of the village, as well as with the home-workers and tradesmen. In respect 
lo trade, and then also in respect to finance, a certain dependence of the 
State industry on private trade capital and financial capital arises during 
the years 1921/24, which then leads to a part-redivision of the values 
expropriated during 1918/20, among the holders of the power and the 
enterprising elements. 
The nationalised industry, united into so-called ‘‘trusts” by accidental 
characteristics, increases its productivity up to 259% of pre-war time, im- 
proves slightly its inner organisation, in part re-establishes discipline in the 
process of production, and absorbs within itself many of the old technical 
forces and administrative elements at the beginning of this period. The 
first period of the new economic policy has therefore created the illusionary 
impression, as if the communistic power had turned to purely capitalistic 
principles, as if it had turned in the direction of reconstructing the free 
sconomic systems, only hampered by the belated opposition of the expiring 
radical elements of the communist party. During this period of a still 
andisturbed development of the new economic policy, the State industry 
and the transport system of the State, were working at a great loss; firstly 
because, the capacity of production — coupled with enormous working 
expenses and charges —, after all, did not reach more than a 1/4 of the 
capacity of production of pre-war time; and further, the working capital 
having become diminished by plundering and squandering, the industry 
was compelled to have recourse to dotations from the State exchequer, or 
to pay enormous interest for moneys supplied by semi-governmental com- 
panies as loans on reciprocal security. Secondly, the industrial concerns, 
‘acking appropriate economic leadership, and being quite dependent on 
departments of the State perfectly incapable and ignorant in the domain 
of industrial activity, became a booty of the covetous endeavours of the 
so-called “Red Directors” and of their surroundings. And finally, in the 
most liberal period of the new economic policy, the Government was 
aevertheless compelled — for mere political reasons — to raise the wages 
to the amount of pre-war time (nominally), and in addition to this, to 
write off large amounts of the funds of industrial concerns for social 
guarantees. 
The second period of the new economic policy begins, in trade and 
industry, in 1924. Its characteristic feature is the increasing pressure of 
the State power on the small enterprises in the industry, in trade and in 
the home-work, as well as the attempt to subordinate the country to the 
own by diverse means. 
At the outset the chief instrument for realising this policy, was the 
system of taxation, which, in perfectly arbritary forms, was directed at 
extorting means from rural and small urban economic undertakings. The 
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