Sunday, June 27, 2010

Soviet Millionaires

SOVIET MILLIONAIRES
A Russia Today Pamphlet
Revised Edition (1945)
by Reg Bishop

Printed and published by Fairleigh Press (T.U.), Beechwood Rise, Watford, for the Russia Today Society, 150 Southampton Row, London, W.C.1.

THE news that there are Soviet "millionaires" - men and women who have been able to invest a million roubles or more in the country's War Loan - has come as a great surprise and, indeed, with a sense of shock to many people to whom the very word "millionaires" represents an evil influence in society.

Many of these "millionaires" are collective farmers. The emergence of Soviet collective farm millionaires means that Stalin's promise in 1933 that the Soviet Government aimed at making collective farmers well-to-do is on the road to fulfilment.

The very term "millionaire" is misleading, for there are many kinds of millionaires. Before the war one could be a millionaire in sterling, in dollars, in francs or any other currency. The possessor of a million pounds was nearly five times as wealthy as the possessor of a million dollars, and the latter was more than 25 times as wealthy as the possessor of a million francs. The possessor of a million Rumanian lei or Turkish piastres had still less money.

In other words, a rouble millionaire has not the wealth of a sterling millionaire. Even were a rouble millionaire to be possessed of as much money as a sterling one it would still not necessarily be either anti-social or anti-Socialist, because the atmosphere of social inequity which surrounds a millionaire is due not to the measure of his wealth but to the method of its acquisition, and his use of it to exploit others.

In all countries the law smiles upon the acquisition of wealth, but in all countries legal barriers are erected against certain methods of becoming wealthy. In a capitalist country, a man who acquires wealth by robbing a bank or by selling shares for non-existent gold-mines is arrested, tried and sent to gaol if found guilty. In the Soviet Union, a man who becomes wealthy by robbing a bank is also sent to gaol, but the socialist nature of the Soviet State requires it as equally immoral to acquire wealth by the exploitation of the labour of others, or by speculation; that is to say, buying in the cheapest market to sell in the dearest.

These methods are held to imply as great, or even greater, moral obliquity as robbing a bank, hence, whereas it is reasonable to suppose that in a capitalist country millionaires have acquired their status by means of the exploitation of others, or by tricky, though strictly legal, financial manipulations, in the Soviet Union the millionaire has acquired his roubles by his own toil and by services to the Soviet State and people.

The first person to be publicly acclaimed as a millionaire was one, Berdyebekov, a collective farmer from the Central Asiatic Soviet Republic of Kazakstan. Perhaps it is easier to understand how Soviet millionaires are made by studying the career of Berdyebekov than by any amount of abstract and theoretical discussion.

At the time of the Revolution, Berdyebekov was a landless peasant, that is to say, an agricultural labourer. The Revolution gave him land, as it did every other peasant throughout the Soviet Union.

When the drive for collectivisation began, Berdyebekov was one of the first farmers in Kazakstan to realise the benefits it promised to the entire rural population of the Union and to the whole economy. At the end of 1929 his village organised one of the earliest collective farms in Kazakstan. From that day to this he and his family have worked as collective farmers and have seen their farm become one of the most prosperous in the Kazak Republic. In part, this prosperity has been due to the work and initiative of the farmers themselves, and in part, too, to the enterprise of the Soviet State which developed cotton growing in that territory to an enormous extent.

A word would not be out of place here as to the way in which collective farmers distribute their gains at the end of the year. If a farm has 600 members, it does not, at the end of the year, divide its proceeds in cash and kind into 600 equal parts. Each of the members of the collective has a particular job to do, some jobs are more skilled than others and consequently receive higher remuneration. Therefore at the end of the year the total number of workday units performed by the collective as a whole are divided up into the number of workday units performed by each individual member.

For instance, whilst an unskilled man or woman will receive one workday unit for each day's work put in, a tractor driver will receive perhaps one-and-a-quarter workday units for each day's work performed, and a tractor driver who is also a mechanic, capable of repairing and looking after his tractor, may receive one-and-a-half. Similar evaluation is made for every job on the farm.

Berdyebekov and his family have been collective farmers for close on fourteen years. In 1942 the family was credited with 1,500 workday units. Three of his brothers, who worked on the farm in peacetime, are now in the Red Army, one remains on the farm with two sisters and three daughters.

The family had worked hard; the farm is prosperous, the family has accumulated savings, entirely the fruit of their own labour. The sum of slightly more than one million roubles which Berdyebekov subscribed to the Soviet war loan represented the life savings of this family. Soviet conditions and laws do not permit of these savings being invested in private enterprises abroad, and there are no private enterprises suitable for investment in the U.S.S.R. The savings cannot be used either directly or indirectly for the exploitation of others. Neither can they be used for speculation. To what better purpose, then, could they be put than to devote them to their country's war effort? Berdyebekov's gesture lead to similar subscriptions being made by seventeen other Kazak farmers.

It is as astounding as it is magnificent that Soviet collective farmers should be in a position to make such financial contributions to their country's war effort, particularly as in many cases these men are not Russians but members of those races which, twenty-five years ago, were even more poverty-stricken and oppressed than the Russians themselves.

A warm letter of thanks was sent by Stalin to Berdyebekov, the first Soviet millionaire, and in those thanks every British friend of the Soviet Union will want to join.

There has been a great deal of misrepresentation of the position of the Soviet millionaires in the British Press. Even so well-informed a journal as the Economist in its issue of June 19, 1943, suggests that the emergence of these people represents a swing-back of Soviet policy.

"It looks," says the Economist, "as if the 'immoral Kulak' - liquidated thirteen years ago - has been miraculously resurrected. ... Marshal Stalin's letters to the donors have more than a hint of the old 'enrichissez.'"

Another of the allegations made in the Economist is that the collective farmers have become wealthy as a result of inflated prices on the uncontrolled sector of the market. This, maybe, is a contributory factor, but certainly a very subsidiary one. Actually, the facts are as follows:
Since 1934, the members of collective farms have been encouraged to retain in their private possession a certain number of dairy cattle, sheep and goats, pigs and fowls, they have been urged to cultivate a garden or allotment for their own use, this varying between half an acre and two acres in extent. The produce of these private holdings has gone in the main to the feeding of the farmer's own family. Any surplus he has been able to dispose of, at whatever it would fetch in the open market.

In wartime the great bulk of foodstuffs was placed on rations from the day of invasion. Such small quantities as were available from sources outside the main stream of supply, such as the small private holdings of the collective farmers, were allowed to be put on the market to fetch what price they could. Naturally this produce fetched high prices, but in the Soviet Union the people who were able to afford these prices and thus to supplement their rations consisted largely of the skilled workers in the heavy industries, whose requirements were greatest.

Of course, in the areas under siege, or where the rations could not be fulfilled, all private trading ceased and goods were commandeered to meet basic requirements.

Although the prices were high, the amount of material available from the small holdings was certainly far from sufficient either to enable the vendors to become millionaires as a result of their trade, or to alter materially the ratio of food distribution.

Despite all that has been said to the contrary, the basis of the Soviet millionaires has and is the steady development of collective farming, compared to which extensions in their trade of goods from their small holdings is insignificant. Neither exploitation nor market speculation enters into the trade in produce from the private holdings of collective farmers.

Nothing could be more inapt than the attempted parallel between the modern collective farmer (no matter how prosperous) and the old Kulak.

What was the Kulak? Literally translated the word means "fist." He was the big fist that hammered the impoverished population of the countryside. He was the individual who enriched himself and his family by the ruthless exploitation of others and by market speculation. He was the bitter enemy of the collectivisation which ended exploitation in the Soviet countryside.

That is why the Soviet authorities set out - and succeeded - to liquidate the Kulaks as a class. Note those last three words. It was not the wealth of the individual Kulak which was resented, but his methods. No exploiting class could be permitted in the Soviet countryside any more than in the Soviet towns. As far back as 1933 Stalin had made the position of the Soviet Government in regard to the Kulak and collectivisation abundantly clear.

The occasion was the first Congress of collective farm shock workers, which was held in Moscow in February, 1933, and at which the present writer was present as a newspaper correspondent. In his report Stalin said:

"The task of the Five-Year Plan in agriculture was to unite the scattered and small individual peasant farms, which lacked the opportunity of utilising tractors and modern agricultural machinery into large collective farms, equipped with all the modern implements of highly developed agriculture and to cover the free land with model Soviet farms. ...

"The Party succeeded, in a matter of three years, in organising more than 200,000 collective farms ... the Party succeeded in uniting more than sixty per cent of the peasant farms which cover more than seventy per cent of the land cultivated by peasants into collective farms ...

"The Party has succeeded in smashing up the Kulaks as a class. The working peasants have been emancipated from Kulak bondage and exploitation and a firm economic basis, the basis of collective farming has been established in the Soviet countryside."


At the concluding session of the Congress, Stalin, yielding to the demand of the delegates that he make another speech, addressed a simple informal talk to this gathering of the best Soviet farmers. In this speech he said:-

"Our achievements are that we have helped millions of poor peasants to join the collective farms. That having joined the collective farms and utilising on them the best land and the best instruments of production, millions of poor peasants have raised themselves to the level of the middle peasants. That millions of poor peasants who formerly lived in a state of semi-starvation are now in the collective farms, are now on the level of middle peasants, are now living in security.

"It means that not less than twenty million poor peasants have been rescued from poverty and ruin, have been rescued from Kulak bondage, and thanks to the collective farms have been transformed into people with a secure living.

"This is a great achievement. This is an achievement that has never been gained in the world before, that no other State in the world has yet gained."


And here Stalin thrilled his rapt audience by the bold and splendidly simple programme he set before them, expressing it in these few words:-

"The next step is to make all the collective farmers well-to-do."

And in case there was any doubt, Stalin reiterated his last words as follows: "Yes, comrades, well-to-do."

All the above rather takes the sting from the Economist gibe "enrichissez-vous."

In 1933 the Soviet Union set out to make its peasant population prosperous on the basis of collective effort, without exploitation. The emergence of Berdyebekov and others like him affords evidence as to how far it has succeeded in this direction. One other misconception emerges in the criticism that is heard on this question. It was embodied in a letter to me, the writer of which said:

"The fact that there are Soviet millionaires does not stick in my gullet, but surely if, having acquired their million roubles by toil, the Soviet millionaires invest them in war loan at four per cent, a class of rentiers is being created which, in time, will become indistinguishable from any similar class in other countries."

The reasoning is flawless, but is based on a misconception and therefore ceases to be valid. On June 4th, 1943, Moscow radio announced:

"The rate of interest payable on the interest-bearing portion of the loan is two per cent per annum. The Commissar for Finance, speaking yesterday on the conditions of issue, said that the interest-bearing portion of the loan is open for subscription by organisations only, that is, by collective farms, etc. Individuals may only subscribe to the lottery prize portion of the loan which provides winnings to one-third of such bonds over the next twenty years. The remaining two-thirds of this portion of the loan will be redeemed at face value at the end of the twenty years."

Thus it will be seen that no subscriber receives interest on his investment, payment of which is reserved for organisations. Instead, he receives a chance in a quarterly prize-drawing, from which one-third of the holders will benefit. The remaining two-thirds receive nothing more than repayment at the end of twenty years.

Such terms would not be likely to appeal to the rentier of any country!

Enthusiasm for the Loan
IN the previous edition of this pamphlet I gave details of the second Soviet War Loan (that of 1943). The target of 12,000 million roubles was over-subscribed within 24 hours. The third War Loan (1944) was fixed at 25,000 million roubles, more than double the previous year's target. This in turn was over-subscribed.

Even prior to the war the Soviet State loans were an annual feature which was closely linked up with the whole plan of socialist construction. In ten years, from 1931 to 1941, the number of subscribers to the State loan grew from 33 million to more than 60 million. Today almost every citizen in the free portion of the Soviet Union is subscribing. And it cannot be too much stressed that the loans are, and always have been, purely voluntary.

In the course of the first Five-Year Plan the loans aggregated 5,900 million roubles; during the second Five-Year Plan the amounts lent by citizens to the State rose to 15,000 million roubles; between 1938 and 1942, when the seriousness of the war threat was fully realised by every Soviet citizen, the amount rose again to 41,000 million roubles. Every year since 1931 has seen an increase in the amount lent.

So far, principal attention has been given to the part played by collective farmers in voluntary contributions to the war. That has been because the sensational character of the contributions made by Berdyebekov and others has concentrated discussion around them. But the effort has been nation-wide, embracing all sections of the population.

Workers, intellectuals, clergy, all have played their part as well as the collective farmers.
As is well known, in the latter half of 1942 the Bishops of the Orthodox Church and the leading figures of other denominations vied as to which could make the most generous contribution. But the contributions made by the Church dignitaries does not represent the only effort of the clergy.

Typical of many others is Vladimir Stefanov, priest of the Moscow Church of the Assumption, who donated his life savings, 73,000 roubles, to the Defence Fund last year. In doing so, he wrote the following letter to Stalin:

"As a shepherd of souls, I deeply mourn the fate of our brothers and sisters who fell under the yoke of the fascists in areas temporarily occupied by the Germans and who have suffered unparalleled atrocities and tortures at their hands.

"Being eager to help the Red Army to defeat the enemy as speedily as possible and to clear our sacred Russian land of the fascist vermin, I have deposited with the State Bank all my savings, totalling 73,000 roubles in cash."


Typical of the intellectuals is Professor Galant, of Khabarovsk, who, in sending 12,000 roubles to the Fund wrote:

"The great patriotic movement amongst the collective farmers in our country has found a ready response in the hearts of Soviet intellectuals."


The company of the Bolshoi Theatre, Moscow, collected rather more than 700,000 roubles among their number as their contribution to the National Defence Fund.

Then there is the inventor, Livshitz, manager of the Bureau of Inventions of a large factory, who donated 40,000 roubles towards the construction of a Soviet airplane to be called Soviet Inventor. The 40,000 roubles had recently been awarded him as a premium for inventions which has effected a saving of millions of roubles in industry.

Soviet Finance
IN view of the fact that there is not generally available any handy reference book on the subject of Soviet finance, a few brief notes here may not be out of place. In normal times the principal source of Soviet revenue is not an income tax but a turnover tax levied at the source of production on all industrial goods.

The tax varies between half of one per cent and two per cent. In 1940 this tax produced 60 per cent of the total State revenue. The 1941 budget was estimated again on the basis of 60 per cent of revenues from the turnover tax. Of course the invasion in June of that year destroyed the basis of all calculations.

In addition to the turnover tax, there was an agricultural tax levied on collective farms and paid mostly in the form of deliveries in kind of fixed quantities of produce to the State at a low, fixed price considerably below the market price.

In addition to the turnover tax, all trading and industrial organisations were liable to a profit tax, and there was also an income tax which was very low in peace-time, although it has, of course, been very much raised since.

Soviet income tax is based not only on what a man earns, but how he earns it. The lowest taxes are paid by factory workers and office employees in Soviet institutions, in all by over 30 million people. The tax is paid on a monthly basis.

The first 150 roubles is tax free, after which the tax formula works out as follows:-

(This table is taken from Russia Fights On, by Maurice Hindus [Collins])

Earnings (By month, in roubles) / Tax / Surtax
150-200 / 1.20 / 3% above 150
201-300 / 2.70 / 3.3% above 200
301-500 / 6.00 / 4% above 300
501-700 / 14.00 / 5% above 500
701-1,000 / 24.00 / 6% above 700
1,001 and up / 42.00 / 7% above 1,000

Collective farmers pay no income tax on their collective farm earnings, but they pay a much higher rate than the industrial workers on the proceeds of their private plots of land, their individually owned livestock, or any other occupation they pursue outside of farming.

The highest tax of all is paid by that small section of Soviet people who still pursue individual occupations with their own tools, such as private dressmakers, the handful of drosky drivers, etc.

Since Russia has been involved in war, the general levy on income has been very considerably increased. Basically, it has been doubled, but many exemptions are in operation. If two or more members of a family are in the armed forces, the remaining breadwinners are exempted from the double tax and pay at pre-war rates. A similar exemption is given to those whose income is less than 500 roubles a month.

On the other hand, those who are of military age, but are exempted from military service, pay three times the normal income tax instead of the double.

Laws of Inheritance
IN March, 1945, the Soviet law of inheritance changed. The new decree was described in the Soviet press as follows:

"A significant step in the development of the Soviet inheritance law as part of the general system of Soviet state measures aimed at protecting the rights of citizens, protecting the rights of owners of personal property and strengthening the family."

The previous law of inheritance limited the circle of heirs both by law and by will.

Heirs could be children, grandchildren, adopted children (and their descendants), husband or wife, and also incapacitated and needy persons who were dependants on the deceased for not less than three years.

The testator could also bequeath his property to State bodies or public organisations. The new law broadens the circle of legal heirs by including parents and brothers and sisters. It also includes a new procedure. Formerly the property was divided into equal portion among all the heirs unless the will contained provision to the contrary. Now there is a definite group which has priority: children (including adopted children), and wife or husband and incapacitated parents, and also other incapacitated persons who were dependants of the deceased for at least one year prior to his death.

The new law introduces a big change into inheritance by will. A person may will his property to one or several of his legal heirs as well as to State bodies and public organisations. But he may not deprive any of his children, who are minors, or who are unable to work, of the portion due to them.

In the absence of legal heirs, the property may be willed to any person of the testator's choice. Formerly it could be willed only within the more limited chain of legal heirs.

There is only one kind of private property in the U.S.S.R., that is personal property (e.g., money, furniture, a house, etc.). There being no such thing as private property in wealth-producing enterprises or in land, these cannot be transferred by legacy.

Guns and Butter
LOOKING over the Soviet scene today we find that far from there having been any departure from the early socialist principles, in actual fact socialism did not become established until in 1934 the Soviet State was able to announce that the exploitation of man by man had ended. A new era was ushered in. Exploitation and speculation were things of the past. The energies of the whole State were diverted to raising the standard of life of the whole people, and making them prosperous and happy. Coincident with this development was the accession to power of Hitler in Germany, which meant that much of the energy and much of the resources which would have gone to raising the standard of the people was perforce devoted to strengthening the instruments of national defence.

Nevertheless, despite an armaments expenditure which doubled and redoubled itself year after year, it was possible right up until 1940 to raise the standards of the people steadily and to increase their social security. Goering had told the Germans that it was impossible to have both guns and butter.

Taking butter to mean the good things of life in general, it is an outstanding fact that in the difficult years of the second half of the 1930's, the Soviet Union was able to give its people guns in abundance and, simultaneously, to give them more butter. Naturally, had it not been necessary to build the guns (which in this context means planes and tanks and battleships and submarines as well), it cannot be doubted that the increase of butter - meaning food of all kinds, good clothes, good houses and the amenities of life - would have been even more rapid than it actually was.

In these circumstances the Soviet Union has produced a handful of rouble millionaires. Some of them famous writers, or inventors, engineers and industrial organisers, others, simple peasants. All have one thing in common - their wealth has been acquired entirely without the taint of exploitation or speculation, the result of their own efforts, and in acquiring it they have benefited not themselves alone, but the whole Soviet State and people.

Surely the emergence of these people must be regarded from any viewpoint as a good portent, one holding out every hope that once this war is over and the invader driven from the land, the Soviet Union, when it has once more set its house in order, will be able to produce, if not a nation of millionaires, a nation of uniformly prosperous and contented people.

Marriage and the Family
BY a decree of July, 1944, big increases of allowances were paid to mothers of large families as follows:

Mothers / Non-Recurring Payment (Roubles) / Monthly Payment (Roubles)
With 2 children on birth of 3rd / 400 / -
With 3 children on birth of 4th / 1,300 / 80
With 4 children on birth of 5th / 1,700 / 120
With 5 children on birth of 6th / 2,000 / 140
With 6 children on birth of 7th / 2,500 / 200
With 7 children on birth of 8th / 2,500 / 200
With 8 children on birth of 9th / 3,500 / 250
With 9 children on birth of 10th / 3,500 / 250
With 10 children on birth of each subsequent child / 5,000 / 300

Monthly assistance to mothers with several children to be paid from second year of birth of child until his fifth birthday. Article 3 of the same decree provides State assistance for single (unmarried) mothers for the support of their children. These amount to: 100 roubles monthly for one child, 150 roubles monthly for 2 chilren, 200 roubles monthly for three or more children. State assistance to unmarried mothers is paid until the children reach twelve years of age.

Unmarried mothers with three or more children receive the State assistance laid down in Article 3, in addition to the regular assistance to mothers with many children, which is received in accordance with Article 2 of the same decree.

When an unmarried mother marries, the right to assistance is retained by her. Should an unmarried mother wish to place a child, to which she has given birth, in a children's institution, the latter is obliged to accept the child, to support and bring it up entirely at the expense of the State, the mother having the right at any time to remove the child from the Institution and to bring it up herself. Of course, when the child is in the Institution, State assistance is not paid to the mother.

Red Army Pay

ANOTHER item on which there has been a great deal of misunderstanding concerns army remuneration, the fact that whereas a private soldier gets a mere pittance, Red Army officers receive relatively high pay - a lieutanant gets approximatley 1,000 roubles a month, a colonel something over 2,000 roubles, and so on for the higher grades.

The Soviet citizen who is conscripted into the Forces must be found employment not less remunerative than that which he was pursuing at the time of his enrolment. If he is totally incapacitated, he will receive a pension equivalent to what he would have been earning had he been able to return to industry. Should he be partially incapacitated, that is to say, only able to undertake employment less remunerative than he would normally have been able to do, a person will make up his rate of pay to what he would otherwise have received.

Obviously, Soviet millionaires are not going to develop on the pay of a ranker, but equally obviously this is no question of class differentiation, but one of sound socialist policy, in line with the general wages policy of the U.S.S.R.

Every male citizen is liable to military service in the U.S.S.R.; for a limited period of time he gives his services to the State, receiving in return a pocket-money allowance. At the end of that time he returns to civil life, usually better equipped for his vocation than when he was called up. Although his remuneration in the army has been tiny, he has had so many free services - postage, travel, cleaning materials, entertainment, smokes, etc. - that he has been at least as well off as soldiers in the armies of other countries.

But the case of the man who stays on to become an officer is of an entirely different character. He is making his career in the forces as another is making his in industry, on the farm, in literature, etc. He therefore is entitled to the same degree of remuneration, if he is successful, as the man who is a good collective farmer, a Stakhanovite worker, a successful novelist, and so on.

And in the Red Army there is no question of promotion for any reason other than merit.

Listen to what Godfrey Blunden, famous Australian newspaper correspondent had to say about the Soviet generals in an article of the Evening Standard of May 25, 1943:-

"All the Soviet generals whom I have ever met had the look of hard-worked men who had never had any spare time on their hands, men who had had a hard struggle to rise to the ordinary level of education - which a class-selected British officer, for example, has by natural right - even before he had turned his mind to the arduous job of learning his trade. There is no comfort in being a general in Russia. ...

"I have heard it suggested that in granting privileges to generals, Stalin is creating a new class. That does not seem right to me."


No matter whether one looks at the generals, the successful collective farmers, the outstanding intellectuals, the Stakhanovites of industry or any other successful men and women in Russia, one finds that the millionaires, far from being those who have successfully battened on others, are in fact, those who have put much more into the common pool than they have taken out.

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