PERSA Working Paper No. 37

Planning the Soviet Defense Industry: the Late 1920s and 1930s

Andrei Markevich

Moscow State University

Political Department of Economics Economy

Research in Soviet Archives

Version: 7 November 2004

Available from www.warwick.ac.uk/go/persa.

Planning the Soviet Defense Industry: the Late 1920s and 1930s*

Andrei Markevich†

Open Lyceum, All Russian External Multi-Disciplinary School, Moscow State University

Abstract The paper describes the procedures for planning the Soviet defense industry in the interwar period and analyses its limitations. Three features differentiated the planning of the defense industry from that of the civilian economy. First, the supply of national defense in the broadest sense had high priority and received the close attention of the country’s top leadership. Second, the process of military and economic planning for defense that created the context of defense industry plans had a strongly forward-looking character and generated increasing demands through the interwar years. Third, the detailed planning of defense industry was carried on simultaneously in two separate bureaucracies, a military hierarchy preoccupied with formulating demands and an industrial hierarchy the task of which was to organize supply; planners made strenuous efforts to reconcile supplies and demands in the defense industry, and met with limited success.

* This paper contributes to research on the political economy of the Soviet Union under Stalin funded by the Hoover Institution (principal investigator, Paul Gregory). † Thanks to Paul Gregory and Mark Harrison for advice and comments; I am responsible for remaining errors. Please address communications to Andrei Markevich care of [email protected].

First draft (in Russian) October 11, 2004. This version November 7, 2004.

Planning the Soviet Defense Industry: the Late 1920s and 1930s

In the twentieth century the waging of war rested on economic foundations. Armies in battle required weapons, ammunition, uniforms, and food rations. Planning for war, whether in aggression or defense, was inconceivable without accounting for resources. This paper reviews the Soviet way of planning the economic aspect of warfare that was laid down at the end of the 1920s and the 1930s following the abandonment of a mixed economy and the transition to forced industrialization. Some relevant issues of Soviet military thought concerning preparation for war have been investigated in the recent literature (Simonov 1996a,b; Samuelson 2000a,b, 2001; Ken 2002). As a rule, scholars have tended to analyse the work of the civil and military agencies separately; Samuelson was the first to investigate the links between military thinking and civilian economic plans. Despite this we still know little about the day-to-day planning of the defense industry, and of the supply of defense more broadly with general-purpose fuels and machinery, transport and medical services, mobilization preparedness and stocks, and so forth. This paper is organized as follows. Part 1 defines the military input into economic planning. This came about in two ways: immediate military demands influenced economic plans for the distribution of current output, while long-term military requirements were reflected in the distribution of investment resources. Part 2 describes the institutional hierarchies through which military requirements were brought into contact with the command economy’s civilian allocation and management systems. Military requirements had a general impact on the economy as a whole as well as specific implications for the defense industry: these are considered in Parts 3 and 4. Part 4 deals at some length with the problem of administrative reconciliation of planned supplies with planned demands. At the stage of implementation ministerial plans had to be translated in detailed contracts for specific enterprises to deliver specific goods to the military purchaser at agreed prices, and this process was decentralized to a considerable extent. Part 5 describes the problems that arose. Finally, in the course of implementation plans were vulnerable to amendment from above and below; the reasons for this and the implications are the theme of Part 6. Part 7 concludes. To limit the use of Russian terms as far as possible, and to clarify possible ambiguities, I use the following conventions. (1) Soviet ministries were called “people’s commissariats” until they were renamed ministries in 1946. I refer to them as ministries. (2) I translate VSNKh as the “industry ministry,” NKTP as the “heavy industry ministry,” NKOP as the “defense industry ministry,” and so on. (3) I translate dogovor as “contract” (or “specific contract”), tipovoi dogovor as “model contract,” and osnovnye usloviia postavki as “master delivery agreement.” (3) I retain six official acronyms in the text, (a)

First draft (in Russian) October 11, 2004. This version November 7, 2004. 2

Politburo, the political bureau or decisive core of the party central committee (b) Sovnarkom, the council of people’s commissars, chaired by the prime minister (c) STO, the Council of Labor and Defense (d) NKVD, until 1946 the people’s commissariat (ministry) of internal affairs, responsible for internal security and forced labor (e) Gosplan, the state planning commission, and (f) KPK, the ruling party’s “control” or audit commission. 1. The Military and Economic Planning In the Soviet Union as elsewhere, the military prepared for war on the basis of alternative scenarios for the future evolution of events. Starting from the current political and international situation, the defense ministry and Red Army general staff assessed the most likely external threats and the military requirements that these posed. This informed their plans for military modernization, against which they measured the country’s military and economic potential. As Samuelson (2001, p. 77) and Sokolov (2004) have shown, this led Tukhachevskii and other military leaders to press for greater military control over economic planning and the management of industry. In principle the economic issues that concerned the military may be divided into mobilization planning and operational planning. Mobilization plans prepared the economy for the contingency of a war that might or might not happen and set out the economic tasks that should be undertaken in that event but not otherwise. At this time most Soviet military experts imagined that the war for which they were planning would be protracted over several years; consequently they gave most attention to computing annual average resources and requirements. Thus, the activity of mobilization planning in the broadest sense went on at several levels, including computation of the resources that would meet the “mobilization requirements for a year of waging war”; plans for the “initial period of war,” usually covering three months; plans for the “initial year of war” when the country’s economy would not yet have been mobilized to the full; and also “mobilization plans” in the narrow sense of prescribing procedures for a transition to war production that utilized productive capacities as fully as possible. Operational planning, in contrast, was oriented on the immediate future. The most important economic components of military planning for the immediate future were proposals for national economic development that took into account the needs of defense; and plans of “current military orders” to procure weapons and military equipment, closely linked with economic plans for defense industry. The issues raised by operational and mobilization planning were clearly inseparable; some contemporaries regarded operational planning as no more than a component part of mobilization planning more generally.1 Mobilization planning aimed to prepare the economy for a specific contingency, that of war, and to ensure a seamless transition to wartime production if that contingency

1 GARF, 8418/8/9, ff. 3-6 (Gosplan deputy chairman Mezhlauk, letter to prime minister Molotov “On the procedure for confirming annual and quaterly plans in defense industry,” dated July 31, 1933). On the evolution of mobilization planning in more detail see Davies (2004); for previous accounts see Simonov (1996, 2000), Samuelson (2000), and Ken (2002).

was realized. Operational planning aimed to optimize the allocation of current resources for all contingencies, including that of war, and specifically the resources of the defense industry for the army’s peacetime needs. The resource constraints of a poor country posed cruel dilemmas. What was the cheapest way of supplying defense requirements? The Soviet authorities believed that they were faced with a choice between two extremes. At one extreme lay a peacetime defense industry of specialized “cadre” factories mostly or entirely devoted to military products. At the other lay what they saw as the “American” style of industrial mobilization based on the creation of dual-purpose capacities that could be switched from peacetime to wartime priorities at short notice. In the short run the first variant looked cheaper since specialized war production plants offered lower capital costs than factories with built-in flexibility. In the long term, however, the second variant looked cheaper because it would provide more civilian production as long as peace was maintained; meanwhile, specialized armament factories would be less fully utilized and risked rapid obsolescence. The military were more inclined to the first, and the civilian planners to the second. But it was the political leadership that had the decisive voice. The actual path that was chosen wandered between the two extremes, depending on the international context and fears about the planning horizon for war. The “war scare” of 1927 showed the leadership that the Soviet economy was unready for war and that war requirements were hugely in excess of the defense industry’s existing capabilities (Simonov 1996a). Under the first five- year plan the main stress fell on building specialized “cadre” factories so as to close the gap as quickly as possible. Then, during the 1930s, some of the emphasis switched to building up the potential of the strategic branches of civilian industry such as engineering, vehicles, aviation, and chemicals for wartime mobilization. Under the third five-year plan, however, mobilization requirements again rose greatly above the mobilization potential of civilian industry, and in 1938 to 1940 the Soviet leadership returned to the advantages of building up “cadre” factories (Samuel'son 2001, pp. 144, 196, and 232). The links between mobilization and operational planning are illustrated in Figure 1. The military plan of war began from military thinking about the likely character of a future conflict. The main economic component of this plan was its mobilization requirement for resources in the event of war, which underpinned the mobilization plan. Analysis of the mobilization requirement relative to the resources that already existed showed up the likely bottlenecks in the specialized defense industry and the strategic civilian branches, and signalled how investment should be allocated now so as to eliminate these bottlenecks in the future. Thus mobilization planning fed into the investment aspect of the national economic development plan. This was a somewhat one-sided interaction: military specialists expected to have significant influence over the civilians responsible for planning the defense industry and the economy as a whole, but were reluctant to grant civilians any access to military planning (Samuel'son 2001, p. 14).

Figure 1. Planning for Defense Mobilization Plan Investment in Civilian Branches Plan of Mobilization Capital Requirement Construction Investment in Plan of War Defense Industry Current Plan Plan of Current of National Military Orders Economic Products of Development Civilian Branches for Military Use Plan of Gross Decentralized Value of Contracts Output Products of Defense Industry for Military Use

Key: Current Planning Mobilization Planning

Figure 2. Planning the Defense Industry Stalin and his Defense Subcommittee(see Figure 3): Politburo, Sovnarkom, STO; Defense Commission, Economic Council, Defense Committee, etc.

Plan of Current Expert Agencies: Plan of Gross Value Military Orders for General Issues: Defense Issues: of Output of Industry Weapons and Military Gosplan, Gosplan defense Branches Equipment Finance sector, Defense Ministry Committee staff

Defense Ministry Model Contracts Ministries and Chief Combat Staff Supply Staff Administrations of Master Defense Industry Delivery Agreements Enterprise Plans

Specific Enterprises Contracts

For present purposes the national economic development plan had two aspects: the investment plan and the plan for current output. Investment in defense industry and the other strategic branches was channeled through the specialized industrial ministries and chief administrations’ capital construction plans. But the current needs of the armed forces for combat-readiness, operations, maintenance, and training were met from the economy’s current output. The latter came under the national economic plan in the form of targets for the gross value of output, disaggregated among the specialized ministries (for a new account of these arrangements in civilian branches see Markevich 2004, 2005a). Some output was stockpiled in reserves for mobilization deployment in the event of war. The army’s current peacetime requirements were embodied annually in plans of “current military orders” for weapons and military equipment from industry. These procurements, financed by budgetary allocations, were fixed by the political leadership at the highest level. The plan of military orders provided the basis for contracts that were then drawn up between the defense ministry and individual suppliers of weapons and equipment, and these contracts were executed in turn through deliveries by one party and payments by the other. Figure 2 illustrates the relationship between the Army’s procurement plans and the production plans of Industry. In short, the planning of output and investment in the defense industry proceeded in two separate channels. One was a military channel that gave rise to mobilization requirements for investment and current orders for output. The other was the civilian channel for planning the economy as a whole, with the associated plans for investment and gross output of each sector including the defense industry. 2. Planning Institutions and Agents The defense planning agencies emerged at the end of the 1920s as part of the hierarchical system of the Soviet command economy. As Figure 2 shows, there were two parallel hierarchies, one civilian and the other military. The civilian agencies were primarily responsible for planning current production, while military agencies took the lead in mobilization planning. There were also centralized coordinating institutions that mediated between the two. Within this general picture the institutional details were continually redefined through the frequent reorganizations that proved to be a hallmark of the command economy. In this section I provide some of the detail. 2.1. The Civilian and Military Hierarchies The Plan of War. Forward-looking thinking about the next war was the task of the Red Army general staff and the Revolutionary Military Council with other agencies subordinate to the defense ministry.2 These worked out

2 My use of the term “defense ministry” embraces a complex sequence of official designations for the ministerial departments that governed the Red Army and Navy. From 1923 to 1934 there was a single unified defense department, the people’s commissariat for military and naval affairs (NKVM). In 1934 it became the people’s commissariat of defense (NKO). From 1937 to 1946 it was subdivided into separate departments for defense (NKO) and the

7 mobilization requirements and presented them to the government and Politburo so that defense needs could be incorporated into national economic plans. April 1928 saw a special decision to allow military involvement in all stages of compiling national economic plans; thus, defense ministry officials reviewed all the successive drafts of the first five-year plan. The Plan of Current Military Orders. The plans of military orders emerged from the purchasing administrations of the defense ministry, and were transmitted to the government for approval. Until 1929 the Red Army had just one administration for supply, which was then subdivided into specialized administrations for artillery, war chemicals, military equipment, and so forth. From 1929 to 1937 the Red Army appointed a specialized chief of armament to oversee the purchasing administrations; from 1930 he had the rank of a deputy of the defense minister. The Plan of Gross Output of Defense Industry. This was a component part of the civilian economic planning process. Defense industry current plans of gross value of output, finance, investment, labor, and so on, as for industry generally, primarily involved civilian agencies; the ministries, chief administrations, trusts, and enterprises producing military items comprised the same range of functional departments as other Soviet production-branch organizations. In addition to their current plans all Soviet economic agents had annually to work out a mobilization plan that set out what they would do in the event of war. In industry, for example, mobilization plans were compiled at all levels: for industry as a whole as well as for every ministry, chief administration, and enterprise. The plans for industry and for each ministry followed a common layout with a plan for the supply of products by assortment, a plan of supporting measures, and a plan of “material-technical supply.” Ministerial plans included plans of measures to transfer subordinate enterprises to a war footing. Enterprise plans included a description of measures that would be implemented on the announcement of mobilization or other government instruction, a production plan for mobilization, and the preparatory measures that were necessary to implement it. Under rules promulgated in June 1927, most ministries established mobilization sections; from 1929 these began to appear in every state enterprise. Defense sections in civilian agencies were staffed mainly by party members subject to security screening by the OGPU. Each had access, however, only to information directly relevant to his or her own responsibilities; “defense issues within the remit of the given department” could be made known only the leadership and “a strictly limited number of responsible staff.”3

navy (NKVMF). In 1946 all the people’s commissariats were renamed ministries. The Revolutionary Military Council was the title of the defense ministry “collegium” (i.e. governing body) from 1918 to 1934.

3 Hoover/RGASPI, 85/27/405, ff. 1-6 (STO executive session, “Provisional statute of the procedure for staffing the defense agencies of civilian departments, conditions of employees’ service, and producure for processing defense issues,” June 25, 1927).

In the 1930s defense sections in civilian agencies, known variously as “military,” “special,” or “mobilization” departments, were involved not only in mobilization matters but also in the current planning of defense production to meet military orders. For this they had to work alongside the regular agencies and hierarchies for line-management and the monitoring of accounts, prices, statistics, and so forth. The only exception was in the branches that supplied products solely for civilian use; there, naturally, mobilization departments had nothing else to do but plan for mobilization. In practice there was much variation in how mobilization planning and current planning were organized from one ministry to another. A summary of investigations carried out in 1938 concluded that “the mobilization agencies of ministries are designed on the most varied schemes”; “there is no one organizational structure. [The ministry of the defense industry] has a mobilization administration subdivided into two departments and groups, [the ministry of heavy industry] has a military department subdivided into 8 branch groups, [the ministry of engineering] has a military department with 12 sectors, and [the ministry of local industry] has a special department with 3 sectors … There is no approved statute for military departments.” The personnel of military departments at the ministerial level ranged from 11 in the ministry of state farms to 70 in the ministry of engineering. The military departments of chief administrations and enterprises showed similar variation.4 2.2. The Central Agencies. While civilian and military agencies managed these matters from day to day, strategic decisions and coordination fell to the central agencies. Final responsibility, according to the Soviet constitution, lay with the Council of Ministers (Sovnarkom). In practice, above the Sovnarkom stood Stalin and the party Politburo. Stalin was extremely interested in the details of defense policy and reserved the right to intervene in them at any time; normally, however, he delegated management to a series of high-level defence subcommittees the exact title and official subordination of which changed over the years. These changes are illustrated in Figure 3. In 1925 the Politburo established a joint civilian-military commission for defense matters. It was disbanded in 1927 and replaced by a new defense commission of STO, the Council of Labor and Defense; this defense commission shortly became the STO “executive session” (RZ STO). In 1930 the executive session in its turn gave way to a joint Defense Commission of the Sovnarkom and Politburo. When the STO itself was abolished in 1937 the Defense Commission went too; their

4 GARF, 8418/22/79, f. 5 (report prepared by staff of the Defense Committee, May 9, 1938); GARF, 8418/26/250, ff. 32-33 (report on working arrangements in military departments in the listed ministries, June 21, 1938), 34-39 (report on the condition of mobilization work in the ministry of heavy industry, July 23, 1938), 39-40 (report on investigation of mobilization work of the special department of the ministry of local industry, July 22, 1938), 41- 44 (report on the condition of the military department of the ministry of engineering, July 22, 1938), and 53-56 (report of investigation of the fifteenth administration of the ministry of defense industry, July 20, 1938).

place was taken by an Economic Council with oversight of current economic management and civilian economic coordination and a parallel Defense Committee for the defense industry. In 1940 the Economic Council was replaced by specialized councils for the major branches of the economy, including the defense industry, and the council of the defense industry also absorbed the functions of the Defense Committee. Finally, when war broke out in 1941 all these agencies collapsed into a single body endowed by absolute and untrammeled authority, the State Defense Committee. Figure 3. Stalin’s Defense Subcommittee: Lines of Succession and Official Subordination Defense 1925 Politburo Commission

STO: 1927 Council of Defense Labor and Commission Defense

1927 STO Executive Session

Sovnarkom: Defense 1930 Council of Commission Ministers

1937 Economic Defense Council Committee

1940 Councils of Council of Other Branches Defense Industry

1941 State Defense Committee Key: Succession Subordination

High-level coordination for current purposes involved a range of organizations. For the decade 1927 to 1937 the defense sector of Gosplan was mainly responsible. The defense sector comprised both military and civilian staff and was supposed to unify the efforts of the defense ministry and general staff with those of Gosplan, the country’s lead organization for economic planning. The remit of the defense sector was to compile an economy-wide plan for the event of war, coordinate the mobilization plans of the economic ministries, reconcile the armed forces’ long-term plans with the five-year national economic development plans, and coordinate all defense issues that arose within Gosplan. The military strongly influenced the work of the sector

and used it to lobby for the interests of the armed forces; in this sense Gosplan was not a monolithic agency. The proposals that emerged from the defense sector tended, however, to be moderate by comparison with the initial proposals for which the armed forces pressed; sometimes they were also more modest than the outcomes of decisions made at the highest levels (Samuel'son 2001, pp. 92, 195). In the second half of the 1930s the whole system of defense industry administration was refashioned, and this shifted the locus of planning authority. At the end of 1936 a separate ministry of the defense industry was sliced out of heavy industry. April 1937 saw the disbanding of the STO, while the joint Defense Commission was reorganized into the Defense Committee. In December 1937 the Gosplan defense sector was wound up and its powers transferred to a new mobilization sector; the Defense Committee staff were also fundamentally reorganized.5 The Defense Committee assumed the predominant role in dealing with defense issues. The reorganized Defense Committee had four departments. The first of these regulated, coordinated, and approved mobilization plans and reserves; the spring of 1938 saw the short-lived establishment of a special military- industrial commission (VPK) of the Defense Committee to exercise leadership over mobilization planning; it lasted only until 1939. The second department dealt with military orders; it brought the defense ministry plan of military orders to the Defense Committee for review and monitored its implementation. The third department regulated and audited budget outlays on defense and reviewed ministerial requests for access to defense funds. The fourth department provided the Defense Committee with administrative support.6 The personnel were picked from the Red Army command and leadership staff; this consolidated the privileged influence of the military in planning that they had previously exerted in the Gosplan defense sector. Civilian specialists, even those representing the ministries of defense industry, could obtain access to Defense Committee papers only if armed with special authorization “for this purpose by ministers personally.”7 Within the Defense Committee the first and second sections had the dominant roles (and, in 1938/39 its VPK). This resulted from their responsibilities for mobilization planning and current planning respectively. This binary division became still more clear after the reorganization of June 7, 1940, which reduced the Defense Committee structure to a “mobilization- planning department” and a secretariat. The department’s tasks were “work on

5 GARF, 8418/12/402, f. 6 (Defense Committee resolution no. 190s “On the apparatus of the Defense Committee of the USSR Sovnarkom,” December 7, 1937).

6 GARF, 8418/12/402, f. 10 (Defense Committee resolution no. 190s, December 7, 1937: Annexe 2, “Statute on the apparatus of the Defense Committee of the Sovnarkom”).

7 GARF, 8418/12/402, f. 9 (Defense Committee resolution no. 190s, December 7, 1937: Annexe 1, “Establishment of the apparatus of the Defense Committee of the Sovnarkom”).

the mobilization plans of industry, transport, and [air defense] on the basis of the requirements of [the ministries of defense and the navy] and the NKVD troops” and to prepare all matters concerned with the mobilization of industry and transport for review by the Defense Committee. The secretariat was to prepare current defense industry items for review by the Defense Committee including annual and quarterly plans for current military orders, military freight plans, military and naval construction, starting and stopping production of specific military items, and defense finance.8 3. Defense in Economy-Wide Planning A main problem that arose in planning the needs of defense was to balance them against “the necessity of maintaining the forced pace of industrialization of the country.”9 Both military and civilian specialists recognized “that the perspective plan of preparation for defense should be organically incorporated in the overall plan of the national economy.”10 The basic difficulty was how to do this in practice. What should come first: the demands of the military or the needs of the economy? The prime responsibility for economy-wide plans fell to Gosplan. In conformity with a framework established by government decrees it issued directives comprising the chief indicators of the plan for the next period. Lengthy negotiations and deals with branch ministries subsequently converted preliminary guidelines into a finalized plan approved by the government. On the other hand the military was primarily responsible for coming up with proposals to strengthen the country’s defensive capabilities. More precisely, they had to work out the level of economic development that was theoretically required to support the mobilization requirement of a successful war effort at the end of the annual or quinquennial plan period. But it was not their responsibility to work out how to achieve this level. Thus Gosplan received proposals for national defense-related projects from the defense ministry, and for local defense projects from the staff of the territorial military districts; the latter had to conform, in turn, with the framework of instructions issued by the general staff to local planning commissions of the Union Republics, territories, and districts.11 Since the military and Gosplan worked on these matters simultaneously and in parallel, it follows that Gosplan’s preliminary directives often failed to

8 GARF, 8418/24/226, ff. 1-2 (Sovnarkom resolution no. 983/372ss “On the reorganization of the Defense Committee apparatus,” June 7, 1940).

9 GARF, 8418/1/113, f. 16 (Gosplan, letter to the STO executive session, September 17, 1927).

10 GARF, 8418/2/28, f. 1 (excerpt from minute no. 15 of the STO session “On the procedure for work on compiling the perspective plan of preparation of the national economy for defense,” February 20, 1928).

11 GARF, 8418/22/631, ff. 2-4 (chief of Red Army general staff Shaposhnikov and military commissar of the general staff Zaporozhets, letter to Defense Committee secretary Basilevich, April 21, 1938).

take into account the needs of defense as the Army saw it; it was on the basis of these preliminary directives, however, that all other economic agents calculated their own proposals. This gave rise to repeated supplementary directives concerned with planning the needs of defense, coupled with periodic complaints to the effect that defense requirements were being planned in isolation and then added mechanically to the overall plan for the economy. In sum, defense planning was a matter of “evaluation and correction of the overall economic plan from the standpoint of providing within it for the requirements of defense.”12 The compartmentalization of military-economic planning was also fostered by the regime of secrecy. Such plans appeared in two forms, either “covertly within overall [control figures]” or “in the form of a separate secret appendix” to more open documents.13 Procedures for compiling overall plans and plans for defensive preparation were also separate and distinct. The joint SNK and STO decree of February 7, 1928, “On Deadlines and Procedures of Compiling the Five-Year Plan of the National Economy,” for example, was followed by a supplementary decree of STO “On the Procedure of Work on Compiling the Perspective Plan of Preparation of the National Economy for Defense.”14 Similar decrees were adopted in the case of annual plans.15 To ensure that the needs of defense were “covertly” taken into account in the overall five-year plan it was envisaged “to receive the perspective plans of separate branches of defense (the five-year plan of construction of the armed forces, defense industry, strategic railway construction, etc.) in the STO executive session prior to final summarization [do okonchatelnoi svodki] of the overall five-year plan.”16 The parallel planning of defense and the economy gave rise to frequent system failures. The first five-year defense plan was never formally adopted, for example (Simonov 1996b, p. 89). Defense was included in the first five- year plan for the economy as a whole, but “covertly” (Samuel'son 2001, p.

12 GARF, 8418/3/93, f. 2-3 (STO executive session resolution “On the procedure and deadlines of compiling defense c[ontrol] f[igures] for 1929/30,” July 28, 1929): emphasis added.

13 GARF, 8418/1/61, f. 4 (STO executive session resolution, “Directives on accounting for the needs of defense in working out c[ontrol] f[igures] for 1927/28,” June 25, 1927).

14 GARF, 8418/2/28, ff. 1, 11 (excerpt from minute no. 15 of the STO session, February 20, 1928).

15 E.g. GARF, 8418/1/61, ff. 2-4 (STO executive session resolution, “Directives on accounting for the needs of defense in working out c[ontrol] f[igures] for 1927/28,” June 25, 1927); GARF, 8418/3/93, ff. 2-3 (STO executive session resolution “On the procedure and deadlines of compiling defense c[ontrol] f[igures] for 1929/30,” June 28, 1929).

16 GARF, 8418/2/28, f. 1 (STO resolution “On the procedure for compiling the perspective plan of preparation of the national economy for defense,” February 20, 1928).

93). During the first five-year plan period there was no perspective plan for rearmament, an omission that the planners themselves often lamented.17 This story was repeated under the second five-year plan (Davies 2004). Throughout the 1930s Gosplan did not assemble any annual plans for defense generally; “such plans were compiled only by the Gosplans of the union republics.”18 Officials at every level from ministries to enterprises often complained that instructions relating to defense needs were generally issued later than more general directives in the planning cycle; this tended to devalue the work done at earlier stages and required each “new assignment to be worked through in a great hurry.”19 This “makes it impossible to work attentively and thoughtfully with special purpose.” The result was “frequent revision and rebuilding of estimates for outlays on defensive readiness,” which put a brake on the “final scrutiny and approval of estimates for the next financial year” and on the signing and implementation of contracts.20 This led agents, on one hand, to press for earlier circulation of directives relating to defense plans and, on the other, to delay the processing of overall plans until the intentions of the central agencies with respect to both civilian and military programmes had been clarified. In 1929, for example, the ministries were supposed to supply Gosplan with papers relating to defense by August 1. As of August 20 “not one department and not one union republic has provided any papers to Gosplan with the exceptions of the OGPU troops, [the ministry of agriculture of the Russian republic], and very preliminary plans of [the ministries of transport and communications].”21 The STO executive session had no alternative but to extend the deadlines previously announced.22

17 E.g. GARF, 8418/1/61, ff. 5-6 (Gosplan, letter accompanying draft “Directive on accounting for the needs of defense in working out c[ontrol] f[igures] for 1927/28”); GARF, 8418/3/150, ff. 8-46 (Gosplan report on “Military industry and the military products of civilian industry in the c[ontrol] f[igures] for 1929/30 (capital construction and development of capacities),” October 1, 1929).

18 GARF, 8418/22/631, ff. 2-4 (chief of Red Army general staff Shaposhnikov and military commissar of the general staff Zaporozhets, letter to Defense Committee secretary Basilevich, April 21, 1938).

19 GARF, 8418/3/150, ff. 8-46 (Gosplan report on “Military industry and the military products of civilian industry in the c[ontrol] f[igures] for 1929/30 (capital construction and development of capacities),” October 1, 1929).

20 GARF, 8418/3/93, f. 12 (deputy minister of transport, letter to the secretary of the STO executive session, June 21, 1929).

21 GARF, 8418/3/93, f. 20 (Gosplan, letter to the STO executive session, August 21, 1929).

22 GARF, 8418/3/93, f. 1 (secretary of the STO executive session Appoga, letter to Gosplan, the defense ministry, VNSKh, and other departments, August 23, 1929).

The reconciliation of defense plans and economy-wide plans between Gosplan and the military was further complicated by the intervention of a third party: the ministry of finance. Defense needs expressed in the mobilization requirement first and foremost influenced the allocation of investment. Defense-related investment was financed mainly from the state budget. Ministries compiled special itemized lists of defense projects, and in their investment plans a separate column showed the financial limits for defense items.23 At some point there needed to be a reconciliation between the itemized projects and the funds available. When the 1929/30 annual plan was compiled, for example, it emerged that the initial financial limit for defense industry, 185 million rubles, “was coordinated neither with the mobilization assignment under plan ‘B’, based on the [defense ministry] triennial mobilization requirement, nor with the mobilization assignment under plan ‘P’ for October 1, 1930, that [the industry ministry] had established as a transitional step to achieving plan ‘B’.”24 In other words the plan indicators based on the military mobilization requirements, whether in the plan’s minimal or optimal variant, were indequately financed. After this had become clear, the industry ministry asked the STO executive session either to supplement the funding or curtail the programme in so far as “the [industry ministry] presidium cannot take it upon itself to alter the mobilization assignment under ‘P’ nor can it decide which items of the [defense ministry] triennial requirement to put off beyond the October 1, 1931, deadline.”25 The finance ministry, intervening on behalf of the government in an expert capacity to reconcile professed goals with the funds available, typically took a hard line and tried not to concede anything whether to the Army or to Industry.26 4. Planning the Defense Industry 4.1. A Coordination Problem Planning the defense industry was central to defense planning in the wider sense. In the 1920s and 1930s the Soviet Union differed from most other countries in the degree to which its defense industry formed a distinct,

23 GARF, 8418/9/198, ff. 1-2 (STO resolution no. K-11s “On the procedure of financing and material provision of defense measures in 1934,” January 15, 1934).

24 GARF, 8418/3/150, ff. 8-46 (Gosplan report on “Military industry and the military products of civilian industry in the c[ontrol] f[igures] for 1929/30 (capital construction and development of capacities),” October 1, 1929).

25 GARF, 8418/3/150, f. 5 (Presidium of VNSKh, letter to the STO executive session “On the c[ontrol] f[igures] for defense work,” August 9, 1929).

26 See the process of assigning funds to the defense ministry for military orders in 1927/28: GARF, 8418/1/113, ff. 21-22 (ministry of finance, letter to the STO executive session, October 1, 1927).

specialized branch. The “cadre” factories were brought together under their own trusts, chief administrations, and eventually ministries of defense industry. Most defense items came from the specialized “cadre” facilities, including nearly 80 per cent of all military goods produced in the country in 1940 (Simonov 1996b, p. 154). There was relatively little participation by civilian factories. In so far as the cadre factories were designed to meet the wartime needs of the armed forces, peacetime defense requirements could not utilize them fully and they were also employed in producing civilian goods; in 1933, for example, civilian items accounted for more than one third of the gross output of the defense factories subordinate to the ministry of heavy industry.27 In 1938, however, after a few more years of rearmament, orders for the ministry of defense and the NKVD troops had risen to 80 per cent of the planned gross output of the factories of the ministry of defense.28 The result was that the definition of the defense sector was intrinsically fuzzy, as Figure 4 illustrates: the planners dealt with the defense industry as an administrative bloc, but the defense industry also served civilian consumers while the armed forces procured their weapons and military equipment from a circle of producers that was actually wider than the defense industry as such. In the Soviet economy all agents were subject to higher level plans, and defense enterprises and their ministerial fundholders were no exception. The defense industry was planned in the same general way as other branches: the government transmitted preliminary assignments down to ministries, chief administrations and enterprises where they were elaborated in more detail before finalized proposals were returned from below through the higher levels to the government.29 There were some particular exceptions, however. For example, the plans of defense suppliers included separate columns for items for military and civilian use.

27 GARF, 8418/8/9, ff. 3-6 (deputy Gosplan chairman Mezhlauk, letter to prime minister Molotov “On the procedure for confirming annual and quarterly plans for military industry,” July 31, 1933).

28 GARF, 8418/22/463, ff. 5-7 (Defense Committee resolution no. 29ss “On the plan of production of the ministry of defense industry in 1938,” February 20, 1938).

29 E.g. RGAE, 7515/1/156, ff. 200-332 (ministry of defense industry sixth chief administration, correspondence with factories and with the ministry leadership concerning the compilation of plans of the sixth chief administration and its enterprises for the third and fourth quarters of 1937); RGAE, 8157/1/389, ff. 1-236 (ministry of armament, correspondence with Gosplan concerning the compilation of plans of the ministry of armament, its chief administrations, and enterprises for the second, third and fourth quarters of 1939 and the annual plan for 1939).

Figure 4. Military and Civilian Producers and Products

B Defense factories’ civilian products

A Defense factories’ military products

C Civilian factories’ military products

Key:

Products of the All defense All products cadre defense products, A + C factories, A + B

The most important difference was that the ministries and enterprises supplying weapons and military equipment had to fix their plans not only within the guidelines set by the authorities above them and with their agreement, but also by agreement with the purchaser: the defense ministry. This procedure was instituted at the beginning of the command system. According to a resolution “On the procedure for approving the plans of the military industry” adopted by STO on October 5, 1927, the defense ministry was to supply the industry ministry with full “information necessary for drafting the five-year plan of recovery and further development of the military industry and of accumulation of materials of the mobilization reserve.” The industry ministry drafted this plan presented it to STO for approval, but only by agreement with the defense ministry and Gosplan.30 In parallel with plans for defense industry the military drafted both the five-year and annual plans for current military orders that expressed their demands on industry. There was virtually no export of arms before the war, and the state was the sole purchaser of military items.31 In principle, therefore, the plan of current military orders (in Figure 4, A + C) should have been equivalent to the output plan of the defense industry (A + B) after subtracting the defense industry’s civilian products (B), and adding the civilian industry’s military products (C). Although the defense ministry drafted both the five-year

30 GARF, 8418/1/4, f. 1 (STO, resolution “On the procedure of planning the military industry,” October 5, 1927).

31 Strictly speaking the army and navy were not the only purchasers of weapons; the NKVD also bought military equipment for its internal security troops. NKVD purchases were relatively unimportant, however: its planned orders for 1938 amounted to 128 million rubles compared with 9.9 billion rubles for the defense ministry. See GARF, 8418/22/463, ff. 5-7 (Defense Committee resolution no. 29ss “On the plan of production of the ministry of the defense industry for 1938,” February 20, 1938).

and annual plans for current military orders, the annual plans never added up to the five-year totals. Actual military orders were based on the international situation, not on the five-year plan which generally proved to be a poor forecast. As Eugène Zaleski (1980) showed in the case of the economy-wide five-year plans, therefore, the five-year plans for military orders had little to do with reality. The annual plans for military orders had more chance of being realized although they too were often modified in the course of their execution. As for the annual plans for military orders, the procedure for drafting them and linking them with the plans for defense industry failed to stabilize during the 1930s despite the fact that the circle of individuals involved showed little change. A document drafted in 1939 by staff of the Defense Committee states: “The defense ministry has no statute that sets out the procedure and deadlines for signing agreements with industry, the procedure for resolving pre-contract disputes, or the procedure for negotiating prices, etc.”32 The military themselves complained repeatedly about this. In early February 1940, for example, naval officials commented that the lack of clear rules for drafting plans of military orders “governing the normal drafting of the plan of orders through the coordination system up to the point of its approval and provision with financial credits places extreme burdens and delays on the work of the [navy ministry] in both compiling the plan and implementing it in industry.” In the light of the navy ministry’s experience with the 1938 and 1939 plans of orders, the authors stressed the need for the Defense Committee to issue a binding “Instruction on drafting the plan of orders” which “should include clear requirements and instructions of the [navy ministry] for the entire system of work on the [navy ministry’s] plan of orders and define at each stage the mutual relationships with the Defense Committee, the Economic Council, and the industrial ministries that arise in the process of this work.”33 This reached the Defense Committee a week after receipt of a similar letter from the Red Army general staff.34 A result of the lack of rules was that the plan of defense industry and the plan of military orders emerged as outcomes of the disputes and deals that were typical of the Soviet economy. In the autumn preceding the planned year the defense ministry compiled its annual requirement for weapons and equipment and sent it to industry. The ministries supplying defense products held special meetings with military participation to review the military orders that were envisaged, determine which orders could be handled by their

32 GARF, 8418/25/544, f. 121 (Defense Committee staff, note “On the financial department,” not dated or signed but 1939).

33 GARF, 8418/24/2, ff. 7-9 (deputy head of the chief naval staff Ivanov and military commissar of the chief naval staff Nikolaev, letter to Defense Committee secretary Safonov, February 4, 1940).

34 GARF, 8418/24/2, ff. 44-45 (chief of the Red Army general staff Shaposhnikov, acting military commissar of the general staff Gusev, and chief of the armament department of the general staff Ermolin, letter to Defense Committee secretary Safonov, January 26, 1940).

factories and which could not, assess their value, and so forth.35 From these meetings emerged the ministerial responses to the planned military orders, including unresolved differences with the military. Disputes were referred to special commissions; the central authorities made the final decisions. As far as we can judge their motivations, the military generally wanted to extract the greatest possible volume of armament from industry. Industry, on the other hand, wanted first and foremost to obtain plans that it could fulfill. An example illustrates the scale of resulting disagreements. In drafting the plan of the defense industry ministry for 1938, the defense ministry asked for orders to the tune of 13.3 billion rubles, a sum 3.3 times larger than the value of orders that the defense industry had fulfilled the previous year. The defense industry ministry agreed to accept orders only in the sum of 9.5 billion rubles. Government leaders received a list of disputed items more than 40 pages long.36 Disputes on this scale were encouraged by the isolation of military planning from planning the economy. In connection with the 1938 plan, for example, the defense industry ministry commented that “to realize the [defense ministry] order in full will increase the defense industry’s requirement for machine tools and metals (in particular nonferrous) much more rapidly than the growth rates of engineering and metallurgy that are envisaged in the national economic plan for 1938.”37 Defense Committee staff noted the same thing. One document remarks that “financial planning in the defense ministry proceeds in isolation from the planning of physical stocks. There is no one agency in the defense ministry that unifies issues of overall plannning of financial and physical stocks. Physical planning is carried out without any account of the production possibilities of industry.” The result was that Industry could not fulfill the Army’s equipment orders, while the defense ministry could not spend the financial resources assigned to this purpose.38 Not all disputes arose from Industry’s refusal to accept orders on the basis that they could not be filled. The defense industry sought to increase orders for those items that were already in production. The industry ministry requested a larger plan for 1929/30 for rifles, cartridges, and explosive powder, despite the fact that the military had no need of them. It was motivated, evidently, by a desire to be asked to produce items that its enterprises could easily produce

35 E.g. GARF, 8418/23/91, ff. 83-89 (minute of meeting in the ministry of transport central military department, October 27, 1939).

36 GARF, 8418/22/463, ff. 134-174 (table of disagreements in defense ministry orders for 1938).

37 GARF, 8418/22/463, ff. 73-76 (defense industry minister Kaganovich, letter to deputy prime miniser Chubar', February 2, 1938).

38 GARF, 8418/25/544, f. 125 (Defense Committee staff, note “On the financial department,” not dated or signed but 1939).

and so fulfil the plan at a profit.39 Since industry refused to offer the items the armed forces wanted on the grounds of the “overburdening of capacity,” the defense ministry purchasing staff were forced “to place only the orders that would be accepted although at the expense of the composition of armament and military equipment.”40 Despite the high priority of defense supplies, therefore, the military could not negotiate complete satisfaction of their demands. There were several reasons. First, the defense ministry had to operate under a budget constraint. In planning military orders for 1940, for example, a key problem which was referred to a special commission established by the Defense Committee to manage disputes between the Army and Industry was “determination of the overall sizes of the budget and volume of military orders.”41 Second, there were too many disputes for the central agencies to go into each in detail. The central agencies could not cope with the flood of military complaints about the conduct of industry, as the following story shows. In 1930 the defense ministry asked the government to make industry take on a number of orders that it was refusing to accept. But the government responded that it could not review these disagreements and “not to burden the government with issues that can be solved by inter-ministerial negotiation”; it recommended that “in future such issues, to the extent that they pile up, should be considered jointly by the USSR Revolutionary Military Council [i.e. the defense ministry leadership] and [the industry ministry]”; it was permitted to refer such issues to the government only “in the event that they cannot be resolved by the efforts of the ministries.”42 The result was to differentiate issues by status: the more important the problem, the higher the committee to which it could be referred. Overall plan indicators and summary figures for military orders were reviewed in the Politburo and by Stalin personally.43 Less important issues

39 GARF, 8418/3/111, f. 2 (VSNKh, letter to the STO executive session “On disagreements with the defense ministry on the bulletin of compulsory orders for 1929/30,” June 11, 1929).

40 GARF, 8418/24/2, f. 44 (chief of the Red Army general staff Shaposhnikov, acting military commissar of the general staff Gusev, and chief of the armament department of the general staff Ermolin, letter to Defense Committee secretary Safonov, January 26, 1940).

41 GARF, 8418/23/732, f. 145 (Defense Committee staff official Ivanov, aide memoire on the “Procedure for working out the plan of current military orders for 1940,” November 2, 1939).

42 GARF, 8418/4/39, f. 1 (prime minister and STO chairman Rykov, letter to defense minister Voroshilov and Kuibyshev (for VSNKh), February 26, 1930).

43 Having approved the budgetary control figures of the defense ministry for 1927/28, for example, the STO executive session resolved to refer them upward “for confirmation by the instantsiia,” i.e. by the Politburo (GARF, 8418/1/113, f. 1 (the STO executive session, excerpt from minute no. 10, October 8, 1927)). In February 1938 prime minister Molotov requested the

were dealt with in the Sovnarkom, STO, the Economic Council, or Defense Committee. Industry could freely refuse orders of lower priority, or negotiate their acceptance on advantageous terms. The orders that industry rejected were a permanent headache for the defense ministry. The military repeatedly asked the government to give the plan of military orders priority over the plans of industry, and remove the other ministries’ option “to refuse to fill orders.”44 The plan of defense industry and the plan of current military orders were finally reconciled by special government decrees. This was another major difference from planning procedures in the civilian economy, where ministerial plans did not usually reach the stage of final approval (Markevich 2004). The output plan of the defense industry ministry for 1938, for example, was approved by a Defense Committee resolution of February 20, 1938. The resolution fixed the gross value of output of the industry, the volume of orders of the defense ministry and NKVD, the plan of output of the main military and civilian items in physical units, the average value of gross output per worker, the numbers to be employed and the wage bill, and a target for the percentage reduction in unit variable costs.45 The procedure that confirmed the defense industry plan for 1939 was similar.46 On this procedure the Defense Committee approved plans for the defense industry following government approval of the annual plan for the whole economy which already included assignments for the various ministries, including that of the defense industry, and of the state budget which already included rows for outlays of the defense ministry, the NKVD, and the plan of military orders. In short, the plans of the defense industry were somewhat more rigidly defined than those of the civilian branches, and this reflected their high priority. After the war, in contrast, the plans of the defense industry ministries were confirmed by ministerial decrees, like those of the civilian ministries.47 It should be added that special decrees bringing together all the plan indicators for the defense economy were not issued in the early 1930s; the practice only emerged after the establishment of a specialized defense industry

Politburo to confirm the defense, navy, and NKVD order for armament and military equipment (GARF, 8418/22/463, ff. 122-126 (Molotov, draft memorandum to the Politburo, no date).

44 GARF, 8418/24/2, ff. 7-9 (deputy head of the chief naval staff Ivanov and military commissar of the chief naval staff Nikolaev, letter to Defense Committee secretary Safonov, February 4, 1940).

45 GARF, 8418/22/463, ff. 5-7 (Defense Committee resolution no. 29ss “On the plan of production of the ministry of defense industry in 1938,” February 20, 1938).

46 GARF, 8418/23/345, f. 145 (defense industry minister Kaganovich, letter to the Defense Committee requesting approval of the defense industry ministry plan for 1939, January 10, 1939).

47 E.g. RGAE, 8157/1/1258, ff. 3-98; 8157/1/1259, ff. 5-119; 8157/1/1260, ff. 4-121; 8157/1/1261, ff. 4-121 (minister of armament, decrees approving various plans of the ministry of armament for 1949). On the confirmation of postwar plans of civilian ministries see Markevich (2004).

ministry. In 1933, for example, Gosplan complained to the government that “in the situation that has been created, an overall, mutually coordinated plan for defense industry is not compiled at present. The plan of the ministry of heavy industry for the third quarter was not compiled and therefore was not reviewed by Gosplan.” The same prevailed in defense industry investment: “In practice construction goes ahead without itemized lists and plans for commissioning of production that have been reviewed by Gosplan and confirmed by the government. The trusts of the chief administration assemble and distribute itemized lists for implementation that have not been coordinated with each other and are not consistent in the spirit of unified objectives.” “The same situation has also emerged in the field of working out production programmes, labor plans, quality indicators, and financial plans: these are all worked out by the trusts, and go essentially without the serious review or audit by higher-level agencies that is necessary for coordination of the plan.”48 Gosplan requested the Sovnarkom to issue a decree obliging the ministry of heavy industry “to present overall annual and quarterly plans for the defense industry through Gosplan for confirmation by the Sovnarkom, with the [same] range of indicators prescribed for heavy industry as a whole and the same deadlines prescribed for presenting plans for the ministry as a whole.” 49 The absence of overall plans for the defense industry in the first half of the 1930s resulted from the lack of a planning office that could act in this capacity. According to Gosplan “the central planning sector of the [ministry of heavy industry] essentially stands aloof from planning the defense industry while GVMU [the ministry’s chief war-mobilization administration] brings together mobilization work in defense industry but not the current plan.” Secrecy made things worse. The same report noted that “since the work of defense industry … is not open to press criticism, as a result we are faced with the great backwardness of defense industry in methods of work, standards of consumption of materials, cutting costs, and so forth.”50 It seems likely that this situation was one of the considerations behind the separation of the defense industry ministry from the ministry of heavy industry. Recently Mark Harrison (2003) proposed a model of Army-Industry relations in which Stalin exploited the lack of coordination of ex ante supply (Industry’s production plan) with demand (the Army’s plan of military orders) to foster their mutual rivalry and so divide and rule. The archives suggest that this model is oversimplified. In the strict sense it can apply only to the early 1930s. From the second half of the 1930s the Politburo did coordinate ex ante supplies and demands, at least in principle. I shall show that this did not put an

48 GARF, 8418/8/9, ff. 4-5 (Gosplan deputy chairman Mezhlauk to prime minister Molotov “On the procedure for confirming annual and quaterly plans in defense industry,” letter dated July 31, 1933).

49 GARF, 8418/8/9, f. 7 (Sovnarkom draft decree “On the procedure for confirmation of annual and quarterly plans for military industry”).

50 GARF, 8418/8/9, f. 4 (Gosplan deputy chairman Mezhlauk, letter to prime minister Molotov “On the procedure for confirming annual and quaterly plans in defense industry,” July 31, 1933).

end to the jockeying between the Army and Industry for one-sided advantage in the market place for weapons. It appears, however, that this resulted from the failure of efforts to coordinate supply and demand rather than from a deliberate lack of effort. 4.2. Effective Coordination and Its Costs From the second half of the 1930s the plans of the defense industry ministries began to be confirmed directly by the government. Other problems of Soviet planning that characterized the civilian branches persisted in the defense sector, however. First, deadlines for the approval of plans were rarely met; procedural difficulties in reconciling the plan of military orders with ministerial production plans were a major factor here. The annual defense industry plan for 1938, as noted above, was approved only on February 20. Confirmation of the navy ministry’s plan of orders for 1939 was delayed until March of that year, and with it the production plans of the branch ministries; the same plans for 1940 were not approved until February. 51 The 1941 production plan for the ministry of ammunition was confirmed on February 14. In a memorandum to the party central committee dated April 8, 1941, the Gosplan mobilization department noted that: “Large delays in the approval of the plan of defense industry by assortment in physical units are a persistent phenomenon in all the ministries, as are discrepancies between the physical assortment and the aggregate and quality indicators” (cited by Simonov 1996b, p. 131). Plans were passed down to chief administrations and enterprises with still longer delays. As Table 1 shows, the ministry of heavy industry distributed the finalized version of the plan of special orders for 1936 to its chief administrations only on February 23 of that year. In 1941, in the much smaller and more specialized ministry of ammunition, the same condition was reached only on March 11. As for the enterprise level, in 1935 the defense factories received their finalized plans only at the end of July; in 1936, during the second half of the year and in some cases not until October or November. In 1937 the naval shipyards received their annual plans in March. In the same year its third-quarter plan reached the Sarkombain aircraft factory in Saratov on October 23, three weeks after the quarter had finished. In 1939 its annual plan reached the Molotov armament factory on June 28. A planning official in the defense industry ministry, Kharitonovich, remarked: “It’s clear that if we get involved in the detailed reconciliation of the plan in all its components, we cannot issue it in time.” This was a problem in all branches of the economy: the need to trade the detail of the plan against its timeliness. The solution that Kharitonovich envisaged was: “Even if we make mistakes in a few respects, we will gain from compiling the plan in good time. I would rather sacrifice the perfection of a few points in the plan and at least issue the plan in good time.”52

51 GARF, 8418/24/2, ff. 7-9 (deputy head of the chief naval staff Ivanov and military commissar of the chief naval staff Nikolaev, letter to Defense Committee secretary Safonov, February 4, 1940).

52 RGAE, 8183/1/146, ff. 33ob-34 (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second

Table 1. Finalized Annual Plans: Ministerial Distribution to Chief Administrations and Enterprises Ministry Period Distributed to: When 1. Heavy Industry 1935 Defense factories End-July 2. Heavy Industry 1936 Chief administrations February 23 (special orders) 3. Heavy Industry 1936 Defense factories Second half; October/November in some cases 4. Heavy Industry 1937 Shipyards March 5. Heavy Industry 1937 Sarkombain aircraft October 23 factory 6. Armament 1939 Molotov armament June 28 factory 7. Ammunition 1941 Chief administrations March 11 (military orders) Sources. Rows 1 and 3: 1935: RGAE, 1562/329/120, ff. 30-33 (head of the statistical administration Kraval', memorandum to Stalin, October 23, 1935); 1936, second half of the year: RGAE, 1562/329/120, ff. 41-43 (acting head of the statistical administration special sector Tutenkov, explanatory memorandum on “Fulfilment of the production plan of military industry for nine months of 1936,” not dated). 1936, October or November: Hoover/RGASPI, 77/1/286, f. 53 (transcript of remarks of Anisimov (Voroshilov factory) at a meeting in the presence of comrade Zhdanov with the party committee secretaries of numbered factories, December 23, 1936). Row 2: GARF, 7297/38/247, f. 434 (ministry of heavy industry, decree no. 21s, February 23, 1936). Row 4: RGAE, 8183/1/146, f. 34ob (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second (shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937). Row 5: RGAE, 7515/1/156, ff. 284-288 (head of the defense industry ministry third chief administration Vannikov, letter to director Novikov of the Sarkombain factory, October 23, 1937). Row 6: Hoover/RGANI, 6/2/250, f. 27 (KPK plenipotentiary for the Khabarovsk region, information to KPK chairman Andreev “On leadership and support of the Molotov factory from the ministry of armament and [its] chief administration,” November 21, 1939). Row 7: Simonov 1996b, p. 130.

In summary we have the following picture. Factories always began the year or quarter with only the most general plan indicators, and these were preliminary and subject to further change, especially as regards production.

(shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

The finalized, detailed version of the plan came much later and, in some cases, not at all.53 The same Kharitonovich gives an example: At the end of 1936 the shipyards were given 1937 figures under the special heading of ‘control points.’ These figures amounted to the yards’ portfolios of orders. The yards had to regard them as such, the more so in so far as at the beginning of the year the head of the chief administration called in the factory directors and chief engineers and told them that the points issued to them were not a plan but amounted to the portfolio of orders. The question was raised whether we would be expecting the factories to fulfill the control points in all aspects. [The reply was that ] we would not, in particular because at the time when they were compiled there was no previously confirmed plan of defense ministry orders, which was being confirmed by a special procedure conditionally on the finances assigned to the defense ministry, and we had not yet received a firm plan, which was passed down to us only in March. We were unable to issue a firm plan to the factories at the end of 1936. To orient them in relation to the work in prospect we informed them of the substance of their portfolios of orders (the control points).54 In the defense industry, meanwhile, as in the civilian branches, the practice of dual planning was widespread. This means that the chief administration played safe by issuing a more ambitious plan to the enterprises than had been confirmed by the government (as defense industry minister Rukhomovich recognized in May 1937 in remarks cited by Simonov 1996b, p. 109). The planners themselves saw nothing wrong in this: What is it that amounts to so-called dual planning? Maybe it’s like this: for the second quarter the defense industry ministry approved a limit of 230 million to the chief administration, and we [the chief administration] gave out 250 million to the factories because the assortment plan that [the ministry] also approved for us doesn’t fit within 230 million. I think that a 10 per cent difference is hardly a catastrophe. I wouldn’t try to cover up the shortcomings that we actually have: plans include elements that turn out to be unsupported in the factory; mistakes happen; we sometimes issue plans that are not always exactly in line with the directive instructions of the defense industry ministry. Here I recognize this and I consider that we

53 The Molotov armament factory never received its 1939 first quarter plan for labor (Hoover/RGANI, 6/2/250, f. 31 (KPK plenipotentiary for the Khabarovsk region, information to KPK chairman Andreev “On leadership and support of the Molotov factory from the ministry of armament and [its] chief administration,” November 21, 1939)).

54 RGAE, 8183/1/146, f. 34ob (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second (shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

should set ourselves the goal of eliminating these shortcomings in the future.55 This style of work naturally reduced the quality of planning and promoted conflicts both between the plans of various economic agents and within each agent’s plan. Finally, the quality of defense planning was degraded by agents’ self- interested manipulation of information, as in the economy more widely (Markevich 2004). Higher-level bodies approved the plans of defense agencies and enterprises at lower levels on the basis of the information that the latter had supplied. This information was largely taken on trust since the higher- level agencies had few means of verifying it. As a result, the agents responsible for executing plan assignments themselves had great influence over those who approved their assignments. Preferring to be given assignments that could be fulfilled without great effort, the agents tended to understate their possibilities and overstate their needs, and this in turn promoted the practice of understated planning. The central authorities understood this problem and recognized that “the industrial ministries typically do not get down to individual enterprises.”56 The quality of planning at lower levels “cannot be high, if the higher-level agencies do not review or cross-check their projections; large errors are an inevitable consequence of the lack of checking and internal consistency of the plan of defense industry as a whole.”57 Attempts to change this situation by means of periodic campaigns and audits had only short-term effects. 5. Decentralized Contracting The plans of the defense industry ministries and the plans of current military orders remained highly aggregated. Plans at lower levels were more detailed, but this means that they incorporated a mass of unsolved problems, for example how to identify the specific source, user, and quality requirements of a specific line of output. These problems had to find their solutions in specific contracts between particular suppliers and purchasers. Contracts were a crucial element of the planned economy which would not have been able to function in their absence. No plan could anticipate the whole range of desirable links between producers and consumers; the transaction

55 RGAE, 8183/1/146, f. 35 (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second (shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

56 Hoover/RGASPI, 77/3/22, f. 1 (central committee, draft closed letter “On defects in the city and district party committees’ leadership of work in industry and measures to root out these defects,” no date but 1940).

57 GARF, 8418/8/9, f. 5 (Gosplan deputy chairman Mezhlauk, letter to prime minister Molotov “On the procedure for confirming annual and quaterly plans in defense industry,” July 31, 1933).

costs of compiling such a plan would have spiralled to infinity (Mises 1981, Hayek 1991). Unlike plans, the authority to make contracts was decentralized. Contracts specified a producer, a consumer, prices, quantities, and deadlines. Contracts were also necessary to smooth over planning errors. Contracts were operational by definition and so helped to solve such problems as how to work in the gap between the beginning of the plan period and the finalization of the plan, what to do when plan indicators were inconsistent or in conflict, and so forth. Contracts gave detail to plans. The processes of planning and contracting went in parallel: the preparation of contracts began shortly after the drafting of annual plans began, while the conclusion of contracts coincided roughly with the confirmation of plans: often it happened that contracts were signed before plans were approved, but could then be revised after plans were confirmed. A contract in this planned economy was different in principle from a contract in a market economy. It was not the outcome of unforced convergence of the parties on terms for mutual benefit. The context was set by the annual “contract campaign.” The official purpose of contracting was simply to fulfill the agents’ approved plans. In reality, the decentralized character of the contracting process left both sides room for manoeuvre. In some cases the dissatisfied party could reject the terms offered altogether. Centrally funded commodities tended to be those in shortest supply; where these were concerned, contracts tended to be most strictly tied to the plans for their distribution. In negotiating for non-funded items, both buyer and seller could exercize greater discretion. The contracting process differed in minor ways between the defense and non-defense branches. Generally, the “contract campaign” was initiated and managed from the centre. The autumn of the year before marked its start with the publication of a raft of government resolutions and ministerial decrees. These legislative acts prescribed deadlines for the conclusion of contracts, listed the agents who should conclude them, and set out the procedure for resolving contractual disputes. The campaigns themselves proceeded at two levels. One level was the conclusion of “model contracts” and “master delivery agreements”; the other was the conclusion of the specific contracts themselves. The campaigning unit was the ministry: each ministry had its own campaign, while the government fixed only the general rules of the game. Model contracts and master delivery agreements were concluded among the ministries producing and purchasing goods. They fixed the general procedures for delivery and acquisition of items, the requirements for quality and assortment, the rejection of substandard goods and associated penalties, and mechanisms for resolving disputes.58. The list of commodities subject to master delivery agreements was revised every year by the government. In

58 E.g. RGAE, 8157/1/134, ff. 44-47 (model contract between the defense ministry and the ministry of armament for 1940).

1940, for example, the minister of ammunition had to sign 39 master delivery agreements with the ministries supplying it.59 Specific contracts were concluded at the enterprise level between the actual producer and consumer. This is where the detail of price, quantity, and assortment was thrashed out. The signature of specific contracts marked the closure of the contract campaign. In aggregate, specific contracts were supposed to fulfill overall plans in conformity with “master delivery agreements settled between supplier and consumer ministries” on one hand and model contracts on the other.60 The side of the supplier bore primary responsibility for designing model contracts, master delivery agreements, and specific contracts. In the course of negotiation with purchasers, a mass of disputes and conflicts naturally arose. Conciliation could be pursued directly or through the state arbitration courts of Gosarbitrazh. The latter was organized hierarchically so that the level at which a review was held corresponded with the status of the contending parties. Thus a dispute among enterprises of the same ministry would be settled by intra- departmental arbitration. The arbitration system also reviewed the fulfillment of contractual terms and imposed penalties on violators (Belova 2005). The high degree of secrecy and priority in matters pertaining to defense industry affected procedures for resolving disputes between buyer and seller. An STO resolution of November 28, 1931, established a special financial and technical arbitration commission within the ministry of the workers’ and peasants’ inspection to examine disputes over military orders. In 1934 the inspection ministry was abolished and the arbitration commission was replaced by a new special procedure. Disputes were taken out of the hands of local arbitration agencies and centralized under the chief arbitration officer “regardless of the sum at stake.”61 Since the chief arbitration officer was immediately overwhelmed by the resulting caseload, in 1936 he fixed a minimum value for the cases that he would review, the requirement being initially 10,000 and later 25,000 rubles. Actions for smaller sums over military orders not classified secret were relegated to the ordinary arbitration procedure.62 In short, the process of contracting continued and supplementing the annual planning process and most of the problems that arose in planning also cropped up in the contract campaigns. We will take the campaign of 1940 in the ministry of ammunition as an example.

59 RGAE, 8157/1/134, f. 67 (head of the chief inspectorate Svistunov to minister Vannikov “On the conclusion of contracts for 1940 by [the central administration for material supply],” December 26, 1939).

60 The words cited are from RGAE, 8157/1/134, f. 48 (Sovnarkom resolution no. 1989 “On the conclusion of contracts for 1940,” December 5, 1939).

61 GARF, 5446/15а/1101, f. 1 (Sovnarkom decree no. 561/93s, March 18, 1934).

62 GARF, 5446/18а/893, f. 1 (Sovnarkom, letter to Gosarbitrazh, December 16, 1936).

The preparatory stage began before the government had issued the framework resolutions. In mid-September 1939 the ministry of armament issued its own decree no. 264 “On preparation for the conclusion of contracts for 1940.”63 It ordered enterprise directors, “in consultation with operational staff for supply, sales, and finance, and legal advisers, to review the operating systems for contractual relations and ‘master delivery agreements’” and present proposals to the chief administrations and trusts not later than October 1, 1939. The trusts and chief administrations in turn were to draft the master delivery agreements and model contracts and present them to the ministry of armament arbitration staff by October 5 for transmission upward to the minister by October 15. This decree turned out to be premature given that the 1940 plan assignments for the ministry and its enterprises remained unknown; in consequence, its deadlines could not be realized. They were revised in subsequent decrees of the government and ministry. The Sovnarkom decree of November 8 “On the conclusion of contracts for 1940” served to signal the real start of the contracts campaign.64 Producer ministries were to provide master delivery agreements for an appended list of commodities by November 20. Deadlines were also given for the conclusion of specific contracts. Ministers now circulated the corresponding decrees in their own fiefs. Another such decree appeared in the armament ministry; the decree no. 264 that had preceded it was forgotten. Table 2 shows that the new ministerial decree required the master delivery agreements and model contracts to be drafted within more compressed deadlines than the centre had envisaged, except for deliveries to “other” (therefore unimportant) purchasers. This was motivated partly by the minister’s desire to play safe and insure against the natural tendency of those below to ignore deadlines, and partly by a desire to give enterprises extra time for the negotiation of the contracts themselves. The ministry wanted its master delivery agreements confirmed by November 10 and by November 15 a model plan for “conclusion of agreements for 1940 in quantative and summary terms.” This was at the same time that chief administrations were typically embarking on the first draft of enterprise production programmes for the coming year (Markevich 2004). For conclusion of the specific contracts the ministry decree repeated the government deadlines.

63 RGAE, 8157/1/134, f. 24 (Ministry of Armament decree no. 264 “On preparation for the conclusion of contracts for 1940,” September 16, 1939).

64 RGAE, 8157/1/134, ff. 49-50 (Sovnarkom resolution no. 1648 “On the conclusion of contracts for 1940, October 8, 1939).

Table 2. The 1940 Contracts Campaign in the Ministry of Armament: Government and Ministerial Deadlines Ministry of Government Armament Responsible Agency within the Ministry Deadlinea Deadlineb of Armament Model contracts and master delivery agreements For items to be received by enterprises and agencies of the ministry of armament From other ministries 20 Nov. 5 Nov. Central administration of material supply in consultation with chief administrations From Oboronpromsnabc 20 Nov. 25 Oct. Central administration of material supply For items of mass consumption to be supplied by 20 Nov. 25 Oct. Mass consumption trust enterprises and agencies of the ministry of armament For items to be supplied for intermediate use by 20 Nov. 1 Nov. Department of cooperation (i.e. intra- enterprises within the ministry of armament ministry subcontracting) For items to be supplied by enterprises and agencies of the ministry of armament To “basic purchasers,” i.e. the ministries of 20 Nov. 1 Nov. Ministry defense, the navy, and NKVD To “other ministerial purchasers” 20 Nov. 25 Nov. Chief production administrations Specific contracts For mass consumption items 20 Dec. 20 Dec. … For items of intermediate use and equipment 20 Jan. 20 Jan. … For freight transport 20 Jan. 20 Feb. … For capital construction in progress … 1 Feb. … For new capital construction … 1 Mar. … Notes: a Sovnarkom decree no. 1648 “On the Conclusion of Contracts for 1940,” October 8, 1939. b Ministry of Armament decree no. 297 “On the Conclusion of Contracts for 1940,” October 17 1939. c Oboronpromsnab: the organization responsible for intermediate supply of defense industry enterprises. Source: RGAE, 8157/1/134, ff. 25-26, 49-50.

Responsibility for the timely conclusion and the appropriateness of contracts was laid personally on enterprise directors and heads of chief administrations and others at the equivalent levels. All were obliged to report progress to the ministry. A deputy minister was given personal charge of the contracts campaign as a whole. Its progress would be monitored by the ministerial arbitration and inspection officers.65 Despite the theoretical coherence of the contracts campaign, its implementation was still a complex process. Of the 39 master delivery agreements that the ministry of armament central administration of material supply should have signed with suppliers, none was ready by the 20 November deadline, and 28 remained unsigned by the first of 1940.66 Things were hardly better with the specific contracts and master delivery agreements that were the responsibility of other administrations. Only the “Master Agreement for Coooperation and Sales of Mass Consumption Goods” was ready on time. The “Master Agreement for delivery of goods by Oboronpromsnab” (see the note to Table 2) was approved ten days late, with a 17-day delay for the model contract for supply of principal products of the ministry. An audit showed that the heads of chief administrations and the central administration for material supply “have not engaged directly with this work, delegating it to second-rank staff of the chief administrations.” In the same way the task of concluding specific contracts proceeded at “unsuitable [lack of] speeds.” By mid-December 1939 the conclusion of contracts had only just started.67 At the end of December the difficulties with the campaign were specifically raised in a meeting of the ministry of armament collegium, which obligated the heads of chief administrations and enterprise directors “personally to take all measures to complete the conclusion of contracts for mass consumption goods in the coming days and finish the conclusion of the remaining contracts within the deadlines approved by the Sovnarkom resolution of October 8, 1939.” It required them immediately to compile plans of the conclusion of contracts for 1940 in summary terms. The chief of the central administration for material supply was to complete the negotiation of master agreements with with the supply ministries without delay and circulate them to the armament enterprises.68

65 RGAE, 8157/1/134, ff. 25-26 Ministry of Armament decree no. 297 “On the conclusion of contracts for 1940,” October 17, 1939).

66 RGAE, 8157/1/134, ff. 67-70 (head of the chief inspectorate Svistunov to minister Vannikov “On the conclusion of contracts for 1940 by [the central administration for material supply],” December 26, 1939).

67 RGAE, 8157/1/134, ff. 21-23 (ministry of armament chief arbiter Beshtau, memorandum on the course of fulfilment of Sovnarkom resolution no. 1648 “On the conclusion of contracts for 1940” (October 8, 1939) to the ministry of armament collegium, December 25, 1939).

68 RGAE, 8157/1/134, ff. 3-4 (ministry of armament collegium, resolution “On the course of fulfilment of Sovnarkom resolution no. 1648 of October 8, 1939, and ministry of armament decree no. 297 of October 17, 1939, ‘On the conclusion of contracts for 1940’”).

There were two underlying causes of delay. First, both the contracting parties tended to hold back from agreement until they had been informed of their future plan obligations so as not to conclude agreements unnecessarily and end up having to supply more than the plan would have required.69 Second, one of the parties could often gain a one-sided advantage by using delay as a bargaining tactic in fixing contract terms. Reporting to the ministry on progress with contracts at the end of 1939, the heads of chief administrations noted that the signing of contracts “is being delayed by a number of disagreements over quantity, quality terms, and prices”;70 “Contracts with [the navy ministry] have not yet been concluded because the navy ministry considers it possible to proceed to signing contracts only after confirmation of the programme of orders for 1940 by the government.”71 Delays in signing specific contracts and disputes over detailed contract terms culminated not infrequently in a collapse of negotiations; thus, the theoretically straightforward relationship between plan and contract sometimes broke down. In such cases, examples of which are scattered through the archives, the industrial supplier and military purchaser failed to sign any contract for items that had been planned. Called “precontract disputes,” these were subject to automatic review by the arbitration agency. The outcome of arbitration was formally binding on both sides. The state arbitration agencies annually adjudicated on tens of thousands of cases of precontract disputes, amounting to between 5 and 15 percent of their overall workload (Belova 2005). Even this authority was not always effective in compelling the parties to agree. The enterprises’ contract disputes with the military were in large part an extension of the conflicts that arose in reconciling the defense industry’s production programme with the defense ministry’s plan of military orders. By refusing to come to specific contract terms, the parties tried to re-engage in battles already lost, as they had thought, at the stage of reconciling the production plan with the plan of military orders. Another factor in the military rejection of orders was changes in their perception of future wartime requirements. It is not possible to say which side bore the chief responsibility for breakdowns, but the frequency of breakdowns is hard to understate. At the end of 1938, for example, the ministry of defense industry requested the

69 At a meeting that he convened to discuss the tank industry on March 23, 1936, Leningrad party boss Zhdanov remarked: “A contract is a good thing, but comrade Ruda [a Leningrad tank factory director] is saying: Until I get an assignment from the chief administration, I won’t sign a contract” (Hoover/RGASPI, 77/1/826, ff. 11-12).

70 RGAE, 8157/1/134, f. 51 (deputy head of the ministry of armament first chief administration Zak to minister of armament Vannikov, December 27, 1939).

71 RGAE, 8157/1/134, ff. 60-61 (head of the ministry of armament sixth chief administration Eremin to minister of armament Vannikov, December 22, 1939).

government to trim its ministerial gross output plan by 535.2 million rubles or 4.4 per cent, appending a detailed list of the assortment and value of items that it wished to drop. In each case the justification offered took one of two forms.72 Either the purchaser had refused to conclude a contract to accept the item concerned, or a contract had been signed for a lesser value than that initially planned. These reasons accounted for more than half of the value of the items that it was proposed to drop.73 Thus Industry tried to present the situation as precipitated by the actions of the Army, and it is hard to see how any other motivation could have been presented. Clearly, however, the responsibility should have been shared since the Army’s refusal was based on the terms that Industry offered: it takes two to disagree. If the enterprise walked away from negotiations, then it typically blamed the technological difficulties of satisfying the military’s requirements: the lack of production facilities, the mismatch between the product and the available technologies, etc. Underlying this lay the producers’ desire to limit their efforts to “easy” items that did not require new investments or special efforts. This limited the range of goods for which they would willingly accept orders. If it was hard to refuse top-priority orders those of secondary status provided Industry with much more room for manoeuvre, particularly since the centre could not monitor everything at once. The Army employed several stratagems to limit Industry’s opportunistic behavior. First, they could use the official route of referring disputes to Gosarbitrazh. Second, they could work more closely with enterprises at the earlier stage of reconciling the plan of military orders with the production plan. This route was taken in 1940, for example, by the command staff of the first and second far eastern Red Banner armies, which sought a direct influence over the production programme of the Molotov no. 106 factory, which supplied artillery and small arms production and repairs to these armies.74 Third, one of the tasks of the military agents in industry was to lobby for the conclusion of contracts (Markevich 2005b). They had to report all cases of refusal to sign contracts to the central organs of the defense ministry so that steps could be taken. A timely signal enabled the defense ministry to step in and force acceptance of the contract concerned. In 1938, for example, defense industry factory no. 145, the sole supplier of two-headed lubricators,

72 GARF, 8418/22/463, ff. 46-63 (minister of defense industry Kaganovich, letter to Defense Committee chairman Molotov asking for a reduction in the defense industry plan of gross output for 1938 with a list of items to be removed, December 15, 1938).

73 GARF, 8418/22/463, f. 45 (Defense Committee staff, note to Molotov on the request of the ministry of defense industry to reduce the defense industry plan of gross output for 1938, December 20, 1938).

74 Hoover/RGANI, 6/2/250, f. 24 (KPK plenipotentiary for the Khabarovsk region, note by cable “On account of the requirements of the first and second Far Eastern Red-Banner armies for repair of artillery and products of the Red Army vehicle and armor administration by the Molotov no. 106 armament factory” to KPK chairman Andreev).

refused a delivery contract on the grounds that the workshop was under reconstruction. The military agent reported to the Red Army artillery administration that “the factory … has requipped the workshop … it has sold off some of the equipment for manufacture of lubricators. The factory is also selling off the lubricators in stock that it has not declared.”75 This enabled the artillery administration to intervene and force the restoration of production before it had been permanently stopped. The army did not always succeed in forcing the acceptance of the contracts that it needed. The result, in the words of defense industry minister Rukhimovich in 1937, was that “contracts with the defense ministry have not matched either annual or quarterly plans for output in terms of either quantities or deadlines” (cited by Simonov 1996b, p. 109). 6. Plan Revisions and Contracts The process of planning the defense industry did not finish with the approval of plans and conclusion of contracts. As in other branches, plan assignments and contracts for defense items were liable to frequent interventions and revisions. The high priority of defense did not enable greater plan stability; on the contrary it may have increased the frequency of plan amendments. Many revisions resulted from high-level intervention. Changes in the international environment and the government’s foreign policy orientation, for example, were speedily reflected in reviews of military requirements and defense industry assignments. Long-term plans were strongly affected by such reviews. In the spring of 1929, for example, the government adopted a series of measures that dealt with rearmament and revisions to the five-year plan for military orders.76 A new “five-year plan of construction of the Red Army” was adopted and this led to further review of the armed forces’ mobilization requirement and plan of military orders. On the basis of the defense ministry’s new five-year requirement industry was required “to work out operational plans (capital investment, amounts and sources of finance, etc.) of the amount and provision of the Red Army’s construction and requirements during the five-year period.”77 Annual plans and contracts were less vulnerable to high-level intervention; in the course of a year, however, such interventions could still be large enough

75 RGAE, 7515/1/404, ff. 46-53 (acting head of the Red Army artillery administration Savchenko, letter to defense industry minister Kaganovich, March 23, 1938).

76 GARF, 8418/3/48, f. 1 (excerpt from minute no. 32 of the STO executive session “On strengthening the Red Army artillery and amendment of the five-year plan of orders for artillery,” April 16, 1929; GARF, 8418/3/76, ff. 1-2 (STO executive session resolution “On Red Army construction in the second period of the five-year plan and the five-year plan of special preparation of the country for defense,” May 27, 1929).

77 GARF, 8418/3/76, ff. 1-2 (STO executive session resolution “On Red Army construction in the second period of the five-year plan and the five-year plan of special preparation of the country for defense,” May 27, 1929).

to require review of the plans of particular agents and even of the entire defense budget. Measures to increase the delivery of military items that were adopted by the Defense Committee in 1932, for example, led to an increase in the military budget for 1933. Forced into a corner, defense minister Voroshilov turned to heavy industry minister Ordzhonikidze for advice: “What is to be done?” (cited by Samuel'son 2001, p. 195). The quarterly plans and annual plan of the defense ministry third chief administration for 1937 had to be revised several times in the light of new government assignments.78 The final variant of the annual plan was confirmed on December 22, 1937, with nine days to go to the end of the plan period.79 The Molotov armament factory’s investment plan for 1939 was amended five times.80 Most revisions that were initiated from below resulted from mismatches between plans and mistakes within them, and were triggered by the difficulties that arose in attempting to implement them, particularly problems of supply. When the third chief administration of the armament ministry sought changes in the fourth quarter plan and contracts of factory no. 2 for 1937, it justified two changes on supply shortfalls, two more on the lack of familiarization with particular items of production, and one on the poor quality [of supply?].81 When supplies were missing the factory might substitute other products for which the necessary stocks existed. “Take this case. The plan says series 9. During the year there is a complication with the diesels. Is this not something that ought to be reflected in the plan? Instead of [the original] series we’ll put another one in the plan, but within the same quota that was [already] given.”82 While subordinates could adopt variations within the constraints of higher- level plans freely and more or less with impunity, plan reductions required

78 RGAE, 7515/1/156, ff. 196-199, 200, 301 (head of the defense industry ministry third chief administration Vannikov and head of the sixth department Sharanin, correspondence with the head of the defense industry ministry planning administration, July 26 and 27 and November 15, 1937).

79 RGAE, 7515/1/156, f. 332 (head of the defense industry ministry planning administration, letter to head of the defense industry ministry third chief administration Vannikov, December 22, 1937).

80 Hoover/RGANI, 6/2/250, f. 31 (KPK plenipotentiary for the Khabarovsk region, information to KPK chairman Andreev “On leadership and support of the Molotov factory from the ministry of armament and [its] chief administration,” November 21, 1939).

81 RGAE, 7515/1/156, f. 220 (head of the defense industry ministry third chief administration Vannikov and head of the sixth department Sharanin, letter to the defense industry ministry planning administration on the causes of alteration of contracts for factory no. 2, August 14, 1937).

82 RGAE, 8183/1/146, f. 35 (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second (shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

higher-level approval. In the words of an economic official, “the chief administration has the right to reduce the plan, but no right to vary government decisions.”83 To summarize, interventions from above and below led to the situation clearly depicted by a military agent: “The plan is compiled and assignments are handed out to factories. The factories set the plan in motion but in a short period of time the whole thing goes to nothing and begins again from the beginning”84 The defense industry’s planners and managers regarded this as entirely normal; they just adopted the view of Stalin (1937, p. 413), who had declared that planning only begins with compiling the plan. They affirmed that “for the plan to be vitalized requires [us] to introduce corrections while it is being implemented; flexibility is necessary and the factories must show versatility such as to allow them to switch to other tasks.”85 Before reporting on plan fulfillment at the end of each period it was necessary to work out revised plans that took into account all the interventions that had accumulated during the year. Thus defense planning did not escape the general problem of Soviet planning that in principle the plans were intended to abolish the supply constraints, but in practice the constraints tended to take precedence and the plans had to adapt to the constraints. The dominant influence of current supply became particularly apparent during World War II; the example of the tank industry shows that, in such rapidly changing circumstances, factory plans were often drafted either retrospectively or not at all.86 The high priority of defense made one difference: the constraints on its supply attracted the special attention of the top leadership. According to armament minister Vannikov, “Stalin studied the summaries of aircraft and aeroengine production every day, and demanded explanations and adopted measures in every instance of a deviation from the target … One can say the same about his involvement in reviewing issues of the tank industry and naval shipbuilding” (cited by Simonov 1996b, p. 128). A wide range of central agencies was drawn into meeting the dictator’s requirements, among them the Defense Committee staff who complained: “practice shows that the existing establishment of the Defense Committee secretariat ... in addition to its core

83 Hoover/RGASPI, 77/1/826, f. 64 (remarks of Rubenov at Zhdanov’s meeting with party secretaries of numbered factories, December 23, 1936).

84 RGAE, 8183/1/146, f. 79ob (condensed transcript of remarks of Kudakov, official of the navy ministry, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

85 RGAE, 8183/1/146, f. 34 (condensed transcript of remarks of Kharitonovich, planning official of the defense industry ministry second (shipbuilding) chief administration, at a meeting of the second (shipbuilding) chief administration party group of activists to discuss the outcomes of the February central committee plenum, April 11 to 13, 1937).

86 RGAE, 8752/1/248, ff. 1-40 (meeting of chief accountants of the tank industry ministry at the Uralmash factory, Sverdlovsk, October 26 to 30, 1942).

work on compiling annual and quarterly plans of current military orders, has been burdened mainly by issues of the material and technical provision of current military orders, their frequent alteration, and issues of capital construction of the defense industry ministries …”87 Intensified regulation had the effect that plan alterations and interventions to assist the defense industry were shifted up the hierarchy to the highest level. Another consequence of the high priority of defense was the effect on its contribution to civilian supplies: when difficulties arose with the delivery of military items, the first reaction was often to cut back on the plan of civilian goods. In August 1932, for example, the planned output of instrumentation was almost halved (from 18.9 to 10 million rubles) and a special resolution of STO authorized the instrumentation association of the heavy industry ministry “to review contracts for the delivery of its products with all parties other than organizations of [the defense ministry].”88 Similarly the civilian shipbuilding plan was cut back in 1935 “in the interests of naval shipbuilding.”89 All this did not go far enough, however, to satisfy the ambitions of the leadership for the defense industry. A memorandum prepared by Defense Committee staff for Molotov about defense industry plan revisions in 1938 declared that “the Defense Committee decisions on curtailment of the defense industry ministry’s programme for 1938 were effectively induced by the underfulfillment of the defense industry ministry’s programme for 1938.”90 In mid-December 1938 defense industry minister Kaganovich requested the Defense Committee to incorporate all the reductions into a finalized version of the 1938 plan.91 The armament ministry made a similar request on similar grounds in 1939.92 7. Conclusions In a broad sense the planning of defense generally, and of the defense industry in particular, and the contract campaigns in the defense sector, followed the same patterns as planning in the economy as a whole. The main differences

87 GARF, 8418/24/226, f. 11 (memorandum of Defense Committee official Aleksandrov to Molotov, May 29, 1940).

88 GARF, 5446/12а/16, f. 1 (STO resolution no. 1219, September 27, 1932).

89 GARF, 5446/16а/84, f. 1.

90 GARF, 8418/22/463, f. 45 (Defense Committee staff, note to Molotov on the request of the ministry of defense industry to reduce the defense industry plan of gross output for 1938, December 20, 1938).

91 GARF, 8418/22/463, f. 46 (defense industry minister Kaganovich, letter to Defense Committee chairman Molotov, December 15, 1938).

92 GARF, 8418/23/732, f. 86 (Defense Committee staff, note to Voznesenskii on alteration of the ministry of armament plan for 1939, December 2, 1939).

followed from the exceptional priority of defense and included the participation of the military in plan procedures and the development of a complex methodology for negotiating military requirements with civilian planning agencies. The military contribution to planning current military orders had an important influence on defense industry plans; the military mobilization requirement likewise powerfully affected the allocation of investment and perspective plans for the economy as a whole. Other differences followed. The central agencies were preoccupied with issues of the country’s war readiness. This added to the status of the agencies with special responsibility for the supply of defense, even in minor aspects. The detailed drafting and negotiation of plans between the Army and Industry was important enough to be dealt with in the secret central core of the command system, by the defense sector of Gosplan and the Defense Committee staff. It was important enough that formal procedures for finalizing plans were given effect in the defense industry long before they were extended to civilian branches, which operated almost entirely under “preliminary” or draft plans at this time. High priority had some adverse effects on planning. The parallel activities of military and civilian planners were often poorly reconciled; the attempts at reconciliation prolonged the drafting process and made deadlines frequently unrealistic. As economywide planning was done in the 1930s, effective procedures for taking defense requirements into account did not emerge equivalent to those followed in defense industry. Final decisions were the result of prolonged disputes that subsided only with the signing of specific contracts. The high priority of defense may have increased the likelihood of interventions and plan revisions in the course of their implementation. In the final analysis, military requirements were more important carried than the aspirations of industry; in this sense the plans of current military orders more weight than the defense industry’s supply plans. Despite this, industry had many means with which to defend its interests. It faced multiple requirements. As a result the government could not attach identical priority to all of them. From this, in practice, emerged a hierarchy of tasks. One result was that the aggregate of specific contracts for the delivery of military goods tended to add up neither to the plan of military orders nor the output plan of the defense industry. The execution of these contracts depended greatly on the supply situation of industry which ultimately dominated the outcomes of both plans of military orders and industrial output plans. References Archives GARF: State Archive of the Russian Federation (Moscow). Hoover/RGANI and RGASPI: Hoover Institution (Stanford, California), “Archives of the Former Soviet State and Communist Party” from the Russian State Archive of Recent History and Russian State Archive of Social and Political History (Moscow). RGAE: Russian State Economic Archive (Moscow).

Publications Belova, Eugenia. 2005. Legal Contract Enforcement in the Soviet Economy. Comparative Economic Studies, forthcoming. Davies R. W. 2004. The Mobilisation of the Soviet Economy in the 1930s. Paper to ESRC Workshop on “Terror, War Preparations and Soviet Economic Development.” University of Birmingham, Centre for Russian and East European Studies, August 23-25. Harrison, Mark. 2003. Soviet Industry and the Red Army Under Stalin: A Military-Industrial Complex? Les Cahiers du Monde russe, 44:2-3, Les pratiques administratives en Union soviétique, 1920-1960, pp. 323-342. Hayek, F.A. 1991. The Fatal Conceit: The Errors of Socialism. Chicago, IL: University of Chicago Press. Ken, Oleg N. 2002. Mobilizatsionnoe planirovanie i politicheskie resheniia. Konets 1920-seredina 1930-kh gg. St Petersburg: Evropeiskii Universitet v Sankt-Peterburge. Markevich, Andrei M. 2004. Byla li sovetskaia ekonomika planovoi? Planirovanie v narkomatakh v 1930-e gg. In Ekonomicheskaia istoriia. Ezhegodnik 2003, pp. 20-54. Leonid I. Borodkin, editor. Moscow: Rosspen. Markevich, Andrei M. 2005a. Soviet Planning Archives: The Files That Bergson Could Not See. Comparative Economic Studies, forthcoming. Markevich, Andrei M. 2005b. “Sovetskoe znachit nadezhnoe”: voenpredy I problema kachestva v sovetskoi oboronnoi promyshlennosti. In Ekonomicheskaia istoriia. Ezhegodnik 2005. Leonid I. Borodkin, editor. Moscow: Rosspen. In press. Mises, Ludwig von. 1981. Socialism: an Economic and Sociological Analysis. Indianapolis, IN: Liberty Fund. Samuelson, Lennart. 2000a. The Red Army and Economic Planning. In The Soviet Defence-Industry Complex from Stalin to Krushchev, pp. 47-69. John Barber and Mark Harrison, editors. Basingstoke: Macmillan Press. Samuelson, Lennart. 2000b. Plans for Stalin’s War Machine: Tukhachevskii and Military-Economic Planning, 1925-41. London and Basingstoke: Macmillan. Samuel'son [Samuelson], Lennart. 2001. Krasnyi koloss. Stanovlenie sovetskogo voenno-promyshlennogo kompleksa. 1921-1941. Moscow: AIRO-XX. Simonov, Nikolai S. 1996a. “Strengthen the Defence of the Land of the Soviets”: the 1927 “War Alarm” and its Consequences. Europe-Asia Studies, 48:8, pp. 1355-1364. Simonov, Nikolai S. 1996b. Voenno-promyshlennyi kompleks SSSR v 1920- 1950-e gody: tempy ekonomicheskogo rosta, struktura, organizatsiia proizvodstva i upravlenie. Moscow: Rosspen. Sokolov, Andrei K. 2004. NEP i voennaia promyshlennost' Sovetskoi Rossii. In Ekonomicheskaia istoriia. Ezhegodnik 2003, pp. 95-117. Leonid I. Borodkin, editor. Moscow: Rosspen. Stalin, I.V. 1937. Voprosy leninizma, 10th edn. Moscow: Gospolitizdat. Zaleski, Eugène. 1980. Stalinist Planning for Economic Growth, 1933-1952. London and Basingstoke: Macmillan.