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of -three times as many tanks; yee this effort, it is argued, is backed by an industry whose output of basic commodities such as steel, coal and power is not much in excess of that of the United Kingdom and which is having to devote a larger effort to the repair of the ravages of war. following paragraphs suggest some of the reasons why this paradox is more apparent than real.

Nature of the Military Effort

The

6. Several factors tend to reduce the apparently much greater economic burden which the current Soviet military effort represents. A simple comparison of military strengths takes no account of such factors as differences in the technical quality of equipment, in the training, standard of pay, rations, allowances and welfare in the forces, and the effort devoted to research and development. Some of these, particularly maintenance and pay of the forces, are markedly lower in the U.S.S.R. than in this country.

7. Moreover, the disparity in absolute numbers in the armed forces virtually disappears when these are expressed as a percentage of the populations of the two countries (roughly 2 per cent. in each case).

The Comparison of Overall Economic and Industrial Capacity

8. Annex A attempts a comparison of the economic strengths of the U.S.S.R. and United Kingdom. It concludes that, as measured by national income, the U.S.S.R. has a preponderance of some 50 per cent. over the United Kingdom, and, as measured by the output of manufacturing industries (calculated from labour distribution and applying a relative efficiency factor), a preponderance of about 25 per cent. over the United Kingdom. So far as this kind of comparison goes, it shows that the argument in paragraph 5, above, considerably underestimates the U.S.S.R.'s economic and industrial power.

The Comparison of Expenditure

9. Annex A further calculates that expenditure in the U.S.S.R. in 1948 on defence purposes other than the pay and allowances of the armed forces, though something over twice as great as in the United Kingdom, was still only about 8 per cent. of the national income as against the 5 per cent. in this country. The percentage devoted to armaments proper would, in each case, be smaller still. The conclusion from these figures is that the burden of defence expenditure in the U.S.S.R. in proportion to total resources is not markedly greater than it is in this country.

The Comparison of Output of Basic Commodities

10. A direct comparison of the output of basic commodities in the U.S.S.R. and the United Kingdom shows that the U.S.S.R.'s present output in absolute terms is, in several instances, about equal to, or little greater than, that of the United Kingdom. The limitations of this form of comparison as a criterion of industrial effort and war potential must, however, be strongly stressed. Two examples, coal and steel, may be taken.

11. Coal. It is true that the calorific value of the United Kingdom's coal output in 1948 was appreciably greater than the U.S.S.R.'s output of hard and brown coal and peat. Nevertheless, there was little difference in the amounts available for home use in the two countries, and because of differences in the consumption pattern the industries of the U.S.S.R. actually received about 24 million tons (or 40 per cent.) more than the industries of the United Kingdom, despite the fact that the Russian railways required three times as much.

12. Steel. The U.S.S.R.'s output of steel is now at an annual rate approach- ing 20 million tons, and is planned to rise to 25 million tons in 1950. This compares with the current output in the United Kingdom of about 15 million tons.

13. The comparison of the availability of steel for home consumption, how- ever, shows that the U.S.S.R.'s position is relatively even more favourable, the United Kingdom's supplies being reduced by nearly 2 million tons on foreign trade balance and the USSR.'s increased by the considerable imports provided by reparations and by dismantling of machinery, machine tools filway track, &c.,

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