The Soviet Government took the position that the western Powers had tried to enforce a humiliating abandonment of the principle of the repudiation of Tsarist debts and of the monopoly of foreign trade, which it had now come to regard as one of the main pillars of its economic system. If the stability of the new currency was to be maintained, rigid control over exports and imports was imperative. But in the first years of the New Eco nomic Policy foreign trade was somewhat hampered by the at tempt to force it all through the bottle-neck of an untrained bureaucratic department. With growing experience there was a tendency to transfer the placing of orders and sales abroad to the State organizations directly concerned, while the Foreign Trade Department continued to act as control. Soviet trading corpora tions were established in London, Berlin, New York and other centres. French and American business men hesitated to allow long-term credits, but the English and Germans found them pos sible and the volume of trade steadily increased.
Effects of the New Economic Policy.—The policy of "con cessions" to foreign enterprise on Russian soil, though less suc cessful than the Soviet had hoped, brought money into the country and helped to increase the turnover. Important service was ren dered by the Russian Union of Co-operatives, whose offices abroad did much to secure the first credits given to the Soviet and con ducted a steadily increasing business which was principally in foodstuffs.
The following table shows the development of foreign trade during this period' : The growth of exports was the most striking change after the introduction of the New Economic Policy. Total trade expanded, and imports, following the Soviet policy of rigid control, fluctu ated widely; but exports were multiplied two and a half times between 1922 and 1923, and in the newly established fiscal year ending Sept. 3o, 1924, they were nearly doubled again.
The first years of NEP showed a corresponding improvement in internal trade and production. The figures below show the increase in turnover of all taxable concerns, State, co-operative and private, in the R.S.F.S.R., White Russia and the Ukraine. Accurate results for internal trade are impossible in any country, even a highly organized industrial one, but the indication that turnover was multiplied by four between the summer of 1922 and the spring of 1924 is probably not far wrong.
The period brought a great change in the outward appearance of the cities. Instead of grass-grown streets, dilapidated houses and closed shops, there was movement of traffic, fresh paint and plaster, and the hum of business. In the villages, discontent and
famine gave way before plentiful harvests.
In the autumn of 1923 prices of agricultural products fell to 6o% of the pre-war level. Meanwhile, stimulated by the necessity for showing profits which the New Economic Policy required, the trusts and other industrial enterprises had raised the prices of manufactured goods to 8o% above that level. The disproportion was so great that the peasants refused to sell grain or buy goods. Warehouses were glutted and industrial stagnation was threatened. Trotsky coined the term "Scissors" to describe the crisis which followed, because the graph illustrating the ratio of industrial and agricultural prices to the pre-war average had the form of opened scissors, with industrial prices forming the upper blade.
To close the scissors was imperative. It was done in six months, by the sale of goods below cost price, which swept away most of the paper profits of the trusts but removed the danger of indus trial stagnation, and by the progressive increase in the price of food products. Although this very serious crisis was past, the 'The tables showing the development of foreign and domestic trade are summarized from those given in Ten Years of Soviet Power in Figures, U.S.S.R. Central Statistical Board (Moscow, 1927), pp. 368, 394-395.
task of keeping the scissors closed remained one of the major problems of the Soviet State.
The comparative liberty given to private trade under the New Economic Policy had produced a host of prosperous "Nepmen," as they were called. They spent money lavishly in the newly revived restaurants, cabarets and gambling rooms, and were no more popular with the mass of their fellow-citizens than the war or "valuta" profiteers in western Europe. They were largely mid dlemen, retail traders and small manufacturers, for the State con tinued to hold the principal sources of production and wholesale business in its own hands. They doubtless served their purpose in getting the commercial machine back into running order and fur nishing new accumulations of capital; but they were peculiarly repugnant to the extreme Communists and to the organized work ers, who saw them as a "new bourgeoisie." Nevertheless their luxuries and greed and gambling were not without value to the community. In the year 1923 gambling rooms, cabarets and res taurants yielded some ten million roubles' revenue to the munici pality of Moscow, to be used for the repair of streets, water mains and sewers, and for other public works which greatly improved the condition of the city.