" 'Newest-- E. P."

RUSSIA

" 'Newest' E. P."

Last week's despatches told a simple story and, like many such, its signifi- cance was great. The story was that Bolshevik Russia had reformed its internal trade policy, permitted private capitalists to operate, begun what was known as the " 'Newest' Economic Policy."

In 1921, Lenin the Late promulgated his N. E. P. (New Economic Policy) - inviting foreign capital to exploit Russian concessions sharing profits with the Government -which virtually marked the receding of the waves of Communism from the shores of Capitalism. It was a fearless step to save Russia from economic ruin. It showed that Moscow Communists, whatever else they were, were not afraid to admit their errors and rectify them; but the Party held many diehards, notably ex-War Lord Trotzky. The N. E. P. was kept in force until 1923. Private traders began to gain confidence. The Government flirted with foreign Powers. The Russian Bear began to raise itself on its bony haunches.

At the end of 1923, the Communist intransigents triumphed, began a drive against the capitalists. The N. E. P. went largely by the board. The drive was chiefly a political movement, readily understandable, since the rise of Capitalism, even in an attenuated form, must eventually spell the fall of Communism. The capitalists had been restoring Russia to economic ability, themselves to power. It was this latter factor that caused the Moscow oligarchy to attack.

Following this reaction, the year 1924 in Russia was economically and politically rotten. The country went from bad to worse. Cooperative trading between town and village broke down; industrial unrest assumed alarming proportions at Leningrad and Moscow; the peasants stuck more closely than ever to their hoarded grain; the capitalists, such few as there were, were hounded into inactivity. On top of this, came heavy frost in the autumn before the first snowfall, with incalculable damage to the sown grain. Abroad, Communism saw an intractable U. S., a change of Government in Britain, that could hardly be looked upon as favorable to Russia. It secured recognition in Italy, France, some other countries,*but no appreciable benefits. Early this year (TIME, Feb. 2), recognition by Japan was more easily obtained, sincethere were no momentous fiscal questions involved ; and Russia went farther in that case to secure tangible advantages to herself than she has during the past seven years.

But where recognized, where unrecognized, Russia secured few real ad- vantages, and Communism was seemingly drifting to Never Never Land. The Russian Bear sank down exhausted on its empty belly. Starvation was once more a reality. Discontent was growing more difficult to control. Elaborate propaganda failed to screen the actualities of a situation that was not far from desperate.

Last week, came acknowledgment of blunder, speedy reforms, promises of more, assurances that the change of the Government's policy was "meant seriously and for a long period." Under the Newest Economic Policy, private capitalists will enjoy the same privilege as Government monopolies, trusts and cooperatives. Bolshevik banks will extend credit, taxes will be lowered, private property restored. Practically all administrative and economic pressure on internal trade was removed.

One step leads to another. Seemingly, it cannot be long before a New Foreign Policy will open the way to the restablishment of Russia in the comity of nations, with resultant prosperity lor the world. The embarrassing question : Can Communism compromise with Capitalism and yet be Communism ?

*These are the countries which have recognized the Bolshevik Government given in order of recognition: Esthonia, Lithuania, Latvia, Finland, Persia, Afghanistan, Turkey, Poland, Germany, Great Britain, Italy, Norway, Austria, Greece, Sweden, China, Denmark, Mexico, Hungary, France, Japan.