Trucks are so leaky that in several harvest areas the Soviet press has reported the roads are yellow with wheat.

Wheat purchases abroad are putting a heavy drain on the Soviet Union's limited foreign exchange. This appears likely to slow down its programs of heavy industry and consumer goods. Both count substantially on machinery purchases from other countries, notably West Germany, Italy, France, and England.

CUBA TO BENEFIT

A half billion dollars is to be paid to Canada in the next 18 months for delivery of 5.3 million tons of wheat and 500,000 tons of flour. An additional 1.5 million tons of wheat has been ordered from Australia, with a like amount of option.

Much of this will be shipped immediately to the Soviet Union's foreign customers, to protect its position as a supplier. About 3.3 million tons normally go to Communist countries of Eastern Europe and 1.5 million to other countries, including Scandinavia and West Germany.

Of the Canadian purchase, 450,000 tons of wheat and flour will go to Cuba.

Effects of the crop shortage are being felt in special ways in Moscow.

Flour cannot be bought at many stores, apparently because it can be hoarded while bread cannot.

Many farmers buy bread to feed to cows and pigs they are allowed to raise privately

for market. It is forbidden but continues. One couple was pilloried in the press Sunday for having bought nearly half a ton of flour, bread, rice, and macaroni, apparently to feed much of it to their herd.

Butter is becoming scarce and likely will become scarcer in the winter.

And Mr. Khrushchev's campaign against inefficient farming could bring another round of administrative shakeups this winter.

Dr. Adenauer's advice will be listened to. He seems likely to concern himself more with personalities than with policies.

It was only at Premier Khrushchev's insistence that the nation undertook to plow up many millions of acres in previously unproductive semiarid areas of Kazakhstan and western Siberia.

Thus, Khrushchev has his own prestige at stake in the success of this gigantic gamble, into which heavy investments for machinery and personnel have been sunk.

Yet now, for the fifth consecutive year, the crops there are clearly failing to match the previous year's.

Pravda, organ of the Central Committee of the Soviet Communist Party, said today that "this year as never before, nature has been unmerciful to the people of the virgin lands."

The latest in a series of mishaps was a snowfall within the last 10 days, it maintained. This bent wheat to the ground for several days just at the peak of the harvesting season.

SUFFERED FROM FROST

The trouble began in the spring, when many crops suffered from frost. Then in June dry winds blew across the steppes, and at summer's end prolonged showers delayed the start of the many individual farms managed to turn in good results, the paper said.

Theirs was a fight against difficult conditions, there were many undeveloped grain plants. Then after the rains, weeds sprouted so profusely that in many areas the use of machine harvesters was hampered, it continued.

Then came the other chores of autumn

haycutting, corn harvesting, winter crop plowing, and the preparation of cattle for winter. Organization and prompt action were necessary, Pravda declared.

It blamed the regional party, Government and production board chiefs of the Tselinny (virgin soil) region for not concentrating their work properly and not demanding enough from their subordinates.

WHEAT DEAL REPORTED TO SOVIET PUBLICRADIO LIBERTY BROADCASTS ALSO SHOW LISTENERS IN U.S.S.R. WHERE RESPONSIBILITY LIES FOR GRAIN SHORTAGE

NEW YORK.-"The grain problem, formerly considered the most acute and serious problem, has been solved, solved definitely and finally in the Soviet Union." Stormy and prolonged applause by delegates to the 19th

Communist Party Congress followed this statement by the then Central Committee Secretary Georgi Malenkov, 11 years ago.

Malenkov's rash statement is one of many skeletons in the Soviet grain bin, dusted off by Radio Liberty researchers as themes for the freedom network's around-the-clock broadcasts informing millions of Soviet citizens of the huge Soviet-Canadian wheat deal.

The impact of Radio Liberty's special programs on wheat in Russian and 16 other languages has been that the deal demonstrates the bankruptcy of collectivized agriculture.

In the meantime, the Soviet media have carried a one-paragraph announcement that a trade agreement was signed. No mention of wheat or grain was made.

Another theme of Radio Liberty broadcasts is that the responsibility for the Soviet crop catastrophe rests with the Communist Party, since it took over farm management in the fall of 1962.

"On the basis of listener reaction to previous programs on farm problems, millions of Soviet citizens are already aware of the proportions of the Soviet-Canadian wheat deal," a Radio Liberty spokesman said.

The freedom network-the most powerful voice heard in the U.S.S.R.-uses close to 2 million watts of power to overwhelm Soviet jammers. Its transmitters are located in West Germany, Spain, and Formosa.

SOVIET INDICATES 18-PERCENT LAG IN GRAINMOSCOW PRESSES FOR A 75-PERCENT EXPANSION IN FERTILIZER OUTPUT WITHIN 2 YEARS Moscow, October 6.-An official Soviet source indicated today that grain supplies

available to the Government from domestic production this year would be as much as 18 percent below the 1962 level.

This disclosure, by a commentator of Tass, the official press agency, was the first to be made publicly by an official source on the extent of the Soviet crop failure.

The gravity of the agricultural situation was underscored by two other developments. All morning newspapers printed on their front pages an open letter of the Communist Party's Central Committee and the Soviet Government. The letter called on workers in the chemical fertilizer industry to do their utmost to fulfill the ambitious plans for expanding production by 75 percent in the next 2 years.

On a more immediate level, 25,000 citizens and all available trucks were mobilized to stock the city's warehouses with potatoes, cabbage, and other vegetables for the winter. The Sunday work was necessitated by a backlog of loaded freight cars in rail yards. The disclosure of the 18-percent decline in the grain harvest, which has not yet been publicized in the Soviet press, was contained in an English-language report prepared for foreign subscribers by Ivan Artemov, economic commentator for Tass.

In the report, designed to rebut speculation in the foreign press regarding the gravity of the grain situation, Mr. Artemov wrote: "Incidentally, procurement (by the Government from the farms) will be approximately on the level of 1959 and 1960."

Procurements in those years were 46.6 million and 46.7 million metric tons respectively, down from 56.6 million metric tons last year. A metric ton equals about 2,204 pounds.

Grain purchased by the Government usually represents 40 percent of the total harvest, with the rest being retained by the farms as seed reserve and for payments in kind to collective farmers.

Mr. Artemov thus suggested that the total harvest might be 125 million tons. The grain crop last year was a record 147.5 million tons.

The seriousness of the crop shortage was underscored this year by unprecedented Soviet wheat purchases abroard. These have been estimated by Premier Khrushchev at a total of at least 9 million tons, or almost enough to fill the 10-million-ton gap in Government supplies suggested by Mr. Arte

mov.

BREAD ECONOMIES INTENSIFIED

The poor harvest also gave rise to an intensive propaganda campaign for bread economies and strict implementation of a longstanding rule that no more than 2 kilograms, 41⁄2 pounds, be sold to a customer.

This restriction was intended to curb unlimited purchases of cheap bread as feed for private livestock. Its effect has been very limited since there is nothing to prevent animal owners from visiting several bakeries, one after another.

An important byproduct of this year's decreased grain crop has been a decision by the Soviet leadership to abandon the program of large expansions in the crop area. Instead, the Government is concentrating on getting higher yields per acre.

This is to be achieved through increased fertilizer output and an expansion of irrigation, designed to eliminate the ever-present danger of drought.

As a first step, fertilizer production is to be increased from this year's 29 million tons to 35 million tons by 1965.

[From the Christian Science Monitor, Oct. 23, 1963] BAD GRAIN HARVEST STILL STALKS PEIPING (By Takashi Oka)

HONG KONG.-Interim reports on mainland China's grain harvest this year suggest that it may not be much better than last year and may be slightly worse.

This means that the pace of Communist China's recovery from the three disastrous years 1959 to 1961 continues to be fitful and slow.

In the absence of official Peiping statistics information collated by Western agencies in Hong Kong is at best a guesstimate. But the cautious tone adopted by Peiping itself during the past month, combined with such observations as are available from visitors and refugees, suggest that the Chinese Communists do not have a great deal to cheer about on the agricultural front as they face the coming winter.

ONE BRIGHT SPOT

Floods north of the Yangtze River and drought in southern coastal provinces have taken their toll of the wheat and rice crop. Despite strenuous efforts to increase the supply of chemical fertilizers, production remains a bottleneck and as in previous years the bulk of the available supply has gone to industrial crops such as cotton. In fact, cotton is the one bright area in the Chinese Communist production picture; acreage increased by 20 percent and the harvest also is expected to go up by a similar percentage. This means in turn that textile factories, which have been operating at 30 to 40 percent of capacity, may raise production to about 50 percent.

This will be welcome news to citizens of mainland China who have been having to make do with cloth rations of 3 to 7 feet a year.

On the food front visitors from Shanghai report that the situation has eased and that nonstaple foods (including meat and vegetables) are more available than in the past, but that citizens still do not live as well as they did in 1957, before the disastrous great leap forward of 1958.

Overall, one rough estimate of grain required to feed 700 million mainland Chinese is 200 million tons. Last year's harvest came to between 180 and 185 million tons.

WHEAT IMPORTED

Imported Canadian and Australian wheat helped to make up the difference especially in great urban centers like Shanghai and Peiping.

This year's harvest is not likely to be much better and perhaps foreseeing this eventuality Peiping already has contracted for 5.3 million tons of Western grain for delivery this year.

This difficult domestic situation, complicated by the economic consequences of the Sino-Soviet dispute, is undoubtedly one of the principal reasons for the moderate tone

Peiping has adopted in its trade dealings with Western countries such as Britain and Japan.

THE SOVIET INDUSTRIAL AND ECONOMIC CRISIS

[From Metalworking News, Oct. 22, 1968]

DECENTRALIZED PLANTS, RESEARCH LACK RETARD SOVIET TOOLING TECHNOLOGY, SAYS U.S. AID

(By Philip Trupp) WASHINGTON.-Decentralized production facilities and a lack of applied research are keeping the Soviet machine tool industry technologically backward, according to a Government research specialist.

In an interview with Metalworking News, Joseph A. Gwyer, senior Soviet research analyst with the Library of Congress, said the U.S.S.R. annually produces about 170,000 machine tools. But of this total, he said, only 20.3 percent are forming types.

He noted 55 to 60 percent of the cutting tools annually produced by the Russians are lathes and drills.

"The lack of forming equipment is in evidence throughout the country," he said.

The decentralization of production facilities, he continued, tends to jack up the cost

of new tools and makes the fabrication process slow, inefficient, and tedious.

In its production planning policies, Mr. Gwyer said, the U.S.S.R. has failed to meet the demand for forming equipment. Even in the area of cutting types-the variety of tools most produced by Soviet industry-the pinch of decentralization is being felt.

YEARS BEHIND UNITED STATES

In the field of general-purpose tools, as well as in the area of numerical-controlled equipment, the Russians are years behind the United States, the researcher noted.

"There aren't enough tools to go around," he stated, "and the replacement of obsolete tools is inadequate."

Last year, Mr. Gwyer pointed out, the U.S.S.R. produced only 13 percent of its estimated quota of numerical-controlled equipment. He said numerical-controlled technology in Russia is in the "infant stages," lacking the sophisticated controls found on U.S. models. Though the Soviets at recent tool shows in Europe have displayed relatively modern automatic machinery, most of it is for "demonstration purposes only," Mr. Gwyer said, and cannot be found in the majority of Soviet factories.

Little is known about the machinery used in Soviet defense plants, but indications are that what little advanced equipment is being developed and utilized in these plants is costing the U.S.S.R. tremendous amounts of time and money, he continued.

Moreover, the U.S.S.R. is importing much of its precision machinery, Mr. Gwyer said. Even some American equipment-sold to Western European nations by the United States occasionally, through trade deals, winds up in Soviet plants.

West Germany, Italy, Switzerland, and Britain supply much up-to-date machinery to the Soviets, he said. These items include grinders, transfer machines, and the like.

SPENDS MORE ON REPAIRS

Mr. Gwyer reported that the U.S.S.R. spends more to repair its existing machines than it does to build new ones. Last year, he said, the U.S.S.R. spent some $1 billion to repair portions of their inventory.

Soviet tool research is directed at producing workable automatic controls, Mr. Gwyer said, but their efforts in this field are still "theoretical."

He noted that U.S.S.R. industry shows a glaring lack of transfer machines.

"The notion the Soviet Union annually turn out 100 transfer machines in incorrect" he pointed out.

When reporting production figures, they lump together numerical-controlled semi

automatic, and transfer equipment.

Mr. Gwyer asserted that the U.S.S.R. has only 340 transfer units in operation. Two years ago, he said, they had 200 such units.

In the area of semi-automatic machines, the Soviets are also doing poorly, he continued, and are critically short on spindle

and turret lathes.

Russian high energy rate forging and explosive, and electrohydraulic forming are still in the "experimental stage," he added.

Much of the Soviet's tool research is aimed at future military production, he said, with the added drawback that very little is in the "practical," or "applied" stages.

PRODUCTION LAGS

To make matters worse, the U.S.S.R. isn't fulfilling its production quotas. Mr. Gwyer pointed out the Soviets had hoped to produce 205 new transfer units for a big automobile plant by the end of 1962. To date, only 43 have been built.

At present, he said, repair functions occupy 50 percent of all Soviet machine tool workers and 30 percent of all existing tools.

U.S.S.R. machine equipment, by American standards, is inadequate, Mr. Gwyer stated, and the Soviet tool inventory, for the most part, is obsolete.

He pointed out that 63 percent of all Soviet machine tools are 10-20 years old or older.

"I don't think the U.S.S.R. is ahead of the United States in any branch of metalworking," he said. "In fact I don't think they're ahead of any of the Western European nations."

The researcher noted that the bulk of Russian tool experts go to other Soviet bloc nations. Soviet exports outside the Communist bloc amount to only about 1 percent of their total tool export figure, Mr. Gwyer said.

[From the New York Times, July 28, 1963] ECONOMIC PRESSURE GROWS IN THE SOVIET KHRUSHCHEV'S 'PEACE OFFENSIVE' Is WEIGHED IN THE LIGHT OF NEED TO EASE BURDEN OF ARMS RACE

(By Harry Schwartz)

Western analysts trying to probe the factors behind Premier Khrushchev's "peace offensive" toward the West in recent weeks are paying increasing attention to the economic pressures upon the Soviet leader.

Substantial new evidence on this score became available a few days ago with publication of the official Soviet report on the economy's performance during the first half of 1963.

The Premier himself referred obliquely to these pressures in his major speech last July 19. There, he declared that the real test of socialism is the amount and quality of the food, clothing and other amenities and necessities provided the people living under Socialist rule.

"If socialism does not provide for all this and does not give advantages over capitalism, we shall be idle babblers and not revolutionaries," Mr. Khrushchev declared bluntly.

BASIC PROBLEMS

Moscow's basic economic problem can be stated simply, as can be the relevance of the degree of international tension to that problem:

The Soviet Union now finds itself grossly overextended economically, saddled with vast military, space, and other programs whose demands on Moscow's limited resources cannot be satisfied without keeping a sharp rein on the growth of Soviet living standards. The central importance of Premier Khrushchev's present peace offensive from this point of view is this: Only if international tension is substantially reduced can Premier Khrushchev divert large numbers of men and large amounts of materials from the military and space sectors to ordinary industry and agriculture producing for civilian

needs.

The signs of Soviet economic difficulty are plainly visible in the latest economic report and other recent Soviet economic news.

In the first half of this year, Soviet industrial production increased at a slower

pace than during any year since World War II. The volume of new housing completed during this period was less than that of a year ago. Soviet collective and state farms produced less milk during the last 6 months than they did in the period a year earlier, and on June 30 last they had fewer hogs and poultry than they had had 12 months earlier. Soviet foreign trade grew by only 2 percent during the first half of 1963, though it had grown by 13 percent in the same period of 1962.

But the most vivid sign of current Soviet economic difficulties is the evidence that a drastic campaign of cutting back capital investment programs is going on throughout the country. Thousands of projects are being halted or slowed because there are not enough resources to go around, and the Soviet Government is therefore trying to concentrate the labor and materials it does have on those new factories, mines, etc., which can be brought into production quickly. Premier Khrushchev last month

went to the extreme of suggesting that no new capital investment project be started next year unless it had extraordinary importance and has been approved by the highest Soviet authorities.

WORST PINCH

From the point of view of Soviet consumers, the worst present pinch comes from the abysmal failure of Soviet agriculture to meet its goals during the current 7year plan period. Soviet food and fiber production has roughly kept pace with Soviet population growth since 1958. This is good enough to prevent hunger, but it is completely inadequate to give the Soviet people the vastly improved diet-with more meat, milk, eggs, butter, and the likewhich Premier Khrushchev has promised them, or to provide the needed stocks of agricultural raw materials-leather, cotton, wool, etc.-needed sharply to increase Soviet output of clothing and footwear.

Here is where the vise in which Premier Khrushchev's economic policy is caught is to be seen most clearly. Soviet agriculture fails to produce what is desired of it for two main reasons. One is the failure to provide adequate incentive to Soviet peasants by paying them satisfactorily high prices for their output. The other reason is the scarcity of many essentials needed for a more efficient and more productive agriculture farm machinery, fertilizers, insecticides, and the like.

To pay the peasant higher prices, Mr. Khrushchev would have to produce more consumer goods so as to match the increased money incomes on farms with real goods available for purchase. To produce more farm machinery, fertilizers, and other chemical aids to agriculture, Premier Khrushchev must allocate more capital to build new factories and expand existing ones. But where shall these additional resources be found when the economy is already terribly strained to meet the existing needs?

SPECIAL PLAN

Even before his latest peace offensive, Premier Khrushchev had begun trying to meet the problem. His "solution" offered some time ago, was virtually to scrap many features of the current 7-year plan and to order preparation of a new special 2-year plan that will replace the current plan in its last years, 1964 and 1965. The key to Premier Khrushchev's efforts has been a massive rearrangement of investments, with capital allocations for new steel plants and other similar "old" branches of industry cut sharply, while the amounts saved in this way are diverted to the chemical, farm equipment, and related industries.

But the possibilities opened by this approach are of limited scope, and each cut in an old industry encounters great opposition from its top bureaucrats and other vested interests. These opponents point out that to slow down the growth of Soviet steel production, for example, is to threaten nonrealization of the grandiose blueprint for achieving communism which was adopted by the Communist party 2 years ago.

The hard fact Premier Khrushchev faces is that the only possible quick way to revitalize Soviet agriculture and industryparticularly those branches producing food and consumer goods-is to withdraw large amounts of resources now tied up in the Soviet military and space efforts and divert them to civilian economy.

But to cut back on arms and on the moon race, Mr. Khrushchev requires a detente in the cold war, a much more radical shift from the Soviet-United States tension remaining after last October's thermonuclear confrontation over Cuba than anything that has yet occured.

It should not be forgotten that in Moscow's equivalent of the Pentagon there are Soviet marshals and generals who oppose

any talk of a military spending cutback by arguing fiercely about the dangers threatening Russia from imperialist warmongers. Premier Khrushchev needs tangible evidence of Soviet-American agreement to refute the arguments of his military politicians.

ANSWER IN NEGATIVE

Is the present economic pressure on Premier Khrushchev likely to be long lasting, or is it only temporary, a problem soluble by some short-term measures? The answer would seem to be in the negative. Now that his fight with the Chinese Communists is out in the open, Premier Khrushchev is publicly more committed than ever before to the idea that communism can defeat capitalism only by giving its people a high standard of living and by the Soviet Union's outproducing the United States in industry and agriculture.

The kind of economic competition upon which Premier Khrushchev has banked his reputation and strategy is simply incompatible with any longstanding program of massive military and related nonproductive spending. If the Soviet leader's strategy is ever to be given a chance to see if it can succeed, he needs a long-range detente with the United States and the opportunity for massive diversion of his resources from rockets to tractors and from hydrogen bombs to artificial fertilizers.

[From the Christian Science Monitor, Apr. 29, 1963]

SOVIETS PARE SPENDING

(By Paul Wohl)

Militarization of Soviet industry advances with seven-league boots. This is the one hard fact which seems to emerge from the maze of contradictory figures about stoppage of construction projects, reallocations of investments, etc., which the Kremlin has given out in the past 2 weeks.

First Deputy Premier and chairman of the newly formed Supreme Economic Council, Dmitry F. Ustinov, who has headed Soviet armament industries continuously for 22 years, is pruning bloated industrial finances and molding industrial development in accordance with his purposes.

These purposes are:

1. A stronger, more efficiently organized Soviet economy.

2. Top speed industrialization of central Asia and Siberia.

REPORT ON OUTPUT OF ROCKETS

Colonel General Ustinov, the youngest of the three First Deputy Premiers, reported to the 21st party congress in February, 1959, on the production of rockets and sputniks as the outstanding achievement of the armament industries and an example of the mobilization of the internal resources of industry.

Together, with his longtime deputy in the Armaments Ministry, Konstantin N. Rudnev, head of the State Committee for Coordination of Research, he is one of the main sponsors of the Siberian branch of the Soviet Academy of Sciences.

The shelving of some 500 construction projects planned for this year and of sevother eral hundred unfinished projects could emanate only from Mr. Ustinov's Supreme Economic Council, which has jurisdiction over the two planning agencies (for current and prospective plans) as well as over the central construction board Gosstroi.

SOME PROJECTS ON BOOKS 15 YEARS The impact of this little publicized measure can be inferred from the fact that, according to the plan, the building of 628 major enterprises was to be started this year.

Some of the unfinished projects have been on the statute books for more than 15 years. By the end of 1961, they immobilized 25

billion rubles, a sum equal to about two and a half times the annual, official defense budget.

These unfinished projects block the even progress of industry. According to the first December issue of Kommunist, 20 iron and steel works were to be started between 1959 and 1962. Only five are being built. "In the machine-tool industry 2 projects are under construction instead of 10."

"The

There are many more examples. Government's requests to increase the capacity of specialized enterprises were sabotaged," wrote Kommunist. The word "sabotage" has an ominous ring.

AUTOMATION DEVICES MENTIONED

The "specialized enterprises" referred to by Kommunist were engaged in developing automation devices which Mr. Ustinov in 1959 had called imperative.

Mr. Ustinov was given his economic empire and entrusted with the revision of the current 7-year plan (1959-65) a few days after Premier Nikita S. Khrushchev's great speech on arts and letters.

In view of the importance of these measures, which so far have not been explained to the Soviet public, one must ask whether the present accent on ideology is not merely the political accompaniment of a progressive militarization of the Soviet economy.

The development of investments in the past few years makes it appear as though this process had been going on for some time. Since 1960 the growth rate of investments in all major industries declined sharply (with the exception of powerplants, especially in Siberia), while the total investment outlay continued to grow at the usual rate of between 12 and 9 percent.

BUILDING MATERIAL GAIN-ZERO

Thus investment in metallurgy last year increased by only 2 percent as compared with 12 percent in 1960, investment in the chemical industry by 8 percent as compared with 33 percent in 1960. The corresponding figures for the gas and oil industry were 5 and 10 percent respectively. Investment in building materials (for civilian purposes) does not seem to have increased at all.

One plausible explanation of this contradictory development is that a large part of the total investment in the economy for the past 3 years actually has been earmarked for armament production, including Mr. Ustinov's sputniks and rockets.

[From the Washington (D.C.) Star,
June 28, 1963]

KHRUSHCHEV ACTS-FAULTY TV SETS
RILE REDS

(By Bernard Gwertzman)

Fed up with complaints about brokendown TV sets, Soviet authorities have called for a campaign to make a televizor that works.

As campaigns go, this probably is one of the most popular the Khrushchev regime ever has dreamed up. If letters to the editor are any index, Russians have been grousing for years about the "dead box in the corner" that once was a television set.

So bad is the present situation, a top-level state commission reported the other day in Pravda, that more than 60,000 complaints were received last year alone about television snafus.

The Party-State Control Commission of the Central Committee of the Communist Party and the Council of Ministers were called on to investigate the television industry, after Premier Khrushchev complained about burned out tubes at a party meeting last fall.

As part of their investigation, the commission reported that 30 to 50 percent of five makes of sets tested stopped working in the first hours of use.

On one line the Yenesei-80 percent broke down soon after being plugged in.

And of all sets sold, 65 percent were brought back for repairs within the first 6 months of use.

In addition, the commission said televizors are sold with slipshod finishing and with crude defects.

The Soviet Union has produced about 9 million sets since 1950.

"Why do many factories manufacture unreliable television sets?" the control commission asked.

One reason given was lack of proper inspection procedure. Other reasons were poor quality tubes, sloppy work, and "illegal activities."

The report noted that each factory has a certain monthly production schedule of units to manufacture. The best method, the report said, would be to space the units out during the whole month. But the common practice, it said, is to rush them in a few days.

In Bakinsky, for instance, almost a half month's work is produced in the last 5 days of the month. In Leningrad, two-thirds of a month's work is finished in 10 days.

As is usual in these control commission reports, a few individuals were made scapegoats for the whole industry. The director one plant was severely reprimanded. Other supervisors received punishment ranging from 2 months' loss of pay to dismissal from their jobs.

Such exposés about economic "crimes" have become a regular feature in the Soviet press. The party-state commission is headed by A. N. Shelepin, former head of the KGB (secret police) and is authorized to bring to light various economic wrongdoers.

[From the Christian Science Monitor, June 12, 1963]

Moscow JUNKS 7-YEAR PLAN
(By Paul Wohl)

Moscow's much vaunted 7-year plan (1959-65), approved by the 21st party congress and by the Supreme Soviet, has been scrapped. This is the burden of a communique of the U.S.S.R. Council of Ministers of June 4.

Even the plan for this year, which the Supreme Soviet confirmed in December has been made over. "Of the 3,000 largest projects (so far) reviewed, 2,430 are being corrected with the objective of concentrating resources in a (new) order of priority," Gosstroi chairman Ignaty T. Novikov reported in Pravda of June 5.

Gosstroi, the state committee, or superministry, in charge of construction, is one of the three top economic agencies of the U.S.S.R. The others are Gosplan, in charge of long-range planning, and the Economic Soviet of the U.S.S.R., which implements the plan for each current year. Since March 13, these three agencies are coordinated by a Supreme Economic Soviet, headed by veteran Armament Minister, now First Deputy Premier Dmitry F. Ustinov.

An inkling of what was in the cards came on May 27, at a Gosstroi conference attended by Mr. Ustinov, which had before it a devastating report of the Construction Minister of the R.S.F.S.R. (Russian Republic). The theme once again was: Dispersal of investment capital on too many projects to the detriment of important ones. But the Construction Minister was not the only one to be criticized. The other culprit was the Economic Soviet for the R.S.F.S.R.

The Economic Soviet for the U.S.S.R., headed by Deputy Premier Veniamin E. Dymshits, which is one echelon above the R.S.F.S.R. Economic Soviet, also came in for criticism.

"If in the planning organs they do not understand, let us make jobs free for more farsighted workers," Premier Nikita S. Khrushchev angrily told the managers of a large electrical plant in Yaroslavl on June 5.

NEW PLAN ORDERED

Included in this warning was Gosplan, now at work on the plan for the 2-year period 1964-65, which for all practical purposes no longer is an organic part of the old 7-year plan.

For the time being, Gosplan and Gosstroi are to make "a completely new plan for capital construction." Also needed is "a unified plan for the supply of construction projects with technical equipment and material," wrote Mr. Novikev.

In the same article he admitted that the Soviet Union at present had 195,000 unfinished projects, which in the first quarter of this year had swallowed up "almost half of all material resources and pinned down nearly half of the labor force."

This year alone "tens of large enterprises under construction, hundreds of medium ones, and more than 1,000 other projects" will be abandoned and the material resources tied up there, "redirected."

WORKERS DIRECTED

One wonders how the millions of workers "freed" from their present place of work and "directed" to other projects will feel about it. The confusion caused by all these shifts

and "redirections" must be boundless.

One must also wonder how good the original 7-year plan and the plan for the current year can have been, if now so much has to be planned all over again. This question suggests itself so strongly that it may explain why the sweeping announcement of June 4 was made only on behalf of the government, without reference to the party's central committee.

Still, it would be a mistake to close one's eyes to the fact that the Soviet industry is progressing. Only the cost is vast, and the so-called plan constantly has to be revised in accordance with the time-honored method of trial and error.

[From the Christian Science Monitor, May 28, 1963]

SECONDS DESTROYED-SOVIETS ACT TO HALT BREAKAGE

(By Paul Wohl)

The Kremlin's newly appointed chief production economists are to be communism's minutemen in the battle against economic muddle and waste. One of their tasks will be to ferret out and stop an industry unique in the world-the Soviet industry of breakage.

Whole industrial installations, complete with conveyor belts and electronic equipment, at times, have been set up to destroy brandnew products turned out by the factory next door.

As a rule these products could be marketed at the right price, even if transportation costs were added.

A trickle of the vast output slated for industrial destruction does reach the open-air bazaars, which can be visited in many cities. In the Ukraine not so long ago, for example, I saw stand after stand selling new offquality furniture, porcelain, cutlery, fabrics, and electric fixtures. The shrewd-looking peasants at the stands seemed to be doing a brisk business.

QUALITY RECALLED

As I walked through the crowded bazaar, I inquired here and there where these goods came from. Since this was not one of the beautifully laid out, covered markets of the Government, but a large-scale flea market affair, I at first thought these might be products of village industries.

These village industries, which employed about 10 million before World War I, used to be famous for their craftsmanship. I remember samples of cutlery and fabrics which my father had brought home from Russia as souvenirs in the first years of the century. When I was in the Soviet Union in the 1930's

these products of folkcraft were still around, but they no longer had their old, fine quality.

What I saw in the Ukranian flea market seemed to have no quality at all. It came from Government factories, I was told, and was sold here "legally."

COST ESTIMATED

Not wishing to query any further, I sought an explanation in the newspapers. It was there I first discovered the existence of a sizable industry devoted to what might as well be called breakage which, as now spelled out in Pravda and in the Economic Gazette, may cost the Soviet Union several hundred million rubles a year (a ruble equals $1.10).

The goods sampled in the flea market may somehow have slipped past the purveyors of this industry.

All this is to be stopped now by the Kremlin's production economists, seconded by the million-strong joint state and party control apparatus and by the bookkeepers of the state bank.

What this latest economy drive is up against was illustrated by a report published last July 14 in Pravada Ukrainy, the Russianlanguage daily of the Ukrainian Communist Party, under the headline: "Throw the Fur

Into the Fire."

QUALITY CONTROL

The report summarized the findings of an investigation made in a dozen factories with special installations to destroy a large part of their production.

An example was the stocking factory of the provincial capital of Zhitomir, which had one conveyor belt to produce stockings, and another to destroy what had been produced. The latter mechanism, according to the party newspaper, worked more efficiently than the former. A special machine tore up 5,000 pairs of stockings in 8 hours.

Regardless of quality, a pair of stockings was destroyed if one stocking was 1 inch shorter than another. No effort was made to sell them at a reduced price.

In one porcelain factory, 38.3 percent of the production was destroyed in the first quarter of the year. One "shockworker" earned a large bonus for destroying more than 4,000 plates an hour.

"It is savageness to destroy, consciously, coldly, values created by the work of the people, and equally savage to produce valueless goods," wrote the newspaper.

Henceforth such off-quality products are to be sold at lower prices. But this is no new idea. Party inspectors could not believe their eyes when they visited the Zhitomir stocking factory and saw the conveyor belt of the "destruction" shop. They rang up the Ukrainian Economic Soviet in Kiev, the capital of the Ukraine.

TIPS FROM CAPITALISTS?

They were tersely told by N. Grad, chief engineer of the council's light-industries division, that formerly the factories of the region had turned out stockings of four different qualities. "We have ordered them to produce only two qualities," said Mr. Grad. "They have to follow our directives."

"The fleas bite you" commented Pravda Ukrainy, "and you throw the fur into the

fire."

The bureaucracy's indifference is the thing which worries the Kremlin more than ever today. The way out, as Soviet Premier Nikita S. Khrushchev seems to see it, is for the chief production economists, appointed by the Communist Party, to teach Soviet managers elementary capitalist virtues.

[From the Christian Science Monitor, June 14, 1963] CONSUMERS GRUMBLE-SHODDY GOODS PROVOKE SOVIETS (By Ralph Nader)

The problem of quality control is racking the Soviet Union. From shoddy consumer

goods to defective machinery, the Soviets, from Premier Nikita S. Khrushchev to Ivan, are grumbling over the quality of Soviet production.

This rampant dissatisfaction is observable

various perspectives. A tourist in Moscow or Leningrad is made almost selfconscious as Soviets admire the quality of his clothing and other material possessions. One of the easiest ways to start a Muscovite complaining is to talk about shoes. What wrath he pours on the sloppy workmanship of shoe manufacturers.

Cartoonists in Krokodil and other satirical magazines are having a field day with their caustic portrayals of rejects and unmarketable goods.

RESOURCES DRAINED

This is not a new situation. But as the nation's industrialization has matured beyond the point where quantitative goals were the chief preoccupation of planners, the emphasis on product quality has been growing stronger. Two pressures are chiefly accountable.

First, defective machinery is draining scarce resources by its adverse effect on production efficiency and output. Second, rising consumer expectations are resulting in refusals to purchase substandard merchandise which is piling up in warehouses.

Widespread criticism recently in Soviet journals and newspapers discloses the failures of industrial organization responsible for such poor quality performances.

There are about 1 million inspectors employed in Soviet factories. The Technical Control Division (OTK) administers the network of quality control throughout the country. No products are permitted to leave any factories without the OTK stamp of approval and certificate of quality.

INSPECTORS POORLY PAID

But the system under which the OTK inspector works militates against his effectiveness. He is paid at lower rates than most production workers whom he is inspecting and is subordinate to the plant managers. Bonuses for workers and managerial personnel are predicated on surpassing production quotas.

Consequently, actions by conscientious OTK inspectors could result in the nonfulfillment of quotas and no bonuses which are a substantial portion of total wages.

In many plants, the "OTK" stamp is a mere formality. This kind of situation, where a potentially advantageous clash of interest between inspectors and managers is, in practice, resolved to the detriment of optimum industrial operation, was decried by Premier Khrushchev before the Communist Party's Central Committee last November.

Breakdowns in quality occur over virtually the entire range of industry. Soviet technical journals often enumerate instances of defective products. A recent copy of Ekonomicheskaya Gazeta noted there are 40 million electric meters and an annual output of 4 million units in the country. About one-quarter of all counters are in repair shops.

TV SET FAILURES

Izvestia reported that 60 percent of all TV sets sold in 1961 failed to work during the 6-month guaranteed period. Komsomolskaya Pravda declared that all washing machines manufactured in August 1962, by the Chelyabinsk plant were found defective and that operators of the Vladimirets-28 tractors complain of spending more time under the tractor repairing it than behind the steering wheel.

Mechanizatsiya i Avtomatizaztsiya Proizvodstva (Mechanization and Automation of Production) noted that 20 percent of all electric motors are constantly in repair shops and that more is spent on mainte

nance of single-scoop excavators than on the production of new units.

An indication as to the overall economic effect of substandard production was contained in a recent article in Kommunist by a leading quality control specialist, V. Gostev. He estimated an annual loss to the Soviet economy from defective manufacturing at between $16 and $21 billion or more than one-fourth of the income of the state budget.

The lag of Soviet standards, according to Mr. Gostev, is shown in lower quality requirements for many raw materials, such as coal, and finished products such as automobile tires, bearings, electric light bulbs, and radio tubes.

ATTITUDE CONDEMNED

He mentioned certain economic districts where, because of defects, about 25 percent of automobiles, 15 percent of tractors and 30 percent of electric motors remain idle. Along with other commentators, he strongly condemned the attitude of heavy reliance on production cost index without considering improvement of quality.

Last year the Committee on Standards, Measures, and Measuring Instruments of the U.S.S.R. Council of Ministers concluded that a chief cause of defective workmanship is the poor reliability of measuring instruments.

What all this critical consensus amounts to is recognition that action must be taken to scientifically build quality into the product from the very beginning of the manufacturing process, not just inspect at the end of the assembly line, and establish industrial procedures to deter substandard work. Because quantity has been for so long the chief measure of plan fulfillment, a profound shakeup in the present system is required.

FEEDBACK MISSING

In two jolting Izvestia articles, the wellknown airplane designer, O. Antonov, attributed the inefficiency throughout Soviet industry to the absence of an independent feedback which, he added, is provided for under capitalism by market forces and competition.

The vast reorganization of the economic system now underway has as one of its aims the development of countervailing forces that work toward quality output. This involves a wide range of changes from more stringent laws and enforcement against those responsible for defective goods and data falsification to greater autonomy and accountability at the factory level. Under serious consideration is a plan to make bonuses dependent more on plant earnings than on surpassing production quotas.

But quality improvement has to rely on more than sharper incentives and sharper lines of responsibility. Of great importance are advances in the science and engineering of quality control.

The Soviets have made notable gains in mathematical methods but their engineering of these methods into the production process is seriously lagging. That is one reason for the current program of reorientation and organization of Soviet industry to remove the roadblocks.

[From the Christian Science Monitor,
Apr. 22, 1963]

SCHISMS LOOSEN GRIP OF RED BEAR (By Joseph C. Harsch) LONDON.-Largely unnoticed in the West, Rumania of recent days has done an unusual thing.

Its Communist government in defiance of Moscow policy has returned its Ambassador to Albania, signed a new trade agreement with Communist China which increases that trade by 10 percent, and placed a large order for television sets from Japan.

The purchase of the television sets is particularly interesting because the deal involved rejection of Soviet television sets. Japanese sets were bought instead-on the candid grounds that the Japanese ones were better. Why, the Rumanians asked, should they buy inferior Soviets sets when they could get better Japanese sets at a lower price?

The above does not mean that Bucharest is adopting an anti-Soviet or anti-Khrushchev line but rather that it has taken advantage of the strain between Moscow and Peiping to exercise freedom of maneuver to pursue a line to its national advantage.

ANATHEMA TO MOSCOW

Rumanian trade, until now, has been managed to Moscow taste and for the benefit of the Soviet Union and the Communist bloc. But Rumania has gold, probably the healthiest agriculture of any Communist bloc country, and is generally in relatively good economic condition.

It would have been inconceivable even 6 months ago that any one of the Eastern European Communist countries would have dared renew diplomatic amenities with Albania which, after all, is still anathema to Moscow. Equally inconceivable would have been what amounts to the secession of one of these countries from the Communist economic system known as "Comecon."

That the impossible is now possible and has been done is evidence of how far the loosening of ties of the Communist system has progressed under the hammer blows of the Moscow-Peiping schism. There still is no sign of any healing of that schism. In fact, during this past week Red Star in Peiping began publishing another long serial of Chinese complaints against Moscow in the familiar guise of a defense of Lenin.

ABOVE PARTY?

So far as is known in the West, Nikita Khrushchev was still in the Crimea when a long adulatory article appeared in Pravda in Moscow which some Western observers read as paving the way for a maneuver which would "elevate" Mr. Khrushchev above party as Mao Tse-tung has been elevated in Peiping.

There could be a difference in implication. Mr. Mao is apparently still calling the signals in China. There begins to be doubt that Mr. Khrushchev could give up an official state office and continue to exercise full power behind the scenes.

If he gave up state office he would lose perhaps his last chance of recouping his damaged political fortunes. Negotiations are going on for another Kennedy-Khrushchev meeting. The very fact of such a meeting would be a plus for Mr. Khrushchev. But to meet the President of the United States a man must either be a prime minister or a head of government. Washington does not recognize mere party secretaries in the fraternity of world figures.

CONFLICT EASED

In the midst of such uncertainty there continues to be evidence of what might almost be called partial ideological disarmament between East and West. Most striking has been the sequence of events in relations between Moscow and the Roman Catholic Church.

This began with the Adzhubei visit to the Vatican in early March. Since then the papal encyclical "Pacem in Terris" has all but called off the Catholic crusade of recent years against Moscow and all its works.

Add that during the past week Franz Cardinal Koenig from Vienna was in Budapest undoubtedly trying to complete negotiations for the retreat of Joseph Cardinal Mindszenty from the American Embassy there to Rome. The most significant business being transacted across the Iron Curtain involved Moscow and the Vatican.