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John G. Wright

Stalin Resorts to Inflation

The Printing Presses Will ‘Make’ Rubles – And Hunger

(March 1941)

From The Militant, Vol. V No. 10, 8 March 1941, p. 5.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Stalin is resorting for a second time in fifteen years to the policy of inflation which look such a terrible toll among the Soviet masses during the First Five Year Plan.

Incontrovertible proof that Soviet currency is again being recklessly inflated is to be found in the budget adopted by the Supreme Council of the USSR.

Generally speaking, statistics are not very inspiring. Stalinist-falsified statistics are most wearisome of all. But the data relating to Stalin’s 1941 budget is of such great importance, and bears so directly on Soviet developments, that every thinking worker, every real defender of the Soviet Union, is duty bound to acquaint Himself with and to verify for himself the facts presented in this article. The 1941 budget originally called for a natural income of 216,000,000,000 rubles and a total outlay of 215,400,000,000 rubles. “The anticipated revenue.” explained Moscow, “will exceed expenditures by 788 million rubles.” (Daily Worker, February 26)

The national income for 1940 as “estimated” at 179 billion rubles. The 1941 budget, therefore, proposed to spend 36.4 billion rubles more than the income of the year before! Where would this from increased production? Not even Stalin’s boasters dared claim that production for 1941 would be the production of the previous year. Then the additional spending could come, logically, only from the hides of the Soviet workers and peasants.

But the budget finally adopted by the Supreme Council – one of Stalin’s aliases – surpasses even these staggering figures. The “estimate”, now officially fixed than 222,375,000,000 rubles, while the expenditures are fixed at 216,052,000,000 rubles. (New York Times, March 2) Thus without a word of explanation the expenditures were boosted by almost a million, while the revenues were made to exceed the expenditures – on paper – by more than six billion.

When the budget was first announced, the Daily Worker asked pertinently enough: “Where are the revenues of the state budget drawn from?” The answer reads:

“The bulk of the revenues is drawn from the Socialist industry.” (Daily Worker, February 27)

This answer is quite true in recent years have been actually based on two primary sources of revenue: turnover taxes aim profits from industry. These two sources did provide from 85 to 90 per cent of all revenue in recent years.

But these two sources cannot supply amounts even closely approximating the astronomic sums required by the 1941 budget. To prove this, we shall use only official Stalinist figures.

Printing-Press “Profits”

According to Voznessensky, Chairman of the Slate Planning Commission. Soviet industry showed last year a profit of less than 14 billion rubles. “In 1940,” he said, addressing the Eighteenth Party Conference, “the profits already amounted to nearly 14,000,000,000 rubles.” (Daily Worker, February 23)

The highest increase in profits envisaged by Moscow for 1941 was 40 per cent, which would make total 1941 profits of not more than 20 billion rubles.

But according to the budget Soviet industry must provide no less than 31 billion rubles in profits. “The profits tax,” lied Moscow, “will bring in 31,000,000,000 rubles. that is it will be 40 per cent more than last year.” (Daily Worker, February 27) The brazen fraud is self-evident. 31 billion is over the 1940 profit of 14 billion, and not 40 per cent as is falsely asserted.

The new figure for “profits” can be realized, therefore, in only one way. Stalin will have to print billions of paper rubles. There is no possible source for the billions which constitute the “extra” 85 per cent profit other than Moscow’s printing presses.

The second major source of which is essentially an indirect “In 1941,” asserts the Kremlin, to yield 124.5 billion rubles.” (Daily Worker, February 27) Yet, according to Voznessensky, who presented the official estimate of the State Planning Commission three days before, “turnover of state and comparative trade in 1941 ... will amount to nearly 197 billion rubles”. (Daily Worker, February 23) Taxes on this turnover, according to the figure given three days later, amount to more than 65 per cent of the total turnover for 1941.

Stalin is not a fool. But only fool could seriously expect to divert into the state treasury 124.5 billion out of a total trade turnover of 197 billion. Stalin has, in reality, a different plan: the printing presses will work overtime to produce paper rubles by means of which the needed sums can be extorted from the population.

The extent of the currency inflation to which Stalin is resorting can best be gauged by comparing the total income from these two primary sources with the entire budget. Even by Stalin’s figures, “profits” of 31 billion and “taxes” of 124.5 billion add up to only 155.5 billion rubles. But the budget calls for expenditures or 216.05 billion. This leaves the enormous sum of 60.45 billion still to he accounted for.

Where Will Stalin Find This Money

Could 60.45 billion conceivably be obtained through direct taxation? The standard of living of the masses would have to be very, very high indeed to make such a course feasible. The Kremlin, however, does not even pretend that this amount can be obtained through direct taxation.

Direct taxes – income tax paid by the workers and office employees, by collective farm household, by collective farmers, and by individual peasant households, and also the agricultural tax – never played a major role in state budgets; in all previous budgets direct taxes amounted to 7% of the total. Not that Stalin has neglected this means for further degrading the masses. far from it. By

taxing the wages of workers who make as little as 150 rubles a month, by levying an even stiffer tax on peasants earning as little as 100 rubles a month, and through all other channels of direct taxation, 9.7 billion rubles were squeezed out for the treasury In 1940. But that amounted to less than 6% of the total budget.

For 1941, direct taxes have been doubled, which means a new deduction from the pay envelopes. The Daily Worker was the only newspaper which did not carry the dispatches from Moscow reporting this increased taxation. The big metropolitan dailies reported the Stalinist-censored version which made the income tax apply only to peasants. The truth is that it also applies to the workers. The only ones exempt from direct taxes are the privileged bureaucrats, those who have been decorated, etc.

Yet the Kremlin is forced to admit that it will he able to squeeze out not more than 12.5 billion rubles from direct taxes. (Daily Worker, February 27)

There remains for Stalin the notorious method of state loans, subscription to which is in effect obligatory. The loans for 1941 have been fixed at an unprecedented figure of 13 billion rubles.

But, even so, direct taxes and forced loans will bring less than half of the 60.55 billion rubles still to be found for expenditures.

Again, the only possible way in which this shortage of scores of billions can be covered is – the printing press.

It is hardly necessary to explain what inflation means to the are already sky-high. The shortage of goods is already acute. Inflation, in the Soviet Union as in the capitalist, world, will mean still higher prices, even less goods. Mr. Walter Duranty, whose dispatches are invariably hailed by the Daily Worker, gives the lie direct to the brazen claims of Minor-Browder aud Co. that the Soviet masses are constantly receiving more and more consumers’ goods. “Mr. Voznessensky,” reports Duranty, “frankly admitted that the production of consumers’ goods must still take a secondary place.” (N.Y. Times, February 25)

Let every Communist Party member, who tries to solace himself with the illusion that Stalin is draining the masses for the sake of strengthening the Soviet Union, ask himself these questions:

Last updated: 4 October 2015