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Chapter 3

This webpage reproduces a chapter of

Ukraine under the Soviets
by Clarence Manning

published by
Bookman Associates
New York,

The text is in the public domain.

This page has been carefully proofread
and I believe it to be free of errors.
If you find a mistake though,
please let me know!


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Chapter 5

 p45  Chapter Four

The New Economic Policy

With the cities prostrate, the land untilled and the people starving, not only in Ukraine but elsewhere on Soviet-controlled territory, Lenin suddenly changed his policies and introduced various measures which rapidly relieved some of the most glaring defects of the Soviet system. The general term for the new arrangement is the New Economic Policy which more or less remained in force until 1929.

The basis of these measures was a change in the method of collecting taxes and income. Whereas, during the period of Militant Communism, the peasants had been compelled in theory to hand over their entire production to the state with the exception of what they were allowed to retain for their own personal use, they were now assigned a fixed amount which they were to contribute, and the balance they could retain or even sell in the local markets. The decree providing for this was signed March 21, 1921. This gave the peasants a new inspiration to work, for they could begin to make plans rationally and intelligently and could hope to receive some reward for their diligence and industry. This measure was supplemented by others which made it appear that the Bolshevik regime was in some degree returning to the philosophy or the practices of capitalism.

That was undoubtedly the impression that Lenin wanted to convey abroad. There had been signs that some of the European countries were willing to renew commercial relations with the Soviets, and the introduction of the New Economic Policy strengthened these desires. People began to speculate glibly and naively that the practical realities of existence had forced Lenin to admit much that he had previously denied and they predicted that in  p46 the coming years the form of Soviet life would steadily approach that in the Western world.

The same reaction was to be seen at home. Many of the more sincere and convinced Communists greatly disliked the concessions to the old order that were made at this time. It seemed to them that their revered master was turning his back upon his old position and they scoffed at the new Nepmen, who were growing wealthy under the new regime.

Lenin was not to be shaken in his policy. His motives in these concessions to capitalism are well expressed in the remarks in the History of the All‑Union Communist Party. "Militant Communism had tried to take the fortress by frontal assault. It advanced too far and risked being cut off from its base. Lenin made the proposition to retire a few steps, to retreat for a while to the rear, so as to pass from an assault to a siege, and then, after gaining strength, to return to the assault."

The later sequence of events showed the correctness of this explanation. The New Economic Policy in Lenin's mind was a temporary move which was made in the hope that the economic life of the country would revive. He made no lasting concessions and a careful reading of all the measures shows that they were not motivated by the sense of failure that was ascribed to them by the capitalistic world. Lenin did not put the measures in any form that would definitely bind himself or his successors. They did not provide any guarantees of their permanence, nor did they state any principle that was in contradiction with the basic philosophy of Communism. They were, obviously, a mere tactical manoeuvre in the difficult situation in which the Soviets found themselves.

The basic decree was signed in Moscow and was, of course, only applicable to the Russian Soviet Federated Socialist Republic. It could not therefore be valid without further action in the Ukrainian Soviet Republic which was, by hypothesis, a completely independent and sovereign state. Yet so closely knit together was the fate of the Ukrainian Communist Party with that of Russia that it was not necessary for the Ukrainian Soviet regime to issue immediately any new decree on the subject. It was automatically  p47 assumed that it was equally binding in Ukraine and without any further ado, the Ukrainian peasants were given the right of selling any surplus products exactly as if there had been no independent Ukrainian Soviet government.

The legal aspects of this decree did not interest the bulk of the Ukrainian peasants. They saw only the relief which it afforded them and the opportunities that it gave. They immediately took advantage of it, and its first effects were to be seen in a surprisingly short time. Of course, there could be no improvement in the national well-being until the harvest; and the harvest of 1921 was again reduced by drought, so that with the best of intentions, it was not until 1922 that conditions began to improve.

A new Russian land code was finally adopted on March 3, 1921, and it was, of course, the model to be observed in Ukraine. Yet this did not suppress the discontent of the Ukrainian peasants.

In an effort to suppress this smouldering discontent, D. Manuilsky, who was then the Commissar for Agriculture of the All‑Ukrainian Revolutionary Committee (the revolutionary centre and the provisional government of the country), summoned to Kharkiv a gathering of agronomists from all parts of Ukraine in the First All‑Ukrainian Agronomical Congress. He found the more than one thousand present practically united in their assertions that the agricultural laws as developed by the Bolsheviks were inapplicable to Ukraine. They had been drawn up and approved on March 6, 1919 and they were entirely based on the spirit of the Russian land commune which provided usually for a redistribution of the land every three years, with the supplemental provision that the redistribution should take into account the number of persons in each family. This was all very good when it agreed, as it did in Russia, with the general spirit of the people who were vitally interested in the commune as such. Conditions were different in Ukraine and the purely artificial Land Society was developed. Of course, all the peasants had to become members but the land was divided by households rather than on an individual basis. Furthermore, it was provided in the Ukrainian Code that "The right to land handed over for labor use is without term and  p48 can be taken away only in accordance with the provisions of the law." This insured the individual household in possession of its own piece of land and made it possible for the more industrious to undertake the improvement of the soil.

By the time that the final form of the Labor Code was established on November 22, 1922, it had become almost essentially different from the Russian Code, although it paid a lip service to the principle of nationalization through the actions of the Land Societies. A further sign of submission was the establishment of maximums on landholding. No household in the densely settled areas could have more than fourteen hectares or, in the less thickly populated areas, forty-eight hectares. The Land Society had the right to decide on the form of exploitation of the land to be carried out but if a family disagreed with the form established, it was entitled to demand the same amount of land but not necessarily the same land that it had contributed. Furthermore, outside of the requirement that all members of household were compelled to labor personally on the land, the provisions dealing with hired labor and the renting of land were left purposely vague or were omitted for further study.

The new code, which was more liberal than that in Russia, was devised in the interests of the landless peasants and also the poor and middle peasants, and definitely ratified the seizure of the estates of the large landowners. Sixty-eight per cent of the landless peasants received small tracts of land and fifty‑two percent of those with holdings from two to four hectares were settled under or favorable conditions, or received additional land. On the other hand, 27.2% of those with more than sixteen hectares, the normal holding, and 56.8% of those with more than twenty-five hectares, saw their additional land removed and handed over to their less fortunate neighbors. In a sense this might seem to have been a solution of the crying need of the peasants for land but it brought with it some unexpected results.

The civil war had completely destroyed any free capital, and without capital the peasants could not buy the tools, the fertilizers, etc., which they needed to prosper. This made little difference in  p49 the very beginning, for at the moment the primary need was for food and the peasants were compelled to live upon what they could raise. It was not long before the returning prosperity commenced new differentiations in the villages. The poorer peasants began to take advantage of the provisions that they could lease their newly acquired land, and while the Russian law provided that a lease could run for only three years, the Ninth All‑Ukrainian Congress of Soviets soon lengthened this term to 13 years and liberalized the laws for hired labor.

The result was that by 1926, the poor peasants had leased 1,181,000 hectares and 53.9% of the peasants who had at least ten hectares rented additional land.

In a word, under the New Economic Policy conditions began, in fact, to return to what had been the situation prior to the revolution, with the exception that the great land owners had disappeared, but as they had been largely Russian or Polish, their departure only increased the Ukrainian influence in the villages and made them more homogeneous than they had been before.

The Commissariat of Agriculture endeavored during these years of reconstruction to maintain as independent a position as possible. It established its own independent services, its own research stations which were concerned with Ukrainian agricultural problems, its own breeding stations and its own bureaus for study and development of the various branches of agriculture, and it did its best to separate these from the similar services directed by Moscow and not concerned with the particular problems of Ukraine.

The peasants responded to this with their own efforts. In 1922, with the famine still raging, they secured permission from Moscow to establish the so‑called Selo-Pomich (or Village Aid) to provide credit for the peasants. This finally persuaded the Cheka to hand over part of the golden objects which they had stolen from the churches, and it used the capital thus secured to buy seed corn in America. It then loaned this to the peasants and when the harvest came, the loan was repaid in kind and more credit was then extended.

 p50  The peasants also revived and breathed new life into the cooperatives which had been broken up during the period of Militant Communism. In 1923 they established another cooperative organization, the Selo-Tekhnyka (Village Machines) which purchased more expensive agricultural machinery and rented it out to the peasants for the appropriate agricultural work. These points became the centre of mechanization and were in effect the first tractor stations. In 1924 they established the First Agricultural Bank, a sort of private institution which at one time had more loans outstanding than had the Ukrainian State Bank which was, of course, closely supervised by Moscow.

All these efforts met with marked success and agriculture speedily began to revive. The peasants became more prosperous and their holdings of livestock rapidly increased, although they did not reach the pre‑war level. This, in its turn, created a new demand for manufactured products and restored the factories to operation, and with them the conditions in the cities began to improve.

Similar concessions were made to industry, but with one important difference. The larger and more important industrial plants were not turned back to their former owners who were, as before, allowed no voice or influence in their direction. They were taken from the workers who had seized and abused them during the period of Militant Communism and placed under the supervision of government trusts. These were either regional in character or confined to a single branch of industry. In either case, they were under the control of a more or less trusted group of men among whom Communists were in the leading positions, but while they received certain credits from the state, they were more or less autonomous and they were allowed to go through regular commercial transactions and encouraged to show profits in their annual reports. There was thus again a source of encouragement both for the directors and the workers, and slowly but surely the level of industry began to rise.

The smaller plants were very often leased to individuals who were allowed to employ hired labor and the hope was given to these that their taxes would be at such a level that they, too, could  p51 show profits. The very small shops and plants were in some cases taken back by their former owners when they had survived and any provisions about the use of hired labor were tacit­ly forgotten in the first flush of the New Economic Policy.

All of these measures were interpreted by the great mass of the Ukrainian people as a recognition of the validity of human experience. There were, of course, keen realists who gave full credence to the declarations of Lenin that the Soviets had never wavered in their objections and were using these concessions only as a means of reviving the life of the country and strengthening their own position. At first this did not seem to be true and it was only as conditions really settled down and a semblance of prosperity returned that it became possible to note the steadily increasing pressure which the government exerted.

In the same way the currency reforms were not without their own influence. In 1923 the government introduced a new currency, the chervonets, which was ostensibly based on a gold standard, to take the place of the old depreciated paper. Nevertheless, the latter was allowed to circulate in the rural districts with the result that its value continued to fall and it became more and more difficult for the peasants to satisfy their needs for manufactured goods which were priced in the new currency. This produced the so‑called "scissors," for with the restoration of industry, the value of manufactures continued to rise, while the prices of agricultural products continually fell.

The political system was still not clear. The new regulations were introduced in the Council of Commissars in Moscow and it was emphatically stated that they were for the Russian Soviet Federated Socialist Republic, but Ukraine and also the other Soviet Republics put into practice the same resolutions, often without any decree by the ostensibly independent government.

The key to this enigma lay in the nature of Communist discipline. In theory and on paper the Soviet regime was thoroughly democratic in the broad sense of the word. There was an elaborate scheme of elections to the village and the higher Soviets, and even though this was weighted very heavily to provide increased representation  p52 for the city proletariat where the Communists felt themselves strongest, it was always possible to defend the system.

Yet this does not tell the full story, for though non‑party men were elected to lower and local Soviets, the number of Communists increased steadily in the higher. These Communists were themselves classified as members of the Ukrainian branch of the Russian Communist Party and they were bound by party discipline to obey all the instructions given by the Executive Committee of the Russian Communist Party.

There was thus, in reality, two governments in both Ukraine and the Russian Republic. There was first the republic government theoretically responsible to the people and thus transmitting the wishes to people upward, even though the highest republic authorities were the direct appointees of Moscow. There was likewise the domination, more or less veiled, of the Communist Party, a government which only transmitted instructions from the top down. In the early days, and indeed for a considerable period, it is often difficult to determine whether certain measures came into effect because they had been approved by the Council of Commissars in Moscow or because they had the backing of the Executive Committee of the Russian Communist Party which was a monolithic organization, responsible only to its chiefs. It was in a sense a theoretical question for, by the period of the New Economic Policy, the Council of Commissars, the Executive Committee of the Russian Communist Party and the control of the Communist International rested in the hands of the same men who functioned in three different capacities but still formed a well-knit body. Even though the legal relations between Ukraine and Russia rested on the vague treaties and agreements made during the period of Militant Communism and the civil wars, the Ukrainian Soviet government could be practically overruled at any moment and on any point on which it disagreed with the wishes of Moscow.

Since all non‑Communist organizations had been dissolved, the only possible opposition could come from the Ukapisty, the Ukrainian Communist Party. This was composed of a small number of brilliant men, confirmed Communists, who insisted upon preserving  p53 the independence of the Ukrainian Communist regime in the hope that sooner or later they would be admitted to the Communist International as an independent national Communist Party. They therefore willingly accepted the doctrines of the International, which was little more than the third facet of the ruling block. By 1925 the situation had so far developed that their aspirations for this were definitely checked and even this theoretical opposition was eliminated by compelling the Ukapisty to enter into the Ukrainian Section of the Russian Communist Party, or else.

This situation makes clear the relations that existed between Ukraine and Russia during the early years of the New Economic Policy. As agriculture and industry revived in Ukraine, it was suggested that the Ukrainian government send aid to its Communist brothers. That suggestion was a command, and just as the Muscovite bands under Militant Communism scoured Ukraine for food, so under the New Economic Policy, the so‑called Ukrainian government began to drain off the wealth of the country for the charitable purpose of helping its Russian brothers.

The vagueness and the ambiguity of this system was partially cleared up by the formation of the Union of Soviet Socialist Republics. The treaty establishing this was signed on December 30, 1922, just as Lenin was becoming paralyzed and unable to function effectively. It bound together the various Soviet Republics, while at the same time it paid lip service to the right of any of these Republics to secede. Of course, this was from the beginning an empty phrase, for the only people who had the power to declare the secession was the Council of Soviets of the Federal Republic and they were Communists assigned to their posts by Moscow and bound to obey the orders of the Central Committee of the Russian Communist Party. In addition to this, a surprising number of the ruling group of the Russian Soviet Republic now took over the corresponding posts in the Union and thus added still a fourth facet to their varied activity.

The Constitution, which was formally adopted at the All-Union Congress of Soviets on July 6, 1923, went still further in providing for the government of the Union. The Commissariats were divided  p54 into three classes: Union, Joint and Republic. Thus, those of Foreign Affairs, Armed Forces, Foreign Trade, Communications, Water Transport, Posts and Telegraphs, Heavy Industry, Light Industry, Supply and Timber had full control over the corresponding sections in the federal republics. Those of Internal Trade, Labor, Finance and Workers' and Peasants' Inspection were nominally joint commissariats but, in case of a dispute between the Union and the Republic commissariats, the rights of the former were supreme. The remaining commissariats, Interior, Justice, Education, Health, Agriculture, and Social Welfare were still left under the Executive Committee of the Republic Supreme Soviet. It was thus very evident that, except in a few fields, the powers of the Ukrainian Soviet Republic to decide its own destiny were practically non‑existent.

It goes quite without saying that it was these local commissariats which attracted the Communists of Ukrainian origin, whether or not they belonged to the Ukapisty or had joined the Ukrainian Section of the Russian Communist Party as former members of the Borotbisty. This was a very important development in the next decade in Ukrainian history and it was due to the relative freedom of the Commissariat of Education that the Ukrainian cultural renaissance took the form which it did.

At the same time, despite all the verbiage and the apparent exceptions, it was abundantly clear from the very beginning that the economic system of the Ukrainian Soviet Republic was to be bound hand and foot to the Moscow regime and that its financial and industrial potentialities would be treated as Moscow wished.

It was relatively simple to deal with industry. The development of the coal and iron resources of Ukraine were simply transferred to Moscow control and it was practically impossible for the Ukrainians to express any opinion as to the form which that development would take. The Russian directors of the trusts could make such contracts as they desired and carry them out without regard to the wishes of the local population or the workmen.

Agriculture was a little more difficult. The decree of 1921, which had started the New Economic Policy, provided for the  p55 payment of a specific amount of tax in kind and left to the peasant the rest of his crop. In an endeavor to get this grain into Russia, the government offered to buy it but it did not have the funds or the inclination to pay for it at the market price. The financial reforms connected with the introduction of the chervonets could, to a certain degree, make it expedient for the peasant to sell to the government for cash, and as time went on the peasant gained the power of selling his crop for cash but the Moscow control of transportation and the prohibition of large scale trading left him helpless and he saw himself forced to dispose of it locally or to the government. Then the government made a fixed price which was far below that of the free market, and was often scarcely a third of the amount that the peasant could have secured. This sale of large quantities of agricultural products at a fixed price gradually became the rule and was one of the signs that the period of toleration for private income was coming to an end.

In 1925, the government began to clamp down on the small traders, the Nepmen, who had profited by the opportunities which they had had. Again it had a large choice of measures. Thus, depending on the situation, it could invoke laws against the hiring of labor; it could order the state agencies to refuse to buy from or sell to an obnoxious individual and thus isolate him; it could suspend his ration cards and perquisites, take away his right of voting and thus make him a pariah in the community; it could levy prohibitive taxes which would put him out of business and confiscate his property; or it could find some violation of some other law or regulation and imprison or exile him.

The degree of pressure which was put upon the peasants and the workers varied from year to year. Each year Ukraine was compelled to export more to Russia without regard to the needs of the local population. Thus, the amount of grain rose from 1,050,000 tons in 1924‑5 to 3,165,000 tons in 1926‑7, when there was a bumper crop, but in 1927‑8, when the harvest partially failed and there were signs of need in the country, the amount collected and exported rose to 4,353,000 tons. At the same time, the continually increasing demands aroused again a spirit of opposition  p56 and of indifference among the peasantry and a resentment against the growing exactions of the Soviet regime in Moscow.

Still these were years of relative peace. With the introduction of the New Economic Policy, the government became more tolerant of differences of opinion and the OGPU (the Organization of the State Political Administration, the new name for the old Cheka) was relatively inactive. There were few political arrests, imprisonments, executions and deportations and the bulk of the population began to breathe more easily. There were men, however, who saw the straws in the wind. For example in 1924, Mikhnovsky, who had been one of the early Ukrainian nationalists, committed suicide and so did Syrotenko, a prominent Social Revolutionist, but these were in a way exceptional cases.

It is far more likely that this lull was part of the Moscow policy of preparing to eliminate in one swoop all persons who might prove to be dangerous, but it was also affected by the confusion and the intrigues that were going on in Moscow. With the death of Lenin, there was no clear successor to his post and prestige. There were many claimants, notably Stalin and Trotsky. When Lenin died, the power passed into the hands of a small group of leaders with Stalin, the Secretary of the Communist Party, and Trotsky as Commissar for War as the main contenders for the supreme power. The struggle between these two men lasted for several years, with the star of Stalin rising over that of Trotsky who favored a far more rigorous policy toward both the Nepmen and traders in the cities and the kulaks or kurkuls (the richer peasants) who had profited materially by the opportunities for private trade and production. It was not until that conflict was over that any one dared to risk the internal upheaval that might come with a change from the avowed outlines of the New Economic Policy and a reintroduction of more rigorous socialist or communist practice.

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