chapter  IV
24 Pages

The Economic Effects of the War

IT would be foolish to underestimate the very grave damage that has been done to Soviet industrial capacity and her economic war potential by the German invasion. Particular damage has been done by the German occupaiion of the rich Donetz and Don regions, rich both industrially and agriculturally, and by the invasion of the North Caucasus and Volga regions during the summer offensive of 1942. While by the winter of 1941-2 the Germans had succeeded in occupying no more than 5 per cent. of the total territory of the U.S.S.R., this was the most populated and the most economically developed part, containing some 30 per cent. of the total population and 22·5 per cent. of the total urban population and 37 per cent. of the railway network. Before the war this area embraced some 30 per cent. of the grain, some 30 per cent. of the cattle and as much as 90 per cent. of the country's sugar-beet. If we add to the area of German penetration the North Caucasus, Stalingrad and Voronezh districts, which at the time of writing are occupied or threatened, we have 45 per cent. of the wheat production and 41 per cent. of the rye production within the war zone. As far as industry is concerned, the most serious effect of the occupation is on iron-ore supplies and basic iron-and steel-making capacity. With the loss of Krivoi Rog went nearly two-thirds of her iron-ore output; with the loss of the Donetz Basin over half of her coal output. In the Ukraine was nearly 60 per cent. of her 1940 pig-iron capacity and some 46 per cent. of her steel capacity. Two of the principal aluminium plants recently constructed near the

Volkhov and at Zaporoje were within the fighting zone. The engineering industry was rather better situated; and Dr. Baykov has estimated that in the winter of 1941-2 " about 20-25 per cent. of the productive capacity of the engineering industry was lost in occupied territory". But although much of the engineering was in Moscow and Leningrad and continued working, and many of the most recent plants were on the Volga or in the Urals, a substantial amount of heavy engineering, especially machine-tool production, was in places like Kharkhov which the Germans have overrun.! These considerations, added to the fact of the weaker initial economic potential of the U.S.S.R. relatively to Germany,2 make it even clearer than was the case a year ago that the U.S.S.R. lacks sufficient weight behind her fighting line to go on holding the full impact of the German war machine as she has virtually been doing for the past fourteen months. The e~onomic assitance that her allies have sent her, in the way of industrial supplies and also tanks and aeroplanes, have no doubt been a valuable contribution. Yet we must face the fact that in relation to the resources involved in the titanic struggle in Eastern Europe, and to the gaps that invasion have torn in our ally's war potential, this contribution has heen a relatively small one. (Mr. Churchill recently mentioned the figure of 2,000 tanks; and one naturally asks the question: does this amount to as much as one month's German output?) It would he criminal complacency to suppose that a weakening of Hitler is possible without both a powerful military blow against his western frontier, to divert resources and divide his strength, and also an industrial contribution to the common pool of economic

resources of the Allied Nations greatly surpassing anything we have made hitherto.