Iron Curtain (43 page)

Land reform had a greater chance of being popular in Hungary, where the rural economy was still very nearly feudal. About 0.1 percent of all landowners still controlled some 30 percent of all Hungarian agricultural land in 1939, many of them living in ancient castles on vast latifundia. At the same time most peasant farms were tiny and most peasant farmers very poor. Populist land reformers had been thick on the ground in interwar Hungary, although they usually opposed Soviet-style collectivization and called for the creation of private cooperatives to replace the vast aristocratic estates.
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After the war, most Hungarian politicians had reached an uneasy consensus about the necessity of land reform, but they had come to no agreement about scale or timing. Both issues were resolved for them by the Soviet
occupiers, who forced the provisional government to carry out land reform immediately, in the spring of 1945, on the grounds that the redistribution of property would encourage any Hungarian peasants still fighting against the Red Army to drop their arms and come home. Soviet authorities also made a fast decision about the scale of the reform, which was very wide-ranging and very harsh. The decree on land reform in March 1945 expropriated all estates—land, livestock, and machinery—larger than 570 hectares, along with all estates belonging to “
Germans, traitors and collaborationists.” Church property was not exempted.
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All of this property was redistributed to some 750,000 landless Hungarian peasants and farmworkers. A ten-year moratorium was then placed on all land sales in order to prevent peasants, or anyone else, from re-creating large estates. In 1948, the reform was extended further: wealthier farmers lost the right even to lease land from other farmers. Instead, any unused agricultural land now had to be leased to farm workers and collective farms at very low rents.
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Many peasants thanked the communists for their new land. But many were made uneasy by the receipt of “someone else’s property,” particularly as the clergy were often preaching against it. Rural Hungarians still had bad memories of Béla Kun’s 1919 communist revolution and like the Poles they knew something of what had happened in Ukraine. András Hegedüs, the dynamic young Madisz leader, was sent out to the countryside to agitate in favor of the reform and encountered a wide range of reactions, from gratitude to hostility. In some villages, he was told that nobody wanted any land, in which case “we were sure that there was a reactionary priest in that village.” At times, he had to use force. In one county, where he was constantly and mistakenly introduced as “the comrade who came by airplane to
Debrecen” (he had not, in fact, been on Mátyás Rákosi’s plane from Moscow), one of the local administrators, a member of the nobility, told Hegedüs he would not cooperate. “I had to report to the Soviet commander,” Hegedüs remembered, “who came back with me and told the man he would stand him up against the wall and shoot him if he didn’t fulfill the request in twenty-four hours.” Sometimes he was threatened, once with hanging. Even at the time, he knew that the “party leadership overestimated the political impact of land distribution on peasants.”
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In much of the country, land reform increased support not for the communist party but for the Smallholders’ Party, whose rural ethos appealed
far more to the new class of small landowners. Empowered by land reform, they gravitated to their “own” party and to the church, not to the more “urban” communists, even though the latter had pushed the reforms.
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Though collectivization was not mentioned in 1945 and 1946, both the Hungarian and the German communist parties did return to the idea in 1948 and 1956, respectively, as did other Eastern Europeans, though never the Poles. The Hungarians began with a program of voluntary collectivization, which took advantage of a wave of rural bankruptcies. Between 1950 and 1953, they pursued kulaks with a vengeance, demanding very high land taxes and insurance premiums while forcing them to accept low prices for their produce. The word “kulak,” borrowed from Russian, means “wealthy peasant,” and it sounds awkward and artificial in Hungarian. But like “Trotskyite” or “fascist,” it rapidly became a political term that could also be used to mean “anyone the communist party doesn’t like.” The Germans also imposed “voluntary” collectivization after 1956, thereby ensuring that thousands of East German peasants fled to the West. By then, many other economic refugees had done the same.
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Ulrich Fest was only ten years old when the war ended. His father was missing in action.
Wittenberg, the town where his family had run a grocery store for several generations, now lay in the Soviet zone of occupation. As Fest remembered:

Faced by this catastrophe, his mother and grandfather had no doubt about what to do: they reopened the shop and went back into business. They were not alone.

Between the wars, Eastern Europe had not been as wealthy and as industrialized
as the western half of the continent.
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Businesses were small-scale, trade was limited, and infrastructure was poor. Many states in the region, most notably Nazi Germany, had practiced forms of corporatism that gave the state a large role in the affairs of business, especially big business. Nevertheless, at the most basic level, Poland, Hungary, Czechoslovakia, and the other nations of Eastern Europe had been recognizably capitalist societies. Small workshops, small factories, and retail shops had all been in private hands. Some wholesale distribution had been done through cooperatives, as in Western Europe and the United States, but these were usually private cooperatives, organized by merchants for their own benefit. All had established systems of commercial, corporate, and contract law; functioning stock markets; and property rights.

After the war, small businessmen like the Fests were initially allowed to continue operating. This was not because the new authorities liked or admired small businesses. Lenin himself, correctly spotting the importance of small-scale enterprises to a healthy free market economy, once wrote that “unfortunately, small-scale production is still widespread in the world, and small-scale production engenders capitalism and the bourgeoisie.”
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Although they didn’t necessarily say so in public, most communist leaders shared Lenin’s loathing for small business. At a Central Committee meeting in October 1946, for example, German communist leaders discussed not
whether
private shops should be brought under state control but
when
. One of those present argued against acting fast: an overly rapid dismantling of the sector would lead to chaos, which would drive people into the arms of the reactionaries. Another argued for greater speed, on the grounds that dangerous liberal economic ideas were taking hold among small businessmen: “We must prove to retail that a planned economy is a higher form of people’s economy.”
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All present were clearly hostile to private business, though anxious that they should not appear to be. The public might react badly to an overnight
nationalization of all trade. More to the point, all present knew that private trade was still necessary because there wasn’t anything else. In the ruins of the Eastern European cities, there was no way to stop starving people from trading, and indeed there was no alternative means of distributing food. In the most devastated parts of the region, it would have been difficult even to organize rationing. The Italian writer
Primo Levi, upon being liberated from
Auschwitz, immediately trudged to the nearest city:

But as the occupying authorities across the region began to impose rationing, tax laws, and regulation, that sort of market acquired a sordid reputation and became known as a black market. The people working in it were no longer traders but rather black marketeers. In order to rid squares and plazas of (in their eyes) messy and uncontrolled capitalism, communist authorities set out to nationalize the retail and wholesale industries right away in just about every country in the region. In eastern Germany, for example, the Soviet authorities resurrected a prewar cooperative, Konsum, setting it up to behave exactly like a state company. Instead of serving its members as it had before the Nazis shut it down, Konsum received privileged access to wholesale goods and could choose to whom to sell them.
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Though their businesses were technically legal in 1945 and 1946, Eastern Europe’s small-scale capitalists understood right from the start that they were operating in a hostile environment. In Fest’s retelling of his family’s story, his grandfather’s decision to reopen his shop during that period acquires the attributes of a heroic struggle. Immediately after the war, the Fests had to fight just to get allotments of flour and sugar from the state offices (Handel und Versorgung), which had quickly taken over the distribution of basic goods, all of which were eventually allotted through ration cards. “We didn’t get nearly enough merchandise to match the amount people wanted to buy,” Fest remembered. So he and his family would collect customers’ ration cards and take them over to Konsum, where they used them to purchase the goods that they hadn’t been able to procure themselves. They made no profit from this activity, which they saw as a favor to customers. They hoped it would build loyalty and help keep the shop open.
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Down the street from the Fest establishment,
Ulrich Schneider’s family business, a textile and clothing shop, underwent a similar transformation. The Schneiders’ shop had also been in the family for several generations and
was also the focus of enormous hopes and fears. In the final days of the war, his father had hidden their inventory—coats, dresses, rolls of fabrics—in friends’ houses and barns. What remained in the store was plundered by the Russians in May 1945. The Red Army then adopted the family house as a provisional headquarters, using the shop windows to lay out their dead in coffins. Schneider and his parents moved into an apartment above the shop. In August his father—who had not been in the Nazi party and somehow avoided Soviet arrest and deportation—received a permit from the occupation regime to resume trade.

Like the Fests, the Schneiders boarded up their shop windows with wood, leaving only a few small openings so that some of their wares—whatever had been rescued from the local attics and basements—could be displayed and sold off. They dragged a few sewing machines out of hiding and began doing alterations and making rag dolls. “There wasn’t anything else to do,” remembered Schneider.

After a few weeks, Schneider’s father began making regular trips to the
Erzgebirge, the mountains on the German–Czech border, the traditional home of the textile industry. Though the region was hundreds of kilometers away, he went by horse-drawn cart: “It was very trying, because there were checkpoints everywhere and he was held up wherever there were Russians.” He had no other options because there was no other source of goods. But what he brought back he could certainly sell.
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Hope that things would improve kept the Fests, the Schneiders, and other small entrepreneurs open throughout the years of 1945 and 1946. By 1947, however, it became clear that things were not going to get better. The
Leipzig Fair, reopened that year for the first time since the war, proved a major disappointment and was for textile merchants like the Schneiders a turning point. Although the fair, a central feature of German commercial life since the Middle Ages, was hailed with much fuss and propaganda, no textiles or fabrics were actually for sale. In the past, “you met other companies there or caught up on things—what there was, what was new,” Schneider explained. But now the fair had become a propaganda event, not a place to exchange real business information.

The year 1947 was a turning point in Poland too. Following the parliamentary elections in January, the “victorious” communists launched a series of reforms designed to increase the number of industrial workers, who
presumably might support them in the future, and to cut down on private industry and retail, which did not support them at all. This was the infamous “battle for trade,” launched by the economics minister,
Hilary Minc. Personally appointed by Stalin, Minc was a prewar communist who had acquired a real gift for Marxist economic jargon. “The struggle for the conquest of the market does not mean the elimination of market-capitalist elements,” he told the Central Committee plenum in April; “it means only a struggle for control over these elements by the People’s Democratic State.”
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There would be a “free market,” in other words, but it would be kept under firm government control—which meant it would not be free, of course.

In practice, Minc tried to kill off private enterprise without ever quite saying so. The “battle for trade” took the form of rigid price regulation and high taxation, accompanied by criminal penalties for the failure to fill out proper forms, as well as a massive licensing and permit system. All entrepreneurs had to have business licenses that required them to prove they were “professionally qualified,” whatever that meant in the postwar chaos. Limits were placed on the number of people one entrepreneur could employ and on what quantities of goods could be taken in and out of the country and even in and out of Warsaw. As in Germany, the Poles also effectively nationalized the wholesale industry. Private businesses were prevented from buying and selling specific commodities, including food, at wholesale prices.