Private Capital in the USSR -1927- The objective of the work

Private Capital in the USSR -1927
State publishing house

Translated from the Original- no omissions

Agents and accomplices of private capital in the state apparatus

The first and simplest method of illegal activities to create private capital was the presence of its accomplices and agents in the state apparatus. In the composition of the state apparatus there was not a very wide, not very numerous circle of people, measured perhaps only a few tens of thousands of people, who used the beginning of the NEP in this sense. While serving in economic agencies themselves, they at the same time organized various enterprises either in the name of their relatives, partners, or even directly in their own name. And then they pumped into these private enterprises the state funds at their disposal from the state bodies where they served. Having made such a transfer, they usually left state agencies altogether and ʺstand on their own feet.ʺ This phenomenon was extremely widespread. One could cite hundreds of examples of how various responsible and not very responsible figures, commercial directors and other figures of factories, various economic associations, railways, trade organizations ‐ state and cooperative ‐ organized parallel shops, parallel stores, parallel societies, parallel firms. , who allegedly began to deal with deliveries and contracts for state bodies and all sorts of transactions with them. But all this was carried out by direct transfer, in the form of abuse, to the private institutions they created of those funds that were at their disposal for service in Soviet institutions. trade organizations ‐ state and cooperative ‐ organized parallel shops, parallel shops, parallel societies, parallel firms, which allegedly began to deal with deliveries and contracts for state bodies and all sorts of transactions with them. But all this was carried out by direct transfer, in the form of abuse, to the private institutions they created of those funds that were at their disposal for service in Soviet institutions. trade organizations ‐ state and cooperative ‐ organized parallel shops, parallel shops, parallel societies, parallel firms, which allegedly began to deal with deliveries and contracts for state bodies and all sorts of transactions with them. But all this was carried out by direct transfer, in the form of abuse, to the private institutions they created of those funds that were at their disposal for service in Soviet institutions.

To illustrate how this was done, I will cite a few examples from the rich treasury of materials collected by Comrade Kondurushkin, established, verified, and confirmed by court verdicts. For example, employees of the Leningrad military port entered into an agreement with the private office ʺZavodopomoshchʺ organized for this purpose and stole 200 thousand pounds of fuel oil from the Leningrad military port, which they took out by a number of trains and tanks and handed over to the office. And Zavodopomoshch sold 50,000 poods of them to the Izhora plant and the rest to other government agencies in need of fuel oil. This private office did not have any money or any other means at the time of its foundation, but only a room in the passage room, one typewriter and a typist.

The director of the former Franco‐Russian plant in Leningrad, Lopatin, entered into an agreement with the private office of the engineer Evzerov, the Inzhbyuro, to which he transferred 35,000 poods of roofing iron.

Employees of the ʺTriangleʺ plant organized a private office called ʺMartynovʹs Officeʺ, from which they bought the cable. This was done in the following way: on the one hand, the stolen cable was taken out of the factory to the warehouses of

ʺMartynovʹs Officeʺ through one gate, and no payment was made for this, since all this was done in the manner of abuse, and through the other gate the cable was imported from ʺOffices of Martynovʺ, well paid by the ʺTriangleʺ.

The head of the supply department of the October Railway instructs his father‐in‐law Medovy to supply burners, lamp glasses and wicks for the railway. Medovoy has neither burners nor money ‐ the whole point is the availability of a responsible relative on the railway. Then Medovy receives samples of burners from the Leningrad Unified Consumer Society (LEPO), presents them to the supply department, where they draw up an inspection report and pay Medovy for the entire supply.

Engineer Zak, head of the restoration subdivision of the NKPS, organized a private technical office, Mosmet, which was supposed to supply exactly the materials that the restoration subdivision needed.

The head of the commercial department of the Leningrad branch of Transmostorg (government agency) organizes a private office ʺLakokraskaʺ and writes to himself as its owner, making various transactions with it (he pumped ultramarine out of Transmostorg especially a lot, which he then supplied through his brother to state agencies in Moscow).

The head of the department of the North‐Western Railway, engineer Lukyanov, himself makes deliveries to this department (through a figurehead, the former lawyer Zukkau) and himself makes the acceptance.

In 1922, Lvov, a consultant for the October Railway, was an almost monopoly supplier of various materials for this railway, submitting applications, etc., on behalf of the fictitious, non‐ existent person Shura. He supplied, for example, zinc cans,

ʺminingʺ them at the Fundkombalt, etc.

Khrapovitsky, the head of the North‐Western Railway, is personally negotiating with a petty TPO agent for the purchase of 100 pounds of Swedish nails (which are allegedly the property of this agent), issuing a note on payment of all the

money to him immediately. The nails are actually taken from a state abandoned barn.

The agent of the Leningrad Gubotkomkhoz, the son of a merchant, Belokrinitsky, who had already been sentenced to five years for association with bandits, is another supplier, an accomplice of Khrapovitsky.

Leningrad laboratory assistants in 1922 and 1923 for bribes, they received denatured alcohol from Rauspirt, which was then used by private merchants for perfumery. Having, thus, the material cheaper than TEZHE (Trust Zhirkost), they beat it on the market, selling their perfumes at 15‐20% cheaper.

Employees of the Baltic Fleet Konstantinov, Kurylenko, Zverev opened two stores, which were filled entirely from the warehouses of the fleet (ʺincluding up to brushes and wicksʺ).

Such examples, established by later trials (mainly 1923‐1925), but which took place in life in 1921‐1923, one could collect not hundreds, but thousands. In general, in the first period of the NEP, for the bourgeoisie, which had agents of private enterprises in the state bodies, it was precisely the existence of not the usual type of commercial economic transactions, even if profitable, but the presence of direct abuses, and these abuses were clothed only in the form of transactions. By ʺnormalʺ commercial operation, I mean one in which a private entrepreneur, although he profits, sells something that really belongs to him or buys something really at his own expense, and so on. In the cases cited, we are talking about the actual movement of state funds, only fraudulently passed off as private thanks to officials sitting in state apparatuses, who in fact are private entrepreneurs or agents of private entrepreneurs. When later this first period of ʺsquanderingʺ passed and they began to find out and take into account where what was stolen, hundreds of trials were organized for various

enterprises and large economic organizations, which found out in court the amount of losses of public funds in favor of private capital. Of course, this account is incomplete, but it is very indicative. found out in court the amount of losses of public funds in favor of private capital. Of course, this account is incomplete, but it is very indicative. found out in court the amount of losses of public funds in favor of private capital. Of course, this account is incomplete, but it is very indicative.

The results of only 56 such trials (according to the materials cited in Comrade Kondurushkinʹs work) show that in these 56 trials alone, state property worth about 54 million rubles in gold was transferred in this way into the hands of private individuals. But trials in cases of 1921‐1923. there were much more than 56. As a result of all these abuses, much more property was transferred into the hands of private individuals than 54 million rubles. ʺCompetent persons (comrade Lezhava, bodies of the Supreme Council of National Economy, etc. ‐ Yu.L.) determined the losses of industry for 1921/22 within the very large amount of 150‐200 million rubles in goldʺ (Zhirmunsky. Private capital in trade turnover, p. 18). This is for the first year of NEP alone.

It is especially interesting that these processes make it possible to identify the circle of those persons who were in 1921‐1923. agents of private capital and its accomplices in the ranks of our state bodies. Comrade Kondurushkin made a statistical calculation covering a number of major processes. For example, the process of the Leningrad military port, where there were

125 people. defendants; the trial of the North‐Western Railways, where there were 118 defendants; Rausspirt process, where there were 79 people. defendants;

trial of the Main Marine Technical Economic Administration with 64 defendants, etc.

And now it turns out that of all the persons found guilty of these abuses by the court and who were our civil servants in 1921‐1923, 25% had a higher education, more than 50% had a secondary education and had only a lower education, or were self‐taught, or did not have none ‐ less than 25%. Thus, about three‐quarters of those civil servants who were active organizers of private enterprises and the transfer of state funds into them were technical, legal, and other intellectuals. The vast majority of them were not people who had already been private entrepreneurs before the revolution; we have before us the process of the formation of a new, post‐revolutionary bourgeoisie. These were people who turned into a real entrepreneurial bourgeoisie in the early years of the NEP, using their administrative position in state bodies to enrich themselves through the people they created in the name of nominees, relatives, etc. private enterprises, in order to then openly and themselves turn into independent entrepreneurs.

And indeed, according to a number of these trials, uniting several hundred defendants, there is an estimate of who the people who were convicted in the trials for the abuses they committed in the period 1921‐1923 when they were employees of state bodies became. Trials usually took place two or three years after the discovery of abuses (due to the large size of the trials, the large number of people involved, the complexity of the investigation, etc.). It turns out that of the persons who were civil servants, who organized all these parallel offices in 1921‐ 1923, etc., by the time of the trial, 53% turned out to be independent private entrepreneurs.

In addition, 8% were economic agents, and these agents were formally, as it were, civil servants, but in fact they worked on percentages, i.e. in fact, they were also private entrepreneurs. Further, clerical employees turned out to be 12%, accountants, etc. employees ‐ 10% and technical engineering personnel ‐17%.

Thus, of those persons who, as civil servants, committed major abuses in the early years of the NEP, more than 60% have already formally and openly turned into independent private entrepreneurs. Of course, they were convicted for the crimes they had committed. But we very often have amnesties, or even without amnesties, there is simply ʺunloading prisons.ʺ Our country has an insufficient number of prisons in comparison with the scale of economic abuses that have taken place, and therefore, in addition to any amnesties, prisons are periodically unloaded, during which only the most important criminals, such as murderers, are left in prisons, and less important ‐ thieves ‐ release. The convicts soon begin to operate again using stolen funds.

Comrade Kondurushkin establishes that there is almost no one among todayʹs large private entrepreneurs who has not previously been on trial or has not been expelled administratively on economic matters. Among private wholesalers, semi‐wholesalers and larger private manufacturers, there is almost no element that did not pass through the criminal stigma in the first years of NEP. They exactly followed Marxʹs position that private capital does not stop at any criminal offense if it finds material gain in it.

By the way, from the tables cited by Comrade Kondurushkin, it is clear that of the private entrepreneurs whose cases were heard by the court in 1924‐1926, until 1921, no less than 90% were in the public service. It should be added to this characteristic that only about 60% of the civil servants of 1921‐ 1923 who then committed crimes in favor of private capital, but who did not turn into formal private entrepreneurs in subsequent years, formally turned into private entrepreneurs‐ so, that part that did not turn, it again and again in 1924‐1926 often came across again in similar economic crimes.

Comrade Kondurushkinʹs conclusion from the economic data of 1925‐1926 is interesting. about the judicial past of those civil servants who were convicted for bribes and other economic crimes committed in 1924‐1926. And every economic crime in our conditions is a crime in favor of a private trader, connected in one way or another with the interests of the private trader.

It turns out that of all the employees who in the second period of the NEP, i.e. in 1924‐1926, committed economic crimes, about 80% had already been convicted earlier for economic crimes. In other words, we have a stable circle of economic criminals in our government agencies. Of those criminals who have been convicted over the past two or three years, four‐fifths have already been convicted several times (and some have even been convicted several times) in various economic trials, but then they were again recruited into the service ‐ other than a clever

ʺirreplaceableʺ person, like a clever agent, or moved from one government agency to serve in another government agency, where they did not pay attention to the past, or there were friends in the apparatus who pulled them in again, or in general the authorities looked through their fingers at the past ‐ perhaps it will not happen again. One way or another, but the fact is that the thieves of the first period of the NEP, who were convicted by law because they did not turn into private entrepreneurs, quite often returned again to the state service. Of the newly convicted for economic crimes, employees of state bodies, as it was said, 80% are already convicted earlier, before that.

From this, by the way, it is clear that a special law should be issued that would prohibit all state bodies, and at the same time all cooperatives, from accepting into the state and cooperative service those persons who, at any time during the Soviet regime, were convicted of economic crimes, although if they were then amnestied, at least they served their sentence, at least

they were released in order to unload prisons. It is time, in the tenth year of the revolution, to do without patented thieves in the public service. You can allow them to move on to physical labor on the ground or in the trades, but do not trust them again with positions that enable economic crimes. Under tsarism, revolutionaries were forbidden to live in medium and large cities. We will act quite correctly if we prohibit living in cities from 50 thousand inhabitants of the entire ʺNep scumʺ, to all who have ever been convicted or administratively deported on economic matters. There are only 85 such cities in the USSR, and these are the key economic points of the country, where the

ʺcriminal bourgeoisieʺ has the most opportunities and does the most harm. This question has already been raised and is close to a positive resolution.