HIDDEN MILITARY APPROPRIATIONS IN SOVIET BUDGET/ECONOMIC IMPORTANCE OF SLAVE LABOR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600010210-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 15, 2016
• Document Release Date: January 23, 2004
• Sequence Number: 210
• Publication Date: February 14, 1952
• Content Type: REPORT

Approved For Release 2004/02/10 : CIA-RDP80-00809A000600010210-3
-------.-CLASSIFICATION SErIRL:T -
CENTRAL INTEL CE AGENCY REPORT NO
COUNTRY Ussrt
Consumer ruble -,%a th a rubl o? ?rlollrcr ratio of 28:;1
SUBJECT Hidden Ma llLary Appropriations in Soviet Budget,/
Economic Importance of Slave Labor
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. 7??, ?r ( 0.0. (50(0. It. . ....,5.1?? 0 .,.~.
101,?. ? ,T?^0077(1,. 7Y'( 0(177 . .,((0 7(0(05 ,.
r.oa (I i(? a lN? t.. .. . ...0(N?. 07 701(5 r0..01. ..?.
D
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Iy Feb 52
NO. OF ENCLS.
(LISTED BELOW)
SUPPLEMENT TO
REPORT NO.
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THIS IS UNEVALUATED INFORMATION AX1X
to I car;not n;lyt ou ?ororq,ly tilat t.1ie ?tatiof the So-ri?t..Ty ?Iati.onal. Income and
of the State Bu(-1_rot,, m)iether e~.L,resaed in borrms of por?cont-a;cu cr in "absolute"
1'i.gurc:a are nu to :ooan.il:r;icc .. S2.milarly-, fi urea on military ernondi'tur-.z of the
SovIet i)udget netire only to r,ia:end raid. to fool the public at dome and the go ern??
ment^ abroad. Tine onaration or man1 ui".itio.^, c}i' :coora1. t'JGcs of r~., ies in the Soviet
economy is cc?.clt,c: ve to the statistical policy employed by t.',he S_. r,L>tn As a rosuli-D
many ';7eat-'rri eccnomi ;ts and publi: of.i'ic:iala are misled by the Soviet ocono!rLi.c
statl.^,tie "erpcr.1.a11.-J in the f;cids of notional income and ma.-lit'iry cxpond'_'ture
ac?;our. tso An cf this :n W.nip,uiati.on of the ruble is the difference in the p>ur
chasing power of the ruble in the f?acyd of armcncntz and in the r)a-c ratio? For the
pr":' o Cnlorlt of 1r!a o erne, ml itary nu, rnl.ies and goods of military er .?:bll :hI;lents
the relation of the rublo to Liao dollar is 4??l0 _" e vr,,;o ruble ratio is 28?-10
20 In analyzing Soviet economic proccs:Ies, it should bn, undo; stood th:.t four different
typos of rubles exits t..
(a' St at proc.urc.ni_r..'? r Lt'.r of
r,i?ric.ul?.urn.: r r.r nlu er1.a.:1 ~.. h the rte: Le
do Linr _.nteo 6 .-i.
(b) State inductr,a procurement ruble of industrial products with ratio of 4;1
(c1
(a)
O1'fici al f?, . c.i to exchange ruble, with a ratio of
INFORMATION REPORT
'SECRET
30 `111c announced annual budgets for the Soviet Union are entirely misleading and the
fi ur. a for the .nii.itorf expenditures are outright frauds? Act,.iallyo much more in
spent for arm,:.aorta and for armaient plants that, the budgets indicate,. The addition-
al a].loirances voithin the budgets arc under other categoricao
4o Thu managers of' arnameTit indui;t-rtes are not tied down With budgetary limitations its
long -as they meet the quantit1 and quaiity apoci.fication-n,ul to 9o% The plAnte arm
FORM NO. 51-40
JAN 19x1
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5. Araiccncnt Plant managers are not re?qui rcd to rendor an accounting to the State and
arc not subject to other civil. controls They are responsible only to a special.
Military Dxamini.ng Co:emissiono T^Thenevcr an armnmont plant or manager of the con-
struction operations for the V1inistor of Defence exceed the pl.annod expenditures,
they are entitled to additional funds or additional labor or materiel on short
notice, This i.s in sharp contrar*.. with the practice .existing in the construction or
manu.'acturin i.ndusi;riea of non-military significance.
6. In the non--military co:istructi n -And production industries over--plant expenditures are
considered a "crime". ;,cquisition of additional funds is a hard and prolonged pro.-
Coss. L !c: riec, the r,rocurement of needed materiel and labor is often a long-drawn
out nroresdure. Therefore there is cause for complaint about. undor%fulfillinent in
the cons i:rue Lion and consumers' goods production industrie !again, I cannot stress
too strongly and emphatically that in order to understand the Soviet econom:.c opera-
tione we must un l.ere i:and that the entire USSE is operated like a large military-
camp with the .ntiro cr.onoinic policy directed toward one objective, namely, the build-
ing up of military ini._ lit, at the expense of the standard of livinfg of the Russian
people,
7o In 1938 thorn were approrimatoly 19 million adults in the slave labor carapn in the
USSR, of w:rom about 20ja were women? Utili cation of this vast number of State slaves
in the USSR serves the following economic and political nurnoses; As a source of
revenue for the up keep of t ho tre ronc'tou police and military force (TAVD, MGM?) as r,.
revenue of niobilc?.cc canal labor on vrhi? h to draw for various anductrie:s with seasonal
nea! a as a moans oP cffecting transportation and hounin.g equalities by transferring
and housing groups of single individuals (instead of i'emily units); tc -provide labor
force for n-wly do-161oped and undesirabl aroas; as n. source of su.bstan.tial revenue
for the government i.n. gold nroductin:n; a., a whip of terror over they heads of al l
(froo) workers in the TJS7,.,R0
8? The productivity of slave labor during the period 1958-19,13 was about one.-half that
of (froo) labor engaged in similar work (mostly manual labor-). State expenditures
on slave labor per day was as follows
Wae.^. 30 rubles per ay
Food 1.50 rubles per ;ay
per head cost to the. Government pe:r day 1 80 rubles
Wages of (fr-ee) labor averaged uoout 16.6(. rubles
9o Slave labor is also hired out to industrial. -trusts at 12 rubles nor day 9'iC)0
The actual cost according 'to the labor carnpra on accounting per head costs was ac
follows;
Expenditures for uuksep of MID and MG!3 organs 5~10 rubles
1.50
Food o3c:
Mono' ry pay
Amortization of invciitory 1?0C:
Nnortizetion of barracks =t~C
Total charge per cersori pear day 8?60 rubles
100 Dosp'l to surface ind`i.cat:ioris, the hiring of slave labor by industrial. management
proves more costly 'to the enterprise par head,, and as a rule cntor,riao, do not like
to use slave labor. IIo`acver, in. orda?:r to met c onr truction deadlines on the zoasor_al
peak requirements, such hiring is a nccoc:ity? The extra cost must be coverod by
overall costs in non--military segments of industry.
1.1 In the geld mining industry, slave labor produces about $4000 worth of gold per dray?
12, The published ratio of rolative vvaluc, of industrial and agricultural produc'bQ_ is
artificially inflated in favor of industry. Furthermore, the ratio is .dietor ad
by the fact -t-hat agricultural products are "confiscated' from the collective fanners
by paying the peasants in 1913-id prices with current rubles, and sollint; these pro-
ducts to the population (including 'the poas>ants) at 1,200 to 1,500 percent profit.
1 run convinced the.: in real values the agricultural. segment of the economy is pro-
ducing the greater share of the total national production than the official figures
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Ruthless exploitation of the agricultural aegmont of the population providca the
largest source of industrialization and military buildup of the USSR. This in
evident when wo consider that production coots on Statn #arrre were about eight times
higher than trio prices thu State paid for similar products to the cooporativo peasants.
On State farms, the government pays prevailing, though miserable, wages, which makes
the cost of tha products to the Statco several hundred percent higher than the coat
of confiscated products?,
14. T believe that by devious manipulation of budgotary figures, the Soviets have
succeeded in misleading the Western economic analysts and public officials as to the
total magnitude of the USSR efforts in military proparodneac.
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