ECONOMIC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600240953-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: July 6, 2011
• Sequence Number: 953
• Publication Date: August 14, 1949
• Content Type: REPORT

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COUNTRY bu:L arse
SUBJECT Economic
HOW
PUBLISHED Monthly periodical
WHERE
PUBLISHED Moscow
DATE
PUBLISHED Feb 1949
LANGUAGE
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CENTRAL INTELLMME AMFddKl'~ 2EPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
UATEOF.
INFORMATION 1949
DATE DIST.fA. 1949
NO. OF PACES 8
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
SOURCE Voprosy Skonomiki To! TI, go 2,1949. (FRB Doc No 519746)
In 1944 the Bulgarian metallurgical industry produced about 4,000
tons of r&,, iron, 1,800 tone of oast Iron, 2,000 tone of tin, and about
1,000 tons of bronze, while the country as a whole needed 180,000 tone
of metals. Bulgarian industry used only 718,000 tons of coal in 1936.
By the and of 1945 there were 126 electric power plants in the country,
with a total capacity of 126,200 kilowatts.
In industry, small enterprises with obsolete, worn-ot equipment
predominated. In 1947, only 45o of the 7,000 enterprises in Bulgaria
employed more than 50 workers. The textile industry, which is the beet-
equipped branch of the economy from the technical point of view, has an
average of less than one horsepower of machinery per worker.
The mineral resources of Bulgaria are poorly explored, and the
known deposits of ores and other minerals have scarcely been exploited.
In 1946, only about 20,000 workers were employed in mining, three fourths
of them in coal mines. The principal mineral product of the country is
brown coal. Not more than 200,000 tons of coking coal are mined per ytar.
Before the war Bulgaria depended entirely upon imports for machinery,
spare parts, raw materials, (metals, cotton, leather. rubber, etc.),
liquid Prole, lubricants, and other materials indispensable for industrial
production.
Eand:cgafts- played a prominent part in the Bulgarian eoonrmq.
About 100,000 artisans' shops, employing barely 200,000 people were
operating in Bulgaria before the war. Large artisans' shops existed
only in Sonia and a few other cities.
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CLASSIFICATION UNAMAL
Nsae DISTRIBUT:DN
I)ej FBI I
50X1-HUM
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farms of this category increased from 47.9 to 52.1 hectares.
of t. middle-class farmer. Between 1926 and 1946, the number of
farms increased from 750,613 to 1,039,072 (not counting Southern
Dobruja), as a result of the elimination of the middle farmer. In
1926, 427,519 farmers, or 57 percent of the total, owned less than
r b....kwwi.a as -1--red with 712.420 cr 68,6 percent in.:946. On
g
the old, patriarchal form of land o.lnership the rural cooperative,
were eliminated at the end of the 19Th century, after Russia freed
aria from Turkey. The.aevelopment. of capitalism put an end to
Bul
e
were put into the ground, or about one kilogram of fertilizer per c~.
per year. The coat of imported fertilizer was very high; it was used
tobacco and fruit arms. Productivity in Bulgaria rated about
on
]
would be rotated with corn. Artificial fertilizer was not produced in
Bulgaria, and between 1935 and 1944 oily 59,200 tons t>f chemical fertilizer
're
h
of the farms of less than 5 hectares nad plows; eV-0 Fd.ruo.J~ .:au -
draft animals at all, and 36.5 percent had only one draft animal.
can
,,
the lowest in Europe, In 1939, 62.5 percent of the arabla land in Bulgaria
was plznted. in grain, while only 8.4 percent vas used for industrial crops.
Strait raising also was extremely retarded. Sheep and goats predominated;
large livestock was used mainly for draft purposes.
During World War II, the Germans carried avey goods worth more that
e stood at billion 611 leva. percent tanth, end of 1941f, the production of & of agriculture at 70 percent of Bulgarian industry
he low prewar
level.
Immediately after the liberation of Bulgaria from fast em, 87 percent
of the coal mining and 32 percent of the are mining were taken over by
the state, as were 73 percent of tha electric power production; 16.6
percent of the largest industrial enterprises; all railroad, highway,
and air transport, and all transport equipment; 73 percent of the banking
and credit system; all communication facilities (mail, telegraph, and
telephone); 4m11 allsomoee.ofj-~ 8b perch cf- fciatt.peeeed h-fotlaetate and
oosomaal ownership. The basic agricultural products are purchased. and
distributes through the "Thranoiznos" (Food Export) state agency, also
known an "!ksportkhleb."
The first cooperatives were set up in the sugar, canning, woodwork-
ing, forestry, and a few other industries, and some producing cooperatives
were set up for handicrafts. later the largest of these enterprises were
uationalized. Cooperative farming was limited to a few cooperative stock
farms, and at the end of 1945, machine-tractor Stations were formed.
Shortly after Commminist Bulgaria camp into existence, there were more
than 4,000 cooperatives o, various kinds in Bulgaria with a membership
of over one million persons.
Credit. cooperatives and national banks made up 21 percent of au
credit institutions during this period. In 1946 there were 111 consoaiare?
cooperatives in Bulgarian cities, as well as consumer sections within
the credit cooperatives in the country, while 50 percent of all oomreerce
was in the hands of cooperativea.
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C AL
Although in 1946, 92 percent of all ':.'_ mz in B'lgerla belonged to
small and middle farmers, thousands of t;andlcraft shops and smarj_ retail
businesses were in operation.
In 1946, private capital accounted for 83.6 percent of Bulgarian
industrial production and 77,8 percent of all the comparatively large
plants and fentorles; About 8 percent of all farms were owned by kulake;
$nlake owned the beet land (about 25 percent of the total' arable area),
70 percent of all draft animals, the majority of the farm tools and
implements, many mills and dairies, etc. Large and middle-sized private
enterprises controlled more than 50 percent of all commerce and. 6 percent
of credit operations
tion of raw materials, secondary materials and fuels, and fixing the
prices of industrial goods while the Ministry of Trade assigned the
volume of production, assortment of goods (nomenklatura}s and the prices
of the products of all private enterprises, the raw materials they were
to use, and where they were to dispose of their products. New labor
lame, such as the ones safeguarding labor and those on the t5-hour day,
restricted the exploitation of labor by private enterprises; ?contracts
The campaign to restrict and dislodge tIi. capitalist elements wee
based upon progressive taxation. A tax was imposed Immediately or.
the owners of large fortunes and other illegally acquired property, the
eeme as on war profiteers. About 50 percent of the population were
exempt from the property tax: those who owned less than 3 hectares of
land and other property worts less than 500,000 lava. Your fifths of
those taxed paid 2 to 3 percent; r:hiio the largest property owners paid
up to 10.5 percent of the value of their property.
At the begi rung of 1947, the progressive income tax was established.
Taxpayers were divided into five groups according to the si4o and source
of their inc, omeThe highest tax was levied on capitalists and private
businessmen who obtained their income from hired labor (ranging from
15 percent on an income of 100,000 lava to 68 percent or. an income of
more than 1,500,000 lava, The joist stock companies left in Bulgaria sere taxed.
fro'..18 percent on an income of 100,000 lava to 74 percent on an income
of more than 1,500,000 lava, The low-income brackets wore exempt from
this tax.
In March 1947 a monetary reform was introduced to stabilize the
currency. Vast amounts of money that had been accumulated through
speculation were confiscated.
The government confiscated the property of war criminals, traitors,
and collaborators, Sale to the government of the enterprises most
important for the development of the national economy was made compulsory.
In February 1946 a law was or:ssed authorizing the confiscation of p-operty
acquired after 1 January 1935 through speculation or, other illegal means,
Under the law on the tobacco monopoly (18 February 1947), all tobacco
fact?oriee pans,)e into the hands of the state.
At the end of 1947, the government -cu,rned to the ligc.idation of
capitalism in industry and banking., On 23 December 1947 the Groat
People's Sobranlye of Bulgaria unanimously passed. a law nationalising
large and .:addle-sized industrial and mining enterprises and all their
property. Cooperative and handicraft eutorprisee were not affected,
Former German assets were taken over by the USSR under the terms of the
peace treaty. Compensation for nationalized enterprises was paid with
interest -bear ig notes, less deduction ranging from. 10 percent in the
C@91RFAgfiAI
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case of small enterprises to 70 pe eLt '._.e case of large, for the
benefit of the state. No compensat"o;i was paid to enemies of the
people., pro-fascist elements, collaborators with German and Italian
fascists, or those resisting the antifascist People's movement in
Bulgaria.
Under this law, 5,552 industrial enterprises were nationalized.
Of these, 2,011 plants and factories were put under the jurisdiction
of the Ministry of Industry (after their reorganization and consoli-
dation, the number. was reduced to 813), More than .3,000 enterprises
of local significance (mills, dairies, etc.) were turned over to
agercies of the local govei'nments for their. perpetual uses while
others'were distributed among various ministries. At present 93
percent of Bulgarian industrial production, and as much as 100
percent in some branches, has been nationalized. There are 1,037 artisan
cooperatives, employing 44,000 persons, financed by a.num of 2,200
million leva. Thus 95 percent of industrial production Is in the
hands of cooperatives or the state,
In December 1947 a law was passes nationalizing the banks. All
Bulgarian and foreign jolut-stock banks ai,d their branches (except
banks falling under Article 24 of the peace treaty with Bulgarie) were
taken over by the State. Shares belonging to Bulgarian nationals and
persons under Bulgarian jurisdiction; in the country were bought up at
10 to 50 percent of their value for the profit of the Bulgarian people
and the Bulgarian investment banks, and those belonging to foreign nationals
were redeemed under the following term: the first 100,000 love. would be
paid for in cash, and the remainder with i-percent notes maturing in 20
years.
In Yarch 19b8 the nationalirat?oa of large housing propertied in
cities was announced. Private hospitals, baths, sat...tcria, and spas also
were taken over.
Foreign trade is a monopoly of the state. At the beginning of
19h8, private capital was ousted from internal wholesale trade and lost
its predominance in the retail trade. The leading role in commerce is
played by "Barmagi" (state stores), "Shoremagi" (municipal joint enter-
prises: hotels, restaurants, and stores), and, especially, cooperatives.
In 1947, 60 percent of all internal trade and 14 percent of the foreign,
reckoned in terms of value, were in cooperative hands; and in 1948` 80
percent of retail trade in rural areas and 50 percent in towns were
controllerl by cooperatives. The nuaber of cooperative stores had risen
to 5,700 in 1948. The supply of the most Important farm products,
potatoes, vegetables, fruit, grapes, dairy products. eggs, etc., depends
upon the cooperative monopoly. The share of the socialistic sector
(i.e., state enterprises and cooperatives) in internal trade rose to 70
percent in 1948, while the share of the private sector shrank to 30 per-
cent.
General agricultural cooperatives which have been formed in 3,000
villages have attracted a membership of more than 634,000 persona. Theca
general cooperatives handle farm produce and sell more than 70 percent
of the mamnfactured goods sold to the peasants. More than 600 hanii-
craft sections, 890 stock farms, 1,222 cheese factorise, and other enter-
prises are parts of general cooperatives.
C o'er tII[i1-ITA L
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CONFIDENTIAL
plants was complete, 2,550 kilometers of high-tension power line were
built, the "Vulkan" Factory, with a production capacity of 200,000 tons
of cement, and a. number of. other industrial enterprises were erected,
and 140 kilometers of railroad line were laid. A amber of metallurgical,
chemical, and machinery plants, large electric power plantsp and reservoire
are under construction. The Five-Year Plan for the development of the
Bulgarian economy from 1949 to 1953 was adopted in December 1948.
the size of farms to 20 hectares, or 30 hectares in Southern DobruJa.
Middle farmers were defined as those having 5 or more hectares i8 or
more in Southern Dobruja).. Peasant families with many children may
obtain an extra hectare of land for each child in excess of two.
of land were distributed. among landless peasants and small farmers, An
additional 1,207 hectares were distributed among 7,863 farmers for gardens
for their own use.
land that the former owner received. Five percent of. the price of the
land was paid in advance, end all the remainder by noninterest-bearing
notes maturing in 20 years. Disabledvetorans of World War II trounded
after 9 September 1944 and widows and orphans were allowed a discount
of 50 percent, and members of working-producing cooperatives received
a discount of 40 percent of the value of the land.
Sale of the land received under the agrarian reform is forbidden,
even after It is paid for. Not more than 40 percent of the area allowed
under the land ownership law may be leased. If this regulation is broken,
the amount of lend the culprit may own will be reduced to 10 hactares. A
law of December 1948 provides that rents may be paid only in cash, and
the amount is to be determined by the local People's Couicl ie according to
the state rent scale.
In the fall of 1948 there were 84 state farms in Bulgaria` with an
area of 77,500 hectares, 305 state stock farms, and 70 machine-tractor
stations controlling 80 percent of all heavy farm implements in the country.
In 1948 there were 4,960 tractors engaged in farm operations. The machine-
tractor stations allot their equipment on the basis of contracts. First
preference goes to labor cooperative farms (TRZRh) which also receive a 25-
percent discount.
The basic form of agricultural cooperative is the labor cooperative
farm. There were 110 of those at the end of 1944, with a membership of
7,238 persons and 25,680 hectares of land. This form of cooperative
recognizes the private ownership of the land for the present. The law on
labor cooperative farms, passed Ii April 1945, provides that farmers may
withdraw from these cooperatives voluntarily after 3 years. Terms of
membership and exp-L-leion are regulated by an assembly of the cocperative
members. They decide, for example, whether a member must contribute all
his livestock end other property to the cooperative. Not more than 0,5
hectares of land may be reserved for the personal use of members. The
law recognizes private ownership of the !and end authorize9 its avers, the
members of the cooperative, to sell it as a whole or in part, to will it
to an hair, to give it as a gift, etc. The cooperative enjoys the right
of option to buy the land of any of As members who may want ?.c.
sell. Whsn a cooperative member withdraws or is expelled he reae.'c_
commensation for his land as prescribed'in a special register. The area
of a cooperative may not be broken up. Special plots are assigned to tb3
ccoVerativer- wlthoiit charge, for their perpetual use for faritty-arda, farm
buildings, and essential reclamation pro3ecte.
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Except for the land, which remainA t.h private proceriy of the
members, the cooperatives take over `.quiff and frozen assets. The
difference between the value of these assets and the ertaollshed entrance
fee (which ranges from 1,500 lava to 2,500 leva per 0.1 hectare) either
Is paid in cash. within a stipulated perms or is entered to the credi?
of its former owner as a share of stock or as a savings depoe;t. Only
productive livestock remains in the private possession of the cooperative
members.
In accordance with the law, all work on the labor cooperative farms
is done by the members and their families. All members capable of work-
ing are aosigned to brigades and detachments, which work on the basis
of norms and a labor and production plan approved by a general assembly
of the cooperative members. The land, equipment, and draft animals are
divided among the production brigades and detachments. The working day
is determined by the kind and amount of work. In some cooperatives,
individual piece-work and the progressive system of payment provide,
on the distribution of profite among cooperative members. After tae quota
for the state has been fulfilled, the necessary amounts of grain saved
for need, bonuses paid, and aid to those too old or ill to work deducted,
the remaining bread and othor products (except milk and vepi9tables, which
are sold to the members at market prices) are to be distributed among the
cooperative members, according to the amount of land and labor they con-
tributed. Products for the market, such as tobacco and sugar beets, are
not distributed in this namier. The most prevalent allocation of net
income is as follows., 10 percent for savings, 30 percent for payment of
rent for land, and 60 percent for labor.
The greatest enthusi.asmfor cooperative farming in Bulgaria is
found among sa+l.l and poor farmers, In 1946, 76.6 percent of the members
of farm cooperatives had owned not more than 5 hectares of land, while
7.8 percent had been landless peneants. In 1947, 7.1 percent of the
members had been landless and 78.5 percent had owned between 1 and 5
hectares. In 1948 the farms admitted to cooperatives averaged about
3.5 hectares, while the average farm outside the cooperative movement
measured 4.2 hectares.
Government aid to the labor cooperative farms takes every possible
form. The number of machine-tractor stations and farm implements is
being increased. The government finances the cooperatives and provides
them with aechinery, fertilizer, seed, and construction and ocher materials
at preferential prices. Taxation of the cooperatives has been greatly
reduced, labor cooperative farms and machine-tractor stations are entirely
exempt from the turnover tax and from immediate pay.nont c^ property taxes.
Members of the cooperatives are exempt until 1950 from taxes on income
derived from the cooperative.
On 17 December 1948 there were, 1,046 labor cooperative farms in
Bulgaria, with a membership of 73,569 peasants and 29(,lh4 hectares of
land. The productivity of grain and industrial crops in all Bulgarian
labor cooperatives averaged 25 to 30 percent greate., than on individual
farms. In some Bulgarian villages, 9C to 100 percent of the farmers
belong to cooperatives.
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On 18 Febriary 1948 the GreAt., Powlr. n})rAn yVN T-1-11, l e' for
the compulsory purchase of large fare imp''ementa, Az, that time about
4,000 tractors; 2,300 tractor plows, and many other farm machines were
owned by kulaks, while the machine-tractor etatiors 'tad only 140 tractors
and the state farms had only 37. Another law passer in December 1918.
prohibited the lease of land or live Stock.
The first 2-year economic plan for 1947 and 1048 came into force on
1 April 191!7. On the whole the plan was realized euccessfully. In 1947
industrial production exceeded the prewar level by 30 percent. The ful-
fillment of only 85 percent of the industrial plan in 1947 is explained
principally by sabotage from capitalistic elements and by a serious
drought.
In 194b, Bulgarian industrial production was 71,- percent above the
prewar level. As compared with 1939, electric power production had
increased 109 percent, coal uroduction (4 percent, ieavy Industry 125
percent, and light industry 55 percent. The 1940 industrie.x plan was
'Fulfilled 106 percent. Agriculture had reached 99 percent of the prewar
level, stock raising 91 percAnt, forestry 170 percent, and fishing 1143
percent.
In 1947 .aru 1948, the planted area of Bulgaaia increased by 53,100
hectares. Capital investment in the national economy exceeded 72 b3,llion
le-?a (:.n current priers), while 23 billion leva were invested in industry,
10 billion lava in agriculture, 23 bill'.:m lava L. transportation, one
billion leva in commerce, and 14 billion in cultural life.
The government is actively interested in raising the workers`
standard of living. In 1948 the amount of agricultural and industrial
products sold to the people increased substantially. Wages for industrial,
construction, tad transport workers were 30 percent higher in 1948 than
in 1947: the total rose from 30 billion lava in 1947 to 39 billion lava
in 1948. A new wage scale was evolved on the basis of qualifications.
difficulty of the work, labor conditions, and importance of the
industryy. In 1947 alone, Ba.garian workers received ,bout one
billion lava for production above the norms, and 5b1 million lava during
the first half of 1948. The number of workers who received an increased
bread ration rose from 250,000 in 1947 to 350,000 in 1948. Unemployment
disappeared. The numbor of blue- and white-collar workers roached 719,600,
an increase of 22.6 over 1946. Real wages were 10 percent above the pre-
war level. The productiveness of industrial labor in 1948 was 26,7 percent
greater than in 1947,
In December 1948 the Great People's Sobraniye approved the Five-Year
Plan for the development of the national economy between 1949 and 1953,
The Plan provides for a change in the ratio between industry and agr"culture
in the national economy from 30,770 to 45:55, and between heavy and light
industry from 26:74 to 45:55 by 1953.
Capital investment under the plan is to reach v2; billion levy at
current prices, 4Q percent of it for industry, 22 percent for trenaport,
17,5 percent for agriculture, and 11.5 percent for improvements in cultural
life, living conditiond, communal-end residential building; etc. Eighty-
three percent of all capital spent on industry will be used for the pro-
duction of means of production, which will assure an increase of 320 per-
cent in branches of heavy industry. The plan providee an in reaee in the
basic funds from 47 billion lava in 19948 to 89 billion lure _'n 1955 (at
1939 prices). The volume of industrial production will. increase by 119
percent and agricultural production by 5t percent by 1953. - the eni f
the Five-Year Plan the grain problem should be completely eo'ved, fur the
production of bread grains will increase by 20 percent over the 199 level.
The national income will increase from 52 billion lava co 19116 to 96
billion leva ix. 1953 ;based on 1939 prices),
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The 1Fi;o-Year P1aa ca116 fog ie :01 _-1-16
i icx ~~~a la' iuo c: to _I
the socialistin ner.tor in ?hg +_ r..1 g?- ria oduotl
' - ..~~~ p+a env v.
97.1 97.1
1.1 2,9
1,8 -
Affjqulture
i3tate farms
Labor cooperative farms 2.2 60.0
Private fare 97.8 37.5
State 64.o 70.0
Cooperative 36.0 30.0
Private
Wholesale Trade
Aeta11'Trade
state 22.3 45.0
Cooperative 45.5 50.0
Private: 32.2 5.0
The Five-Tear Plan calls for the development of cooperative farms
on a was scale and the elial ation of oapitaliem in industry and trade.
By 1953, 72 percent of the tra''e in bread will be in the hands of he
socialistic sector.
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