Foreign Concessions

Foreign concessions in the national economy of the USSR

Period: 1922-1927
State publishing house 1928
Moscow 1928 Leningrad
Printed at the 1st Exemplary Printing House of Giza. Moscow, Pyatnitskaya, 71.
Glavlit No. A 613. Giz No. 2371 Order No. 4679. Circulation 3000 copies.

Our concession plans and opportunities.
Concessions and the All-Union Economic Plan.

In determining the prospects for our concession policy, we must proceed from the general plans for the construction of our national economy and the position of the Soviet Union among the surrounding capitalist states.

The Soviet Union was the only state in the world that, after the imperialist and civil wars, independently, without any outside help, restored its national economy to the pre-war level. Now the period of reconstruction of our national economy has begun. This period will require more foreign capital assistance than the recovery period could have required. The acceleration of the rate of industrialization of the country, the complete renewal of the fixed capital of our industry, its construction on a higher technical basis, the construction of new factories, the introduction of new technology—all this, which is the main and decisive factor in our movement towards socialism—all this will be accomplished in a shorter period. time if we manage to use foreign financial and technical assistance. Of course, attraction of foreign capital by means of loans is for us the most desirable form of drawing this capital into the construction of our country, but we can hardly count on loans in sufficient amounts in the next few years. If we remember that, along with foreign capital, we also need foreign equipment, we will see that in the next period of time the concession form of work of foreign capital will be very relevant in our country.

The new period in the construction of the national economy of our Union must also be a new period in our concession policy. We are building socialism and building it in a planned order, firmly regulated by the proletarian dictatorship. And concessions, as an element which we consider very useful to use in building our socialist economy, must naturally be linked with this plan, must naturally enter into it as an inseparable part of it.

That is why we are confronted with the question of drawing up a plan for concession projects, that is, of identifying those parts of the national economy that we would like to develop with the help of foreign capital. We have decided to put forward to foreigners those areas to which we wish to draw their attention. In drawing up such a plan, the question of its forms and limits naturally arose before us. In what areas and to what extent can a foreign element be allowed into our economy, what are concessions?

Not an object, but a subject of the concession policy.
Of course, we do not want to be the object of concession policy, because only colonial states that fall under the economic and political dependence of other economically stronger states can be the object of concession policy. We don't want to be a colony and we won't be. We have been growing up to now and will continue to grow just as quickly without becoming an object of concession policy, which was and still is a number of Eastern states and even old Tsarist Russia, because if we recall the history of Russia, then only recently, in at the very end of the tsarist regime, attempts were made to take the role of a subject in the concession policy. A concession plan was worked out, a number of decrees and laws were issued with the aim of attracting foreign capital to Russia on certain established conditions. Prior to this, foreign capital took what it wanted,

Proceeding from the fact that we are the subject of a concession policy, in our plan we firmly establish the limits to which we attract foreign capital, we take into account that this attraction gives our socialist construction, what opportunities will open up for us in terms of enriching and strengthening our economy.

Before the war, about 80 million rubles of real fresh capital came to us every year. We can hardly count on such a tide in the coming years, but we have nothing to fear from it either. After all, the United States in the 19th century attracted foreign capital on a scale that we cannot even dream of, because both Japan and Belgium developed at the expense of foreign capital. And none of these countries became a colony. Naturally, if we introduce the attraction of this capital within certain limits set by us , we will not have to fear that we will turn into an object of the concession policy.

How to choose concession objects.
Our concession plan must, of course, be a derivative unit of the general plan for the reconstruction of the country's national economy. It must help, accelerate the development of industry, must promote the industrialization of agriculture. And the work of foreign capital in a number of branches of our national economy will free up the country's resources for the strengthening and development of other groups in this economy. That is why the objects of concessions should be closely linked to the construction plans for the coming years. The necessity and sequence of attracting foreign capital in concessions within the framework of the general tasks of reconstructing the national economy is determined by the degree of technical backwardness of individual industries that need foreign capital and technology in the first place. It is not excluded, of course, the possibility of attracting foreign capital to enterprises,

Each individual object must be chosen so as to minimize the evil that will inevitably accompany the process of introducing a foreign body into our system; it is therefore necessary to foresee the dialectical ways of introducing foreign capital, to foresee the possibilities of our influence on it. And here, first of all, the so-called "command heights", which under no circumstances we can let go of the hands of the Soviet state, must be excluded from the list of possible concessions.

But with all this, we are well aware that our plan will be real only if it provides a junction between the interests of our economy and those or other capitalist groups. By its nature, the concession policy is a policy of a certain compromise between certain groups. Previously, these were private forces, only to a small extent regulated by the state. Today, on the one hand, the state, on the other, groups of capitalists. And here we have to look for and find the possibilities of such a combination of interests in which they could be needed by us, and we by them. The economic criterion for us here should be the effect that will be obtained in expanding the production of goods, raising the base of production to a higher technical level. An economic criterion for the capitalistis the rate of profit which he can achieve. For even Marx said that “once there is sufficient profit in cash, capital becomes bold. Provide 10%, and capital is ready for any application, at 20% it becomes lively, at 50% it is positively ready to break its head.[ 1 ]. Our legislation provides enough legal guarantees for the concession.

The tentative plan of concession objects outlined by the Main Concession Committee for its full implementation will require up to 3 billion rubles, which is about ¼ of all currently invested authorized capital of state industry, transport and trade. But no one, of course, has in mind the fulfillment of this plan entirely at the expense of foreign capital. It is a list of objects from which a foreigner can choose. This plan, of course, is not stable. It will probably be reviewed and rebuilt constantly in ongoing work. For since it includes objects that are part of the general plan of the national economy, which will be built and restored at the expense of state funds, by the time the applicant for the concession arrives, the plant chosen by him may be built by us, or we will spend so much money on it, that leasing it to a concession would be inappropriate. In addition, the ratio between the state and attracted concession capital will constantly be individualized, depending on the nature and condition of each given branch of the national economy.

Until now, concessionaires have been striving mainly for industrial centers. Since the delivery of concessions took place in an unplanned manner, we rarely sent a concessionaire to one or another non-industrial area. Meanwhile, the industrialization of the Union requires the construction of industry in those regions where it does not yet exist or where it is weak. Naturally, therefore, it is of great interest to us to attract foreign concessionaires to these areas, even at the expense of some concessions in concession agreements.

In addition to this, with the greatest willingness of our plan, we will rent out concessions that provide for the investment of large capitals, because, as we have said before, they will enable us to throw our funds on other work; then concessions that increase our exports or improve conditions for imports; furthermore, concessions for those branches of production which in our country are either not developed at all or are developed to a minimum degree, even if these branches require the investment of small capital.

Finally, concessions for the development of our raw materials are highly desirable, because after the rapid growth of raw materials in previous years, in 1926 there was a slowdown in the growth rate of most agricultural crops and even a reduction in some of them. The raw material base was one of the limits for the development of a number of branches of industry in 1926/27. And this may lead to a slowdown in the rate of development of production in subsequent years to a much greater extent than hitherto.

If up to now we have considered it inexpedient for concessionaires to work in those branches of the national economy where our state-owned enterprises already operate and meet the needs of the market, now that our enterprises are already more or less firmly on their feet, we can allow concession enterprises to work next to them. . In 1926/27, the commodity shortage in its elementary form was eliminated, the market made new demands, questions of the quality of the assortment, and prices began to play an important role. And here the work of the concessionaire next to our enterprise in a competitive environment will pull up our enterprises, competition will lead to an improvement in quality, to a reduction in the cost of products at our enterprise, to the approximation of this quality and prices to the quality and prices of the world market. That is why concessions of this kind are also included in our concession plan.

Objectives of the concession plan.
Thus, our concession plan must fulfill three tasks : the main task of our concession policy is the task of attracting foreign capital to those areas of our industry where there are no capital investments yet and where we will hardly be able to invest this capital ourselves in the near future ; the task of attracting foreign capital for the purpose of restoring, renewing and transforming fixed capital in existing state-owned enterprises , and the last task is to create a carefully and systematically conducted competition that will bring Soviet industry closer in quality and prices to the world .

These are, in general terms, the prerequisites that necessitated the drawing up of the concession plan, and the grounds that must be taken into account when implementing it.

* * *

Let us now turn to an acquaintance with what we can offer to foreigners, from which they will be able to make their choice.

transport concessions.
Before the war and the revolution, transport concessions almost exclusively for railways were the largest source of foreign capital in Russia. Of the total fixed capital of railways of general importance in 1913, 7.539 million rubles. only 2.880 million rubles. was spent from state funds, and the remaining 4.659 million rubles. were obtained through foreign, mainly, loans from private railways.

The USSR's need for new railways is estimated at tens of thousands of miles. Existing roads, in turn, require huge sums to increase the throughput and carrying capacity. Undoubtedly, we will not soon be able to cover our Union with the railroads so necessary for us, given our vast expanses, at our own internal means. It is therefore natural that the attraction of foreign capital into the construction of new railways is highly desirable for us. Of particular interest to us are the roads, which, in addition to strengthening domestic trade, will give us significant export goods. And among them, we would be most willing to attract foreign capital to the construction of roads that will enable the settlement of new areas,

The State Planning Committee of the USSR has scheduled a number of such railways for concession. Of these, 4 are directly related to the exploitation of forest areas and are expected to be leased out for concession for a joint combined venture. Of these lines, the roads Ob-Belomorskaya (2,100 versts), Kotlas-Soroki , and Ob-Kotlas (both together 2,100 versts long) are lines with great export opportunities for the export of timber. The Perm-Pechora line (440 versts) is connected with the development of forests for the domestic market. It passes through the forests of the Northern Urals and the upper reaches of the Pechora River .. In the absence of coking coal in the Urals, iron production takes place here on charcoal. In connection with the gradual decrease in timber reserves here, this line will therefore be of great economic importance.

The next group is represented by railways associated with metallurgical and coal concessions: Kuznetsk - Telbes (96 versts) and Barnaul - Kuznetsk (330 versts). The first line is connected directly with the concession for the construction of a metallurgical plant and with the development of the richest coal in the Kuznetsk basin. The future of both these factories and roads is enormous. These lines will give an outlet to the products of the metallurgical plant and coal in the Ob region , and then to the treeless and fuel-deprived Irtysh steppes in the Semipalatinsk region.

Next comes the Alexandrov Gai - Chardzhui railway, 1,800 versts long, connected in the western part with the Emba oil fields. This road, in addition to serving the Emba oil region, is of great importance for cotton growing, because it makes it possible to directly export cotton from Central Asia to the centers of the USSR. The expansion of oil production in connection with the construction of this road will increase our oil balance and will make it possible to increase the export of oil from Baku and Grozny; the intensification of cotton growing, which it will cause, will reduce the import of cotton from abroad.

The next group of roads that may be the subject of a concession are roads associated with the export of agricultural products and the development of agricultural culture. Here we can advance the Fedorovka-Skadovsk-Khorly (250 versts) and Saratov-Millerovo (550 versts) lines.

The construction of these roads will undoubtedly increase the cultivation and export of grain. They pass through rich and grain-growing regions. With the construction of a bridge across the Volga along with the Saratov-Millerovo road and the proposed connection between Saratov and Siberia, this road will become a powerful line for the export of millions of poods of Siberian grain through the southern ports abroad. To the same group belongs zhel. road Barnual - Kulunda in southern Siberia. This line will pass through a rich but sparsely populated area, promising a large surplus of grain.

It may be that, in addition to those indicated, the Crimean South Coast Railway is also offered for concession. road associated with the construction of Crimean resorts.

Concessions for railways may be admitted both for their construction and for their operation. Moreover, in the latter case, the concessionaires will have to obey the general charter of the railways, the tariff legislation of the USSR, the technical control of the NKPS, etc.

In addition to railways, among the transport concessions, foreign capital may be offered the construction of canals (eg the Volga-Don canal) and the development of a shipping company on the rivers of the Union.

Along with attracting foreign capital to the construction of railways and the development of various means of communication, it is highly desirable to build city trams, subways and other urban suburban and interurban lines of communication at the expense of foreign capital. Road and highway communications can also go next to them, especially in areas where the size of the freight turnover does not allow the construction of railways.

Electrification.
The grandiose plan for the electrification of our Union requires enormous capital, and assistance from the concession capital would be very useful here. Therefore, the plan of concession facilities includes a number of power plants, especially hydroelectric power plants, for the construction of which it is expedient to attract foreign capital. We could lease the Svirskaya station, which requires 75 million rubles for its construction, the Moscow station, a number of stations in the North Caucasus and Transcaucasia, etc. Concessions can take place both for the construction and for the operation of power plants. In the latter In this case, the state should reserve the right to regulate electricity tariffs.

Industry.
The industrialization of the country will be carried out by us only if we succeed in transforming ourselves from a country that can only supply raw materials to the world market and is itself subsisted to a large extent on the work of the industry of the bourgeois countries, into a country that produces on a scale sufficient for the construction of socialism as a machine for production of means of production, as well as consumer goods, We must turn from a predominantly agricultural country into an industrial-agricultural country. For this we must build tens and hundreds of factories and plants in various branches of industry. Their construction will require huge funds. It is natural, therefore, that industry is the place where we especially desire an influx of foreign capital. There is almost no branch of industry where we could not hand over concessions.

Metallurgy and metal industry.
The first place among them is the foundation of our industry — metallurgy and the metal industry.

Even before the war, our metallurgy did not keep up with the ever-increasing demand in its development, and in 1912 to cover it, 6 million poods of pig iron and 4 million poods of iron and steel had to be imported from abroad to Russia. The revolution and the civil war reduced the production of our metallurgical plants to almost nothing, and in 1921 we gave, in relation to 1913, pig iron - 2.7%, steel - 4.6%. From 1922/23 our metallurgy began to rise, and in 1925/26 we produced about 54% of pig iron compared to 1913 and about 65% of steel. In 1927/28 they should give 89% and 96%, respectively. Due to the rapid recovery of the country's economic life, the demand for metal industry products is growing at an enormous rate and cannot be satisfied by the factories that are currently operating.

The demand for non-ferrous metals is also growing. This is natural, because in 1913, for example, per capita consumption of copper in Russia was 0.6 pounds, and in the most industrial countries 8-9 pounds, with an average consumption of 2 pounds per capita for the entire population of the earth. The same picture is observed for lead and zinc. Tsarist Russia covered only 2.32% of the need for lead with domestic production (out of a total need of 3 million poods of lead, domestic production provided about 100 thousand poods.) And 27.3% of the need for zinc (out of 2 million poods of zinc, domestic production gave about 180 thousand pounds). As for copper, as well as for lead and zinc, we are still very far from meeting our demand for domestic resources. The demand for copper in 1925/26 was 32,000 tons, but only about 12,500 tons were produced. The demand for lead was 25.

The existing factories have almost exhausted their production capabilities, and the expansion of production is possible only with their expansion, completion and construction of a number of new factories. The Supreme Council of National Economy believes that up to 2 billion rubles will be required to fulfill the five-year program in metallurgy and the metal industry. These costs will make it possible to increase the per capita consumption of cast iron from 1.7 pounds.[ 2 ] pre-war to 3.3 pounds.

With all the tension of our state resources, it will be very difficult for us to fulfill this plan at the expense of internal funds alone. It is necessary to attract foreign capital here, in particular through concessions.

When choosing those enterprises that can be the subject of concession in this most important industry for us, we should proceed from the following provisions:

1) Both enterprises included in the five-year plan and not included in it, but going along the line of covering the difference between the country's need for products and their output, can be handed over to the concession. 2) Enterprises that are directly related to the defense of the country cannot be leased into a concession. 3) The state retains its dominant position in all branches of the metal industry. 4) Enterprises that require large capital outlays are subject to preferential concession. 5) No more than 15% of pig iron smelting and no more than 15% for certain types of its further processing may pass into the hands of the concessionaire.

With these guidelines in place, concessionaires may be given a choice of, for example, the following:

New metallurgical plants : 1) in Krivoy Rog with a capacity of 40-50 million pounds. pig iron, or 2) in the Kuznetsk basin with an initial output of 20 million poods of pig iron.

In addition to them, the objects of concessions may be old metallurgical plants , the equipment of which is very outdated and requires high costs for its renewal.

In the metallurgy of non-ferrous metals , a number of deposits of copper, zinc and lead ores can be offered for concession, requiring preliminary exploration and study before the construction of plants.

In the field of mechanical engineering , we have to take into account not only the lack of funds, but also the lack, both in the past and in the present, of sufficient technical and organizational experience and skills. Therefore, concessions here, along with funds, must bring us foreign technology and production skills.

Here we have; a car building plant, car building plants, a plant for the production of aircraft engines, a tractor plant, a river ship building plant, a plant for general machine tool building, a tool plant, plants for the production of equipment for various branches of our industry, plants for the production of typewriters, dental instruments, etc.

It is natural, of course, that here, as in metallurgy, only a part of the plants can be commissioned, and the list of objects, as individual plants are put into concession, will have to be reviewed and changed, because we are not going to build our entire metal industry at the expense of concessionaires, but we want to receive their help only in the part of our construction that we ourselves limited.

Electrical industry.
The electrification of our Union, which has introduced electricity into all branches of our economy, is causing an enormous demand for electrical products. Now the electrical industry satisfies 55-60% of this demand. In order to cover the capacity of the market by the end of the five-year period, we must invest enormous sums in the electrical industry. And besides, in order to obtain enterprises that are at the level of modern technology, it will probably be necessary to resort extensively to foreign technical assistance. Attracting concessionary capital to the electrical industry can increase the rate of development of production, provide a basis for electrification without importing electrical products, and accelerate the industrialization of the country and the growth of the economy as a whole. In concession, we can hand over enterprises that are distinguished by the complexity and duration of production, requiring expenditures on preliminary experiments and surveys, requiring large investments of capital and significant and costly foreign aid. Their description is made up of factories of steam turbine generators, porcelain insulators, heating appliances, and alkaline batteries. By transferring these enterprises to a concession, the state will save up to 80 million rubles, which we could transfer to some other branch of industry important to us.

Mining concessions.
This group of concessions may include concessions for iron, copper and lead-zinc ores, for gold and graphite.

We have vast reserves of iron ore, which we can use both to meet the needs of the domestic market and for export. But the development of these reserves requires very large expenditures, which are difficult for us. The minimum economic plan for the development of ore mining assumes that in 1929/30 in the south of the USSR (Krivoy Rog and Nikopol) at an expense of 50 million rubles. it will be possible to extract 500 million poods. Naturally, if there were solid applicants, we would hand over on concession a part of the already operating mines that require re-equipment and expansion, as well as new, not yet explored parts of the deposits, with the right to exploit them. An interesting concession object for foreigners is further Dashkesan magnetic iron ore in the Caucasus, which, provided that, along with the extraction of ore, a railway line to the station. Ganja can give a very cheap product. We also have ore deposits in the Far East, in the Kuznetsk Basin and in the Minusinsk Territory. Many of these deposits are currently not only not developed, but not even explored, and they could be real objects for concession.

The next group of concession facilities are copper ore deposits. In addition to the Degtyarinskoye and Zyuzelevsky deposits in the Urals handed over to Lena Goldfields, we have very little explored copper deposits in Siberia (Minusinskoye, in Kazakhstan (Bayan-Aulskoye), in the Perm region. All of them can be objects in the early stages of an exploration concession[ 3 ].

Of particular importance for our national economy may be concessions for the extraction of lead and zinc. We pointed out above that before the revolution we experienced a huge shortage of these metals - 97% of lead and 91% of zinc were imported into Russia from abroad. According to the five-year program for the development of industry in 1929-1930. it is planned to smelt 1.2 million poods of lead—40% of the need—and 1.62 million poods of zinc—90% of the need. Thus, in the course of the next five years, and with the full implementation of the production program for lead and zinc, we will not be freed from importing these most important products for us from abroad. At the same time, it must also be borne in mind that the production of lead and zinc is very complex in technical terms and very expensive in terms of costs. For the annual production of each pood of lead and zinc, it is necessary to spend on the construction of mines, factories, equipment, etc., and for housing construction up to 14 million rubles, which, according to the calculation of consumption in 1929/30, will require about 5 million pounds of lead and zinc, up to 70 million rubles. It is natural, therefore, that the concession of lead-zinc enterprises is highly desirable. At present, lead and zinc are smelted by state trusts in Altai and the Caucasus. In addition, the concessions "Tetyukhe" in the Far East and "Lena Goldfields" in the Zmeinogorsk and Zyryanovsky districts in Kazakhstan operate.

But in addition to these deposits, which are already being worked on, we have the richest deposits of lead and zinc in the Nerchinsk District, in Kazakhstan and in the Far East. Some of these deposits may be quite real objects of concessions.

The next group of mining concessions are gold mining concessions. Our gold industry, in view of the need to switch to the mechanical development of gold-bearing rocks, requires expenses in the next 2 years up to 20 million rubles. Still greater expenditures are required for the development of the gold industry, both in the still little explored deposits, and in those that were already in development, but extraction from which is possible only with extensive mechanization and very large investments of capital. Such deposits could serve as the object of concessions. They are available in the Urals, in the Yenisei province, on the Far East coast and in Yakutia.

Of the other mining resources that could be handed over for development in a concession, graphite is of undoubted interest for foreign capital. We have enormous deposits of graphite in the Turukhansk Territory, in Siberia on the Kureyka River. Part of this deposit may be leased out in concession so that the mined graphite will be exported abroad.

Fuel concessions.
Along with concessions for the extraction of various ores, concessions that increase the country's fuel balance are of great interest to our economy: concessions for coal and oil.

To achieve in 1929/30 coal production of 2.642 million poods, it is necessary to invest in the coal industry for new work, major repairs and housing construction up to 750 million rubles. It will be very difficult for us to carry out this work in the required relatively short period of time with our own forces and means. Therefore, it would be highly desirable to lease some hard coal mines into concession. Coal concessions can take place both in the Donbass and in the Kuznetsk basin and the Caucasus.

As far as oil is concerned, the situation is somewhat different. Baku and Grozny industries developed rapidly on their own strength and resources. We have fully mastered the development of these richest deposits. Therefore, the admission of foreign capital here in the form of concessions seems unnecessary and even harmful. Some of the other oil fields may, under certain conditions, be the subject of a concession. In areas already being developed, concessions may take place in the Uralo-Emba region. Of the fields that are little explored, but certainly rich in oil, deposits in Kamchatka, in Uzbekistan, on the eastern coast of the Caspian Sea can be handed over to the concession.

It is natural, of course, that the concession of some of these deposits will entail leaving the others to us, so that at any given moment the state occupies a dominant position in each given branch of the mining and fuel industries.

Chemical industry.
Our chemical industry, both in pre-revolutionary times and now, trails behind the world chemical industry. Yes, during the war, the organization of the chemical industry in Russia was of a handicraft character, and it remains the same today. Before the war, the entire fixed capital of the chemical industry amounted to 106 million rubles, but in modern prices, the entire fixed capital of the chemical industry as of October 1, 1926, amounted to 318 million rubles. We do not have a number of the most important branches of the chemical industry. As a result, with the share of the chemical industry of the USSR in all factory production in 1923/24 at 8%, the share of chemical imports reached 25%. And beyond this, the prices of chemical products in the USSR are much higher than world prices and have a higher index in relation to world prices than the prices of other manufactured goods. It is therefore natural that the development of the chemical industry requires large investments of capital. In order to have, by the end of the five-year period, the production of the chemical industry that is normal for the Union, 300 million rubles must be invested in it. If it is impossible to invest such funds from the state budget, concessions may be the source of these funds.

Many branches of the chemical industry require either foreign technology, or foreign equipment, or an influx of fresh funds. Therefore, foreign capital or, in other cases, foreign technical assistance is desirable both for the development of non-existent branches of the chemical industry in our country, and for the development and reconstruction of existing ones. Concession facilities can be found in the production of nitrogenous and potassium fertilizers, in the production of synthetic alcohols, resins, in the production of dry distillation of wood, in the production of motor fuels, compressed and rare gases, fine pharmaceutical products, zinc and titanium white, etc.

Timber and paper industry.
The total forest area of the USSR, according to approximate estimates, is approximately 850 million acres, of which about 550 million acres are convenient. But even this area is not all within reach and can be exploited only in the construction of railways, the cleaning of rafting tracks and the colonization of forest areas. Currently, up to 100 million acres of forest are available for exploitation. The possible annual leave, i.e., the normal annual increase in wood, is determined at 23 million cubic meters. soot But we cannot use this amount either. The actual vacation reaches no more than 60% of the possible. How insignificant our use of our forest resources can be judged by some comparison with Finland. The total forest area of Finland is no more than 3% of the forest area of the USSR. Meanwhile, Finland annually exports 1.000. 000 standards of sawn material and about the same amount, in terms of standards, pulp, wood cash and paper. Our pre-war export of timber reached 1,000,000 standards, and the maximum export in 1926/27 will hardly reach 400,000 standards, that is, our present export is only 20% of the export of Finland.

The imperialist and especially the civil wars brought great disorder to the woodworking industry. At this time, the timber industry was turned into a wood harvesting industry.

The restoration of the woodworking industry began in 1922/23. In 1924/25, there was already a shortage of sawn timber. In 1925/26 even the expanded program (200 million cubic feet) was unable to meet the expected demand for sawn products.

The development of the timber and wood-working industry is currently hampered mainly by the insufficiency of working capital and the depreciation of fixed capital.

Even before the war, Russia was far behind in the field of technology in the forestry and woodworking industries. The imperialist and civil wars have thrown us even further away from the successes and technical achievements of Europe and America in this field.

For the further expansion of sawmill production, it is necessary to build and put into operation new plants, new equipment, repair and renovate the old, improve and rationalize the production process. Therefore, in the near future it was planned to make capital expenditures in the amount of about 25,000,000 rubles.

The situation is no better in the area of the paper industry.

In 1913 the total number of wood pulp, pulp, paper and paperboard factories is 212, with a total workforce of about 413,000 and an annual output of 140,000 tons of wood pulp and pulp and 400,000 tons of paper and paperboard.

As a result of the war and the formation of limitrophic states, 138 enterprises remained within the USSR with 28,000 workers and with a possible annual productivity (until 1913) of wood pulp and pulp of about 88,500 tons and 220,000 tons of paper and cardboard.

Even before the war, the country's need for paper and cardboard was not satisfied by the domestic industry, and a significant part of this product was imported from abroad.

The five-year hypothesis for the development of the paper industry is built on the assumption that by the end of the five-year period, i.e., by 1929/30, the per capita consumption of paper in the USSR should double against 1914, i.e., reach 5.7 kg, or 14 lb., versus 2.9 kg, or 7 lb., in 1914

The growing imports of paper and cardboard from year to year indicate the enormous importance for the USSR of the expansion of existing factories, as well as new construction in the paper industry.

But one thing is our desires in the field of development of these industries, another thing is the real possibilities.

The failure to fulfill our construction programs in the timber and paper industries, with the obvious need to implement them, since one of these industries is exporting, and the other is importing its products, speaks of how urgent the question of attracting concession capital to these industries is.

Concessionary capital in the timber and paper industries, attracted according to a definite plan, coordinated with the plan for the development of state industry, could, on the one hand, awaken our dormant forest resources and, on the other, would make it possible to maintain an appropriate pace of development of these branches of industry.

Before the war, the timber and paper industry and trade were supported quite solidly by foreign capital. In 23 timber enterprises there were more than 25 million rubles. foreign capital.

At present, it is necessary to outline ways of attracting foreign capital in which foreign capital could not interfere with the development of the state timber and paper industry.

In connection with the great growth of the state forestry and woodworking industry and the development by it in recent years of almost all forests that are within the reach, concession objects in most cases have been identified in areas that are inaccessible. In this connection, a number of measures should be carried out in many areas for the economic recovery and revitalization of these areas (railway construction, expansion of waterways, colonization, development of other industries, etc.).

Concession facilities in the timber and paper industries are planned mainly in the regions: Severny, in the Urals, in Siberia, in the Caucasus and in the Far East.

A total of 35 concession sites are planned, with a total area of 17,200,000 acres, with a possible annual timber supply of up to 350 million cubic meters. ft.

Agricultural concessions.
The Soviet Union occupies one-sixth of our planet in terms of area, and less than one-tenth of our planet in terms of population. Despite this, in many areas of the Union there is a land shortage. The main reasons for this are: the low productivity of land involved in peasant farming, and a significant amount of land that requires either drainage or irrigation in order to become available for agricultural exploitation. Raising the productivity of the lands developed by the peasant economy and expanding the land area by means of irrigation and drainage for the purpose of developing it are the first and most urgent task of the Soviet government. The general direction of our agricultural policy is timed to the maximum development of marketability in agriculture and its industrialization. The implementation of these measures requires extremely large funds,

Concession objects in the field of agriculture can only be land areas that require melioration, that is, in some cases, irrigation, and in others, drainage. There are two types of such concessions:

1) The concessionaire receives a free area of land requiring reclamation, which is put into operation for a period specified in the contract.

2) The concessionaire reclaims the vacant area, maintains reclaiming facilities during the term of the contract and receives a certain remuneration from the government. The exploitation of the reclaimed lands is assumed by the government itself.

Within the limits of the Union, 12 concession facilities are planned that require land reclamation, with a total area of 4 million acres. The capital required for these works is estimated at about 300 million rubles. In addition, on the developed lands, for the purpose of industrializing agriculture, concessions are possible in the areas of field crops, animal husbandry, poultry farming, sheep breeding, etc.

Concessions in the field of cotton growing.
The needs of the textile industry of the USSR make it necessary to expand the area under cotton crops. Necessary increase in irrigated area for the five years of 1926-1930. should be expressed in 1.907.000 acres. Such an increase, in addition to large expenses for the settlement and development of irrigated areas, will require more than 200 million rubles for irrigation construction.

The difficulty for the Union in allocating such large funds from the state budget raises the question of attracting foreign capital into this construction by surrendering irrigation concessions. In total, up to 30 possible objects of concessions are planned, with a total area of up to 4.5 million acres. The cost of these works is estimated at several hundred million rubles.

Communal concessions.
In pre-revolutionary times, the participation of foreign capital in the construction and operation of communal enterprises - trams, water pipes, sewers, power plants, etc. - was very significant. Of the total amount of foreign capital invested in the industry and trade of Russia, expressed in 1915 at 2.205 million rubles, 246 million rubles, i.e., about 11%, fell on public utilities, and in absolute terms, the capital invested in this branch of the national economy, stood in third place after the mining and metal industries.

The significant growth of the cities of the Soviet Union, as well as the growth of the cultural needs of the population, require a number of expenses for urban improvement. The construction of water supply, sewerage, trams and power plants is associated with the need for large investments of capital.

Of the 816 cities of the RSFSR, only ½ has water pipes, and these water pipes serve no more than 40-50% of the total population of these cities. If we take the total number of inhabitants of the cities of the RSFSR, then only 20-25% of the inhabitants use the water supply system. The average daily per capita water consumption in all cities is 55 liters, in Moscow - 75 liters, while in Berlin it is 129 liters, and in Chicago - 1.007 liters. During the years of Soviet construction, 20 million rubles were invested in the construction of water pipelines in the RSFSR. - the amount, of course, is negligible in comparison with the need.

In order for the population of the cities of the RSFSR, which will amount to 18 million people (except for the capitals) over the next 10 years, to be provided with electricity, it is necessary to invest in the construction of new and expansion of old power plants, about 385 million rubles. Of this amount, only about 50% will be able to invest the cities themselves and about 200 million rubles. required from outside.

No less great is our need for trams. A number of cities with a population of over 100,000 people do not have trams at all. The need for funds for tram enterprises is about 100 million rubles, not counting such enterprises as the construction of the metro in Moscow.

Foreign capital can find here a sufficient field for its activities.

Building concessions.
Every year the Soviet state's own expenditures on all kinds of construction are increasing. However, due to our technical backwardness, we do not always succeed in using these means rationally. Compared with foreign countries, where construction technology has gone far ahead, we build both expensively and for a long time, and the quality is worse. It is understandable, therefore, that it is in the interests of the Soviet Union to enlist foreign construction experience, its high technology and organization, to assist in the construction that is being carried out at the Soviet country's own expense.

Construction concessions are the form by which we attract foreign technical and construction assistance. They differ from all other concessions in that the main purpose of attracting foreigners lies not so much in their capital as in their technical achievements.

Foreign construction firms that have proven themselves financially and technically are admitted to construction activities on the territory of the Soviet Union as contractors. To do this, they enter into a construction concession contract with the Soviet government.

The main duty of concessionaire contractors is to apply the latest technical improvements adopted abroad in the construction business, to mechanize the process of construction work, to reduce the cost and improve the quality of their construction.

housing concessions.
Another type of construction concessions are concessions for the construction of dwellings and their operation.

From the very first years of the imperialist war until recently, the national housing stock has been gradually decreasing. New houses were not built, and the old ones were not repaired and fell into disrepair. As a result, the Soviet Union is experiencing an acute housing crisis that will not be overcome for quite a long time.

In order to satisfy only the growth of the urban population of 12 square meters. arshin per person and compensate for the natural wear and tear of existing houses, it is necessary to build about 3,000,000 cubic meters annually. sazhen, and in order to reach the “hungry norm” of 16 sq. arshin per person, it is necessary to build 38.4 million cubic meters. soot Meanwhile, the housing construction program of various state bodies, cooperatives and private individuals for 1926/27 is planned in the amount of 2,100,000 cubic meters. saz., i.e., only 70% of the need necessary to meet the annual population growth and stabilize the average living area.

There is no need to prove that it is impossible to satisfy the colossal housing shortage with state funds alone. The correct way to solve this problem is mass cooperation of the population. This does not exclude the expediency and desirability of attracting foreign capital under the concession procedure for the construction of residential buildings at the expense of the concessionaires themselves, and, of course, one cannot hope that this capital will be able to eliminate the housing crisis; concession housing construction will be one way to alleviate housing hunger.

Other sectors of the national economy.
Of the other branches of our economy in need of attracting foreign capital, we can also note the sugar, leather and cement industries and the production of canned food.

In the leather industry, concessions for extract factories are of particular interest to us. We currently import up to 70% of tanning agents from abroad. And since almost the entire world industry for the production of tanning extract is in the hands of one American firm, our leather industry is completely dependent on the mood of this firm. Meanwhile, we have a sufficient amount of raw materials necessary for the production of tanning agents. Enlisting foreign capital and technology to organize this business in our country will free us from foreign dependence and will have a beneficial effect on our foreign exchange balance.

The cement industry requires investments of up to 70 million rubles in the next five years. If some of these funds were invested in us by foreigners, this would make it possible to accelerate the growth of this branch of industry, which is essential for the development of our construction, and would free up funds for construction itself.

The food and canning industry is in its infancy. Meanwhile, the raw materials and consumer market for this industry is inexhaustible. Since we have to invest in the main industries, this industry receives very little money for its development. Therefore, the work of foreign capital here to organize the production of meat, fruit, vegetable, fish and other types of canned food in various regions of the USSR is of great interest to us today.

The sugar industry also needs to attract foreign capital: the construction of sugar factories in new areas - in the Altai, in the Kuban, in the Far East - will be significantly accelerated by attracting foreign capital here.

There are a number of branches of our national economy that have already become so strong that they do not need the help of foreign capital. In such industries, we do not lease concessions and do not intend to lease them. These include the production of electric machines, radio equipment, the weaving part of our textile industry, the production of braids, pitchforks, etc.

Along with concessions, during the period of reconstruction of our national economy, foreign technical assistance is acquiring great importance. That is why we have recently concluded more technical assistance agreements than purely concession agreements. Along with the plan for concessions, Glavkontsesskom developed a plan for attracting technical assistance from the most experienced and interesting foreign firms for us.

We have a great future in the fields of mechanical engineering, electrical engineering, chemistry and foreign technical assistance.

Our perspectives.
The list of objects that could be offered by us for concession is quite large. In it we have enterprises of the most varied scale, from those that require the payment of hundreds of thousands of rubles to those that require tens of millions.

What are the real prospects for putting our concession plans into practice?

1. We have already noted above that foreign capital will come to us only when it is to its advantage, if it can expect to receive higher profits from us than abroad. As a general rule, profits in the USSR are higher than abroad. The possibility of obtaining 15-20% profit from us is an unconditional incentive for foreign capital to come to us.

2. The restoration of industry and trade in Western Europe after the war, the industrialization of the colonies, the necessity of exporting capital compel foreign capitalists to pay serious attention to work with us. The monopoly of foreign trade does not give the possibility of importing into the USSR surplus goods abroad. It is naturally advantageous, therefore, to organize the production of such goods directly in the USSR at a concession plant.

3. The growth of industry in the capitalist world entails an increase in the demand for raw materials. This raw material can be obtained from the USSR, where its reserves are inexhaustible, only by investing in our national economy. In America, the reserves of oil, zinc, and other major industries of raw materials and fuel are colossally declining. Zinc in the United States will only last 20 years. Americans around the world are now looking for zinc. They also need cheap timber. We have huge untouched forest reserves. And, willy-nilly, they will have to go to develop raw materials in the USSR. The growth of our economy and the strengthening of our international position will intensify the real desire of American capital to work with us.

Thus, there are prospects for attracting foreign capital to us. If until now the inflow of serious concessionaires to us has been relatively small, it cannot be assumed that in the future our concession policy will develop at the same slow pace.

The strengthening of our domestic economic position, the strengthening in connection with this of our importance among the world capitalist states, the transition from the policy of waiting for concessionaires to the policy of attracting them according to a definite plan - all this makes us hope that concessions will develop in our country in the future on a wider scale than before. so far.

• But if foreign capital does not come to us, or if it comes as slowly as before, our economy will not stop in its development.

Until now we have had a small influx of foreign capital, in particular in the form of concessions, but in spite of this we have developed, our economic situation has improved from year to year. Without foreign capital, of course, it will be difficult for us to accelerate the pace of our economic development, we will rise more slowly, but then our subsequent growth will be very rapid.

Consider Ford, who built his enterprises entirely at his own expense; he refused loans, refused any material assistance from outside. Therefore, at first it grew very slowly, but then faster and faster, and now it has grown in a way that it could not have grown if it had worked at the beginning with any help from outside.

Therefore, the later foreign capital comes to us, the tougher our conditions will be. We will put a whole number of enterprises that are now on the concession plan on their own feet and exclude them from the plan - the further, the less concession capital will receive from us. We will confine ourselves to attracting foreign technical assistance, using foreign engineers and technicians, using foreign scientific achievements in our own socialist enterprises. Gradually, our specialists will grow up, our scientific achievements will catch up with foreign ones.

Socialism will be built!

Notes :

[ 1 ] K. Marx . Capital, vol. I.

[ 2 ] Per capita consumption of pig iron in the United States of America is about 12-15 pounds, in Germany - about 7 pounds per year.

[ 3 ] Such a concession has as its purpose the production of prospecting and exploration of various kinds of ores and sources of fuel. The mining wealth found as a result of exploration is usually transferred for exploitation on the basis of a concession agreement to the group or firm that carried out the exploration.

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