Iron Curtain (44 page)

Officially, the communist press trumpeted the “battle for trade” as a resounding success, and official Polish historiography continued to do so until the 1980s. But the economist
Anders Åslund notes that this success was short-lived: “It is difficult to join in the exultation, since the ‘battle for trade’ dealt a savage blow to trade as a whole.” Between 1947 and 1949, the number of private trading and distribution firms fell by half, and the state sector was not able to replace them. Thanks to the death of wholesaling, the remaining private shops and businesses, especially in small towns, had no legal access to goods of any kind.
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The imposition of these new rules was unpredictable. “From one day to another, specified economic activities lost their legal basis of existence,” recalled one economist.
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But the result was perfectly predictable: the rapid development of more black markets (now clandestine), the chaotic distribution of goods—and chronic shortages of everything. A former auditor of a rural cooperative—a fancy name for what was, in practice, a state-managed wholesaler—remembers that it was difficult to know whether the shortages in her sector were the result of theft or incompetence. As a part
of her job, she was required to inspect the account books of her company’s regional branches, and they were full of mistakes: “I didn’t always know the reason for the missing money … all the shopgirls were uneducated, they couldn’t add or measure.” By 1950, the cooperative had expelled whatever remained of the prewar “blue-blooded” management and replaced them with reliable members of the working class, in one case a hairdresser. Not surprisingly, the situation failed to improve.
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Overnight the rule of law disappeared, since the only way for many to stay in business was to break the law. Small businessmen ceased to be respectable and instead became
prywaciarze
: privateers, semi-outlaw figures. The daughter of a talented engineer who ran a very small manufacturing business in that period remembers being embarrassed to tell her friends what her father did for a living.
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Some entrepreneurs bent rules that limited the number of employees by employing family members, or bent rules limiting the size of a business by appointing family members as “owners.” Private businessmen also learned to avoid big investments—they attracted too much attention from the tax authorities—and to focus on business plans that could be started and halted very quickly, as the legal situation changed. Long-term planning was impossible.

Over time, businessmen also learned how to work together. Many renamed themselves “craftsmen,” a designation that allowed them to maintain tiny businesses and workshops without the stigma of being “capitalists.” They also created guilds, state institutions that sometimes acted in the interests of their members. The guilds tried to organize access to raw materials for private shops at official, state-controlled prices. They also altered registration rules so that car mechanics, plumbers, and others could become “craftsmen.” A former guild boss—technically a state employee—recalls “bending the rules” on more than one occasion, in the expectation that sooner or later the whole system would be improved: “I thought people would change, as they studied more, learned more, that the system would become more intelligent.” Alas it did not.
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In Hungary, the nationalization of retail proceeded more slowly, not least because in 1945 and 1946 the communist party didn’t initially have a large enough parliamentary majority to control every aspect of economic policy and wasn’t able to impose harsh regulations and taxes. The party conducted a “war on trade” anyway, not through regulation but through propaganda organs and police. In the summer of 1945, the communist party’s invective
against small businessmen, small traders, and informal street markets grew ever fiercer, until it was nearly as harsh as its attacks on fascists. In July, the Budapest police chief declared he intended to “liberate the workers of Budapest from the hyenas of the black market.” By September, some 600 policemen, accompanied by 600 Soviet soldiers and 300 detectives, had detained 1,500 “black marketeers,” mostly in the course of two raids on large Budapest street markets.

The antibusiness propaganda campaign quickly spread beyond the street markets. Later in July,
Szabad Nép
printed a series of photographs showing workers laying tram rails while people sat in cafés nearby, sipping coffee—in other words, enjoying themselves while the working class worked. Police raids on cafés, bars, and restaurants in Budapest followed soon afterward. The police even shut down the Café New York, a beloved prewar institution; confiscated the food found in its storerooms; and ostentatiously distributed it to returning prisoners of war.
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Through bribery and connections some restaurants stayed open. But that led to another campaign and another series of raids a year later. In June 1946,
Szabad Nép
reported that ten “luxury” restaurants had been shut because “by serving the most expensive banned meat products to satisfy the needs of the few, they endangered social peace and public calm.” That might well have been true: the communist campaign was intended to be popular, and among some people it probably was. In a period of shortages, inflation, and real hunger, resentment of those who could eat well must have been running very high.
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Other articles tried to make private restaurants seem not just immoral but laughable. Some mocked the “bourgeois” practice of tipping, and one made fun of the tailcoat, the traditional garb of the Budapest waiter:

The secret police followed up, investigating private business for all manner of fraud and impropriety. A baker in an elegant district was detained by
the police after they discovered that “not a single gram of salt is added” to his bread, although he had received 400 kilos of salt as a part of that month’s ration.
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He was suspected of selling the salt on the black market. Another target was the owner of the Baghdad Café, whose aesthetics were deemed immoral. “The entrance of the restaurant leads the visitor into a wardrobe with mirrors on the wall, beside a painting depicting ladies dressed in evening dress in erotic positions with their thighs uncovered,” the police report complained. Worse, “two Negroes are members of staff.” This last observation reflected not merely racism but also a deep suspicion of an establishment able to retain such exotic foreign employees.
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Hoping to stay in business, restaurateurs tried various strategies to stay afloat. One café owner transformed herself into a street vendor; others joined the communist party, with the hope that this would absolve them of political suspicion. Eventually, many café owners volunteered to be “nationalized,” the better to ensure their own future as “managers” of their former businesses. One such petition, filed by Mrs. Lászlóné
Göttler in 1949, reads like a for-sale advertisement:

Some of them succeeded. Klára Rothschild, proprietress since 1934 of the Clara Salon in Váci Utca, Budapest’s most exclusive shopping street, managed to stay in charge of her shop following its nationalization, not least because she was so popular among party leaders’ wives. Rothschild followed Paris fashions and adapted them to Budapest tastes. Because of her high status, she was even allowed to travel to Paris in order to keep au courant with French styles.
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Over time, nearly all private restaurants in Budapest became “people’s” cafeterias or state-owned “proletarian” pubs. The names changed too: instead of the New York Café they adopted short, Hungarian-sounding names—Adam’s Buffet or Quick Café—or else simply a number. Waiters
and tips disappeared. Queues replaced good service. In a city tht had fueled itself on espresso and cream cakes for decades, these were truly revolutionary changes.

Land reform came first because land reform was thought to be popular. Retail came later because the communists knew its elimination would be unpopular. But industry—especially heavy industry—was the main prize. Industry had always interested communists far more than “backward” sectors like farming and “irrelevant” sectors like retail. In the Marxist view of the world, manufacturing was the future. Steel plants, mills, and machine-tool factories would modernize the country, eliminating old-fashioned ways of thinking. The goal of industrialization was ultimately political: once everybody was an industrial worker, then everybody would support the communist party—or so the theory went. In the meantime, the destruction of the property-owning class would deprive the opposition of powerful allies.

The most profound changes had to wait until the period of Soviet reparations and generalized theft came to an end. Thanks to the poor election results, the USSR agreed to slow down its collection of reparations in Hungary in 1946, and in 1948 reparations demands were decreased by 50 percent.
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German reparations on a large scale also came to an end in 1948, largely thanks to the pleas of Walter Ulbricht and others who knew what damage they had done to the communist party’s reputation.
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In Poland and Czechoslovakia there had never been any official acknowledgment of reparations, and so there was no official acknowledgment of their end. Still, by 1947–48 the most visible forms of Soviet and Red Army theft had stopped.

But the damage had been done. In the postwar period, everything had been up for grabs and nobody’s property had been sacrosanct. In that atmosphere, the first wave of large-scale nationalizations won some public acceptance. Many people were no longer shocked by the sight of mass confiscations. Others thought that only state ownership could bring order to the economic chaos. In October 1945, for example, the Polish provisional government abruptly nationalized all the land within the boundaries of the city of Warsaw, homes and factories included.
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Such a decree would have been considered outrageous before 1939 and is unthinkable now. But in 1945, the
nationalization of urban land, mostly covered in rubble, seemed only logical to many Poles.
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The provisional government’s January 1946 decree, nationalizing all factories across the country with fifty or more workers, didn’t encounter much resistance either. Many of these factories had no owners anyway, and the previous managers had died or fled. When these businesses became the property of the state, the situation was actually more stable: at least the ownership was clear.
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In Germany, the newly unified communist party initially portrayed the nationalization of major industry not as an
economic policy but as a piece of antifascist politics. Just like the Junkers, the German industrialists were accused of complicity with Nazism: if they’d owned anything of consequence before the
war then they deserved to lose it. As a precaution, the communist party decreed that nationalization of industry should be the policy of the “antifascist bloc,” and none of the legal political parties were permitted to oppose it. Initially, the Eastern German Christian Democratic Party leader,
Jakob Kaiser, balked. Though he approved in principle (later he became a proponent of nationalization in West Germany), he feared that if the Soviet zone implemented nationalization on its own, then the policy would split Germany into two different economies—as it eventually did. Under pressure from the
Soviet Military Administration, Kaiser did finally agree, however. As a final piece of propaganda, the communists decided to hold a referendum on nationalization in 1946. Anxious not to botch their referendum, like the Poles had, they limited the vote to the state of
Saxony, and they restricted the ballot to one question: Did voters want to place “the factories of war criminals and Nazi criminals into the hands of the people”? It passed.
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At the same time, Hungarian nationalization took place in stages. First the coal mines, then the largest industrial conglomerates, and eventually the banks. In March 1948, the government nationalized all remaining factories with more than 100 workers, putting 90 percent of heavy industry and 75 percent of light industry in state hands. By 1948 there was very little major private industry anywhere in the country.
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This “success” had a political price, in Hungary as everywhere else. In practice, nationalization had very little effect on the daily lives of ordinary workers: they were paid the same wages, did the same work, had the same grievances. What difference did it make if their foremen worked for a capitalist
or for the Ministry of Industry? Buoyed by consciousness of the rightness of his cause—he was an employee of “the people” after all—a state manager might even be more arrogant than a private owner. Instead of making the communist party more popular, nationalization often made workers more wary and even led in some places to strikes. The historian
Padraic Kenney described what happened next in the textile city of Łódź: