Present Position of the U.S.S.R.

PRESIDENT: Gentlemen, on behalf of the Club, I wish to welcome to the meeting today a large number of guests of the Club and, particularly, the President and delegates of the Canadian Education Association, who are with us today.

I would also like to point out to those of you whose status is deficient in respect to not being a member of the Club, that we can easily put that right in a very few moments and I trust some of you will see fit to do so.

From time to time this Club has heard from men who have travelled in Russia. We have been given the benefit of impressions, generally first impressions, of people who have had the opportunity of being in Russia for a very temporary period of time. Naturally, the first impressions of such travellers, while they may be exceedingly picturesque and vivid and of very great value, nevertheless they are bound to be coloured to a great extent by the preconceived political views and the social philosophies of the particular observants.

Today, we welcome Mr. Allan Monkhouse who has lived for over twenty years in Russia. During the old regime, throughout the Great War and the Revolution and under the Five-Year Plan, Mr. Monkhouse has carried on business from day to day and has been in they were quite unable to set to work to actually start construction or reconstruction work. During that time, the decrees and the laws they issued and the steps they took were designed, of course, simply to meet the immediate needs of the moment. They had to fight off the attacks made on them by the white armies and by 1919 and 1920, they found themselves having to fight famine and altogether the country got into a very serious state of chaos and disorder.

In 1920 they looked around and when they saw the state the country was in they felt that the only possible way to get out of the difficulty was to introduce that policy which came to be known as the New Economic Policy and that was a temporary measure, a temporary expedient and was virtually private capitalism reintroduced. That went on from 1921 to 1928 and during those years the country certainly picked up very considerably and took on quite a different aspect.

During that time the Soviet Government went to work and did quite a considerable amount of preparatory work-preparatory construction work in preparation for bringing in the Five-Year Plan. I only mention that because it was that work that took us to Russia in 1923 to 1924. That preparatory work included the building of a very large electrical net work and of a number of power stations in different parts of the country and it also included the making of a very complete survey of all their natural resources, and as well as that, sending engineers and scientific workers, professors and others to America, to England and Germany and other countries to study modern scientific methods and various methods of industrial production in order that all that information might be used when the Plan itself was put into being in 1928.

In 1928, they felt themselves strong enough to start the Plan itself and the first thing they did was to set the tax collector to work to tax out of existence as quickly as possible the private business, the private works and shops that had grown up under the period. of the New Economic Policy in order that their place might be taken by state-owned and state-controlled concerns. Unfortunately, the tax collectors worked too quickly as you will see later and many of the poorer businesses were taxed out of existence before the state was in a position to put anything in their place.

The Plan itself included providing for almost every phase of the people's life. It not only included the complete reconstruction of the economic forces and the development of their economic resources, but it also covered plans for the people's education and for their welfare. It included a state medical service and provision for the study of art and music, for athletics, sports and everything of that kind. All those activities and all those sides of the people's life were properly considered by the incoming authorities when they drew up their plan in Moscow.

Perhaps the most spectacular side, however, of the work they have already accomplished, the one that has attracted the most attention in the outside world, has been what they have done in industry. Therefore, I propose to deal with that first because, incidentally, it is that work in which the greatest action is to be shown, and the greatest action is shown,, incidentally, to people who visit the Union.

In industry, they contented themselves for the first two or three years in developing work in the western district of European Russia, particularly in Leningrad District. It was a particularly tragic thing to do. The district should never have been developed as an industrial center; it is much too far removed from sources of raw material and markets. They went ahead at that time in developing their oil industry because they found that was a ready and quick source of revenue and they wanted foreign currency in order to purchase more equipment.

After two years they turned their attention to the Ural Mountains and the development of the eastern District. Time, I am afraid, will not permit me to dwell at any length on work in the Ural Mountains but they certainly put through some big engineering projects in that district. It was more important in 1931 when the industrial plans were seriously influenced by the fear of an attack that suddenly grew within them, from the Far East, and they definitely began to change their, industrial plans and concentrated their attention on quickly developing those industries which could be quickly diverted to war purposes.

That was one of the influences that worked upon them and caused them to suddenly turn their attention to the central Siberian District, that is the district immediately around Tomsk, the best known town in that district. There, they are blessed with almost every natural resource that could be desired. There are fine coal deposits, fine copper, zinc-almost every mineral, with the exception of tin. There is no tin in the Soviet Union. There are fine forests and fine agricultural land. There is good wheat land to the west, in the center of Siberia. To the immediate south they built a railway, linking that rich territory with the Central Asian District, the Turkmenistan District where they grow the cotton crops and where, incidentally, through their planning scheme, they are growing practically eighty per cent of the total amount of cotton they require for their textile factories.

True, this development that is going on in Central Siberia is one we haven't heard much about in the outside world. To my mind it is one of the most important because though it may be decided at the moment with a military idea at the back of their minds, we sincerely hope,, I think, that will not be necessary and that they will come to more amicable relations with their Far Eastern neighbours. On the other hand the development of industry in that district is going to put them in an extraordinarily strong position in developing the power situation over Mongolia and Afghanistan and many of the other countries immediately around. Incidentally, they do look on these countries as natural markets. While referring to that as their natural market, I might refer to the general question that frequently arises as to whether all this industrial development work in Russia is designed for their coming out into the outside world as competitors, to compete with us in our markets, and I think you will find, although they have spent $825,000,000 on equipment, both in this country, in America and in England and in Germany, too; though they have spent that large amount of money, their industrial equipment is still hopelessly inadequate for other than the supplying of home demand for many, many years to come. I think it is very questionable if they will be in a position for many years to come to compete in the outside market. What they have done in dumping manufactured commodities on the European market has been done more or less as a desperate attempt, in order to prevent themselves falling down, to finance commitments when they were unable to get the prices they expected for their natural exported raw materials. I think that the bogey of Russia building a big industrial development scheme in order to compete in the world markets is something quite unfounded, except in the Central Asian markets.

Now, time does not permit me to talk at any length about what they have actually achieved in building up these industries. Perhaps their biggest work has been done in aeroplane construction, tractor building and certain of the heavier engineering and basic industries. I think that was one of the mistakes they have made. They have rushed ahead too rapidly with the basic industries and they have neglected to develop the lighter industries which supply them with the ordinary commodities, such as boots and shoes and things of that kind. It was one of the serious mistakes and they recognize it now and if you look at the programme you find there very little provision for the further development of heavy industry and that the main attention is being directed to developing light industries-commodities the people require.

In actual industry itself and in the working of these big plants they have built, they are definitely getting a considerable amount of success. Actually, they are getting more success than many of us thought they would-even those of us who lived very close to them. I think it is very important when we think of that success which they are getting that we should realize that the methods which they are employing to control industry, the actual--what you might call the mechanics of industry--the control of work differs practically not at all from what we have in our capitalist countries. They have gone back entirely from the idea they had in 1917--the syndicalism of control of work and factory by local committees--and they have put these factories entirely in single handed control, entirely in the hands of state-appointed individuals who answer directly through trust organizations to the Supreme Economic Council or to the bodies now taking the place of the Supreme Economic Council, that is to say the light industries, the heavy industries and the timber industry.

Now, the way industry is controlled is almost identical with what we have in our own country. That is one important point. The other important point is that they have completely departed from the idea of equal pay. I remember in the days after the Revolution, the tremendous fights we had with the work committees and the trade unions when they tried to introduce the ideas to us. In those days they had the idea that there should

be practically equal pay for all people. That is completely gone in industry and is going almost everywhere else throughout the Union. Nowadays, the workers in the factory, the semi-skilled factory worker, can get something around 125 or 150 rubles a month, as a basic rate; the labourer, perhaps, fifty-five rubles. Foremen get 400 or 500 rubles and the senior executive officers may get as much as 1000 or 1400 rubles a month. So you see the scales of pay differ very little indeed from that which we have in our own country. They have completely reintroduced piece work and they are working on piece work almost everywhere throughout the Union.

I think that the fact that they have introduced practically the same methods we employ in our countries is one of the things that is contributing more than anything else to the success they are getting in their industrial programmes.

So much then, for what has happened in industry.

I have already referred to the fact that in developing their industries they were evidently much influenced in 1931 by the fear of war. I might mention here that they are building up quite a strong army which they contend, and I believe they honestly contend, is intended for defence purposes. Anything of the nature of war would be a serious thing to the Soviet Union at the present time. On the other hand they have definitely, or they pretend to have felt anyhow, the menace from the Far East and have built up a strong army and an extremely strong air fleet to endeavour to counter that menace.

Let us speak for a few moments about agriculture. That, perhaps, is the most important thing in the Soviet Union at the present time and the agricultural situation is much different from the industrial. You find a very different state of affairs in agriculture. The trouble, perhaps originally began there in 1917 when Lenin and his friends, wishing to carry the peasants with them and get their assistance to fight off the white armies: permitted them to take over the estates of the old landed proprietors and assume almost ownership over them. This breaking up of the fine estates which were responsible for the growth of the largest proportion of the grain Russia used to export, was a very serious matter, indeed. And following that, Lenin very quickly realized that so long as over a hundred million people of Russia's population were small proprietors and peasants working their own land in their own way there never would be a Communist majority in that country, if they had a real proper open election, a ballot box election as we know it. Realizing that, he thought it was necessary to take some steps to make that mass of people into what he called "wage earners and proletarians." In other words, the had to bring in some form of legislation that would take the land from them, that would stop private enterprize among the peasants and make them workers for the state in one way or another. That was done by introducing large state farms where the people who work in agriculture are direct employees of the government. Introducing the collectivization idea does not necessarily mean that the peasants work for the state but the way they have it organized it comes to that because all the !agricultural machinery, the tractors and other equipment is leased out and farmed to the peasants by the state and is paid for in kind by grain grown on the farms. 'So, in that way, they keep the whip hand expertly over them and virtually make the peasants into state workers.

The idea back of the collectivization idea is to make these people so they are proletarians, as they say, and it is therefore much easier for the government to spread the Communistic ideas among them. That is the idea at the back of bringing in the plan; that is the reason they forced it through. It was a very risky experiment in the way they have done it. The peasants naturally resist and resist it hard. The older peasants, the so called Kulaks, took steps to try and prevent the grain collection in the villages and stopped growing their crops. The government immediately retaliated by taking these people from the villages and deporting them to the timber camps in the north and caused them to cut timber under very difficult and serious conditions. They were deported to the sites of canal development schemes and other schemes under the supervision of the government. That left the villages in the hands of the less experienced and younger peasants. Naturally, the richer peasants were the men who had made the best show at farming and they were all in the hands of these agitators and organizers sent down from the towns to organize them politically and to group them into collective farms. The result has been very serious indeed. Many of the villages fail to get anything like the results they should have got. The crops were so far short of what was demanded of them and what was far more serious is that before the peasant enters these farms, many of the richer and middle class peasants discovered that it was only necessary to have a certain amount of live stock, a certain number of horses and cattle to qualify for membership of the farms. Therefore, before entering the farms, they, slew the remainder of their stock and sold the meat and the skins and in that way they very seriously depleted the herds and the income of Russia.

The seriousness of this was only realized this year when Stalin quoted figures in Moscow to show that from 1929 to the present year the amount of live stock in Russia has decreased by more than half. There aren't half as many animals on the farms in Russia today as there were in 1929. For instance, the number of horses that have been killed is seventeen and a half million, out of a total of thirty-four million horses. The argument, of course, is that they have made tractors to take their place. That is not strictly true because the total number of tractors is still something like 350,000, and that is not going to take the place of seventeen and a half million horses which have been killed or have died within the last five years. So you see the agricultural position is very serious.

Then, the wheat crops have not matured in the way they expected. They have not managed to get the wheat crops they anticipated and the crop this year is just about the same as they got in 1913. That means that they are going to have very little wheat, indeed, to export. Although in 1913, they had quite a considerable amount to export from their crop, you must remember that at the present time the population of that country has grown immensely. It is growing at the rate of 3,000,000 a year and there are 32,000,000 more people in Russia today than in 1913, so the fact that they only have the same (crop as in 1913, I think, indicates that they are going to have very little wheat to export. As a matter of fact, I think the same thing applies to their oil, too. You will find, in the very near future, that they are rapidly increasing their automobile industry and the number of tractors they are using and the growth of their industrial work as a whole will mean that they are not going to have any surplus of oil for export, either.

So, I think both those two exports are ones we need not necessarily consider seriously in thinking of Russia. They want what they grow in wheat and what they produce in oil for their own requirements.

Now, pass from that to a question of distribution, another serious factor in the lives of the people in Russia today. They set to work in 1928 to tax out of existence all private shop keepers and private distributors and put the whole thing in the hands of the co-operatives. The co-operatives are not sufficiently organized and not strong enough to really cope with the matter thoroughly. Remember, they struggled hard with it. Nevertheless, in 1931 and 1932 food lines again appeared in the cities, Moscow and elsewhere, which were simply caused by failure on the part of the co-operative authorities to organize the distribution properly. So, they had serious distribution troubles.

Now, in the actual crisis of food stuffs there, an interesting thing has happened. I should have said when I was referring to industry, and I might say now, that wages in the Soviet Union have increased during the last five years. They have increased approximately sixty or seventy per cent. So, it looks on the face of it as though the standard of living ought to increase, but when you examine food prices you find that prices of Russian commodities--and all essential foods are rationed in the same way as in our countries during the war--have increased more than sixty per cent. So far as food and clothing is concerned, the standard of living has not improved the last five years. Rationed commodities are only issued to trade unions and to state employees and to those people who are, you might say, in good standing with the government. All the people who are disenfranchised, such as priests and people not in good standing with the government do not get rations and therefore have to purchase their food stuffs in the same way as workers getting food money--they have to purchase excess food stuffs. Anything they want in addition to the ration, they must purchase from special stores which they call "commercial co-operative stores", where they pay four or five times the price they pay from the rations shop. It is an extraordinary state of affairs. The worker goes along and gets so much food. He goes next door and buys some more and pays four or five times as much.

That shows why it is you cannot give any definite figure for the value of the ruble in Russia, or outside, for that matter.

In addition, there is another kind of store, known as the torgsin. It is a trade store,, primarily designed for foreigners. It only trades with those from foreign countries. Those establishments have gone all over Russia because it is means of getting hoarded gold out of the pockets of the Russians.

Another new and interesting development is that they have set up the stores in the gold mining district, in the mineral valley, and they are encouraging Russians to go and work as private prospectors, washing gold and bringing it in and changing it for commodities in the stores. This is a new policy and it is something of importance that will definitely affect the gold position of Russia during the next few years. I wouldn't be surprised if this year's gold production is not something like twice what it was two years ago, due to the fact, not that the state is producing more gold, but that private prospectors are being encouraged to go back and wash gold and sell it for commodities.

Now, briefly, I want to refer to the transport situation. I have not much to say about that except that it is such that the Russians have been severely criticized for not developing transport systems quickly enough. They contend that they have studied the transport systems in America and particularly in Canada and they say that they don't want to overdevelop their railway system. (Laughter). I am afraid I don't know much about Canadian politics. Apparently that is the opinion they reached when they came over here. Apparently what they are contenting themselves with doing is developing the existing main lines, to make them into four-track lines, if necessary,, and to electrify them, increasing their carrying capacity and then they are going to distribute from those lines on good roads with motor trucks.

That explains why it is they have American engineers to help with the grading of roads and the putting down of large factories to manufacture motor trucks.

In dealing with the transport situation, there is one other point I would like to mention. This brings us to one of the most unsatisfactory sides. In developing their canals--they have done some big canal development work in the north-they are using forced labour everywhere. It is done under the supervision of the Ogpu. The canal that joins the White Sea and the Baltic Sea was cut through in the short space of twenty months and the work was done by "50,000 people," all under the Ogpu. As long as the Russian Government permits the Ogpu to handle big undertakings of that kind and recruit the labour in the way they do, they are making a very serious mistake and a serious violation of the liberty of the subjects in that country.

I must briefly refer to housing work and other social welfare work. In housing, I should say, they have a tremendous amount of headway to make up. They are certainly building fine houses around Moscow but they are still hopelessly inadequate to house the people now going into the industrial district. They are well built but hopelessly short, except in some of the houses for the more favoured higher officials. You don't get the same overcrowding there and there is no doubt there is a certain privileged class now growing up around the government.

I don't want to refer at any length to medical work. It is all being done extraordinarily well. One of the things that strikes people is the good work being done in decreasing infant mortality. It is one of he most interesting things I have seen. In the old days, the number of children who died in the summer was terrible. That is completely stopped. The children are removed to sanitariums and rest houses outside of the towns and the very heavy infantile death rate has tremendously improved.

So I think that is one of the reasons why it is that you find the population of Russia increasing at the rate it is. It is going up at the rate of three million a year. It is not necessarily that there are so many more but the infantile death rate is down so considerably.

That brings us to the educational problem. There, again, there is quite a lot of good work, very excellent work. However, there is a great amount to make up. In all senior work they are making the mistake of rather specializing with men too young, and the education is not sufficiently liberal. They say that is a necessity because of the fact that they desire to get the men trained as rapidly as possible to take executive positions in industry and science. I think, ultimately, they will have to amend the educational system and make it much wider. When you come in contact with the young men you find how narrow their education has been.

Then, I want to refer quite briefly to the religious question. They have said that they want to remove the superstition among the workers from their lives but they said at the outset that they were not going to do it by direct attack. Therefore, they are going to do it subversively and this is the way they are attacking religion itself. It is a serious matter although the young people don't seem to notice the absence of religion in their lives but when the period is over, we think they will settle down and find the lack of religion in their lives and they will want religion brought back into their lives. At the present time the government is trying to force on the people this materialistic idea of atheism and of preventing them from learning anything about the ordinary religious teachings in any form.

Another thing that also arises in connection with the Russian question is the attack they made in the early days on home life and marriage. That, I am glad to say, is being stopped and it is very interesting to note at the present time they definitely appear to be realizing that that was a mistake. Quite recently, Kavinovitch, Stalin's right hand man, made the statement that the strength of the Anglo-Saxon people lies in their firesides. When they talk that way, I think they are coming to see sensibly on that side of the problem, as well.

With reference to the marriage law, we do not think that the easy divorce law introduced is being abused in anything like the way we thought it was. It seems that though divorce is so extraordinarily easy to obtain, they don't seem to take advantage as we might anticipate.

Time is going rapidly and, I want to refer to sports and athletics. That is something that you used not to find in the lives of the Russian people in the old days. Nowadays, quite considerable attention is being paid by the government to the development of sports, athletics, music, opera and everything of that kind. A great deal of good work is being done. Although there are many things against the Soviet, in that particular direction they are doing good work.

In concluding the general remarks about the general conditions of living, I do want to make it clear, although they are getting a certain amount of success in their industry and in the other activities just referred to, nevertheless, in that country agriculture is very seriously threatening the whole at the moment and also, that we can not view with anything but the greatest disfavour their attack on religion and the absence of freedom that you feel in that country when you live and work in it.

Everywhere people are in terror of that secret police organization, the Ogpu. The Ogpu deliberately maintain people in that state of terror. I think that many of the stories of what they do to the people when they get them in the provinces are actually started in order to keep the people in a state of terror. I actually doubt whether they take place but they keep the people in a state of terror.

I think you find people in the Union, under this government, the young people, particularly, who are con-tent; they are keen and thoroughly enthusiastic, but that only applies to people say„ under 32 or 33 years of age. The people who have grown up with the regime have seen a gradual and slow improvement since 1931 and have been led to believe the improvement will go steadily on until they get a standard of living higher than anywhere else in the world. That, however, only applies to the young people and I think you will find the older people do not share that enthusiasm and keenness--particularly, the older peasants, the older intelligensia are very much to be sympathized with. The older intelligensia in the -other days did much to help it but now that others are trained the government has jettisoned them and I think they are very much to be sympathized with.

Generally speaking, I think the sacrifices these people have been called on to make a very great sacrifice, indeed. I also feel that the sacrifice they have been called on to make, that they say is for future generations, is almost 'too great. Nevertheless, I think the Soviet Government is firmly in power and come what may, they intend to forward their plans.

Now, there are a few minutes left and I want to speak of events that took place in Moscow the beginning of last year. You see from what I said that the Soviet did not get quite the satisfaction they expected from carrying out the Five-Year Plan. So Stalin called together the government and executives of the Communist body and made a speech in which he reviewed what had happened. He reviewed the successes and the failures. When he reviewed the failures he pointed out these failures, chiefly due to the action of wreckers, saboters and others, working against the Soviet Union. I think we have seen that was not the case, that that was due to political mistakes. Nevertheless, Stalin's speech was very strong and called for action on the part of the political police in order to demonstrate that his statements were correct. They got to work very quickly and immediately found plots among the medical workers, the food distributing people and among the agricultural workers and they announced, on the day we were arrested that they had shot thirty-five people in the communities where the agricultural work was going on for interfering with agriculture. Whether they were shot or not, I don't know. I shook hands eighteen months after with some of the people that were shot.

They wanted a big plot to have a big trial in Russia. They had big trials in the old days. More recently, late in 1927, they had a trial in which the Germans figure. They had another in 1921 and they wanted another, so they chose the electric power stations--it was something that everybody was interested in. They evidently wanted to bring in foreigners to make it more interesting. They decided to bring in the British engineers. This was largely dictated because at that time they were greatly annoyed with Great Britain because at that time we had found it necessary to amend our trading agreement with them as a result of the arrangements we had reached at Ottawa the previous summer. That was one of the reasons they did not hesitate to bring in the British. In choosing the victims„ there was only one firm to choose from. The firm which I represented had been working on the power stations. In selecting personnel, they chose one man-they chose my old friend and colleague, Leslie Thornton. They chose him because of his family name. His name was the same as that of a family which were previously the owners of the biggest textile firm in Russia. I think that was why they tried to make him the center of that trial.

It came to our knowledge that something was wrong. I sensed it in January. I went home to London and reported it and then, came back. They only waited for me to come back to make the arrest. They arrested me on the 11th of March. That was done by the Ogpu without the full knowledge of the government. Immediately the Ministers of the heavy industries and the Ministers of trade, and the head of the Five-Year Plan himself got to know about it. They evidently moved--in fact, we know they moved--and that is why I was released almost forty-eight hours after I was arrested. I was in the fortunate position of seeing the inside of the Lubianka prison for forty-eight hours. That was quite enough, I assure you. The British Government moved and took a very strong and firm attitude, indeed. That was something they never expected. I think the Russians had it in mind that the company T was associated with was associated with the big armament firm of Vickers. They did not realize that that was not entirely the case. I think that was one reason they thought the British Government would not interfere. It was rather a shock when the British Government came down. as they did with a firm hand. That brought them to their senses but the thing had gone so far that they could not back out and they had to go through a farce of a trial with all the propaganda trappings for their own propaganda purposes. They had to save their faces in front of their own people. That is the way we looked at it through the trial. I am afraid we got a lot of sympathy that we did not deserve. We felt that they were playing out an act and the result seemed a foregone conclusion. Many funny things occurred during the trial. We were quite at liberty. They were doing their best to treat us well. They realized that they would have to let us go and they wanted us to go back and tell a good story. I was at liberty and I used to go to my office and attend to my ordinary office duties every morning and then would go to the trial. Incidentally, I used to ring up my home on the telephone to have a conversation with my wife and tell her not to worry. In fact, I spoke to her every morning throughout the trial.

One day, the President of the Council on Imports had the nerve to call me to talk business with me, and I had to explain to him that I had to go down to the court at ten o'clock. It explains the general attitude toward us. When the verdict was brought in, I think it was just about as near an acquittal as we could possibly get, having in mind that they had to save their faces in front of their people. Nevertheless, they did establish the general idea that there must have been some wrecking activities. In fact people say that there must have been fire somewhere or there wouldn't have been any smoke. However, about three months after the trial was over, they published reports for all the power stations and it showed that the ten power stations which we were supposed to be busy wrecking had all better operating characteristics than any single power station in Great Britain in 1932. I do not think that that indicates that we were extraordinarily bad wreckers. (Prolonged applause).