Comrades, since the Fifteenth Congress two and a half years have passed. Not a very long period one would think. Nevertheless, during this period most important changes have taken place in the life of peoples and states. If one were to characterise the past period in two words, it could be called a turning point period. It marked a turning point not only for us, for the U.S.S.R., but also for the capitalist countries all over the world. Between these two turning points, however, there is a fundamental difference. Whereas for the U.S.S.R. this turning point meant a turn in the direction of a new and bigger economic upswing, for the capitalist countries it meant a turn towards economic decline. Here, in the U.S.S.R., there is a growing upswing of socialist development both in industry and in agriculture. There, among the capitalists, there is growing economic crisis both in industry and in agriculture.

    Such is the picture of the present situation in a few words.

    Recall the state of affairs in the capitalist countries two and a half years ago. Growth of industrial

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production and trade in nearly all the capitalist countries. Growth of production of raw materials and food in nearly all the agrarian countries. A halo around the United States as the land of the most full-blooded capitalism. Triumphant hymns of "prosperity." Grovelling to the dollar. Panegyrics in honour of the new technology, in honour of capitalist rationalisation. Proclamation of an era of the, "recovery" of capitalism and of the unshakable firmness of capitalist stabilisation. "Universal" noise and clamour about the "inevitable doom" of the Land of Soviets, about the "inevitable collapse" of the U.S.S.R.

    That was the state of affairs yesterday.

    And what is the picture today?

    Today there is an economic crisis in nearly all the industrial countries of capitalism.

    Today there is an agricultural crisis in all the agrarian countries. Instead of "prosperity" there is mass poverty and a colossal growth of unemployment. Instead of an upswing in agriculture there is the ruin of the vast masses of the peasants. The illusions about the omnipotence of capitalism in general, and about the omnipotence of North American capitalism in particular, are collapsing. The triumphant hymns in honour of the dollar and of capitalist rationalisation are becoming fainter and fainter. Pessimistic wailing about the "mistakes" of capitalism is growing louder and louder. And the "universal" clamour about the "inevitable doom" of the U.S.S.R. is giving way to "universal" venomous hissing about the necessity of punishing "that country" that dares to develop its economy when crisis is reigning all around.

    Such is the picture today.

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    Things have turned out exactly as the Bolsheviks said they would two or three years ago.

    The Bolsheviks said that in view of the restricted limits of the standard of living of the vast masses of the workers and peasants, the further development oi technology in the capitalist countries, the growth of productive forces and of capitalist rationalisation, must inevitably lead to a severe economic crisis. The bourgeois press jeered at the "queer prophesies" of the Bolsheviks. The Right deviators dissociated themselves from this Bolshevik forecast and for the Marxist analysis substituted liberal chatter about "organised capitalism." But how did things actually turn out? They turned out exactly as the Bolsheviks said they would.

    Such are the facts.

    a)  In studying the crisis, the following facts, above all, strike the eye:

    1.  The present economic crisis is a crisis of overproduction. This means that more goods have been produced than the market can absorb. It means that more textiles, fuel, manufactured goods and food have been produced than can be purchased for cash by the bulk of the consumers, i.e., the masses of the people, whose incomes remain on a low level. Since, however, under capitalism, the purchasing power of the masses of the people remains at a minimum level, the capitalists keep their "superfluous" goods, textiles, grain, etc., in

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their warehouses or even destroy them in order to bolster up prices; they cut down production and discharge their workers, and the masses of the people are compelled to suffer hardship because too many goods have been produced.

    2.  The present crisis is the first post-war world economic crisis. It is a world crisis not only in the sense that it embraces all, or nearly all, the industrial countries in the world; even France, which is systematically injecting into her organism the billions of marks received as reparations payments from Germany, has been unable to avoid a certain depression, which, as all the data indicate, is bound to develop into a crisis. It is a world crisis also in the sense that the industrial crisis has coincided with an agricultural crisis that affects the production of all forms of raw materials and food in the chief agrarian countries of the world.

    3.  The present world crisis is developing unevenly, notwithstanding its universal character; it affects different countries at different times and in different degrees. The industrial crisis began first of all in Poland, Rumania and the Balkans. It developed there throughout the whole of last year. Obvious symptoms of an incipient agricultural crisis were already visible at the end of 1928 in Canada, the United States, the Argentine, Brazil and Australia. During the whole of this period United States industry showed an upward trend. By the middle of 1929 industrial production in the United States had reached an almost record level. A break began only in the latter half of 1929, and then a crisis in industrial production swiftly developed, which threw the United States back to the level of 1927. This

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was followed by an industrial crisis in Canada and Japan. Then came bankruptcies and crisis in China and in the colonial countries, where the crisis was aggravated by the drop in the price of silver, and where the crisis of overproduction was combined with the ruination of the peasant farms, which were reduced to utter exhaustion by feudal exploitation and unbearable taxation. As regards Western Europe, there the crisis began to gain force only at the beginning of this year, but not everywhere to the same degree, and even in that period France still showed an increase in industrial production.

    I do not think there is any need to dwell particularly on the statistics that demonstrate the existence of the crisis. Nobody now disputes the existence of the crisis. I shall therefore confine myself to quoting one small but characteristic table recently published by the German Institute of Economic Research. This table depicts the development of the mining industry and the chief branches of large-scale manufacturing industry in the United States, Britain, Germany, France, Poland and the U.S.S.R. since 1927; the 1928 level of production is taken as 100.

    Here is the table:

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    What does this table show?

    It shows, first of all, that the United States, Germany and Poland are experiencing a sharply expressed crisis in large-scale industrial production; in the first quarter of 1930, in the United States, after the boom in the first half of 1929, the level of production dropped 10.8 per cent compared with 1929 and sank to the level of 1927; in Germany, after three years of stagnation, the level of production dropped 8.4 per cent compared with last year and sank to 6.7 per cent below the level of 1927; in Poland, after last year's crisis, the level of production dropped 15.2 per cent compared with last year and sank to 3.9 per cent below the level of 1927.

    Secondly, the table shows that Britain has been marking time for three years, round about the 1927 level, and is experiencing severe economic stagnation ; in the first quarter of 1930 she even suffered a drop in production of 0.5 per cent compared with the previous year, thus entering the first phase of a crisis.

    Thirdly, the table shows that of the big capitalist countries only in France is there a certain growth of large-scale industry; but whereas the increase in 1928 amounted to 13.4 per cent and that in 1929 to 9.4 per cent, the increase in the first quarter of 1930 is only 3.7 per cent above that in 1929, thus presenting from year to year a picture of a descending curve of growth.

    Lastly, the table shows that of all the countries in the world, the U.S.S.R. is the only one in which a powerful upswing of large-scale industry has taken place; the level of production in the first quarter of 1930 was more than twice as high as that in 1927, and the increase rose from 17.6 per cent in 1928 to 23.5 per cent in 1929

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and to 32 per cent in the first quarter of 1930, thus presenting from year to year a picture of an ascending curve of growth.

    It may be said that although such was the state of affairs up to the end of the first quarter of this year, it is not precluded that a turn for the better may have taken place in the second quarter of this year. The returns for the second quarter, however, emphatically refute such an assumption. They show, on the contrary, that the situation has become still worse in the second quarter. These returns show: a further drop in share prices on the New York Stock Exchange and a new wave of bankruptcies in the United States; a further decline in production, a reduction of wages of the workers, and growth of unemployment in the United States, Germany, Britain, Italy, Japan, South America, Poland, Czechoslovakia, etc.; the entry of a number of branches of industry in France into a state of stagnation, which, in the present international economic situation, is a symptom of incipient crisis. The number of unemployed in the United States is now over 6,000,000, in Germany about 5,000,000, in Britain over 2,000,000, in Italy, South America and Japan a million each, in Poland, Czechoslovakia and Austria half a million each. This is apart from the further intensification of the agricultural crisis, which is ruining millions of farmers and labouring peasants. The crisis of overproduction in agriculture has reached such a pitch that in Brazil, in order to keep up prices and the profits of the bourgeoisie, 2,000,000 bags of coffee have been thrown into the sea; in America maize has begun to be used for fuel instead of coal; in Germany, millions of poods of rye are

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being converted into pig food; and as regards cotton and wheat, every measure is being taken to reduce the crop area by 10-15 per cent.

    Such is the general picture of the developing world economic crisis.

    A most important result of the world economic crisis is that it is laying bare and intensifying the contradictions inherent in world capitalism.

    a)  It is laying bare and intensifying the contradictions between the major imperialist countries, the struggle for markets, the struggle for raw materials, the struggle

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for the export of capital. None of the capitalist states is now satisfied with the old distribution of spheres of influence and colonies. They see that the relation of forces has changed and that it is necessary in accordance with it to redivide markets, sources of raw materials, spheres of influence, and so forth. The chief contradiction here is that between the United States and Britain. Both in the sphere of the export of manufactured goods and in the sphere of the export of capital, the struggle is raging chiefly between the United States and Britain. It is enough to read any journal dealing with economics, any document concerning exports of goods and capital, to be convinced of this. The principal arena of the struggle is South America, China, the colonies and dominions of the old imperialist states. Superiority of forces in this struggle -- and a definite superiority -- is on the side of the United States.

    After the chief contradiction come contradictions which, while not the chief ones, are, however, fairly important: between America and Japan, between Germany and France, between France and Italy, between Britain and France, and so forth.

    There can be no doubt whatever that owing to the developing crisis, the struggle for markets, for raw materials and for the export of capital will grow more intense month by month and day by day.

    Means of struggle: tariff policy, cheap goods, cheap credits, regrouping of forces and new military-political alliances, growth of armaments and preparation for new imperialist wars, and finally -- war.

    I have spoken about the crisis embracing all branches of production. There is one branch, however, that

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has not been affected by the crisis. That branch is the armament industry. It is growing continuously, not withstanding the crisis. The bourgeois states are furiously arming and rearming. What for? Not for friendly chats, of course, but for war. And the imperialists need war, for it is the only means by which to redivide the world, to redivide markets, sources of raw materials and spheres for the investment of capital.

    It is quite understandable that in this situation so-called pacifism is living its last days, that the League of Nations is rotting alive, that "disarmament schemes" come to nothing, while conferences for the reduction of naval armaments become transformed into conferences for renewing and enlarging navies.

    This means that the danger of war will grow at an accelerated pace.

    Let the Social-Democrats chatter about pacifism, peace, the peaceful development of capitalism, and so forth. The experience of Social-Democrats being in power in Germany and Britain shows that for them pacifism is only a screen needed to conceal the preparation for new wars.

    a) I have spoken above about the contradictions of world capitalism. In addition to these, however, there is one other contradiction. I am referring to the contradiction between the capitalist world and the U.S.S.R. True, this contradiction must not be regarded as being of the same order as the contradiction within capitalism. It is a contradiction between capitalism as a whole and the country that is building socialism. This, however, does not prevent it from corroding and shaking the very foundations of capitalism. More than that, it lays bare all the contradictions of capitalism to the roots and gathers them into a single knot, transforming them into an issue of the life and death of the capitalist order itself. That is why, every time the contradictions of capitalism become acute, the bourgeoisie turns its gaze towards the U.S.S.R., wondering whether it would not be possible to solve this or that contradiction of capitalism, or all the contradictions together, at the expense of the U.S.S.R., of that Land of Soviets, that citadel of revolution which, by its very existence,

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is revolutionising the working class and the colonies, which is hindering the organisation of a new war, hindering a new redivision of the world, hindering the capitalists from lording it in its extensive home market which they need so much, especially now, in view of the economic crisis.

    Let us pass to the internal situation in the U.S.S.R.

    In contrast to the capitalist countries, where an economic crisis and growing unemployment reign, the internal situation in our country presents a picture of increasing advance of the national economy and of progressive diminution of unemployment. Large-scale industry has grown up, and the rate of its development has increased. Heavy industry has become firmly established. The socialist sector of industry has made great headway. A new force has arisen in agriculture -- the state farms and collective farms. Whereas a year or two ago we had a crisis in grain production, and in our grain-procurement operations we depended mainly on individual farming, now the centre of gravity has shifted to the collective farms and state farms, and the grain crisis can be regarded

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as having been, in the main, solved. The main mass of the peasantry has definitely turned towards the collective farms. The resistance of the kulaks has been broken. The internal situation in the U.S.S.R. has been still further consolidated.

    Such is the general picture of the internal situation in the U.S.S.R. at the present time.

    a)  In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, the gross output of agriculture as a whole, including forestry, fishing, etc., amounted in pre-war rubles to 12,370,000,000 rubles, i.e., 106.6 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 107.2 per cent, in 1928-29 it was 109.1 per cent, and this year, 1929-30, judging by the course of development of agriculture, it will be not less than 113-114 per cent of the pre-war level.

    Thus we have a steady, although relatively slow, increase in agricultural production as a whole.

    In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, the gross output of industry as a whole, both small and large scale, including flour milling, amounted in pre-war rubles to 8,641,000,000 rubles, i.e., 102.5 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 122 per cent, in 1928-29 it was 142.5 per cent, and this year, 1929-30, judging by the course of industrial development, it will be not less than 180 per cent of the pre-war level.

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    Thus we have an unprecedentedly rapid growth of industry as a whole.

    b)  In 1926-27, i.e., at the time of the Fifteenth Congress of the Party, freight turnover on our entire railway system amounted to 81,700,000,000 ton-kilometres, i.e., 127 per cent of the pre-war level. In the following year, however, i.e., in 1927-28, it was 134.2 per cent, in 1928-29 it was 162.4 per cent, and this year, 1929-30, it, by all accounts, will be not less that 193 per cent of the pre-war level. As regards new railway construction, in the period under review, i.e, counting from 1927-28, the railway system has grown from 76,000 kilometres to 80,000 kilometres, which is 136.7 per cent of the pre-war level.

    c)  If we take the trade turnover (wholesale and retail ) in the country in 1926-27 as 100 (31,000,000,000 rubles), then the volume of trade in 1927-28 shows an increase to 124.6 per cent, that in 1928-29 to 160.4 per -cent, and this year, 1929-30, the volume of trade will, by all accounts, reach 202 per cent, i.e., double that of 1926-27.

    d)  If we take the combined balances of all our credit institutions on October 1, 1927 as 100 (9,173,000,000 rubles), then on October 1, 1928, there was an increase to 141 per cent, and on October 1, 1929, an increase to 201.1 per cent, i.e., an amount double that of 1927.

    e)  If the combined state budget for 1926-27 is taken as 100 (6,371,000,000 rubles) that for 1927-28 shows an increase to 125.5 per cent, that for 1928-29 an increase to 146.7 per cent, and that for 1929-30 to 204.4 per cent, i.e., double the budget for 1926-27 (12,605,000,000 rubles).

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    f)  In 1926-27, our foreign trade turnover (exports and imports) was 47.9 per cent of the pre-war level. In 1927-28, however, our foreign trade turnover rose to 56.8 per cent, in 1928-29 to 67.9 per cent, and in 1929-30 it, by all accounts, will be not less than 80 per cent of the pre-war level.

    g)  As a result, we have the following picture of the growth of the total national income during the period under review (in 1926-27 prices): in 1926-27, the national income, according to the data of the State Planning Commission, amounted to 23,127,000,000 rubles; in 1927-28 it amounted to 25,396,000,000 rubles -- an increase of 9.8 per cent; in 1928-29 it amounted to 28,596,000,000 rubles -- an increase of 12.6 per cent; in 1929-30 the national income ought, by all accounts, to amount to not less than 34,000,000,000 rubles, thus showing an increase for the year of 20 per cent. The average annual increase during the three years under review is, therefore, over 15 per cent.

    Our national economy is growing not spontaneously, but in a definite direction, namely, in the direction of industrialisation; its keynote is: industrialisation, growth of the relative importance of industry in the general system of the national economy, transforma-

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tion of our country from an agrarian into an industrial country.

    a)  The dynamics of the relation between industry as a whole and agriculture as a whole from the point of view of the relative importance of industry in the gross output of the entire national economy during the period under review takes the following form: in pre-war times, industry's share of the gross output of the national economy was 42.1 per cent and that of agriculture 57.9 per cent; in 1927-28 industry's share was 45.2 per cent and that of agriculture 54.8 per cent; in 1928-29, industry's share was 48.7 per cent and that of agriculture 51.3 per cent; in 1929-30 industry's share ought to, by all accounts, be not less than 53 per cent and that of agriculture not more than 47 per cent.

    This means that the relative importance of industry is already beginning to surpass the relative importance of agriculture in the general system of national economy, and that we are on the eve of the transformation of our country from an agrarian into an industrial country. (Applause.)

    b)  There is a still more marked preponderance in favour of industry when regarded from the viewpoint of its relative importance in the commodity output of the national economy. In 1926-27, industry's share of the total commodity output of the national economy was 68.8 per cent and that of agriculture 31.2 per cent. In 1927-28, however, industry's share was 71.2 per cent and that of agriculture 28.8 per cent; in 1928-29 industry's share was 72.4 per cent and that of agriculture 27.6 per cent, and in 1929-30, industry's share will, by all accounts, be 76 per cent and that of agriculture 24 per cent.

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    This particularly unfavourable position of agriculture is due, among other things, to its character as small peasant and small-commodity agriculture. Naturally, this situation should change to a certain extent as large-scale agriculture develops through the state farms and collective farms and produces more for the market.

    c)  The development of industry in general, however, does not give a complete picture of the rate of industrialisation. To obtain a complete picture we must also as certain the dynamics of the relation between heavy industry and light industry. Hence, the most striking index of the growth of industrialisation must be considered to be the progressive growth of the relative importance of the output of instruments and means of production (heavy industry) in the total industrial output. In 1927-28, the share of output of instruments and means of production in the total output of all industry amounted to 27.2 per cent while that of the output of consumer goods was 72.8 per cent. In 1928-29, however, the share of the output of instruments and means of production amounted to 28.7 per cent as against 71.3 per cent, and in 1929-30, the share of the output of instruments and means of production, will, by all accounts, already amount to 32.7 per cent as against 67.3 per cent.

    If, however, we take not all industry, but only that part which is planned by the Supreme Council of National Economy, and which embraces all the main branches of industry, the relation between the output of instruments and means of production and the output of consumer goods will present a still more favourable picture, namely: in 1927-28, the share of the output of instruments and means of production amounted to 42.7 per

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cent as against 57.3 per cent; in 1928-29 -- 44.6 per cent as against 55.4 per cent, and in 1929-30, it will, by all accounts, amount to not less than 48 per cent as against 52 per cent for the output of consumer goods.

    The keynote of the development of our national economy is industrialisation, the strengthening and development of our own heavy industry.

    The keynote of the development of our national economy is industrialisation. But we do not need just any kind of industrialisation. We need the kind of industrialisation that will ensure the growing preponderance of the socialist forms of industry over the small-commodity and, still more, over the capitalist forms of industry. The characteristic feature of our industrialisation is that it is socialist industrialisation, an industrialisation which guarantees the victory of the socialised sector of industry over the private sector, over the small-commodity and capitalist sector.

    Here are some data on the growth of capital investments and of gross output according to sectors:

    a)  Taking the growth of capital investments in industry according to sectors, we get the following picture. Socialised sector : in 1926-27 -- 1,270,000,000 rubles; in 1927-28 -- 1,614,000,000 rubles; in 1928-29 -- 2,046,000,000 rubles; in 1929-30 -- 4,275,000,000 rubles. Private and

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capitalist sector : in 1926-27 -- 63,000,000 rubles; in 192-7-28 -- 64,000,000 rubles; in 1928-29 -- 56,000,000 rubles; in 1929-30 -- 51,000,000 rubles.

    This means, firstly, that during this period capital investments in the socialised sector of industry have more than trebled (335 per cent).

    It means, secondly, that during this period capital investments in the private and capitalist sector have been reduced by one-fifth (81 per cent).

    The private and capitalist sector is living on its old capital and is moving towards its doom.

    b)  Taking the growth of gross output of industry according to sectors we get the following picture. Socialised sector : in 1926-27 -- 11,999,000,000 rubles; in 1927-28 -- 15,389,000,000 rubles, in 1928-29 -- 18,903,000,000 rubles; in 1929-30 -- 24,740,000,000 rubles. Private and capitalist sector : in 1926-27 -- 4,043,000,000 rubles; in 1927-28 -- 3,704,000,000 rubles; in 1928-29 -- 3,389,000,000 rubles; in 1929-30 -- 3,310,000,000 rubles.

    This means, firstly, that during the three years, the gross output of the socialised sector of industry more than doubled (206.2 per cent).

    It means, secondly, that in the same period the gross industrial output of the private and capitalist sector was reduced by nearly one-fifth (81.9 per cent).

    If, however, we take the output not of all industry, but only of large-scale (statistically registered) industry and examine it according to sectors, we get the following picture of the relation between the socialised and private sectors. Relative importance of the socialised sector in the output of the country's large-scale industry: 1926-27 -- 97.7 per cent; 1927-28 -- 98.6 per cent; 1928-29 -- 99.1

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per cent; 1929-30 -- 99.3 per cent. Relative importance of the private sector in the output of the country's large-scale industry: 1926-27 -- 2.3 per cent; 1927-28 -- 1.4 per cent; 1928-29 -- 0.9 per cent; 1929-30 -- 0.7 per cent.

    As you see, the capitalist elements in large-scale industry have already gone to the bottom.

    Clearly, the question "who will beat whom," the question whether socialism will defeat the capitalist elements in industry, or whether the latter will defeat socialism, has already been settled in favour of the socialist forms of industry. Settled finally and irrevocably. (Applause.)

    c)  Particularly interesting are the data on the rate of development during the period under review of state industry that is planned by the Supreme Council of National Economy. If the 1926-27 gross output of socialist industry planned by the Supreme Council of National Economy is taken as 100, the 1927-28 gross output of that industry shows a rise to 127.4 per cent, that of 1928-29 to 158.6 per cent and that of 1929-30 will show a rise to 209.8 per cent.

    This means that socialist industry planned by the Supreme Council of National Economy, comprising all the main branches of industry and the whole of heavy industry, has more than doubled during the three years.

    It cannot but be admitted that no other country in the world can show such a terrific rate of development of its large-scale industry.

    This circumstance gives us grounds for speaking of the five-year plan in four years.

    Above I spoke about the state of agriculture as a whole, including forestry, fishing, etc., without dividing agriculture into its main branches. If we separate agriculture as a whole into its main branches, such as, for example, grain production, livestock farming and the production of industrial crops, the situation, according to the data of the State Planning Commission and the People's Commissariat of Agriculture of the U.S.S.R. is seen to be as follows:

    a)  If the grain crop area in 1913 is taken as 100, we get the following picture of the change of the grain crop area from year to year: 1926-27 -- 96.9 per cent; 1927-28 -- 94.7 per cent; 1928-29 -- 98.2 per cent; and this year, 1929-30, the crop area will, by all accounts, be 105.1 per cent of the pre-war level.

    Noticeable is the drop in the grain crop area in 1927-28. This drop is to be explained not by a retrogression of grain farming such as the ignoramuses in the Right opportunist camp have been chattering about, but by the failure of the winter crop on an area of 7,700,000 hectares (20 per cent of the winter crop area in the U.S.S.R.).

    If, further, the gross output of grain in 1913 is taken as 100, we get the following picture: 1927 -- 91.9 per cent; 1928 -- 90.8 per cent; 1929 -- 94.4 per cent, and in 1930

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we shall, by all accounts, reach 110 per cent of the pre-war standard.

    Noticeable here, too, is the drop in the gross output of grain in 1928 due to the failure of the winter crop in the Ukraine and the North Caucasus.

    As regards the marketable part of the gross output of grain (grain sold outside the rural districts), we have a still more instructive picture. If the marketable part of the grain output of 1913 is taken as 100, then the marketable output in 1927 is found to be 37 per cent; in 1928 -- 36.8 per cent, in 1929 -- 58 per cent, and this year, 1930, it will, by all accounts, amount to not less than 73 per cent of the pre-war level.

    Thus, it follows that, as regards grain crop area and gross grain output, we are reaching the pre-war level and slightly exceeding it only this year, 1930.

    It follows, further, that, as regards the marketable part of the grain output, we are still far from having reached the pre-war standard and shall remain below it this year too by about 25 per cent.

    That is the basis of our grain difficulties, which became particularly acute in 1928.

    That, too, is the basis of the grain problem.

    b)  The picture is approximately the same, but with more alarming figures, in the sphere of livestock farming.

    If the number of head of livestock of all kinds in 1916 is taken as 100, we get the following picture for the respective years. In 1927 the number of horses amounted to 88.9 per cent of the pre-war level; large horned cattle -- 114.3 per cent; sheep and goats -- 119.3 per cent; pigs -- 111.3 per cent. In 1928, horses -- 94.6 per cent;

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large horned cattle -- 118.5 per cent; sheep and goats -- 126 per cent; pigs -- 126.1 per cent. In 1929, horses -- 96.9 per cent; large horned cattle -- 115.6 per cent; sheep and goats -- 127.8 per cent; pigs -- 103 per cent. In 1930, horses -- 88.6 per cent; large horned cattle -- 89.1 per cent sheep and goats -- 87.1 per cent; pigs -- 60.1 per cent of the 1916 standard.

    As you see, if we take the figures for the last year into consideration, we have obvious signs of the beginning of a decline in livestock farming.

    The picture is still less comforting from the standpoint of the marketable output of livestock farming, particularly as regards meat and pork fat. If we take the gross output of meat and pork fat for each year as 100 the marketable output of these two items will be: in 1926 -- 33.4 per cent; in 1927 -- 32.9 per cent; in 1928 -- 30.4 per cent; in 1929 -- 29.2 per cent.

    Thus, we have obvious signs of the instability and economic unreliability of small livestock farming which produces little for the market.

    It follows that instead of exceeding the 1916 standard in livestock farming we have in the past year obvious signs of a drop below this standard.

    Thus, after the grain problem, which we are already solving in the main successfully, we are faced with the meat problem, the acuteness of which is already making itself felt, and which is still awaiting solution.

    c) A different picture is revealed by the development af industrial crops, which provide the raw materials for our light industry. If the industrial crop area in 1913 is taken as 100, we have the following: cotton, in 1927 -- 107.1 per cent; in 1928 -- 131.4 per cent; in 1929 -- 151.4

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per cent; in 1930 -- 217 per cent of the pre-war level. Flax, in 1927 -- 86.6 per cent; in 1928 -- 95.7 per cent; in 1929 -- 112.9 per cent; in 1930 -- 125 per cent of the pre-war level. Sugar-beet, in 1927 -- 106.6 per cent; in 1928 -- 124.2 per cent; in 1929 -- 125.8 per cent; in 1930 -- 169 per cent of the pre-war level. Oil crops, in 1927 -- 179.4 per cent; in 1928 -- 230.9 per cent; in 1929 -- 219.7 per cent; in 1930 -- no less than 260 per cent of the pre-war level.

    The same, in the main, favourable picture is presented by the gross output of industrial crops. If the gross output in 1913 is taken as 100, we get the following: cotton, in 1928 -- 110.5 per cent; in 1929 -- 119 per cent; in 1930 we shall have, by all accounts, 182.8 per cent of the pre-war level. Flax, in 1928 -- 71.6 per cent; in 1929 -- 81.5 per cent; in 1930 we shall have, by all accounts, 101.3 per cent of the pre-war level. Sugar beet, in 1928 -- 93 per cent; in 1929 -- 58 per cent, in 1930 we shall have, by all accounts, 139:4 per cent of the pre-war level. Oil crops, in 1928 -- 161.9 per cent; in 1929 -- 149.8 per cent; in 1930 we shall have, by all accounts, 220 per cent of the pre-war level.

    As regards industrial crops, we thus have a more favourable picture, if we leave out of account the 1929 beet crop, which was damaged by moths.

    Incidentally, here too, in the sphere of industrial crops, serious fluctuations and signs of instability are possible and probable in the future in view of the predominance of small farming, similar to the fluctuations and signs of instability that are demonstrated by the figures for flax and oil crops, which come least under the influence of the collective farms and state farms.

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    We are thus faced with the following problems in agriculture:

    1)  the problem of strengthening the position of industrial crops by supplying the districts concerned with sufficient quantities of cheap grain produce;

    2)  the problem of raising the level of livestock farming and of solving the meat question by supplying the districts concerned with sufficient quantities of cheap grain produce and fodder;

    3)  the problem of finally solving the question of grain farming as the chief question in agriculture at the present moment.

    It follows that the grain problem is the main link in the system of agriculture and the key to the solution of all the other problems in agriculture.

    It follows that the solution of the grain problem is the first in order of a number of problems in agriculture.

    But solving the grain problem, and so putting agriculture on the road to really big progress, means completely doing away with the backwardness of agriculture; it means equipping it with tractors and agricultural machines, supplying it with new cadres of scientific workers, raising the productivity of labour, and increasing the output for the market. Unless these conditions are fulfilled, it is impossible even to dream of solving the grain problem.

    Is it possible to fulfil all these conditions on the basis of small, individual peasant farming? No, it is impossible. It is impossible because small-peasant farming is unable to accept and master new technical equipment, it is unable to raise productivity of labour to a suf-

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ficient degree, it is unable to increase the marketable output of agriculture to a sufficient degree. There is only one way to do this, namely, by developing large-scale agriculture, by establishing large farms with modern technical equipment.

    The Soviet country cannot, however, take the line of organising large capitalist farms. It can and must take only the line of organising large farms of a socialist type, equipped with modern machines. Our state farms and collective farms are precisely farms of this type.

    Hence the task of establishing state farms and uniting the small, individual peasant farms into large collective farms, as being the only way to solve the problem of agriculture in general, and the grain problem in particular.

    That is the line the Party took in its everyday practical work after the Fifteenth Congress, especially after the serious grain difficulties that arose in the beginning of 1928.

    The turn of the peasantry towards collectivisation did not begin all at once. Moreover, it could not begin all at once. True, the Party proclaimed the slogan of collectivisation already at the Fifteenth Congress; but the proclamation of a slogan is not enough to cause the peasantry to turn en masse towards socialism. At least one more circumstance is needed for this, namely, that the masses of the peasantry themselves should be convinced that the slogan proclaimed is a correct one and that they should accept it as their own. Therefore, this turn was prepared gradually.

    It was prepared by the whole course of our development, by the whole course of development of our industry, and above all by the development of the industry that supplies machines and tractors for agriculture. It was prepared by the policy of resolutely fighting the kulaks

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and by the course of our grain procurements in the new forms that they assumed in 1928 and 1929, which placed kulak farming under the control of the poor- and middle-peasant masses. It was prepared by the development of the agricultural co-operatives, which train the individualist peasant in collective methods. It was prepared by the network of collective farms, in which the peasantry verified the advantages of collective forms of farming over individual farming. Lastly, it was prepared by the network of state farms, spread over the whole of the U.S.S.R. and equipped with modern machines, which enabled the peasants to convince themselves of the potency and superiority of modern machines.

    It would be a mistake to regard our state farms only as sources of grain supplies. Actually, the state farms, with their modern machines, with the assistance they render the peasants in their vicinity, and the unprecedented scope of their farming were the leading force that facilitated the turn of the peasant masses and brought them on to the path of collectivisation.

    There you have the basis on which arose that mass collective-farm movement of millions of poor and middle peasants which began in the latter half of 1929, and which ushered in a period of great change in the life of our country.

    What measures did the Central Committee take so as to meet this movement fully equipped and to lead it?

    The measures taken by the Central Committee were along three lines: the line of organising and financing state farms; the line of organising and financing collective farms; and lastly, the line of organising the manufacture of tractors and agricultural machinery and of

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supplying the countryside with them through machine and tractor stations, through tractor columns, and so forth.

    a)  As early as 1928, the Political Bureau of the Central Committee adopted a decision to organise new state farms in the course of three or four years, calculating that by the end of this period these state farms could provide not less than 100,000,000 poods of marketable grain. Later, this decision was endorsed by a plenum of the Central Committee. The Grain Trust was organised and entrusted with the task of carrying out this decision. Parallel with this, a decision was adopted to strengthen the old state farms and to enlarge their crop area. The State Farm Centre was organised and entrusted with the task of carrying out this decision.

    I cannot help mentioning that these decisions met with a hostile reception from the opportunist section of our Party. There was talk about the money invested in the state farms being money "thrown away." There was also criticism from men of "science," supported by the opportunist elements in the Party, to the effect that it was impossible and senseless to organise large state farms. The Central Committee, however, continued to pursue its line and pursued it to the end in spite of everything.

    In 1927-28, the sum of 65,700,000 rubles (not counting short-term credits for working capital) was assigned for financing the state farms. In 1928-29, the sum of 185,800,000 rubles was assigned. Lastly, this year 856,200,000 rubles have been assigned. During the period under review, 18,000 tractors with a total of 350,000 h.p. were placed at the disposal of the state farms.

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    What are the results of these measures?

    In 1928-29, the crop area of the Grain Trust amounted to 150,000 hectares, in 1929-30 to 1,060,000 hectares, in 1930-31 it will amount to 4,500,000 hectares, in 1931-32 to 9,000,000 hectares, and in 1932-33, i.e., towards the end of the five-year plan period, to 14,000,000 hectares. In 1928-29 the crop area of the State Farm Centre amounted to 430,000 hectares, in 1929-30 to 860,000 hectares, in 1930-31 it will amount to 1,800,000 hectares, in 1931-32 to 2,000,000 hectares, and in 1932-33 to 2,500,000 hectares. In 1928-29, the crop area of the Association of Ukrainian State Farms amounted to 170,000 hectares, in 1929-30 to 280,000 hectares, in 1930-31 it will amount to 500,000 hectares and in 1932-33 to 720,000 hectares. In 1928-29, the crop area of the Sugar Union (grain crop) amounted to 780,000 hectares, in 1929-30 to 820,000 hectares, in 1930-31 it will amount to 860,000 hectares, in 1931-32 to 980,000 hectares, and in 1932-33 to 990,000 hectares.

    This means, firstly, that at the end of the five-year plan period the grain crop area of the Grain Trust alone will be as large as that of the whole of the Argentine today. (Applause.)

    It means, secondly, that at the end of the five-year plan period, the grain crop area of all the state farms together will be 1,000,000 hectares larger than that of the whole of Canada today. (Applause.)

    As regards the gross and marketable grain output of the state farms, we have the following picture of the change year by year: in 1927-28, the gross output of all the state farms amounted to 9,500,000 centners, of which marketable grain amounted to 6,400,000 centners; in

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1928-29 -- 12,800,000 centners, of which marketable grain amounted to 7,900,000 centners; in 1929-30, we shall have, according to all accounts, 28,200,000 centners, of which marketable grain will amount to 18,000,000 centners (108,000,000 poods); in 1930-31 we shall have 71,700,000 centners, of which marketable grain will amount to 61,000,000 centners (370,000,000 poods), and so on and so forth.

    Such are the existing and anticipated results of our Party's state-farm policy.

    According to the decision of the Political Bureau of the Central Committee of April 1928 on the organisation of new state farms, we ought to receive from the new state farms not less than 100,000,000 poods of marketable grain in 1931-32. Actually, it turns out that in 1931-32 we shall already have from the new state farms alone more than 200,000,000 poods. That means the programme will have been fulfilled twice over.

    It follows that the people who ridiculed the decision of the Political Bureau of the Central Committee fiercely ridiculed themselves.

    According to the five-year plan endorsed by the Congress of Soviets, by the end of the five-year plan period the state farms controlled by all organisations were to have a total crop area of 5,000,000 hectares. Actually, this year the crop area of the state farms already amounts to 3,800,000 hectares, and next year, i.e., in the third year of the five-year period, their crop area will amount to 8,000,000 hectares.

    This means that we shall fulfil and overfulfil the five-year programme of state-farm development in three years.

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    According to the five-year plan, by the end of the five-year period the gross grain output of the state farms was to amount to 54,300,000 centners. Actually, this year the gross grain output of the state farms already amounts to 28,200,000 centners, and next year it will amount to 71,700,000 centners.

    This means that as regards gross grain output we shall fulfil and overfulfil the five-year plan in three years.

    The five-year plan in three years!

    Let the bourgeois scribes and their opportunist echoers chatter now about it being impossible to fulfil and overfulfil the five-year plan of state-farm development in three years.

    b)  As regards collective-farm development, we have an even more favourable picture.

    It follows, therefore, that the progressive growth of the socialist sector in the sphere of industry and in the sphere of agriculture is a fact about which there can not be the slightest doubt.

    What can this signify from the point of view of the material conditions of the working people?

    It signifies that, thereby, the foundations have already been laid for a radical improvement in the material and cultural conditions of the workers and peasants.

    Why? How?

    Because, firstly, the growth of the socialist sector signifies, above all, a diminution of the exploiting elements in town and country, a decline in their relative importance in the national economy. And this means that the workers' and peasants' share of the national income must inevitably increase owing to the reduction of the share of the exploiting classes.

    Because, secondly, with the growth of the socialised (socialist) sector, the share of the national income that has hitherto gone to feed the exploiting classes and their hangers-on, is bound henceforth to remain in production, to be used for the expansion of production, for building new factories and mills, for improving the conditions of life of the working people. And this means that the working class is bound to grow in numbers and strength, and unemployment to diminish and disappear.

    Because, lastly, the growth of the socialised sector, inasmuch as it leads to an improvement in the material conditions of the working class, signifies a progressive

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increase in the capacity of the home market, an increase in the demand for manufactured goods on the part of the workers and peasants. And this means that the growth of the home market will outstrip the growth of industry and push it forward towards continuous expansion.

    All these and similar circumstances are leading to a steady improvement in the material and cultural conditions of the workers and peasants.

    a)  Let us begin with the numerical growth of the working class and the diminution of unemployment.

    In 1926-27, the number of wage-workers (not including unemployed) was 10,990,000. In 1927-28, however, we had 11,456,000, in 1928-29 -- 11,997,000 and in 1929-30, we shall, by all accounts, have not less than 13,129,000. Of these, manual workers (including agricultural labourers and seasonal workers) numbered in 1926-27 -- 7,069,000, in 1927-28 -- 7,404,000, in 1928-29 -- 7,758,000, in 1929-30 -- 8,533,000. Of these, workers employed in large-scale industry (not including office employees) numbered in 1926-27 -- 2,439,000, in 1927-28 -- 2,632,000, in 1928-29 -- 2,858,000, in 1929-30 -- 3,029,0.00.

    Thus, we have a picture of the progressive numerical growth of the working class; and whereas the number of wage-workers has increased 19.5 per cent during the three years and the number of manual workers 20.7 per cent, the number of industrial workers has increased 24.2 per cent.

    Let us pass to the question of unemployment. It must be said that in this sphere considerable confusion reigns both at the People's Commissariat of Labour and at the All-Union Central Council of Trade Unions.

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    On the one hand, according to the data of these institutions we have about a million unemployed, of whom, those to any degree skilled constitute only 14.3 per cent, while about 73 per cent are those engaged in so-called intellectual labour and unskilled workers; the vast majority of the latter are women and young persons not connected with industrial production.

    On the other hand, according to the same data, we are suffering from a frightful shortage of skilled labour, the labour exchanges are unable to meet about 80 per cent of the demands for labour by our factories and thus we are obliged hurriedly, literally as we go along, to train absolutely unskilled people and make skilled workers out of them in order to satisfy at least the minimum requirements of our factories.

    Just try to find your way out of this confusion. It is clear, at all events, that these unemployed do not constitute a reserve and still less a permanent army of unemployed workers of our industry. Well? Even according to the data of the People's Commissariat of Labour it appears that in the recent period the number of unemployed has diminished compared with last year by over 700,000. This means that by May 1, this year, the number of unemployed had dropped by over 42 per cent.

    There you have another result of the growth of the socialist sector of our national economy.

    b)  We get a still more striking result when we examine the matter from the point of view of the distribution of the national income according to classes. The question of the distribution of the national income according to classes is a fundamental one from the point of view of the material and cultural conditions of the

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workers and peasants. It is not for nothing that the bourgeois economists of Germany, Britain and the United States try to confuse this question for the benefit of the bourgeoisie by publishing, every now and again, their "absolutely objective" investigations on this subject.

    According to data of the German Statistical Board, in 1929 the share of wages in Germany's national income was 70 per cent, and the share of the bourgeoisie was 30 per cent. According to data of the Federal Trade Commission and the National Bureau of Economic Research, the workers' share of the national income of the United States in 1923 amounted to over 54 per cent and the capitalists' share to over 45 per cent. Lastly, according to data of the economists Bowley and Stamp, the share of the working class in Britain's national income in 1924 amounted to a little less than 50 per cent and the capitalists' share to a little over 50 per cent.

    Naturally, the results of these investigations cannot be taken on trust. This is because, apart from faults of a purely economic order, these investigations have also another kind of fault, the object of which is partly to conceal the incomes of the capitalists and to minimise them, and partly to inflate and exaggerate the incomes of the working class by including in it officials who receive huge salaries. And this is apart from the fact that these investigations often do not take into account the incomes of farmers and of rural capitalists in general.

    Comrade Varga has subjected these statistics to a critical analysis. Here is the result that he obtained. It appears that the share of the workers and of the working people generally in town and country, who do not ex-

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ploit the labour of others, was in Germany 55 per cent of the national income, in the United States -- 54 per cent, in Britain -- 45 per cent; whereas the capitalists' share in Germany was 45 per cent, in the United States -- 46 per cent, and in Britain -- 55 per cent.

    That is how the matter stands in the biggest capitalist countries.

    How does it stand in the U.S.S.R.?

    Here are the data of the State Planning Commission. It appears that:

    a)  The share of the workers and working peasants, who do not exploit the labour of others, constituted in our country, in 1927-28, 75.2 per cent of the total national income (including the share of urban and rural wage-workers -- 33.3 per cent); in 1928-29 it was 76.5 per cent (including the share of urban and rural wage workers -- 33.2 per cent); in 1929-30 it was 77.1 per cent (including the share of urban and rural wage-workers -- 33.5 per cent).

    b)  The share of the kulaks and urban capitalists was in 1927-28 -- 8.1 per cent; in 1928-29 -- 6.5 per cent; in 1929-30 -- 1.8 per cent.

    c)  The share of handicraftsmen, the majority of whom are working people, was in 1927-28 -- 6.5 per cent; in 1928-29 -- 5.4 per cent; in 1929-30 -- 4.4 per cent.

    d)  The share of the state sector, the income of which is the income of the working class and of the working people generally, was in 1927-28 -- 8.4 per cent; in 1928-29 -- 10 per cent; in 1929-30 -- 15.2 per cent.

    e)  Lastly, the share of the so-called miscellaneous (meaning pensions) was in 1927-28 -- 1.8 per cent; in 1928-29 -- 1.6 per cent; in 1929-30 -- 1.5 per cent.

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    Thus, it follows that, whereas in the advanced capitalist countries the share of the exploiting classes in the national income is about 50 per cent and even more, here, in the U.S.S.R., the share of the exploiting classes in the national income is not more than 2 per cent.

    This, properly speaking, explains the striking fact that in the United States in 1922, according to the American bourgeois writer Denny "one per cent of estate holders owned 59 per cent of the total wealth," and in Britain, in 1920-21, according to the same Denny, "less than two per cent of the owners held 64 per cent of the total wealth " (see Denny's book America Conquers Britain ).

    Can such things happen in our country, in the U.S.S.R., in the Land of Soviets? Obviously, they cannot. There have long been no "owners" of this kind in the U.S.S.R., nor can there be any.

    But if in the U.S.S.R., in 1929-30, only about two per cent of the national income falls to the share of the exploiting classes, what happens to the rest, the bulk of the national income?

    Obviously, it remains in the hands of the workers and working peasants.

    There you have the source of the strength and prestige of the Soviet regime among the vast masses of the working class and peasantry.

    There you have the basis of the systematic improvement in the material welfare of the workers and peasants of the U.S.S.R.

    f)  In the light of these decisive facts, one can quite understand the systematic increase in the real wages of the workers, the increase in the workers' social insurance budget, the increased assistance to poor- and middle-

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peasant farms, the increased assignments for workers' housing, for the improvement of the workers' living conditions and for mother and child care, and, as a consequence, the progressive growth of the population of the U.S.S.R. and the decline in mortality, particularly in infant mortality.

    It is known, for example, that the real wages of the workers, including social insurance and allocations from profits to the fund for improvement of the workers' living conditions, have risen to 167 per cent of the pre-war level. During the past three years, the workers' social insurance budget alone has grown from 980,000,000 rubles in 1927-28 to 1,400,000,000 rubles in 1929-30. The amount spent on mother and child care during the past three years (1927-28 -- 1929-30) was 494,000,000 rubles. The amount spent on pre-school education (kindergartens, playgrounds, etc.) during the same period was 204,000,000 rubles. The amount spent on workers' housing was 1,880,000,000 rubles.

    This does not mean, of course, that everything necessary for an important increase in real wages has already been done, that real wages could not have been raised to a higher level. If this has not been done, it is because of the bureaucracy in our supply organisations in general, and primarily and particularly because of the bureaucracy in the consumers' co-operatives. According to the data of the State Planning Commission, in 1929-30 the socialised sector of internal trade embraced over 99 per cent of wholesale trade and over 89 per cent of retail trade. This means that the co-operatives are systematically ousting the private sector and are becoming the monopolists in the sphere of trade. That, of course, is

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good. What is bad, however, is that in a number of cases this monopoly operates to the detriment of the consumers. It appears, that in spite of the almost monopolist position they occupy in trade, the co-operatives prefer to supply the workers with more "paying" goods, which yield bigger profits (haberdashery, etc.), and avoid supplying them with less "paying," although more essential, goods for the workers (agricultural produce). As a result, the workers are obliged to satisfy about 25 per cent of their requirements for agricultural produce in the private market, paying higher prices. That is apart from the fact that the co-operative apparatus is concerned most of all with its balance and is therefore reluctant to reduce retail prices in spite of the categorical instructions of the leading centres. It follows, therefore, that in this case the co-operatives function not as a socialist sector, but as a peculiar sector that is infected with a sort of Nepman spirit. The question is, does anyone need co-operatives of this sort, and what benefit do the workers derive from their monopoly if they do not carry out the function of seriously raising the workers' real wages?

    If, in spite of this, real wages in our country are steadily rising from year to year, it means that our social system, our system of distribution of the national income, and our entire wages policy, are such that they are able to neutralise and make up for all defects arising from the co-operatives.

    If to this circumstance we add a number of other factors, such as the increase in the role of public catering, lower rents for workers, the vast number of stipends paid to workers and workers' children, cultural services, and so forth, we may boldly say that the percent-

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age increase of workers' wages is much greater than is indicated in the statistics of some of our institutions.

    All this taken together, plus the introduction of the seven-hour day for over 830,000 industrial workers (33.5 per cent), plus the introduction of the five-day week for over a million and a half industrial workers (63.4 per cent), plus the extensive network of rest homes, sanatoria and health resorts for workers, to which more than 1,700,000 workers have gone during the past three years -- all this creates conditions of work and life for the working class that enable us to rear a new generation of workers who are healthy and vigorous, who are capable of raising the might of the Soviet country to the proper level and of protecting it with their lives from attacks by its enemies. (Applause.)

    As regards assistance to the peasants, both individual and collective-farm peasants, and bearing in mind also assistance to poor peasants, this in the past three years (1927-28 -- 1929-30) has amounted to a sum of not less than 4,000,000,000 rubles, provided in the shape of credits and assignments from the state budget. As is known, assistance in the shape of seeds alone has been granted the peasants during the past three years to the amount of not less than 154,000,000 poods.

    It is not surprising that the workers and peasants in our country are living fairly well on the whole, that general mortality has dropped 36 per cent, and infant mortality 42.5 per cent, below the pre-war level, while the annual increase in population in our country is about three million. (Applause.)

    As regards the cultural conditions of the workers and peasants, in this sphere too we have some achievements,

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which, however, cannot under any circumstances satisfy us, as they are still small. Leaving out of account workers' clubs of all kinds, village reading rooms, libraries and abolition of illiteracy classes, which this year are being attended by 10,500,000 persons, the situation as regards cultural and educational matters is as follows. This year elementary schools are being attended by 11,638,000 pupils; secondary schools -- 1,945,000; industrial and technical, transport and agricultural schools and classes for training workers of ordinary skill -- 333,100; secondary technical and equivalent trade schools -- 238,700; colleges, general and technical -- 190,400. All this has enabled us to raise literacy in the U.S.S.R. to 62.6 per cent of the population, compared with 33 per cent in pre-war times.

    The chief thing now is to pass to universal, compulsory elementary education. I say the "chief" thing, because this would be a decisive step in the cultural revolution. And it is high time we took this step, for we now possess all that is needed to organise compulsory, universal elementary education in all areas of the U.S.S.R.

    I have spoken about our achievements in developing our national economy. I have spoken about our achievements in industry, in agriculture, in reconstructing the whole of our national economy on the basis of socialism. Lastly, I have spoken about our achievements in improving the material conditions of the workers and peasants.

    It would be a mistake, however, to think that we achieved all this "easily and quietly," automatically, so to speak, without exceptional effort and exertion of willpower, without struggle and turmoil. Such achievements do not come about automatically. In fact, we achieved all this in a resolute struggle against difficulties, in a serious and prolonged struggle to surmount difficulties.

    Everybody among us talks about difficulties, but not everybody realises the character of these difficulties. And yet the problem of difficulties is of serious importance for us.

    What are the characteristic features of our difficulties, what hostile forces are hidden behind them, and how are we surmounting them?

    a)  When characterising our difficulties we must bear in mind at least the following circumstances.

    First of all, we must take into account the circumstance that our present difficulties are difficulties of the reconstruction period. What does this mean? It means that they differ fundamentally from the difficulties of the restoration period of our economy. Whereas in the restoration period it was a matter of keeping the old

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factories running and assisting agriculture on its old basis, today it is a matter of fundamentally rebuilding, reconstructing both industry and agriculture, altering their technical basis and providing them with modern technical equipment. It means that we are faced with the task of reconstructing the entire technical basis of our national economy. And this calls for new, more substantial investments in the national economy, for new and more experienced cadres, capable of mastering the new technology and of developing it further.

    Secondly, we must bear in mind the circumstance that in our country the reconstruction of the national economy is not limited to rebuilding its technical basis, but that, on the contrary, parallel with this, it calls for the reconstruction of social-economic relationships. Here I have in mind, mainly, agriculture. In industry, which is already united and socialised, technical reconstruction already has, in the main, a ready-made social economic basis. Here, the task of reconstruction is to accelerate the process of ousting the capitalist elements from industry. The matter is not so simple in agriculture. The reconstruction of the technical basis of agriculture pursues, of course, the same aims. The specific feature of agriculture in our country, however, is that small-peasant farming still predominates in it, that small farming is unable to master the new technology and that, in view of this, the reconstruction of the technical basis of agriculture is impossible without simultaneously reconstructing the old social-economic order, without uniting the small individual farms into large, collective farms, without tearing out the roots of capitalism in agriculture.

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    Naturally, these circumstances cannot but complicate our difficulties, cannot but complicate our work in sur mounting these difficulties.

    Thirdly, we must bear in mind the circumstance that our work for the socialist reconstruction of the national economy, since it breaks up the economic connections of capitalism and turns all the forces of the old world upside down, cannot but rouse the desperate resistance of these forces. Such is the case, as you know. The malicious wrecking activities of the top stratum of the bourgeois intelligentsia in all branches of our industry, the brutal struggle of the kulaks against collective forms of farming in the countryside, the sabotage of the Soviet government's measures by bureaucratic elements in the state apparatus, who are agents of our class enemy -- such, so far, are the chief forms of the resistance of the moribund classes in our country. Obviously, these circumstances cannot facilitate our work of reconstructing the national economy.

    Fourthly, we must bear in mind the circumstance that the resistance of the moribund classes in our country is not taking place in isolation from the outside world, but is receiving the support of the capitalist encirclement. Capitalist encirclement must not be regarded simply as a geographical concept. Capitalist encirclement means that the U.S.S.R. is surrounded by hostile class forces, which are ready to support our class enemies within the U.S.S.R. morally, materially, by means of a financial blockade and, if the opportunity offers, by military intervention. It has been proved that the wrecking activities of our specialists, the anti-Soviet activities of the kulaks, and the incendiarism and explosions at our

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factories and installations are subsidised and inspired from abroad. The imperialist world is not interested in the U.S.S.R. standing up firmly and becoming able to overtake and outstrip the advanced capitalist countries. Hence, the assistance it renders the forces of the old world in the U.S.S.R. Naturally, this circumstance, too, cannot serve to facilitate our work of reconstruction.

    The characterisation of our difficulties will not be complete, however, if we fail to bear in mind one other circumstance. I am referring to the special character of our difficulties. I am referring to the fact that our difficulties are not difficulties of decline, or of stagnation, but difficulties of growth, difficulties of ascent, difficulties of progress. This means that our difficulties differ fundamentally from those encountered by the capitalist countries. When people in the United States talk about difficulties they have in mind difficulties due to decline, for America is now going through a crisis, i.e., economic decline. When people in Britain talk about difficulties they have in mind difficulties due to stagnation, for Britain, for a number of years already, has been experiencing stagnation, i.e., cessation of progress. When we speak about our difficulties, however, we have in mind not decline and not stagnation in development, but the growth of our forces, the upswing of our forces, the progress of our economy. How many points shall we move further forward by a given date? What per cent more goods shall we produce? How many million more hectares shall we sow? How many months earlier shall we erect a factory, a mill, a railway? -- such are the questions that we have in mind when we speak of difficulties. Conse-

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quently, our difficulties, unlike those encountered by, say, America or Britain, are difficulties of growth, difficulties of progress.

    What does this signify? It signifies that our difficulties are such as contain within themselves the possibility of surmounting them. It signifies that the distinguishing feature of our difficulties is that they themselves give us the basis for surmounting them.

    What follows from all this?

    It follows from this, first of all, that our difficulties are not difficulties due to minor and accidental "derangements," but difficulties arising from the class struggle.

    It follows from this, secondly, that behind our difficulties are hidden our class enemies, that these difficulties are complicated by the desperate resistance of the moribund classes in our country, by the support that these classes receive from abroad, by the existence of bureaucratic elements in our own institutions, by the existence of unsureness and conservatism among certain sections of our Party.

    It follows from this, thirdly, that to surmount the difficulties it is necessary, first of all, to repulse the attacks of the capitalist elements, to crush their resistance and thereby clear the way for rapid progress.

    It follows from this, lastly, that the very character of our difficulties, being difficulties of growth, creates the possibilities that we need for crushing our class enemies.

    There is only one means, however, of taking advantage of these possibilities and of converting them into reality, of crushing the resistance of our class enemies and surmounting the difficulties, and that is to organise

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an offensive against the capitalist elements along the whole front and to isolate the opportunist elements in our own ranks, who are hindering the offensive, who are rushing in panic from one side to another and sowing doubt in the Party about the possibility of victory. (Applause.)

    There are no other means.

    Only people who have lost their heads can seek a way out in Bukharin's childish formula about the capitalist elements peacefully growing into socialism. In our country development has not proceeded and is not proceeding according to Bukharin's formula. Development has proceeded, and is proceeding, according to Lenin's formula "who will beat whom." Either we vanquish and crush them, the exploiters, or they will vanquish and crush us, the workers and peasants of the U.S.S.R. -- that is how the question stands, comrades.

    Thus, the organisation of the offensive of socialism along the whole front -- that is the task that arose before us in developing our work of reconstructing the entire national economy.

    That is precisely how the Party interpreted its mission in organising the offensive against the capitalist elements in our country.

    b)  But is an offensive, and an offensive along the whole front at that, permissible at all under the conditions of NEP?

    Some think that an offensive is incompatible with NEP, that NEP is essentially a retreat, that, since the retreat has ended, NEP must be abolished. That is nonsense, of course. It is nonsense that emanates either from the Trotskyists, who have never understood anything

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about Leninism and who think of "abolishing" NEP "in a trice," or from the Right opportunists, who have also never understood anything about Leninism and think that by chattering about "the threat to abolish NEP" they can manage to secure the abandonment of the offensive. If NEP was nothing but a retreat, Lenin would not have said at the Eleventh Congress of the Party, when we were implementing NEP with the utmost consistency, that "the retreat has ended." When Lenin said that the retreat had ended, did he not also say that we were thinking of carrying out NEP "in earnest and for a long time"? It is sufficient to put this question to understand the utter absurdity of the talk about NEP being incompatible with an offensive. In point of fact, NEP does not merely presuppose a retreat and permission for the revival of private trade, permission for the revival of capitalism while ensuring the regulating role of the state (the initial stage of NEP). In point of fact, NEP also presupposes, at a certain stage of development, the offensive of socialism against the capitalist elements, the restriction of the field of activity of private trade, the relative and absolute diminution of capitalism, the increasing preponderance of the socialised sector over the non-socialised sector, the victory of socialism over capitalism (the present stage of NEP). NEP was introduced to ensure the victory of socialism over the capitalist elements. In passing to the offensive along the whole front, we do not yet abolish NEP, for private trade and the capitalist elements still remain, "free" trade still remains -- but we are certainly abolishing the initial stage of NEP, while developing its next stage, the present stage, which is the last stage of NEP.

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    Here is what Lenin said in 1922, a year after NEP was introduced:

    Thus, we have the picture of the internal situation in the U.S.S.R.

    We also have the picture of the internal situation in the chief capitalist countries.

    The question involuntarily arises: What is the result if we place the two pictures side by side and compare them?

    This question is all the more interesting for the reason that the bourgeois leaders in all countries and the bourgeois press of all degrees and ranks, from the arrant capitalist to the Menshevik-Trotskyist, are all shouting with one accord about the "prosperity" of the capitalist countries, about the "doom" of the U.S.S.R., about the "financial and economic bankruptcy" of the U.S.S.R., and so forth.

    And so, what is the result of the analysis of the situation in our country, the U.S.S.R., and over there, in the capitalist countries?

    Let us note the main, generally known facts.

    Over there, in the capitalist countries, there is economic crisis and a decline in production, both in industry and in agriculture.

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    Here, in the U.S.S.R., there is an economic upswing and rising production in all spheres of the national economy.

    Over there, in the capitalist countries, there is deterioration of the material conditions of the working people, reduction of wages and increasing unemployment.

    Here, in the U.S.S.R., there is improvement in the material conditions of the working people, rising wages and diminishing unemployment.

    Over there, in the capitalist countries, there are increasing strikes and demonstrations, which lead to the loss of millions of work-days.

    Here, in the U.S.S.R., there are no strikes, but rising labour enthusiasm among the workers and peasants, by which our social system gains millions of additional work-days.

    Over there, in the capitalist countries, there is increasing tension in the internal situation and growth of the revolutionary working-class movement against the capitalist regime.

    Here, in the U.S.S.R., there is consolidation of the internal situation and the vast masses of the working class are united around the Soviet regime.

    Over there, in the capitalist countries, there is growing acuteness of the national question and growth of the national-liberation movement in India, Indo-China, Indonesia, in the Philippines, etc., developing into national war.

    Here, in the U.S.S.R., the foundations of national fraternity have been strengthened, peace among the nations is ensured and the vast masses of the people in the U.S.S.R. are united around the Soviet regime.

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    Over there, in the capitalist countries, there is confusion and the prospect of further deterioration of the situation.

    Here, in the U.S.S.R., there is confidence in our strength and the prospect of further improvement in the situation.

    They chatter about the "doom" of the U.S.S.R., about the "prosperity" of the capitalist countries, and so forth. Would it not be more correct to speak about the inevitable doom of those who have so "unexpectedly" fallen into the maelstrom of economic crisis and to this day are unable to extricate themselves from the slough of despond?

    What are the causes of such a grave collapse over there, in the capitalist countries, and of the important successes here, in the U.S.S.R.?

    It is said that the state of the national economy depends in a large measure upon the abundance or dearth of capital. That, of course, is true! But can the crisis in the capitalist countries and the upswing in the U.S.S.R. be explained by abundance of capital here and a dearth of capital over there? No, of course not. Everybody knows that there is much less capital in the U.S.S.R. than there is in the capitalist countries. If matters were decided in the present instance by the state of accumulation, there would be a crisis here and a boom in the capitalist countries.

    It is said that the state of economy depends in a large measure on the technical and organising experience of the economic cadres. That, of course, is true. But can the crisis in the capitalist countries and the upswing in the U.S.S.R. be explained by the dearth of technical

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cadres over there and to an abundance of them here? No, of course not! Everybody knows that there are far more technically experienced cadres in the capitalist countries than there are here, in the U.S.S.R. We have never concealed, and do not intend to conceal, that in the sphere of technology we are the pupils of the Germans, the British, the French, the Italians, and, first and foremost, of the Americans. No, matters are not decided by the abundance or dearth of technically experienced cadres, although the problem of cadres is of great importance for the development of the national economy.

    Perhaps the answer to the riddle is that the cultural level is higher in our country than in the capitalist countries? Again, no. Everybody knows that the general cultural level of the masses is lower in our country than in the United States, Britain or Germany. No, it is not a matter of the cultural level of the masses, although this is of enormous importance for the development of the national economy.

    Perhaps the cause lies in the personal qualities of the leaders of the capitalist countries? Again, no. Crises were born together with the advent of the rule of capitalism. For over a hundred years already there have been periodical economic crises of capitalism, recurring every 12, 10, 8 or fewer years. All the capitalist parties, all the more or less prominent capitalist leaders, from the greatest "genuises" to the greatest mediocrities, have tried their hand at "preventing" or "abolishing" crises. But they have all suffered defeat. Is it surprising that Hoover and his group have also suffered defeat? No, it is not a matter of the capitalist leaders

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or parties, although both the capitalist leaders and parties are of no little importance in this matter.

    What is the cause, then?

    What is the cause of the fact that the U.S.S.R., despite its cultural backwardness, despite the dearth of capital, despite the dearth of technically experienced economic cadres, is in a state of increasing economic upswing and has achieved decisive successes on the front of economic construction, whereas the advanced capitalist countries, despite their abundance of capital, their abundance of technical cadres and their higher cultural level, are in a state of growing economic crisis and in the sphere of economic development are suffering defeat after defeat ?

    The cause lies in the difference in the economic systems here and in the capitalist countries.

    The cause lies in the bankruptcy of the capitalist system of economy.

    The cause lies in the advantages of the Soviet system of economy over the capitalist system.

    What is the Soviet system of economy?

    The Soviet system of economy means that:

    1)  the power of the class of capitalists and landlords has been overthrown and replaced by the power of the working class and labouring peasantry;

    2)  the instruments and means of production, the land, factories, mills, etc., have been taken from the capitalists and transferred to the ownership of the working class and the labouring masses of the peasantry;

    3)  the development of production is subordinated not to the principle of competition and of ensuring capitalist profit, but to the principle of planned guidance and

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of systematically raising the material and cultural level of the working people;

    4)  the distribution of the national income takes place not with a view to enriching the exploiting classes and their numerous parasitical hangers-on, but with a view to ensuring the systematic improvement of the material conditions of the workers and peasants and the expansion of socialist production in town and country;

    5)  the systematic improvement in the material conditions of the working people and the continuous increase in their requirements (purchasing power), being a constantly increasing source of the expansion of production, guarantees the working people against crises of overproduction, growth of unemployment and poverty;

    6)  the working class and the labouring peasantry are the masters of the country, working not for the benefit of capitalists, but for their own benefit, the benefit of the working people.

    What is the capitalist system of economy?

    The capitalist system of economy means that:

    1)  power in the country is in the hands of the capitalists;

    2)  the instruments and means of production are concentrated in the hands of the exploiters;

    3)  production is subordinated not to the principle of improving the material conditions of the masses of the working people, but to the principle of ensuring high capitalist profit;

    4)  the distribution of the national income takes place not with a view to improving the material conditions of the working people, but with a view to ensuring the maximum profits for the exploiters;

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    5)  capitalist rationalisation and the rapid growth of production, the object of which is to ensure high profits for the capitalists, encounters an obstacle in the shape of the poverty-stricken conditions and the decline in the material security of the vast masses of the working people, who are not always able to satisfy their needs even within the limits of the extreme minimum, which inevitably creates the basis for unavoidable crises of overproduction, growth of unemployment, mass poverty;

    6)  the working class and the labouring peasantry are exploited, they work not for their own benefit, but for the benefit of an alien class, the exploiting class.

    Such are the advantages of the Soviet system of economy over the capitalist system.

    Such are the advantages of the socialist organisation of economy over the capitalist organisation.

    That is why here, in the U.S.S.R., we have an increasing economic upswing, whereas in the capitalist countries there is growing economic crisis.

    That is why here, in the U.S.S.R., the increase of mass consumption (purchasing power) continuously outstrips the growth of production and pushes it forward, whereas over there, in the capitalist countries, on the contrary, the increase of mass consumption (purchasing power) never keeps pace with the growth of production and continuously lags behind it, thus dooming industry to crises from time to time.

    That is why over there, in the capitalist countries, it is considered quite a normal thing during crises to destroy "superfluous" goods and to burn "superfluous" agricultural produce in order to boister up prices and

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ensure high profits, whereas here, in the U.S.S.R., anybody guilty of such crimes would be sent to a lunatic asylum. (Applause.)

    That is why over there, in the capitalist countries, the workers go on strike and demonstrate, organising a revolutionary struggle against the existing capitalist regime, whereas here, in the U.S.S.R., we have the picture of great labour emulation among millions of workers and peasants who are ready to defend the Soviet regime with their lives.

    That is the cause of the stability and security of the internal situation in the U.S.S.R. and of the instability and insecurity of the internal situation in the capitalist countries.

    It must be admitted that a system of economy that does not know what to do with its "superfluous" goods and is obliged to burn them at a time when want and unemployment, hunger and ruin reign among the masses -- such a system of economy pronounces its own death sentence.

    The recent years have been a period of practical test, an examination period of the two opposite systems of economy, the Soviet and capitalist. During these years we have heard more than enough prophesies of the "doom," of the "downfall" of the Soviet system. There has been even more talk and singing about the "prosperity" of capitalism. And what has happened? These years have proved once again that the capitalist system of economy is a bankrupt system, and that the Soviet system of economy possesses advantages of which not a single bourgeois state, even the most "democratic," most "popular," etc., dares to dream.

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    In his speech at the conference of the R.C.P.(B.) in May 1921, Lenin said:

    1)  First of all there is the problem of the proper distribution of industry throughout the U.S.S.R. However much we may develop our national economy, we cannot avoid the question of how properly to distribute industry, which is the leading branch of the national economy. The situation at present is that our industry, like the whole of our national economy, rests, in the main, on the coal and metallurgical base in the Ukraine. Naturally, without such a base, the industrialisation of the country is inconceivable. Well, the Ukraine fuel and metallurgical base serves us as such a base.

    But can this one base satisfy in future the south, the central part of the U.S.S.R., the north, the north east, the Far East and Turkestan? All the facts go to

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    1)  The chief problem is to force the development of the iron and steel industry. You must bear in mind that we have reached and are exceeding the pre-war level of pig-iron output only this year, in 1929-30. This is a serious threat to the whole of our national economy. To remove this threat we must force the development of the iron and steel industry. By the end of the five-year period we must reach an output not of 10,000,000 tons as is laid down in the five-year plan, but of 15-17 million tons. We must achieve this aim at all costs if we want really to develop the work of industrialising our country.

    Bolsheviks must show that they are able to cope with this task.

    That does not mean, of course, that we must abandon light industry. No, it does not mean that. Until now we have been economising in all things, including light industry, in order to restore heavy industry. But we have already restored heavy industry. Now it only needs to be developed further. Now we can turn to light industry and push it forward at an accelerated pace. One of the new features in the development of our industry is that we are now in a position to develop both heavy and light industry at an accelerated pace. The overfulfilment of the cotton, flax and sugar-beet crop plans this

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year, and the solution of the problem of kendyr and artificial silk, all this shows that we are in a position really to push forward light industry.

    2) The problem of rationalisation, reducing production costs and improving the quality of production. We can no longer tolerate defects in the sphere of rationalisation, non-fulfilment of the plan to reduce production costs and the outrageous quality of the goods turned out by a number of our enterprises. These gaps and defects are harmfully affecting the whole of our national economy and hindering it from making further progress. It is time, high time, that this disgraceful stain was removed.

    Bolsheviks must show that they are able to cope with this task.

    1)  The problem of livestock farming and industrial crops. Now that we have, in the main, solved the grain problem, we can set about solving simultaneously both the livestock farming problem, which is a vital one at

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the present time, and the industrial crops problem. In solving these problems we must proceed along the same lines as we did in solving the grain problem. That is to say, by organising state farms and collective farms, which are the strong points for our policy, we must gradually transform the technical and economic basis of present-day small-peasant livestock farming and industrial crops growing. The Livestock Trust, the Sheep Trust, the Pig Trust and the Dairy Trust, plus livestock collective farms, and the existing state farms and collective farms which grow industrial crops -- such are our points of departure for solving the problems that face us.

    2)  The problem of further promoting the development of state farms and collective farms. It is scarcely necessary to dwell at length on the point that for us this is the primary problem of the whole of our development in the countryside. Now, even the blind can see that the peasants have made a tremendous, a radical turn from the old to the new, from kulak bondage to free collective-farm life. There is no going back to the old. The kulaks are doomed and will be eliminated. Only one path remains, the collective-farm path. And the collective-farm path is no longer for us an unknown and unexplored path. It has been explored and tried in a thousand ways by the peasant masses themselves. It has been explored and appraised as a new path that leads the peasants to emancipation from kulak bondage, from want and ignorance. That is the basis of our achievements.

    How will the new movement in the countryside develop further? In the forefront will be the state farms as the backbone of the reorganisation of the old way of

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life in the countryside. They will be followed by the numerous collective farms, as the strong points of the new movement in the countryside. The combined work of these two systems will create the conditions for the complete collectivisation of all the regions in the U.S.S.R.

    One of the most remarkable achievements of the collective-farm movement is that it has already brought to the forefront thousands of organisers and tens of thousands of agitators in favour of collective farms from among the peasants themselves. Not we alone, the skilled Bolsheviks, but the collective-farm peasants themselves, tens of thousands of peasant organisers of collective farms and agitators in favour of them will now carry forward the banner of collectivisation. And the peasant agitators are splendid agitators for the collective-farm movement, for they will find arguments in favour of collective farms, intelligible and acceptable to the rest of the peasant masses, of which we skilled Bolsheviks cannot even dream.

    Here and there voices are heard saying that we must abandon the policy of complete collectivisation. We have information that there are advocates of this "idea" even in our Party. That can be said, however, only by people who, voluntarily or involuntarily, have joined forces with the enemies of communism. The method of complete collectivisation is that essential method without which it will be impossible to carry out the five-year plan for the collectivisation of all the regions of the U.S.S.R. How can it be abandoned without betraying communism, without betraying the interests of the working class and peasantry?

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    This does not mean, of course, that everything will go "smoothly" and "normally" for us in the collective farm movement. There will still be vacillation within the collective farms. There will still be flows and ebbs. But this cannot and must not daunt the builders of the collective-farm movement. Still less can it serve as a serious obstacle to the powerful development of the collective-farm movement. A sound movement, such as our collective-farm movement undoubtedly is, will achieve its goal in spite of everything, in spite of individual obstacles and difficulties.

    The task is to train the forces and to arrange for the further development of the collective-farm movement.

    3)  The problem of bringing the apparatus as close as possible to the districts and villages. There can be no doubt that we would have been unable to cope with the enormous task of reconstructing agriculture and of developing the collective-farm movement had we not carried out redelimitation of administrative areas. The enlargement of the volosts and their transformation into districts, the abolition of gubernias and their transformation into smaller units (okrugs), and lastly, the formation of regions as direct strong points of the Central Committee -- such are the general features of this redelimitation. Its object is to bring the Party and Soviet and the economic and co-operative apparatus closer to the districts and villages in order to make possible the timely solution of the vexed questions of agriculture, of its upswing, of its reconstruction. In this sense, I repeat, the redelimitation of administrative areas has been of immense benefit to the whole of our development.

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    But has everything been done to bring the apparatus really and effectively closer to the districts and villages? No, not everything. The centre of gravity of collective-farm development has now shifted to the district organisations. They are the centres on which converge all the threads of collective-farm development and of all other economic work in the countryside, as regards both co-operatives and Soviets, credits and procurements. Are the district organisations adequately supplied with the workers they need, and must have, to cope with all these diverse tasks? There can be no doubt that they are extremely inadequately staffed. What is the way out? What must be done to correct this defect and to supply the district organisations with a sufficient number of the workers required for all branches of our work? At least two things must be done:

    1)  abolish the okrugs (applause ), which are becoming an unnecessary barrier between the region and the districts, and use the released okrug personnel to strengthen the district organisations;

    2)  link the district organisations directly with the region (Territorial Committee, national Central Committee).

    That will complete the redelimitation of administrative areas, complete the process of bringing the apparatus closer to the districts and villages.

    There was applause here at the prospect of abolishing the okrugs. Of course, the okrugs must be abolished. It would be a mistake, however, to think that this gives us the right to decry the okrugs, as some comrades do in the columns of Pravda. It must not be forgotten that the okrugs have shouldered the burden of tremendous

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    Lastly, the transport problem. There is no need to dwell at length on the enormous importance of transport for the whole of the national economy. And not only for the national economy. As you know, transport is of the utmost importance also for the defence of the country. In spite of the enormous importance of transport, however, the transport system, the reconstruction of this system, still lags behind the general rate of development. Does it need to be proved that in such a situation we run the risk of transport becoming a "bottleneck" in the national economy, capable of retarding our progress? Is it not time to put an end to this situation?

    Matters are particularly bad as regards river transport. It is a fact that the Volga steamship service has barely reached 60 per cent, and the Dnieper steamship service 40 per cent, of the pre-war level. Sixty and forty per cent of the pre-war level -- this is all that river transport can enter in its record of "achievements." A big "achievement" to be sure! Is it not time to put an end to this disgrace? (Voices : "It is.")

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    The task is to tackle the transport problem, at last, in the Bolshevik manner and to get ahead with it

    Such are the Party's next tasks.

    What is needed to carry out these tasks?

    Primarily and chiefly, what is needed is to continue the sweeping offensive against the capitalist elements along the whole front and to carry it through to the end.

    That is the centre and basis of our policy at the present time. (Applause.)

    I pass to the question of the Party.

    I have spoken about the advantages of the Soviet system of economy over the capitalist system. I have spoken about the colossal possibilities that our social system affords us in fighting for the complete victory of socialism. I said that without these possibilities, without utilising them, we could not have achieved the successes gained by us in the past period.

    But the question arises: has the Party been able to make proper use of the possibilities afforded us by the Soviet system; has it not kept these possibilities concealed, thereby preventing the working class from fully developing its revolutionary might; has it been able to squeeze out of these possibilities all that could be squeezed out of them for the purpose of promoting socialist construction along the whole front?

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    The Soviet system provides colossal possibilities for the complete victory of socialism. But possibility is not actuality. To transform possibility into actuality a number of conditions are needed, among which the Party's line and the correct carrying out of this line play by no means the least role.

    Some examples.

    a)  The Party's principal line at the present moment is transition from the offensive of socialism on separate sectors of the economic front to an offensive along the whole front both in industry and in agriculture.

    The Fourteenth Congress was mainly the congress of industrialisation.

    The Fifteenth Congress was mainly the congress of collectivisation.

    This was the preparation for the general offensive.

    As distinct from the past stages, the period before the Sixteenth Congress was a period of the general offensive of socialism along the whole front, a period of intensified socialist construction both in industry and in agriculture.

    The Sixteenth Congress of the Party is the congress of the sweeping offensive of socialism along the whole front, of the elimination of the kulaks as a class, and of the realisation of complete collectivisation.

    There you have in a few words the essence of our Party's general line.

    Is this line correct?

    Yes, it is correct. The facts show that our Party's general line is the only correct line. (Applause.)

    This is proved by our successes and achievements on the front of socialist construction. It was not and cannot

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be the case that the decisive victory won by the Party on the front of socialist construction in town and country during the past period was the result of an incorrect policy. Only a correct general line could give us such a victory.

    It is proved by the frenzied howl against our Party's policy raised lately by our class enemies, the capitalists and their press, the Pope and bishops of all kinds, the Social-Democrats and the "Russian" Mensheviks of the Abramovich and Dan type. The capitalists and their lackeys are abusing our Party -- that is a sign that our Party's general line is correct. (Applause.)

    It is proved by the fate of Trotskyism, with which everybody is now familiar. The gentlemen in the Trotsky camp chattered about the "degeneration" of the Soviet regime, about "Thermidor," about the "inevitable victory" of Trotskyism, and so forth. But, actually, what happened? What happened was the collapse, the end of Trotskyism. One section of the Trotskyists, as is known, broke away from Trotskyism and in numerous declarations of its representatives admitted that the Party was right, and acknowledged the counter-revolutionary character of Trotskyism. Another section of the Trotskyists really degenerated into typical petty-bourgeois counter-revolutionaries, and actually became an information bureau of the capitalist press on matters concerning the C.P.S.U.(B.). But the Soviet regime, which was to have "degenerated" (or "had already degenerated"), continues to thrive and to build socialism, successfully breaking the backbone of the capitalist elements in our country and their petty-bourgeois yes-men.

    It is proved by the fate of the Right deviators, with which everybody is now familiar. They chattered and

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howled about the Party line being "fatal," about the "probable catastrophe" in the U.S.S.R., about the necessity of "saving" the country from the Party and its leadership, and so forth. But what actually happened? What actually happened was that the Party achieved gigantic successes on all the fronts of socialist construction, whereas the group of Right deviators, who wanted to "save" the country but who later admitted that they were wrong, are now left high and dry.

    It is proved by the growing revolutionary activity of the working class and peasantry, by the active support for the Party's policy by the vast masses of the working people, and lastly, by that unprecedented labour enthusiasm of the workers and peasant collective farmers, the immensity of which astonishes both the friends and the enemies of our country. That is apart from such signs of the growth of confidence in the Party as the applications from workers to join the Party in whole shops and factories, the growth of the Party membership between the Fifteenth and Sixteenth Congresses by over 600,000, and the 200,000 new members who joined the Party in the first quarter of this year alone. What does all this show if not that the vast masses of the working people realise that our Party's policy is correct and are ready to support it?

    It must be admitted that these facts would not have existed if our Party's general line had not been the only correct one.

    b)  But the Party cannot confine itself to drawing up a general line. It must also, from day to day, keep check on how the general line is being carried out in practice. It must guide the carrying out of the general

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line, improving and perfecting the adopted plans of economic development in the course of the work, and correcting and preventing mistakes.

    How has the Central Committee of our Party performed this work?

    The Central Committee's work in this sphere has proceeded mainly along the line of amending and giving precision to the five-year plan by accelerating tempo and shortening time schedules, along the line of checking the economic organisations' fulfilment of the assignments laid down.

    Here are a few of the principal decisions adopted by the Central Committee amending the five-year plan in the direction of speeding up the rate of development and shortening time schedules of fulfilment.

    In the iron and steel industry : the five-year plan provides for the output of pig-iron to be brought up to 10,000,000 tons in the last year of the five-year period; the Central Committee's decision, however, found that this level is not sufficient, and laid it down that in the last year of the five-year period the output of pig-iron must be brought up to 17,000,000 tons.

    Tractor construction : the five-year plan provides for the output of tractors to be brought up to 55,000 in the last year of the five-year period; the Central Committee's decision, however, found that this target is not sufficient, and laid it down that the output of tractors in the last year of the five-year period must be brought up to 170,000.

    The same must be said about automobile construction, where, instead of an output of 100,000 cars (lorries and passenger cars) in the last year of the five-year

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period as provided for in the five-year plan, it was decided to bring it up to 200,000.

    The same applies to non-ferrous metallurgy, where the five-year plan estimates were raised by more than 100 per cent; and to agricultural machine-building, where the five-year plan estimates were also raised by over 100 per cent.

    That is apart from harvester-combine building, for which no provision at all was made in the five-year plan, and the output of which must be brought up to at least 40,000 in the last year of the five-year period.

    State-farm development : the five-year plan provides for the expansion of the crop area to be brought up to 5,000,000 hectares by the end of the five-year period; the Central Committee's decision, however, found that this level was not sufficient and laid it down that by the end of the five-year period the state-farm crop area must be brought up to 18,000,000 hectares.

    Collective-farm development : the five-year plan provides for the expansion of the crop area to be brought up to 20,000,000 hectares by the end of the five-year period; the Central Committee's decision, however, found that this level was obviously not sufficient (it has already been exceeded this year) and laid it down that by the end of the five-year period the collectivisation of the U.S.S.R. should, in the main, be completed, and by that time the collective-farm crop area should cover nine-tenths of the crop area of the U.S.S.R. now cultivated by individual farmers. (Applause.)

    And so on and so forth.

    Such, in general, is the picture of the way the Central Committee is guiding the carrying out of the Par-

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ty's general line, the planning of socialist construction.

    It may be said that in altering the estimates of the five-year plan so radically the Central Committee is violating the principle of planning and is discrediting the planning organisations. But only hopeless bureaucrats can talk like that. For us Bolsheviks, the five-year plan is not something fixed once and for all. For us the five-year plan, like every other, is merely a plan adopted as a first approximation, which has to be made more precise, altered and perfected in conformity with the experience gained in the localities, with the experience gained in carrying out the plan. No five-year plan can take into account all the possibilities latent in the depths of our system and which reveal themselves only in the course of the work, in the course of carrying out the plan in the factory and mill, in the collective farm and state farm, in the district, and so forth. Only bureaucrats can think that the work of planning ends with the drafting of a plan. The drafting of a plan is only the beginning of planning. Real guidance in planning develops only after the plan has been drafted, after it has been tested in the localities, in the course of carrying it out, correcting it and making it more precise.

    That is why the Central Committee and the Central Control Commission, jointly with the planning bodies of the Republic, deemed it necessary to correct and improve the five-year plan on the basis of experience, in the direction of speeding up the rate of development and shortening time schedules of fulfilment.

    It may be thought that the work of guiding socialist construction, the work of carrying out the Party's general line, has proceeded in our Party calmly and smoothly, without struggle or tense effort of will. But that is

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not so, comrades. Actually, this work has proceeded amid a struggle against inner-Party difficulties, amid a struggle against all sorts of deviations from Leninism both as regards general policy and as regards the national question. Our Party does not live and operate in a vacuum. It lives and operates in the thick of life and is subjected to the influence of the surrounding environment. And our environment, as you know, consists of different classes and social groups. We have launched a sweeping offensive against the capitalist elements, we have pushed our socialist industry far forward, we have widely developed the formation of state farms and collective farms. Events like these, however, cannot but affect the exploiting classes. These events are usually accompanied by the ruin of the moribund classes, by the ruin of the kulaks in the countryside, by the restriction of the field of activity of the petty-bourgeois strata in the towns. Naturally, all this cannot but intensify the class struggle, the resistance of the moribund classes to the Soviet government's policy. It would be ridiculous to think that the resistance of these classes will not find reflection in some way or other in the ranks of our Party. And it does indeed find reflection in the Party. All the various deviations from the Leninist line in the ranks of our Party are a reflection of the resistance of the moribund classes.

    Is it possible to wage a successful struggle against class enemies without at the same time combating deviations in our Party, without overcoming these deviations? No, it is not. That is because it is impossible to develop a real struggle against class enemies while having their agents in our rear, while leaving in our

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rear people who have no faith in our cause, and who strive in every way to hinder our progress.

    Hence an uncompromising struggle against deviations from the Leninist line is an immediate task of the Party.

    Why is the Right deviation the chief danger in the Party at the present time? Because it reflects the kulak danger; and at the present moment, the moment of the sweeping offensive and the tearing out of the roots of capitalism, the kulak danger is the chief danger in the country.

    What did the Central Committee have to do to overcome the Right deviation, to deliver the finishing stroke to the "Left" deviation and clear the way for rallying the Party to the utmost around the Leninist line?

    a)  It had, first of all, to put an end to the remnants of Trotskyism in the Party, to the survivals of the Trotskyist theory. We had long ago routed the Trotskyist group as an opposition, and had expelled it. The Trotskyist group is now an anti-proletarian and anti-Soviet counter-revolutionary group, which is zealously informing the bourgeoisie about the affairs of our Party. But the remnants of the Trotskyist theory, the survivals of Trotskyism, have not yet been completely swept out of the Party. Hence, the first thing to be done was to put an end to these survivals.

    That is the essence of Trotskyism?

    The essence of Trotskyism is, first of all, denial of the possibility of completely building socialism in the U.S.S.R. by the efforts of the working class and peasantry of our country. What does this mean? It means that if a victorious world revolution does not come to our aid in the near future, we shall have to sur-

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render to the bourgeoisie and clear the way for a bourgeois-democratic republic. Consequently, we have here the bourgeois denial of the possibility of completely building socialism in our country, disguised by "revolutionary" phrases about the victory of the world revolution.

    Is it possible, while holding such views, to rouse the labour enthusiasm of the vast masses of the working class, to rouse them for socialist emulation, for mass shock-brigade work, for a sweeping offensive against the capitalist elements? Obviously not. It would be foolish to think that our working class, which has made three revolutions, will display labour enthusiasm and engage in mass shock-brigade work in order to manure the soil for capitalism. Our working class is displaying labour enthusiasm not for the sake of capitalism, but in order to bury capitalism once and for all and to build socialism in the U.S.S.R. Take from it its confidence in the possibility of building socialism, and you will completely destroy the basis for emulation, for labour enthusiasm, for shock-brigade work.

    Hence the conclusion: in order to rouse labour enthusiasm and emulation among the working class and to organise a sweeping offensive, it was necessary, first of all, to bury the bourgeois theory of Trotskyism that it is impossible to build socialism in our country.

    The essence of Trotskyism is, secondly, denial of the possibility of drawing the main mass of the peasantry into the work of socialist construction in the countryside. What does this mean? It means that the working class is incapable of leading the peasantry in the work of transferring the individual peasant farms to collectivist lines, that if the victory of the world revolution

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does not come to the aid of the working class in the near future, the peasantry will restore the old bourgeois order. Consequently, we have here the bourgeois denial of the capacity or possibility of the proletarian dictatorship to lead the peasantry to socialism, disguised by a mask of "revolutionary" phrases about the victory of the world revolution.

    Is it possible, while holding such views, to rouse the peasant masses for the collective-farm movement, to organise a mass collective-farm movement, to organise the elimination of the kulaks as a class? Obviously not.

    Hence the conclusion: in order to organise a mass collective-farm movement of the peasantry and to eliminate the kulaks, it was necessary, first of all, to bury the bourgeois theory of Trotskyism that it is impossible to bring the labouring masses of the peasantry to socialism.

    The essence of Trotskyism is, lastly, denial of the necessity for iron discipline in the Party, recognition of freedom for factional groupings in the Party, recognition of the need to form a Trotskyist party. According to Trotskyism, the C.P.S.U.(B.) must be not a single, united militant party, but a collection of groups and factions, each with its own centre, its own discipline, its own press, and so forth. What does this mean? It means proclaiming freedom for political factions in the Party. It means that freedom for political groupings in the Party must be followed by freedom for political parties in the country, i.e., bourgeois democracy. Consequently, we have here recognition of freedom for factional groupings in the Party right up to permitting political parties in the land of the dictatorship of the proletariat, disguised

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by phrases about "inner-party democracy," about "improving the regime" in the Party. That freedom for factional squabbling of groups of intellectuals is not inner-party democracy, that the widely-developed self-criticism conducted by the Party and the colossal activity of the mass of the Party membership is real and genuine inner-party democracy -- Trotskyism cannot understand.

    Is it possible, while holding such views about the Party, to ensure iron discipline in the Party, to ensure the iron unity of the Party that is essential for waging a successful struggle against class enemies? Obviously not.

    Hence the conclusion: in order to guarantee the iron unity of the Party and proletarian discipline in it, it was necessary, first of all, to bury the Trotskyist theory of organisation.

    Capitulation in practice as the content, "Left" phrases and "revolutionary" adventurist postures, as the form disguising and advertising the defeatist content -- such is the essence of Trotskyism.

    This duality of Trotskyism reflects the duality of the position of the urban petty bourgeoisie, which is being ruined, cannot tolerate the "regime" of the dictatorship of the proletariat and is striving either to jump into socialism "at one go" in order to avoid being ruined (hence adventurism and hysterics in policy), or, if this is impossible, to make every conceivable concession to capitalism (hence capitulation in policy).

    This duality of Trotskyism explains why it usually crowns its supposedly "furious" attacks on the Right deviators by a bloc with them, as undisguised capitulators.

    And what are the "Left" excesses that have occurred in the Party in connection with the collective-farm

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movement? They represent a certain attempt, true an unconscious one, to revive among us the traditions of Trotskyism in practice, to revive the Trotskyist attitude towards the middle peasantry. They are the result of that mistake in policy which Lenin called "over-administration." This means that some of our comrades, infatuated by the successes of the collective-farm movement, began to approach the problem of collective-farm development not as builders, but mainly as administrators and, as a result, committed a number of very gross mistakes.

    There are people in our Party who think that the "Left" distorters should not have been pulled up. They think that our officials should not have been taken to task and their infatuation should not have been counteracted even though it led to mistakes. That is nonsense, comrades. Only people who are determined to swim with the stream, can talk like that. These are the very same people who can never understand the Leninist policy of going against the stream when the situation demands it, when the interests of the Party demand it. They are khvostists, not Leninists. The reason why the Party succeeded in turning whole detachments of our comrades on to the right road, the reason why the Party succeeded in rectifying mistakes and achieving successes is just because it resolutely went against the stream in order to carry out the Party's general line. That is Leninism in practice, Leninism in leadership.

    That is why I think that if we had not overcome the "Left" excesses we could not have achieved the successes in the collective-farm movement that we have now achieved.

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    That is how matters stand as regards the struggle against the survivals of Trotskyism and against the recurrence of them in practice.

    Matters are somewhat different as regards Right opportunism, which was, or is, headed by Bukharin, Rykov and Tomsky.

    It cannot be said that the Right deviators do not admit the possibility of completely building socialism in the U.S.S.R. No, they do admit it, and that is what distinguishes them from the Trotskyists. But the misfortune of the Right deviators is that, while formally admitting that it is possible to build socialism in one country, they refuse to recognise the ways and means of struggle without which it is impossible to build socialism. They refuse to admit that the utmost development of industry is the key to the transformation of the entire national economy on the basis of socialism. They refuse to admit the uncompromising class struggle against the capitalist elements and the sweeping offensive of socialism against capitalism. They fail to understand that all these ways and means constitute the system of measures without which it is impossible to retain the dictatorship of the proletariat and to build socialism in our country. They think that socialism can be built on the quiet, automatically, without class struggle, without an offensive against the capitalist elements. They think that the capitalist elements will either die out imperceptibly or grow into socialism. As, however, such miracles do not happen in history, it follows that the Right deviators are in fact slipping into the viewpoint of denying the possibility of completely building socialism in our country.

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    Nor can it be said that the Right deviators deny that it is possible to draw the main mass of the peasantry into the work of building socialism in the countryside. No, they admit that it is possible, and that is what distinguishes them from the Trotskyists. But while admitting it formally, they will not accept the ways and means without which it is impossible to draw the peasantry into the work of building socialism. They refuse to admit that state farms and collective farms are the principal means and the "high road" for drawing the main mass of the peasantry into the work of building socialism. They refuse to admit that unless the policy of eliminating the kulaks as a class is carried out it will be impossible to transform the countryside on the basis of socialism. They think that the countryside can be transferred to socialist lines on the quiet, automatically, without class struggle, merely with the aid of supply and marketing co-operatives, for they are convinced that the kulaks themselves will grow into socialism. They think that the chief thing now is not a high rate of industrial development, and not collective farms and state farms, but to "release" the elemental forces of the market, to "emancipate" the market and to "remove the shackles" from the individual farms, up to and including those of the capitalist elements in the countryside. As, however, the kulaks cannot grow into socialism, and "emancipating" the market means arming the kulaks and disarming the working class, it follows that the Right deviators are in fact slipping into the viewpoint of denying that it is possible to draw the main mass of the peasantry into the work of building socialism.

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    It is this, really, that explains why the Right deviators usually crown their sparring with the Trotskyists by backstairs negotiations with them on the subject of a bloc with them.

    The chief evil of Right opportunism is that it breaks with the Leninist conception of the class struggle and slips into the viewpoint of petty-bourgeois liberalism.

    There can be no doubt that the victory of the Right deviation in our Party would have meant completely disarming the working class, arming the capitalist elements in the countryside and increasing the chances of the restoration of capitalism in the U.S.S.R.

    The Right deviators do not take the stand of forming another party, and that is another thing that distinguishes them from the Trotskyists. The leaders of the Right deviators have openly admitted their mistakes and have surrendered to the Party. But it would be foolish to think, on these grounds, that the Right deviation is already buried. The strength of Right opportunism is not measured by this circumstance. The strength of Right opportunism lies in the strength of the petty-bourgeois elemental forces, in the strength of the pressure on the Party exercised by the capitalist elements in general, and by the kulaks in particular. And it is precisely because the Right deviation reflects the resistance of the chief elements of the moribund classes that the Right deviation is the principal danger in the Party at the present time.

    That is why the Party considered it necessary to wage a determined and uncompromising struggle against the Right deviation.

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    There can be no doubt that if we had not waged a determined struggle against the Right deviation, if we had not isolated its leading elements, we would not have succeeded in mobilising the forces of the Party and of the working class, in mobilising the forces of the poor- and middle-peasant masses, for the sweeping offensive of socialism, for the organisation of state farms and collective farms, for the restoration of our heavy industry, for the elimination of the kulaks as a class.

    That is how matters stand as regards the "Left" and Right deviations in the Party.

    The task is to continue the uncompromising struggle on two fronts, against the "Lefts," who represent petty-bourgeois radicalism, and against the Rights, who represent petty-bourgeois liberalism.

    The task is to continue the uncompromising struggle against those conciliatory elements in the Party who fail to understand, or pretend they do not understand, the necessity of a determined struggle on two fronts.

    b)  The picture of the struggle against deviations in the Party will not be complete if we do not touch upon the deviations that exist in the Party on the national question. I have in mind, firstly, the deviation towards Great-Russian chauvinism, and secondly, the deviation towards local nationalism. These deviations are not so conspicuous and assertive as the "Left" or the Right deviation. They could be called creeping deviations. But this does not mean that they do not exist. They do exist, and what is most important -- they are growing. There can be no doubt whatever about that. There can be no doubt about it, because the general atmosphere of more acute class struggle cannot fail to

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cause some intensification of national friction, which finds reflection in the Party. Therefore, the features of these deviations should be exposed and dragged into the light of day.

    What is the essence of the deviation towards Great-Russian chauvinism under our present conditions?

    The essence of the deviation towards Great-Russian chauvinism lies in the striving to ignore national differences in language, culture and way of life; in the striving to prepare for the liquidation of the national republics and regions; in the striving to undermine the principle of national equality and to discredit the Party's policy of nationalising the administrative apparatus, the press, the schools and other state and public organisations.

    In this connection, the deviators of this type proceed from the view that since, with the victory of socialism, the nations must merge into one and their national languages must be transformed into a single common language, the time has come to abolish national differences and to abandon the policy of promoting the development of the national cultures of the formerly oppressed peoples.

    In this connection, they refer to Lenin, misquoting him and sometimes deliberately distorting and slandering him.

    Lenin said that under socialism the interests of the nationalities will merge into a single whole -- does it not follow from this that it is time to put an end to the national republics and regions in the interests of . . . internationalism? Lenin said in 1913, in his controversy with the Bundists, that the slogan of national culture is a bourgeois slogan -- does it not follow from this that

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it is time to put an end to the national cultures of the peoples of the U.S.S.R. in the interests of . . . internationalism?

    Lenin said that national oppression and national barriers are destroyed under socialism -- does it not follow from this that it is time to put a stop to the policy of taking into account the specific national features of the peoples of the U.S.S.R. and to go over to the policy of assimilation in the interests of . . . internationalism?

    And so on and so forth.

    There can be no doubt that this deviation on the national question, disguised, moreover, by a mask of internationalism and by the name of Lenin, is the most subtle and therefore the most dangerous species of Great-Russian nationalism.

    Firstly, Lenin never said that national differences must disappear and that national languages must merge into one common language within the borders of a single state before the victory of socialism on a world scale. On the contrary, Lenin said something that was the very opposite of this, namely, that "national and state differences among peoples and countries . . . will continue to exist for a very, very long time even after the dictatorship of the proletariat has been established on a world scale "* (Vol. XXV, p. 227).

    How can anyone refer to Lenin and forget about this fundamental statement of his?

    True, Mr. Kautsky, an ex-Marxist and now a renegade and reformist, asserts something that is the

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