The Soviet Union and International

Foundation and Concerning Questions of Leninism 

Report on the Work of the Central Committee to the Eighteenth Congress of the C.P.S.U.(B.)

(Delivered March 10, 1939.)

1. The Soviet Union and International

Comrades, five years have elapsed since the Seventeenth Party Congress. No small period, as you see.

During this period the world has undergone considerable changes. States and countries, and their mutual relations, are now in many respects totally altered.

What changes exactly have taken place in the international situation in this period? In what way exactly have the foreign and internal affairs of our country changed?

For the capitalist countries this period was one of very profound perturbations in both the economic and political spheres. In the economic sphere these were years of depression, followed, from the beginning of the latter half of 1937, by a period of new economic crisis, of a new decline of industry in the United States, Great Britain and France; consequently, these were years of new economic complications. In the political sphere they were years of serious political conflicts and perturbations. A new imperialist war is already in its second year, a war waged over a huge territory stretching from Shanghai to Gibraltar and involving over five hundred million people. The map of Europe, Africa and Asia is being forcibly redrawn.

The entire post-war system, the so-called regime of peace, has been shaken to its foundations.

For the Soviet Union, on the contrary, these were years of growth and prosperity, of further economic and cultural progress, of further development of political and military might, of struggle for the preservation of peace throughout the world.

Such is the general picture.

Let us now examine the concrete data illustrating the changes in the international situation.

1. New Economic Crisis in the Capitalist Countries, Intensification of the Struggle for Markets and Sources of Raw Material, and for a New Redivision of the World.

The economic crisis which broke out in the capitalist countries in the latter half of 1929 lasted until the end of 1933. After that the crisis passed into a depression, and was then followed by a certain revival, a certain upward trend of industry. But this upward trend of industry did not develop into a boom, as is usually the case in a period of revival. On the contrary, in the latter half of 1937 a new economic crisis began which seized the United States first of all and then England, France and a number of other countries.

The capitalist countries thus found themselves faced with a new economic crisis before they had even recovered from the ravages of the recent one.

This circumstance naturally led to an increase of unemployment. The number of unemployed in capitalist countries, which had fallen from thirty million in 1933 to fourteen million in 1937, has now again risen to eighteen million as a result of the new economic crisis.

A distinguishing feature of the new crisis is that it differs in many respects from the preceding one, and, moreover, differs for the worse and not for the better.

Firstly, the new crisis did not begin after an industrial boom, as was the case in 1929, but after a depression and a certain revival, which, however, did not develop into a boom. This means that the present crisis will be more severe and more difficult to cope with than the previous crisis.

Further, the present crisis has broken out not in time of peace, but at a time when a second imperialist war has already begun; at a time when Japan, already in the second year of her war with China, is disorganizing the immense Chinese market and rendering it almost inaccessible to the goods of other countries; when Italy and Germany have already placed their national economy on a war footing, squandering their reserves of raw material and foreign currency for this purpose; and when all the other big capitalist powers are beginning to reorganize themselves on a war footing. This means that capitalism will have far less resources at its disposal for a normal way out of the present crisis than during the preceding crisis.

Lastly, as distinct from the preceding crisis, the present crisis is not a general one, but as yet involves chiefly the economically powerful countries which have not yet placed themselves on a war economy basis. As regards the aggressive countries, such as Japan, Germany and Italy, who have already reorganized their economy on a war footing, they, because of the intense development of their war industry, are not yet experiencing a crisis of overproduction, although they are approaching it. This means that by the time the economically powerful, non-aggressive countries begin to emerge from the phase of crisis the aggressive countries, having exhausted their reserves of gold and raw material in the course of the war fever, are bound to enter a phase of very severe crisis.

This is clearly illustrated, for example, by the figures for the visible gold reserves of the capitalist countries.

VISIBLE GOLD RESERVES OF THE CAPITALIST COUNTRIES

               (In millions of former gold dollars)

                     End of 1936              Sept 1938

Total . . . . . . . . . 12,980 . . . . . . . . . 14,301 

U.S.A. . . . . . . . . 6,649 . . . . . .  .  . . . 8,126 

Great Britain . . . . 2,029 . . . . . .  . . . . 2,396 

France . . . . . . . . 1,769 . . . . . . .  . . . 1,435 

Holland . . . . .. . . . 289 . . . . . .  .  . . . . 595 

Belgium . . . . .... . . 373 . . . . . . .  .  . . . 318 

Switzerland . . . .. . 387 . . . . . . .  .  . . . 407 

Germany . . . . . . ... 16 . . . . .  .  .  . . . . . 17 

Italy . . . . . . . . .... 123 . . . .  . . ... . . . . 124 

Japan . . . . . . . . . 273 . . . . . . .    .  .  . . . 97

This table shows that the combined gold reserves of Germany, Italy and Japan amount to less than the reserves of Switzerland alone.

Here are a few figures illustrating the state of crisis of industry in the capitalist countries during the past five years and the trend of industrial progress in the U.S.S.R.

VOLUME OF INDUSTRIAL OUTPUT COMPARED WITH 1929 (1929 = 100)

                          1934           1935            1936            1937              1938
U.S.A. . . . . . . . . . 66.4 . . . . . . 75.6 . . . . . . 88.1 . . . . . . 92.2 . . . .  . . 72.0
Great Britain . . . . . 98.8 . . . . . 105.8 . . . . . 115.9 . . . ... 123.7 . . . .  112.0
France . . . . . . .  . . 71.0 . . . .. . 67.4 . . . . . . 79.3 . . . .  . . 82.8. . . .  .. 70.0
Italy . . . . . . . .. . . . 80.0 . . . .. . 93.8 . . . . . . 87.5 . . . . .. . 99.6 . .  .. . 96.0
Germany . . . .  . . . 79.8 . . . . . . 94.0 . . . . . 106.3 . . . .. . 117.2. . . . . 125.0
Japan . . . . . . . . . 128.7 . . . . . 141.8 . . . . . 151.1 . . . .. . 170.8 . . . . . . 165.0
U.S.S.R. . . . .  . . 283.3 . . . . . 293.4 . . . . . 382.3 . . . .. . 424.0 . . . . .477.0

This table shows that the Soviet Union is the only country in the world where crises are unknown and where industry is continuously on the upgrade.

This table also shows that a serious economic crisis has already begun and is developing in the United States, Great Britain and France.

Further, this table shows that in Italy and Japan, who placed their national economy on a war footing earlier than Germany, the downward course of industry already began in 1938.

Lastly, this table shows that in Germany, who reorganized her economy on a war footing later than Italy and Japan, industry is still experiencing a certain upward trend - although a small one, it is true - corresponding to that which took place in Japan and Italy until recently.

There can be no doubt that unless something unforeseen occurs, German industry must enter the same downward path as Japan and Italy have already taken. For what does placing the economy of a country on a war footing mean? It means giving industry a one-sided war direction; developing to the utmost the production of goods necessary for war and not for consumption by the population; restricting to the utmost the production and, especially, the sale of articles of general consumption - and, consequently, reducing consumption by the population and confronting the country with an economic crisis.

Such is the concrete picture of the trend of the new economic crisis in the capitalist countries.

Naturally, such an unfavourable turn of economic affairs could not but aggravate relations among the powers. The preceding crisis had already mixed the cards and intensified the struggle for markets and sources of raw materials. The seizure of Manchuria and North China by Japan, the seizure of Abyssinia by Italy - all this reflected the acuteness of the struggle among the powers. The new economic crisis must lead, and is actually leading, to a further sharpening of the imperialist struggle. It is no longer a question of competition in the markets, of a commercial war, of dumping. These methods of struggle have long been recognized as inadequate. It is now a question of a new redivision of the world, of spheres of influence and colonies, by military action.

Japan tried to justify her aggressive actions by the argument that she had been cheated when the Nine-Power Pact was concluded and had not been allowed to extend her territory at the expense of China, whereas Britain and France possess vast colonies. Italy recalled that she had been cheated during the division of the spoils after the first imperialist war and that she must recompense herself at the expense of the spheres of influence of Britain and France. Germany, who had suffered severely as a result of the first imperialist war and the Peace of Versailles, joined forces with Japan and Italy, and demanded an extension of her territory in Europe and the return of the colonies of which the victors in the first imperialist war had deprived her.

Thus the bloc of three aggressive states came to be formed.

A new redivision of the world by means of war became imminent.