Background to New Economic Policy From early 1921 Lenin had a formidable task of rebuilding an economy, shattered by first world war and then by civil war. War Communism has been unpopular with the peasants, who saw no point working hard to produce food which was taken away from the. without compensation. This caused food shortages aggravated by droughts in 1920-21 In addition indusiry was almost at the stanastill. In March 1921, a serious naval mutiny occurred at Kronstadt, the island naval base in the Gulf of Finland, just off St. Petersburg This mutiny convinced Lenin that a new approach was needed to win back the support of the peasants, workers . He put into operation what became known as New Economic PolicyNew Economic Policy + Lenin was a farsighted and a realistic leader. Although, he had succeeded in repressing his opponents, but he was atraid"e|yire deteriorating economic conditions of Russia. + He very well knew that the economic policy should be immediately changed in order to pacify the discontented of the masses. * In March 1921, Lenin said “We are in the condition of such poverty, ruin and exhaustion of the productive powers of the workers and peasants that everything must be set aside to increase production” Thus he adopted the New Economic Policy in March 1921, which continued fill 1928.An eminent historian Lipsomopines, * Anal jon, together and r ie soviet fleet, forced Lenin in 1921 to adopt New Economic Policy " However Lenin held talks with peasanis and workers and carefully tead their letter in the newspaper ‘Bednof’ and then adopted the new economic policy and the methods for implementing it * 2 G 3 -» . uA0ES HOPE NEW POLICY “ost of Their > Severe Strain Communists. * PARTY DISCIPLINE warding the Workers From “sation” Now the BSishe- siaula for Communism. «uZER DURANTY, ty te New Yorn Tres. 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Lenin's new eco- ‘severe strain an the famine was expected bi Nery few. ‘The taming gid littl Uinn ‘being home. to. the mass party ‘the necessity. for change, frag aitesay obvious (67 LSnin an leaders. ‘The Few policy 1s a concession capitaliem, but to the peasants. in the decree embodying It that ish Iberty of private trading gourage ‘the use of money ure 6 Tenssure the peasant pro will be able to ‘salt food aud Du Mfactured goods with the proceed Slauses directed co the stimulatio dustrial praduction by the lease tories and felntroduction of the of bonuses, &c., is destined to Planufnctivted aod for the pen buy.” Untess. thir can ‘be. done, elimination of urban workers wil Wars Open to Ald City Worl At present they are on might commons, despite the fact. that tho first year of peace Tussta J Joyed since i914. ‘The reason wholly the famine. for as Mamen self pointed out the harvest in t of Rusela so far exceetted the es aa to attain the expected total whole country, despite the elmo fallure of crops tn, the affilcte But even should the new policy check the Drocess of reduction‘Reasons.behind-NEP 1. The policy was chiefly adopted in order to win back the peasants, who opposed Bolsheviks during the period of war communism. 2. The policy was adopted to end the economic differences between the workers and peasants. 3. Russian peasant wanted to sell their production freely, however this was not possible during the war communism . 4, The policy was adopted to remove the economic discontent on one side and to Improve the economic health of the country. 5. The management of industries, was entrusted to the league of workers during war communism. However, the production was gone down, so the new economic policy was adopted to overhaul the economic system. 6. Lastly the policy was adopted so as to give individual economic freedom to the people of Russia. Z D@ EGFeatures /Programmes of NEP ~RPNAARYOND Regeneration of Agriculture. Nationalisation of Agriculture Collective Farming Beginning of Private Trade Nationalisation of industries. Reforms in Currency Loans fo indusitial Units New labour Code Special concessions to small scale industries.Regeneration of Agriculture. 1. Under the new economic policy, all the compulsory procurement of the surplus yield of the peasants was stopped and they permitted to sell it in the open market. Thus started retail trading and the retail traders made market transaction with a view to earning profit. 2. There were two revolutions in agriculture Government nationalised agriculture, did away with the landlords. The government redistributed the landlords land among the peasants. Second agricultural revolution took place 10 years later. Land was taken from the individual peasants and handed over to the co-operatives. The first change was brought by an circulating order, though which government decided to redistribute land. This increased their holding by 1/3 (however no change in their status) The second change was brought by two factors, first they feared that the affluent peasants might not bring capitalism. Secondly Russia had suffered scarcity of food grains, and to import wheat and also introduced rationing q b) Zz ien sctionepialcat 1. The Russian government, with a view to increase agricultural, produetion, opted for nationalisatiomef.agriculture. 2. For this, governmeptopened.Jarge-farms, under which the barremandintertile land was brought under cultivation. 3. The peasants were also given financial,facilities:by the government . 4, The work progressed so fast that by 1929-30 more than half of the farms had been collectivised. 5. Butt also turned many farmers into rebels and the government failed to procure machines in required number for all the collective farms.Golleetive-Farming 1. Copemetethiiig meant to bring together the farms of severahpeasants under a Co-operative management. Collective farming could be put up into 3 classes A. nithe'firstrelass, there were farms in which the peasants only'pecled.theiniand and perf jintly. The yield was also shared , however ls were owned individually. ARTELS: In this , besides land and labour, capital was collectivized. C. Communes: In these type of farms, everything was collectivised. The farmers owned nothing individually . House, cattle and implements were collective property and the farmers got their requirement from the joint stock. Ze E SCollective Farming By collectivisation,of.agriculture, the Bolshévi ‘ent took a big step in the direction of socialisation. In the first five years plan 1 92832" 1,50,000 peasant families (61.5%) were organised in 2,10,000 farms. 2 1937, the membership of the collective farms rose to 1,85,00,000 peasant families| 93%) 3 These collective farms owned 4,56,000 tractors, 1,29,000 harvester combines, 1,46,000 trucks Now soviet Union became a country with a large scale agricultural production.Beginning of Private Trade Under.the NEP. The peasants were allowed to sell their surplus in the open market. Private enterprise on a small scale was to be allowed Private retail trading was allowed on a small scale. RwWwRO Hence the policy encouraged the private trade and improved the conditions of the peasants. 5. Private trading by farmers deprived the Narcomprod or Commissariat of supplies of its monopoly to collect and distribute agricultural produce.Nationalisation.of Industries 1. Forraising the level of production of war materials, rapid industrialisation was a must. Unfortunately Russia possessed very few heavy machines and very little capital. 2. In November 1917, the Bolshevik government issued an order and put an end to the ownership of factories by capitalists. 3. It was decided to constitute management boards to run the factories, but these boards failed to mange the industries successfully. 4, Under the new economic policy, the government decided to continue capitalism with nationalism, iment not only controlled the large industries but also permitted a certain of decentralisation. 6. The factories producing the same goods were brought under one head. For E.g. all the textile mills were put under a central organisation called ‘Syndicate’ or a ‘trust *Reforms in Currency + The new economic policy made reforms in the currency and brought stability in the economy . During the civil war, currency had been completely devalued. + Therefore, in 1922 , the government bank was authorised to issue Chavonets, i.e. the government notes of value of 10 gold roubles. Overall the economy of Russia improved. ‘Amount of profit * put in the reserve + Capital for business was raised from there sources Bank loans advanced to State help factories by the govt banks* According to the new economic policy 1. The govt il s. One Part was put in reserve fund of thi aaa ‘ory eapeacrnecllei peace! jUcation, medical care and other welfare activities. ( Now the business in Russia aimed at the progress of the country , public interest and the workers welfare. 2. FOR INDUSTRIAL PROGRESS, a branch of communist part was established in every factory, which saw that no worker, craftsman or technician working there propagated against the Bolshevik revolution. 3. As aresult, over all industrial production in the country increased 4, The task of laying pipeline from Grozny in Caucasus to Tuapse port and from Baku to Batumi for increasing production of mineral oll was completed within the given time, 5. Production in government industrial units in 1923 trebled that of 1920. ZzLoans=torindustrial-Wnits + In order to provide loan to various industrial units, the government established a central bank. + In September 1922! government opened ‘Bankot.indusin/sRromvBank'New labourCode * In order to improve the conditions of the workers and labourers in 1923, the government imposed New Labour Code. Under it Provisions of compulsory labour was improved. The wages of the labourers were fixed . aS The working hours were fixed to 8 hours per day. 4, The workers were also granted two weeks leave on full payment in a year. Thus the new labour policy improved the conditions of labourers, thereby strengthened the economic system in Russia.Special coneessions.to.small.scale.industrie 1. The government also offered special concessions to small scale industries and also encouraged the foreign firms to set up industries in Russia. 2. The Government granted licences to 4000 small scale industries.1. Itled to a great increase in industrial production and further led to great industrialidevelopment. 2. Trade prospered due to the efforts of the private sector. 3. The policy brought life in agriculture, which improved the conditions of the peasants. 4, Itled to the economiedevelopment of the country and Russia was the only country to be unaffected by Great Depression of 1929-33 A.D 5. Russia becami erful and reached pre war levels. Benns, however remarked, ‘Russia's economic life came to present a strange picture of intermingled state socialism and state capitalism’-Summary=» Lenin's NEP consisted of a series of reform aimed at bringing political and economic stability to the country. It went a long way in pacifying various economic sections and interests. Though Lenin had to give up some of his original economic and social programmes for the country as he found them to be unreasonable. He had to allow some growth of private enterprise and capitalism fo please the Russian peasant. He permitted them to sell their products for profit, guaranteed their personal property and allowed them to employ labour. He also allowed private retail trade under certain conditions. Similarly, private capitalists were allowed to open factories, which employed less than 20 workers. Foreign investors were allowed to invest their capital in Russian industrial concerns provided they shared their profits with the state Incentives such as higher wages for improved production were offered to the labourers. Strike in factories were banned and strict discipline was imposed. Anew currency was introduced on the basis of the gold standard. Z