The present economic crisis in the capitalist countries differs from all analogous crises, among other things, in that it is the longest and most protracted crisis. Formerly crises would come to an end in a year or two; the present crisis, however, is now in its fifth year, devastating the economy of the capitalist countries year after year and draining it of the fat accumulated in previous years. It is not surprising that this is the most severe of all the crises that have taken place.

    How is this unprecedentedly protracted character of the present industrial crisis to be explained?

    It is to be explained, first of all, by the fact that the industrial crisis has affected every capitalist country without exception, which has made it difficult for some countries to manoeuvre at the expense of others.

    Secondly, it is to be explained by the fact that the industrial crisis has become interwoven with the agrarian crisis which has affected all the agrarian and semi-agrarian countries without exception, which could not but make the industrial crisis more complicated and more profound.

    Thirdly, it is to be explained by the fact that the agrarian crisis has grown more acute in this period, and has affected all branches of agriculture, including live-stock farming; that it has brought about a retrogression of agriculture, a reversion

page 674

from machines to hand labour, a substitution of horses for tractors, a sharp reduction in the use of artificial fertilizers, and in some cases a complete abandonment of them -- all of which has caused the industrial crisis to become still more protracted.

    Fourthly, it is to be explained by the fact that the monopolist cartels which dominate industry strive to maintain high commodity prices, a circumstance which makes the crisis particularly painful and hinders the absorption of commodity stocks.

    Lastly -- and this is the chief thing -- it is to be explained by the fact that the industrial crisis broke out in the conditions of the general crisis of capitalism, when capitalism no longer has, nor can have, either in the major countries or in the colonial and dependent countries, the strength and stability it had before the war and the October Revolution; when industry in the capitalist countries has acquired, as a heritage from the imperialist war, chronic under-capacity operation of plants and armies of millions of unemployed, of which it is no longer able to rid itself.

    Such are the circumstances that have given rise to the extremely protracted character of the present industrial crisis.

    It is these circumstances also that explain the fact that the crisis has not been confined to the sphere of production and trade, but has also affected the credit system, foreign exchange, the debt settlements, etc., and has broken down the traditionally established relations both between countries and between social groups in the various countries.

    An important part was played by the fall in commodity prices. In spite of the resistance of the monopolist cartels, the fall in prices increased with elemental force, affecting primarily and mainly the commodities of the unorganized commodity

page 675

owners -- peasants, artisans, small capitalists -- and only gradually and to a smaller degree those of the organized commodity owners -- the capitalists united in cartels. The fall in prices made the position of debtors (manufacturers, artisans, peasants, etc.) intolerable, while, on the other hand, it placed creditors in an unprecedentedly privileged position. Such a situation was bound to lead, and actually did lead to the mass bankruptcy of firms and of individual capitalists As a result, tens of thousands of joint-stock companies have failed in the United States, Germany, Britain and France during the past three years. The bankruptcy of joint-stock companies was followed by a depreciation of currency, which slightly alleviated the position of debtors. The depreciation of currency was followed by the non-payment of debts, both foreign and internal, legalized by the state. The collapse of such banks as the Darmstadt and Dresden banks in Germany and the Kreditanstalt in Austria, and of concerns like Kreuger's in Sweden, the Insull corporation in the United States, etc. is well known to all.

    Naturally, these phenomena, which shook the foundations of the credit system, were bound to be followed, and actually were followed, by the cessation of payments on credits and foreign loans, the cessation of payments on inter-Allied debts the cessation of export of capital, a further decline in foreign trade, a further decline in the export of commodities, an intensification of the struggle for foreign markets, trade war between countries, and -- dumping. Yes, comrades, dumping. I am not referring to the alleged Soviet dumping, about which only very recently certain honourable members of honourable parliaments in Europe and America were shouting themselves hoarse. I am referring to the real dumping that is now being practised by almost all "civilized" states, and about which

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these gallant and honourable members of parliaments maintain a prudent silence.

    Naturally, also, these destructive phenomena accompanying the industrial crisis, which took place outside the sphere of production, could not but in their turn influence the course of the industrial crisis, aggravating it and complicating the situation still further.

    Such is the general picture of the course of the industrial crisis.

    Here are a few figures, taken from official data, that illustrate the course of the industrial crisis during the period under review.

    As you see, this table speaks for itself.

    While industry in the principal capitalist countries declined from year to year, compared with 1929, and began to recover somewhat only in 1933 -- although still far from reaching the level of 1929 -- industry in the U.S.S.R. grew from year to year, experiencing an uninterrupted rise.

    While industry in the principal capitalist countries at the end of 1933 shows on the average a reduction of 25 per cent and

page 677

more in volume of output compared with 1929, industrial output in the U.S.S.R. has more than doubled during this period, i.e., it has increased more than 100 per cent. (Applause.)

    Judging by this table, it may seem that of these four capitalist countries Britain is in the most favourable position. But that is not quite true. If we compare industry in these countries with its pre-war level we get a somewhat different picture.

    Here is the corresponding table:

    As you see, industry in Britain and Germany has not yet reached the pre-war level, while the United States and France have exceeded it by several per cent, and the U.S.S.R. has raised, increased its industrial output during this period by more than 290 per cent over the pre-war level. (Applause.)

    But there is still another conclusion to be drawn from these tables.

    While industry in the principal capitalist countries declined steadily after 1930, and particularly after 1931, and reached its lowest point in 1932, in 1933 it began to recover and pick up somewhat. If we take the monthly returns for 1932 and 1933

page 678

we find still further confirmation of this conclusion; for they show that, despite fluctuations of output in the course of 1933, industry in these countries revealed no tendency to fall to the lowest point reached in the summer of 1932.

    What does this mean?

    It means that, apparently, industry in the principal capitalist countries had already reached the lowest point of decline and did not return to it in the course of 1933.

    Some people are inclined to ascribe this phenomenon exclusively to the influence of artificial factors, such as the war-inflation boom. There can be no doubt that the war-inflation boom plays no small part in it. This is particularly true in regard to Japan, where this artificial factor is the principal and decisive force stimulating a certain revival in some industries, mainly war industries. But it would be a gross mistake to explain everything by the war-inflation boom. Such an explanation would be incorrect, if only for the reason that the changes in industry which I have described are observed, not in separate and chance areas, but in all, or nearly all, the industrial countries, including the countries with a stable currency. Apparently, in addition to the war-inflation boom, the internal economic forces of capitalism are also operating here.

    Capitalism has succeeded in somewhat alleviating the position of industry at the expense of the workers, by heightening their exploitation through increased intensity of labour; at the expense of the farmers, by pursuing a policy of paying the lowest prices for the products of their labour, for foodstuffs and, partly, raw materials; and at the expense of the peasants in the colonies and economically weak countries, by an even greater lowering of prices for the products of their labour, principally for raw materials, and also for foodstuffs.

page 679

    Does this mean that we are witnessing a transition from a crisis to an ordinary depression, to be followed by a new upswing and flourishing of industry? No, it does not. At any rate, at the present time there is no evidence, direct or indirect, to indicate the approach of an upswing of industry in the capitalist countries. More than that, judging by all things, there can be no such evidence, at least in the near future. There can be no such evidence, because all the unfavourable conditions which prevent industry in the capitalist countries from making any considerable advance continue to operate. I have in mind the continuing general crisis of capitalism, in the circumstances of which the economic crisis is proceeding; the chronic under-capacity operation of the enterprises; chronic mass unemployment; the interweaving of the industrial crisis with an agricultural crisis; the absence of tendencies towards a more or less serious renewal of fixed capital, which usually heralds the approach of a boom, etc., etc.

    Evidently, what we are witnessing is a transition from the lowest point of decline of industry, from the lowest point of the industrial crisis, to a depression -- not an ordinary depression, but a depression of a special kind, which does not lead to a new upswing and flourishing of industry, but which, on the other hand, does not force industry back to the lowest point of decline.

    A result of the protracted economic crisis has been an unprecedented increase in the tension of the political situation in the capitalist countries, both within those countries and in their mutual relations.

page 680

    The intensified struggle for foreign markets, the abolition of the last vestiges of free trade, the prohibitive tariffs, the trade war, the foreign currency war, dumping, and many other analogous measures which demonstrate extreme nationalism in economic policy have strained to the utmost the relations among the various countries, have created the basis for military conflicts, and have put war on the order of the day as a means for a new redivision of the world and of spheres of influence in favour of the stronger states.

    Japan's war against China, the occupation of Manchuria, Japan's withdrawal from the League of Nations, and her advance in North China, have made the situation still more tense. The intensified struggle for the Pacific and the growth of naval armaments in Japan, the United States, Britain and France are results of this increased tension.

    Germany's withdrawal from the League of Nations and the spectre of revanchism have further added to the tension and have given a fresh impetus to the growth of armaments in Europe.

    It is not surprising that bourgeois pacifism is now dragging out a miserable existence, and that idle talk of disarmament is giving way to "business-like" talk about armament and rearmament.

    Once again, as in 1914, the parties of bellicose imperialism, the parties of war and revanchism are coming to the foreground.

    Quite clearly things are heading for a new war.

    The internal situation of the capitalist countries, in view of the operation of these same factors, is becoming still more tense. Four years of industrial crisis have exhausted the working class and reduced it to despair. Four years of agricultural crisis have utterly ruined the poorer strata of the peasantry,

page 681

not only in the principal capitalist countries, but also -- and particularly -- in the dependent and colonial countries. It is a fact that, notwithstanding all kinds of statistical trickery designed to minimize unemployment, the number of unemployed, according to the official figures of bourgeois institutions, reaches 3 million in Britain, 5 million in Germany and 10 million in the United States, not to mention the other European countries. Add to this the more than 10 million partially unemployed; add the vast masses of ruined peasants -- and you will get an approximate picture of the poverty and despair of the labouring masses. The masses of the people have not yet reached the stage when they are ready to storm capitalism; but the idea of storming it is maturing in the minds of the masses -- of that there can hardly be any doubt. This is eloquently testified to by such facts as, say, the Spanish revolution which overthrew the fascist regime, and the expansion of the Soviet districts in China, which the united counter-revolution of the Chinese and foreign bourgeoisie is unable to stop.

    This, indeed, explains why the ruling classes in the capitalist countries are so zealously destroying or nullifying the last vestiges of parliamentarism and bourgeois democracy which might be used by the working class in its struggle against the oppressors, why they are driving the Communist Parties underground and resorting to openly terrorist methods of maintaining their dictatorship.

    Chauvinism and preparation of war as the main elements of foreign policy; repression of the working class and terrorism in the sphere of home policy as a necessary means for strengthening the rear of future war fronts -- that is what is now particularly engaging the minds of contemporary imperialist politicians.

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    It is not surprising that fascism has now become the most fashionable commodity among war-mongering bourgeois politicians. I am referring not only to fascism in general, but, primarily, to fascism of the German type, which is wrongly called national-socialism -- wrongly because the most searching examination will fail to reveal even an atom of socialism in it.

    In this connection the victory of fascism in Germany must be regarded not only as a symptom of the weakness of the working class and a result of the betrayals of the working class by Social-Democracy, which paved the way for fascism; it must also be regarded as a sign of the weakness of the bourgeoisie, a sign that the bourgeoisie is no longer able to rule by the old methods of parliamentarism and bourgeois democracy, and, as a consequence, is compelled in its home policy to resort to terrorist methods of rule -- as a sign that it is no longer able to find a way out of the present situation on the basis of a peaceful foreign policy, and, as a consequence, is compelled to resort to a policy of war.

    Such is the situation.

    As you see, things are heading towards a new imperialist war as a way out of the present situation.

    Of course, there are no grounds for assuming that war can provide a real way out. On the contrary, it is bound to confuse the situation still more. More than that, it is sure to unleash revolution and jeopardize the very existence of capitalism in a number of countries, as happened in the course of the first imperialist war. And if, in spite of the experience of the first imperialist war, the bourgeois politicians clutch at war as a drowning man clutches at a straw, that shows that they have got into a hopeless muddle, have landed in an impasse, and are ready to rush headlong into the abyss.

page 683

    It is worth while, therefore, briefly to examine the plans for the organization of war which are now being hatched in the circles of bourgeois politicians.

    Some think that war should be organized against one of the great powers. They think of inflicting a crushing defeat upon that power and of improving their affairs at its expense. Let us assume that they organize such a war. What may be the result of that?

    As is well known, during the first imperialist war it was also intended to destroy one of the great powers, viz., Germany, and to profit at its expense. But what was the upshot of this? They did not destroy Germany; but they sowed in Germany such a hatred of the victors, and created such a rich soil for revenge, that even to this day they have not been able to clear up the revolting mess they made, and will not, perhaps, be able to do so for some time. On the other hand, the result they obtained was the smashing of capitalism in Russia, the victory of the proletarian revolution in Russia, and -- of course -- the Soviet Union. What guarantee is there that a second imperialist war will produce "better" results for them than the first? Would it not be more correct to assume that the opposite will be the case?

    Others think that war should be organized against a country that is weak in the military sense, but represents an extensive market -- for example, against China, which, it is claimed, cannot even be described as a state in the strict sense of the word, but is merely "unorganized territory" which needs to be seized by strong states. They evidently want to divide it up completely and improve their affairs at its expense. Let us assume that they organize such a war. What may be the result of that?

page 684

    It is well known that at the beginning of the nineteenth century Italy and Germany were regarded in the same light as China is today, i.e., they were considered "unorganized territories" and not states, and they were subjugated. But what was the result of that? As is well known, it resulted in wars for independence waged by Germany and Italy, and the unification of these countries into independent states. It resulted in increased hatred for the oppressors in the hearts of the peoples of these countries, the effects of which have not been removed to this day and will not, perhaps, be removed for some time. The question arises: What guarantee is there that the same thing will not result from a war of the imperialists against China?

    Still others think that war should be organized by a "superior race," say, the German "race," against an "inferior race," primarily against the Slavs; that only such a war can provide a way out of the situation, for it is the mission of the "superior race" to render the "inferior race" fruitful and to rule over it. Let us assume that this queer theory, which is as far removed from science as the sky from the earth, let us assume that this queer theory is put into practice. What may be the result of that?

    It is well known that ancient Rome looked upon the ancestors of the present-day Germans and French in the same way as the representatives of the "superior race" now look upon the Slav races. It is well known that ancient Rome treated them as an "inferior race," as "barbarians," destined to live in eternal subordination to the "superior race," to "great Rome", and, between ourselves be it said, ancient Rome had some grounds for this, which cannot be said of the representatives of the "superior race" of today. (Thunderous applause.) But what was the upshot of this? The upshot was that the

page 685

non-Romans, i.e., all the "barbarians," united against the common enemy and brought Rome down with a crash. The question arises: What guarantee is there that the claims of the representatives of the "superior race" of today will not lead to the same lamentable results? What guarantee is there that the fascist literary politicians in Berlin will be more fortunate than the old and experienced conquerors in Rome? Would it not be more correct to assume that the opposite will be the case?

    Finally, there are others who think that war should be organized against the U.S.S.R. Their plan is to defeat the U.S.S.R., divide up its territory, and profit at its expense. It would be a mistake to believe that it is only certain military circles in Japan who think in this way. We know that similar plans are being hatched in the circles of the political leaders of certain states in Europe. Let us assume that these gentlemen pass from words to deeds. What may be the result of that?

    There can hardly be any doubt that such a war would be the most dangerous war for the bourgeoisie. It would be the most dangerous war, not only because the peoples of the U.S.S.R. would fight to the death to preserve the gains of the revolution; it would be the most dangerous war for the bourgeoisie for the added reason that it would be waged not only at the fronts, but also in the enemy's rear. The bourgeoisie need have no doubt that the numerous friends of the working class of the U.S.S.R. in Europe and Asia will endeavour to strike a blow in the rear at their oppressors who have launched a criminal war against the fatherland of the working class of all countries. And let not Messieurs the bourgeoisie blame us if some of the governments near and dear to them, which

page 686

today rule happily "by the grace of God," are missing on the morrow after such a war. (Thunderous applause.)

    It is easy to understand how difficult it has been for the U.S.S.R. to pursue its peace policy in this atmosphere poisoned with the miasma of war schemes.

    In the midst of this eve-of-war frenzy which has affected a number of countries, the U.S.S.R. during these years has stood firmly and unshakably by its position of peace: fighting against the menace of war; fighting to preserve peace; meeting half-way those countries which in one way or another stand for the preservation of peace; exposing and tearing the masks from those who are preparing for and provoking war.

    What did the U.S.S.R. rely on in this difficult and complicated struggle for peace?

    a) On its growing economic and political might.

    b) On the moral support of the vast masses of the working class of all countries, who are vitally interested in the preservation of peace.

    c) On the prudence of those countries which for one motive or another are not interested in disturbing the peace, and which want to develop trade relations with such a punctual client as the U.S.S.R.

    d) Finally -- on our glorious army, which stands ready to defend our country against assaults from without.

    I pass to the question of the internal situation in the U.S.S.R. From the point of view of the internal situation in the U.S.S.R. the period under review presents a picture of ever increasing progress, both in the sphere of the national economy and in the sphere of culture.

    This progress has not been merely a simple quantitative accumulation of strength. This progress is remarkable in that it has introduced fundamental changes into the structure of the U.S.S.R., and has radically changed the face of the country.

    During this period, the U.S.S.R. has become radically transformed and has cast off the aspect of backwardness and mediaevalism. From an agrarian country it has become an industrial country. From a country of small individual agriculture it has become a country of collective, large-scale mechanized agriculture. From an ignorant, illiterate and uncultured country it has become -- or rather it is becoming -- a literate and cultured country covered by a vast network of higher, secondary and elementary schools functioning in the languages of the nationalities of the U.S.S.R.

page 695

    New industries have been created: the production of machine tools, automobiles, tractors, chemicals, motors, aircraft, harvester combines, powerful turbines and generators, high-grade steel, ferro-alloys, synthetic rubber, nitrates, artificial fibre, etc., etc. (Prolonged applause.)

    During this period thousands of new, fully up-to-date industrial plants have been built and put into operation. Giants like the Dnieprostroi, Magnitostroi, Kuznetskstroi, Chelyabstroi, Bobriki, Uralmashstroi and Krammashstroi have been built. Thousands of old plants have been reconstructed and provided with modern technical equipment. New plants have been built, and industrial centres created, in the national republics and in the border regions of the U.S.S.R.: in Byelorussia, in the Ukraine, in the North Caucasus, in Transcaucasia, in Central Asia, in Kazakhstan, in Buryat-Mongolia, in Tataria, in Bashkiria, in the Urals, in Eastern and Western Siberia, in the Far East, etc.

    More than 200,000 collective farms and 5,000 state farms have been organized, with new district centres and industrial centres serving them.

    New large towns, with large populations, have sprung up in what were almost uninhabited places. The old towns and industrial centres have grown enormously.

    The foundations have been laid for the Urals-Kuznetsk Combine, which unites the coking coal of Kuznetsk with the iron ore of the Urals. Thus, we may consider that the dream of a new metallurgical base in the East has become a reality.

    The foundations for a powerful new oil base have been laid in areas of the western and southern slopes of the Urals range -- in the Urals region, Bashkiria and Kazakhstan.

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    It is obvious that the huge capital investments of the state in all branches of the national economy, amounting in the period under review to over 60,000 million rubles, have not been spent in vain, and are already beginning to bear fruit.

    As a result of these achievements the national income of the U.S.S.R. has increased from 29,000 million rubles in 1929 to 50,000 million in 1933; whereas during the same period there has been an enormous decline in the national income of all the capitalist countries without exception.

    Naturally, all these achievements and all this progress were bound to lead -- and actually have led -- to the further consolidation of the internal situation in the U.S.S.R.

    How was it possible for these colossal changes to take place in a matter of three or four years on the territory of a vast state with a backward technique and a backward culture? Was it not a miracle? It would have been a miracle if this development had taken place on the basis of capitalism and individual small farming. But it cannot be described as a miracle if we bear in mind that this development took place on the basis of expanding socialist construction.

    Naturally, this enormous progress could take place only on the basis of the successful building of socialism; on the basis of the socially organized work of scores of millions of peoples; on the basis of the advantages which the socialist system of economy has over the capitalist and individual peasant system.

    It is not surprising, therefore, that the colossal progress in the economy and culture of the U.S.S.R. during the period under review has at the same time meant the elimination of the capitalist elements and the relegation of individual peas-

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ant economy to the background. It is a fact that the socialist system of economy in the sphere of industry now constitutes 99 per cent of the total; and in agriculture, according to the area sown to grain crops, it constitutes 84.5 per cent of the total, whereas individual peasant economy accounts for only 15.5 per cent.

    It follows, then, that capitalist economy in the U.S.S.R. has already been eliminated and that the individual peasant sector in the countryside has been relegated to a secondary position.

    Of all branches of our national economy, the one that has grown most rapidly is industry. During the period under review, i.e., beginning with 1930, our industry has more than doubled, namely, it has increased by 101.6 per cent; and compared with the pre-war level it has grown almost four-fold, namely, by 291.9 per cent.

    This means that our industrialization has been going ahead at full speed.

    As a result of the rapid growth of industrialization the output of industry has advanced to first place in the gross output of the whole national economy.

    Here is the corresponding table:

    This means that our country has definitely and finally become an industrial country.

page 699

    Of decisive significance for the industriali~ation of the country is the growth of the output of instruments and means of production in the total development of industry. The figures for the period under review show that this item has become predominant in the gross output of industry.

    Here is the corresponding table:

    As you see, this table requires no explanation.

    In our country, which is still young as regards technical development, industry has a special task to fulfil. It must re-

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construct on a new technical basis not only itself, not only all branches of industry, including light industry, the food industry, and the timber industry; it must also reconstruct all forms of transport and all branches of agriculture. It can fulfil this task, however, only if the machine-building industry -- which is the main lever for the reconstruction of the national economy -- occupies a predominant place in it. The figures for the period under review show that our machine-building industry has advanced to the leading place in the total volume of industrial output.

    Here is the corresponding table:

page 701

    This means that our industry is developing on a sound foundation, and that the key to reconstruction -- the machine building industry -- is entirely in our hands. All that is required is that we use it skilfully and rationally.

    The development of industry according to social sectors during the period under review present an interesting picture.

    Here is the corresponding table:

page 702

    From this table it is evident that the capitalist elements in industry have already come to an end and that the socialist system of economy is now the sole system, holding a position of monopoly, in our industry. (Applause.)

    However, of all the achievements of industry in the period under review the most important is the fact that it has succeeded in this period in training and moulding thousands of new men and women, of new leaders of industry, whole strata of new engineers and technicians, hundreds of thousands of young skilled workers who have mastered the new technique and who have advanced our socialist industry. There can be no doubt that without these men and women industry could not have achieved the successes it has achieved, and of which it has a right to be proud. The figures show that in the period under review about 800,000 more or less skilled workers have graduated into industry from factory training schools, and over 180,000 engineers and technicians from higher technical educational institutions, other higher educational institutions and technical schools. If it is true that the problem of cadres is a most important problem of our development, then it must be admitted that our industry is beginning really to cope with this problem.

    Such are the principal achievements of our industry.

    It would be wrong, however, to think that industry has only successes to record. No, it also has its defects. The chief of these are:

    a) The continuing lag of the iron and steel industry.

    b) The lack of order in the non-ferrous metals industry.

    c) The underestimation of the great importance of developing the mining of local coal for the general fuel supply of the

page 703

country (Moscow Region, the Caucasus, the Urals, Karaganda, Central Asia, Siberia, the Far East, the Northern Territory, etc.)

    d) The absence of proper attention to the question of organizing a new oil centre in areas of the Urals, Bashkiria, and the Emba.

    e) The absence of serious concern for expanding the production of goods for mass consumption both in the light and food industries and in the timber industry.

    f) The absence of proper attention to the question of developing local industry.

    g) An absolutely impermissible attitude towards the question of improving the quality of output.

    h) The continuing lag as regards increasing the productivity of labour, reducing the cost of production, and adopting business accounting.

    i) The fact that bad organization of work and wages, lack of personal responsibility in work, and wage equalization have not yet been eliminated.

    j) The fact that red-tape and bureaucratic methods of management in the economic People's Commissariats and their bodies, including the People's Commissariats of the light and food industries, are still far from having been eliminated.

    The absolute necessity for the speedy elimination of these defects scarcely needs any further explanation. As you know, the iron and steel and non-ferrous metals industries failed to fulfil their plan throughout the first five-year plan period; nor have they fulfilled the plan for the first year of the second five year plan period. If they continue to lag behind they may become a brake on industry and the cause of failures in its work. As to the creation of new centres of the coal and oil

page 704

industries, it is not difficult to understand that unless this urgent task is fulfilled both industry and transport may run aground. The question of goods for mass consumption and of developing local industry, as well as the questions of improving the quality of output, of increasing the productivity of labour, of reducing production costs, and of adopting business accounting also need no further explanation. As for the bad organization of work and wages, and red-tape and bureaucratic methods of management, the case of the Donbas and of the enterprises of the light and food industries has shown that this dangerous disease is to be found in all branches of industry and hinders their development. If it is not eliminated, industry will be in a bad way.

    Our immediate tasks are:

    1) To maintain the present leading role of machine building in the system of industry.

    2) To eliminate the lag of the iron and steel industry.

    3) To put the non-ferrous metals industries in order.

    4) To develop to the utmost the mining of local coal in all the areas already known; to develop new coal-fields (for example, in the Bureya district in the Far East), and to convert the Kuzbas into a second Donbas. (Prolonged applause.)

    5) Seriously to set about organizing a centre of the oil industry in the areas of the western and southern slopes of the Urals range.

    6) To expand the production of goods for mass consumption by all the economic People's Commissariats.

    7) To develop local Soviet industry; to give it the opportunity of displaying initiative in the production of goods for mass consumption and to give it all possible assistance in the way of raw materials and funds.

page 705

    8) To improve the quality of the goods produced; to stop turning out incomplete sets of goods, and to punish all those comrades, irrespective of their post, who violate or evade Soviet laws concerning the quality and completeness of sets of goods.

    9) To secure a systematic increase in the productivity of labour, a reduction in production costs, and the adoption of business accounting.

    10) To put an end to lack of personal responsibility in work and to wage equalization.

    11) To eliminate red-tape and bureaucratic methods of management in all the departments of the economic Commissariats, and to check systematically the fulfilment of the decisions and instructions of the directing centres by the subordinate bodies.

    Development in the sphere of agriculture has proceeded somewhat differently. In the period under review progress in the main branches of agriculture proceeded many times more slowly than in industry, but nevertheless more rapidly than in the period when individual farming predominated. In live stock farming, however, there was even a reverse process -- a decline in the number of livestock, and it was only in 1933, and then only in pig breeding, that signs of progress were observed.

    Evidently, the enormous difficulties of uniting the scattered small peasant farms into collective farms, the difficult task of creating a large number of big grain and livestock farms,

page 706

starting almost from nothing, and, in general, the period of reorganization, when individual agriculture was being remodelled and transferred to the new, collective-farm basis, which required much time and considerable outlay -- all these factors inevitably predetermined both the slow rate of progress of agriculture, and the relatively long period of decline in the number of livestock.

    In point of fact, in agriculture the period under review was not so much one of rapid progress and powerful upswing as one during which the conditions were created for such a progress and upswing in the near future.

    If we take the figures for the increase in the area under all crops, and separately the figures for industrial crops, we get the following picture of the development of agriculture during the period under review.

page 707

    These tables reflect the two main lines in agriculture:

    1) The line of the greatest possible expansion of crop areas in the period when the reorganization of agriculture was at its height, when collective farms were being formed in tens of thousands and were driving the kulaks from the land, seizing the vacated land and taking charge of it.

    2) The line of refraining from wholesale expansion of crop areas; the line of passing from wholesale expansion of crop areas to improved cultivation of the land, to the introduction of proper rotation of crops and fallow, to an increase of the harvest yield and, if shown to be necessary in practice, to a temporary reduction of crop areas.

    As you know, the second line -- the only correct line in agriculture -- was proclaimed in 1932, when the period of reorganization in agriculture was drawing to a close and the question of increasing the harvest yield became one of the fundamental questions of the progress of agriculture.

    But the data on the growth of the crop areas cannot be regarded as a fully adequate indication of the development of agriculture. It sometimes happens that while the crop area increases, output does not increase, or even declines, because

page 708

cultivation of the soil has deteriorated, and the yield per hectare has fallen. In view of this, data on crop areas must be supplemented by data on gross output. Here is the corresponding table:

    It can be seen from this table that the years in which the reorganization of agriculture was at its height, viz., 1931 and 1932, were the years of the greatest decrease in the output of grain crops.

    It follows, further, from this table that in the flax and cotton areas, where the reorganization of agriculture proceeded at a slower pace, flax and cotton hardly suffered, and progressed more or less evenly and steadily, while maintaining a high level of development.

    Thirdly, it follows from this table that whereas there was only a slight fluctuation in the output of oil seeds, and a high level of development was maintained as compared with the pre-war level, in the sugar-beet districts, where the reorganization of agriculture proceeded at the most rapid rate, sugar beet farming, which was the last to enter the period of reorganization, suffered its greatest decline in the last year of reorgan-

page 709

ization, viz., in 1932, when output dropped below the pre-war level.

    Lastly, it follows from this table that 1933, the first year after the completion of the reorganization period, marks a turning-point in the development of grain and industrial crops.

    This means that from now on grain crops, in the first place, and then industrial crops, will firmly and surely achieve a mighty advance.

    The branch of agriculture that suffered most in the reorganization period was livestock farming.

    Here is the corresponding table:

    It can be seen from this table that in the period under review there was not an improvement, but a continual decline in the quantity of livestock in the country as compared with the pre-war level. It is obvious that this table reflects, on the one hand, the fact that livestock farming was most of all dominated by big kulak elements, and, on the other hand, the intense kulak agitation for the slaughter of livestock, which found favourable soil in the years of reorganization.

page 710

    Furthermore, it follows from this table that the decline in the number of livestock began in the very first year of reorganization (1930) and continued right up to 1933. The decline was greatest in the first three years; while in 1933, the first year after the termination of the period of reorganization, when the grain crops began to make progress, the decline in the number of livestock reached a minimum.

    Lastly, it follows from this table that the reverse process has already commenced in pig breeding, and that in 1933 signs of direct progress were already seen.

    This means that the year 1934 can and must mark a turning point towards progress in all branches of livestock farming.

    How did the collectivization of peasant farms develop in the period under review?

    Here is the corresponding table:

    And what was the development as regards the areas under grain crops according to sectors?

    Here is the corresponding table:

page 711

    What do these tables show?

    They show that the period of reorganization in agriculture, during which the number of collective farms and the number of their members increased at a tempestuous pace, is now ended, that it was already ended in 1932. Hence, the further process of collectivization is a process of the gradual absorption and re-education of the remaining individual peasant farms and farmers by the collective farms.

    This means that the collective farms have triumphed completely and irrevocably. (Stormy and prolonged applause.)

    They show also that the state farms and collective farms together control 84.5 per cent of the total area under grain in the U.S.S.R.

    This means that the collective farms and state farms to gether have become a force which determines the fate of the whole of agriculture and of all its branches.

page 712

    The tables further show that the 65 per cent of peasant farms united in collective farms control 73.9 per cent of the total area under grain crops, whereas all the individual peasant farms that remain, representing 35 per cent of the entire peasant population, control only 15.5 per cent of the total area under grain crops.

    If we add to this fact that in 1933 the various deliveries to the state made by the collective farms amounted to more than 1,000 million poods of grain, while the individual peasants, who fulfilled their plan 100 per cent, delivered only about 130 million poods; whereas in 1929-30 the individual peasants delivered to the state about 780 million poods, and the collective farms not more than 120 million poods -- then it becomes absolutely clear that during the period under review the collective farms and the individual peasants have completely exchanged roles: the collective farms during this period have become the predominant force in agriculture, whereas the individual peasants have become a secondary force and are compelled to subordinate and adapt themselves to the collective-farm system.

    It must be admitted that the labouring peasantry, our Soviet peasantry, has completely and irrevocably taken its stand under the Red banner of socialism. (Prolonged applause.)

    Let the Socialist-Revolutionary, Menshevik, and bourgeois Trotskyite gossips chatter about the peasantry being counter-revolutionary by nature, about its mission to restore capitalism in the U.S.S.R., about its inability to serve as the ally of the working class in building socialism, and about the impossibility of building socialism in the U.S.S.R. The facts show that these gentlemen slander the U.S.S.R. and the Soviet peasantry. The facts show that our Soviet peasantry has quit the shores of capitalism for good and is going forward, in alliance with

page 713

the working class, to socialism. The facts show that we have already laid the foundations of a socialist society in the U.S.S.R., and it only remains for us to erect the superstructures -- a task which undoubtedly is much easier than that of laying the foundations of a socialist society.

    The increase in crop area and in output is not the only thing, however, that reflects the strength of the collective farms and state farms. Their strength is reflected also in the increase in the number of tractors at their disposal, in their increasing use of machinery. There is no doubt that in this respect our collective farms and state farms have gone a long way forward.

    Here is the corresponding table:

page 714

    We have thus depicted the situation of our industry and agriculture, their development during the period under review and their state at the present moment.

    To sum up, we have:

    a) A mighty advance in production both in industry and in the main branches of agriculture.

    b) The final victory, on the basis of this advance, of the socialist system of economy over the capitalist system both in industry and in agriculture; the socialist system has become the sole system in the whole of the national economy, and the capitalist elements have been ousted from all spheres of the national economy.

    c) The final abandonment of small-commodity individual farming by the overwhelming majority of the peasants; their uniting in collective farms on the basis of collective labour and collective ownership of the means of production; the complete victory of collective farming over small-commodity individual farming.

    d) An ever-increasing process of expansion of the collective farms through the absorption of individual peasant farms, which are thus diminishing in number month by month and are, in fact, being converted into an auxiliary force for the collective farms and state farms.

    Naturally, this historic victory over the exploiters could not but lead to a radical improvement in the material standard of the working people and in their conditions of life generally.

page 722

    The elimination of the parasitic classes has led to the disappearance of the exploitation of man by man. The labour of the worker and the peasant is freed from exploitation. The incomes which the exploiters used to squeeze out of the labour of the people now remain in the hands of the working people and are used partly for the expansion of production and the enlistment of new detachments of working people in production, and partly for directly increasing the incomes of the workers and peasants.

    Unemployment, that scourge of the working class, has disappeared. In the bourgeois countries millions of unemployed suffer want and privation owing to lack of work, whereas in our country there are no longer any workers who have no work and no earnings.

    With the disappearance of kulak bondage, poverty in the countryside has disappeared. Every peasant, whether a collective farmer or an individual farmer, now has the opportunity of living a human existence, provided only that he wants to work conscientiously and not to be a loafer, a tramp, or a despoiler of collective-farm property.

    The abolition of exploitation, the abolition of unemployment in the towns, and the abolition of poverty in the countryside are historic achievements in the material condition of the working people that are beyond even the dreams of the workers and peasants even in the most "democratic" of the bourgeois countries.

    The very appearance of our large towns and industrial centres has changed. An inevitable feature of the big towns in bourgeois countries is the slums, the so-called working-class districts on the outskirts of the towns -- a heap of dark, damp and dilapidated dwellings, mostly of the basement type, where usually the poor live in filth and curse their fate. The revolu-

page 723

tion in the U.S.S.R. has meant the disappearance of such slums. They have been replaced by blocks of bright and well-built workers' houses; in many cases the working-class districts of our towns present a better appearance than the centre of the town.

    The appearance of the countryside has changed even more. The old type of village, with the church in the most prominent place, with the best houses -- those of the police officer, the priest, and the kulaks -- in the foreground, and the dilapidated huts of the peasants in the background, is beginning to disappear. Its place is being taken by the new type of village, with its public farm buildings, with its clubs, radio, cinemas, schools, libraries and crèches ; with its tractors, harvester combines, threshing machines and automobiles. The former important personages of the village, the kulak-exploiter, the blood-sucking usurer, the merchant-speculator, the "little father" police officer, have disappeared. Now, the prominent personages are the leading people of the collective farms and state farms, of the schools and clubs, the senior tractor and combine drivers, the brigade leaders in field work and livestock raising, and the best men and women shock brigaders on the collective-farm fields.

    The antithesis between town and country is disappearing. The peasants are ceasing to regard the town as the centre of their exploitation. The economic and cultural bond between town and country is becoming stronger. The country now receives assistance from the town and from urban industry in the shape of tractors, agricultural machinery, automobiles, workers, and funds. And the countryside itself now has its own industry, in the shape of the machine and tractor stations, repair shops, all sorts of industrial undertakings of the collective

page 724

farms, small electric power stations, etc. The cultural gulf between town and country is being bridged.

    Such are the principal achievements of the working people in the sphere of improving their material conditions, their everyday life, and their cultural standard.

    On the basis of these achievements we have the following to record for the period under review:

    a) An increase in the national income from 35,000 million rubles in 1930 to 50,000 million rubles in 1933. In view of the fact that the income of the capitalist elements, including concessionaires, at the present time constitutes less than one half of one per cent of the total national income, almost the whole of the national income is distributed among the workers and other employees, the labouring peasants, the co-operatives, and the state.

    b) An increase in the population of the Soviet Union from 160,500,000 at the end of 1930 to 168,000,000 at the end of 1933.

    c) An increase in the number of workers and other employees from 14,530,000 in 1930 to 21,883,000 in 1933. The number of manual workers increased during this period from 9,489,000 to 13,797,000; the number of workers employed in large-scale industry, including transport, increased from 5,079,000 to 6,882,000; the number of agricultural workers increased from 1,426,000 to 2,519,000, and the number of workers and other employees engaged in trade increased from 814,000 to 1,497,000.

    d) An increase in the total of the wages paid to workers and other employees from 13,597 million rubles in 1930 to 34,280 million rubles in 1933.

    e) An increase in the average annual wages of industrial workers from 991 rubles in 1930 to 1,519 rubles in 1933.

page 725

    f) An increase in the social insurance fund for workers and other employees from 1,810 million rubles in 1930 to 4,610 million rubles in 1933.

    g) The adoption of a seven-hour working day in all surface industries.

    h) State aid to the peasants by the organization of 2,860 machine and tractor stations, involving an investment of 2,000 million rubles.

    i) State aid to the peasants in the form of credits to the collective farms amounting to 1,600 million rubles.

    j) State aid to the peasants in the form of seed and food loans amounting in the period under review to 262 million poods of grain.

    k) State aid to the economically weaker peasants in the shape of relief from taxation and insurance payments amounting to 370 million rubles.

    As regards the cultural development of the country, we have the following to record for the period under review:

    a) The introduction of universal compulsory elementary education throughout the U.S.S.R., and an increase in literacy among the population from 67 per cent at the end of 1930 to 90 per cent at the end of 1933.

    b) An increase in the number of pupils and students at schools of all grades from 14,358,000 in 1929 to 26,419,000 in 1933, including an increase from 11,697,000 to 19,163,000 in the number receiving elementary education, from 2,453,000 to 6,674,000 in the number receiving secondary education, and from 207,000 to 491,000 in the number receiving higher education.

    c) An increase in the number of children receiving pre-school education from 838,000 in 1929 to 5,917,000 in 1933.

page 726

    d) An increase in the number of higher educational institutions, general and special, from 91 in 1914 to 600 in 1933.

    e) An increase in the number of scientific research institutes from 400 in 1929 to 840 in 1933.

    f) An increase in the number of clubs and similar institutions from 32,000 in 1929 to 54,ooo in 1933.

    g) An increase in the number of cinemas, cinema installations in clubs, and mobile cinemas, from 9,800 in 1929 to 29,200 in 1933.

    h) An increase in the circulation of newspapers from 12,500,000 in 1929 to 36,500,000 in 1933.

    Perhaps it will not be amiss to point out that the proportion of workers among the students in our higher educational institutions is 51.4 per cent of the total, and that of labouring peasants 16.5 per cent; whereas in Germany, for instance, the proportion of workers among the students in higher educational institutions in 1932-33 was only 3.2 per cent of the total, and that of small peasants only 2.4 per cent.

    We must note as a gratifying fact and as an indication of the progress of culture in the countryside, the increased activity of the women collective farmers in social and organizational work. We know, for example, that about 6,000 women collective farmers are chairmen of collective farms, more than 60,000 are members of management boards of collective farms, 28,000 are brigade leaders, 100,000 are team organizers, 9,000 are managers of collective-farm marketable livestock sectors, and 7,000 are tractor drivers.

    Needless to say, these figures are incomplete; but even these figures quite clearly show the great progress of culture in the countryside. This fact, comrades, is of tremendous significance. It is of tremendous significance because women form half the population of our country; they constitute a huge army of

page 727

workers; and they are called upon to bring up our children, our future generation, that is to say, our future. That is why we must not permit this huge army of working people to remain in darkness and ignorance! That is why we must welcome the growing social activity of the working women and their promotion to leading posts as an indubitable sign of the growth of our culture. (Prolonged applause.)

    Finally, I must point out one more fact, but of a negative character. I have in mind the intolerable fact that our pedagogical and medical faculties are still being neglected. This is a great defect bordering on violation of the interests of the state. This defect must be remedied without fail, and the sooner the better.

    Thus we have:

    a) An increase in the output of industry, including goods for mass consumption.

    b) An increase in the output of agriculture.

    c) A growth in the requirements and the demand for produce and manufactured goods on the part of the masses of the working people of town and country.

    What more is needed to co-ordinate these conditions and to ensure that the entire mass of consumers receives the necessary goods and produce?

    Some comrades think that these conditions alone are sufficient for the economic life of the country to go full steam ahead. That is a profound delusion. We can imagine a situation in which all these conditions exist; yet if the goods do not reach the consumers, economic life -- far from going full steam ahead -- will, on the contrary, be dislocated and disorganized

page 728

to its foundations. It is high time we realized that in the last analysis goods are produced not for the sake of producing them, but for consumption. Cases have occurred where we have had quite a quantity of goods and produce, but they have not only not reached the consumers, they have continued for years to wander in the bureaucratic backwaters of our so-called commodity-distribution network, at a distance from the consumers. Naturally, under these circumstances industry and agriculture lost all stimulus to increase production; the commodity-distribution network became overstocked, while the workers and peasants had to go without these goods and produce. The result was a dislocation of the economic life of the country, despite the existence of the goods and produce. If the economic life of the country is to go full steam ahead, and industry and agriculture are to have a stimulus for further in creasing their output, one more condition is necessary, namely, well-developed trade turnover between town and country, between the various districts and regions of the country, between the various branches of the national economy. The country must be covered with a vast network of wholesale distribution bases, shops and stores. There must be a ceaseless flow of goods through these bases, shops and stores from the producer to the consumer. The state trading system, the co-operative trading system, the local industries, the collective farms, and the individual peasants must be drawn into this work.

    This is what we call fully developed Soviet trade, trade without capitalists, trade without speculators.

    As you see, the expansion of Soviet trade is a very urgent problem, which must be solved or further progress will be rendered impossible.

page 729

    And yet, in spite of the fact that this truth is perfectly obvious, in the period under review the Party has had to over come a number of obstacles to the expansion of Soviet trade which could briefly be described as the result of an aberration of the brain among a section of Communists on questions of the necessity and importance of Soviet trade.

    To begin with, there is still among a section of Communists a supercilious, disdainful attitude towards trade in general, and towards Soviet trade in particular. These Communists, so-called, look upon Soviet trade as a matter of secondary importance, not worth bothering about, and those engaged in trade as being quite hopeless. Evidently, these people do not realize that their supercilious attitude towards Soviet trade is not an expression of Bolshevik views, but rather of the views of impoverished aristocrats who are full of ambition but lack ammunition. (Applause.) These people do not realize that Soviet trade is our own, Bolshevik work, and that those employed in trade, including those behind the counter -- if only they work conscientiously -- are doing our revolutionary, Bolshevik work. (Applause.) It goes without saying that the Party had to give those Communists, so-called, a slight dressing down and throw their aristocratic prejudices on the rubbish heap. (Prolonged applause.)

    Further, we had to overcome prejudices of another kind. I have in mind the Leftist chatter current among a section of our functionaries to the effect that Soviet trade is a superseded stage; that it is necessary to organize the direct exchange of products; that money will soon be abolished, because it has become mere tokens; that it is unnecessary to develop trade,

page 730

since the direct exchange of products is knocking at the door. It must be observed that this Leftist petty-bourgeois chatter, which plays into the hands of the capitalist elements who are striving to sabotage the expansion of Soviet trade, is current not only among a section of our "Red professors," but also among certain of our trading personnel. Of course, it is ridiculous and funny to hear these people, who are incapable of organizing the very simple business of Soviet trade, chatter about their readiness to organize the more complicated and difficult business of a direct exchange of products. But Don Quixotes are called Don Quixotes precisely because they lack the most elementary sense of reality. These people, who are as far removed from Marxism as the sky from the earth, evidently do not realize that we shall use money for a long time to come, right up to the time when the first stage of communism, i.e., the socialist stage of development, has been completed. They do not realize that money is the instrument of bourgeois economy which the Soviet government has taken over and adapted to the interests of socialism for the purpose of expanding Soviet trade to the utmost, and so preparing the conditions necessary for the direct exchange of products. They do not realize that the direct exchange of products can replace, and be the result of, only a perfectly organized system of Soviet trade, of which we have not a trace as yet, and shall not have for some time. Naturally, in trying to organize developed Soviet trade, our Party found it necessary to give a dressing down to these "Left" freaks as well, and to scatter their petty-bourgeois chatter to the winds.

    Further, we had to overcome among the people in charge of trade the unhealthy habit of distributing goods mechanically;

page 731

we had to put a stop to their indifference to the demand for a greater range of goods and to the requirements of the consumers; we had to put an end to the mechanical consignment of goods, to lack of personal responsibility in trade. For this purpose, regional and inter-district wholesale distribution bases and tens of thousands of new shops and booths were opened.

    Further, we had to put an end to the monopoly position of the co-operatives in the market. In this connection we instructed all the People's Commissariats to start trade in the goods manufactured by the industries under their control; and the People's Commissariat of Supplies was instructed to develop an extensive open trade in agricultural produce. This has led, on the one hand, to an improvement in co-operative trade through emulation, and, on the other hand, to a drop in market prices and to sounder conditions in the market.

    A wide network of dining-rooms was established which provide food at reduced prices ("public catering"). Workers' Supply Departments were set up in the factories, and all those who had no connection with the factory were taken off the supply list; in the factories under the control of the People's Commissariat of Heavy Industry alone, no less than 500,000 such persons had to be removed from the list.

    We have organized a single centralized bank for short-term credit -- the State Bank, with its 2,200 district branches capable of financing trade operations.

    As a result of these measures we have the following to record for the period under review:

    a) An increase in the number of shops and trading booths from 184,662 in 1930 to 277,974 in 1933.

page 732

    b) A newly created network of regional wholesale distribution bases, numbering 1,011, and inter-district wholesale distribution bases, numbering 864.

    c) A newly created network of Workers' Supply Departments, numbering 1,600.

    d) An increase in the network of shops for non-rationed sale of bread, which now exist in 330 towns.

    e) An increase in the number of public dining-rooms, which at the present time cater for 19,800,000 consumers.

    f) An increase in state and co-operative trade turnover, including public dining-rooms, from 18,900 million rubles in 1930 to 49,000 million rubles in 1933.

    It would be a mistake, however, to think that all this expansion of Soviet trade is sufficient to satisfy the requirements of our economy. On the contrary, it is now becoming clearer than ever that the present state of trade turnover cannot satisfy our requirements. Hence, the task is to develop Soviet trade still further, to draw local industry into this work, to increase collective-farm and peasant trade, and to achieve new and decisive successes in the sphere of increasing Soviet trade.

    It must be pointed out, however, that we cannot restrict ourselves merely to the expansion of Soviet trade. While the development of our economy depends upon the development of the trade turnover, upon the development of Soviet trade, the development of Soviet trade, in its turn, depends upon the development of our transport, both rail and water transport, and motor transport. It may happen that goods are available, that all the possibilities exist for expanding trade turnover, but transport cannot keep up with the development of trade turnover and refuses to carry the freight. As you know, this happens rather often. Hence, transport is the weak spot which may be a stumbling-block, and indeed is perhaps already begin-

page 733

ning to be a stumbling-block to the whole of our economy and, above all, to our trade turnover.

    It is true that railway transport has increased its freight turnover from 133,900 million ton-kilometres in 1930 to 172,000 million ton-kilometres in 1933. But that is too little, far too little for us, for our economy.

    Water transport has increased its freight turnover from 45,600 million ton-kilometres in 1930 to 59,900 million ton-kilometres in 1933. But that is too little, far too little for our economy.

    I say nothing of motor transport, in which the number of automobiles (lorries and passenger cars) has increased from 8,800 in 1913 to 117,800 at the end of 1933. That is so little for our national economy that one is ashamed even to mention it.

    There can be no doubt that all these forms of transport could work much better if the transport system did not suffer from the well-known disease called bureaucratic red-tape methods of management. Hence, besides the need to help transport by providing personnel and means, our task is to root out the bureaucratic red-tape attitude in the administration departments of the transport system and to make them more efficient.

    Comrades, we have succeeded in solving correctly the main problems of industry, which is now standing firmly on its feet. We have also succeeded in solving correctly the main problems of agriculture, and we can say quite definitely that agriculture also is now standing firmly on its feet. But we are in danger of losing all these achievements if our trade turnover begins to be defective and if transport becomes a fetter on our feet. Hence, the task of expanding trade turnover and of decisively improving transport is an immediate and urgent problem which must be solved or we cannot go forward.

page 734

    I pass to the question of the Party.

    The present congress is taking place under the flag of the complete victory of Leninism, under the flag of the liquidation of the remnants of the anti-Leninist groups.

    The anti-Leninist group of Trotskyites has been smashed and scattered. Its organizers are now to be found in the backyards of the bourgeois parties abroad.

    The anti-Leninist group of the Right deviators has been smashed and scattered. Its organizers have long ago renounced their views and are now trying in every way to expiate the sins they committed against the Party.

    The groups of nationalist deviators have been smashed and scattered. Their organizers have either completely merged with the interventionist émigrés, or else they have recanted.

    Does this mean, however, that the fight is ended, and that the offensive of socialism is to be discontinued as superfluous?

    No, it does not.

    Does it mean that all is well in our Party, that there will be no more deviations in the Party, and that, therefore, we may now rest on our laurels?

    No, it does not.

    We have smashed the enemies of the Party, the opportunists of all shades, the nationalist deviators of all kinds. But remnants of their ideology still live in the minds of individual members of the Party, and not infrequently they find expression. The Party must not be regarded as something isolated from the people who surround it. It lives and works in its environment. It is not surprising that at times unhealthy moods penetrate into the Party from outside. And the ground for such moods undoubtedly exists in our country, if only for the reason that there still exist in town and country certain intermediary strata

page 736

    I have spoken of our successes. I have spoken of the victory of the Party line in the sphere of the national economy and of culture, and also in the sphere of overcoming anti-Leninist groups in the Party. I have spoken of the historic significance of our victory. But this does not mean that we have achieved victory everywhere and in all things, and that all questions have already been settled. Such successes and such victories do not occur in real life. We still have plenty of unsolved problems and defects of all sorts. Ahead of us is a host of problems demanding solution. But it does undoubtedly mean that the greater part of the urgent and immediate problems has already been successfully solved, and in this sense the very great victory of our Party is beyond doubt.

page 751

    But here the question arises: How was this victory brought about, how was it actually achieved, as the result of what fight, as the result of what efforts?

    Some people think that it is sufficient to draw up a correct Party line, proclaim it for all to hear, state it in the form of general theses and resolutions, and have it voted for unanimously, for victory to come of itself, automatically, as it were. That, of course, is wrong. It is a gross delusion. Only incorrigible bureaucrats and red-tapists can think so. As a matter of fact, these successes and victories did not come automatically, but as the result of a fierce struggle for the application of the Party line. Victory never comes of itself -- it is usually won by effort. Good resolutions and declarations in favour of the general line of the Party are only a beginning; they merely express the desire for victory, but not the victory itself. After the correct line has been laid down, after a correct solution of the problem has been found, success depends on how the work is organized; on the organization of the struggle for carrying out the Party line; on the proper selection of personnel; on checking upon the fulfilment of the decisions of the leading bodies. Other wise the correct line of the Party and the correct solutions are in danger of being seriously prejudiced. More than that, after the correct political line has been laid down, organizational work decides everything, including the fate of the political line itself, its success or failure.

    As a matter of fact, victory was achieved and won by a systematic and fierce struggle against all sorts of difficulties in the way of carrying out the Party line; by overcoming these difficulties; by mobilizing the Party and the working class for the task of overcoming the difficulties; by organizing the struggle to overcome the difficulties; by removing inefficient

page 752

executives and choosing better ones, capable of waging the struggle against difficulties.

    What are these difficulties; and where do they lie?

    They are difficulties of our organizational work, difficulties of our organizational leadership. They lie in ourselves, in our leading people, in our organizations, in the apparatus of our Party, Soviet, economic, trade-union, Young Communist League and all other organizations.

    We must realize that the strength and prestige of our Party and Soviet, economic and all other organizations, and of their leaders, have grown to an unprecedented degree. And precisely because their strength and prestige have grown to an unprecedented degree, it is their work that now determines everything, or nearly everything. There can be no justification for references to so-called objective conditions. Now that the correctness of the Party's political line has been confirmed by the experience of a number of years, and that there is no longer any doubt as to the readiness of the workers and peasants to support this line, the part played by so-called objective conditions has been reduced to a minimum; whereas the part played by our organizations and their leaders has become decisive, exceptional. What does this mean? It means that from now on nine-tenths of the responsibility for the failures and defects in our work rest, not on "objective" conditions, but on ourselves, and on ourselves alone.

    We have in our Party more than 2 million members and candidate members. In the Young Communist League we have more than 4 million members and candidate members. We have over 3 million worker and peasant correspondents. The Society for the Promotion of Air and Chemical Defence has more than 12 million members. The trade unions have a membership of over 17 million. It is to these organizations that we

page 753

are indebted for our successes. And if, in spite of the existence of such organizations and of such possibilities, which facilitate the achievement of successes, we still have quite a number of shortcomings in our work and not a few failures, then it is only we ourselves, our organizational work, our bad organizational leadership, that are to blame for this.

    Bureaucracy and red tape in the administrative apparatus; idle chatter about "leadership in general" instead of real and concrete leadership; the functional structure of our organizations and lack of individual responsibility; lack of personal responsibility in work, and wage equalization; the absence of a systematic check on the fulfilment of decisions; fear of self-criticism -- these are the sources of our difficulties; this is where our difficulties now lie.

    It would be naïve to think that these difficulties can be overcome by means of resolutions and decisions. The bureaucrats and red-tapists have long been past masters in the art of demonstrating their loyalty to Party and Government decisions in words, and pigeon-holing them in deed. In order to overcome these difficulties it was necessary to put an end to the disparity between our organizational work and the requirements of the political line of the Party; it was necessary to raise the level of organizational leadership in all spheres of the national economy to the level of political leadership; it was necessary to see to it that our organizational work ensured the practical realization of the political slogans and decisions of the Party.

    In order to overcome these difficulties and achieve success it was necessary to organize the struggle to eliminate them; it was necessary to draw the masses of the workers and peasants into this struggle; it was necessary to mobilize the Party itself; it was necessary to purge the Party and the economic organizations of unreliable, unstable and degenerate elements.

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    What was needed for this? We had to organize:

    1) Full development of self-criticism and exposure of short comings in our work.

    2) The mobilization of the Party, Soviet, economic, trade union, and Young Communist League organizations for the struggle against difficulties.

    3) The mobilization of the masses of the workers and peasants to fight for the application of the slogans and decisions of the Party and of the Government.

    4) Full development of emulation and shock-brigade work among the working people.

    5) A wide network of Political Departments of machine and tractor stations and state farms and the bringing of the Party and Soviet leadership closer to the villages.

    6) The subdivision of the People's Commissariats, chief boards, and trusts, and the bringing of economic leadership closer to the enterprises.

    7) The abolition of lack of personal responsibility in work and the elimination of wage equalization.

    8) The elimination of the "functional system," the extension of individual responsibility, and a policy aiming at the abolition of collegium management.

    9) Stronger checking on the fulfilment of decisions, and a policy aiming at the reorganization of the Central Control Commission and the Workers' and Peasants' Inspection with a view to the further strengthening of checks on the fulfilment of decisions.

    10) The transfer of skilled personnel from offices to posts closer to production.

    11) The exposure and expulsion from the administrative apparatus of incorrigible bureaucrats and red-tapists.

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    12) The removal from their posts of people who violate the decisions of the Party and the Government, of "window dressers" and windbags, and the promotion to their place of new people -- business-like people, capable of concretely directing the work entrusted to them and of strengthening Party and Soviet discipline.

    13) The purging of Soviet and economic organizations and the reduction of their staffs.

    14) Lastly, the purging of the Party of unreliable and degenerate people.

    These, in the main, are the measures which the Party has had to adopt in order to overcome difficulties, to raise the level of our organizational work to that of political leadership, and thus ensure the application of the Party line.

    You know that it was precisely in this way that the Central Committee of the Party carried on its organizational work during the period under review.

    In this the Central Committee was guided by Lenin's brilliant thought that the chief thing in organizational work is selection of personnel and checking on fulfilment.

    In regard to selecting the right people and dismissing those who fail to justify the confidence placed in them, I should like to say a few words.

    Besides the incorrigible bureaucrats and red-tapists, as to whose removal there are no differences of opinion among us, there are two other types of executive who retard our work, hinder our work, and hold up our advance.

    One of these types of executive consists of people who rendered certain services in the past, people who have become big-wigs, who consider that Party decisions and Soviet laws are not written for them, but for fools. These are the people who do not consider it their duty to fulfil the decisions of the

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Party and of the Government, and who thus destroy the foundations of Party and state discipline. What do they count upon when they violate Party decisions and Soviet laws? They presume that the Soviet government will not venture to touch them, because of their past services. These overconceited big-wigs think that they are irreplaceable, and that they can violate the decisions of the leading bodies with impunity. What is to be done with executives of this kind? They must unhesitatingly be removed from their leading posts, irrespective of past services. (Voices : "Quite right!") They must be demoted to lower positions and this must be announced in the press. (Voices : "Quite right!") This is essential in order to bring those conceited big-wig bureaucrats down a peg or two, and to put them in their proper place. This is essential in order to strengthen Party and Soviet discipline in the whole of our work. (Voices : "Quite right!" Applause.)

    And now about the second type of executive. I have in mind the windbags, I would say honest windbags (laughter ), people who are honest and loyal to the Soviet power, but who are incapable of leadership, incapable of organizing anything. Last year I had a conversation with one such comrade, a very respected comrade, but an incorrigible windbag, capable of drowning any live undertaking in a flood of talk. Here is the conversation:

    I : How are you getting on with the sowing?

    He : With the sowing, Comrade Stalin? We have mobilized ourselves. (Laughter.)

    I : Well, and what then?

    He : We have put the question squarely. (Laughter.)

    I : And what next?

    He : There is a turn, Comrade Stalin; soon there will be a turn. (Laughter.)

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    I : But still?

    He : We can see an indication of some improvement. (Laughter.)

    I : But still, how are you getting on with the sowing?

    He : So far, Comrade Stalin, we have not made any headway with the sowing. (General laughter.)

    There you have the portrait of the windbag. They have mobilized themselves, they have put the question squarely, they have a turn and some improvement, but things remain as they were.

    This is exactly how a Ukrainian worker recently described the state of a certain organization when he was asked whether that organization had any definite line: "Well," he said, "as to a line . . . they have a line all right, but they don't seem to be doing any work." (General laughter.) Evidently that organization also has its honest windbags.

    And when such windbags are dismissed from their posts and are given jobs far removed from operative work, they shrug their shoulders in perplexity and ask: "Why have we been dismissed? Did we not do all that was necessary to get the work done? Did we not organize a rally of shock brigaders? Did we not proclaim the slogans of the Party and of the Government at the conference of shock brigaders? Did we not elect the whole of the Political Bureau of the Central Committee to the Honorary Presidium? (General laughter.) Did we not send greetings to Comrade Stalin -- what more do you want of us?" (General laughter.)

    What is to be done with these incorrigible windbags? Why, if they were allowed to remain on operative work they are capable of drowning every live undertaking in a flood of watery and endless speeches. Obviously, they must be removed from leading posts and given work other than operative

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work. There is no place for windbags on operative work. (Voices : "Quite right!" Applause.)

    I have already briefly reported how the Central Committee handled the selection of personnel for the Soviet and economic organizations, and how it strengthened the checking on the fulfilment of decisions. Comrade Kaganovich will deal with this in greater detail in his report on the third item of the congress agenda.

    I should like to say a few words, however, about further work in connection with increased checking on the fulfilment of decisions.

    The proper organization of checking on the fulfilment of decisions is of decisive importance in the fight against bureaucracy and red tape. Are the decisions of the leading bodies carried out, or are they pigeon-holed by bureaucrats and red tapists? Are they carried out properly, or are they distorted? Is the apparatus working conscientiously and in a Bolshevik manner, or is it working to no purpose? These things can be promptly found out only by a well-organized check on the fulfilment of decisions. A well-organized check on the fulfilment of decisions is the searchlight which helps to reveal how the apparatus is functioning at any moment and to bring bureaucrats and red-tapists into the light of day. We can say with certainty that nine-tenths of our defects and failures are due to the lack of a properly organized check on the fulfilment of decisions. There can be no doubt that with such a check on fulfilment, defects and failures would certainly have been averted.

    But if checking on fulfilment is to achieve its purpose, two conditions at least are required: firstly, that fulfilment is checked systematically and not spasmodically; secondly, that the work of checking on fulfilment in all sections of the Party,

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Soviet and economic organizations is entrusted not to second rate people, but to people with sufficient authority, to the leaders of the organizations concerned.

    The proper organization of checking on fulfilment is most important of all for the central leading bodies. The organizational structure of the Workers' and Peasants' Inspection does not meet the requirements of a well-devised system for checking on fulfilment. Several years ago, when our economic work was simpler and less satisfactory, and when we could count on the possibility of inspecting the work of all the People's Commissariats and of all the economic organizations, the Workers' and Peasants' Inspection was adequate. But now, when our economic work has expanded and has become more complicated, and when it is no longer necessary, or possible, to inspect it from one centre, the Workers' and Peasants' Inspection must be reorganized. What we need now is not an inspection, but a check on the fulfilment of the decisions of the centre -- what we need now is control over the fulfilment of the decisions of the centre. We now need an organization that would not set itself the universal aim of inspecting everything and everybody, but which could concentrate all its attention on the work of control, on the work of checking on fulfilment of the decisions of the central bodies of the Soviet power. Such an organization can be only a Soviet Control Commission under the Council of People's Commissars of the U.S.S.R., working on assignments of the Council of People's Commissars, and having representatives in the localities who are independent of the local bodies. And in order that this organization may have sufficient authority and be able, if necessary, to take proceedings against any responsible executive, candidates for the Soviet Control Commission must be nominated by the Party congress and endorsed by the Council of People's Com-

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missars and the Central Executive Committee of the U.S.S.R. I think that only such an organization could strengthen Soviet control and Soviet discipline.

    As for the Central Control Commission, it is well known that it was set up primarily and mainly for the purpose of averting a split in the Party. You know that at one time there really was a danger of a split. You know that the Central Control Commission and its organizations succeeded in averting the danger of a split. Now there is no longer any danger of a split. But, on the other hand, we are urgently in need of an organization that could concentrate its attention mainly on checking the fulfilment of the decisions of the Party and of its Central Committee. Such an organization can be only a Party Control Commission under the Central Committee of the C.P.S.U.(B.), working on assignments of the Party and its Central Committee and having representatives in the localities who are independent of the local organizations. Naturally, such a responsible organization must have great authority. In order that it may have sufficient authority and be able to take proceedings against any responsible executive who has committed an offence, including members of the Central Committee, the right to elect or dismiss the members of this commission must be vested only in the supreme organ of the Party, viz., the Party congress. There can be no doubt that such an organization will be quite capable of ensuring control over the fulfilment of the decisions of the central organs of the Party and of strengthening Party discipline.

    That is how matters stand with regard to questions of organizational leadership.

    Our tasks in the sphere of organizational work are:

    1) To continue to adapt organizational work to the requirements of the political line of the Party.

    2) To raise organizational leadership to the level of political leadership.

    3) To secure that organizational leadership fully ensures the implementation of the political slogans and decisions of the Party.

    I am coming to the end of my report, comrades.

    What conclusions must be drawn from it?

    Everybody now admits that our successes are great and extraordinary. In a relatively short space of time our country has been transferred on to the lines of industrialization and collectivization. The First Five-Year Plan has been successfully carried out. This arouses a feeling of pride among our workers and increases their self-confidence.

    That is very good, of course. But successes sometimes have their seamy side. They sometimes give rise to certain dangers, which, if allowed to develop, may wreck the whole work. There is, for example, the danger that some of our comrades may become dizzy with successes. There have been such cases among us, as you know. There is the danger that certain of our comrades, having become intoxicated with success, will get swelled heads and begin to lull themselves with boastful songs, such as: "It's a walkover," "We can knock anybody into a cocked hat," etc. This is not precluded by any means, comrades. There is nothing more dangerous than sentiments of this kind, for they disarm the Party and demobilize its ranks. If such sentiments gain the upper hand in our Party we may be faced with the danger of all our successes being wrecked.

    Of course, the First Five-Year Plan has been successfully carried out. That is true. But the matter does not and cannot end there, comrades. Before us is the Second Five-Year Plan,

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which we must also carry out, and successfully too. You know that plans are carried out in the course of a struggle against difficulties, in the process of overcoming difficulties. That means that there will be difficulties and there will be a struggle against them. Comrades Molotov and Kuibyshev will report to you on the Second Five-Year Plan. From their reports you will see what great difficulties we shall have to overcome in order to carry out this great plan. This means that we must not lull the Party, but sharpen its vigilance; we must not lull it to sleep, but keep it ready for action; not disarm it, but arm it; not demobilize it, but keep it in a state of mobilization for the fulfilment of the Second Five-Year Plan.

    Hence, the first conclusion: We must not become infatuated with the successes achieved, and must not become conceited.

    We have achieved successes because we have had the correct guiding line of the Party, and because we have been able to organize the masses for putting this line into effect Needless to say, without these conditions we should not have achieved the successes that we have achieved, and of which we are justly proud. But it is a very rare thing for ruling parties to have a correct line and to be able to put it into effect.

    Look at the countries which surround us. Can you find many ruling parties there that have a correct line and are putting it into effect? Actually, there are now no such parties in the world; for they are all living without prospects, they are floundering in the chaos of the crisis, and see no way of getting out of the swamp. Our Party alone knows in what direction to steer its course, and it is going forward successfully. To what does our Party owe its superiority? To the fact that it is a Marxist party, a Leninist party. It owes it to the fact that it is guided in its work by the teaching of Marx, Engels, and Lenin. There can be no doubt that as long as we remain true

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to this teaching, as long as we have this compass, we shall achieve successes in our work.

    It is said that in some countries in the West Marxism has already been destroyed. It is said that it has been destroyed by the bourgeois-nationalist trend known as fascism. That, of course, is nonsense. Only people who are ignorant of history can talk like that. Marxism is the scientific expression of the fundamental interests of the working class. To destroy Marxism, the working class must be destroyed. But it is impossible to destroy the working class. More than 80 years have passed since Marxism came into the arena. During this time scores and hundreds of bourgeois governments have tried to destroy Marxism. And what has happened? Bourgeois governments have come and gone, but Marxism has remained. (Stormy applause.) Moreover, Marxism has achieved comylete victory on one-sixth of the globe; moreover, it has achieved victory in the very country in which Marxism was considered to have been utterly destroyed. (Stormy applause.) It cannot be regarded as an accident that the country in which Marxism has achieved complete victory is now the only country in the world which knows no crises and unemployment, whereas in all other countries, including the fascist countries, crisis and unemployment have been reigning for four years now. No, comrades, that is no accident. (Prolonged applause.)

    Yes, comrades, our successes are due to the fact that we have worked and fought under the banner of Marx, Engels, and Lenin.

    Hence, the second conclusion: We must remain true to the end to the great banner of Marx, Engels, and Lenin. (Applause.)

    The working class of the U.S.S.R. is strong not only because it has a Leninist party that has been tried and tested in battle;

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further, it is strong not only because it enjoys the support of the vast masses of the labouring peasants; it is strong also because it is supported and assisted by the world proletariat. The working class of the U.S.S.R. is part of the world proletariat, its advanced detachment, and our republic is the cherished child of the world proletariat. There can be no doubt that if our working class had not had the support of the working class in the capitalist countries it would not have been able to retain power, it would not have secured the conditions for socialist construction, and, consequently, it would not have achieved the successes that it has achieved. International ties between the working class of the U.S.S.R. and the workers of the capitalist countries, the fraternal alliance between the workers of the U.S.S.R. and the workers of all countries -- this is one of the corner-stones of the strength and might of the Republic of Soviets. The workers in the West say that the working class of the U.S.S.R. is the shock brigade of the world proletariat. That is very good. It means that the world proletariat is prepared to continue rendering all the support it can to the working class of the U.S.S.R. But it imposes serious duties upon us. It means that we must prove by our work that we deserve the honourable title of shock brigade of the proletarians of all countries. It imposes upon us the duty of working better and fighting better for the final victory of socialism in our country, for the victory of socialism in all countries.

    Hence, the third conclusion: We must be true to the end to the cause of proletarian internationalism, to the cause of the fraternal alliance of the proletarians of all countries. (Applause.)

    Such are the conclusions.

    Long live the great and invincible banner of Marx, Engels, and Lenin! (Stormy and prolonged applause from the whole

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hall. The congress gives Comrade Stalin an ovation. The Internationale is sung, after which the ovation is resumed with renewed vigour. Shouts of "Hurrah for Stalin!" "Long live Stalin!" "Long live the C.C. of the Party!")

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