Professional Documents
Culture Documents
Did it Work?
• It brought some form of economic sense back to Russia’s economy.
• It eased peasant discontent – by Lenin’s death in 1924 the economy was vastly improving.
• Trade operated on an economic and commercial accounting basis.
• Industry was divided into ‘trusts’, which controlled various ‘enterprises’.
• In the first stages of NEP, restrictions were placed on a firm’s freedom to buy and sell but by
1922, these limits were dropped and profit-making became the main aim of those in industry.
• No industry was obligated to supply the state and, as Lenin had commented, the Communists
had to learn how to trade.
• Loyal Bolsheviks were angry at a new class of ‘get rich quick’ businessmen who took advantage
of this new ‘capitalist’ approach.
• They were unhappy at how these new men flaunted their new wealth.
• ‘NEPmen’ as they were called flaunted their wealth in bars, nightclubs and newly opened
casinos.
• Some people declared that NEP actually stood for ‘New Exploitation of the Proletariat’.
• Lenin never pretended that the NEP was anything other than a surrender of his principles for the
sake of political survival.
• He described it as a tactical economic retreat.
But why was it needed?
• However, an expanding economy needed a decent transport system.
• The civil war had decimated Russia’s rail system.
• 1921: 50% of Russia’s trains were off the tracks due to a lack of repairs and skilled men needed
to repair them.
• 1923: a huge effort was needed to build up the rail system and the rail system carried 45% more
passengers and 59% more goods than two years earlier.
• 1927: the number of people/goods carried by trains passed the 1913 figure.
• If advances were made in the rail system, roads remained massively backward with transport
being almost wholly based on horse and cart.
Currency Issues
• The NEP also needed a stable currency and this was difficult to achieve after such huge economic
dislocation in such a short space of time.
• The rouble of 1922 had an inflationary value of 60,000 over the 1913 figure – and the 1922
budget was based on the pre-war rouble.
• The rouble was discredited and associated with the old regime.
• Therefore, a new currency was needed, and a decision to do this took place in July 1922.
• It was to be called the chervonets.
• By 1923, the paper rouble became worthless.
• The new economy was backed by gold so the demand for the chervonets was high and it
became the sole currency in February 1924.
• The task of moving Russia to a new currency was handed over to the State Bank.
• Such was the move to this new currency, that the state had a financial budget surplus at the end
of 1925.
• This was a major achievement – but as with anything in Russia, it did disguise problems.
• Many financial transactions in rural areas were still done in a form of bartering as the economic
modernisation being witnessed in the cities had yet to fully transfer itself to the countryside.
• This imbalance was to lead to a major economic problem – the so-called ‘Scissors Crisis’.