I N 1921-2 reconstruction had suffered from the verysmall volume of agricultural produce available forpurchase on the market. The legacy of the war period in the shape of shrunken cultivation, both in area and intensiveness, aggravated by the failure of crops in the Volga region, fettered industry in its efforts toward recovery by starving it of the supplies of food and materials which it required. For the moment agriculture could not be wooed by the offer of more favourable terms of exchange by industry, ho\~ever much the trusts might lower prices and unload their stocks; and the result was the crisis of circulating capital in the first half of 1922. But by the turn of 1923 the wooing had won some favour. The more favourable terms of trade had begun to evoke response in extended cultivation, and Nature, relenting, had yielded an improved harvest. So much, indeed, had the recovery of agriculture proceeded in the 12 months that its restoration by then had greatly exceeded that of industry. Industrial recovery had been retarded by the crisis of the spring of 1922; and even though the end of 1922 witnessed a progress that in the illusory form of percentages appeared phenomenal and 1923 continuedsteadily the upward trend, this recovery, depending on more complex factors, was appreciably slower than that of agriculture. Moreover, the trusts had ceased their hectic liquidation of stocks, and were even accumulating stocks again, so that the flow of goods on to the market was actually slower than the rate of output from the factory. Further, by the formation of syndicates industry had achieved some success in limiting competition between the trusts, and in improving the terms of exchange between itself and its customers. The result was that the rate of interchange

between the products of the town and the village) which in the spring of 1922 had heavily favoured the latter, now changed in industry's favour, until in September 1923 it attained the surprising ratio of over 3 : 1.1 It was this which constituted the great problem, the" scissors " crisis of 1923-

The recovery of industry had proceeded from a level of about a quarter of pre-war production at the beginning of 1922 to about a third at the beginning of 1923. According to official estimates, gross industrial production, which had stood at about 18 per cent of the pre-war level in 1920-1 (October 1st-September 30th), was raised to 27 per cent in the following year and to 35 per cent in 1922-3. In the fuel industry, which had shown a large advance in the previous year, the progress made in 1923 was proportionately small, coal and oil production advancing some 10 to 14 per cent over 1921-2. The metal industry showed the large percentage improvement of 70 per cent, but still remained at a level of some 10 to 12 per cent of pre-war. The finishing industries, however, profiting from the earlier progress in the fuel and transport situation, showed a more substantial growth than the average, chemicals and rubber attaining nearly half their pre-war level, linen some three-quarters, other textiles between 30 and 35 per cent and the paper industry over 40 per cent. 2 On the other hand, the area sown with grain in 1923 had recovered to about 80 per cent of the area of 1916 (for U.S.S.R. as a whole) and the gross yield

of grain to over 70 per cent of 1916.1 The quantity of agricultural produce placed upon the market, since it represented a surplus over peasant home-consumption, had not recovered as greatly as the total yield. In pre-war days this marketable surplus, according to the estimate of Professor Prokopovitch, had amounted to about 32 per cent of the gross agricultural yield. In 1923 it scarcely reached a quarter of the total yield; and in quantity it amounted to nearly 60 per cent of the prewar figure. 2 Compared with the pre-war proportions, therefore, agricultural produce on the market was some 70 per cent more plentiful than were industrial goods. Strumilin. on a rough estimate of effort-cost, concluded that each unit of industrial produce represented an 80 per cent greater cost than a unit of agricultural produce, when compared with pre-war. 3

Some increase, accordingly, of industrial prices over agricultural was to be expected from the fact that industry in its recovery lagged behind agriculture. It is possible that this fact warranted as much as a 2 ; 1 change in the terms of trade between town and village-that is, a rise in industrial values until each unit of manufactures was worth twice as many units of agricultural produce as pre-war. But a 2 : I change was almost certainly the maximum change that could be attributed to this cause; while probably this factor was responsible for no more than a considerably smaller rise. The much greater widening of the " scissors " which took place in the summer of 192 3 cannot, therefore, be attributed to the disproportion between industrial and agricultural development. This disproportion, while it constituted an important cause, was probably not the main cause; and the principal explanation of the "scissors "- at any rate for the full extent of their widening-must be sought elsewhere.