Evaluation of Soviet Economic Data

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A000400220001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 6
• Document Creation Date: November 9, 2016
• Document Release Date: November 6, 1998
• Sequence Number: 1
• Publication Date: March 29, 1949
• Content Type: MF

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tYEEPIOflJ MUM FUR: bdniral Souers, Executive Secretary
National Security Council
SUBJECT; Evaluation of Soviet Economic Data
ENCLOSURES: A.
$?
Your memorandum of 29 i,rch 1949
Letter to .~;dn~ ral Souers fro,.. Dr. Clark,
dated 22 xrch 1949
Draft letter from admiral Souers to Dr. Clark
(Confidential)
Central Intelligence Sources Used to "`valuate
Soviet7conomic Data (Top Secret)
1, Enclosure, is forwarded in response to reference a.
Enclosure is submitted for ;;our information and such use as
you may desire to make of it.
2, Dr. Clark's query is, of course, a very broad one and a
govorinent-wide investigation would be necessary to give it
exhaustive treatment. He is concerned with an iiportant matter,
and you may well wish to have other government agencies report to
you on tieir methods for evalur".ting Soviet statistics, or the use
to which these statistics are later put by policy-makers.
3, The Office of Intelligence Research, Department of State,
has infor:ial.ly indicated that it considers Enclosure B a good
summary'of sources, though State reliance on any specific source,
in view of its special responsibilities, night well vary from that
of CI,i,
25X1 A9a ORE;d/gT:few
Distribution;
Director's File (1)
AD/R&E (1)
Central Records (1)
B/EE (1).
G/SI
Document No.
00/
NO CHANGE in Class-
El DECLASSIFIED
Class. CbI. NCED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA 14' :. 77/1763
O
Date: 101111~PP' By: 0/1
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The Honorable John D. Clerk
Council of Economic Advisers
Washington, D. C.
Dear Hr. Clark:
I am now able to reply in some detail to your letter of "arch 22
concerning our evaluation of Soviet economic strength. Inasmuch as
the Central Intelligence Jgency is the intelligence organ of the
National Security Council, the following remarks pertain particularly
to the evaluation of Soviet economic intelligence in that office.
At the outset I think I can assure you that the csti-ates which CIA.
has produced in this field are made with the greatest care. .'here an
irreducible doubt has persisted in estimates prepared for planning
purposes, OIL has, as a matter of policy, presented the higher figure
in order to avoid the danger of underestimating the economic strength
of the USSR. This, however, has little practical effect on final
evaluations,
There are a number of important considerations in determining
Soviet economic strength. The development of.Soviet power under a
completely state-controlled economy in no way "requires us to abandon
our faith in the superior productivity of our system of free enter-
prise," In terns of total capacity, total production and productivity
the US far surpasses the USSR. However, the Soviet leaders through
the State Planning Corission have established the development of
military potential as the primary task of the economy. The formidable
strength of the USSR today rests not so much on its productivity as
on the goals toward which the factors of production are directed.
Direct military product.. on; preps ration of ogler seg-lents of the
economy for immediate conversion to war-time production; development
of relatively self-sufficient and strategically located industrial
areas; and stockpiling represent a considerably higher percentage of
the over-all economic effort than they do in the United States. In
addition, capital goods production receives relatively much greater
emphasis as opposed to consumers goods than it does in the US,
Direct government control over all phases of the economy (the
utilization of raw rr-terials, machinery and equiprmnt, transportation
and finished products as well as indisputable control over the
tremendous manpower of the USSR), provides a large measure of flexi-
bility in the effective accomplishment of a 1.":' e number of high
priority plans.
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It is this special emphasis on military preparedness at the
1,i-ediate expense of the civilian consumer that is the basis of
Soviet strength as it is derived from the economy. Control of the
Satellite economies is also being employed with this objective in
view.
The analysts in CIA share your reluctance to accept official
Soviet figures without qualification, but feel that when these data
are carefully checked against additional sources in which CIA has
the greatest confidence, they prove to be of real value. These
additional sources include intelligence documents captured from
former energies, former members of Soviet and Satellite governments,
Soviet personnel who have defected, former enemies who were prisoners
of war in the USSR, private US individuals who have travelled in the
USSR, CTA special agents, US officials who have travelled extensively 25X1X7
in the USSR, , reports
from State, Army, Navy, and Air representatives in Moscow, other US
government agencies, UN publications, foreign broadcasts, and non-
official publications in the US. These sources are in turn evaluated
and analyzed by men with long experience in industry, agriculture,,
banking, and economics, and by men who have had long residence and
wide travel throughout the USSR.
In short, I have complete confidence that the coordinated intelli-
gence produced as a basis for planning is as reliable as it it humanly
possible to produce.
Sincerely,
SIDNEY W. SOUERS
Executive Secretary
ffrfAQ Q_-"01%
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Central Intellirrence Sources Used to Evaluate Soviet Economic Dat
In addition to official Soviet information (in the press, and in
industrial, agricultural and economic hooks and periodicals) CIA.
utilizes the following sources in the determination of Soviet economic
conditions:
Captured German Intelligence Documents.
These papers are a comprehensive and detailed study of the
prewar Soviet economy derived largely from first-hand observation.
Plant information is especially useful. This material often provides
the base for estimating present production figures, capacities and
product manufacture and aids in confirming reports received from other
sources. It must, however, be carefully evaluated.
b. Japanese Intelligence :lstirntes.
These include prewar studies of certain industrial segments of
the USSR. Some of these studies are particularly rood on the Soviet Far
'.Fast, Industrial plant information is often detailed and often gives a
base for estimating present capacities, but over-all industrial data is
not always comprehensive. In addition, certain Japanese commercial com-
panies made reports direct to the Japanese Government which are also use-
ful. as background -Information.
c. Former ;embers of. 'le, Soviet and Satellite Hierarchy.
These individuals are extremely useful for their broad 'knowledge
of an industry or group of industries. In addition, they understand the
statistical and accounting methods employed and the degree of accuracy of
information released through the press and other official channels. Care-
ful questioning or critical evaluation of reports is essential to determine
whether the source has an understanding of the industry and whetkier or not
he has strong prejudices.
d. Soviet Dofectees Soldiers Factory tomorkers. Engineers. Technical
Personnel.nagers etc
Data obtained from these persons is extremely valuable current
first-hand information on the detailed operation and potentialities of
some phases of the Soviet economy, providing both additional information
and confirmation of material previously acquired, Such data must be
scrutinized, however, for bias and inaccurate generalizations.
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e. Germans and Japanese, for mmerly Prisoners of War in the USSR.
Information from this source is useful in spotting industrial
installations, railroad facilities, crops, labor conditions, etc., but,
again, all source data must be critically evaluated and analyzed in the
light of the source's background and prejudices.
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h. US Officials Who Have Traveled Extensively in the USSR (State,
Arm Wavy and Air Representatives in Moscow and the Port
Areas, riembers of Special lassions).
When the individual reporting has special qualifications in a
25X1 X4 particular line his reports are pwrticu-
larlyy useful in confirming information from other sources and in filling
in blind spots. Broad observations are valuable in analyzing general
economic conditions.
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Reports of te..te irr.?yam Iy v?r, and Air iron r1oscotia.
These reports are based both on published material and the
travels and observations of US representatives. The advantage of being
close: to the scene for a long period of time is useful in-interpretation
of events and the analysis of published data.
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L. Other US encie ~ t ~,? ? ; ne ce Divisions o :Mate Ariuy, NMI
and Air. Bureau of nines. Office- of Intern :tions,l ~`rade (Coz.vnerce),
etc.
These agencies prepare estimates on the USSR which are particu-
larly valuable in re-evaluating the conclusions of this office. iii-monthly
conferences are held with other economic intelligence offices and papers
are coordinated with these agencies prior to publication.
m. EGA and BOE.
These organizations prepare consolidated reports on the basis of
special reports compiled by foreign nationals.
n. UIT Publications.
Information from this source is often a repetition of official
data. Its value is its interpretation by experienced international economists;
however, it cannot, of course, be unqualificdly accepted.
Foreign broadcasts .
This material is largely of an official nature ',gut is useful
check on current developments.
Publications in the USmre the USSR.
These publications are written by men who art: specialists in
certain lines. Unfortunately, in the last analysis, much of their material
is derived from official Soviet sources, but a large part is the result of
actual experiences of the writer in the USSR. Practically all of this
material must be analyzed with an eye to the background and proclivities
of the writer.
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