The basic and new feature, the decisive feature that has affected all the events in the sphere of foreign relations during this period, is the fact that a certain temporary equilibrium of forces has been established between our country, which is building socialism, and the

 
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countries of the capitalist world, an equilibrium which has determined the present period of "peaceful co-existence" between the Land of Soviets and the capitalist countries. What we at one time regarded as a brief respite after the war has become a whole period of respite. Hence a certain equilibrium of forces and a certain period of "peaceful co-existence" between the bourgeois world and the proletarian world.
    At the bottom of all this lies an internal weakness, the weakness and infirmity of world capitalism, on the one hand, and the growth of the workers' revolutionary movement in general, and particularly the growth of strength in our country, the Land of Soviets, on the other.
    What lies at the bottom of this weakness of the capitalist world?
    At the bottom of this weakness lie the contradictions which capitalism cannot overcome, and within the framework of which the entire international situation is taking shape -- contradictions which the capitalist countries cannot overcome, and which can be overcome only in the course of development of the proletarian revolution in the West.
    What are these contradictions? They can be reduced to five groups.
    The first group of contradictions are those between the proletariat and the bourgeoisie in the capitalist countries.
    The second group of contradictions are those between imperialism and the liberation movement in the colonies and dependent countries.
    The third group of contradictions are those that are developing, and cannot but develop, between the

 
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    And so, let us begin with the first series of contradictions, those between the proletariat and the bourgeoisie in the capitalist countries. In this sphere, the basic facts may be reduced to the following.
    Firstly. Capitalism is emerging, or has already emerged, from the chaos in production, trade and in the sphere of finance which set in, and in which it found itself, after the war. The Party called this the partial, or temporary, stabilisation of capitalism. What does that mean? It means that the production and trade of the capitalist countries, which had become terribly low at one time in the period of the post-war crisis (I have in mind the years 1919-20), have begun to make progress,

 
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and the political power of the bourgeoisie has begun to become more or less consolidated. It means that capitalism has temporarily extricated itself from the chaos in which it found itself after the war.
    Here are the figures, if we take Europe.
    Production in all the advanced countries of Europe is either making progress compared with 1919, is growing, reaching in some places 80-90 per cent of the pre-war level, or is keeping on one level. Only in Britain are there some branches of production which have not yet straightened themselves out. In the main, if we take Europe as a whole, production and trade are making progress, although they have not yet reached the pre-war level. If we take the production of grain, we find that Britain has reached 80-85 per cent of the pre-war level, France 83 per cent, and Germany 68 per cent. In Germany, the production of grain is rising very slowly. In France it is not rising, and in Britain it is sinking. All this is compensated for by imports of grain from America. Coal output in Britain in 1925 amounts to 90 per cent of the pre-war level, in France to 107 per cent of the pre-war level, in Germany to 93 per cent. Steel production in Britain amounts to 98 per cent of the pre-war level, in France to 102 per cent, in Germany to 78 per cent. Consumption of raw cotton in Britain is equal to 82 per cent of the pre-war level, in France to 83 per cent, in Germany to 81 per cent. Britain's foreign trade shows an unfavourable balance and amounts to 94 per cent of pre-war; that of Germany is slightly higher than in 1919 and also shows an unfavourable balance; that of France is now higher than the pre-war level -- 102 per cent. The level of European trade as a whole, taking 1921, was

 
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63 per cent of the pre-war level, but now, in 1925, it has reached 82 per cent of that level. The budgets of these countries balance in one way or another, but the balance is obtained by imposing a frightful burden of taxation upon the population. There is a fluctuation in the currency in some countries, but, in general, the former chaos is not observed.
    The general picture is that the post-war economic crisis in Europe is passing away, production and trade are approaching the pre-war level. One of the European countries, France, has already surpassed the pre-war level in the sphere of trade and production, while another European country -- I refer to Britain -- still remains at one and the same, or almost one and the same, level without reaching the pre-war level.
    Secondly. Instead of the period of flow of the revolutionary tide that we observed in Europe in the years of the post-war crisis, we now see a period of ebb. This means that the question of taking power, of the proletariat capturing power any day, is not now on the order of the day in Europe. The period of rising revolutionary tide, when the movement pushes forward and upward and the Party's slogans cannot keep pace with the movement, as was the case in our country, for example, in 1905 or in 1917 -- that period of rising tide still lies ahead. At present, however, it does not exist; instead, there is a period of temporary ebb, a period in which the proletariat is accumulating forces, a period which is giving big results as regards indicating new forms of the movement, as regards the existence and growth of a mass movement under the banner of the struggle for trade-union unity, as regards establishing and strengthening

 
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ties between the working-class movement in the West and the working-class movement in the Soviet Union, as regards a swing to the Left -- the British working-class movement for example -- as regards the disintegration of Amsterdam, the deep fissure in it, etc., etc. I repeat, we are in a period of accumulation of forces, which is of great importance for future revolutionary actions. It is the period in which the conquest of the mass organisations of the proletariat (the trade unions, etc.) and the "removal from their posts" of the Social-Democratic leaders becomes the slogan of the communist movement, as was the case in our country in 1911-12.
    Thirdly. The centre of financial power in the capitalist world, the centre of the financial exploitation of the whole world, has shifted from Europe to America. Formerly, France, Germany and Britain usually formed the centre of the financial exploitation of the world. That cannot be said now without special reservations. Now, the centre of the financial exploitation of the world is mainly the United States of America. That country is growing in every respect: as regards production, as regards trade, and as regards accumulation. I shall quote some figures. The production of grain in North America has risen above the pre-war level; it is now 104 per cent of that level. Coal output has reached 90 per cent of the pre-war level, but the deficit is compensated for by an enormous increase in the output of oil. And it must be pointed out that the oil output of America amounts to 70 per cent of world output. Steel production has risen to 147 per cent -- 47 per cent above the pre-war level. The national income amounts to 130 per cent of pre-war --

 
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exceeding the pre-war level by 30 per cent. Foreign trade has reached 143 per cent of the pre-war level and has an enormous favourable balance in relation to the European countries. Of the total world gold reserve amounting to 9,000 millions, about 5,000 millions are in America. United States currency is the most stable of all currencies. As regards export of capital, America, at the present time, is almost the only country that is exporting capital in ever-growing proportions. The amount exported by France and Germany is terribly small; Britain has also considerably reduced her export of capital.
    Fourthly. The temporary stabilisation of European capitalism to which I referred above has been achieved mainly with the aid of American capital, and at the price of the financial subordination of Western Europe to America. To prove this, it is sufficient to quote the figure of Europe's state indebtedness to America. That figure amounts to no less than 26,000 million rubles. This is apart from private debts to America, i.e., American investments in European enterprises, amounting for Europe to the sum of several thousand millions. What does that show? It shows that Europe has begun to get on its feet, more or less, as a result of the influx of capital from America (and partly from Britain). At what price? At the price of Europe's financial subordination to America.
    Fifthly. In view of this, in order to be able to pay interest and principal, Europe is forced to increase the burden of taxation on the population, to worsen the conditions of the workers. That is precisely what is happening now in the European countries. Already, before the payment of principal and interest has properly started,

 
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in Britain, for example, the burden of taxation as a percentage of the total national income has increased from 11 per cent (in 1913) to 23 per cent in 1924; in France it has increased from 13 per cent of the national income to 21 per cent, and in Italy -- from 13 per cent to 19 per cent. Needless to say, in the very near future the burden of taxation will grow still heavier. In view of this, the material conditions of the working people in Europe, and primarily those of the working class, will certainly deteriorate and the working class will inevitably become revolutionised. Symptoms of this revolutionisation are already to be observed in Britain and in other European countries. I have in mind the definite swing to the Left of the working class in Europe.
    Such are the principal facts which show that the temporary stabilisation of capitalism which Europe has achieved is a putrid stabilisation that has grown up on putrid soil.
    It is very likely -- I do not exclude the possibility -- that production and trade in Europe will reach the pre-war level. But that does not mean that capitalism will thereby reach the degree of stability it possessed before the war. That degree of stability it will never reach again. Why? Because, firstly, Europe has purchased her temporary stability at the price of financial subordination to America, which is leading to a colossal increase in the burden of taxation, to the inevitable deterioration of the conditions of the workers, and to the revolutionisation of the European countries; secondly, because of a number of other reasons -- about which I will speak later -- that make the present stabilisation undurable, unstable.

 
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    Let us pass to the second series of contradictions, those between the imperialist countries and the colonial countries.
    The basic facts in this sphere are: the development and growth of industry and of the proletariat in the colonies, especially during and after the war; the growth

 
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of culture in general, and of the national intelligentsia in particular, in these countries; the growth of the national-revolutionary movement in the colonies and the crisis in the world domination of imperialism in general; the struggle for liberation waged by India and Egypt against British imperialism; the war for liberation waged by Syria and Morocco against French imperialism; China's struggle for liberation against Anglo-Japanese-American imperialism, etc.; the growth of the working-class movement in India and China and the increasingly important role of the working class in these countries in the national-revolutionary movement.
    From this it follows that the Great Powers are faced with the danger of losing their chief rear, i.e., the colonies. Here, the stabilisation of capitalism is in a bad way; for the revolutionary movement in the oppressed countries, growing step by step, is beginning in some places to assume the form of open war against imperialism (Morocco, Syria, China), while imperialism is obviously unable to cope with the task of curbing "its" colonies.
    It is said -- especially by bourgeois writers -- that the Bolsheviks are to blame for the growing crisis in the colonies. I must say that they do us too much honour by blaming us for that. Unfortunately, we are not yet strong enough to render all the colonial countries direct assistance in securing their liberation. It is necessary to delve deeper to find the cause. The cause is, apart from everything else, that the European states, being obliged to pay interest on debts to America, are compelled to intensify oppression and exploitation in the colonies and dependent countries, and this cannot

 
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    I pass to the fourth series of contradictions, to those between the victor countries. The basic facts here are that, in spite of the existence of a sort of bloc between America and Britain, a bloc founded on an agreement between America and Britain against the annulment of Allied debts, in spite of this bloc, I say, the conflict of interests between Britain and America is not being allayed, on the contrary, it is becoming more intense. One of the principal problems now facing the world powers is the problem of oil. If, for example, we take America, we find that she produces about 70 per cent of the world output of oil and accounts for over 60 per cent of total world consumption. Well, it is just in this sphere, which is the principal nerve of the entire economic and military activities of the world powers, that America everywhere and always encounters opposition from Britain. If we take the two world oil companies -- Standard Oil and Royal Dutch-Shell, the former representing America and the latter Britain -- we find that the struggle between those companies is going on in all parts of the world, wherever oil is obtainable. It is a struggle between America and Britain. For the problem of oil is a vital one; because who will command in the next war depends on who will have most oil. Who will command world industry and trade depends on who will have most oil. Now that the fleets of the advanced countries are passing over to oil propulsion, oil is the vital nerve of the struggle among the world states for supremacy both in peace and in war. It is precisely in this sphere that the struggle

 
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between the British oil companies and the American oil companies is a mortal one, not always coming into the open, it is true, but always going on and smouldering, as is evident from the history of the negotiations and from the history of the clashes between Britain and America on this ground. It is sufficient to recall the series of Notes of Hughes, when he was United States Secretary of State, directed against Britain on the oil question. The struggle is going on in South America, in Persia, in Europe, in those districts of Rumania and Galicia where oil is to be found, in all parts of the world, sometimes in a concealed and sometimes in an open form. That is apart from such a fact of no little importance as the conflict of interests between Britain and America in China. You no doubt know that the struggle there is a concealed one, and that very often America, operating in a more flexible manner and refraining from the crude colonial methods which the British lords have not yet abandoned, succeeds in putting a spoke in Britain's wheel in China in order to oust Britain and pave the way for herself in China. Obviously, Britain cannot look upon this with indifference.
    I shall not dwell at length on the opposition of interests between France and Britain arising from the struggle for supremacy on the European continent. That is a generally known fact. It is also clear that the conflict of interests between Britain and France takes place not only over the question of hegemony on the continent, but also in the colonies. Information has got into the press that the war in Syria and Morocco against French imperialism was organised not without Britain's participation. I have no documents, but I think that this information is not altogether groundless.

 
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    Nor shall I dwell on the opposition of interests between America and Japan -- that, too, is common knowledge. It is enough to recall the recent American naval manoeuvres in the Pacific and the Japanese naval manoeuvres to understand why they took place.
    Lastly, I must mention a fact which must surprise everybody, namely, the colossal growth of armaments in the victor countries. I am speaking about the victors, about the contradictions among the victor states. These victors are called allies. True, America does not belong to the Entente, but she fought in alliance with it against Germany. Well, those allies are now arming themselves to the utmost. Against whom are they arming? In the past, when the Entente countries piled up armaments, they usually referred to Germany, saying that she was armed to the teeth and constituted a danger to world peace, owing to which it was necessary to arm for defence. But what about now? Germany as an armed force no longer exists; she has been disarmed. Nevertheless, the growth of armaments in the victor countries is proceeding as never before. How, for example, is the monstrous growth of the air force in France to be explained? How is the monstrous growth of armaments, and especially of the navy, in Britain to be explained? How is the monstrous growth of the navies of America and Japan to be explained? What and whom are Messieurs the "Allies," who jointly defeated Germany and disarmed her, afraid of? What are they afraid of, and why are they arming? And where is the pacifism of the Second International, which shouts about peace and does not see -- pretends that it does not see -- that the "Allies," who have officially called each other friends, are feverishly arming against

 
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    I pass to the fifth series of contradictions, those between the Soviet Union and the capitalist world.
    The basic fact in this sphere is that an all-embracing world capitalism no longer exists. After the Land of Soviets came into being, after the old Russia was transformed into the Soviet Union, an all-embracing world capitalism ceased to exist. The world split up into two camps: the camp of imperialism and the camp of the struggle against imperialism. That is the first point that must be noted.
    The second point that must be noted in this sphere is that two major countries -- Britain and America, as an Anglo-American alliance -- are coming to stand at the head of the capitalist countries. Our country -- the Soviet Union -- is coming to stand at the head of those discontented with imperialism and who are engaged in mortal struggle against it.
    The third point is that two major, but opposite, centres of attraction are being created and, in conformity with this, two lines of attraction towards those centres all over the world: Britain and America -- for the bourgeois governments, and the Soviet Union -- for the workers of the West and for the revolutionaries of the East. The power of attraction of Britain and America lies in their wealth; credits can be obtained there.The power of attraction of the Soviet Union lies in its revolutionary experience, its experience in the struggle for the emancipation of the workers from capitalism and of the oppressed peoples from im-

 
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perialism. I am speaking of the attraction of the workers of Europe and of the revolutionaries of the East towards our country. You know what a visit to our country means to a European worker or to a revolutionary from an oppressed country, how they make pilgrimages to our country, and what an attraction our country has for all that is honest and revolutionary all over the world.
    Two camps, two centres of attraction.
    The fourth point is that in the other camp, the camp of capitalism, there is no unity of interests and no solidarity; that what reigns there is a conflict of interests, disintegration, a struggle between victors and vanquished, a struggle among the victors themselves, a struggle among all the imperialist countries for colonies, for profits; and that, because of all this, stabilisation in that camp cannot be lasting. On the other hand, in our country there is a healthy process of stabilisation, which is gaining strength, our economy is growing, our socialist construction is growing, and in the whole of our camp all the discontented elements and strata of both the West and the East are gradually and steadily rallying around the proletariat of our country, rallying around the Soviet Union.
    Over there, in the camp of capitalism, there is discord and disintegration. Over here, in the camp of socialism, there is solidarity and an ever-increasing unity of interests against the common enemy -- against imperialism.
    Such are the basic facts which I wanted to point out in the sphere of the fifth series of contradictions -- the contradictions between the capitalist world and the Soviet world.

 
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    I should like to dwell particularly on the fact which I have called the attraction of the revolutionary and socialist elements of the whole world towards the proletariat of our country. I have in mind the workers' delegations which come to our country, delegations which carefully probe every detail of our work of construction in order to convince themselves that we are able not only to destroy, but also to build the new. What is the significance of these workers' delegations -- this pilgrimage of workers to our country -- delegations which today reflect an entire stage in the development of the working-class movement in the West? You have heard how leaders of the Soviet state met a British workers' delegation, and a German workers' delegation. Have you noticed that our comrades, directors of various spheres of administration, not only provided the representatives of the workers' delegations with information, but actually rendered account to them? I was not in Moscow at the time, I was away, but I read the newspapers, and I read that Comrade Dzerzhinsky, head of the Supreme Council of National Economy, not merely gave the German workers' delegation information, but rendered account to them. That is something new and special in our life, and special attention should be paid to it. I have read that the directors of our oil industry -- Kosior in Grozny and Serebrovsky in Baku -- not merely gave the workers' delegates information as is done to tourists, but rendered account to these workers' delegations as if to a higher supervising authority. I have read that all our higher institutions, the Council of People's Commissars and the Central Executive Committee of Soviets, right down to the local Executive Committees of Soviets, were prepared to render

 
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account to the workers' delegations, whose visits to us they regarded as the friendly, fraternal supervision by the working class of the West of our work of construction, of our workers' state.
    What do all those facts show? They show two things. Firstly, that the working class of Europe, at all events the revolutionary part of the working class of Europe, regards our state as its own child, that the working class sends its delegations to our country not out of curiosity, but in order to see how things are here, and what is being done; for, evidently, they regard themselves as being morally responsible for everything that we are building here. Secondly, that the revolutionary part of the proletariat of Europe, having adopted our state, and regarding it as its child, is ready to defend it and to fight for it if need be. Name another state, even the most democratic, that would dare to submit to fraternal supervision by workers' delegations from other countries! You cannot name such a state, because there is no such state in the world. Only our state, the workers' and peasants' state, is capable of taking such a step. But, in placing the utmost confidence in the workers' delegations, our country thereby wins the utmost confidence of the working class of Europe. And that confidence is more valuable to us than any loans, because the workers' confidence in our state is the fundamental antidote to imperialism and its interventionist machinations.
    That is what lies at the bottom of the change in the mutual relations between our state and the proletariat of the West that has taken place, or is taking place, on the basis of the workers' pilgrimages to our country. That is the new factor, which many have failed to

 
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discern, but which is decisive at the present time. For if we are regarded as a part, as the child, of the working class of Europe, if on those grounds the working class of Europe assumes moral responsibility, undertakes the task of defending our state in case, say, of intervention by capitalism, the task of defending our interests against imperialism, what does that show? It shows that our forces are growing and will continue to grow very rapidly. It shows that the weakness of capitalism will increase very rapidly. For without the workers it is impossible to wage war nowadays. If the workers refuse to fight against our Republic, if they regard our Republic as their child in whose fate they are closely concerned, then war against our country becomes impossible. That is the secret, that is the root, that is the significance of the pilgrimages to our country that we have had, which we shall have more of, and which it is our duty to encourage to the utmost as a pledge of solidarity and a pledge that the ties of friendship between the workers of our country and the workers of the Western countries will be strengthened.
    Perhaps it will not be superfluous to say a word or two about the number of the delegations that have visited our country. I heard recently that at the Moscow Conference a comrade asked Rykov: "Are not those delegations costing us too much?" Comrades, we must not say such things. We must never talk in that strain about the workers' delegations that visit us. It is disgraceful to talk like that. We cannot and must not shrink from any expense, or any sacrifice, to help the working class in the West to send their delegates to us, to help them to convince themselves that the working class, after capturing power, is capable not only of destroying capitalism,

 
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but also of building socialism. They, the workers of the West, many of them at any rate, are still convinced that the working class cannot do without the bourgeoisie. That prejudice is the chief disease of the working class in the West, injected into it by the Social-Democrats. We shall not shrink from any sacrifice to give the working class in the West the opportunity, through their delegates, to convince themselves that the working class, after capturing power, is capable not only of destroying the old order, but also of building socialism. We shall not shrink from any sacrifice to give the working class in the West the opportunity to convince themselves that our country is the only state in the world that is a workers' state, which they in the West ought to fight for, and which is worth defending against their own capitalism. (Applause.)
    Three kinds of delegations have visited us: delegations of intellectuals -- teachers and so forth; delegations of adult workers, I think there have been, roughly, about ten of them; and delegations of young workers. In all, 550 delegates and tourists have visited our country. Another sixteen delegations, registered with the All-Union Central Council of Trade Unions, are expected. We shall continue to promote these visits in the future in order to strengthen the ties between the working class of our country and the working class in the West, and thereby erect a barrier against any possibility of intervention.
    Such are the characteristic features of the basic contradictions that are corroding capitalism.
    What follows from all these contradictions? What do they show? They show that the capitalist world is

 
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being corroded by a whole series of internal contradictions which are enfeebling capitalism; that, on the other hand, our world, the world of socialism, is becoming more and more closely welded, more united; that because of this, on precisely this basis, there arose that temporary equilibrium of forces that put an end to war against us, that ushered in the period of "peaceful co-existence" between the Soviet state and the capitalist states.
    I must mention two other facts which also helped to bring it about that instead of a period of war we have a period of "peaceful co-existence."
    The first fact is that at the present moment America does not want war in Europe. It is as though she were saying to Europe: I have loaned you thousands of millions; sit still and behave yourself if you want to get more money in future, if you don't want your currency to get into a mess; get down to work, earn money and pay the interest on your debts. It scarcely needs proof that this advice of America's, even if it is not decisive for Europe, is bound to have some effect.
    The second fact is that since the victory of the proletarian revolution in our country, a whole vast country with tremendous markets and tremendous sources of raw materials has dropped out of the world capitalist system, and this, of course, was bound to affect the economic situation in Europe. The loss of one-sixth of the globe, the loss of the markets and sources of raw materials of our country, means for capitalist Europe that its production is reduced and experiences a severe shaking. And so, in order to put a stop to this alienation of European capital from our country, from our markets and sources

 
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    Such are all those factors that have led to a certain equilibrium of forces between the camp of socialism and the camp of capitalism all over the world; that have caused the period of war to be replaced by a period of respite; that have converted the brief respite into a whole period of respite, and have enabled us to carry out a sort of "collaboration," as Ilyich called it, with the capitalist world.
    Hence the series of "recognitions" of the Soviet Union which has commenced, and which is bound to continue.
    I shall not enumerate the countries that have "recognised" us. I think that America is the only one of the big countries that has not done so. Nor shall I dilate on the fact that after these "recognitions" we concluded trade agreements, with Germany and Italy, for example. I shall not deal at length with the fact that our foreign trade has grown considerably, that America, a country which exports cotton to us, and Britain and Germany, countries which import our grain and agricultural produce, are particularly interested in this trade. There is one thing I must gay, namely, that this year is the first year since the advent of the period of "co-existence"

 
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with the capitalist states in which we are entering into rich and wide commercial relations with the capitalist world on a more or less large scale.
    That, of course, does not mean that we have already done away with all those, so to speak, reservations, and all those claims and counter-claims, as they might be called, that have existed and still exist between our state and the states of the West. We know that payment of debts is being demanded of us. Europe has not yet forgotten this, and probably will not forget it, at any rate, not so soon. We are told that our pre-war debts to Europe amount to 6,000 millions, that the war debts are estimated at over 7,000 million rubles, hence, a total of 13,000 millions. Allowing for depreciation of currency, and subtracting from this sum the share of the border countries, it works out that we owe the West-European states not less than 7,000 millions. It is known that our counter-claims in connection with the intervention of Britain, France and America during the civil war amount, I think, to the figure (if we take Larin's calculations) of 50,000 million rubles. Consequently, they owe us five-times more than we owe them. (Larin, from his seat : "We shall get it.") Comrade Larin says that in good time we shall get all of it. (Laughter.) If, however, we make a more conservative calculation, as the People's Commissariat of Finance does, it will amount to no less than 20,000 million. Even then we stand to gain. (Laughter.) But the capitalist countries refuse to reconcile themselves to this, and we still figure in their lists as debtors.
    It is on this ground that snags and stumbling-blocks arise during our negotiations with the capitalists. That

 
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    I pass to the question of our Party's tasks in connection with the external situation.
    I think that here our Party's tasks, in the sense of its work, should be outlined in two spheres: the sphere of the international revolutionary movement, and then in the sphere of the Soviet Union's foreign policy.
    What are the tasks in the sphere of the international revolutionary movement?
    The tasks are, firstly, to work in the direction of strengthening the Communist Parties in the West, of their winning a majority among the masses of the workers. Secondly, to work in the direction of intensifying the struggle of the workers in the West for trade-union unity, for strengthening the friendship between the proletariat in our Union and the proletariat in the capitalist countries. This includes the pilgrimages of which I have spoken and the significance of which I described above. Thirdly, to work in the direction of strengthening the link between the proletariat in our country and the movement for liberation in the oppressed countries, for they are our allies in the struggle against imperialism. And fourthly, to work in the direction of strengthening the socialist elements in our country, in the direction of the victory of these elements over the capitalist elements, a victory that will be of decisive significance for revolutionising the workers of all countries. Usually, when speaking about our Party's tasks in the sphere of the international revolutionary movement, our comrades confine themselves to the first three tasks and forget about the fourth task, namely, that our struggle in our

 
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country, the struggle for the victory of the socialist elements in our country over the capitalist elements, our struggle in the work of construction, is also of international significance, for our country is the base of the international revolution, for our country is the principal lever for expanding the international revolutionary movement; and if our work of construction here, in our country, proceeds at the proper tempo, it means that we are performing our work in all the other channels of the international revolutionary movement precisely in the way the Party demands that we should perform it.
    Such are the Party's tasks in the sphere of the international revolutionary movement.
    Now about the Party's tasks in the sphere of our Union's foreign policy.
    Firstly, to work in the direction of fighting against new wars, in the direction of maintaining peace and ensuring so-called normal relations with the capitalist countries. The basis of our government's policy, of its foreign policy, is the idea of peace. The struggle for peace, the struggle against new wars, the exposure of all the steps that are being taken to prepare a new war, the exposure of those steps that cover up actual preparation of war with the flag of pacifism -- such is the task. It is precisely for this reason that we refuse to join the League of Nations, for the League of Nations is an organisation for covering up the preparations for war; for, to join the League of Nations, we must choose, as Comrade Litvinov has rightly expressed it, between the hammer and the anvil. Well, we do not wish to be either a hammer for the weak nations or an anvil for the strong ones. We want

 
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    I pass to the second part of the Central Committee's report. This part deals with the internal situation in our state and with the Central Committee's policy on questions concerning the internal situation. I should like to quote some figures. Although quite a number of figures have been published in the press recently, we cannot, unfortunately, avoid quoting some here.

    But, before passing to the figures, permit me to set out several general propositions which define our work in the building of a socialist economy (I intend to start with our economy).
    The first proposition. We are working and building in the circumstances of capitalist encirclement. That means that our economy and work of construction will develop in the contradiction, in conflicts, between our system of economy and the capitalist system of economy. We cannot possibly avoid this contradiction. It is the framework within which the struggle between the two systems, the socialist and the capitalist systems, must proceed. It means, furthermore, that our economy must be built not only amidst its opposition to the capitalist economy outside our country, but also amidst the opposition between the different elements within it, the opposition between the socialist elements and the capitalist elements.
    Hence the conclusion: we must build our economy in such a way as to prevent our country from becoming an appendage of the world capitalist system, to prevent it from being drawn into the general system of capitalist development as a subsidiary enterprise of this system, so that our economy develops not as a subsidiary enterprise of world capitalism, but as an independent economic unit, based mainly on the home market, based on the bond between our industry and peasant economy in our country.
    There are two general lines: one takes as its starting point that our country must for a long time yet remain

 
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    If, further, we take the questions that directly concern the interrelations of industry and agriculture now and in the immediate future, they can be reduced to the following points.
    Firstly. We are still an agrarian country: agricultural output predominated over industrial output. As regards industry, the main thing is that it has

 
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already approached the limit of the pre-war level, that further steps in industry mean developing it on a new technical basis, with the utilisation of new equipment and the building of new plants. That is a very difficult matter. To step across this threshold, to pass from the policy of utilising to the utmost all that we have had in industry to the policy of building up a new industry on a new technical basis, on the basis of building new plants, to cross this threshold calls for large amounts of capital. As, however, we suffer from a considerable shortage of capital, the further development of our industry will, in all probability, proceed at a less rapid tempo than it has done up to now.
    That is not the case in agriculture. It cannot be said that all the potentialities latent in agriculture on its present technical basis are already exhausted. Unlike industry, agriculture can make rapid progress for a certain time even on its present technical basis. Even simply raising the culture of the peasant, literacy, even a simple thing like cleaning seed, could increase the gross output of agriculture 10-15 per cent. Just reckon up what that means for the entire country. Such are the potentialities still latent in agriculture. That is why the further development of agriculture does not, for the time being, encounter the technical difficulties that our industry does. That is why the discrepancy between the balance of output of industry and the balance of output of agriculture will continue to grow during the next few years, because agriculture possesses a number of inherent potentialities which are far from being utilised yet, and which are due to be utilised during the next few years.
    What are our tasks in view of this circumstance?

 
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    First of all, to raise our large-scale state industry at all costs, overcoming the difficulties that confront us. Next, to raise the local type of Soviet industry. Comrades, we cannot concentrate only on the development of Union industry, because Union industry, our centralised trusts and syndicates, cannot satisfy all the diverse tastes and requirements of a 140,000,000-population. To be able to satisfy these requirements, we must see to it that life, industrial life, is pulsating in every district, in every okrug, in every gubernia, region and national republic. Unless we unleash the forces latent in the localities for the purpose of economic construction, unless we lend local industry every support, beginning with the districts and okrugs, unless we unleash all these forces, we shall not be able to achieve that general upswing of economic construction in our country that Lenin spoke about. Unless we do this, unless we link the interests and benefits of the centre with the interests and benefits of the localities, we shall not solve the problem of stimulating initiative in the work of construction, the problem of a general economic upswing in the country, the problem of securing the speediest industrialisation of the country.
    Secondly. Formerly, the problem in relation to fuel was that of over-production. Now we are approaching the problem of a fuel crisis, because our industry is growing faster than the fuel supply. We are approaching the level on which our country stood under the bourgeois system, when there was a shortage of fuel and we were obliged to import it. In other words, the position is that there is a discrepancy between the balance of fuel output and the balance of output of industry, the requirements

 
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of industry. Hence the task of accelerating the development of our fuel industry, of improving its technical equipment, so that its development should overtake, should be able to overtake, the development of industry.
    Thirdly. There is some discrepancy between the balance of output of metals and the balance of the national economy as a whole. If we calculate the minimum metal requirements and the maximum possibility of producing metals, we shall find that we have a shortage running into tens of millions. Under these conditions, our economy, and our industry in particular, cannot make further progress. That is why this circumstance must receive special attention. Metal is the foundation of foundations of our industry, and its balance of output must be made to correspond to the balance of industry and transport.
    Fourthly. The discrepancy between the balance of our skilled labour power and the balance of our industry. A number of figures have been published in the press and I will not quote them; I will merely say that the additional skilled labour power required for the whole of industry in 1925-26 amounts to 433,000 people, and we can supply only a fourth of the number required.
    Fifthly. I should like to mention one other defect and discrepancy, namely, that the standards for using railway rolling stock exceed all limits. The demand for rolling stock is so great that next year we shall be obliged to use locomotives and freight wagons, not to 100 per cent of their capacity, but to 120-130 per cent. Thus, the fixed capital of the People's Commissariat of Transport will be subjected to excessive wear and tear, and we may be faced with disaster in the near future if we do not take resolute measures.

 
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    Permit me now to pass to questions concerning trade. The figures show that in this sphere, as in the industrial sphere, the relative importance of state-based trade is increasing as compared with trade on a private capitalist basis. If we take the total internal trade turn-over before the war as being equal to 20,000 million commodity rubles, we find that the turn-over for 1923-24 amounted to 10,000 million, i.e., 50 per cent of pre-war, while that for 1924-25 equals 14,000 million, i.e., 70 per cent. The general growth of the internal turn-over is beyond doubt. Speaking of the state's share in that turn-over, we find that in 1923-24, the state's share amounted to 45 per cent of the total internal trade turn-over; the share of the co-operatives was 19 per cent, and the share of private capital 35 per cent. In the following year, i.e., in 1924-25, the state's share amounted to 50 per cent; the share of the co-operatives, instead of 19 per cent, was 24.7 per cent, and the share of private capital, instead of 35 per cent, was 24.9 per cent. The share of private capital in the total turn-over is falling; the shares of the state and of the co-operatives are rising. If we divide the turn-over into two parts, wholesale and retail, we shall see the same trend. The state's share of wholesale trade in 1923-24 amounted to something over 62 per cent of the total turn-over; in 1924-25 it amounted to 68.9 per cent. An obvious increase. The share of

 
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the co-operatives shows an increase from 15 to 19 per cent. The share of private trade was 21 per cent; now it is 11 per cent. In retail trade, the state's share in 1923-24 amounted to 16 per cent; in 1924-25 it was almost 23 per cent. The co-operatives' share of retail trade last year was 25.9 per cent, and in 1924-25 it was 32.9 per cent. The growth is beyond doubt. Private capital's share of the retail trade in 1923-24 amounted to 57 per cent; now it is 44.3 per cent. We have obviously crossed the threshold in the sphere of retail trade. Last year, private capital predominated in retail trade; this year, the state and the co-operatives predominate.
    The growth of the importance of the state and the co-operatives in the procurement of raw materials and grain is shown by the following figures: oil seeds in 1924-25 -- 65 per cent; flax -- 94 per cent; raw cotton -- almost 100 per cent; grain in 1923-24 -- 75 per cent and in 1924-25 -- 70 per cent. Here we have a slight drop. On the whole, the growth of the state and co-operative bases in the sphere of internal trade is beyond doubt, both as regards wholesale and retail trade.
    Although the state's share of grain procurement is preponderant, nevertheless, it is not growing as much as it did last year, and that points to mistakes committed in the procurement of grain. The fact of the matter is that the miscalculation in regard to procurement was a miscalculation not only on the part of the Soviet bodies, but also of the Central Committee, for it is the latter's duty to supervise the Soviet bodies, and it is responsible for everything they do. The miscalculation consists in the fact that when planning we failed to take into account that this year the state of the mar-

 
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    The development of the national economy in the country has led to an improvement in the material conditions primarily of the working class. The declassing of the working class has become a thing of the remote

 
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past. The restoration and growth of the working class are proceeding at a rapid rate. Here are the figures according to data of the People's Commissariat of Labour: on April 1,1924, counting all workers, in all forms of industry, including small-scale industry, including seasonal workers and agricultural labourers, we had 5,500,000 workers, of whom 1,000,000 were agricultural labourers and 760,000 unemployed. On October 1, 1925, we already had over 7,000,000 workers, of whom 1,200,000 were agricultural labourers and 715,000 unemployed. The growth of the working class is beyond doubt.
    The average monthly wage per worker in industry as a whole, in chervonets rubles, amounted in April 1925 to 35 rubles, or 62 per cent of the pre-war average. In September 1925 it was 50 rubles, or 88.5 per cent of the pre-war average. Some branches have exceeded the pre-war level. The average daily real wage per worker in commodity rubles amounted in April 1925 to 0.88 ruble and in September 1925 to 1 ruble 21 kopeks. The average output per man-day worked in industry as a whole amounted, in pre-war rubles, to 4.18 in April 1924, but in 1925 it amounted to 6.14, i.e., 85 per cent of the pre-war average. If we take the relation between wages and productivity of labour month by month we shall find that they run in parallel lines: when wages rise, productivity of labour rises. But in June and July wages rose; productivity of labour, however, rose less than wages. That was due to holidays and to the influx of new strata of workers -- semi-peasants -- into the mills and factories.
    Now as regards wage funds. According to data of the People's Commissariat of Labour, wage funds

 
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(I have in mind industry, leaving out other branches) amounted in 1923-24 to 808,000,000; in 1924-25 they amounted to over 1,200 million; the estimate for 1925-26 is 1,700 million rubles.
    I shall not, comrades, speak of the needs for which the social insurance funds are used, everybody knows that. Permit me to mention one general figure to enable you to judge how much the proletarian state spends on workers' insurance. The total number of insured workers in 1924-25 was 6,700,000; the estimate for 1925-26 is 7,000,000. The average assignment calculated on the wage budget amounted in 1924-25 to 14.6 per cent; the estimate for 1925-26 is 13.84 per cent. Expressing this in gross figures, the amount expended on this in 1924-25 was 422,000,000 rubles; the estimate for 1925-26 is 588,000,000. Perhaps it will not be superfluous to inform you that from the fund that was allocated last year a certain sum was left in the social insurance coffers, amounting to 71,000,000 rubles.
    As regards the peasants, the increase in the output of agriculture was naturally bound to be reflected in an improvement in the material conditions of the peasant population. According to data of our planning bodies, the personal consumption of the peasant population, the percentage increase in this consumption, is higher than the percentage increase in the consumption of the urban population. The peasant has begun to feed better, and he retains a far larger share of his production for himself, for his personal consumption, than was the case last year.
    What assistance did the proletarian state render the households of the poor peasants, those who had

 
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suffered from the crop failure? The People's Commissariat of Finance calculates that financial assistance to poor peasants in 1924-25 amounted, in preliminary figures, not quite exact, to 100-105 million rubles, of which tax and insurance exemptions constituted about 60,000,000 rubles; furthermore, disbursements from the fund for combating the consequences of the crop failure amounted to 24,000,000 rubles, and credits to 12,000,000 rubles. Assistance to victims of the crop failure in 1924 covered an area with a population of over 7,000,000. The total spent for this purpose amounted to 108-110 million rubles, of which 71,000,000 came from the state budget and 38,000,000 from the funds of public organisations and banking institutions. In addition to this, a fund of 77,000,000 was set up for combating drought. Such was the assistance that the proletarian state rendered the poor strata of the peasantry, inadequate assistance, of course, but such as deserves a word or two of comment.
    Improvement of the material conditions of the working class and of the peasantry is a fundamental premise of all progress in the sphere of our construction work. We see that this premise already exists.
    A few words about the increase in the activity of the masses. The chief thing in our internal situation, that which strikes the eye and which one cannot possibly get away from, is that as a consequence of the improvement in the material conditions of the workers and peasants there has been an increase in their political activity, they have become more critical in their attitude towards our shortcomings, they are speaking more loudly about the defects in our practical work. We have entered

 
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a period of greater activity of all classes and all social groupings. The working class has become more active, the peasantry, with all its groupings, has become more active, as also the new bourgeoisie, its agents in the countryside (the kulaks) and its representatives among the intelligentsia. This fact served as the basis for the turn in our policy which is expressed in the decisions of the Fourteenth Party Conference. The policy of revitalising the Soviets, the policy of revitalising the co-operatives and the trade unions, the concessions to the peasantry as regards precise regulation of questions of renting and leasing land and hiring labour, the material assistance for the poor peasants, the policy of a stable alliance with the middle peasants, the elimination of the remnants of war communism -- it is these, chiefly, that express the Party's new course in the countryside. You are well aware what the situation was in the countryside at the end of last year and in the beginning of this year. General discontent among the peasantry was growing, and here and there even attempts at revolt occurred. Those were the circumstances which determined the Party's new course in the countryside.
    Such are the foundations of the Party's policy towards the peasantry in the period of the rise in the activity and organisation of the masses; a policy calculated to regulate relationships in the countryside, to raise there the prestige of the proletariat and its Party, and to ensure a stable alliance of the proletariat and poor peasants with the middle peasantry.
    You know that this policy has fully justified itself.

 
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Department of the Central Committee, and another handbook, issued, if I am not mistaken, by the Agitation and Propaganda Department of the Leningrad organisation. If we are to believe these handbooks, it appears that under the tsar the poor peasants in this country constituted somewhere about 60 per cent, but now they constitute 75 per cent; that under the tsar the kulaks constituted 5 per cent, but now -- 8 or 12 per cent; under the tsar there were so many middle peasants, but now there are fewer. I don't want to indulge in strong language, but it must be said that these figures are worse than counter-revolution. How can a man who thinks in a Marxist way invent a thing like that, and print it, too, and in a handbook at that? As a member of the Central Committee, I, too, of course, am answerable for this incredible blunder. If, under the tsar, a policy of creating kulaks was practised, private property in land existed and land could be bought and sold (which exceptionally aggravates differentiation), if the government was such that it forced differentiation to the utmost, and, for all that, the poor peasants constituted no more than 60 per cent, how could it happen that under our government, under the Soviet Government, when private property in land does not exist, i.e., the land is withdrawn from circulation and, consequently, this obstacle to differentiation exists, after we have been busy with dekulakisation for a couple of years and to this day have not abandoned all methods of dekulakisation, when we are conducting a special credit and co-operative policy which is unfavourable to differentiation -- how could it happen that with these obstacles it turns out, allegedly, that there is much more differentiation

 
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today than under the tsar, many more kulaks and poor peasants than in the past? How can people who call themselves Marxists talk such absurd nonsense? It is at once comic and tragic. (Laughter.)
    The same must be said about the ill-starred grain and fodder balance sheet issued by the Central Statistical Board in June, according to which the well-to-do peasants held 61 per cent of the surplus market grain, the poor peasants none, while the middle peasants held the rest. The funny thing about this is that a few months later the C.S.B. came out with a different figure: not 61 per cent, but 52 per cent. And recently, the C.S.B. has given a figure, not 52 per cent this time, but 42 per cent. Is that the way to calculate? We believe that the C.S.B. is a citadel of science. We are of the opinion that without the C.S.B.'s figures not a single administrative body could calculate or plan. We consider that the C.S.B. should provide objective statistics free from all pre-conceived opinions, for the attempt to fit statistics to any pre-conceived opinion is a crime. But, after this, how can we believe the C.S.B.'s figures if it has ceased to believe them itself?
    More briefly. Since we have made the countryside middle-peasant in character as a result of the agrarian revolution, since the middle peasants constitute the majority in the countryside, in spite of the process of differentiation, and since our work of construction and Lenin's co-operative plan call for the enlistment of the bulk of the peasant masses in this work, then the policy of alliance with the middle peasants is, under NEP conditions, the only correct policy.
    Such is the practical aspect of the question.

 
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    In connection with the peasant question, two deviations are observed in our Party. A deviation in the direction of belittling the kulak danger, and a deviation in the direction of exaggerating it, in the direction of belittling and under-estimating the role of the middle peasants. I will not say that there is anything fatal for us in these deviations. A deviation is a deviation; a deviation is something that has not yet taken definite shape. A deviation is the beginning of an error. Either we allow this error to develop -- and then things will become serious; or we nip it in the bud -- and then the danger will be removed. A deviation is something erroneous that will produce its results later if not checked in time.
    A word or two about under-estimating the kulak danger. There is talk about a kulak deviation. That is foolish, of course. There cannot be a kulak deviation in the Party. The point at issue is not a kulak deviation, but a deviation in the direction of under-estimating the kulak danger. Even if nobody had fallen victim to this deviation, even if nobody had adopted the standpoint of this deviation, some people would have done so eventually, because development in our country is proceeding in the direction of some revival of capitalism, and the revival of capitalism is bound to create confusion around our Party. On the other hand, socialist industry is developing in our country, and a struggle is going on between it and private capital. Which will outstrip the other? At present, preponderance is on the side of the

 
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socialist elements. We shall get both the kulaks and the urban private capitalists under our control. So far, however, the fact remains that the kulaks are growing, and we have not beaten them economically by a long way yet. The kulaks are mustering their forces, that is indisputable; and whoever fails to see this, whoever says that this is of no importance, that the kulak is a bogey, puts the Party in danger of losing its vigilance and of finding itself disarmed in the struggle against the kulaks, in the struggle against capitalism, for the kulak is the agent of capitalism in the countryside.
    There is talk about Bogushevsky. Of course, his is not a kulak deviation. His deviation is in the direction of under-estimating the kulak danger. If his were a kulak deviation, he would have to be expelled from the Party. Up to now, however, as far as I know, nobody has demanded his expulsion from the Party. This deviation is in the direction of under-estimating the kulak danger in the countryside, a deviation which hinders us from keeping the Party in a constant state of readiness for the struggle, and which disarms the Party in its struggle against the capitalist elements; as is known, this deviation was condemned by the decision of the Central Committee of the Party.
    But there is another deviation -- in the direction of over-estimating the kulak danger, in the direction of consternation in face of the kulak danger, in the direction of panic: "The kulak is coming, help!" A strange thing! People introduced NEP, knowing that NEP is a revival of capitalism, a revival of the kulaks, that the kulaks would inevitably raise their heads. But it was enough for the kulaks to appear for people

 
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to start shouting "help! " and to lose their heads. And their consternation reached such a point that they forgot about the middle peasants. And yet, the basic task in the countryside at the present time lies in the fight to win over the middle peasants, the fight to wrest the middle peasants from the kulaks, the fight to isolate the kulaks by establishing a stable alliance with the middle peasants. That is forgotten by those comrades who have become panic-stricken in the face of the kulak danger.
    I think that if we delved down to the roots of these two deviations it would be possible to trace them to the following starting points.
    The first deviation consists in belittling the role of the kulaks, and of the capitalist elements generally, in the countryside, in slurring over the kulak danger. It starts out from the wrong assumption that the development of NEP does not lead to the revival of the capitalist elements in the countryside, that in our country the kulaks, and the capitalist elements generally, are passing, or have already passed, into the sphere of history, that differentiation is not taking place in the countryside, that the kulaks are an echo of the past, a bogey, and nothing more.
    What does that deviation lead to?
    In practice, that deviation leads to the denial of the class struggle in the countryside.
    The second deviation consists in exaggerating the role of the kulaks, and of the capitalist elements generally, in the countryside, in becoming panic-stricken in the face of those elements, in denying that an alliance of the proletariat and poor peasants with the middle peasants is possible and expedient.

 
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    That deviation starts from the belief that what is taking place in the countryside is a simple restoration of capitalism, that this process of the restoration of capitalism is an all-absorbing process that also embraces the whole, or the overwhelming part, of our co-operatives, that the result of such a development must be a continuous and large-scale growth of differentiation among the peasantry, that the extreme groups, i.e., the kulaks and the poor peasants, must grow in strength and numbers year by year, while year by year, too, the middle groups, i.e., the middle peasants, grow weaker and melt away.
    In practice, that deviation leads to fomenting class struggle in the countryside, to a reversion to the dekulakisation policy of the Poor Peasants' Committees, consequently, to proclaiming civil war in our country, and thus to the disruption of all our work of construction, and thereby to the repudiation of Lenin's co-operative plan for drawing the millions of peasant farms into the system of socialist construction.
    You will ask: which deviation is worse? It is wrong to put the question that way. One is as bad as the other. And if those deviations are allowed to develop they may disintegrate and destroy the Party. Fortunately there are forces in our Party capable of ridding it of both deviations. (Applause.) Although one deviation is as bad as the other, and it is foolish to ask which of them is more dangerous, nevertheless, there is another point of view from which these two deviations must be approached. Against which deviation is the Party best prepared to fight -- the first or the second? That is how, in practice, the question should be put. Both deviations are dangerous, one is as bad as the other; it is wrong to ask which of

 
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them is more dangerous; but it is possible and necessary to ask: against which deviation is the Party best prepared to fight? If we were to ask Communists what the Party is better prepared for -- to strip the kulaks, or not to do that but to go in for an alliance with the middle peasants -- I think that 99 Communists out of 100 would say that the Party is best prepared for the slogan: strike at the kulaks. Just let them -- they would strip the kulaks in a moment. As for refraining from dekulakisation and pursuing the more complex policy of isolating the kulaks by entering into an alliance with the middle peasants -- that is something not so easily assimilated. That is why I think that in its struggle against both deviations, the Party must, after all, concentrate its fire on the second deviation. (Applause.) No talk of Marxism, no talk of Leninism can cover up the thesis that the kulaks are dangerous. The kulaks are kulaks, they are dangerous, no matter how much Bogushevsky may talk about bogeys. No quotations can obliterate this from the mind of a Communist. But the thesis that a stable alliance with the middle peasants is necessary -- although Ilyich, in the resolution of the Second Congress, wrote about neutralising the middle peasants -- this thesis can always be slurred over, obscured with phrases about Leninism, about Marxism. Here there is a rich field for quotations, here there is a rich field for everyone who wants to confuse the Party, who wants to conceal the truth from the Party, the truth that in relation to the peasantry Lenin had not one, but three slogans. Here, all sorts of manipulations can be performed in regard to Marxism. And precisely for that reason, fire must be concentrated on the second deviation.

 
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    I pass to the Party's tasks in the sphere of internal policy.
    In the sphere of developing the national economy as a whole we must conduct work:
    a) in the direction of further increasing the output of the national economy;
    b) in the direction of transforming our country from an agrarian into an industrial country;
    c) in the direction of ensuring within the national economy a decisive preponderance of the socialist elements over the capitalist elements;
    d) in the direction of ensuring for the national economy of the Soviet Union the necessary independence in the circumstances of capitalist encirclement;
    e) in the direction of increasing the proportion of non-tax revenue in the total state budget.

 
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    In the sphere of industry and agriculture we must conduct work:
    a) in the direction of expanding our socialist industry on a higher technical level, of increasing the productivity of labour, reducing the cost of production and accelerating the turn-over of capital;
    b) in the direction of bringing the balance of output of fuel and metals, and also the fixed capital of railway transport, into conformity with the country's growing requirements;
    c) in the direction of accelerating the development of Soviet local industry;
    d) in the direction of increasing the fertility of the soil, raising the technical level of agriculture, developing the cultivation of industrial crops, industrialising agriculture;
    e) in the direction of drawing the scattered peasant farms into socialist construction by organising co-operatives on a mass scale and by raising the cultural level of the peasantry.
    In the sphere of trade we must conduct work:
    a) in the direction of expanding further and improving the quality of the network of trading channels (co-operatives of all kinds, state trade);
    b) in the direction of accelerating trade turn-over to the utmost;
    c) in the direction of reducing retail prices and further increasing the preponderance of Soviet and co-operative trade over private trade;
    d) in the direction of establishing a united front and strict discipline in procurement among all the procurement bodies;

 
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    e) in the direction of increasing the trade turn-over with the outside world, while ensuring a favourable balance of trade, and hence, a favourable balance of payments, which is an indispensable condition for maintaining the stability of our currency and a necessary guarantee against inflation.
    In the sphere of planning, we must conduct work in the direction of absolutely ensuring the necessary reserves.
    A word or two, by the way, about one of the sources of reserves -- vodka. There are people who think that it is possible to build socialism in white gloves. That is a very gross mistake, comrades. Since we are not receiving loans, since we are poor in capital, and since, furthermore, we cannot go into bondage to the West-European capitalists, not being able to accept the enslaving terms that they offer us and which we have rejected, only one alternative remains -- to seek sources in other spheres. After all, that is better than bondage. Here we have to choose between bondage and vodka, and those people who think that it is possible to build socialism in white gloves are grievously mistaken.
    In the sphere of the correlation of classes we must conduct work:
    a) in the direction of ensuring an alliance of the proletariat and the poor peasants with the middle peasants;
    b) in the direction of ensuring the leadership of the proletariat in this alliance;
    c) in the direction of politically isolating and economically ousting the kulaks and the urban capitalists.
    In the sphere of Soviet affairs we must work in the direction of a resolute struggle against bureaucracy, in

 
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the direction of enlisting the broad masses of the working class in this struggle.
    I should like to say a word or two about the new bourgeoisie and its ideologists -- the Smena-Vekhites. Smena-Vekhism is the ideology of the new bourgeoisie, which is growing and little by little linking up with the kulaks and the intelligentsia in the government service. The new bourgeoisie has put forward its own ideology, the Smena-Vekh ideology, which consists in the view that the Communist Party is bound to degenerate and the new bourgeoisie to consolidate itself, while it appears that, without ourselves noticing it, we Bolsheviks are bound to reach the threshold of the democratic republic, then to cross that threshold and, with the assistance of some "Caesar," who will come forward, perhaps from the ranks of the military, or perhaps from the government service officials, to find ourselves in the position of an ordinary bourgeois republic.
    Such is the new ideology with which attempts are being made to fool our government service intelligentsia, and not only them, but also certain circles that stand close to us. I shall not refute the thesis that our Party is degenerating. It is not worth while refuting nonsense. Our Party is not degenerating, and will not do so. It is not made of such stuff, and it was not forged by such a man, that it should degenerate. (Applause.) Our cadres, young and old, are growing ideologically. It is a fortunate thing for us that we have managed to publish several editions of Lenin's Works. People are now reading, learning and beginning to understand. Not only the leaders, but also the average Party members are beginning to understand, and they cannot be fooled. Shouting about degeneration

 
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    I pass to the question of the Party. I do not put the Party at the end of my report because it is the last in importance of all the factors of our development. No, not because of that, but because, with us, the Party crowns the whole edifice.
    I have spoken about the successes that the proletarian dictatorship has achieved in the sphere of foreign and internal policy, in the sphere of manoeuvring abroad, in

 
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the circumstances of the capitalist encirclement, and in the sphere of socialist construction within the country. But these successes would not have been possible had our Party not been equal to its tasks, had it not grown and gained strength. The Party's importance in this respect, as the guiding force, is immeasurable. The dictatorship of the proletariat is not exercised automatically; it is exercised primarily by the Party's forces, under its leadership. Without the Party's leadership, in the present conditions of capitalist encirclement, the dictatorship of the proletariat would be impossible. It would be enough to shake the Party, to weaken it, for the dictatorship of the proletariat to be shaken and weakened in an instant. It is precisely for this reason that all the bourgeois in all countries talk with such fury about our Party.
    By that I do not at all mean to say that our Party is identical with the state. Not in the least. The Party is the guiding force in our state. It would be foolish to say on these grounds, as some comrades do, that the Political Bureau is the supreme organ in the state. That is not true. It is a confusion that brings grist to the mill of our enemies. The Political Bureau is the supreme organ not of the state, but of the Party, while the Party is the supreme guiding force in the state. The Central Committee and the Political Bureau are organs of the Party. I do not want to identify the state institutions with the Party. All I want to say is that in all the fundamental questions of our internal and foreign policy, the Party has played the leading role. And it was solely due to this that we achieved successes in our internal and foreign policy. That is why the question of the Party's composition, of its ideological level, of the Party's cadres, of

 
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its ability to guide in the presentation of questions concerning economic construction and Soviet affairs, of its weight in the working class and among the peasantry, and, lastly, of its internal condition generally -- is a fundamental question of our policy.
    First of all, about the Party's composition. The total numerical strength of the Party by April 1, 1924, not including the Lenin Enrolment, amounted to 446,000 Party members and candidates. Of these, workers numbered 196,000, i.e., 44 per cent; peasants, 128,000, i.e., 28.8 per cent; office employees and others, 121,000, i.e., 27.2 per cent. By July 1, 1925, we had in the Party not 446,000, but 911,000 members and candidates; of these, workers -- 534,000, i.e., 58.6 per cent; peasants -- 216,000, i.e., 23.8 per cent; office employees and others -- 160,000, i.e., 17.6 per cent. On November 1, 1925, we had 1,025,000 Communists.
    What percentage of the working class (if we take the whole working class) is organised in our Party? At the Thirteenth Congress I said in my report on organisation that the total number of workers in our country was 4,100,000 (including agricultural workers). I did not then include the workers employed in small industry who could not be counted, as social insurance had not yet been extended to them and statistics did not deal with them. At that time I gave the figures for January 1924. Later, when it became possible to take into account the workers employed in small industry, it was found that by July 1, 1924, the total number of workers was 5,500,000, including agricultural workers. Of these, 390,000 workers, i.e., 7 per cent of the entire working class, were in the Party. By July 1, 1925, the workers

 
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numbered 6,500,000; of these, 534,000, i.e., 8 per cent of the entire working class, were in the Party. By October 1, 1925, we had 7,000,000 workers, agricultural and industrial, of small, medium and large-scale industry without distinction. Of these, 570,000, i.e., 8 per cent, were in the Party.
    I am saying all this in order to show how unreasonable it is to talk about getting 90 per cent of the entire working class in the country organised in the Party in one or two years.
    Now let us see in what proportion the working class section of the R.C.P.(B.) stands to the number of workers employed in statistically registered industry. The number of permanent workers, not seasonal, in large-scale statistically registered industry, state and non-state, including also the war industry, the chief railway workshops and main depots -- the number of workers in all these branches, by January 1, 1924, was 1,605,000. At that time we had 196,000 workers in the Party. That amounts to 12 per cent of the total number of workers employed in large-scale industry. If, however, we take the number of workers at the bench who are Party members and see what percentage of the total number of workers employed in large-scale industry they represent, we shall find that by January 1 we had in the Party 83,000 workers at the bench, and that they constituted 5 per cent of the total number of workers employed in large-scale industry. All this was by January 1, 1924. By June 1, 1924, 1,780,000 workers were employed in large-scale industry; in the Party at that time there were 389,000 workers, i.e., 21.8 per cent of the total number of workers employed in large-scale

 
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industry. Of workers at the bench, there were 267,000 in the Party, i.e., 15 per cent of the total number of workers employed in large-scale industry. By January 1, 1925, 1,845,000 workers were employed in large-scale statistically registered industry; the total number of workers in the Party, those at the bench and those not at the bench, was 429,000, i.e., 23.2 per cent of the total number of workers employed in large-scale industry; of workers at the bench, we had in the Party 302,000, i.e., 16.3 per cent of the total number of workers employed in large-scale industry. By July 1, 1925, 2,094,000 workers were employed in large-scale industry; the number of workers in the Party was 534,000, i.e., 25.5 per cent; the number of workers at the bench was 383,000, i.e., 18.2 percent of the total number of workers employed in large-scale industry.
    You see that, whereas in relation to the entire working class the growth of the proportion of workers organised in the Party to the total working class is slower than the growth of the working class itself, in large-scale industry we have the opposite: the growth of the percentage of workers in the Party is faster than the growth of the working class in large-scale industry. That must be noted in order to have in mind what our Party's complexion is like when we speak of its working-class core; it consists mainly of workers employed in large-scale industry.
    Can we now, looking at all this, speak of bringing the number of workers at the bench in the Party up to 90 per cent in the course of one year? No, we cannot, because we do not want to indulge in fantasy. Because, since we have 380,000 workers at the bench in the Party, then, to get all the rest -- that is about 700,000 not at the

 
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bench -- to constitute 10 per cent, we would have to raise the Party membership in the course of one year to 7,000,000. The comrades have simply failed to count, and have put their foot in it with their figure of 90 per cent.
    Is the Party's weight in the working class growing? This self-evident truth scarcely needs proof. You know that our Party is, in essence, a party elected by the working class. In this respect we have achieved what no other party in the world has achieved. This fact alone shows that our Party's weight in the ranks of the working class is immeasurable, and that our Party enjoys a monopoly in the working class.
    As regards our Party's weight in the countryside, the situation is rather displeasing. At the time of the Thirteenth Congress, the rural population from the age of 18 to 60 in our country amounted to 53,000,000; at the time of the Fourteenth Congress it is over 54,000,000. But the Communists in village units of the Party at the time of the Thirteenth Congress numbered 136,000, i.e., 0.26 per cent of the total adult rural population; at the time of the Fourteenth Congress we have 202,000 peasants in the Party, i.e., 0.37 per cent. Our Party's growth in the countryside is terribly slow. I do not mean to say that it ought to grow by leaps and bounds, but the percentage of the peasantry that we have in the Party is, after all, very insignificant. Our Party is a workers' party. Workers will always preponderate in it. That is an expression of the fact that we have the dictatorship of the proletariat. But it is also clear that without an alliance with the peasantry the dictatorship of the proletariat is impossible, that the Party must have a certain percentage of the best people among the peas-

 
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antry in its ranks as an essential foothold in the countryside. From this aspect, matters are still far from well.
    Further, I must note a general rise in our Party's ideological level. As regards the organisational side, Comrade Molotov will report to you and, therefore, I shall not dwell on it; but I cannot refrain from saying one thing, namely, that all the evidence shows that the ideological level of our leading cadres, young and old, has risen considerably. One could take as an example the discussion we had with Trotskyism last year. As you know, the point at issue was the revision of Leninism, changing the leadership of the Party while on the march, so to speak. How solidly the Party encountered that anti-Party wave, you all know. What does that show? It shows that the Party has grown up. Its cadres have become strong; it is not afraid of discussion. Today, unfortunately, we have entered the period of a new discussion. I am sure that the Party will quickly get over this discussion too and nothing exceptional can happen. (Voices : "Quite right!" Applause.) In order not to anticipate events and not to irritate people, I shall not at the present moment touch upon the essence of the Leningrad comrades' behaviour at their conference and upon the way the Moscow comrades reacted to it. I think that the members of this congress will speak about that themselves, and I shall sum up in my reply to the discussion.
    I am coming to the end of my report.
    I have spoken about our foreign policy, about the contradictions that are corroding the capitalist world. I said that those contradictions can be overcome only by a workers' revolution in the West.

 
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    Furthermore, I have spoken about the contradictions within the framework of which our interrelations, the interrelations between the Soviet Union and the capitalist states, develop. I said that those states will strive to convert our country into an appendage of the capitalist system, that they will try intervention against us, but that we shall repel them; that in this we count on the utmost support of the working class in the West, particularly after the workers of the West have begun to visit us frequently and to fraternise with us. Moreover, we are of the opinion that for the capitalists this fraternisation will not be without its cost. We are overcoming those contradictions too. But in the last analysis, we cannot overcome the contradictions outside our country between the capitalist world and the socialist world solely by our own efforts; for that we need the assistance of a victorious proletarian revolution in a number of countries.
    Furthermore, I have spoken about the contradictions within our country, between the capitalist elements and the socialist elements. I said that we can overcome these contradictions by our own efforts. Whoever does not believe that this is possible is a liquidator, does not believe that we can build socialism. We shall overcome these contradictions; we are already doing so. Of course, the sooner assistance comes from the West the better, the sooner shall we overcome these contradictions in order to deliver the finishing stroke to private capital and to achieve the complete victory of socialism in our country, the building of a complete socialist society. But even if we do not receive outside assistance we shall not become despondent, we shall not cry out for help, we shall not abandon our work (applause ) and we shall not be daunted

 
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by difficulties. Whoever is weary, whoever is scared by difficulties, whoever is losing his head, let him make way for those who have retained their courage and staunchness. (Applause.) We are not the kind of people to be scared by difficulties. We are Bolsheviks, we have been steeled by Lenin, and we do not run away from difficulties, but face them and overcome them. (Voices : "Quite right! " Applause.)
    Furthermore, comrades, I have spoken about our Party's successes and mistakes. Of mistakes there have been not a few. In the field of foreign trade, in the field of procurement, and in several other of our fields of work there have been not a few mistakes. Ilyich taught us not to become conceited. We shall not become conceited. There have been not a few mistakes. But there are also successes. Whatever the case may be, we have achieved one thing that cannot possibly be taken from us, namely, that by our extensive constructive work, by our Bolshevik assault on the economic front, by the successes we have gained in this field, we have shown the whole world that the workers, after capturing power, are able not only to beat capitalism, not only to destroy, but also to build the new society, to build socialism. That achievement, the fact that we have made this truth obvious, nobody can take from us. That is the biggest and most difficult of all our achievements up to now. For we have shown the working class of the West and the oppressed peoples of the East that the workers, who throughout history were able only to work for masters, while the masters governed, that these workers, after capturing power, have proved capable of governing a great country, of building socialism under the most difficult conditions.

 
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    What is needed to enable the proletarians of the West to win? First of all, confidence in their own strength, the consciousness that the working class can do without the bourgeoisie, that the working class is capable not only of destroying the old, but also of building the new, of building socialism. The entire work of Social-Democracy consists in imbuing the workers with scepticism, with distrust in their own strength, with disbelief in the possibility of achieving victory over the bourgeoisie by force. The significance of all our work, of all our construction, lies in that this work and this construction convince the working class in the capitalist countries that it can do without the bourgeoisie and can build the new society by its own efforts.
    The workers' pilgrimages to our country, the fact that the workers' delegations that come to our country probe every detail of our work of construction and try to get the feel of our successes in construction, all this shows that, in spite of the Social-Democrats, the working class in the capitalist countries is beginning to acquire confidence in its own strength and in the ability of the working class to build the new society on the ruins of the old.
    I do not say that we have achieved much during the year under review, but, after all, one thing must be admitted, namely, that by our successes in socialist construction we have demonstrated and proved that the working class, after overthrowing the bourgeoisie and taking power into its own hands, is capable of rebuilding capitalist society on a socialist basis. This we have achieved, and nobody can take this from us, whatever happens. This success is inestimable. For what does its

 
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achievement mean? It means giving the workers in the capitalist countries confidence in their own strength, confidence in their victory. It means placing into their hands a new weapon against the bourgeoisie. That they are taking up this weapon and are prepared to use it is evident if only from the fact that workers' pilgrimages to our country are not ceasing, but are becoming more numerous. And when the workers in the capitalist countries become imbued with confidence in their own strength, you may be sure that this will be the beginning of the end of capitalism and a sure sign of the victory of the proletarian revolution.
    That is why I think that we are not working in vain in building socialism. That is why I think that in this work we are bound to achieve victory on an international scale. (Loud and prolonged applause. An ovation from the entire congress.)

 
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    Comrades, I shall not answer separately the notes on particular questions, because the whole of my speech in reply to the discussion will in substance be an answer to these notes.
    Nor do I intend to answer personal attacks or any verbal thrusts of a purely personal character, for I think that the congress is in possession of sufficient material with which to verify the motives of those attacks and what is behind them.
    Nor shall I deal with the "cave men, " the people who gathered somewhere near Kislovodsk and devised all sorts of schemes in regard to the organs of the Central Committee. Well, let them make schemes, that is their business. I should only like to emphasise that Lashevich, who spoke here with aplomb against politics of scheming, was himself found to be one of the schemers and, it turns out, at the "cave men's" conference near Kislovodsk he played a role that was far from unimportant. Well, so much for him. (Laughter.)
    I pass to the matter in hand.

    First of all, a few rejoinders. First rejoinder -- to Sokolnikov. He said in his speech: "When Stalin indicated two general lines, two lines in the building of our economy, he misled us, because he should have formulated these two lines differently, he should have talked not about importing equipment, but about importing finished goods." I assert that this statement of Sokolnikov's utterly exposes him as a supporter of Shanin's theses. I want to say that here Sokolnikov in point of fact speaks as an advocate of the Dawesation of our country. What did I speak about in my report? Did I speak about the exports and imports plan? Of course not. Everybody knows that we are obliged at present to import equipment. But Sokolnikov converts this necessity into a principle, a theory, a prospect of development. That is where Sokolnikov's mistake lies. In my report I spoke about two fundamental, guiding, general lines in building our national economy. I spoke about that in order to clear up the question of the ways of ensuring for our country independent economic development in the conditions of capitalist encirclement. In my report I spoke about our general line, about our prospects as regards transforming our country from an agrarian into an industrial country. What is an agrarian country? An agrarian country is one that exports agricultural produce and imports equipment, but does not itself manufacture, or manufactures very little, equipment (machinery, etc.) by its own efforts. If we get stranded at the stage of development at which we have to import equip-

 
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ment and machinery and not produce them by our own efforts, we can have no guarantee against the conversion of our country into an appendage of the capitalist system. That is precisely why we must steer a course towards the development of the production of the means of production in our country. Can it be that Sokolnikov fails to understand such an elementary thing? Yet it was only about this that I spoke in my report.
    What does the Dawes Plan demand? It demands that Germany should pump out money for the payment of reparations from markets, chiefly from our Soviet markets. What follows from this? From this it follows that Germany will supply us with equipment, we shall import it and export agricultural produce. We, i.e., our industry, will thus find itself tethered to Europe. That is precisely the basis of the Dawes Plan. Concerning that, I said in my report, in so far as it affects our country, the Dawes Plan is built on sand. Why? "Because, " I said, "we have not the least desire to be converted into an agrarian country for the benefit of any other country whatsoever, including Germany, " because, "we ourselves will manufacture machinery and other means of production." The conversion of our country from an agrarian into an industrial country able to produce the equipment it needs by its own efforts -- that is the essence, the basis of our general line. We must so arrange things that the thoughts and strivings of our business executives are directed precisely towards this aspect, the aspect of transforming our country from one that imports equipment into one that manufactures this equipment. For that is the chief guarantee of the economic independence of our country. For that is the guarantee that our country will not be

 
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    Second rejoinder -- to Kamenev. He said that by adopting at the Fourteenth Party Conference the well-known decisions on economic development, on revitalising the Soviets, on eliminating the survivals of war communism, on precise regulation of the question of renting and leasing land and hiring labour, we had made concessions to the kulaks and not to the peasants, that these are concessions not to the peasantry, but to the capitalist elements. Is that true? I assert that it is not

 
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true; that it is a slander against the Party. I assert that a Marxist cannot approach the question in that way; that only a Liberal can approach the question in that way.
    What are the concessions that we made at the Fourteenth Party Conference? Do those concessions fit into the framework of NEP, or not? Undoubtedly they do. Perhaps we expanded NEP at the April Conference? Let the opposition answer: Did we expand NEP in April, or not? If we expanded it, why did they vote for the decisions of the Fourteenth Conference? And is it not well known that we are all opposed to an expansion of NEP? What is the point, then? The point is that Kamenev has got himself mixed up; for NEP includes permission of trade, capitalism, hired labour; and the decisions of the Fourteenth Conference are an expression of NEP, which was introduced when Lenin was with us. Did Lenin know that in the first stages, NEP would be taken advantage of primarily by the capitalists, the merchants, the kulaks? Of course he knew. But did Lenin say that in introducing NEP we were making concessions to the profiteers and capitalist elements and not to the peasantry? No, he did not and could not say that. On the contrary, he always said that, in permitting trade and capitalism, and in changing our policy in the direction of NEP, we were making concessions to the peasantry for the sake of maintaining and strengthening our bond with it; since under the given conditions, the peasantry could not exist without trade, without some revival of capitalism being permitted; since at the given time we could not establish the bond in any way except through trade; since only in that way could we strengthen the bond and build the foundations of

 
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a socialist economy. That is how Lenin approached the question of concessions. That is how the question of the concessions made in April 1925 should be approached.
    Allow me to read to you Lenin's opinion on this subject. This is how he substantiated the Party's transition to the new policy, to the policy of NEP, in his address on "The Tax in Kind" at the conference of secretaries of Party units of the Moscow Gubernia:

    "I want to dwell on the question how this policy can be reconciled with the point of view of communism, and how it comes about that the communist Soviet state is facilitating the development of free trade. Is this good from the point of view of communism? In order to answer this question we must carefully examine the changes that have taken place in peasant economy. At first the position was that we saw the whole of the peasantry fighting against the rule of the landlords. The landlords were equally opposed by the poor peasants and the kulaks, although, of course, with different intentions: the kulaks fought with the aim of taking the land from the landlords and developing their own farming on it. It was then that it became revealed that the kulaks and the poor peasants had different interests and different aims. In the Ukraine, even today, we see this difference of interests much more clearly than here. The poor peasants could obtain very little direct advantage from the transfer of the land from the landlords because they had neither the materials nor the implements for that. And we saw the poor peasants organising to prevent the kulaks from seizing the land that had been taken from the landlords. The Soviet Government assisted the Poor Peasants' Committees that sprang up in Russia and in the Ukraine. What was the result? The result was that the middle peasants became the predominant element in the countryside. . . . The extremes of kulaks and poor peasants have diminished; the majority of the population has come nearer to the position of the middle peasant. If we want to raise the productivity of our peasant economy we must first of all reckon with the middle peasant. It was in accordance with this circumstance that the Communist Party had to mould its

 
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    Third rejoinder -- to Sokolnikov. He says: "The considerable losses that we have sustained on the economic front since the autumn are due precisely to an over-estimation of our forces, to an over-estimation of our socialist maturity, an over-estimation of our ability, the ability of our state economy, to guide the whole of the national economy already at the present time."
    It turns out, then, that the miscalculations in regard to procurement and foreign trade -- I have in mind the unfavourable balance of trade in 1924-25 -- that those miscalculations were due not to the error of our regulating bodies, but to an over-estimation of the socialist maturity of our economy. And it appears that the blame for this rests upon Bukharin, whose "school" deliberately cultivates exaggerated ideas about the socialist maturity of our economy.
    Of course, in making speeches one "can" play all sorts of tricks, as Sokolnikov often does. But, after all, one should know how far one can go. How can one talk such utter nonsense and downright untruth at a congress?

 
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    Fourth rejoinder -- also to Sokolnikov. He said here that he, as People's Commissar of Finance, don't you see, strives in every way to ensure that our agricultural tax is collected in proportion to income, but he is hindered in this, he is hindered because he is not allowed to protect the poor peasants and to curb the kulaks. That is not true, comrades. It is a slander against the Party. The question of officially revising the agricultural tax on the basis of income -- I say officially, because actually it is an income tax -- this question was raised at the plenum of the Central Committee in October this year, but nobody except Sokolnikov supported the proposal that

 
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it be raised at the congress, because it was not yet ready for presentation at the congress. At that time Sokolnikov did not insist on his proposal. But now it turns out that Sokolnikov is not averse to using this against the Central Committee, not in the interests of the poor peasants, of course, but in the interests of the opposition. Well, since Sokolnikov talks here about the poor peasants, permit me to tell you a fact which exposes the actual stand taken by Sokolnikov, this alleged thorough-going protector of the poor peasants. Not so long ago, Comrade Milyutin, People's Commissar of Finance of the R.S.F.S.R., took a decision to exempt poor peasant farms from taxation in cases where the tax amounts to less than a ruble. From Comrade Milyutin's memorandum to the Central Committee it is evident that the total revenue from taxation of less than a ruble, taxation which irritates the peasantry, amounts to about 300-400 thousand rubles for the whole of the R.S.F.S.R., and that the cost alone of collecting this tax is only a little less than the revenue from it. What did Sokolnikov, this protector of the poor peasants, do? He annulled Comrade Milyutin's decision. The Central Committee received protests about this from fifteen Gubernia Party Committees. Sokolnikov would not give way. The Central Committee had to exercise pressure to compel Sokolnikov to rescind his veto on the absolutely correct decision of the People's Commissar of Finance of the R.S.F.S.R. not to collect taxes of less than a ruble. That is what Sokolnikov calls "protecting" the interests of the poor peasants. And people like that, with such a weight on their conscience, have the -- what's the mildest way of putting it? -- the audacity to speak against the Central Committee. It is strange, comrades, strange.

    The question of NEP. I have in mind Comrade Krupskaya and the speech she delivered on NEP. She says: "In essence, NEP is capitalism permitted

 
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under certain conditions, capitalism that the proletarian state keeps on a chain. . . ." Is that true? Yes, and no. That we are keeping capitalism on a chain, and will keep it so as long as it exists, is a fact, that is true. But to say that NEP is capitalism -- that is nonsense, utter nonsense. NEP is a special policy of the proletarian state aimed at permitting capitalism while the commanding positions are held by the proletarian state, aimed at a struggle between the capitalist and socialist elements, aimed at increasing the role of the socialist elements to the detriment of the capitalist elements, aimed at the victory of the socialist elements over the capitalist elements, aimed at the abolition of classes and the building of the foundations of a socialist economy. Whoever fails to understand this transitional, dual nature of NEP departs from Leninism. If NEP were capitalism, then NEP Russia that Lenin spoke about would be capitalist Russia. But is present-day Russia a capitalist country and not a country that is in transition from capitalism to socialism? Why then, did Lenin not say simply: "Capitalist Russia will be socialist Russia," but preferred a different formula: "NEP Russia will become socialist Russia"? Does the opposition agree with Comrade Krupskaya that NEP is capitalism, or does it not? I think that not a single member of this congress will be found who would agree with Comrade Krupskaya's formula. Comrade Krupskaya (may she forgive me for saying so) talked utter nonsense about NEP. One cannot come out here in defence of Lenin against Bukharin with nonsense like that.

    Connected with this question is Bukharin's mistake. What was his mistake? On what questions did Lenin dispute with Bukharin? Lenin maintained that the category of state capitalism is compatible with the system of the proletarian dictatorship. Bukharin denied this. He was of the opinion, and with him the "Left" Communists, too, including Safarov, were of the opinion that the category of state capitalism is incompatible with the system of the proletarian dictatorship. Lenin was right, of course. Bukharin was wrong. He admitted this mistake of his. Such was Bukharin's mistake. But that was in the past. If now, in 1925, in May, he repeats that he disagrees with Lenin on the question of state capitalism, I suppose it is simply a misunderstanding. Either he ought frankly to withdraw that statement, or it is a misunderstanding; for the line he is now defending on the question of the nature of state industry is Lenin's line. Lenin did not come to Bukharin; on the contrary, Bukharin came to Lenin. And precisely for that reason we back Bukharin. (Applause.)
    The chief mistake of Kamenev and Zinoviev is that they regard the question of state capitalism scholastically, undialectically, divorced from the historical situation. Such an approach to the question is abhorrent to the whole spirit of Leninism. How did Lenin present the question? In 1921, Lenin, knowing that our industry was under-developed and that the peasantry needed goods, knowing that it (industry) could not be raised at one stroke, that the workers, because of certain circumstances, were engaged not so much in industry as in making

 
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cigarette lighters -- in that situation Lenin was of the opinion that the best of all possibilities was to invite foreign capital, to set industry on its feet with its aid, to introduce state capitalism in this way and through it to establish a bond between Soviet power and the countryside. That line was absolutely correct at that time, because we had no other means then of satisfying the peasantry; for our industry was in a bad way, transport was at a standstill, or almost at a standstill, there was a lack, a shortage, of fuel. Did Lenin at that time consider state capitalism permissible and desirable as the predominant form in our economy? Yes, he did. But that was then, in 1921. What about now? Can we now say that we have no industry, that transport is at a standstill, that there is no fuel, etc.? No, we cannot. Can it be denied that our industry and trade are already establishing a bond between industry (our industry) and peasant economy directly, by their own efforts? No, it cannot. Can it be denied that in the sphere of industry "state capitalism" and "socialism" have already exchanged roles, for socialist industry has become predominant and the relative importance of concessions and leases (the former have 50,000 workers and the latter 35,000) is minute? No, it cannot. Already in 1922 Lenin said that nothing had come of concessions and leases in our country.
    What follows from this? From this it follows that since 1921, the situation in our country has undergone a substantial change, that in this period our socialist industry and Soviet and co-operative trade have already succeeded in becoming the predominant force, that we have already learned to establish a bond between town and country by our own efforts, that the most striking

 
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forms of state capitalism -- concessions and leases -- have not developed to any extent during this period, that to speak now, in 1925, of state capitalism as the predominant form in our economy, means distorting the socialist nature of our state industry, means failing to understand the whole difference between the past and the present situation, means approaching the question of state capitalism not dialectically, but scholastically, metaphysically.
    Would you care to hear Sokolnikov? In his speech he said:

    "Our foreign trade is being conducted as a state-capitalist enterprise. . . . Our internal trading companies are also state-capitalist enterprises. And I must say, comrades, that the State Bank is just as much a state-capitalist enterprise. What about our monetary system? Our monetary system is based on the fact that in Soviet economy, under the conditions in which socialism is being built, there has been adopted a monetary system which is permeated with the principles of capitalist economy."

    That is what Sokolnikov says.
    Soon he will go to the length of declaring that the People's Commissariat of Finance is also state capitalism. Up to now I thought, and we all thought, that the State Bank is part of the state apparatus. Up to now I thought, and we all thought, that our People's Commissariat of Foreign Trade, not counting the state-capitalist institutions that encompass it, is part of the state apparatus, that our state apparatus is the apparatus of a proletarian type of state. We all thought so up to now, for the proletarian state is the sole master of these institutions. But now, according to Sokolnikov, it turns out that these institutions, which are part of our state apparatus, are

 
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    The question of the peasantry. I said in my report, and speakers here have asserted, that Zinoviev is deviating in the direction of under-estimating the middle peasants; that only recently he definitely held the viewpoint of neutralising the middle peasants, and is only now, after the struggle in the Party, trying to go over to, to establish himself on, the other viewpoint, the viewpoint of a stable alliance with the middle peasants. Is all that true? Permit me to quote some documents.
    In an article on "Bolshevisation," Zinoviev wrote this year:

    "There are a number of tasks which are absolutely common to all the Parties of the Comintern. Such, for example, are . . . the proper approach to the peasantry. There are three strata among the agri-

 
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    It is characteristic that after reading these lines in Zinoviev's article, Comrade Larin, that advocate of "a second revolution" in the countryside, hastened to associate himself with them. I think that although Comrade Larin spoke in opposition to Kamenev and Zinoviev the other day, and spoke rather well, this does not exclude the fact that there are points on which we disagree with him and that we must here dissociate ourselves from him. Here is the opinion Comrade Larin expressed about this article of Zinoviev's:

 
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of neutralising the middle peasants, in spite of Lenin, who proclaimed that neutralisation was not enough, and that a stable alliance with the middle peasants was necessary.
    The next document. In his book Leninism, Zinoviev, quoting from Lenin the following passage dating from 1918: "With the peasantry to the end of the bourgeois-democratic revolution; with the poor, the proletarian and the semi-proletarian section of the peasantry, forward to the socialist revolution!", draws the following conclusion:

 
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and poor peasants with the middle peasants, we run the risk of distorting Lenin, as Zinoviev distorts him. Can we regard it as an accident that Lenin's third slogan, which is our most urgent slogan today, has disappeared, that Zinoviev has lost it? No, it cannot be regarded as an accident, because he holds the viewpoint of neutralising the middle peasants. The only difference between the first and second document is that in the first he opposed the slogan of a stable alliance with the middle peasants, while in the second he kept silent about this slogan.
    The third document is Zinoviev's article "The Philosophy of the Epoch." I am speaking of the original version of that article, which does not contain the changes and additions that were made later by members of the Central Committee. The characteristic feature of that article is that, like the second document, it is completely silent about the question of the middle peasants and, evading this most urgent question, talks about some kind of indefinite, Narodnik equality, without pointing to the class background of equality. You will find in it the rural poor, the kulaks, the capitalists, attacks on Bukharin, Socialist-Revolutionary equality, and Ustryalov; but you will not find the middle peasants or Lenin's co-operative plan, although the article is entitled "The Philosophy of the Epoch." When Comrade Molotov sent me that article (I was away at the time), I sent back a blunt and sharp criticism. Yes, comrades, I am straight-forward and blunt; that's true, I don't deny it. (Laughter.) I sent back a blunt criticism, because it is intolerable that Zinoviev should for a whole year systematically ignore or distort the most characteristic features of Leninism in regard to the peasant question, our Party's

 
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present-day slogan of alliance with the bulk of the peasantry. Here is the answer that I sent then to Comrade Molotov:

    Permit me now to pass to the history of our internal struggle within the majority of the Central Committee. What did our disaccord start from? It started from the question: "What is to be done with Trotsky?" That

 
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was at the end of 1924. The group of Leningrad comrades at first proposed that Trotsky be expelled from the Party. Here I have in mind the period of the discussion in 1924. The Leningrad Gubernia Party Committee passed a resolution that Trotsky be expelled from the Party. We, i.e., the majority on the Central Committee, did not agree with this (voices : "Quite right!"), we had some struggle with the Leningrad comrades and persuaded them to delete the point about expulsion from their resolution. Shortly after this, when the plenum of the Central Committee met and the Leningrad comrades, together with Kamenev, demanded Trotsky's immediate expulsion from the Political Bureau, we also disagreed with this proposal of the opposition, we obtained a majority on the Central Committee and restricted ourselves to removing Trotsky from the post of People's Commissar of Military and Naval Affairs. We disagreed with Zinoviev and Kamenev because we knew that the policy of amputation was fraught with great dangers for the Party, that the method of amputation, the method of blood-letting -- and they demanded blood -- was dangerous, infectious: today you amputate one limb, tomorrow another, the day after tomorrow a third -- what will we have left in the Party? (Applause.)
    This first clash within the majority on the Central Committee was the expression of the fundamental difference between us on questions of organisational policy in the Party.
    The second question that caused disagreements among us was that connected with Sarkis's speech against Bukharin. That was at the Twenty-First Leningrad

 
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Conference in January 1925. Sarkis at that time accused Bukharin of syndicalism. Here is what he said:

    "We have read in the Moscow Pravda Bukharin's article on worker and village correspondents. The views that Bukharin develops have no supporters in our organisation. But one might say that such views, which in their way are syndicalist, un-Bolshevik, anti-Party, are held even by a number of responsible comrades (I repeat, not in the Leningrad organisation, but in others). Those views treat of the independence and extra-territoriality of various mass public organisations of workers and peasants in relation to the Communist Party" (Stenographic Report of the Twenty-First Leningrad Conference).

    That speech was, firstly, a fundamental mistake on Sarkis's part, for Bukharin was absolutely right on the question of the worker and village correspondent movement; secondly, it was, not without the encouragement of the leaders of the Leningrad organisation, a gross violation of the elementary rules of comradely discussion of a question. Needless to say, this circumstance was bound to worsen relations within the Central Committee. The matter ended with Sarkis's open admission of his mistake in the press.
    This incident showed that open admission of a mistake is the best way of avoiding an open discussion and of eliminating disagreements privately.
    The third question was that of the Leningrad Young Communist League. There are members of Gubernia Party Committees here, and they probably remember that the Political Bureau adopted a decision relating to the Leningrad Gubernia Committee of the Young Communist League, which had tried to convene in Leningrad

 
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almost an all-Russian conference of the Young Communist League without the knowledge and consent of the Central Committee of the youth league. With the decision of the C.C. of the R.C.P.(B.) you are familiar. We could not permit the existence, parallel with the Central Committee of the Young Communist League, of another centre, competing with and opposing the first. We, as Bolsheviks, could not permit the existence of two centres. That is why the Central Committee considered it necessary to take measures to infuse fresh blood into the Central Committee of the youth league, which had tolerated this separatism, and to remove Safarov from the post of leader of the Leningrad Gubernia Committee of the Young Communist League.
    This incident showed that the Leningrad comrades have a tendency to convert their Leningrad organisation into a centre of struggle against the Central Committee.
    The fourth question was the question, raised by Zinoviev, of organising in Leningrad a special magazine to be called Bolshevik, the editorial board of which was to consist of Zinoviev, Safarov, Vardin, Sarkis and Tarkhanov. We did not agree with this and said that such a magazine, running parallel with the Moscow Bolshevik, would inevitably become the organ of a group, a factional organ of the opposition; that such a step was dangerous and would undermine the unity of the Party. In other words, we prohibited the publication of that magazine. Now, attempts are being made to frighten us with the word "prohibition." But that is nonsense, comrades. We are not Liberals. For us, the interests of

 
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the Party stand above formal democracy. Yes, we prohibited the publication of a factional organ, and we shall prohibit things of that kind in future. (Voices : "Quite right! Of course!" Loud applause.)
    This incident showed that the Leningrad leadership wants to segregate itself in a separate group.
    Next, the question of Bukharin. I have in mind the slogan "enrich yourselves." I have in mind the speech Bukharin delivered in April, when he let slip the phrase "enrich yourselves." Two days later the April Conference of our Party opened. It was I who, in the Conference Presidium, in the presence of Sokolnikov, Zinoviev, Kamenev and Kalinin, stated that the slogan "enrich yourselves" was not our slogan. I do not remember Bukharin making any rejoinder to that protest. When Comrade Larin asked for the floor at the conference, to speak against Bukharin, I think, it was Zinoviev who then demanded that no speeches be permitted against Bukharin. However, after that, Comrade Krupskaya sent in an article against Bukharin, demanding that it be published. Bukharin, of course, gave tit for tat, and, in his turn, wrote an article against Comrade Krupskaya. The majority on the Central Committee decided not to publish any discussion articles, not to open a discussion, and to call on Bukharin to state in the press that the slogan "enrich yourselves" was a mistake; Bukharin agreed to that and later did so, on his return from holiday, in an article against Ustryalov. Now, Kamenev and Zinoviev think they can frighten somebody with the "prohibition" bogey, expressing indignation like Liberals at our having prohibited the publication of Comrade Krupskaya's article. You will not frighten anybody with that. Firstly,

 
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we refrained from publishing not only Comrade Krupskaya's article, but also Bukharin's. Secondly, why not prohibit the publication of Comrade Krupskaya's article if the interests of Party unity demand that of us? In what way is Comrade Krupskaya different from every other responsible comrade? Perhaps you think that the interests of individual comrades should be placed above the interests of the Party and its unity? Are not the comrades of the opposition aware that for us, for Bolsheviks, formal democracy is an empty shell, but the real interests of the Party are everything? (Applause.)
    Let the comrades point to a single article in the Party's Central Organ, in Pravda, that directly or indirectly approves of the slogan "enrich yourselves." They cannot do so, because no such articles exist. There was one case, the only one, when Komsomolskaya Pravda published an article by Stetsky, in which he tried to justify the "enrich yourselves" slogan in a mild and barely perceptible way. But what happened? The very next day the Secretariat of the Central Committee called the editorial board of that newspaper to order in a special letter signed by Molotov, Andreyev and Stalin. That was on June 2, 1925. Several days later, the Organising Bureau of the Central Committee, with the full consent of Bukharin, adopted a resolution to the effect that the editor of that newspaper be removed. Here is an excerpt from that letter:

    "Moscow, June 2, 1925. To all the members of the editorial board of Komsomolskaya Pravda.
    "We are of the opinion that certain passages in Stetsky's articles 'A New Stage in the New Economic Policy' evoke doubts. In those articles, in a mild form it is true, countenance is given to

 
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the slogan 'enrich yourselves.' That is not our slogan, it is incorrect, it gives rise to a whole series of doubts and misunderstandings and has no place in a leading article in Komsomolskaya Pravda. Our slogan is socialist accumulation. We are removing the administrative obstacles to an improvement of the welfare of the countryside. That operation will undoubtedly facilitate all accumulation, both private-capitalist and socialist. But the Party has never yet said that it makes private accumulation its slogan." . . .

    Is the opposition aware of all these facts? Of course it is. In that case, why don't they stop baiting Bukharin? How much longer are they going to shout about Bukharin's mistake?
    I know of mistakes made by some comrades, in October 1917, for example, compared with which Bukharin's mistake is not even worth noticing. Those comrades were not only mistaken then, but they had the "audacity," on two occasions, to violate a vital decision of the Central Committee adopted under the direction and in the presence of Lenin. Nevertheless, the Party forgot about those mistakes as soon as those comrades admitted them. But compared with those comrades, Bukharin committed an insignificant error. And he did not violate a single Central Committee decision. How is it to be explained that, in spite of this, the unrestrained baiting of Bukharin still continues? What do they really want of Bukharin?
    That is how the matter stands with Bukharin's mistake.
    Next came the question of Zinoviev's article "The Philosophy of the Epoch" and Kamenev's report at the meeting of the Moscow Plenum in the autumn of this year, at the end of the summer -- a question which also strained our internal Party relations. I spoke about

 
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this in my speech and I shall not repeat myself. The issue then was "The Philosophy of the Epoch," the mistakes in that article, how we rectified those mistakes, Kamenev's mistakes in connection with the Central Statistical Board's balance of output of grain and fodder, how Kamenev credulously accepted the C.S.B.'s figure of 61 per cent as being the proportion of the market grain in the hands of the upper groups of the peasantry, and how, later, under pressure of our comrades, he was obliged to rectify his mistake in a special statement he made in the Council of Labour and Defence, and which was published in the newspapers, to the effect that more than half of the market grain was in the hands of the middle peasants. All this undoubtedly strained our relations.
    Then came questions connected with the October Plenum -- new complications, where the opposition demanded an open discussion, where the question of Zalutsky's so-called "Thermidor" came up, and at the end of all this the Leningrad Conference, which on the very first day opened fire on the Central Committee. I have in mind the speeches delivered by Safarov, Sarkis, Shelavin and others. I have in mind Zinoviev's speech, one of his last speeches at the close of the conference, in which he called upon the conference to wage war against the Moscow comrades and proposed that a delegation be elected consisting of people who were willing to fight the Central Committee. That is how it was. And that is precisely why the Bolshevik workers Komarov and Lobov were not included in the Leningrad delegation (they refused to accept the platform of struggle against the Central Committee). Their places in the delegation were filled by

 
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    Let us now pass to the platform advanced by Zinoviev and Kamenev, Sokolnikov and Lashevich. It is time to say something about the opposition's platform. It is rather an original one. Many speeches of different kinds have been delivered here by the opposition. Kamenev said one thing, he pulled in one direction; Zinoviev said another thing, he pulled in another direction; Lashevich a third, Sokolnikov a fourth. But in spite of the diversity, all were agreed on one thing. On what

 
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were they agreed? What indeed is their platform? Their platform is -- reform of the Secretariat of the Central Committee. The only thing they have in common and that completely unites them is the question of the Secretariat. That is strange and ridiculous, but it is a fact.
    This question has a history. In 1923, after the Twelfth Congress, the people who gathered in the "cave" (laughter) drew up a platform for the abolition of the Political Bureau and for politicising the Secretariat, i.e., for transforming the Secretariat into a political and organisational directing body to consist of Zinoviev, Trotsky and Stalin. What was the idea behind that platform? What did it mean? It meant leading the Party without Kalinin, without Molotov. Nothing came of that platform, not only because it was unprincipled at that time, but also because, without the comrades I have mentioned, it is impossible to lead the Party at the present time. To a question sent to me in writing from the depths of Kislovodsk I answered ln the negative, stating that, if the comrades were to insist, I was willing to clear out without a fuss, without a discussion, open or concealed, and without demanding guarantees for the rights of the minority. (Laughter.)
    That was, so to speak, the first stage.
    And now, it appears, the second stage has been ushered in, opposite to the first. Now they are demanding not the politicisation, but the technicalisation of the Secretariat; not the abolition of the Political Bureau, but full powers for it.
    Well, if the transformation of the Secretariat into a simple technical apparatus is really convenient for

 
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    What is to be done now, you will ask; what must we do to extricate ourselves from the situation that has been created? This question has engaged our minds all the time, during the congress as well as before it. We need unity of the Party ranks -- that is the question now. The opposition is fond of talking about difficulties. But there is one difficulty that is more dangerous than all others, and which the opposition has created for us -- the danger of confusion and disorganisation in the Party. (Applause.) We must above all overcome that difficulty. We had this in mind when, two days before the congress,

 
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we offered the opposition terms of a compromise agreement aimed at a possible reconciliation. Here is the text of our offer:

    "The undersigned members of the Central Committee believe that the preparation for the Party congress by a number of leading comrades of the Leningrad organisation was conducted contrary to the line of the Central Committee of the Party and in opposition to the supporters of this line in Leningrad. The undersigned members of the Central Committee regard the resolution of the Moscow Conference as being absolutely correct both in substance and in form, and believe that it is the Central Committee's duty to rebuff all tendencies that run counter to the Party line and disorganise the Party.
    "However, for the sake of maintaining the unity of the Party, peace within the Party, of averting the possible danger of alienating the Leningrad organisation, one of the best organisations in the R.C.P., from the Party's Central Committee -- the undersigned consider it possible, if the congress endorses the Central Committee's distinct and clear political line, to make a number of concessions. With this in view we make the following proposals:
    "1. In drafting the resolution on the Central Committee's report, to take the resolution of the Moscow Conference as a basis but to tone down some of its formulations.
    "2. The publication in the newspapers, or in bulletins, of the letter of the Leningrad Conference and of the Moscow Committee's reply to that letter to be regarded as inexpedient in the interests of unity.
    "3. Members of tbe Political Bureau . . . are not to speak against each other at the congress.
    "4. In speeches at the congress, to dissociate ourselves from Sarkis (on regulating the composition of the Party) and from Safarov (on state capitalism).
    "5. The mistake in connection with Komarov, Lobov and Moskvin to be rectified by organisational measures.
    "6. The Central Committee's decision to include a Leningrad comrade in the Secretariat of the Central Committee to be put into effect immediately after the congress.

 
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    "7. With the view to strengthening connection with the Central Organ, one Party worker from Leningrad to be included in the editorial board of the Central Organ.
    "8. In view of the incompetence of the editor of Leningradskaya Pravda (Gladnev), to recognise the need to replace him by a more competent comrade by agreement with the Central Committee.

"Kalinin, Stalin, Molotov, Dzerzhinsky, and others.  

"15. XII. 1925"

    In the main, we still adhere to the viewpoint of that document. In our draft resolution, as you know, we have already toned down some of the formulations in the interests of peace in the Party.
    We are against amputation. We are against the policy of amputation. That does not mean that leaders will be permitted with impunity to give themselves airs and ride roughshod over the Party. No, excuse us from that. There will be no obeisances to leaders. (Voices : "Quite right!" Applause.) We stand for unity, we are against amputation. The policy of amputation is abhorrent to us. The Party wants unity, and it will achieve it with Kamenev and Zinoviev, if they are willing, without them if they are unwilling. (Voices : "Quite right!" Applause.)

 
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    What is needed for unity? That the minority should submit to the majority. Without that there is no unity of the Party, nor can there be.
    We are opposed to the publication of a special discussion sheet. Bolshevik has a discussion section. That will be quite enough. We must not allow ourselves to be carried away by discussions. We are a Party that is governing a country -- do not forget that. Do not forget that every disaccord at the top finds an echo in the country that is harmful to us, not to speak of the effect it has abroad.
    The organs of the Central Committee will probably remain in their present shape. The Party is hardly likely to agree to break them up. (Voices : "Quite right!" Applause.) The Political Bureau has full powers as it is, it is superior to all the organs of the Central Committee except the plenum. But the supreme organ is the plenum -- that is sometimes forgotten. Our plenum decides everything, and it calls its leaders to order when they begin to lose their balance. (Voices : "Quite right!" Laughter. Applause.)
    There must be unity among us, and there will be if the Party, if the congress displays firmness of character and does not allow itself to be scared. (Voices : "We won't. We are seasoned people.") If any of us go too far, we shall be called to order -- that is essential, that is necessary. To lead the Party otherwise than collectively is impossible. Now that Ilyich is not with us it is silly to dream of such a thing (applause), it is silly to talk about it.
    Collective work, collective leadership, unity in the Party, unity in the organs of the Central Committee,

 
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with the minority submitting to the majority -- that is what we need now.
    As regards the Leningrad communist workers, I have no doubt that they will always be in the front ranks of our Party. With them we built the Party, with them we reared it, with them we raised the banner of the uprising in October 1917, with them we defeated the bourgeoisie, with them we combated, and will combat, the difficulties in the path of our work of construction. I am sure that the Leningrad communist workers will not lag behind their friends in the other industrial centres in the struggle for iron, Leninist unity in the Party. (Stormy applause. The "Internationale" is sung.)
 

 
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