TRANSFER OF SOVIET TROOPS FROM LEIPZIG TO SURROUNDING TOWNS/BLACK MARKET CONDITIONS/NEW COLLECTIVIZATION DRIVE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00926A006100040035-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 27, 2016
• Document Release Date: January 18, 2013
• Sequence Number: 35
• Publication Date: February 26, 1953
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2013/01/18: CIA-RDP80-00926AO06100040035-4
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SECURITY INFORMATION
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
Germanys (Soviet Zone)
SUBJECT Transfer of Soviet Troops from Leipzig to Surrounding
Towns/Slack Market Conditions/New Collectivization
Drive
11PROHIRITED BY THIEREPRODUCTION OF THIS REPORT P
THIS IS UNEVALUATED INFORMATION
Transfer of Soviet Troops from Leipzig
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DATE DISTR. &6 Feb 5-
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NO. OF PAGES 4
NO. OF ENCLS.
SUPP. TO
REPORT NO.
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1. "In Leipzig, as in most large cities throughout the Soviet Zone of Germany,, new Soviet
troop movPbrop'Ata''rou].d be _nboa~-rv A Any.1r=fng the 9.91tumn of '-952. /Tn*.rm-firm dato?ei midy
Decembo* 5 . The present Soviet policy seem to be the evacuation of Soviet garrisons
from large cs.t .vii ,w iamaller tow.e..., ww.vuvub unu rural aretLdo
2. "In Leipzig the Warren and Eutrisch military barracks were returned to the East German
suburb ofLeipzig. The largest Soviet garrison is now in Grimm, There, not only then
former military barracks, but almost all private villas were requisitioned for the
Soviets,
administration for the use of newly established additional Peoples Police troops.
In December 1952 only the headquarters of these Soviet troops remained in the city,
occupying the Gohlis villa district in the northwest. The main office of the EKVD is
also located in this area of Leipzig.
"The Soviet units evacuated from Leipzig have been stationed in surrounding towns:
Delitzsch, Kr?ostitz, Taucha, Wurzen,. Grimma, Markrautedt, and Scbkeudnitz, a Western
40 "Apart from the new Soviet garrison in Taucha, there is also a Soviet military hospital
with about 3,000 beds.
"As a result of the evacuation of Soviet troops from Leipzig, the cityes once thriving
black market is now rather quiet. Occasionally Soviet soldiers come in from the
surrounding villages to exchange personal belongings or military oquipment for East
Marks (military shoes 300-350 EM) military leather coats 700-800 EM on the black
market). The big business in gasoline, oil, tires, etc., has disappeared almost
completely, because the Soviet Army depots were also moved out of the city. Elsewhere
in-the GDR the illegal traffic in Soviet 'imported' goods continues. Gasoline and
tires are the main items., but from time to time the Soviet soldiers show. up with new
short wave radio sets or Soviet Army pistols. This autumn 1952 a Soviet Army pistol
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This report is for the use within the USA of the Intelligence components of the Departments or
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originating office through the Assistant Director of the Office of Collection and Dissemination, CIA.
50X1-H U
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was selling for 80109 East Marks on the black market, the price varying with the
amount of ammunition supplied. The purchasers include Communist officials and
members of the People's Police, When the latter go on furloughs they are not allowed
to take their official pistols along, They feel, however, it is better to be armed
just in case.
6. "The few Soviet officers and soldiers who have remained in Leipzig are now the only
persons who can supply the black market with certain scarce commodities. Leica
cameras for instance can be purchased in HO (State-controlled) shops for the
relatively low price of 1,800 EM, but only one camera'may be sold to a German civilian
and. the purchase is marked on his identification card. In contf?ast, Soviet military
and civilian officials can buy such cameras without limitations. They buy Leicas in
the HO, shops and resell them to blank market dealers for 29000?2,300 EM apiece. Even
at these high prices they are readily bought up. Smuggled to Western Germany these
cameras can be resold for over 700 West Marks, the equivalent of over 39000 East Marks.
7. "Another black market item proceeding through Soviet channels in Leipzig are furs. The
once famous Leipzig fur industry is almost completely dead. The famous private fur
shops around the Bruehl Terraseen are facing liquidation. Today raw furs are being
imported to the Soviet Zone exclusively from the USSR and processed at the well known
furrier workshops in Schkeudnitz. All large businesses in this Leipzig suburb were
taken over by State and Soviet organizations, The German shops get only poor quality
remnants in very limited quantities. The Soviet fur trade administration steadily
places a certain amount of finished furs on the black market at prices,which compared
to Western prices, are rather low, A first class Persian lamb coat, which costs about
$1,000 in the West, can be bought on the Leipzig black market for 6,000 East Marks
(about $300 at black market exchange rate). In autumn 1952 the Soviet authorities
started a drive to weed out the fur black market. It is known that several employees
of the Soviet fur trade administration have disappeared, either arrested or recalled
to the USSR. They have been replaced by new arrivals from the USSR. Despite these
measures the Leipzig black market in furs still flourishes. The turnover in other
items sharply diminished during the second half of 1952.
General Black Market Trends
8. "In a free economy prevailing prices depend on and fluctuate according to supply and
demand. Under the Communist system prices are regulated by the fixed State prices
on one hand, and by the actual cost of production on the other. As a result of
rationing, and existing shortages in certain commodities, the black market flourishes
and Its prices lie somewhere between the fixed State prices and the production costs.
Within this limitation black market prices fluctuate according to existing supply and
demand, very much like the prices in a free economy,
9? "In this respect the situation is very similar in all Communist ruled countries. In
the Soviet Zone of Germany, as in Poland, there are actually three markets:
(a) The rationed State market,
(b) The State controlled free market,
(c) The private black market
to, "The relation between the three, and particularly between (b) and (a) is similar in
all satellite countries:
(a)
(b)
(a)
Prices on the State-controlled free market are about 30-5O% higher
than those on the rationed market;
Producers, i.e. farmers, can sell their products on. the State
free market for higher prices than they receive from black
marketeers;
Prices on the black market are lower than on the State-controlled free
market.
""This strange situation results from the fact that the income farmers receive from
selling their products to the State is strictly controlled and subject to taxation.
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-3-
The money they receive from black marketeers is their clean profit (minus production
costs) and evades State control. Competing with the State's free market, black
marketeerd offer lower prices to their customers; even'so the blank marketeers make a
profit because they also buy at lower prices and have no overhead.
12. "This strange relationship between the prices of the State-controlled free market
and of the black market may be illustrated in the following-.
The average price of pork on the State free-market in the Soviet Zone
in December 1952 was: 12..? East Mars per kg
The black market price was only 7?8.m East Marks per kg.;
At the same time, black marketeers were buying the pork from the farmers for
5m6.? East Nt er cg, w ile the State-owned wholesale organizations
offered 6?8.- East Marks per kg to the farmers.
.134, "Although the State price is higher than that paid by the black marketeers, the farmer
gets more profit from selling to the latter because he must pay about 25% income tax
on the money he receives from the State for his product. In all commodities with
which the black market is competing with the State free market, the same characteristics
may be observed.
JA. "Throughout the Soviet Zone of Germany the black market is now .ecember 19527
.making considerable profit because it is turning more and, more to barter deals. It
has become quite customary for black marketeers no longer to offer cash to the farmers,
but instead some useful industrial product in short supply on the market. This is not
only more profitable for both sides, but is also much safer. If caught even red-
handed by the authorities, such deals can be well 'explained' as a mutual exchange of
gifts. During the second half of 1952 quite a number of such cases which appeared
before East German courts were dismissed on the basis of such argumentation.
15? "Another black market racket is the falsification of food ration coupons. The quaint
feature of this racket is that these forged coupons seldom get into circulation. They
are.merely kept in reserve by shopkeepers and employees of State-owned shops,, the
principal dealers in this racket, to cover up missing amounts of rationed food items
should an unexpected inspection be carried out by. the authorities. The forged ration
coupons are being printed for this special purpose. The missing food commodities are
sold, of course, privately for black market prices.
Collectivization Drive
i6. "In late autumn 1952 the Communist administration of the GDR started an intensive drive
against all these black market manipulations. In an effort to catch the bull by the
horn, rather than hunt for the innumerable black market dealers (almost everybody is
involved in black market dealings one way or another), farmers are first being subjected
to more rigid controls, backed by stiff penalties (imprisonment and fines). The drive
is being used also as means to step up collectivization. Property, at times whole farms,
is being confiscated for collectivization.
17. "There are three types of Koikhozes in the GDR, as in the other satellite countries:
Type # to Where the farmer remains the owner of his land, but the cultivation is oar
a collective basis. The arable land, vegetable gardens and meadows are
managed on a collective basis. His forests are left for his individual
exploitation. He also keeps the livestock for himself. The clearing of
accounts is done through the collective.
Type J2: Similar to Type # 1, with the difference that the owner transfers the
possession of his arable land to the kolkhoz. All other property remains
his private possession. The owner's work for the kolkhoz is subject to
special accounting procedures,
Type # 3: The farmer signing the kolkhoz contract turns over all his property to the
kolkhoz, including cattle, implements and machinery. For his labor he
receives his share in cash and kind at the end of the year along with the
other kolkhoz members. For his private use he may retain a small vegetable`,
garden, a maximum of two cows with calves, two pigs and one horse or one ox.
The Government and the CP are now fecember 19527 exerting pressure to transform all
kolkhozes into Type # 3?
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].S, "This new collectivization drive has evoked much dissatisfaction over the Soviet Zone
and has resulted in a number of incidents. Shortly before Christmas 1952,2 for example,
clashes occurred in the area of Borna and Pegau, near Leipzig. The collectivization
commission was badly beaten up by the villagers. Many arrests were made, The
Communist press printed only brief items about these incidents with the explanation
that some drunk farmers had attacked State functionaries on duty. In other regions
around Leipzig; e.g,9 in Bad Lausick, the collectivization drive had more success.
In. several villages new kolkhozes were set up before Christmas, the majority of them
being Type #3; Some farmers, having no way of resisting the Communist pressure,
abandoned their farms, left all their possessions behind and escaped with their
families to the West."
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