New Economic Policy
War Communism
To win the Civil War, the communists put
together an army of 3 million men.
This number of men could only be supplied
by taking extreme measures, because the
country had not yet recovered from the
First World War.
Lenin introduced a policy known as War
Communism. This was a system that
gave the communists direct control of all
trade and industry.
Civil War
• The Civil War meant few factories
were producing civilian goods
• What was available was expensive
• Russia suffered from soaring
inflation
• Money became almost worthless
• Peasants did not want to accept
money for their produce
• Workers in towns had few
possessions to exchange for food,
so they soon began to go hungry.
Requisition Squads
• Communists sent out requisition
squads of soldiers to take all “surplus”
food without paying.
• The ruthless policy provided some
extra food for cities, but left the
peasants angry.
• The peasant cut the amount they
produced so there would be no
“surplus” to take
• There was a terrible famine in 19211922 due to the peasants producing
less and two poor harvests – about 5
million people died.
Problems in the Cities
• Workers were forced to work longer
hours, under strict new laws which
included the death penalty for strikes.
• Rations were too small, or not available
at all.
• Some peasants brought food to sell, but the price of this
black-market food was too high for most workers.
• People caught trading for profit were shot.
• Cities began to empty as workers returned to the countryside
to find food.
• Petrograd lost 70% of its inhabitants, and Moscow lost 50%.
Growing opposition to War
Communism
• By early 1921 discontent with War Communism
was at its height.
• The Red Army stopped a number of rebellions in
the countryside, costing them ¼ million men in
one year.
• If the communists were to survive they needed a
policy to replace War Communism.
• This new policy needed to strengthen the
economy and end the rising discontent in the
cities and the countryside.
The New Economic Policy
In 1921 Lenin introduced his
New Economic Policy (NEP).
This reduced the government’s control over
the economy.
Some people were allowed to work for
themselves and make a profit, instead of
working directly for the state.
The new policy aimed to boost the economy
and remove the opposition of the workers
and peasants to communist rule by easing
their problems.
Results of NEP
• End of Requisition squads
• Small tax on food peasants
produced
• Peasants began to plan to produce
more, and sell the surplus for profit.
• Small-scale private businesses were allowed to
get industry and trade moving
• This led to a new class of small business men &
traders called Nepman.
• Opposition to the communists ended.
Benefits of NEP
• Year by year food
production increased
• Industry began to recover.
• Value of money began to stabilise
• Variety of goods on sale increased.
• Majority of peasants lost interest in rebellion once
the requisition squads stopped.
• Fewer strikes in the cities.
• NEP reduced discontent amongst workers and
peasants.
Criticism of the NEP
• The new policy only restored industry and agriculture to
pre-war production levels
80
Grain (Million
tonnes)
70
60
Coal (million
tonnes)
50
40
Steel (million
tonnes)
30
20
10
0
1913 1921 1923 1925 1926
Average wage
(per month in
roubles)
• Many communists resented the NEP because they
thought it represented the return to capitalism.
Success
& Failure
• NEP lasted to 1928 and generally Russia
became wealthier.
– An Anglo-Soviet trade agreement in 1921
increased trade with the West.
• Peasants found prices of manufactured goods high
– After 1925 were unwilling to sell their grain for money as they
could not buy much with it.
• Some peasants became quite rich buying land and
animals,
– BUT many remained poor and continued using backward
methods of farming.
• Industrial workers were better off
– BUT levels of unemployment remained high, particularly among
young people – high crime rate
Many people angry about the profiteering of
the Nepmen and the growth of a class of rich
businessmen:
• after 1925 steps were taken to curb their
profits
and luxurious lifestyle
• Up to 1915 progress under NEP had been
from very low levels of production and
involved repairing and restoring old machinery,
factories and transport.
• But by 1926 the economy had reached pre-1914 levels and
massive new investment was needed.
• By the end of the 1920s food supplies were a problem again.