Ussr

1924-25 1926-27 State and Co-operative 57% 67% Private 43% 33% While free trade prevails in internal trade, subject only to the need for a trader or trading company to secure a license to legalise his activities, foreign trade is subject to a state monopoly which is operated through the Commissariat of Trade. (Formerly there were separate Commissariats for Foreign Trade and In ternal Trade. Since 1926 they have been amalgamated.) In prac tice a large number of bodies engage in import and export opera tions, such as the special autonomous trading company of the Commissariat of Trade called Gostorg, certain State trading bodies like Mostorg and Ukraintorg, and the special import and export companies of particular industries like Exportkhleb (grain) and Metalimport and Electroimport ; also Centrosoyus, the Textile Syndicate and "mixed companies" such as the Russo-German Co. and the Russo-British Grain Export Co. Ltd., in which foreign capital participates. But not only must such bodies obtain a licensed right to trade abroad, but their program of imports and exports has to be sanctioned, and can be revised, by the Commissariat of Trade. This enables the latter to maintain a balance between the total volume of imports and exports, and also to discriminate according to plan against certain types of imports and to encourage others, with the combined result of giving to the Russian economic system a highly "protected" character.

In practice the control over imports and exports, and hence over the balance of foreign payments, has enabled the rouble exchange to be maintained at a higher rate (in terms of foreign currencies) than the internal purchasing-power of the rouble in the home market warrants (as, indeed, tends to occur in any country where import is restricted by protective tariffs etc.). And the general effect of the State import policy has been to limit the import of finished industrial goods as rigidly as possible, and instead to import raw materials and machinery which are required for the development of Russian industry. In this way the State monopoly of foreign trade has constituted an integral part of the Soviet policy of accelerating the process of industrialisation; since with out this regulation of import and export finished manufactures rather than machinery and raw materials would have flowed in from abroad under the attraction of the higher Russian industrial price level.

State Economic Planning.

In the realm of industry the state regulating authority is the Supreme Economic Council, which was originally instituted by the Government in December 1917 to supervise and coordinate the process of nationalisation, its governing Board being composed of representatives of the chief Commissariats, of government departments and of the trade unions and the cooperatives, with a permanent commission of scientists, economists and technical experts attached to it in an advisory capacity. The original intention was that this body should be the supreme administrative organ in the economic sphere, coordinating all the various parts of the economic system. But in practice it found itself unable to handle so comprehensive a task, and to-day it constitutes virtually a Commissariat of In dustry, having, perhaps, somewhat the same relation to industry as had the British Ministry of Munitions to the engineering trades during the war. Internally it is divided into two main de partments: the Chief Economic Administration, which is con cerned primarily with framing industrial policy, and the Central Administration of State Industry, which is more narrowly execu tive. This latter body is headed by a directorate composed of the

heads of various sub-departments corresponding to the main in dustries, to supervise the work of the Trusts concerned.

Agriculture, banking and finance, transport and foreign trade, however, fall outside the sphere of the Supreme Economic Coun cil; and to coordinate all these aspects of economic life with the activity of industry according to a single plan is the work of the Council of Labour and Defence (called STO). This is the supreme executive organ in the economic sphere, and being ap pointed directly by the Council of People's Commissaries (equiva lent to a Parliamentary Cabinet) it has authority over all State departments which possess economic functions, including the Commissariats of Trade, Agriculture, Ways and Communications, Finance and the Supreme Economic Council itself. Attached to it is an important institution called the State Economic Planning Commission (Gosplan), which is an expert advisory body, similar to a permanent Royal Commission or group of standing com missions. The economic plan for each year, covering the output of the main industries, the volume of agricultural purchases and of foreign trade, the policy of the State Bank, and the annual Budget, is drawn up by Gosplan, and the provisional plans of various State departments are reviewed, reported upon and co ordinated by it ; while the final power of sanctioning the plans for the coming year rests with STO. The closest parallel in this country to the work of these two bodies, STO and Gosplan, is probably the suggested Committee of Economic Policy and the Economic General Staff which are outlined in the Report of the Liberal Industrial Inquiry of 1927-28.

Banking and Finance.

With the reorganisation of industry on an independent financial basis under the New Economic Policy there arose the need to revive the banking system, which during "war communism" had fallen into disuse and decay, and to introduce a stable monetary unit. In November 1921 the State Bank was re-chartered as a credit institution, with power to make long and short-term advances to industry and trade and State departments. The major part of its capital was subscribed by the Commissariat of Finance, which accordingly exercised a pre dominant voice in its control. A year later the Bank was made the Bank of Issue for the new Io-rouble banknote currency, the chervonetz, which was issued against a minimum legal "cover" of 25 per cent in gold and platinum and foreign valuta. Throughout 1923 the new notes were issued at the same time as the Treasury continued to issue the old depreciated paper rouble in large quantities, the latter continuing to have a certain currency for "small change" transactions, while the chervonetz, being issued in no smaller denominations than Io roubles (gold), became in creasingly used as a unit of account and an investment medium. Finally, in March 1924 the currency of the old depreciated paper rouble was terminated, and in its place new Treasury Notes of denominations up to 5 roubles were issued through the Commis sariat of Finance, their quantity being limited by law to half the amount of cliervontzy in circulation.