MERCHANT FLEET FINANCIAL DATA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600060241-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: September 1, 2011
• Sequence Number: 241
• Publication Date: August 25, 1954
• Content Type: REPORT

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CLASSIFICATION SECRET _
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
PLACE
ACQUIRED
DATE DISTR.-!_ August 1954
NO. OF ENCLS.
(LISTED BELOW)
1. This report will provide tentative results of the financia
the Merchant and Diver Transport Svatema in the year 1957_
0 ow g should be noted general terms: Revrnes and capital accumu-
lations from state enterprises are the main source of revenue for the State
Budget of the Soviet Union. This revenue is made up of tarn-over taxes
(main source of revenue) and assignment cf profits from enterprises. From
merchant and river transport organizations and enterprises, revenues for
the state budget are derived only in the form of assignments from profits.
The rates of profit made by the enterprises are predominately determined
by fulfilment of the plan governing the volume of production and reduction
of its net cost. Profit is one of the basic indices of financial results
of the thriftQ activity of an enterprise. The profits made by & state
enterprise, AS well as the turn-over tax, belong to the state since the
enterprises themselves are state property. However, in order to strengthen
ttie econcan'Lc accounting, a special 4epartment for the distribution of pro-
fits has been established. The entire profit is not turned over to the
state budget, only a part of it is. The greatest percentage of the profit
is used within the same branch of economy in order to :inane capital in-
~estments and for the -2cretion of internal operational funds. Thereby
a
is giver. for atrengthenng the economic set-up.
Cl
u SSIF!CATSn%1 3 E C. R T
OISTRIWTION
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(B) The line of capital accueralations made by the given branch of the economy;
the financing of basic capital outlay and the allotment of working funds.
2. However, the profit obtained as a result of thrifty operations of an enterprise
does not always fall in line with the contemplated state plan for capital in-
vestments in the given enterprise or branch of industry. An a result it happens
that the profit of some enterprises exceeds their planned requirements in expen-
ditures while of others the opposite is true, its, profit is less than these
requirements. For this reason part of the profit is withdrawn from some enter-
prises and transferred over the budget to other enterprises. Newly established
enterprises are in no position to realise their production and consequently
they have no income themselves. When they receive funds for capital investments
from the General State Fund, redistribution of national revenue is taken care of
in a proper manner. Exactly the same holds true when a plan providing for a
considerably large volume of production output is established for an enterprise
and when this enterprise, due to this plan, is in need of additional internal
operational funds. in these cases, where internal funds are insufficient,
operational funds are provided from centralized resources.
Amounts assigned from profits are determined on the basis of planned requirements
of the enterprise in capital expenditures and internal operating funds, and also
on the establishment of a director's fund for the construction of housing and the
provision for cultural every-day needs of the workers and employees in enterprises
and transport.
A government decree issued in 1950 completely abolished the system of state sab-
sidies, in other words, from this year on enterprises' were compelled to operate
on a full self-repayment basis only (expenditures were not allowed to exceed
revenues).
5. uonsequenily, merchant and river transport must now (the same as other branches
of the national economy):
(A) Operate on the basis of full self-repayment, i e)without state subsidies;
(B) Comply with the state task which calls for revenues to exceed expenditures
(to have the anticipated (plan) profit);
(C) Transfer part of the profit to the state budget, which part is fixed by
the plan;
(D) Strive for attainment of over-and-above -plat: profit (over-and-above, plan
capital accumulations). However, profit made over-and-above plan must be
transferred to the state budget in tote, with the exception of a very small
part of the director's fund, which was set up for this purpose.
6. The government may withdraw for the benefit of the state budget not only that
part of the profit which was scheduled for transfer by the plan, but also any
part of the profit in excess of that scheduled to be transferred may be with-
drawn for the benefit of the state budget as well.
7. The planning and financing of merchant and river transport operations (as well
as of other branches of the economy) follows two lines which are closely related
to each other and to the over-all economic plan. They are:
(A) The line of the state widget (budget plan); primarily financial allotments
for replenishment and sattingip of basic means for instance,(f unds for the
construction of new vessels, harbors and plants) and to supplement the
working capital if this is required for an increase in the production task.
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8. Financing of and control over productive-financial activity proceeds accord-gig
to directives of the USSR State Bank and of special banks, for instance, In-
dustrial Bank (PR(1BANx) (Promyshlennyy bank).
9. The USSR State Bank is the only bank giving short-term credits to production
and it is the paying and receiving center of the econasw. In the area of credit,
pay-and receiving-operations, the USSR State Bank (GOSBANK SSSR Gosudarstvennyy
Bank SSSR) operates closely with all erterprises. There are approximately 5,000
branches of the USSR State Bank in the USSR.
10. The Industrial Bank (PROMBANK) is a long-term credit bank (investments). It
provides for financing of capital construction in the transport industry against
the state budget and against internal funds held by economic organizations.
11. The banks enjoy every extensive prerogatives; they are in control of the entire
economic-financial activity of enterprises; they can impose financial sanctions
in the event managers of enterprises interfere with the normal productive and
financial activity of their enterprises.
12. The entire productive-financial activity of enterprises is in the hands of the
state. Managers of enterprises may not arbitrarily manage funds, not even those
derived from over-and-above plan capital accumulations. They are not authorized
tc cover losses in one item of expenditures by charging them to other items even
if by doing so money could be saved (switch funds from the account of one item to
another). Responsibility for losses evolves upon the manager but savings are
transferred to the state budget.
13. The manager may not arbitrarily dispose of his own resources (those profit
residues which were left over after transfer of the principal amount of the
profit). The manager is not even authorized to arbitrarily draw from the di-
rector's fund. Such an expenditure must be approved by the higher level or-
ganization and by the State Bank?
11+. Every-;,hing stated above is valid for both the Merchant and River Transport Sys-
tems.
15. Tentative data on the financial activity of the Merchant Fleet Sys+.sm are as
follows:
ZhR Merchant Fleet System.
EXPENDITUP,ES. (In billion rubles - bn rubles)
Basic operational expenses, directly connected with maintenance
of the fleet:
(a) Basic and supplementary wage bill for ship hoard
personnel, mess room funds, all added to wage bill-0.8 billion rubles
(b) Fuel, lubricating and cleaning material ........... 0.72
(c) Repair (current and average) ...................... 0.7
(d) Ship supply .......................................0.16
(e) Amortization ...................................... 0.25
(f) Ship fees and other navigational ex enses.........0.38
~C) General, a0ministrative/nanagement expenses
t.ra icing, of cadres ...... ......................... 0.19
Total basic operational expenses...... 3.2 billion rubles
SECR T
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(2) Additional operational expenses (militarized p )-
tection, sea lanes, haroors, Register etc.......... 3.0 billion rubles
(3) Cap_tal expenditures (capital outlay, reatablish-
ment and replenishment of basic funds). These are
allocated without being included in the cost of
shipping (grants) .................................. 2.7 n n
(4) Other expenditures, mainly budget expenditures,
not included in 'the cost of shipping intenance
of schools, scientific institutions etc ............ 0.5
Of this figure:
charged to State Budget ........
charged to capital ac-
1.9
cumulations of enterprises.....
0.8
e n
? n
Total of expenditures, which are covered by reve-
nues....6.2 billion rubles
Total of expenditures not covered by revenues...... 3.2 billion rubles
(B) R WENUFS (In billion Rubles)
(1) Freight charges for shipment cf cargo (unit equal
to shipping cost 'e ton of car'&-for a dieter;, of
one mile) ......................................... 7.7 billion rubles
(2) Other revenues .................................... 0.3 ^ ?
(0) PROFIT ................................................. 1.8
From this amount: a Planned profit ............. 1.5
b) Over-and-above-plan profit, 0.3
(D) OVER AND ABOVE--PLAN LOSSES AIM WASTE ................... 0.3
(E) PROFIT MINUS LOSSES .................................... 1.4
(F) SUBJECT TO WITHDRAWAL INTO STATE BUDGET:
e) From planned profit ........ 0.9
b) Total over-and-abate
plan profit ................ 0.3
? n
^ n
Total amount withdrawn into state budget...........1.2 billion rubles
(G) RESIDUE OE PROFIT
(a) according to plan.......... 0.6 billion rubles
(b) In reality ................. 0.2 ? ?
(H) FINANCIAL STATUS .....................................4 1.4 billion rubles
16. These figures representing the financial results of Merchant Fleet system
operations (not considering the Main Administration of the Northern Merchant
Shipping Lanes) are tentative figures, but since they are assembled on the
basis of experience gained on my former job as an executive in the Merchant
Fleet System, they nay be accepted as the sum of greatest possible accuracy.
Bsides, 1 have taker: into consideration the following facts vhile establish-
ing these f' urea:
(A) In the war 1950 the national economy of the country (industry and trans..
Jai together) registered a profit of 7O4 billion rubler. P1 this
amount the sum of 40.4 billion rubles was,&awn Into the State Budget and
the sum of 30.3, billion rubles was left to the enterpeises.
39Casr
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(B) In 1951 the national economy of the country registered a profit of about
75 billion rubles, from which amount abou i, 60% was drawn into the State
Budget.
(C) From 60% to 70% of the total profit is ter'"lly transferred to the State
Budget from organizations of the merchant fleet.
(D) For the years 1949 to 1951 inclusive, merchant fleet organizations pro-
duced from 2 to 2.5% of the total profit made by the entire economy of
the country (enterprises and transport).
(E) In the year 1950 the amount of 1157, billion rubles was earmarked by the
State Budget for the national. economy of the country.
(F) In the year 1951 the amount of 178.5 billion rubles was earmarked by the
State Budget for the rational economy of the country. Of this total 98
billion rubles were earmarked for capital construction and 80.5 billion
rubles for the replenishment of working capital. In addition, 34 bil-
lion rubles were earmarked for capital construction to be charged to
internal resources of branches of the national economy.
(G) The allocation quota established by the State Budget for merchant fleet
organizations for the years 1950 and 1951 cons!.sted of:
(1) For capital construction .................. 1.8% - 2%
(2) For replenishment of working capital..... 1.0% - 1.5%
the State Budget's allocation quota for the merchant fleet
for the years of 1953 and 1954 was raised considerably due to the extensive
program providing for constriction of new vessels as well as the large
volume of work on reconstruction of harbors and industrial enterprises.
It is likely that the allocations will amount to not less than. 5%-6% of the
total allocations for the national economy and that they will amount to
from 6-7 billion rubles..
(I) The following publications were used as reference in the c mplilation of
this report:
'Morskoy Flot' journal from the years 1949-1951
'Morskoy Plot" newspapers from 1952 and 1953
'Rechnoy Transport' newspapers from 1952
"Vodry7 Transport' newspapers from 1953
'Pravda' and 'Izvestiya' newspapers from 1952 and 1953
'Izvestiya' newspaper No 272 from 1952.
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