Private Capital in the credit and money market.

Private Capital in the USSR -1927
State publishing house

Translated from the Original- no omissions

Private Capital in the credit and money market.

1. The amount of credit capital

The most unexplored and even generally unexplored sphere of activity of private capital in the USSR is its size and operations in the credit and money markets. Meanwhile, it is precisely here that public opinion—and not without reason—sees one of the main centers of speculative activity and profit for the capitalists in the USSR. So far, there has been no even rough tentative attempt to estimate the size of the private credit market and characterize its connection with other areas of the private economy and its significance for them at least approximately. The attempt I am making now is therefore only the very first approximation to reality and, no doubt, will still need corrections and additions. But such an initial outline nevertheless gives an idea of the scale and role.

Even individual types of private credit capital have not been subjected to any coherent examination, except for the question of the participation of private capital in state loans. It cannot be said that in general there are not at least fragmentary and partial materials on questions of private credit capital, which, in their totality, can nevertheless give some idea of the matter (otherwise this section of this book could not have been written at all). But the attention of observers has hitherto been attracted more by private trade, with which the population has to deal directly, and partly by private industry. And the private credit capital standing behind them, which financed them, skimmed them off the foam and maneuvered them, remained in the shadows.

In our summary, we take into account the following types of private credit capital in the USSR (except credit capital in agriculture, which is discussed separately below):

a) pawnshop operations;

b) discount (in the order of personal usury);

c) contributions to mutual credit societies;

d) deposits in state credit institutions and savings banks;

e) funds linked in operations with foreign currency and gold;

f) purchase of government loans;

g) the balance of private financing of private trade;

h) the balance of private financing of private industry (including transport, construction, timber).

Lombard transactions mean loans secured by movable property issued by capitalists to individual citizens for their household or small business needs. For these operations, the state opens, among other things, state pawnshops (which already existed in some large centers before the revolution). Adjoining these operations is the accounting (discount) of consumer bills and the issuance of loans on them also for personal, family, or small business needs. For this purpose, by the way, a number of “savings and loan associations”, “mutual aid funds”, etc. organizations controlled by the state have already been established. Yet both of these operations—loans against household goods and loans against personal notes (not for the purposes of capitalist trade and industry)—are the favored branches of private usury. As indicated in the second section (chapter on foreign exchange transactions), there is information by regions (expert estimates of special observers), the summation of which for the USSR gives a value of up to 20 million rubles, private funds invested in this business. Usurers of this type are usually not very big capitalists. “In Moscow, private discounters usually own small amounts of 4‐5 thousand rubles. The discount rate reaches 7% and (the loan) is issued

only against reliable security” (p. 33 of the Review of the Peopleʹs Commissariat for October‐December 1926).

It is possible, of course, that somewhat larger sums are actually circulating in urban personal usury, but there are no direct indications of this. The indications in the workersʹ budgets about the systematic private credit used by the workers should for the most part is not included in this figure. For the worker it is mostly interest‐free small‐shop credit or non‐usurious loans from acquaintances.

Deposits in state credit institutions (except savings banks), as indicated in section two (chapter on state credit), amount to only 8 million rubles, if we count only capitalist firms, which themselves then use credit in our institutions. In addition, on the same date (October 1, 1926), these state credit institutions had more than 20 million rubles. deposits of small and medium‐sized labor investors (freelancers, employees, etc.), whose deposits do not serve the purposes of any entrepreneurial activity, are of a consumer nature (put aside for a “rainy day”, for old age, collects for treatment, etc.). etc.) and are not included by us in the credit capital belonging to the capitalists.

In savings banks, the contributions of non‐working elements and “others” (under “others”, one might think, they are modestly hidden) together amount to 14.5% of the total deposits (as given in section two, chapter on government loans). The entire amount of deposits in the savings banks of the USSR on June 1, 1927 amounted to 150 million rubles. (ʺEconomic Lifeʺ, June 24, 1927). Consequently, about 20 million rubles are accounted for by the capitalists.

In voluntary state loans, as indicated in section two, before October 1, 1926, according to the estimates of our financial agencies, private capital invested up to 18 million rubles. their

funds. Since then, this amount has increased to about 22 million rubles. by June 1, 1927, in connection with the autumn winning interest‐free loan of 1926 and with a ten percent loan of 1927. The real investment of private capital in both loans is added about 9,700 thousand rubles. with a nominal subscription of 40 million rubles. (memorandum of the senior inspector of the Narkomfin comrade Fashinsky), and the funds invested by the capitalists by extracting them from previous loans are deducted (ibid.). By the way, in the part placed among the capitalists, both of these loans suffered the same fate as the previous voluntary loans of 1925 and 1926. That is, having removed the foam during the subscription period (ended on April 1), already in May, the capitalists ʺthrewʺ themselves from the care of loans, throwing them back to the state by selling them on the stock exchange (where they were bought up, willy‐nilly, by the State Bank and at the expense of the State Fund Office of Narkomfin). On the contrary, as before, the subscription of labor savers turned out to be quite stable. The significance of the collective subscription to the 1927 loan on the part of the working people came to the fore especially. By collective subscription of workers, employees, and handicraftsmen, the 1927 loan tickets were purchased by about a million people with an average contribution of about 25 rubles. (as detailed tables show for large centers, for example, for Kharkov, workers subscribed on average for about 20 rubles per participant, employees for 30 rubles, and handicraftsmen for 50 rubles). Of the private capital invested in government loans, according to the calculations of our financial agencies, up to 10 million rubles fall on Moscow, 2.5 million rubles in Leningrad, 1 million rubles in Kharkov, Rostov ‐ 500 thousand rubles, Baku

- 500 thousand rubles. etc. (Garnich, On Private Fund Capital, p. 5).

Capitalistsʹ contributions to mutual credit societies amount to about 35 million rubles. Private credit capital in this single area

is openly coming out in large masses and makes it possible to get acquainted with it in more detail. The interest paid by the OVK on deposits (in 1925/26 it was about 40% per year) is quite close to the interest in the private money market and can be considered its lower limit. For if the difference is too great, then the private credit capital, instead of being placed in the OVK, will prefer to take the risks and inconveniences of individual, personal usury. The section for monitoring private capital of the GEM of the Peopleʹs Commissariat of Trade of the USSR writes, for example, in its Review for the first quarter of 1925/26 the following: “In Leningrad, there is competition between usurious capital and the OVK. The first one lends depending on the provided accounting material and the solidity of the company, from 4‐5% to 12‐15% (per month) and reaches 5 million rubles in size. (Overview, Chapter “Private Money Market”, p. 33).

In transactions with foreign currency and gold, an average of about 20 million rubles is linked. (as indicated in the chapter on foreign exchange transactions, see second section), and sometimes these amounts increase (an example is the period of the gold intervention of the Narkomfin from October 1925 to April 1926, see ibid.). These funds are not exactly ʺcredit capitalʺ as long as they are engaged in the speculative buying and selling of gold and foreign currency. But this operation itself is an appearance on the money market of private credit capital, from which this or that part is directed to this operation, depending on the totality of the conditions and the particular profitability of these operations at the given moment.

It should not be thought that these foreign exchange operations of private capital are taking place completely spontaneously and unorganized. In the second section (Chapter 10), I already gave an example of the operation in 1925/26 in Transcaucasia of special illegal private offices (“barat offices”), which developed

significant operations for storing, exchanging, and transferring Persian currency abroad. Similar offices exist within the USSR for Poland, etc. Private money capital, in the person of its chief movers, generally forms leading centers (not always opened by us), which then govern the petty speculators swarming on the

ʺblack exchangesʺ. These centers coordinate accounting policy, the rate of interest in the private money market, etc.—generally

ʺmake the weather go there.ʺ Comrade Garnich, (an employee of Narkomfin) in his still unpublished ʺEssays on the history of the currency and stock market of our countryʺ tells, for example, about the three years of 1921‐1923. in Moscow, the following: “The stock exchange gatherings on Ilyinka in the mass consisted of relatively small businessmen, casual visitors, and agents of large tycoons of the then private stock market. The main and decisive part of the stock turnover, organized in an organized way, dictating prices (of securities), and artificially creating conjuncture in the manner of the usual technique of stock trading, was concentrated elsewhere. The central point of (decisive private) exchange meetings in the period 1921‐1923. there was a Hermitage restaurant near Trubnaya Square, where the average daily attendance was over

100 people and there was a ʺcommitteeʺ of several people elected by visitors, active businessmen. The ʺCommitteeʺ had the rights and authority to resolve all disputes and cases arising in business practice. This ʺcommitteeʺ made decisions binding on the parties. In relation to these regular meetings (“stock exchange” of private capital), the rest of the “street” (black exchanges on Ilyinka, in Bogoyavlensky Lane, on Karuninskaya Square and in adjacent branches and other places of gatherings of smaller and less qualified businessmen) should be considered as would be a ʺbackstageʺ or a natural appendage to the main exchangeʺ (Garnich, pp. 4‐5 ʺEssaysʺ).

But at the present time private capitalist trade and capitalist industry are the main area for investing private credit capital.

In the section on trade, we saw that, taking the smallest of the existing data and estimates of the placement of private credit capital in it, we have to come to the conclusion that in the summer of 1927 (by the end of the 1926/27 financial year) it amounts to about 200 million rubles here. . And here we have in mind, of course, only the balance, that is, the preponderance, the remainder of the debt of merchants to private individuals over what private individuals owe to merchants.

As for the capitalist industry, then, according to the calculations of the Narkomfin questionnaire (the second, more complete and reduced development by P. Kutler in December 1926), by October 1, 1925, the balance of debts to private individuals for private industry should have been about 135 million rubles According to this calculation, by October 1, 1927, this value should have reached 200 million rubles. But we believe that P. Kutlerʹs development did not sufficiently take into account the mutual connection between private trade and private industry and, therefore, obtained an exaggerated result. With an appropriate correction, we now obtain a balance of debts to private individuals for capitalist industry (including transport, construction, and timber) of only 100 million rubles. by the end of the 1926/27 business year.

Summing up all the above values, we get up to 450 million rubles on October 1, 1927. And for 1925‐26, on average, the calculations of the Commission of the Council of Peopleʹs Commissars of the USSR on the severity of taxation (made at the beginning of July 1927) give a value slightly more than 400 million rubles .

The Size and net accumulation of private capital in general

All private credit capital in the money market (except agriculture), according to sufficiently cautious and reasonable calculations, must now be counted (at the end of the 1926/27

financial year), in this way, as shown in Chapter One, to approximately 450 million rubles. As we saw above, for the same period (approximately October 1, 1927), based on the calculations of the Peopleʹs Commissariat of Trade, Gosplan and Narkomfin, the capital of bourgeois trade should be calculated up to 700 million rubles, and capitalist industry, as follows from the calculations of the Supreme Economic Council and CSB ‐ up to 450 million rubles. (including fixed and current assets together). The total private capital (without private small non‐capitalist economy and without agriculture) thus amounts to about 1,600 million rubles. Moreover, up to 400 million rubles are in circulation and at the disposal of private capitalists (except for agriculture). state credit funds: about 350 million rubles in trade, procurement, construction, and forestry, and about 50 million rubles in capitalist industry, transport, and stock transactions (loans against government loans). In general, therefore, private capital in the USSR is currently operating with its own and state funds to the tune of approximately 2 billion rubles (of which 20% is Soviet credit, cash and in kind, state, and cooperative credit).

If we compare it with what happened six years ago, in 1921, in the first year of the New Economic Policy, then we can assume that at that time private capital operated approximately one billion. Including their own funds at the beginning of 1921, there were about 150 million rubles. (see section two of this Book), and the rest was a variety of state loans (mainly commodity).

Thus, in the past six years of NEP, the entire direct economic base of private capital has absolutely only doubled. Meanwhile, the state economy expanded at a faster pace: the output of state industry has quadrupled in this six years, almost the same applies to the work of state transport and the state budget.

Owing to the fact that the absolute growth of the state economy was faster than the absolute growth of capitalist activity as a whole (to say nothing of the private labor economy), this was the reason for the relative growth in the importance of socialist elements in the countryʹs economy.

At the same time, a significant regrouping took place in the sources of funds for capitalist operations.

The state, thanks to the growth of its own economic organization, managed to get rid of the need to provide its funds to the capitalists in relation to more than half of the funds provided to them in 1921 (reducing the total of Soviet loans to capitalists from 850 million rubles to 400 million rubles).

Only if we turn a blind eye to this major success of ours can we, as the opposition did, try to create an incorrect, artificial idea that capitalist economic activity as a whole, gradually overtakes state economic activity during the NEP period, overwhelms state economic activity as a whole.

Because then it is not the actual means at the disposal of the capitalists (a billion and two billion) that are compared, but only that part of them which was the legal property of the capitalists, and the result is supposedly a faster rate of development of the capitalist economy than the rate of development of the state economy.

Meanwhile, in fact, the totality of capitalist operations developed more slowly, and in the process of this slower development, only the share of the capitalistsʹ own funds increased due to a decrease in the state funds previously provided to them.

This decrease occurred, of course, in connection with the development of state procurement, state and cooperative sales of state products to the population, state trade links between

state agencies for the movement of raw materials, fuel, semi‐ finished products, materials, tools of production.

The bulk of the accumulation of capitalist property falls within the first three years of NEP (1921‐1924); thereafter, its rate of growth slowed noticeably. First, slower growth in recent years compared to the first three years of NEP. This is due to the development of grossly predatory methods of increasing private capital, described in the second section, in the early years, which were then subjected to ever more serious restrictions.

Secondly, a gradual increase in the importance and share of credit capital in the total mass of private capital in recent years has been firmly established. This is primarily due to the partial displacement of private capital by the state and cooperation from certain areas of trade. That is why the new accumulations that had settled in the hands of the capitalists, which only partially found a way out in the capitalist organization by the same entrepreneurs in the handicraft industry, in increasing procurement and trade in meat, vegetables, butter, etc., were looking for applications in the money market. And the development of the industrial and procurement activities of the capitalists in these areas (handicraft, food, etc.), in turn, made it possible to place an ever‐increasing mass of credit capital there.

This was also facilitated by the appearance on the money market of voluntary state loans, partly legal sales of foreign currency and gold (see above about ʺgold interventionʺ), etc. However, state pressure (including through cooperation) on private capital, which drove it into an increasing share in the money market, led at the same time to such a significant result as a decrease in the level of interest in the private money market. According to the data of the branches of the State Bank (summary of the market subdivision of the FEB dated February 23, 1927), one can compare the private interest on the

accounting of bills in seven cities for March 1926 and for January 1927. For these ten months, in the amount of monthly interest on the capitalist money ( ʺfreeʺ) market has undergone the following changes:

March 1926 (in %) January 1927 (in %)

Moscow. Leningrad Arkhangelsk	7‐18 8‐12 7‐10	4‐5 3.5
Kyiv	4‐15	2 3/4 ‐3 1/4
Poltava	6‐12	3‐4
Samara	12‐15	5‐8
Minsk	8‐9	4‐6

Incidentally, this shows that the payment of interest on private credit capital for the year in 1925/26 cannot in any way be considered less than 60 per cent per annum. This is also confirmed by the data of the branches of the State Bank for those cities for which it is impossible to compare with March, but there is information for some month of the second (calendar) half of the year 1926. Here are the data (according to the same report):

(In percent)

Novgorod. 3‐7

Vologda. 5‐8

Tula 8‐10

Morshansk

Kaluga 5‐7

Kharkiv 7‐8

Zinovievsk

Pervomaisk. 8‐10

Saratov 6‐8

Chernihiv

Samarkand 5‐8

Simferopol 7‐8

Thus, the average interest on the capitalist money market (considering the importance of the various centers, the gradual lowering of the level of interest towards the end of 1926, and the need to calculate compound interest) in 1925/26 cannot be considered less than 60%.

Meanwhile, the net income of private commercial capital, according to the definition of the Peopleʹs Commissariat of Trade, is about 32%, and capitalist industrial capital (including fixed and circulating capital together), as indicated in the section on industry, even only 17%. The gradation of net profitability thus corresponds to the widespread opinion that the most profitable for capitalists are money speculations (credit capital), then trade, and then industry.

But one may ask, if there is such a large difference between the profitability of the various branches of activity of private capital, how can it be that some capitalists agree to engage in trade and others in industry, instead of all striving to withdraw only into money speculation? The answer to the question lies in the fact that in reality there is no such division: in the overwhelming majority of cases, the same capitalists are both merchants and financiers, merchants, and industrialists, etc. Here we are mainly dealing not with the exploitation of the merchant and industrialist usurious financier. Here we are

dealing mainly with such a maneuvering of the bourgeoisie with their capital that the largest possible part of the real income on it remains outside taxation (the income of private credit capital to this day almost completely eludes taxation in our country, since our tax system knows almost no external signs of for them (catching).

Only by clarifying and understanding this for oneself can one not exaggerate the real net accumulation of the bourgeoisie and obtain the figures indicated by us in the sections on industry and trade; the income from money and credit transactions goes mostly to the same family treasury of the commercial and industrial capitalist and enables him, having provided for the expenses of the family, to have (together with the income from trade and industry) a certain net accumulation. The materials allow us to give an appropriate approximate calculation.

The private capitalist maneuvers his means in the most varied ways. Today he trades in manufactory, tomorrow he goes into grain or other procurements, then he takes on state loans, begins to speculate in gold, grabs at the capitalist exploitation of handicraft industry, etc. turns its funds to finance, for example, the private industry of vegetable oils or capitalist trade in those areas where there was no particular displacement (meat, vegetables, firewood, etc.).

One and the same capitalist not only alternately, but simultaneously, invests his capital in different branches of activity.

He considers this as an obligatory insurance against changes in the degree of always possible (in his opinion) pressure from the Soviet government in one direction or another, and also uses all these methods of temporary changes in the situation and provides himself against its fluctuations.

When a capitalist closes a textile store, this usually does not mean at all that he has gone bankrupt. Usually this means only that, given the position, he finds another use more profitable for his capital and transfers it to the appropriate branch of activity.

In general, such a practice is very widespread when a capitalist has a clearly existing not particularly large industrial or commercial enterprise (even not particularly profitable) ‐ only as a legal cover for his existence and operations, and allocates most of his capital to other operations (financing of cottage industries, private blanks, etc.), which remain uncontrolled and unknown to the tax authorities and for which his apparently existing enterprise serves only as a legal hook, cover or disguise.

These three features of the contemporary activity of private capital in the USSR are: 1) the variability of the occupations of one and the same capitalist;

2) the simultaneous placement by him of different parts of his capital in different areas and;

3) the prevalence of cover‐up of the main occupation by some secondary, from the point of view of the capitalist himself, legal enterprise—these three features in their present development are the consequence of what capital takes for itself out of the existence of the Soviet system.

Of course, to a certain extent, all these features also existed under the rule of capitalism, but in a much weaker form compared to the current state. The fact of the existence of the Soviet system, on the one hand, creates a tendency for private capital to extremely increase its maneuverability in the three directions indicated, and on the other hand, it facilitates the implementation of this mobility itself in comparison with pre‐ revolutionary times.

Before the revolution, factories were owned, but now they are often rented, etc., which makes it easier to extract investment funds if necessary. It does not require any explanation why the presence of the dictatorship of the proletariat in the country arouses in the capitalists an increased desire for insurance in the event of all sorts of political and economic conjunctures and combinations. From this follows the well‐known phenomenon that the growth of private capital invested in industry (if we discard concession capital) is much slower than the growth of private capital in general.

On October 1, 1924, out of 300 million rubles. private capital in industry accounted for (according to the CSB tables) only 13 million rubles of concession capital, or about 4%. And on October 1, 1927, yes, 450 million rubles. of private capital in industry, concession capital accounts for 47 million rubles, or about 10% (I take the figure for concession capital as of June 1, 1927, according to a report to the Council of Peopleʹs Commissars of the USSR).

Thus, the ʺinternalʺ private capital in industry (without concessions) has grown from 287 million rubles over the past three years. only up to 403 million rubles, or only 40% (which, by the way, lags behind the growth rate of Soviet funds in industry). And in its other forms (commercial and credit together), private capital grows over the same three years from about 500 million rubles. up to 1,050 million rubles, i.e. by 110%. A sufficient illustration of the well‐known fact that the internal capitalists in the USSR are not particularly eager to invest their capital in forms of activity that bind it firmly and for a long time. And in industry itself, “internal” private capital exists partly in a hidden form (false artels), partly in the form of financing the domestic system of capitalist industry, partly in the form of working capital with rented factories, etc.—in a

word, for more than half of the comparatively easily extractable form.

The class distrust of the capitalist in the regime of the dictatorship of the proletariat is quite understandable. The foreign concessionaires feel protected by our interest in economic relations with the bourgeois states from which they come to us. The internal capitalists, on the other hand, have only the completely correct conviction that we are carrying out NEP not for their fair eyes, but because we need it, and in those forms and to the extent that, again, we need it.

Moreover, questions about all the details (whether to let private capital into grain procurements in a given year, whether to let it into the leather industry, etc., etc.) ‐ we decide all these questions ourselves, unilaterally, without any negotiations and agreements with private capital.

Under such conditions—although we have established the New Economic Policy in earnest and for the long haul—the capitalist prefers to keep his capital as mobile as possible.

Indeed, the New Economic Policy will not disappear if we impose very high taxes on private commodity mills, tanneries, and oil mills.

But the domestic capitalist, who has not protected himself with a special concession agreement, is not inclined to build a new factory at his own expense, not knowing whether in five years the tax and other policy regarding private industry in this particular industry will change (carrying out a sustainable differentiated approach for a long period, may influence to some extent in this regard).

From all this follows a change in the very type of capitalist activity in the USSR in comparison with pre‐revolutionary Russia.

Before the revolution, the capitalists had been divided into quite distinct groups, each with a special range of occupations: bankers, manufacturers, domestic wholesalers, exporters, etc. a financier, and a wholesaler, and an overt or covert organizer of industrial products. When a lawsuit allows one to penetrate into the essence of the totality of the operations of a large capitalist, we almost always face a kind of maneuverable

ʺcombineʺ (like the one cited in the second section of the example of the Leningrad capitalist Legach, who immediately had a small water fleet for transporting goods, shot Pargolov several thousand acres of forest for development and trade in it, rented a plant and was engaged in money speculation).

The peculiarities of the Soviet order, as indicated above, even make it easier for the modern capitalist to increase the mobility of his capital and the ease of extracting it from business in comparison with the pre‐revolutionary capitalist.

Before the revolution, the store was often in its own house— now in rented premises; before the revolution, the plant was owned ‐ now, often, rented, etc.

Since basically the same persons are both capitalist merchants, and owners of credit capital, and organizers of capitalist industrial production, the total number of all capitalists in the USSR (except agriculture) should not exceed those almost 180 thousand people, which are, according to tax statistics, average: and large private merchants and industrialists (including about 170 thousand merchants, starting from the third category, and about 10 thousand industrialists, in whose enterprises more than three persons are employed, counting the owner and helping family members ). Actually, their number is not 180 thousand, but less.

The tax statistics for the period April‐September 1926 actually show almost 180,000 private commercial and industrial patents

(starting from the third category, that is, except for pedlars and stalls in trade, and except for those with less than three persons in the enterprise, in industry). But it happens that one owner owns several trading establishments or both a trading and industrial establishment—then a special patent is chosen for each one.

On the other hand, there may still be several thousand capitalist financiers who (or whose family members) do not choose a single patent. Although, by all accounts, there are hardly many such cases, income tax statistics certainly show that there are fewer capitalists than there are corresponding patents. Thus, if we accept the existence of 180,000 capitalist families in the USSR, this would be an exaggeration rather than an understatement.

In their hands is concentrated all the private capital established by us (except agriculture)—commercial, industrial, and credit capital, totaling 1,600 million rubles. as of October 1, 1927. Almost as many capitalist non‐agricultural families (170 thousand) were determined for 1925‐26 by the calculations of the Commission of the Council of Peopleʹs Commissars of the USSR on the severity of taxation (July 1927).

Roughly indicative order, one can give approximately the following scheme of the totality of their total income, including net accumulation for the last financial year. According to the Narkomfin questionnaire developed by P. Kutler (second development, according to complete personal data, p. 9, No. 5 of the NKF “Finance and National Economy”, December 1926), for the in trade and industrial enterprises amounted to about 490 million rubles.

By net profit here we mean the amount of profit received by the owners of enterprises, minus the payment of interest on invested and borrowed capital and minus all taxes, except for

income and housing, but without deducting the living expenses of the ownerʹs family. Over the next two years, private capitalist turnover, according to the official data already cited, increased by more than half against 1924/25. Therefore, for 1926/27, the value of net profit in the indicated sense for private commercial and industrial capital can be taken to be about 750 million rubles. To this we must add the net profit on credit capital, which amounted to about 60% per year with a value of more than 400 million rubles, which gives about 250 million rubles. net profit of private credit capital.

In sum, we thus obtain for 1926/27 about 1 billion gross net profits of 180,000 capitalist families from the exploitation of the working population by their capital (in other words, about 4% of the national income).

To get net savings, you must deduct, firstly, living expenses, and secondly, income and apartment taxes. We consider it possible to take an average of 300 rubles for living expenses. per month. Of course, many live longer (even according to income statistics, there are several tens of thousands of payers with an income above 400 rubles per month).

But there are many more such owners of small shops, especially in the provinces, who live on less than 300 rubles. Indeed, the figure of 180 thousand owners also includes the owners of all permanent retail stores, since only a trading establishment is really a shop, and not a kiosk (a kiosk, according to the law, is a booth where no one except the seller can enter). If we assume that the expenditure budget of 300 rubles. per month (above income and apartment taxes) is taken below the actual average, then the number of 180,000 capitalists, on the other hand, is almost certainly taken more than the actual one (according to the peculiarities of our tax statistics), so that in any case the possible underestimation of the average capitalist expenditure budget will be balanced (necessarily also take into account the

residence of a number of people in their own houses and dachas, in apartments at their enterprises, etc.).

With a conditional average monthly expenditure per family of about 300 rubles, about 650 million rubles must be deducted from the gross net profit of the capitalists for 1926/27 for the living of capitalist families. Income and apartment taxes, together with the capitalists, according to the budget for 1926/27 with local allowances, amount to about 100 million rubles. Thus, out of a gross profit of 1 billion as a result of 1926/27, all the capitalists together (except agriculture) are left with only about 250 million rubles. per year of net savings.

This amounts to about 20% per year for all private capital (by the beginning of the financial year 1926/27, about 1,300 million rubles, excluding agriculture). Less than 10% of the entire accumulation of the country is obtained.

If we approximately distribute credit capital between the owners of commercial and industrial capital (allocating a small part, as personal usury for consumer purposes, etc., which is usually delimited from the activities of capitalists engaged in trade and industry), then it turns out that in In 1926/27, merchants accounted for about 150 million rubles from net accumulation. and for industrialists, about 75 million rubles, and the remaining 25 million rubles. fall on the representatives of pure money capital, who are not involved in the organization of either trade or industry.

Of course, this calculation is only schematic; we only want to emphasize here that without taking into account income from credit capital (not taken into account by the statistics of taxation of trade and industry), it is impossible to explain not only that large net accumulation, which follows from the calculations of the Peopleʹs Commissariat of Trade (Comrade Dvolaytsky), or accumulation, which follows from the calculations of the State

Planning Commission (comrade Strumilin), but even that smaller net accumulation, which follows from this book.

For its entire size would have to be absorbed by the cost of maintaining a family, and it would still not be enough—unless we assume that the average and large Nepman live approximately within the budget of a factory worker. But such an assumption, of course, is clearly absurd and contradicts the evidence that stands before everyoneʹs eyes.

It can be assumed that out of the entire credit capital (about 400 million rubles, except for a relatively small part really separated from trade and industry), the overwhelming majority is in the hands of those capitalists who officially act as wholesale and semi‐wholesale dealers.

There are only less than 25,000 of them, and they finance, firstly, the entire average private trade, secondly, handicraft and partly capitalist industry, and thirdly, preparations (to which they are sometimes transferred personally).

They, by the size of their funds and commercial level, can and are able to play on the stock exchange, speculate in participation in government loans, etc. e. As we have seen, on October 1, 1926, the so‐called ʺown capitalʺ of private traders (including smuggling, etc.) amounted to 550 million rubles, and in industry about 400 million rubles. ., and credit capital (except for the agreed small, limited part) amounted to about 350 million rubles.

We believe that it will hardly be a big mistake if we distribute it among the owners in such a way that the total capital of the “merchants” (trade and credit) is about 850 million rubles, and the total capital of the “industrialists” (industrial and credit) is about 450 million rubles At the same time, reality brings these categories even closer, and many ʺmerchantsʺ are at the same time ʺindustrialistsʺ (for example, the organizers of the

domestic system of capitalist industry among handicraftsmen). If we were to start singling out purely industrial capitalists in the USSR, then, apart from foreign concessionaires, it would be unlikely that any significant part of private capital would come to their share.

From this follows the incorrectness and insufficiency of the method common among us of considering the private capitalist only as a merchant or only as an industrialist, and, moreover, confusing him in one case with beggar peddlers, in another with handicraftsmen, and in all cases without taking into account what is in his property. credit capital, which plays a major role in the entire private economy.

My specific calculations, despite their caution and the choice of smaller values when it is impossible to choose, may require further refinement and improvement, depending on the accumulation of new data and their better elaboration. But the very necessity of approaching private capital with more serious and careful assessments, with greater regard for the uniqueness, totality, and internal coherence of its forms under the conditions of the Soviet system, I think I have shown enough.

For a preliminary numerical concrete orientation, in our work we have used, summarized, compared, and evaluated everything significant that we currently have on this issue.

According to the calculations of the Commission of the Council of Peopleʹs Commissars of the USSR on Gravity (Taxation (July 1927), the average income of 25,000 big capitalists for 1925/26 was determined at 16,000 rubles per owner, i.e., more than four times the average annual income medium‐sized capitalists (about 150,000 people).

With regard to private credit capital in agriculture, given the present state of information, we can only say that its role is

great. But there is almost no data for the digital expression. Its main types:

1) money loans from the capitalist kulak elite to the poor and middle peasants,

2) loans to the poor with draft animals (and sometimes inventory) on extortionate terms. A study of the size of the first type of private credit in agriculture should establish the CSB by means of a more massive collection and corresponding development of peasant budgets (middle peasants and poor peasants).

Judging by all the reports of individual village observers and the peasants themselves, the results should be significant. If the data of about 10,000 peasant budgets of the CSB (see the section on agriculture) were extended to the entire village, then the amount of intra‐peasant money credit would be about 300 million rubles. But we doubt how legitimate such distribution is. In‐kind loans to the poor in working cattle and implements by the kulaks must be distinguished from the cases described in the third section, when the kulaks are formally ʺhiredʺ to the poor with their livestock as ʺpiecework workers.ʺ

In the latter case, we are dealing with the organization of capitalist production in a disguised form, i.e., with productive private capital in agriculture. This must be distinguished from private credit capital in kind in agriculture. These are the cases when the kulak himself does not hire himself as ʺpiecework workerʺ, but only lends the poor in kind seeds for sowing or a horse or implements and materials on enslaving conditions.

The prevalence of this type of credit—maliciously exploitative type of credit—is confirmed by all observations, but digital study of it is entirely in the future. Until now, in our statistics (insofar as one can judge from the editions published up to the current 1927), the populist tradition of considering the village

as a single whole has been alive. Hence the extreme paucity or implausibility of the data as soon as one raises any question of class relations in the countryside (labor laborers, credit exploitation, distribution of income and real tax burden, etc.).

Here is a complete parallel with the reactionary traditions of populism in agronomy. For the populist, the ʺpeasantʺ was depicted as the leader of the obligatory consumer economy, which sows bread for family consumption ‐ and thatʹs it. Connection with the market is something terrible, abnormal, capable of destroying the labor system of farms and leading to stratification. The most that can be allowed is to sow for export (in order to pay taxes) the same ʺholy breadʺ.

We are now reaping the fruits of this reactionary Narodnik tradition in rural statistics and agronomy. In statistics, there is a lack of information about interclass relations, which is necessary for the practical policy of the proletarian state.

Sometimes you have to act simply by touch, by eye (and even then “indicative”). In agronomy, the inert relation of fairly wide layers of the agronomic environment to the vitally necessary reduction in the role of grain crops in agriculture, to an increase in the marketability of the peasant economy, to a much more intensified transfer of it to the production of drought‐resistant fodder plants for the development of cultural animal husbandry, to the transition to the cultivation of agricultural raw materials for industry, etc. Again and again, under the guise of ʺsix‐fields,ʺ we are presented with traditional grain farming, designed primarily for the subsistence system of family farming, as it was portrayed by the apologists of Narodism and as portrayed by its epigones.

Only very recently—under the influence of the pressure of the Soviet government and in particular the Peopleʹs Commissariat of Agriculture of the RSFSR—is this inertia of the agronomic

environment saturated with populist traditions only beginning to move a little from the dead center. It is one of the essential factors in the delay in the progress of our agriculture and in the failure to obtain the full possible effect from additional funds invested in it (including through state credit).

Breaking to the end this tradition, this legacy of the backward past, whose ideology has outlived it and hinders the development of new practice, is equally necessary in statistics and agronomy.

It is to be hoped that the new generation of workers, who are now growing up and being trained in special universities, is sufficiently consciously imbued with the importance of this task before them.