Foreign Relations of the United States Diplomatic Papers, 1941, General, The Soviet Union, Volume I

861.51/2856: Telegram

The Ambassador in the Soviet Union (Steinhardt) to the Secretary of State

Moscow, February 26, 1941—11 p.m.
[Received 11:50 p.m.]

380. The Moscow press today publishes a report delivered yesterday by Zverev,³⁰ Commissar for Finance, to the eighth session of the Supreme Soviet concerning the proposed 1941 state budget. This report also contains certain data with respect to the actual results under the 1940 budget.

Zverev stated that according to preliminary reports the total revenues under the 1940 state budget amounted to 178,080 million rubles as compared with 183,955 million rubles as planned in accordance with the 1940 budget estimate. The nonfulfillment of plan is attributed to smaller receipts from turnover tax³¹ and deductions from profits than had been anticipated, an appreciable contraction in the volume of retail trade during the year when viewed in conjunction with the considerable rises in retail prices which were effected in 1940.

Expenditures in 1940, according to Zverev, totaled 173,259 [million rubles as compared with] 179,912 million rubles. The economies achieved were almost entirely due to a sharp reduction in expenditures incurred in connection with the maintenance of administrative and judiciary organs. The 1941 budget estimate provides for total revenues 216,162 million rubles, or an increase of 214/10% over the revenues above reported as collected in 1940. Turnover tax and deductions from profits account for 72% of the total estimated income, which is slightly higher than the 1940 proportion. Direct taxes and collections from the population are to increase by 31.9% over the 1940 yield from these items.

Expenditures under the 1941 budget are estimated at 215,373 million rubles, representing an increase of 24.3% in comparison with the 1940 preliminary returns. The appropriations for the financing of the national economy amount to 72,875 million rubles, or 338/10% of total expenditures according to the estimate. This constitutes an increase of 276/10% over actual expenditures under this heading last year.

The appropriations for the Commissariats for Defense and for Naval Fleet are set at 70,865 million rubles, or 329/10% of total expenditures estimated for the year. The increase over actual expenditures under these items in 1940 is 323/10%.

It is noted that more than 80% of the total appropriations for the financing of the national economy in 1941 are to be used for capital construction. The state budget is to furnish 777/10% of all funds for capital construction as compared with 675/10% last year.

The occupied territories are included in the 1941 state budget, their aggregate budgetary revenues being fixed at 3,123 million rubles.

It will be observed that the rates of increase of both revenues and expenditures as proposed for 1941 are higher than those foreseen in the budgets of former years. In the case of revenues this is largely due to increased indirect taxes, and in that of expenditures to augmented outlay for capital construction and for purchase of armaments.³²

Steinhardt

30. Arseny Grigoryevich Zverev, People’s Commissar for Finance of the Soviet Union since 1938.
31. A levy arbitrarily assessed by the State and added to the basic cost price of the manufacture or production of goods to constitute the sales price which a purchaser pays for the goods. This turnover tax goes to the State.
32. The Ambassador reported in his telegram No. 401, March 2, 1941, that the eighth session of the Supreme Council of the Soviet Union closed on March 1, having unanimously approved the state budget for 1941 with minor changes, and ratifying the decrees issued by the Presidium since the previous session. (861.51/2857) He concluded in his despatch No. 1247, April 1, 1941, that “the 1941 budget as approved is essentially a ‘military’ budget—to an even greater degree than was the case in 1940. Primary emphasis continues to be placed upon the expansion of capital goods industry, connected with the national defence, and of internal communications, also a vital factor in defence. Both direct and indirect taxation again increase, but still less attention is directed toward the development of consumers’ goods industry than heretofore. Every consideration is subordinated more than ever in the history of the Soviet Union to the strengthening of military power without reference to the needs of the people.” (861.51/2863)