capital investments and grand investment
programmes. At the same time NKFin could not continue
to pump the economy with credits provided by printing money as at the beginning
of the 1930s. NKFin favoured a policy variant in
which the growth in volume and rates of the investments would be achieved at
the expense of the increase of internal accumulation in the public sector and
their redistribution between branches of the economy. In this NKFin's position was close to that of Sovnarkom
and Gosplan.
To realise its role
in a system of planned economy during the Second Five-Year Plan NKFin sought to emphasise the growth of profitability of
the socialised sector, increasing the role of enterprise accumulation in
investments and replenishment of current assets, development of self-financing
of enterprises, and strengthening of ruble control
(by way of penalties and taxes).[25]
The authors even suggested 'to leave at the disposal of enterprises and
organisations of the socialised sector a growing share of profits for coverage
of their capital costs and replenishment of their current assets',[26]
as well as to revise the acting norms of amortisation and to establish
the new norms, which would meet the need of restoring fixed capital.
It was impossible
for NKFin to solve those problems without further
centralising the financial systems' organisation and its management of
financial resources. It completely corresponded with the way management methods
were developing under the planned economy. Therefore the 'Instructions'
emphasised that in managing the financial system in the
Second Five-Year
Plan they should combine 'central planning of state resources with
decentralisation of economic management'.[27]
Accordingly the
role of the united financial plan was considerably enhanced. 'The common
financial plan should be the main instrument of financial planning, providing
the control and reasonable direction of all financial resources, spent on
investments in fixed and working capital, on welfare construction, management
and defence of the USSR.'[28]
The state budget was to become the main instrument, which could secure the
appropriate redistribution of the national income between branches. In general
these ideas meant a return to the schemes advanced during the First Five-Year
Plan but which in fact had not been carried out.
The State Bank's
role in the management of the economy also changed. It was considered to be a
bank of 'short-term credit and a central settlements organisation of the
The contents of
these initial 'Instructions', which obviously were idealistic in character,
could not reflect real process of fighting and bargaining for resources,
through which the drawing up of the five-year plan finally took shape. In the
course of fulfilment of the planning instructions in the Soviet system of the
1930s, the typical divergence between the ideal and reality was revealed. The
main instructions on drawing up the financial plan for the Second Five-Year
Plan looked rather attractive: they envisaged the strengthening of regulation
with the help of monetary and financial levers, stipulated the need for more
rational organisation whilst minimising money and material costs, and stressed
the need to ensure a growth in the living standards of the Soviet people on the
basis of expanding goods circulation as a condition of fulfilment of the
investment programme. However, in practice the realisation of the financial
programme, as it will become clear later, was not based on financial levers,
but rather it was completely administrative.
The contents of
subsequent confidential memoranda ofGrin'ko's
deputies and sector heads concerning the financial programme for the Second
Five-Year Plan, which will be analysed below, proves that the authors of the
financial programme went considerably further than the 'recommendations',
contained in the 'Instructions' (1932), and proceeded from a much more
realistic view of the situation in the economy.
NKFin and the financial crisis of
the winter of 1932-33
By the end of 1932 NKFin had a clear and fixed position on some of the most
important questions concerning the new five-year plan. The deepening financial
crisis at the end of 1932 served to strengthen NKFin's
position in dealing with current difficulties, and also to justify a stronger
role for financial control within the Second Five-Year Plan as a whole.
On 20 November
1932, Grin'ko passed to Stalin, Molotov and
In this memo Grin'ko specified 'what particular price was incurred by
the financial sphere for the rapid increase of the investments to the national
economy against planned volume of investments?'
Of 33 milliard rubles additional resources, 28 milliard rubles were received from the increase of the tariffs,
prices and money issue. The fulfilment of the First Five-Year Plan was
associated with mounting inflation, especially in l931and l932.[31]
Grin'ko was compelled to
draw attention to 'the serious inflationary phenomena in the country'. Other
symptoms of the financial system malfunctioning were the 'vast' increase of
planned wages without a corresponding growth of production, and the slackening
of government pressure on costs reduction. This resulted in the following
negative phenomena: a rapid growth in the unprofitability of enterprises and
whole branches of the economy (in 1932 the losses totalled 3.1 milliard rubles against planned - 800 million rubles,
and for 1933 the commissariat anticipated almost 5 milliard rubles
of planned losses);[32]
the accumulation of significant volume of money '(about 4 milliard rubles) in the hands' of the population which were not
covered by a corresponding increase in commodity supply.
Grin'ko in his memorandum
proposed that in 1933 the government should aim to achieve a state budget
surplus, by means of which 1,500 million rubles
currency could be withdrawn from circulation. This evidently won the support of
the leadership. In a Sovnarkom decree of 16 December
it was recommended that 1,000-1,500 million rubles be
withdrawn from circulation.[33]
The elaboration of
the Second Five-Year Plan The 'drive' for the elaboration of the Second Five-Year
Plan in the spring of 1932 took place more on paper than in practice. The staff of NKFin, overburdened by current
work, were slow to switch to perspective calculations. The minutes of
the commission's meeting (25 July 1932) contain reports from the sectors on
drawing up the Second Five-Year Plan which make clear that the majority of
sectors had not even started drawing up the plan.[34]
By the middle of
July some 100,000 rubles had been spent on drawing up
the financial plan for the Second Five-Year Plan draft, not an insignificant
sum of money.[35]
Despite this expenditure, with considerable sums reserved for the payment of
preparatory materials, the schedule of work elaborated in the spring of 1932
was not actually carried out. Many sectors of the commissariat failed to agree
matters with one another. For example, the conflict between the deputy head of
the sector of financial policy, Rogov, and the head
of the sector of industry, Vvedenskii, concerning the
sensitive matter of accumulation in socialist industry resulted in the matter
being referred to Teumin, the deputy narkom of NKFin.[36]
On 13 September
1932, NKFin's collegium
considered progress on the financial plan (finplan)
for the Second Five-Year Plan. On the basis of a report submitted by Gorelik, the deputy narkom, the
commission's work was voted a failure.[37]
These difficulties
persisted. On 14 March 1933, Grin'ko sent a
memorandum to Molotov complaining that none of the commissariats had submitted
their fmplans for the Second Five-Year Plan to NKFin
Comparing the time
needed for drawing up of the five-year financial plan variants in Gosplan and in NKFin shows that
the latter was considerably behind. In April-May 1933, the calculations of the
major parameters of the financial plan for the five-year plan were submitted to
the chief of the finplan sector, I.G. Konovalov. However on 8 June Mezhlauk
and Borilin from Gosplan
sent an enquiry to NKFin because they had not
received 'any materials for drawing up the Second Five-Year Plan'
.[39] Gosplan asked them to submit the material not later than 10
June.
Table 3.1 shows
rather significant variations in the calculations of Gosplan
and NKFin for the Second Five-Year Plan. NKFin's variants
in 1933 envisaged higher figures for state revenue and higher figures for state
expenditure than Gosplan's variants, with
correspondingly lower targets for the budget surplus.
In drawing up the
financial plan for the Second Five-Year Plan NKFin
clashed not only with Gosplan but also with other
commissariats, especially those which had unstable finances and which
controlled sections which were chronically unprofitable. The positions of three
departments, NKPT, NKLes and NKSovkhoz,
were especially notable. Thus to judge from the archival data, the process of
coordination of variants between NKFin and NKTyazhProm in the summer of 1933 was very difficult. In NKFin's fond a document comparing these variants is
preserved. A. Smirnov, looking through the variants wrote at the bottom of the
page: 'The resulting indicators show vividly the conflicting points of view of
different departments - this is not normal.' For example, NKPT (the People's
Commissariat of Post and Telegraphs) planned the sum of 4.471 milliard rubles for its working capital while NKFin
planned only 4.154 milliard rubles; for profit NKTP
calculated 7.790 milliard rubles and NKFin 8.781 milliard rubles; on
the usage of investments (osvoyenie) and commencement
of production in newly built enterprises, on the contrary, NKTP proposed 6.013
milliard rubles, and NKFin
only 5.384 milliard rubles.[40]
In general in the
1930s, Gosplan and NKFin's
functions in the sphere of financial planning were gradually brought together.
The first reason for this was that the financial plan contained such major
macroeconomic indicators as volume of accumulation and the amount of the
investments to the national economy. Such questions went beyond the limited
sphere of NKFin's competence. For this reason Gosplan actually duplicated the work ofNKPin
in the drawing up of the five-year financial plan in a special sector of the finplan. The specialists of that sector of Gosplan worked independently and in parallel to NKFin and in no way coordinated their calculations with the
latter. For this reason Gosplan had an obvious
priority in drawing up the financial plan in comparison with NKFin.
There were further
reasons for Gosplan assuming leadership in the
elaboration of the financial problems of the Second Five-Year Plan. First,
initial data for the calculations was received by NKFin
from Gosplan, and not vice versa. Moreover, the
correction of the plan was carried out in accordance with correction made by Gosplan. Thus in 1933, when drawing up a variant of the
plan, Maimin specified that a number of figures of
the plan were defined on the basis of information received from Gosplan in 'a working order'.[41]
After the XVII party congress, Gosplan adjusted the
figures of the five-year plan and only then were these adjustments made by NKFin.[42]
Gosplan dictated not only some initial figures, but
also the 'division of labour' in drawing up the plan. Gosplan
itself was to be responsible for questions concerning the level of accumulation
in the national economy, the costing and pricing of goods, plus determining the
purchasing potential of the ruble and the question of
money issue. NKFin, it was suggested, should
concentrate on the question of taxation of the population, methods of financing
of the national economy, including capital construction, creation of insurance
reserves; it was also to consider perspectives of the state credit system and
savings departments.[43]
Finally, the very subordination of Gosplan and NKFin in the framework of Sovnarkom
meant that NKFin should submit to Gosplan
the calculations for the five-year plan, and that the latter would present them
to the government. All this reduced the motivation for NKFin
to establish any independent position in the sphere of perspective financial
planning. NKFin's staff worked extremely slowly on
the drafts of the finplan and state budget, with
large failures.
At the same time
the actual parallel work of drawing up the financial plan resulted in
divergence in the plan drafts of Gosplan and NKFin. In the NKFin fond are
preserved several drafts of the letters from Grin'ko
to Mezhlauk in April 1934, with evaluation of Gosplan's variant of the financial plan for the Second
Five-Year Plan. Grin'ko (with the help of Smilga and Lyando), who prepared
these drafts called upon Gosplan to be more realistic
in calculating the final variant of the finplan,
including the volumes of price rise and trade turnover:
The fund for
reducing prices during the Second Five-Year period, planned by Gosplan in volume of 55 milliard rubles,
seems to be insufficient, if we take into an account, that for 1937 29 milliard
rubles are scheduled and for 1935 and 1936 there
remain 24 milliard rubles. The available data on
trade turnover provide the basis to expect, that 1935 should be the turning
point concerning the reduction of prices. In this case the reduction of prices
in the Second Five-Year period will require a sum of about 70 milliard rubles, and the reserve of 16 milliard rubles
stipulated by Gosplan
NKFin and Gosplan each issued their own variants for the planned
income of the state budget during the Second Five-Year Plan in January 1934.
Revised variants were issued in April. The final version was approved in
November
NKFin and the management
of the state budget NKFin during the Second Five-Year
Plan stmggled constantly for control over the
revenues and expenditures of the state budget. With the increase of the resources
being distributed and redistributed the task of controlling and monitoring
transfers became ever more complicated. In this situation NKFin
was compelled to expand and elaborate the forms of its financial reports, to
enlarge the staffs of its central and local bodies, to create special finance
and budget inspectorates (FBI), to perform numerous check-ups both
independently and jointly with the Commission of Soviet Control (KSK).
The turning point
in NKFin's activities stemmed directly from the
crisis in the collection of public revenues which burst at the end of 1932. The
crisis took NKFin by surprise. When 70 per cent of
the revenues was expected to come from the socialised
sector, that is from state enterprises and economic bodies, many officials assumed
that tax collection would be trouble free. K. Abolin
wrote that 'during
NKFin's actions in curbing
state budget expenditure and in imposing strict wage controls from the end of
1932 to the first half of 1933 played a significant role in stabilising the
financial system in 1933. Here NKFin's efforts
coincided with the important political decisions to cut investments and
investments plans in July 1932.
The Sovnarkom resolution of 9 December 1932 laid on NKFin and its local bodies responsibility
to make inspections and to audit budget and economic bodies on the spending of
budgetary funds to ensure comprehensive control from above. In the newsletter
concerning the results of the FBI's work in the first half of 1933 it was
stated that 'already during the very first period of the FBI's work the
information and materials received from the regions concerning the work reveal
the unsatisfactory organisation of the local financial economy, characterised
not only by the absence of a "saving mode" (rezhim
ekonomii) but by mass cases of overspending and
financial waste (razbazarivanie) of national funds,
including direct waste and plundering'.[47]
At the end of 1932 NKPin was compelled to institute a special 'fortnight
campaign' devoted to the collection of the revenues from the socialised sector.
Several threatening resolutions were issued.[48]
The campaign revealed that a number of enterprises and organisations not only
underpaid their dues to the budget, but tolerated 'criminal facts of
concealment of the sizes of their turn-over'.[49]
The check-up of
In response NKFin in the first half of 1933 took bold steps to
decentralise the collection of payments from the enterprises. Previously a
large part of turnover tax and deductions from profit was collected centrally
by NKFin from
NKFin check-ups in 1933
also uncovered 'extensive facts of overspending of the planned wages funds'[50]
in individual plants as well as in whole commissariats.
The level of wage
and salary debt reached a peak in January, February and March
Through the
application of strong administrative pressure the wage debt was reduced almost
threefold by 1 September 1933.
The main reason for
the delays in the payment of salaries was the shortage of money. However, that
problem stemmed also from intrinsic weaknesses of the planned economy:
non-payment of accounts for work carried out, and the large financial losses incurred
by entire commissariats. On 18 February 1933 Grm'ko
and Kalmanovich, in a letter to Molotov, specified
that all demands to commissariats to liquidate the wages debt only elicited new
requests for additional financing on reimbursement of expenses from the budget
and new claims for credits. They emphasised that the debt emerged as a result
of the fact that 400 million rubles which were
allotted in the first quarter of 1933 for the reimbursement of losses in 1932
were overspent by NKTyazhProm, NKZem,
NKPS, NKSovkhoz and NKLes.
As for NKFin, its part of financing of replenishment
of current assets under the 1933 programme was fulfilled completely and the
planned losses of 1933 were also compensated. Under those conditions Gosbank failed to take any special restrictive measures
towards the listed commissariats.
Whereas the task of
government to reduce the administrative-management expenditures in the economy
in a total sum of not less than 350 million rubles is
being realised extremely slowly, the separate organisations are not informed ot the task, whilst control over the fulfilment of this
business is not organised ... We consider it absolutely impossible to proceed
with the increase of the financing from the budget for compensating of the
wages debt without instituting an absolutely specific programme of mobilisation
of internal resources by each commissariat through the realisation of excessive
material values as well as through the reduction of administrative-management
expenditures, and directing them to liquidate the salary debt.[53]
On 23 February 1933
Sovnarkom issued an appropriate resolution on the
problems of cutting expenditures and mobilisation of the internal resources,
with a breakdown for each of the main commissariats.
However, already on
26 February 1933 Kalmanovich, chairman of Gosbank, complained to Molotov of the unwillingness of a
number of commissariats to implement this resolution. For example, NKTyazhprom 'agreed' with the sum of only 58 million rubles from the task of 200 million rubles
on mobilisation of resources that was proposed. It was motivated by lack of
information about the larger volume of detected resources of excessive material
values.
After the
cancellation of the rationing system the conflict between the regional economic
bodies, which constantly overspent the planned wages funds, and central state
departments which tried to impose certain restraints of wages growth became
even more aggravated. In November 1934 Sovnarkom and
the Central Committee issued a special resolution 'On arbitrary (samochinnyi) increase in wages', in which any increase of
wages not approved by Moscow and which broke the existing rules and laws was
strictly forbidden.[54]
Since state budget expenditure was under tight control, employees of state
enterprises sought to conceal their funds in order to have some small room for
financial manoeuvres in spending of the enterprises means. NKFin
strongly disapproved of such tendencies, denouncing them as a 'bourgeois nepman distortion' of economic accounting, which had
'nothing in common with Bolshevik financial policy'.[55]
In order to
strengthen NKFin's fiscal control Grin'ko
constantly put on the agenda questions of increasing the number of inspectors
and improving their pay. On 5 November 1934 Grin'ko
sent a confidential letter to Molotov with the request for a 1.6-fold increase
of staffs of lower inspectors and for additional state financing of NKFin on that account from Sovnarkom's
reserve fund.[56]
Grin'ko once more returned
to this question in 1937, just a day before his arrest, when he proposed that
the government release rural Soviets from responsibility for calculating and
collecting money taxes, insurance payments and natural deliveries. Having
guided that resolution through Sovnarkom and secured
its ratification by the Politburo Grin'ko won
permission for a significant increase of staff of the tax and insurance
inspectors and auditors in the countryside.
On the whole, the
struggle waged by NKFin together with the Commissions
of Party and Soviet Control (KPK and KSK) for tax collection and for
controlling the spending of state finances was doomed to failure. The
conditions of rigid centralisation of distribution of planned resources
dictated 'the rules of the game', which reasonably quickly trained the main
agents of the Soviet economy. Despite all the check-ups and auditing the volume
of losses to the state, according to NKFin's
estimates, totalled in the years of the Second Five-Year Plan more than 9.9
milliard rubles including the largest share, about
half from NKTyazhProm (more than 4 milliard rubles, of which direct losses were about 1.2 milliard rubles).[57]
NKFin in 1934-37: continuity and
change
After certain
successes in
NKFin sought to
strengthen links with the financial departments of the commissariats to keep
expenditure and investment in line with projections. Two sectors where the
weakness of financial control gave rise to concern were the railways and
agriculture.[58] In June 1934 deputy narkom of NKFin Ya.A. Teumin was transferred to NKPS to head the latter's finance
department, to represent NKPS on the TsIK Budgetary
Commission, and to enforce stricter control. At this time also deputy narkom of NKFin and chairman of
the State Bank M.I. Kalmanovich was appointed narkom of NKSovkhoz.[59]
In the mid-1930s NKFin had to face some new realities: the necessity to
fulfil the financial programme of the Second Five-Year Plan, to reconsider the
methods of establishing revenue and expenditure balances after the abolition of
rationing and the introduction of commercial prices. From 1934 to 1937 NKFin strenuously tried to strengthen its fiscal functions
in different directions.
Taxation policy
The state still controlled
a reliable lever of financial control, namely taxation. And this was the sphere
where NKFin showed itself most active in the 1930s.
In March 1933 Grin'ko submitted a proposal to the
Politburo to determine the kulak's characteristic features in order to solve
the question of taxation. Grin'ko and Kalinin were
entrusted with preparing the proposals.[60]
As a result of their work in March 1934 TsIK
and Sovnarkom USSR approved a resolution, 'On
determining the kulak's attributes under taxation of cultural-housing tax (kultzhilsbor), agricultural tax and other taxes by the Sovnarkoms of the union republics and regional (krai) executive committees'. The resolution was considered
by the Politburo and was then authorised. Its main provision was to extend the
definition of kulak farms to those engaged 'in systematic speculations (buying
and selling) and in making profit (iiazsivautsayd) at
the expense of the workers and peasants'. It was also extended to farms which
were 'not performing plans of sowings given to them and other lawful state
obligations if they could not be defined as poor peasant (bednyak')
farms'.[61]
In connection with
party directives on the destruction of the kulaks, the state during the Second
Five-Year Plan adopted an increasingly punitive taxation policy. After Stalin's
well-known instructions about 'new tactics of the class enemy' the definition
of kulaks was significantly extended to include those farms which no longer
corresponded to the existing definition of kulak but which continued to live on
'unearned (netrudovoi) incomes received earlier'.
Later those farms which failed to fulfil the sowing plan were also considered
as kulak farms.
One of the most
painful questions of tax policy was the question of plurality of enterprises'
payments especially in agriculture. It was an old question of tax policy and
during the 1930s NKFin tried several times to solve
it. For example during the elaboration and estimation of the sizes of 'kultzhilsbor' for 1934 Grin'ko in
a confidential memo to Molotov tried to raise more general questions concerning
tax policy in agriculture. He argued that plurality of payments resulted in a
number of inconveniences. First of all collective farmers and individual
peasants at the beginning of the year did not know the size of their financial
obligations to the state for the whole year. On the other hand lower financial
Soviet bodies during the whole year were swamped with work on calculating each
separate payment.[62]
The proposals on
the unification of rural taxation came to NKFin from
local departments of different regions. NKFin
discussed the question in detail at the end of 1933. It was decreed that for
1934 the issue of unification of payments in agriculture could not be solved. NKFin did not know how to unite three diverse kinds of
payments ('kultzhilsbor', agricultural tax and
self-taxation) in one tax: which method should be used to execute united
taxation, how to estimate the taxed income. Actually the problem concerned not
only the individual incomes of peasant families but above all the taxation of
peasant incomes from their work on collective farms and from collective-farm
trade.
The difficulties
which NKFin encountered in trying to solve those
questions had a real basis. With the growth of the collective farms the character
of the economic relations between the state and agricultural farms changed.
With independent peasant farms the problems of state tax policy included
record-keeping of all kinds of individual household incomes, their
redistribution for the needs of the cities and progressive taxation of 'kulak'
households. Now peasants became the members of the semi-state enterprises, the
collective farms, and their incomes were calculated on the basis of the number
of labour-days (trudoden') worked. The opportunities
for additional incomes gained somewhere else were sharply limited. The more the
'kolkhoz' system developed the less economic base for any special system of
taxation in agriculture was preserved.
However, in 1934 Grin'ko realised the prematurity of radical changes in the
existing system of rural taxation.[63]
In December 1934 he presented to Sovnarkom
Grin'ko proposed to Sovnarkom to unite income tax with 'kultzhilsbor'
in one payment from 1935. Abolition of consumer rationing and the related
increase in workers' and employees' wages as well as government decision that
salary increases should not be the subject for taxation required revision of
levels of a non-taxable minimum of salary and levels of the tax rates for workers
and employees. Therefore Grin'ko offered to increase
the level of a non-taxable minimum up to 140-200 rubles
a month, instead of 90-115 rubles in 1934 and to
reduce a number of non-taxable minimum zones from four to two. He proposed to
introduce a system for the institution of criminal proceedings for
over-calculation of the workers dues and, in particular, for non-submitting of
privileges under the tax.
It proved
impossible in 1935 to unify the system of rural taxation, although some steps
were taken to phase out the system of self-taxation. A confidential report of Grin'ko and Tamarkin, chief of
the mass payments sector of NKFin, nevertheless
insisted that 'taking into consideration new conditions it is necessary to
change the system of rural payments, mainly concerning taxation of individual
farmers. We intend to introduce the most serious changes to the new law about
agricultural tax as the main rural payment.'[65]
At the end of 1935
whilst approving once more the draft of the law about 'kultzhilsbor'
for 1936 Grin'ko explained that the decrease of the
total sum of agricultural 'kultzhilsbor' in 1936 and
the sums aimed at individual farmers are the result of a significant reduction
in the number of individual farms. According to partial data available in NKFin
For that reason in
July 1936 the existing system of taxation of collective farmers through the
agricultural tax was abolished. An income tax calculated from gross income of
collective farmers in the previous year was imposed.
Problems of financial control
During the Second
Five-Year Plan, NKFin concentrated in its hands a
number of important control functions over enterprises, regions and
commissariats, concerning investments, prices, wages, costs of production and
many other items. This, however, provoked counteractions by various economic
departments which tried to escape from rigid central financial control. Pravda
wrote on 1 June 1936: 'The new regulations of NKFin
USSR completely unmasked all abnormality of those separate tendencies of
slipping out from the management and control of NKFin
USSR, which are observed in some regions in credit and financial bodies and
which should be fundamentally eradicated.'[66]
Second, the more functions in the sphere of finance management which NKFin acquired the more its position became vulnerable.
Since 1934, when NKFin consolidated its position, it
was more and more criticised for mistakes and failures in the financial sphere,
even those for which it was not responsible.
Local financial
bodies in the Soviet republics constantly tried to evade rigid central control,
to get at their disposal additional financial resources which were not
controlled from the centre. NKFin repeatedly clashed
with the representatives of
Following these
events the clouds over Grin'ko's department darkened.
Its activity became the frequent subject of resolutions of two powerful control
agencies, the Commission of Party Control (KPK) and the Commission of Soviet
Control (KSK). For example, following check-ups by these bodies in May 1935
party sanctions were applied to Grin'ko and Mar'yasin in connection with the large volume of monetary
substitutes then in circulation.[69]
The issue had been drawn to NKFin's attention by the
Politburo already in February
After the abolition
of the rationing system the government actively sought to strengthen the ruble. The check-up made by KPK and KSK revealed a huge
quantity of 'local substitutes of money' circulating in various regions of the
country. The channels of money circulation in the Caucuses were extremely
obstructed. Here, for example, on state farms various bonuses, coupons and
cheques were issued. In the municipal economy different substitutes for payment
of municipal services were issued. Different kinds of loans and lotteries were
very popular amongst local authorities.[71]
On one occasion the
question of money supply was raised by Stalin himself. In March 1934 Stalin
addressed the Politburo on the question of money issues made from substandard
paper.[72]
The Politburo charged Grin'ko and Kalmanovich,
chairman of Gosbank, with 'negligence' (khalatnost).[73]
The resolution personally obliged Grin'ko to
stop immediately the issue of money from substandard paper and withdraw from
circulation those already issued.
It was obvious that
the issuing of local loans diverted resources of the population from the
centralised loans and permitted local bodies to manipulate financial resources
and to evade central control. The issue of money substitutes not only worsened
the condition of money circulation and promoted inflation, but it also opened a
channel of uncontrolled payments to the population evading the strict controls
imposed on the wages funds. From the point of view of the central authority
this was tantamount to a state crime. The problem was first raised in a
resolution of KPK and KSK, and then by TsIK and Sovnarkom in May 1935.[74]
Grin'ko was compelled to clarify his position. In the
commissariat's journal he placed a lengthy article entitled 'Liquidation of
cards and strengthening of the ruble', which
underlined NKFin's resolve to deal with the problem.[75]
The purge
in NKFin
The purges of
1937-38 did not leave the personnel of NKFin unscathed.
The Central Committee plenum of October 1937 approved the proposal of the
Politburo to expel Grin'ko as candidate member of the
Central Committee on the charge of being an 'enemy of the people'. On 13 March
1938, Grin'ko was accused by the Military Collegium of the Supreme Court USSR of complicity in the
case of the anti-soviet Right-Trotskyist bloc and
shot. He was accused of carrying out wrecking in NKFin.
During the investigation Grin'ko provided false
testimony against his deputies (Levin, Abolin) and
other leading workers of NKFin (Ozeryanskii,
Dolgov, Mar'yasin, Popov, Lazarev) against whom cases were
created.
After Grin'ko's dismissal in August 1937 NKFin
was temporarily headed by V.Ya. Chubar'. Delivering a speech
to the workers of the financial system in January 1938 he said that those who
headed the NKFin in the previous period 'had the aim
to muddle up the finance of the Soviet Union, they made the system of the
turnover tax calculation more complicated on purpose, constantly shifted the
rate of the tax, in order to break down the collection of means through one of
most profitable sources of our budget' .[76]
The work of the
commissariat was paralysed. The commissariat's staff
was so disorganised, that despite the severe atmosphere of 1937 many party
organisers (partorgs) in NKFin
openly expressed their discontent with the scale of the purge.[77]
During 1937 NKFin tried to recover from the heavy
personnel losses which followed the removal of Grin'ko.
A.G. Zverev's appointment as narkom of
NKFin in January 1938, which was personally 'blessed'
by Stalin on Molotov's recommendation, opened a new stage in NKFin's history. Zverev also
started his career with meetings devoted to 'the abolition of the consequences
of wrecking'. However, in 1938 their spirit differed from that ofChubar' in 1937. NKFin's new
administration halted the campaign of 'personnel questions' and the hunt for
'enemies of the people' and started critical consideration of the
commissariat's work in the field of financial planning. The new administration
sought at the same time to allay the displeasure caused to the political
leadership and to those outside of NKFin. On the
other hand the new administration according to the political traditions of the
Soviet bureaucracy had to elaborate a new kind of programme of NKFin's activity under different conditions at the end of
the 1930s. Zverev insisted: 'the problem is not just
the necessity of abolishing the consequences of wrecking, but also in
constructing our work in accordance with those economic and political problems,
which stand before the financial system, and these problems are not identical
to the problems of 1926, 1930 or 1936, they are changing and therefore each
employee must grow to meet these requirements'.[78]
What were those new
problems? Zverev reported that Stalin and Molotov
brought his attention to the problem of balancing the revenues and expenditures
of the budget on the whole and in separate branches and enterprises. The
problem was that rigid collection of public revenues at the expense of the
turnover tax, supported as we saw earlier by Grin'ko
and by the majority of the former NKFin's chiefs did
not enable them to supervise the financial 'health' of the economy. According
to the ideas of Stalin and Molotov there should be cost accounting and
correlation of profits and losses as the main sources of economic health of the
country. As far as the tasks of the Second Five-Year Plan on tax collection and
redistribution of resources through state budget for the needs of industry and
defence were fulfilled the new record-keeping tasks were put before NKFin.[79]
CONCLUSION
The gradual
re-establishment and strengthening of NKFin's
position in the system of state administration in the 1930s did not mean that
the most important matters of administration and control over the financial and
credit system were in NKFin's hands. A significant
proportion of resolutions in these fields, including those within the
competence of NKFin, were settled in the sessions of
the Politburo and Sovnarkom. The Secretariat and Orgburo of the party practically played no part in
examining matters of a general character connected with the activities of NKFin. The Politburo in fact tended to duplicate the most
important financial decisions passed by Sovnarkom:
approving and confirming the state budget, the export-import and hard currency
(valyuta) plans. The Politburo also examined and
approved all basic draft laws concerning changes in the taxation and credit
system.
However, the
character of the decisions, which as a rule, were adopted without extended
discussion and with only minor corrections, show that the Politburo and Stalin
himself did not strive to interfere in detail or on a daily basis into
financial policy, allowing others to act as a 'filter', in the form of Sovnarkom and STO and the various commissions of the
Politburo. According to Molotov, Stalin allowed some matters to be handled by
his deputies, by the commissars and by members of the Central Committee.[80]
Under Grin'ko NKFin was re-established
as an important administrative agency, closely linked to Sovnarkom
and STO; the function of financial and monetary regulation, which in 1928-29
had appeared to be no longer necessary, had to be recreated in response to the
crisis unleashed by unchecked investment growth, and was incorporated into the
management of the planned economy. Within that system NKFin
retained its specialised role, particularly as an agency of financial and
credit control, albeit with uneven success. Its influence in drafting the
Second Five-Year Plan was limited, the commissariat being eclipsed by Gosplan.
[1] Istoriya sotsialisticheskoi ekonomiki,
vol. 4 (Moscow, 1984); R.W. Davies, The Soviet Budgetary System (Cambridge,
1958); E. Zaieski, Slalimsl
Planning for Economic Growth, 1933-1952 (London, 1980).
[2] R.W.
Davies, Mark Harrison and S.G. Wheatcroft (eds) The Economic Transformation of the Soviet Union,
1913-1945 (
[3] KPSS v resolyutsiyakh i resheniyakh s"ezdov,
vol. 4 (Moscow, 1970) p. 496.
[4] See
for example M. Atlas, Kreditnaya reforma
v SSSR (
[5] RGAE
7733/8/171,1 op.
[6] RGAE 7733/8/171, 17op.
[7] RGAE 7733/8/171, 19op.
[8] RGAE 7733/8/171, 21op.
[9] Ibid.
[10] RGAE 7733/8/171, 50.
[11] This
fact is also confirmed by D'yachenko, op. cit., p.
251, where he states that the idea of the unification of taxation was advanced
by TsKK-NKRKI already in 1928.
[12] RGAE 7733/8/171, 89op.
[13] Pis'maI.V.Stalina V.M.Mohtovu,
1925-1936gg: Sbomik dokumentov
(eds L.Koshelova
et al.) (
[14] Ibid., pp. 193.
[15] SZ., 30,53-329. Kalmanovich
served as chairman of Gosbank until April 1934, when
he was replaced by I.E. Mar'yasin, who simultaneously
held the posts of chairman of Gosbank and deputy narkom of NKFin.
[16] R.W.
Davies, Crisis and Progress in the Soviet Economy, 1931-1933 (Basmgstoke, 1996), pp. 110-12.
[17] Leplevskii, deputy chair of
Administrative Affairs (upravlenyi delami) of Sovnarkom, on several
occasions returned draft NKFin documents, signed by
Levin, and not Grin'ko as required by protocol. RGAE, 7733/11/2,163.
[18] R.W.
Davies, The Soviet Budgetary System, p. 152.
[19] RGAE 7733/9/15,195op-196.
[20] According
to Molotov, the political orientations of the Second Five-Year Plan were discussed
at night at Molotov's dacha with Kulbyshev and Mezhlauk. The main outlines of the plan were presented in
Molotov's report to XVII party conference. 'Stalin came to read, then he summoned us, and made amendments.' F. Chuev, Sto sorok
besed c Molotovym (
[21] RGAE
7733/10/61,43-45.
[22] RGAE
7733/10/60,4.
[23] 'Political
danger' of some results of the commissions work
compelled members of NKFin's collegium
to make confidential all the results of its work. See RGAE 7733/10/60, 5.
[24] RGAE
7733/11/11,1.
[25] RGAE
7733/11/11,4.
[26] RGAE
7733/11/11,7.
[27] RGAE
7733/11/11,8.
[28] Ibid.
[29] RGAE,
7733/11/11,10.
[30] Ibid.
[31] GARF
5446/27/5,44.
[32] Ibid.
[33] See
Gosplan chapter, p. 44 above.
[34] RGAE 7733/10/60, 51op.
[35] RGAE
7733/10/60,49.
[36] RGAE 7733/10/61, 84.
[37] RGAE 7733/10/60,107.
[38] GARF
5446/1/1647b, 27.
[39] RGAE
4372/31/16,108.
[40] RGAE
7733/11/126,1.
[41] RGAE
7733/11/130,66.
[42] RGAE
7733/11/1276, 25.
[43] RGAE
4372/31/294,44-5.
[44] RGAE
7733/11/127,4.
[45] K.
Abolin, 'Rabotu po goskhodam-na politicheskuyu vysotu', Fmansy i sotsialisticheskoe
khozyaistvo, 1933, no. 1-2, p 23.
[46] RGAE 773 3/10/308, 84.
[47] GAE 7733/11/304, 55.
[48] Resolution
of NKFin's collegium
'Concerning the fulfilment of the plan of mobilization of money resources of
the population and plan of collection of the turnover tax in the IV quarter
1932' (13 January 1933); Resolution of NKFin's collegium 'Concerning the work of financial bodies in the
field of mobilization of means of the population, state incomes and budget' (23
December 1932); 'Concerning the work of Leningrad oblfo
and gorfo on state revenue in the socialised sector',
see Finansy i sotsiahsticheskoe khozyaistvo.
1933, no. 1-2,pp. 16-20.
[49] K.
Abolin, op. cit., Finansy isotsialisticheskoe khozyaistvo,
1933, no. 1-2, p. 23.
[50] RGAE
7733/12/372.
[51] GARF5446/14/1462b,ll.
[52] GARF5446/14/1462b,94.
[53] GARF, 5446/14/1462b, 115-16.
[54] RTsKhIDNI, 17/3/961,22.
[55] Ibid.
[56] RGAE 7733/12/17, 242.
[57] RGAE
7733/15/228,1.
[58] Pravda
29 January 1935, Gnn'ko's report to TsIK
[59] SZ,
1934,11-92, 14-134.
[60] RTsKhIDNI
17/3/917, 5.
[61] RTsKhIDNI
17/3/919, 31.
[62] RGAE 7733/11/2, 200.
[63] RGAE 7733/12/17,125.
[64] RGAE 7733/12/17,
197.
[65] RGAE 7733/12/17,
204.
[66] P, 1 July 1936.
[67] RGAE 7733/12/9, 54-8.
[68] RGAE
7733/12/9,54, 57-8.
[69] RGAE 7733/13/761.
[70] RTsKhIDNI
17/3/915, 5.
[71] RGAE 7733/13/761.
[72] RTsKhIDNI 17/3/940,2.
[73] RTsKhIDNI 17/3/941,6.
[74] Finansy i sotsialisticheskoe khoiyaistvo, 1935, no. 5-6, p. 5.
[75] Ibid., no. 7-9, p. 5.
[76] V.Ya.
Chubar', Problems of the workers of the finance
system in 1938 (Moscow, 1938).
[77] RGAE
7733/15/85,52-3.
[78] RGAE 7733/16/89, 131.
[79] RGAE 7733/16/89, 144.
[80] F.
Chuev, Slo sorok besed Molotovym,
p. 259.