THE HUNGARIAN FIVE-YEAR PLAN IN 1950 AND TASKS FOR 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600380681-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: September 9, 2011
• Sequence Number: 681
• Publication Date: April 3, 1951
• Content Type: REPORT

CLASSIFICATION CONFIDEft77AL CpHFtDE~1~(t~-'~
CENTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
COUNTRY
SUBJECT
HOW
PUBLISHED
WHERE
PUBLISHED
DATE
PUBLISHED
LANGUAGE
Hungary DATE OF
INFORMATION ly5a
Economic ~ Planning
Laiiy newspaper
Budapest
7 Jan 1951
Hungarian
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Or Tx[ VNIT{D {TATIf ?ITxIR TN! RIARIR{ Ol tf r1OR11{t 11C7 {0
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DATE DIST. 3 ~.fi(~ 1951
NO. OF PAGES N
SUPPLEMENT TO
REPORT N0.
THIS IS UNEVALUATED INFORMATION
THE HUIdC[AR:.AN FIVE~`_'EA.R Pid~.N
IN 195o A.I~T T9SI~ r^OR 195? ?
At a committee meeting of the Hunga.ri~sn Workers Psrty~;; Zoltan vess direc~?
tur cf the Hungarian Fl.anniag Office, gave a summary oP the country's sccom~
pllahments during 1950 and discusae3 the F!ve?~'~esr Plan taskE for 19;i.
?.ccomnltehments ~Duriag 1950
Socializsticn was carried out to the YeiJ.ow:ng extent iuri:.g i3~0a s2.rv?
t'scturi.ng 1G0 percents bai131ug industry 100 percents transpc.ta*,ion i.0 gex??
cent, agriculture 14.3 percent, handicrafts '10,6 percent, who:.esale trade 100
percents and retail trade 67 percent, The share of soae.iist enterprises i~
the :oationai income reached 70 percent.
itndor the Fi.vea.ear Plan, indiystrial production was to be Increased by
17,7 percent during 2950. On the suggestion of Rakoai, howeve~s tb.e rate cf
expansion wsa z?~3;sed to 34.1 percen*, during the cow?se of the ysu"s while a=~
tu,al production exceeded even the reviaeds higher rate.
Heavy industry showed an increase in production of mcse tn,ts:~ 35 percent,
including s 46,5=percent increase in the output of heavy machinery.
The more important products of heavy industry showed the f~l~owing p.=_r~
tentage increases in 1950 as comps,red with 19490
Coal
Electric power
Raw steel
bathes
Milling machines
Diesel engines
Railroad passenger cars
Trucks
Tractors
Bricks
Cement
Fertilizerss phosphates
13,0
~.7
20.4
93.1
29.6
98,3
102.2
107,7
S8D9
122,2
46,1
72.3
o. 1
CLASSIFICATION CONFIDENTIl#L~O~\F~~~,? ? t"~
NAW
F81
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Actual production of light industry in 1950 was 29.4 percent over 1949 pro-
duction as against the 11.8-percent increase providercent morehwoolaclothn 2850r
industry produced 8 percent mercenttmorecleather5shoes, 15 percent more sugar,
percent more knit goods, 5o P
and 29 percent more soap than in the previous year. The plan spercentdduring e
production of the building industry should have increased 39.5 P
the first year. The actual achievement oY the building industry in 1950 was
122.9 percent over 1949?
In 1950, the area under state cultivation increased Prom 543,000"to 823,000
cadastral yokes and that of producers' cooperatives Yrom 316,000 to 811,000 cadas-
tral yokes.
In 1950, the number of agricultural. machine stations grew from 221 to 361
and 3,171 tractors. A total oY 251 Pieces oY motive equipment 000 c9arl.oadsaof-
ing machines were plice~00ncarloads?were avaiable in 1950ed 9,
fertilizer in 1949, 7,
Improvement in agricultural equipment and supplies was reflected in better
yields. The average yield on state farms exceeded those~oa ~9n4dpPrcenteinncorn,
peasants by 15.1 percent in wheat, 30.1 percent in rye,
of independentsfarmspbYa436eperc ntnin wheat8e14i91Percentainiryethandvl5&gPperelds
cent in corn.
The greatest curse of capitalism, unemployment, has been eliminated.
In the manufacturing industries, thercenteSres lting inrashigher2standardiofhlivW
their total wages increased 'by 19 p ' ercent as compared with an in??
ing. Productivity in industry incrlaanned.y 19.4 p ,
crease of 16.8 percent originally p
The 1950 workers' standard of living was improved also by progress in pub-
lic health, social institutions, culture, and education. A tcta,l of 28,400 apart-
ments was built in 1950; clinical facilitieorganizedsvacationsiwereeextendedatod
by 25 percent and 10 percent respectively; and the number of. kindergartens wa.s
40 percent more people in 1950 than in X949;
increased by 144 in 1950.
As a result of adequate school rooms and teaching staffs, 1,230,000 children
were registered in the general schools. The number oandithe-numberrofethoseelodged
students grew from 22,000 in 1949 to 32,0 in~1950,
is apprentice homes from 6,200 to 14,300.800 sand the numbersofyfirsttyeartunin
secondary schools grew Yrom 30,000 to 35, ,
varsity students and oY students in other institutions of higher learning grew
from 8,600 to 14,000.
The social composition of the student body showed a fundamental change, with
39.5 Percent of the first-year university students originating in theercentrareass
and 18.2 percent of peasant origin. Ia the secondary schools, 36.3 P
of worker and 21.7 percent of peasant origin.
The Five-Year Plan provided for the development of Hungary's armed forces.
Enormous ;progress in economic conditions enabhes moderne4~Pmentaand,ttogether
of its national defense. The Hungarian army
with the Soviet Union, the friendly people's democracies, and the freedom-loving
peoples oY the world, it ensures peace against the imperialist warmongers.
The plan also laid down the principle that Hungary should be transfdrmed from
actor ng industriesaintthennationaliinco~aincreas dtfrom $e5spercent ine19 9u-
to 43.3 percent in 1950, including an increase from 20 percent t~ 22.5 percent for
heavy industries. This is a significant step forward in converting Hungary into
an industrial-agrarian country.
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COftFIDF1QTIAL
SY.~rtcomings in 1950
Despite substantial achievements, shortcomings also cropped up in. the exe-
cution of the Five-Year Plan during its first year. The 1950 plan had two basic
defects. First, the preparation of the plan was delayed. Second, the plan un-
derestimpted national resotu?ses, and, as a result, some of the economic branches
showed disproportionate development during 1950.
Because of inexperience, complacency, or a hostile attitude, many planners
established the plan quotas at too low limits. This planning is fundamentally
wrong because it does not mobilze the total efforts of the population. Poor
planning for 1950 resulted, on the one hand, from ignorance of national require-
ments and of industrial production capacity and, on the other hand, from red tape.
and unnecessarily complicated procedure.
Un3ustified investments are a manifestation of a dangerous theory, which
claims the country's economic reserves have been "exhausted" and the rate of
progress will be reduced without new equipment. This theory is wrong, partic-
ularly in view of the enormous progress which has taken place since 1946. Facts
prove that, as a result ~of a mistaken and opportunistic viewpoint, planning for
1950 was based on an underestimate. The results obtained in metallurgy, for in-
stance, could not have been imagined previously.
The 1951 plan calls for a 68..percent increase in raw steel output, as com-
pared with peak production during the World War II. This may be accomplished
essentially with the same plants, but by a proper distribution of investments,
by socialist work organization, by economy in materials, and by the changed at~
tltude of labor.
Overfulfillment of plans may bring about a lack of balance within the econ-~
omy, as evidenced by the results of the 1950 plan. Lack of balance was caused
largely by uneven overfulfillment in the various economic branches. The rela-
tive development of heavy and light industries, respectively, largely satisfies
the requirements of a socialized industry. However, the relative development
of the various heavy industries was out of balance because raw materials and
electric power production developed at a slower pace than the processing in~
dustries.
Thus, while compared to 1949, production of heavy industry increased by
36.4 percent and of the heavy machine industry by 46.5 percent, coal produc-
tion increased by only 13 percent, pig iron by 12.6 percent, raw steel by 20,4
percent, and electric power production by 20.7 percent.
A substantial increase in raw material production had been planned for
1950, but quotas were insufficient to satisfy increased demand.
Matyas Rakosi pointed out correctly that "however impressive the 13-per-
cent increase in coal production may be, the increase in heavy industry is
36 percent, or three times greater. Because of this rapid progress, we must
demand more than a 13-percent increase from our miners."
It is also known that in crude oil production retrogression rather than
progress has been experienced, largely because of failure to repair the dam
ages caused by sabotage and to train adequate cadres. 011 production is also
lagging both in drilling and in research. It will suffice to point out that
drilling speed is 60 percent greater in Rumania than in Hungary. As a result,
the Rumanians achieve 60 percent more with equal drilling equipment. In spite
of an increase .in machine-tool production in 1950, production if gs behind the
..plan.
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The efficient planner looks for the bottlenecks and by investing a few
hundred thousand forints makes it unnecessary to build new plants. The pos-?
sibilities exist for this method, since the machinery is utilized to a low
degree in most plants. Machines should be operated for an average of 4,000
hours in two shifts, whereas actually the operating time was 3,140 hours in
machine-tool production, 2,900 hours in the manufacture oP other machinery,
2,600 hours in vehicle manufactured and only 2,100 hours in the manufacture
of agricultural machinery during 1950. Production could be great3y increased
by the general introduction of the double shift without the installation of
new machinery.
Hungary's economy is thrown out of equilibrium also by the fact that
agricultural production lags behind industry. This situation brings the
backwardness of small-scale farming, as contrasted with the rapid growth
of big industry, into sharp relief.
The conflict can be solved only by the extension of state farms and of
producers' cooperatives. Modern mass-production methods, as well as s net-
work of agricultural machine stations must be developed, adequate supply of
improved seeds and of fertilizer must be assured, production by contract must
be increased, and agricultursl investments must be purposefully directed.
Ir_ socialized agriazl+,ure there is ~.t'l~ m?ich to oe do e. Tha siatF
farms, though their yields ar= much higher than those of independsrt pFs~?-
ants, are very badly managed. With the means e,t their disposal they shou_d
produce much higher yields then has been the case in th~: past. The orgs.ni??
zation cf work as well as discipline, is poor. The state farms a:e ir_%La*.ested
in taking care of themselves .instead of increasing their production,
Although the producers' cooperatives generally achieve better yields
than individual peasants they still operate on a icw leve_. This is true
of animal husbandry as well, and paused =.arge iy by inexperieric ~ s.n.i '_c.ck
of training.
Two other problems exist in Hungarian agriculture. It was rea;.ized +,o,
lste that something was wrong with pig and csttle breeding. In 1950, the
number of livestock actually decrease3 and the agricultural agencies, the lc???
cal councils, and even the trade unions failed to issue a timely w~irning.
Phis trend must be reversed in 1951. It was the work of the enemy.
The second problem is that hundreds of cadastral yokes cf arable iaLd
have been lost during the last 3 years, and it was impossible to stop this
trend as late as 1950. Naturally, the land itself was not 1;cst. It exists
in quarter- and half-yoke plots in the villages, but is plante3 with ether
products than provided for under the plan.
This land ie diverted from state supervision an3 from compulsory delivery,
causing considerable loss to the national economy as a whole and to the work-
ers in particular. All this points to looseness of state discipline, which
must be stopped. State as well as individual discipline must be tightened.
The problem of coat of production must also be mentioned in this ronnec~
tion, since insufficient attention was given it in 1950. The building indus??
try, for example, completely ignored the 1950 Cabinet Counci'1 regulations gov-
erning the reduction of building and operating costs. As a result, building
costs were excessive in 1950 and most of the building enterprises are still. op-
erating at a deficit. The abuses in the building industry were in part due to
right wing Social Democrats and their helpers committing organized wage snd
norm frauds, especially during the first half of 1950. These frauds were not
stopped until June.
50X1-HUM
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CONFIDENTIAL
Adciitinxal ~~ of balance was caused by greatly increased purchasing power
available to the peasantry because of a good harvest and certain speculative
possibilities. There were enough goods on the market, but, as a result of the
enemy's attacks, a periodic "buying Yever" disturbed the equilibrium of distri-
bution. The effect of this fever was enhanced by lack of organization and by
hostile speculation. A vigorous intervention of the party succeeded in over-
coming these difficulties. Adequate supplies for the working population are
assured, and the food situation will improve in 1951, even in case of a medio-
cre crop.
In conclusion it may be stated that the 1950 tasks were accomplished and
that the plan was overfulfilled in many fields.
The accomplishments of the 1950 plan have created the prerequisite for
the fulfilment of the 1951 plan. However, when mistakes are found, they
must be eliminated. The bolahevik weapon of criticism and self-criticism is
a tool of rapid progress.
Tasks in the Second Year of the Five-Year Plan.
The 1951 plan provides for a 25.1-percent increase in the national income,
as compared with the 17.8-percent increase in 1950. The actual rate will be
higher, however, because it is based on the increased 1950 results.
Progress will be made in 1951 in broadening the bases of socialism. In
industry as a whole, including handicrafts, socialization will be increased
to 97 percent, which means total victory for socialism in industry. In local
small industries, because of the strengthening of the cooperative movement,
production by the socialized enterprises will be almost doubled in 1951? The
share of the socialist sector in the national income is to be increased from
70 percent in 1950 to 75 percent in 1951.
Further significant progress in the transformation of Hungary to an in-
dustrial-agrarian country must be achieved in 1951, and the share of the man-
ufacturing industry in the national economy must be raised from 43.3 percent
in 1950 to 46.3 percent in 1951. The share of heavy industry will be increased
from 22.5 percent in 1950 to 25.7 percent in 1951. Industrial production will
be increased by 30.7 percent in 1951? Within this total, heavy industrial
production will be increased by 35.8 percent, light industrial production by
28 percent, and agricultural production by 24 percent. Mining output will be
increased by 20.9 percent, metallurgy by 30 percent, and electrical power by
21.6 percent in 1951.
Twice as many trucks and threshing machines will be manufactured in 1951
as in 1950. The production of autobusses will be 230 percent, motorcycles 125
percent, and tractors 147 percent higher than in 1950. Industry will help agri-
cultural not only by increased production of agricultur machinery, but also
by a 16-percent increase in the production of fertilizers.
In 1951, the machine industry will start production of numerous machines
which were not. made in Hungary before. Among these new machines are the ver-
tical, universal, and groove?~milling machines, turret lathes, mining machinery,
such as undercutting and loading machines, and portable deep drills, Sma11
diesel motors, 10-horsepower electric drills, and mine-damp proof electomotora
and switchboards will also be manufactured.
Light industry production will have to satisfy the increased demand result-
ing from a higher standard of living and also produce an exportable excess. The
textile industry will increase production by 30.6 percent and the agricultural
industry by 24 percent. Production of cotton ?cloth will?be 16.1 percent, wool cloth
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COl4FIDENTIAI,
Sani
9.2 percent, and shoes 18.3 percent larger than in 1950, Alao 25 percent more
high boots and 19 percent more workehoes will be produced. The lacrosse in
sugar production will be 32.5 percent, cigarettes 16.8 percent, milk 21.2 per-
cent, and butter 48.44 percent,
The building industry will increase its production by 54.7 percent. `tb
assure large-scale operations in the building industry, the production of bull-
dozers and other specialized heavy machinery will be increased by 150 percent
over 1950. Brick production will be increased 47 percent, cement manufacture
by 63 percent, and prefabricated reinforced concrete parts by 48 percent. It
is planned to construct serially 15 percent of all new buildings in 1951, using
the conveyor-belt system.
Socialization will progress in agriculture, as a result of development of
state farms and growth in the cooperative movement.
Increase in yields and in the productivity both of state farms and of prc-
ducers' cooperatives is expected to double the value of the production of social-?
ized agricultural in 1951 as compared to i950. This will ensure a higher stand-
ard of living for the participating peasant families. The planted area will be
increased by 50,000 cadastral yokes, over last year. The area planted to fibrous
plants, including cotton, will be increased considerably. Cotton acreage will
be increased from 10,500 to 50,000 cadastral yokes in 1951.
The number of agricultural mgr_hire st~tiens as welt' as machines wii::.be in-
creased substantially.
Livestock breeding and qualitative improvement of the yield are regt:i.xte~.
by a special Cabinet resolution. Forage requirements will be assured by in-?
creasing the acreage planted with fibrous fodder to 90,000 yokes.
Freight moved by rail will be increased by 18.7 percent an3 highway freiu~ht
transportation by 37.2 percent, over 1950.
Under the plan for 1951, imports are to be increased by 18 percent ana ~.x-?
ports by 24 percent. Foreign trade with the USSR and the people's 3emo:.racies
will represent a much larger share of total 1951 exports and imports than. pr=??
viously.
Total investments will increase by 33 percent over 1950. Investments in
1950 totaled 9.5 billion forints and in 1951 they will reach 12.6 billion fo-
rints. This represents 2 billion forints more than we invested during the en~-
tire period covered by the Three-Year Plan.
It is policy to avoid scattered investments and, therefore, 58 percent of
the funds available for investment have been appropriated for 97 ma,jcr projects,
including 61 in industry and agriculture and 13 in transportation. The major
projects of the Five-Year Plan will be given full weight in 1951. Investments
in heavy industry will be increased by 73 percent over 1950.
One of the most important projects in the field of heavy industry w11; be
the combine at Boraod, now under construction, which will manufacture coke from
domestic brown coal and fertilizer. The combine will be equipped with a power
plant. Another combine at Varpalota, which will also have a power p':ant, wi"~1
manufacture aluminum from bauxite. Other major heavy industry projects include
the establishment of a gray-iron foundry and cement factory at Vac?and the large-
scale rebuilding oP the Dioagyor iron and. steel plant.
Light industry projects will serve the expansion of the textile industry
and increase the existing storage and refrigeration capacities for the agricul-
tural industry. In this field, 46.3 percent of?the total investments will be
allocated to the textile and clothing industry and 39.2 percent to the agricul-
tural industry.
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Tnvestments in transpcrt?~tt.5 Percent in
agricultursl industry. Pu.:i.dir_g costs in general will have to be reduced by
14.5 percent from 1950 levels. Tn 5dditior_, the building i.ndusiry must reduce
operating costs by 7.5 percent..
Preakdown of Plsns and Development of Pls:r[ing
Tne 1.951 plin, more than any l:r.for plan, recta on the economic balar_ce
sheet principle. This means the logical bals[;cing of requirements against
potential and stocks on hand. The balance sheet mobilizes hidden reserves,
but only if they are based on progressive nozms. Correct material balsnce
sheets, therefore, increas:; economy an materials.
Following the example of the Soviet tinicn, prce_,t?ess in technical effi-
ciency has been incorporated into the plan. Further progress is shown by the
fact that labor policy and wage~?rs.te schedules have been extended to the en-
tire national economy, Wags rates :lt[ ail fields must :onfcrm to the plan:[ed
wage rates schedule.
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CQl~F4t~ENT@A~
The plan can be effective only if it is understood by all workers and it
must, therefore, be broken down to the workbench level. It is a misconception
among some planners that their duty is done by simply approving a plan. Great
progress has been made in familiarizing workers with plans, but in a great many
plants the relation of worker to plan is unsatisfactory. If this relationship
does not exist, the workers and economydinfproduction costsh cTheeworkersoknow
in materiels, productivity,
best the hidden reserves of their plants, and it is the duty of party organiza-
tions to encourage them to make recommendations for improvements. It should be
clear that such suggestions should not require new investments,. but should point
out more efficient use of available materials and the exploitation of existing
potentials.
Plan Enforcement and Control
Before, the plan can be carried out in the lower echelons, plan enforcement
has to. start on the top level.
Certain enterprises do not meet deadlines, do not carry out investment reg-
ulations, and generally observe the plan very poorly. Sometimes their reports
contain brazen falisfication, and the penalty ie usually a slight fine or repri-
mand.
Tightening of discipline in the whole of the nationaal~cf~mJ' audapunishn-
ti.al task. The law must be observed. When necessary,
ment must be meted out.
Control must be tightened also in the field of investments, since serious
mistakes have been made in the past. This happened at the Bukkszek Chemical
Works, where a chemical plant was built in 1947 on the advice of saboteurs that
enough salt water was there to ,justify the project, Subsequently, it turned
out that this was not true and labor and money were wasted. ~everal more ex-
amples of mismanagement are given.]
The enemy is underground today. He tries to attack socialism from within.
He tries to take advantage of our mistakes and of our inexperience. He wants
to increase our difficulties.
Planning is, inseparable Prom the Pight age.inst the enemy, from being on
the outlook, and from absorbing and applying the Marxist Isninist theories.
The fate of the plan on the plant level rests with the workers and the
lower echelons of the party. It is the duty of party organizations and party
workers to help disseminate the contents of the plan to the workbench level.
When examining planryit is important to look not only at results, but also
at conditions. By doing this, we will eliminate the mistakes made in 1950,
CONFIDEN'P7AL
C~~F~~'F~dTlA1.
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