The Situation of Russian Industry

(January 1923)

From a speech delivered at the 10th All Russian Soviet Congress.
From International Press Correspondence, Vol. 3 No. 11, 30 January 1923, pp. 85–86.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Public Domain: Marxists Internet Archive (2021). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.

During the four years of civil war the whole of our forces were employed in defending our frontiers, and in fighting counter-revolution; industry was away on leave, so to speak, and we could only await the moment when it would be possible to resume work This became possible this year; industry has had to prepare for the attack, and to do so under the conditions of the New Economic Policy. We must describe the difficult conditions attendant on the complete reconstruction of the organization of our industry, its collision with the free market, and with the New Economic Policy

It is clear that the New Economic Policy is no accidental episode in our revolutionary struggle; it is not a method which we adopt today, and can discard again to-morrow by a decree of the same or another congress; it is a definite process, and a long period will be required before it has fulfilled its task of strengthening our economics and attaining a higher form of organization for our industry. It is only after we nave reached this higher level of development that we can pass painlessly over to socialism.

The difficult Conditions of the First Period

The transition to the New Economic Policy involved depriving industry to a considerable extent of state support, and the industrial undertakings were obliged to raise the means required to pay wages themselves, and to purchase raw materials, fuel, etc. in the market. But famine, lack of purchasing power among the peasantry, fear of putting bread and goods on the market, had had such an effect that there was no market at all, and industry was thus frequently forced to sell its products to any buyer who presented himself, without making any proper calculation, and without considering whether the buyer was a private dealer or a state authority. The goods had to be sold to any body who paid cash enabling wages to be paid. The state, just beginning to regulate its finances, had not yet ceased to take over the products of industry for purposes of systematized economics, without giving material compensation for the products taken. This period lasted for about eight months, and was not properly overcome until the spring. Despite the difficult conditions governing the market, industry has carried through its task successfully; the apparatus controlling industry, and the workers engaged in industry, have been able to maintain their position. Their future task consists in rendering this position more secure.

Light Industry

Especially good progress has been made in the sphere of light industry (an increase of production of one and a half times to four times that of our year crisis, 1920). Here we find a production sufficing in many cases to meet the requirements of our market.

At the same time all factors of production have considerably improved during this year in light industry, for instance, in the textile industry. We have increased and improved our sources of supply of raw materials and fuel, we have increased the productivity of work by one and a half to two and a half times in the various branches of the textile industry, we have increased the work of the industrial undertakings by two to three times, attaining to two thirds of the pre-war standard. The actual wages of the workers reached 70 per cent of the pre war wages. Conquered with 1921, and especially compared with 1920, we have taken an enormous stride forward; the textile industry has a firm footing, and its further progress is dependent on the measures taken.

The working conditions in the textile industry were perhaps the most difficult of all. In October the price realized for chintz was lower than the cost price, which resulted in a gradual diminution in the turnover capital of this branch of industry. The condition required to aid this industry, and to enable to continue its work, is the granting of a credit assisting it to overcome, as easily as possible, the inevitable autumn depression.

The Question of Raw Material

After the revolution the peasants ceased to produce raw materials for industry; they cased to breed certain animals, for instance sheep, so that the supply of sheep’s wool was greatly reduced. The progress which we now observe in light industry is closely bound up with our progress in obtaining supplies of raw materials. This year we must import from abroad about 2 million puds of cotton and 300,000 puds of sheep’s wool. One of our most fundamental tasks for next year is the improvement of our raw material economics.

Heavy Industry

The other great section of our industry is the metal industry. Although productivity has increased here also, although we can speak of a threefold production of cast iron and a double production of Martin steel, still the proportion is very small as compared with pre-war production, being only 4 per cent in the case of cast iron, and 7½ per cent for Martin steel. These figures show what little progress has been made in this branch of industry as compared with that observed in other branches.

But we cannot work without metal; without metal we cannot improve our means of transport.

The position of the metal industry differs in various places. The Ural district, having cheap labor and considerable quantities of wood fuel at its disposal, is working, and has increased its projected production from 4 to 8 million puds this year. This improvement began in August, and the productivity increases rapidly from month to month.

Petrograd has obtained fuel in return for the wood shavings sold abroad, and is reviving the factories (chiefly of the metal and metallurgic industry), with this fuel. The locomotive factories can now face the future with greater confidence, their position being secured by orders for 508 new locomotives within three years, and by 1,800 large repairing orders.

Metal industry in the south is in a particularly difficult position. This is the most important metal area, producing in past years three quarters of the total metal production, about 180 million puds. The production here this year is somewhat greater than in the Ural district, but the absolute figures are still very insignificant, amounting in all to only 2½ per cent of the pre-war figures.

In some branches of the metal-working industry a crisis is impending. Lack of financial means renders it impossible for the traffic commissariat to give the required orders. The productivity of the agricultural machinery industry is also extremely small. The development of this industry is hampered by the low purchasing powers of the peasantry. The peasant was accustomed to buy agricultural machines on credit, but the industry is not in a position to sell its products on credit.

But even here, as in light industry, there is an increase of productivity to be observed, one and a half times as much having been produced in comparison with last year, while the work demanded of the industrial undertakings has so increased, that in many factories in the Ural district it has attained to mare than 50 per cent of the pre-war standard. There is also an improvement to be noted in the utilization of raw materials and fuel; the amount of cast iron produced with a certain amount of fuel has increased. As in light industry, general progress in productive conditions has been made, and many important advantages have been won. Further development depends ou the financial situation.


This year has also seen rapid strides forward with regard to fuel. The output of both coal and naphta have increased; the output of naphtha, for instance is already 50 per cent of the pre-war output. Our coal output is 34 per cent of the pre-war output. The percentage of fuel employed for supplying the mines decreases from year to year (39 per cent in 1920, 28 per cent in 1922).

In the Don basin we passed through a severe crisis last year, involving considerable reduction of output.

The naphta industry, on the other hand, has not reduced its production, and Baku and Grosny have been working with the accuracy of clockwork during the whole year.

The utilization of fuel has undergone much improvement during the year, less wood being employed, and more mineral fuel. Three years ago 80 per cent of the fuel required by the state had to be supplied by wood. In the future we shall however calculate upon a reserve of 2 million cubic metres of wood only, and meet the rest of our systematic fuel consumption by mineral fuel. Only a slight further exertion is required, and we shall have attained the normal pre-war proportion of wood and mineral fuel.


This year, as last, the state, despite the lack of financial resources, expended considerable sums on electrification. Work has already been completed at the two most important stations (that in Kaschira, and the “Red October” station near Petrograd). Work is in full progress at the hydro-electric station Volchovstroi, one of the greatest stations of Europe, and at Tschelyabinsk, Kisilowsk, and Nischni-Novgorod, ana work has also been begun at the station in Schatura and at the station in the Don basin. We are also proceeding with the exploitation of the Dnjepr river. This will mean a great hydro-electric station giving life to the Jekaterinoslav district. I pass over a number of smaller stations without special mention. I need only say that this work is proceeding uninterruptedly, and that within four years we shall have nine great stations enabling us to erect electric centres all over Russia. These stations will considerably reduce our costs of production, will allow of our utilizing our fuel much more effectively, and will win for us that strategic position from which we can organize our industry properly, and ensure its further development.

The General Situation

Until October the prices of industrial products were considerably lower than the corresponding pre-war prices, when comparison is made with the price of bread. It was not until the crops created a market, and awakened a demand among the peasantry, that these comparative prices began to equalize.

There was no market before; it is only since September that a real market can be spoken of. In this market our stale industry has been able to fully maintain its position in wholesale trade, and has retained 50 to 70 per cent of the turnover in its own hands. Here we have not abandoned one single position. But state industry cannot deal directly with the immediate consumers, the peasants.

It is typical of our market that for the period of a year the selling prices of the great industrial undertakings were lower than the market prices. This difference was inconsiderable during the tune of depression in the summer, but it increased with the revival of the market, and the market price of the best selling manufactured articles rose to 50 to 60 per cent above the selling price of the trusts. This is a sign that the endeavor of industry towards a rise in the price of its productions is a healthy and normal phenomenon.

Foreign trade

The role played by the state organs in foreign trade has greatly increased in importance, and approximately 50 per cent of our foreign turnover falls to state industry. Our main export branches, such as the wood industry, have won a secure position in the market during this year. The export of our naphta products has greatly increased. This year a breach was made in the blockade against our naphtha products in foreign markets, and in the course of the year we exported naphtha to the value of 14 million gold roubles.

The rubber manufacturing industry is also beginning to send its products to foreign mantels. The quality of the articles manufactured is quite up to foreign requirements.

Questions of organization

Before the 9th Soviet congress the organizatory questions of our industry, under the new conditions created by state capitalism, had not been adequately formulated. The 9th congress created the basis of re-organization. We have had to pass from the principle of various central distribution authorities, from strict centralism, to autonomy of the economic undertakings.

The fundamental organizing cell of our industry, which we have designated with the word “trust”, has proved an element of essential vitality. We do not form these trusts mechanically all after one pattern, but every consideration is accorded to economic and technical conditions in each separate case. The other form of organization of our industry, the union of the separate trusts into syndicates, has also proved to be of lasting value. More than 50 per cent of our trusts are united in syndicates.

What are the conclusions to be drawn from the situation of our industry thus describe!? We must above all recognize the fact that during the past year, industry has passed the dead point of the crisis of the last few years. This preliminary step has been taken, it is greater in light industry than in heavy. There are signs that this development will proceed further, for the living forces of the proletariat are working for it, and these forces strengthen industry both quantitatively and qualitatively.

The commanding position incorporated in our nationalized state industry has remained completely in the hands of the proletariat We can look to the coming year with much greater confidence than we could at last year’s congress, when our industry was still inexperienced in the New Economic Policy. We are able to wait, and we are able to demand conditions favorable to us from the foreign capitalists who are beginning to stream towards us.

Our New Economic Policy sets us the task of encountering foreign and inland capital – where their appearance is unavoidable – with a mighty and centralized state industry. Thia year has demonstrated that we are equal to this task, and we are fully convinced that next year our positions will be finally secured.

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