UDK 338.246(497.

1)"1945/1952"(093)

Rakonjac Aleksandar, PhD

Research Associate
Institute for Recent History of Serbia

Post-War Transformations of Yugoslav Economy

(1945–1952)

In Search of a Model: The Command-Planned Economic

Organisation in Yugoslavia (1945–1951)

The adoption of Soviet economic solutions

In the spring of 1945, the weights which had maintained a balance
until that point disappeared from the scales of global politics and econo-
my. Having defeated the Third Reich, the USSR dispensed with all the po-
litical and economic buffers which had been installed at the beginning of
the 1920s between its western borders and central Europe.1 The newly
formed sphere of exclusive Soviet influence included Yugoslavia as well,
whose leadership had before the end of the Second World War already
decided to sign a treaty of cooperation with the USSR, which resulted in
general political and economic obligations of the two countries.2 Josip Broz
Tito’s visit to Moscow at the beginning of April 1945 was the beginning
of a first major foreign-policy breakthrough of the newly established Yu-
goslav federation. Coming back to the Soviet Union after almost a decade
of absence must have evoked mixed emotions in the Yugoslav marshal.
The fear brought on by memories of executions which Stalin carried out
against Yugoslav and other communists during his stay in Moscow in the
thirties was certainly intermingled with a triumphant feeling of excellence
which the leader of the second successful, and authentic communist rev-

1 Ivan T. Berend, Ekonomska istorija Evrope u XX veku, Ekonomski modeli od laissez-

faire do globalizacije, (Beograd: Arhipelag, 2009), 174−176; I. T. Berend, Centralna
i Istočna Evropa 1944−1993, Iz periferije zaobilaznim putem nazad u periferiju,
(Podgorica: CID, 2001), 25−29.
2 Arhiv Jugoslavije (AJ), Ministarstvo lake industrije Vlade FNRJ (MLIVFNRJ), 10−1−1,
Privredna saradnja podunavsko-balkanskih zemalja , 31. novembar 1945. godine.

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olution carried about him. The capital with which Tito and the Yugoslav
delegation landed in Moscow was large even in the eyes of the Soviet lead-
ers. The Soviet side had no intention of diminishing their guests’ impor-
tance by any move on their part, and appreciation of the Yugoslav contri-
bution to the joint victory was evident during all the official talks. On 11th
April the two sides concluded a treaty of cooperation of the highest order
whereby they, in addition to close cooperation for the sake of general pro-
gress, committed themselves to assisting one another in case of external
aggression against any one of the signatory countries.3 The words of Josip
Broz Tito during the signing of the Agreement on Friendship, Mutual As-
sistance and Post-War Cooperation point to the far-reaching aims of the
two states. The pact made between Belgrade and Moscow was only one
part of a broader process of erecting a bulwark against Germany’s poten-
tial future advance eastwards. The Soviet Union was carefully building a
collective security system with the countries which had around the end
of World War II found themselves in its sphere of interest and influence,
and Yugoslavia was a key ally in the southeast of Europe.4
Ideological closeness to USSR in the first post-war days was the
most important determinant of the overall policy pursued by the Yugo-
slav communists. With ideological fervour they pointed out that Yugosla-
via was the first country after USSR which had fulfilled all the conditions
for transition to planned economy.5 Modelling on Soviet experiences due
to a lack of their own was a constant issue in discussions within the Com-
munist Party of Yugoslavia. However, despite the inclination to introduce
into the economy as many Soviet solutions as possible, there was aware-
ness that the specific features of the USSR’s historical development and
its current circumstances were diametrically different, and the question
of planning was consequently approached by analysing the real possibili-
ties available to Yugoslavia. The starting point was the observation of the
general preconditions of development, which gradually led to defining the

3 AJ, KMJ (Kabinet maršala Jugoslavije), 836/I–1/3, Ugovor o prijateljstvu, uzajamnoj

pomoći i posleratnoj saradnji između Jugoslavije i USSR, april 1945. godine.
4 AJ, 836/I–1/3, Reč maršala Tita prilikom potpisivanja Ugovora o prijateljstvu,
uzajamnoj pomoći i posleratnoj saradnji između Jugoslavije i USSR-a, 11. april 1945.
godine.
5 Istorijski arhiv Beograda (IAB), Legat Blagoja Neškovića i Branislave Perović
(LBNBP), 2157−11, Uporedni pregled našeg Petogodišnjeg plana sa sovjetskim
pjatiljetkama i čehoslovačkim dvogodišnjim privrednim planom (1947−1948), 17.
jun 1947. godine.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

main guidelines.6 Those preconditions of economic planning were, from

the viewpoint of Yugoslav communists, created through radical changes
of the social and economic structure after they assumed power. The first
condition for transition to planning was created when the Communist
Party of Yugoslavia came to power, securing command positions in the
economy, which created an opportunity to steer economy development
in the direction meeting the needs of the entire country and society. As a
result, the state economic plan became a basic element of economic man-
agement. The second basic condition for planning was created through
a change in the country’s social and economic structure. The majority of
the essential economy sectors became state-owned, the most important
being heavy industry, ferrous and non-ferrous metallurgy, mining, for-
ests, transportation, large-scale banking and wholesale trade. The state
sector of the economy became the foundation of the country’s econom-
ic development, thus ensuring the basic elements of planning and plan-
ning management.7
To the Yugoslav communists planned economy implied a com-
plete plan of connected and harmonised all economic activities. In gen-
eral, it was an economic system which included the design, development
and implementation of a consistent plan of production, as well as a plan of
development of the economy in its totality. Planned economy was aimed
at ensuring completely planned labour and development, the exclusion of
“spontaneity” and all liberal-capitalist influences inherent in unpredictable
market mechanisms. Such economy, in the communists’ view, acknowl-
edged a general interconnection and interdependence of phenomena in
society, and did not solve problems “one at a time”, but resolved them in
a holistic manner, directing all the activities towards implementing “indi-
vidual measures and requirements as they logically follow from one an-
other”. As a result, the plan realisation “necessarily had to progress as de-
termined in advance, without chaos, without unpredictability and, most
importantly, without crises.” In other words, in the communists’ view, a
planned economy was exactly the means designed to liquidate the “cat-
astrophic” crises that capitalism had inevitably produced. The socialist

6 AJ, Komisija za privredu Centralnog Komiteta Saveza komunista Jugoslavije

(KPCKSKJ), 507/XI−1/21, Mogućnost i zadaci planiranja u privredi Jugoslavije, 1946.
godina.
7 О петогодишњем плану (чланци и предавања), Београд 1947, 28; Dušan Bilandžić,
Kratak pregled razvitka društveno-ekonomskih odnosa u SFRJ 1945−1965, (Beograd:
Centar za ideološko-političko obrazovanje Radničkog univerziteta “Đuro Salaj”,
1965), 3−9.

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state, through the application of planning mechanisms, was in a position

to establish total control of all the economic opportunities and had “in its
hands” the full power to develop that production in a planned and bal-
anced manner by designing an integral plan of all the production segments.8
The inherited contrasts and different experiences of historical de-
velopment of individual parts of the country were a heavy burden for the
First Yugoslav State. The Kingdom of Serbs, Croats and Slovenes/Yugosla-
via was, due to frequent political crises, unable to complete the integration
and form a single economic space. It was those reasons that guided the
new communist powerholders in their endeavour to overcome the “neg-
ative” historical legacy.9 Thus, the formation of a single economic space
had from the start been a priority of the state economic policy, while the
ideas of the economic leaders were directed towards the elimination of
different, and the implementation of uniform legal norms with the aim of
preventing the creation of regional autarchies. The final aim of this eco-
nomic policy was the formation of a single Yugoslav market, which would
be governed by uniform regulations and economic standards. To achieve
that, it was essential to do away with the disparities from the previous
period through the development of uniform economic institutions, which
would, through their activities, implement all the necessary measures of
mutual integration.10
The ideological attachment to USSR and the prestige that the vic-
torious Soviet economic system enjoyed immediately after the war on a
global scale, had a strong influence on the choice of the type of economic
system. The beginning of development of institutions of command-planned
economy in Yugoslavia was at a time when, in the last months of World
War II, the recovered Yugoslav state took huge efforts to bring the war to
a successful close. After the liberation of Serbia and Belgrade, the Com-
munist Party of Yugoslavia set out to organise all the segments of pow-
er, focusing in particular on the setting up of economic institutions. The
Soviet models were for the Yugoslav communists the main guideline as
to the direction of state and society development.11 The Communist Par-
ty of Yugoslavia Central Committee politburo, in their projections of the

8 AJ, Ministarstvo elektroprivrede Vlade FNRJ (MEVFNRJ), 11−5−19, Planska privreda

i planiranje u industriji.
9 IAB, Legat Vlajka Begovića (LVB), 2821–7, Istorijski uslovi razvitka socijalizma u
Jugoslaviji.
10 AJ, Savezna planska komisija (SPK), 41–5–5, Studija o privrednoj obnovi zemlje,
1945. godina.
11 AJ, 507/XI−1/21, Mogućnosti i zadaci planiranja u privredi Jugoslavije, 1946. godina.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

country’s development, prioritised the phase of reconstruction, which was

viewed as a basic precondition of transition to administrative-centralist
management of the economy and society.12 Even though one of the pri-
ority questions for the Party in the last months of the war was to devise
the plan and method of country reconstruction, around the end of Janu-
ary 1945 the first draft of the Federal Planning Commission was already
prepared on the model of the USSR Gosplan, thus practically announcing
the economic model which was to be implemented in Yugoslavia.13
The proposal of the first draft of the Central Planning Commission,
submitted by Bojan Kugler, the secretary of the Economic Reconstruction
Commission, to the chair of the Economic Council, included the basic or-
ganisational structure and the bill intended to legalise that institution.14
A lack of the professional staff required for the establishment of the Fed-
eral Planning Commission was supposed to be resolved over time. “Pro-
fessionalism, capability, and commitment to work” were the qualities not
open to questioning, because according to the competences this highest
economic authority was to have in the future strictly centralised system, a
slightest mistake would be reflected to the very “bottom”. The predictions
of the future sequence of moves put the founding of the Federal Planning
Commission at the end of August 1945, as it was required to draw up the
economic plan for the following 1946.15 In addition to the Federal Plan-
ning Commission, subordinated to this central economic authority there
were supposed to be republic planning commissions and county planning
commissions within people’s committees. The republic planning commis-
sions were to be organised for the most part on the model of the Federal
Planning Commission. The draft provided for the existence, within peo-
ple’s county committees, of special planning commissions made up of sev-
eral members or officers, depending on the district’s economic structure.
In people’s district committees the commissions were not planned, but
the plan was the responsibility of one committee member, who was sup-
posed to be accompanied by a commission composed of experts or pub-
lic servants, who would, in addition to their role in the “planning”, carry

12 Branko Petranović i Savo Dautović, Jugoslavija, velike sile i balkanske zemlje 1945–
1948, Iskustvo “narodne demokratije” kao partijske države, (Beograd: Istorijski
institut Crne Gore, 1994), 29–37.
13 Александар Ракоњац, „Почеци привредног планирања у Југославији 1946.
године – идеје, организација и институционализација“, Токови историје,
2/2016, 155−156.
14 AJ, 41–1–1, Predlog nacrta Planske komisije, 23. januar 1945. godine.
15 Ibidem, 2.

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out other duties as well. These bodies would make up a monolithic hier-
archical structure, in both the vertical, and the horizontal sense. Parallel
to this, all the bodies by economic sectors and all the way down to facto-
ries, were to have their own planning divisions.16
The duties of economic recovery imposed by the ravages of war
postponed the establishment of these institutions.17 As a result, the begin-
ning of a thorough implementation of the command-planned economic
model was also postponed for a more favourable time. However, despite
the real difficulties, planning remained the most viable prospect of eco-
nomic development. In the meantime, the Commission for the Country’s
Economic Recovery, besides having to carry out a methodological prepa-
ration for transition to planning, also turned into a particular “planning
school”, as a place for gaining the first experiences. In its work, the Com-
mission analysed the country’s economic and financial potential, and drew
up individual recovery plans, and in doing so gained the necessary expe-
rience required for general planning.18 In the period from March 1945
to June 1946, the Commission for the Country’s Economic Recovery did
not perform the tasks entrusted to them by the Communist Party of Yu-
goslavia leadership, having failed to execute the required methodologi-
cal preparations for transition to general planning.19 Tito’s dissatisfaction
with regard to economic policy and insistence on making a major turna-
round in that direction, indubitably show that the process of transition to
planning in economy did not go in the desired direction.20
This issue was discussed in more detail in the Politburo meetings
during April 1946. This led to the criticism of the leading man of the Yugo-
slav economy, Andrija Hebrang, relating to the economic results. The cri-
sis of relations at the top of the Communist Party of Yugoslavia resulted
from Hebrang’s letter to Edvard Kardelj, in which Hebrang, among other
things, expressed suspicions of Tito’s confidence in his economy manage-
ment method. The guilt in management was reflected not in the ultimate
aim, i.e. the total adoption of the command-planned economy model fol-
lowing in the USSR footsteps, but in the absence of a consistent policy in
the transitional period. In his speech, Milovan Đilas pointed out that there

16 Ibid.
17 A. Rakonjac, „Obnova jugoslovenske industrije 1944-1947.: ideje, planovi, praksa“,
Istorija 20. veka, 2/2018, 87−90.
18 AJ, 41–1–1, Izveštaj o pregledu Savezne planske komisije.
19 Ibid, 2.
20 Zapisnici sa sednica Politbiroa Centralnog komiteta KPJ: 11. jun 1945-7. jul 1948,
priređivač Branko Petranović, (Beograd: Službeni list, 1995), 140.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

were two lines in the Central Committee relating to economic policy, re-
sulting from the fact that economic issues had not been sufficiently dis-
cussed in Politburo sessions, as the ministers A. Hebrang and Sreten Žu-
jović had not succeeded in drawing up the study in time. In A. Hebrang’s
defence, S. Žujović justified the omissions up to that point by quoting a
host of unresolved economic issues and denied the allegations on the ex-
istence of the two lines. The conclusion of the majority, which was finally
accepted by the ministers of industry and finance, was that the previous
period was characterised by “wandering” as a result of use of different
methods21 and that in the future a uniform economic policy should be ap-
plied. The outcome of this conflict relating to the concept of development
was Hebrang’s exclusion from the Communist Party of Yugoslavia Central
Committee Politburo in May 1946, after which the positions of the chair
of the Economic Council and the minister of industry were taken by Bo-
ris Kidrič, while the initiator of the procedure against him, Edvard Kar-
delj, concluded that the whole economy should shift to the “NEP” policy.22
The passage of the Constitution of 31 January 1946 established
the legal foundations of command-planned economy, and the chairs of the
Federal Planning Commission and the Federal Control Commission, ac-

21 In his address in the meeting of the party’s top leaders E. Kardelj said that in the period
after the liberation, concluding with the Central Committee Politburo meeting of 19
April 1946, several mutually divergent methods from the Soviet practice of the time
could be identified, such as “war communism”, “state capitalism”, and “administrative
centralism”. In addition to these methods, Kardelj also mentions the application of
methods typical of capitalist economies (Ibid, 148–149).
22 Ibid, 148–161; Југославија–СССР, Сусрети и разговори на највишем нивоу
руководилаца Југославије и СССР 1946–1964, приређивачи Л. А. Величанскаја и
други, (Београд: Архив Југославије, 2014), I/645; A. Hebrang and S. Žujović shared
the opinion that transition to total planning should not be rushed, and that it was
essential to rebuild the country and stabilise the system. Hebrang, with Žujović’s
support, opposed the Party’s general line with regard to the repressive measures
taken when buying up wheat crops. They thought this would disrupt the “class
union” of workers and peasants, in view of the fact that the Yugoslav revolution
was for the most part carried out by the peasants as the largest social class in the
Yugoslav population. On the other hand, with respect to industry, Žujović advocated
the application of full profitability in the operation of enterprises, as this would
stimulate the enterprises to produce more and in turn lead to a faster restoration of
the pre-war production level. Generally speaking, Hebrang and Žujović, as old Party
members from the time before the Stalinist purges, had a less “dogmatic” attitude
with regard to economy compared to the younger party leaders, who entered the
Party when Stalin was already firmly holding the levers of power in the international
labour movement. Their activity both relating to economy and other political issues
principally demonstrates loyalty to Lenin’s last ideas (Б. Кидрич, О изградњи
социјалистичке економике ФНРЈ, (Београд: Борба, 1948), 29–34).

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cording to article 83 of the Constitution became Government members,

which clearly indicated their role in the future system.23 Centralised ac-
cumulation and guided planning, the basic formulae of the administrative
economy management system, acquired through the Constitution unlimit-
ed competences in economic matters.24 The newly established system was
made following the USSR experiences, adopting for the most part the So-
viet constitutional and political-legal solutions. The institutions legalised
by the Constitution originated in the people’s liberation war and revolu-
tion, but the basic concepts and many institutions were adopted from the
Soviet practice. These basic concepts manifested themselves primarily in
the role of the state in society, as the state and its authorities were under-
stood as the leading force of the entire society. The Stalin Constitution of
1936 had de iure one essential difference compared to the Yugoslav Con-
stitution, primarily that the Stalin Constitution legally equated the All-Un-
ion Communist Party (VKP(b)) with the state, which was not the case in
Yugoslavia. Even though CPY (the Communist Party of Yugoslavia) was
not mentioned in the Yugoslav Constitution, in practice CPY followed in
the footsteps of the VKP(b), which led to a mirroring of the centralist par-
ty structure, which was further reflected in the centralist organisation of
the entire state. Imitating the Soviet models ultimately resulted in the bu-
reaucratisation and nationalisation of the entire economy and society.25
During the drafting of the Law on the Federal Planning Commis-
sion, which started immediately after the passage of the Constitution,
there was a need to review the previous experiences of planning in the
USSR. With that in mind, the Soviet economic expert Ivan Evenko, who
was working in Yugoslavia in an instructor’s capacity, drew up an over-
view of the twenty-five-years’ development of the planning bodies in the
USSR. Evenko’s brief presentation was to serve as a model for formulating
the composition of the Federal Planning Commission. Along with Evenko,
B. Kugler also took an active part in drafting the project of the Law.26 The
organisation scheme drawn up by them was an improvement of B. Kugler’s
previous idea. In the new system, the Federal Planning Commission appa-
ratus would be “horizontally” organised into a number of separate depart-

23 „Ustav Federativne Narodne Republike Jugoslavije“, Službeni list FNRJ, 10 /46.

24 Boris Kidrič, Socijalizam i ekonomija, priređivač Viljem Merhar, (Zagreb: Globus,
1979), 3−16.
25 Branko Petranović, Istorija Jugoslavije 1918–1988, I–III, (Beograd: Nolit, 1988),
III/67–68.
26 AJ, 41–1–1, Referat Ivana Evenka o organizaciji Planske komisije, 19. februar 1946.
godine.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

ments, which would form the “basic cells”, below which, along the hier-
archical “vertical”, there would be divisions and groups of officers. In the
beginning, the scope of planning in all areas of economy was to be small-
er, while the plan data or “indicators” for individual areas would only be
general. A department of the Federal Planning Commission was to be ac-
countable to the relevant ministry, but due to a shortage of the required
management staff in the initial phase of work, a maximum concentration
of management in the structure was stipulated, reflected in the forma-
tion of general departments covering related branches of economy. De-
partments of greater importance to people’s economy had to be separat-
ed.27 The establishment of departments and divisions within the republic
Planning Commissions was to be executed in accordance with the specif-
ic economic features of individual republics, for the collected data used
to draw up plans for each republic to be properly analysed and on subse-
quent elaboration adjusted to the needs of development of each individ-
ual republic. On the other hand, the Federal Planning Commission would
be tasked with managing the work of the republic planning commissions,
issuing plan preparation directives, and giving methodological instruc-
tions on the plan preparation forms and methods. The republic planning
commissions would have the responsibility to manage the county plan-
ning commissions, and the county commissions in turn the district ones.
The whole planning body system had to be based on a unity of organisa-
tion and planning methodology. 28
The work on drafting the Law on the General State Economic Plan
and State Planning Authorities was intensified after the aforesaid session
of the Communist Party of Yugoslavia Central Committee Politburo, dur-
ing April and May 1946. These efforts resulted in the passing of the Law
of 25 May 1946, which entered into force in the first days of June. The Law
laid the groundwork for the development of the economic system in the
following years. This defined the first precondition of the “new direction”,
which was followed by an elaboration of the planning authority system.29
The Law provided that there were, within the general state economic plan,
two plan types – the long-term plan, which defined the course of devel-
opment over a longer period of time, and the one-year or current plan,

27 Ibid.
28 AJ, 836/III–1–b/1, Predlog Zakona o osnivanju Savezne planske komisije FNRJ sa
organizacionom strukturom i spiskom radnih mesta u SPK, 1945. godina; AJ, 41–1–1,
Referat Ivana Evenka o organizaciji Planske komisije, 19. februar 1946. godine.
29 AJ, Privredni savet Vlade FNRJ (PSVFNRJ), 40–37–85, Zakon o opštedržavnom
privrednom planu i državnim organima za planiranje (1946. godina).

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which was made at shorter intervals. The general state economic plan in-
cluded the essential economic plans for all branches of state administra-
tion, enterprises and institutions which were under direct management
of federal authorities, and this legal solution also included in its main el-
ements the economic plans of the republics, counties, districts, as well as
towns and cities. The long-term and current general state economic plans
had the force of laws, which meant that all the entities from the state au-
thorities to state-owned enterprises and cooperatives, were obligated to
ensure the fulfilment of the plan terms. Private enterprises had to carry
out economic measures stipulated by the state and were also subject to
stricter control measures.30
When it came into force, the law led to the legalisation, after al-
most two years of efforts, of the highest state planning body, the Federal
Planning Commission. It was in charge of the preparation and drafting of
all the generally applicable state plans in the country.31 The competence
of the Federal Planning Commission included, in addition to the drafting
and submission of the prospective and current economic plans to the Fed-
eral Government, the review of drafts of the republic economic plans and
their harmonisation with the general state economic plan. The aim of this
coordinating role of the Commission was to ensure a proportionate devel-
opment of branches of economy, but it was generally intended to ensure a
balanced regional development. The whole planning service in the coun-
try was under its supervision, and the production programmes and plan
drafts submitted by lower-level services, enterprises and state authori-
ties were considered by the Commission. Its authority included checking
the implementation of all the economic plans, and in case of an imbalance
in the execution of a stipulated plan, it proposed measures to the compe-
tent authorities with the aim of its proper execution. With a view to pre-
venting errors, a statistical service was established at the Federal Plan-
ning Commission, tasked with collecting and processing the data required
for both the general records, and for the drafting and checking of plans.
With the growth of the state economic sector, the complexity of manag-
ing such a system increased, so that the need for a scientific approach to
researching economic activities became increasingly important. With that
in mind, and with a view to improving technical knowledge and resolv-

30 AJ, 41–136–259, Zakon o opštedržavnom privrednom planu i državnim organima

za planiranje, Opšte odredbe, 1946. godina; Dušan Čalić, Metodologija planiranja
proizvodnje, (Beograd: Borba, 1948), 5−7.
31 Ibid.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

ing the economic issues in general, the establishment of the Economic In-
stitute was planned within the Commission. The last of the competences,
without which the work of the Commission would be unthinkable, was the
preparation of the professional staff for planning and statistics activities.32
The centralisation of economic management resulted in the trans-
formation of the Federal Planning Commission into a collection centre
for all the economy-related administrative activities. The ministries of
economy and committees of the FPRY Government were obligated to for-
ward all the data and draft plans for the economic branches they man-
aged, through their planning bodies. Moreover, this procedural scheme
was binding on all the state administration bodies, lower planning com-
missions, state and private enterprises and cooperatives. All the institu-
tions and enterprises covered by the general state economic plan would
be obliged to have their own planning bodies. The Federal Planning Com-
mission had under its control the planning commissions of the people’s
republics, while below them in the hierarchy stood the planning com-
missions of the autonomous provinces, counties, districts and towns and
cities. The lowest planning commissions, at the town/city and district
levels, were obliged to forward the draft plans and reports to the high-
er instance, i.e. the county planning commission, which in turn had the
same obligation in relation to the republic planning commission. The de-
cisions of the Federal Planning Commission of general importance to the
state were forwarded in the opposite direction, this time from the highest
to the lowest instances, and its directives had the power of laws. In case
the economic measures and enactments of the Federal Government and
the governments of the people’s republics were in conflict with the pro-
visions of the general state plan, the Federal Planning Commission and
the republic planning commissions could suspend them for a while un-
til the measures were brought into line with the plan. The “field” work of
the Commission delegates was one of the methods aimed at getting a re-
alistic picture of all the aspects of planning at lower levels. It was there-
fore desirable to delegate members of the Commission who specialised
in particular subjects for temporary work in certain enterprises, institu-
tions or lower planning commissions, where there was need for profes-
sional help. Uniformity of forms and methods of planning of all the plan-

32 Ibid.

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ning commissions and bodies was imposed as an imperative with a view

to more successful plan implementation.33
The first two post-war years were labelled by the top CPY offi-
cials as the “transitional phase”, which was planned to carry out radical
changes in the country’s social and economic structure. Immediately af-
ter the Law on the General State Economic Plan and State Planning Bodies
was announced, followed the first explanations relating to further steps
to be taken with respect to the development of the command-planned
economic system. On that occasion the facts in the economic area were
summed up and it was concluded that the economic and social systems
had within themselves numerous “contradictory elements”. These con-
tradictions were reflected in the existence of the state sector on one, and
the private sector (private industrial enterprises, private trade, individu-
al craft shops and around two million small village holdings) on the other
side. In this situation, encompassing the whole economy by one general
plan was hardly feasible. As a result, attempts were made to initially re-
duce the scope of the plan to only the most important branches of econ-
omy which could, by their development, lead to a development of econo-
my and society in general. This task was taken on immediately upon the
Law coming into force, while the work on the organisation of planning in-
stitutions was carried on during June 1946.34
The Federal Planning Commission got its first organisation form
at the beginning of July. The then adopted organisation scheme was not
definitive, and it was emphasised that the organisation forms would “of
necessity” be altered with the expansion of the planning base and econo-
my development.35 According to the temporary rules on internal organi-
sation, the office of the Federal Planning Commission consisted of 22 de-
partments, four independent divisions, the Secretariat, the State Statistical
Office, the State Revision Office, the Standardisation Commission, the Eco-
nomic Institute and the Patent Office.36 In organising the structure of the
Federal Planning Commission, the twenty-five years of experience of the
Soviet Gosplan and its organisation scheme were the only example Yugo-

33 Ibid.
34 AJ, 41–557–861, Obrazloženje Zakona o opštedržavnom planu i državnim organima
za planiranje, 1946. godina.
35 AJ, 41–557–862, Bojan Kugler’s presentation from the Federal Planning Commission
conference, judging by the content most probably from June-July 1946).
36 AJ, 41–1–1, Organizaciona šema ureda Savezne planske komisije, 1946. godina.

368
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

slavia could follow. The specific nature of the country’s economic struc-
ture prevented the Yugoslav planners from thoroughly “copying” the Gos-
plan organisation system, so that the organisation of the Federal Planning
Commission eventually underwent changes in line with the circumstanc-
es and requirements of the Yugoslav economy. The pivot of the Federal
Planning Commission consisted of the departments of general planning,
material balances, labour and human resources, and the finance depart-
ment. This quartet was the backbone of the Commission and the success
of overall planning depended on its proper functioning.37
The work of the Federal Planning Commission office was man-
aged by the chair, who was assisted in their work by deputy chairs. The
deputy chairs, following the instructions of the chair of the Commission,
managed groups of departments, as well as the work of the State Statis-
tics Office and the Federal Standardisation Commission.38 The Federal
Standardisation Commission was one more innovation within the Fed-
eral Planning Commission, and work on its organisation and scope of ac-
tivities was stipulated by the Government Decree of September 1946.39
The Commission and its bodies were entrusted with tackling the prob-
lems of standardisation in all the branches of economy, technology and
labour, developing new production and technological methods, acceler-
ating the circulation of technical assets and increasing the cost-effective-
ness of enterprises.40 The Federal Administration for the Promotion of
Production was intended, in this sense, to provide it with significant pro-
fessional support.41
The republic planning commissions were organised far more
modestly than the Federal Planning Commission. They had a simpler or-
ganisational structure, the reason for which lied in their narrower scope
of operations. The organisation of all the republic planning commissions
was of a uniform type, and their organisation scheme design had to offer
a model which would fit the specific features of each republic’s economic

37 AJ, 41–1–1, Privremeni pravilnik o unutrašnjoj organizaciji i poslovanju Ureda

Savezne planske komisije, 1946. godina.
38 Ibid.
39 AJ, 41–1–1, Ekonomska politika i standardizacija, 26. novembar 1947. godine.
40 AJ, 41–1–1, Uredba o standardizaciji, 26. septembar 1946. godine.
41 AJ, 41–1–1, Organizacija i podela zadataka na unapređenju proizvodnje.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

structure.42 The pivot of the organisation of each republic’s planning com-

mission, as well as of the Federal Planning Commission, was made up of
the departments of general planning, material balances, labour and human
resources, and the finance department. It was essential to pay special at-
tention to these departments of primary importance, as their strengthen-
ing was the precondition of overall planning success. The related branches
of economy which had their separate departments in the central planning
commission were integrated in the republic planning commissions into
a single department, so that the planning commissions initially had few-
er departments. However, as a result of a shortage of staff in the depart-
ments of individual republic commissions, primarily the commissions of
Bosnia Herzegovina, Montenegro and Macedonia, their work was taken
over by the planning departments of the competent ministries, while the
duty of the planning commissions was to coordinate and integrate their
plans into a single plan.43
The planning departments of the federal and republic minis-
tries were formed in 1946 according to the economic priorities. The
first group of ministries which obtained their planning departments and
professional divisions within them, which were during 1946 somewhat
more fully organised than the rest, were the ministries of industry (both
heavy and light), mining, electric power industry and agriculture. The
first four of the ministries mentioned above had the same organisation
structure, which consisted of six departments, being the departments of
the production plan, the capital construction plan, the financial plan, the
human resources plan, the records and transportation plan. The minis-
try of agriculture differed only in that the production plan department
was branched out into several branches which covered a broader agri-
cultural area.44 The planning sectors of the other ministries started to
be set up and developed during the autumn. The work on their organ-
isation was not completed during 1946, so that the realisation of this
goal was left for the first half of 1947.45

42 Arhiv Srbije (AS), Planska komisija Narodne Republike Srbije (PKNRS), 29−1,
Organizacija planske komisije Srbije, 2. jul 1946. godine.
43 AJ, 41–557–862, Referat Bojana Kuglera sa konferencije Savezne planske komisije.
44 AJ, 41–1–1, Predlog organizacije planskih sektora ministarstava.
45 AJ, 41–2–2, Zapisnik sa konferencije Savezne planske komisije održane 1., 2. i 3.
oktobra 1946. godine, Izveštaji predstavnika saveznih ministarstava i komiteta.

370
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

Figure 1: The hierarchical structure of the planning commissions and planning

departments within economic authorities

At the lowest level of the planning organisation there were the

county and district/town/city planning commissions within the people’s
county, district, and town/city committees. The organisation of a dis-
trict planning commission was identical to the organisational pattern of
the district and town/city planning commissions, the only difference be-
ing that the county planning commission covered a larger area within its
scope of activity. With authority to oversee all the plan segments at the
level of counties and districts of a particular county, the county planning
commission integrated the plans and coordinated the work of the district
and town/city planning commissions. Given that several districts of dif-
ferent sizes and economic development made up one county, this had the
most influence on the number of staff working with the county planning

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

commissions.46 On the ground floor of the planning system was the final
link in the planning bodies’ chain, i.e. the district and town/city planning
commissions. They consisted of the planning commission chair, one sec-
retary and members, from three to five minimum initially, and more if
required. The planning commission chair was a member of the People’s
Executive Committee, while the persons appointed as members could be
from within the ranks of committee members, leaders of trade unions, co-
operatives and professionals. The size and composition of the local plan-
ning commissions (the district and town/city commissions) were deter-
mined according to the size and economic development of the areas. The
professional administrative apparatus included the segments of produc-
tion, investments, records, statistics, economic balance sheets, utility-hous-
ing-cultural-health domain and the general plan. This organisation skel-
eton was not strictly applied in all the districts, but was an example to be
adopted across the country during the development phase. The planning
commission of each district and town/city was expected to pay special
attention to those departments the activity of which covered activities of
special importance to the local economy.47

46 AJ, 41–1–1, Funkcije okružnog narodnog odbora u planskoj privredi, čl. 47.
47 AJ, 41–1–1, Predlog organizacione sheme sreskih i gradskih planskih komisija; In their
ideological definitions, the Yugoslav communists spoke highly of the role of masses
in leadership. But their actual role, although the 1946 Constitution guaranteed the
realisation of “full people’s democracy”, was minimal in reality. However, that did not
mean that with the passage of time and the strengthening of the socialist principles
in the broad section of the population this would remain a permanent category. The
monopoly of the Communist Party of Yugoslavia, in the opinion of leaders of the
Yugoslav revolution, was just a transitional solution. In view of that, the creators
of the Yugoslav command-planning system attempted to establish, in the district
and town planning commissions, an institution which would enable citizens’ active
participation in planning. The institutional solution, which was to play an increasingly
important role in the future, were planning councils. The leadership of the Communist
Party of Yugoslavia counted on successfully carrying through the socialist building
undertaking, and thus creating the conditions for the decentralisation of power, and
of planning as a result. The importance of people’s district committees and planning
commissions would grow with the decentralisation process, while the work of
planning would become more extensive and more responsible. The command
component of the planning system would die down as a result, and the local self-
governments in the form of people’s district and town committees would take over
the competences of the central state authorities. However, this idea only represented
the direction of the society’s movement as envisioned by the CPY leaders, while the
needs of everyday life called for more direct management methods (Branko Horvat,
Ekonomska teorija planske privrede, (Beograd: Kultura, 1961), 287).

372
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

Figura 2: The first management structure of the Federal Planning Commission

Most districts in the country had until the autumn of 1946 not suc-
ceeded in organising the local planning commissions due to a shortage
of professional staff. However, the more developed districts of the coun-
try successfully overcame this organisation phase and were in a way an
indicator based on which the chairs of the Federal Planning Commission
analysed the failures to that point, and that trend of development of the
local planning bodies was used to set up their reorganisation plan. The
new work method was supposed to involve the local enterprises in the
course of planning, along with the local planning commissions.48 This in-
teractive model, in the economic circumstances of the time, was not en-
forceable, and it was quickly abandoned, and its realisation postponed
for a more convenient time.49 The chair of the Economic Council and the
minister of industry, Boris Kidrič, gave the issue of staff equal priority as
the issue of financial assets. The human resources policy, in his opinion,
merited special attention with a view to appropriate plan fulfilment. In
his consideration of the further directions of the human resources pol-

48 By the Law on State-Owned Enterprises, the enterprises were given the status of
legal entities, but in practice lacked operational independence because, like state
authorities, they were controlled by the state. The owner (the state) made decisions
on the enterprise’s administrative-operational management, which had the highest
governing powers in managing the enterprise, while the state used this body to
execute its plans by directives (Branko Petranović, Politička i ekonomska osnova
narodne vlasti u Jugoslaviji za vreme obnove, (Beograd: ISI, 1969), 252–253).
49 AJ, 41–1–1, Predlog organizacione sreskih i gradskih planskih komisija.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

icy, he emphasised that the human resources policy had to be granted

the same status it had in the Soviet Union. This primarily meant accept-
ing Stalin’s position that the staff “resolves all”, but also the premise that
only the staff with sufficient expertise can respond to the economy mod-
ernisation challenges. In that regard, Kidrič emphasised the need for the
creation of a “new type” of staff who would, in addition to their exper-
tise, also be politically profiled in accordance with the changes of the so-
cial reality. The socialist society required a “socialist man”, and “social-
ist cadres” to build the new society. These theses by Kidrič resulted from
the attitude of the general CPY line, which treated the “old society” cad-
res with mistrust, so that the top CPY officials often stressed the need for
the most efficient possible creation of their own cadres, which would re-
place the old ones on all levels.50
The Federal Planning Commission was one of the new-type in-
stitutions which, with respect to cadres, had the authority to conduct
partially independent politics. The possibility to choose their own cad-
res from the very beginning was in a sense a privilege of this institution,
as the FPC had the first choice. The Commission’s staff policy was the re-
sponsibility of the personnel department and the department of labour
and human resources, which were assigned the task to, for the purpose
of the best possible cadre distribution, maintain contacts with the lower
planning commissions and keep records relating to cadre issues, which
would serve as basis for developing a more comprehensive strategy.51
From an early stage, these departments faced major setbacks as a result
of a general “staff crisis” in the country. Problems arose both in relation
to the lower planning instances, and in the Federal Planning Commission
itself. Even though the Commission had gathered an adequate number of
expert associates, the new work method, which was quite unfamiliar for
a large majority of them, introduced difficulties in performing everyday
tasks. Those difficulties were reflected in an uneven distribution of work,
so that it often happened that the heads of individual departments carried
out the tasks themselves, thus slowing down the work, instead of engag-
ing all the associates by distributing the responsibilities in an even man-
ner.52 As a result of this, and all the other problems relating to planned

50 Boris Kidrič, Sabrana dela, Članci i rasprave 1946–1948, (Beograd: Kultura, 1959),
110–120.
51 AJ, 41–1–1, Izveštaj Personalnog odeljenja Predsedništvu vlade FNRJ, 9. avgust 1946.
godine).
52 AJ, 41–2–2, Zapisnik sa sastanka načelnika odeljenja, šefova odseka i referenata
Savezne planske komisije, održanog 21. novembra 1946. godine.

374
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

work and planning, the staff were obliged to attend professional cours-
es and study the Soviet literature, which was translated for professional
development requirements.53
Along with the chairman A. Hebrang, the Commission deputy chairs
also played an important part in the development of the Federal Planning
Commission and in supplying it with cadres. The deputy chairs of the Com-
mission were Bojan Kugler from Croatia, Milenko Jakovljević from Serbia,
Dolfe Vogelnik from Slovenia and the Soviet economic expert Ivan Even-
ko, who took an active part in cadre selection. I. Evenko was one of the
leading Soviet post-war economists and the author of the significant work
“Planning in the USSR”, and his arrival was linked to the professional as-
sistance sent to Yugoslavia by the USSR.54. On his arrival, around the be-
ginning of 1946, Evenko was assigned the task to, while also working on
establishing planned economy institutions, train the Yugoslav planners
for working on the new principles.55 With regard to recruiting the staff for
working with the Commission, Evenko underlined the need to only em-
ploy the best economists and engineers who, in addition to the profes-
sional qualifications, had to be reliable in political terms. This criterion
was consistently applied as much as the capacities allowed, and the ca-
pacities in 1946 were such that the professional staff meeting both con-
ditions were scarce.56 This situation had not substantially changed by the
end of 1946, not only due to a shortage of experts for the planning bod-
ies, but also because the whole economy was facing the same problem. In
such circumstances CPY was forced to abandon the dualistic principle of

53 The works were written by Soviet economists: А. Курскиј, Социјалистичко

планирање народне привреде СССР, Москва 1945; J. Ganopoljski, Kontrola iz-
vršenja proizvodnog plana industrijskog preduzeća, Moskva 1944; Л. Володарски,
Планирање месне привреде и културне изградње, Москва 1945; A. Petrov, Kurs
industrijske statistike, Moskva 1944; V. Bunimovič, Cena koštanja i način snižavan-
ja, Moskva 1945; А. Леонтјев, Совјетски метод индустријализације, Москва
1946; V. Kovaljenkov, A. Hramoj, Automatizacija proizvodnih procesa u industriji,
Moskva 1939; Часопи “плановоје хазјајство”, 1945–1946; Г. Сорокин, Стаљински
петогодишњи планови, Москва 1946 (AJ, 41–111–197, Sovjetska ekonomska liter-
atura, 1945. godina).
54 Југословенско−совјетски односи 1945−1956, Зборник докумената, приређивачи
Љубодраг Димић и други, (Београд: Министарство спољних послова Републике
Србије/Министарство иностраних послова Руске Федерације, 2010), 36–38.
55 AJ, 41–2–2, Sastanak potpredsednika Savezne planske komisije od 23. septembra
1946. godine.
56 AJ, 41–1–1, Referat Ivana Evenka o organizaciji Planske komisije, 19. februar 1946.
godine.

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expertise and political suitability, and to turn to the implementation of a

more elastic personnel policy.

„Total“ planning in economy

Around the beginning of 1947, the discussions regarding the ini-

tiation of the First Five-Year Plan of economic development took most of
the time during the Politburo sessions. The importance of the Plan is re-
flected in the views of the Yugoslav marshal who in those months point-
ed out “that there is no departure from the plan”.57 This aspiration of the
Yugoslav communists and reliance on the Soviet experiences resulted in
the passage of the Law of the First Five-Year Plan. The Five-Year Plan was
an expression of the desire to overcome economic backwardness and root
out poverty in the shortest possible time. In the opinion of the key CPY
officials in charge of economy, the most effective way to accomplish such
a major undertaking lied in detailed planning, military discipline and ac-
celerated industrialisation and electrification of the country.58 Thus, the
main task of the five-year plan of economic development of Yugoslavia con-
sisted in raising the industrial potential by building new factories, power
plants, and carrying out the technical reconstruction and modernisation
of the existing enterprises. During the plan term, the economic planners
intended to improve work in the existing plants, carry out the mechani-
sation of work processes, the concentration of smaller machinery plants
and a specialisation of factories, to introduce new work methods, modern
technology and up-to-date technological processes. With a view to real-
ising the greatest possible self-sufficiency of the Yugoslav economy, the
capacities of the existing plants were to be raised as much as possible by
reconstructions and expansions, and bottlenecks in factories eliminated
with the supply of new machines, and those in economy by building up
to that point non-existent plants in the country.59
In the opinion of the Yugoslav communists, heavy industry was of
first-class importance for the overall progress of the country, and its devel-
opment was a far-reaching solution to the issue of improvement in other

57 Zapisnici sa sednica Politbiroa Centralnog komiteta KPJ: 11. jun 1945-7. jul 1948, 194.
58 Б. Кидрич, Привредни проблеми ФНРЈ, (Београд: Култура, 1948), 7−22.
59 AJ, 41−138−261, Tekst Petogodišnjeg plana 1947−1951, Opšti zadaci, 15. april 1947.
godine.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

branches of economy.60 The principal aim of heavy industry building was

towards achieving a sufficient level of technical knowledge, which was in-
tended, through a synergy of all its branches, to produce machines neces-
sary for a more efficient exploitation of natural resources. The machines,
as superior production tools, were intended to facilitate the achievement
of high productivity and thus ensure the elementary preconditions of fast-
er economic development and growth.61 The rationalisation and recon-
struction of industry, primarily heavy industry, thus became the main le-
vers of modernisation on the path of socialism development.62 In relation
to agriculture, heavy industry had, through its mechanisation, electrifica-
tion and fertilisation, to do away with the primitive tillage method and in
turn solve the centuries-old burning issue of population sustenance. The
mechanisation of all branches of economy became the imperative of state
policy in the economy. Heavy industry was the primary element in econo-
my development, and the government, through a series of measures, gave
it priority, focusing on the staff, loans, materials and foreign currencies.63
Generally speaking, the idea to stop the export of domestic raw materials
at extremely low prices and the import of finished products from abroad
lied at the core of the new industry policy of developing an all-embracing
production-oriented national economy.64
The passage of the law on the First Five-Year Plan definitively
eliminated one of the crucial uncertainties regarding the country’s eco-
nomic development.65 It concerned the industrialisation strategy that dur-
ing the first half of 1946 sparked the first disagreements in the managing
structure, the CPY Central Committee Politburo.66 The Plan finally tipped
the balance in favour of the concept of heavy industry development, thus

60 Nikola Čobeljić i Radmila Stojanović, Teorija investicionih ciklusa u socijalističkoj

privredi, (Beograd: Savremena administracija, 1966), 126−127.
61 N. Čobeljić, Politika i metodi privrednog razvoja Jugoslavije, (Beograd: Nolit, 1959),
53−66.
62 AJ, Savet za mašinogradnju Vlade FNRJ (SMVFNRJ), 6−26−27, Zadaci Ministarstva
teške industrije u Petogodišnjem planu, 1947. godina.
63 AJ, Generalna direkcija crne metalurgije Vlade FNRJ (GDCMVFNRJ), 106−13−24,
Podaci o teškoj industriji, 8. april 1949. godine.
64 AJ, 41−146−278, Referat o industrijskim centrima Jugoslavije, 28. maj 1945. godine.
65 AJ, 41−137−260, Petogodišnji plan razvitka narodne privrede Jugoslavije, Njegov
značaj i zadaci.
66 А. Ракоњац, „Почеци привредног планирања у Југославији 1946. године – идеје,
организација и институционализација“, 160.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

eliminating any doubts about the course of further development.67 This

meant evening out the inherited imbalance between the light and heavy
industries by larger investments into ferrous and non-ferrous metallur-
gy, metal, chemical and electric power industry. The development of these
basic industries was intended to, in the near future, foster the develop-
ment of all the other industry branches, and within the industries men-
tioned above, all the efforts and resources were at first subordinated to
the production of production instruments. In other words, the develop-
ment of the heavy industry was intended to gradually substitute the im-
port of the products which had to that point been imported from abroad,
while there existed all the natural and economic capacities for their fab-
rication in the country. This would create a strong basis for the econom-
ic expansion of the whole country, and in turn a balanced development
of all the branches of economy which would not initially attract large in-
vestments.68
The asymmetric historical development of the regions led to a
disproportion in the distribution of material wealth. Due to its commu-
nications and natural features, the northern part of the country was far
more advanced in the material sense than the southern part of the coun-
try, crisscrossed by mountains and ravines.69 This disparity, in which the
“industrial north” had over those decades created an increasingly grow-
ing superiority in wealth to the “agrarian south”, was to be alleviated as
much as possible by the realisation of the Five-Year Plan. A regular dis-
tribution of the factories newly erected during the First Five-Year Plan
would gradually eliminate those inequalities in the production capacities
of individual republics. The economic planners paid particular attention
to the existing raw materials and energy base, the specific features and
social structure of any given republic, as well as to the general state ex-
pediency. This ultimately meant a strict overall rationalisation through
mastering new technological processes, which would reorient produc-
tion primarily towards the use of the raw materials which the country had
available in sufficient quantities, while the most suitable organisational

67 Zapisnici sa sednica Politbiroa Centralnog komiteta KPJ: 11. jun 1945-7. jul 1948, 200.
68 AJ, 41−137−260, Tekst plana industrije, 9. april 1947. godine.
69 Снежана Ђуровић, Са Теслом у нови век: нова синтеза историје, Изабрани
чланци из економске историје Србије и Југославије 1918−1941, (Београд: Завод
за уџбенике, 1997), 63−65.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

form of enterprise for such a complex exploitation of resources, accord-

ing to the planners, were combined plants.70 The exchange of experiences
in production between factories from different parts of the country, the
specialisation of the production capacities of enterprises by introducing
modern serial fabrication, raising product quality and an active applica-
tion of the most recent scientific research, were planned to raise the work
productivity by 70% in five years at the general level, thus enhancing the
welfare of the whole country.71
The elimination of economic and technical backwardness was in-
tended to strengthen and further develop new production relations. In
the political sense that meant fortifying the socialism foundations.72 The
annual plans within the Five-Year Plan in the field of industry primarily
complied with fulfilling the tasks of the First Five-Year Plan. They were
conceptually designed in such a way as not to represent exclusively pro-
portionate, aliquot parts of the Five-Year Plan, but rather integral parts,
with the aim to fulfil all the tasks of the Five-Year Plan, so that the pro-
jected industrialisation pace differed from one year to another. The plan
set the task of increasing the value of industrial products by approximate-
ly five times compared to 1939. The 394% rise of industrial production
in 1951 compared to production before the war, both in the quantitative
and in the qualitative sense, would change the country’s economic struc-
ture and reduce dependence on the import of capital goods. However, the
strategists of the economic development of Yugoslavia were fully aware
that absolute independence from import was not possible, not even for
far more highly developed industrial countries, so that it was never under
consideration as the ultimate aim of economic policy. This made any eco-
nomic autarchy impossible, but efforts were made to exploit to the utmost
all the resources of domestic origin in the future industrialisation period.73
During 1946 the organisational structure of the Federal Planning
Commission and the other planning institutions was set up with consid-
erable help of Soviet consultant Ivan Evenko. The foundations of com-
mand-planned economy were reinforced by the summer of the same year,

70 AJ, 41−138−261, Tekst petogodišnjeg plana 1947−1951, Opšti zadaci.

71 AJ, 41−137−260, Tekst plana industrije.
72 AJ, 41−137−260, Privredno-politički zadaci.
73 AJ, 41−146−278, Odgovori na pitanja o industrijalizaciji i razvitku industrije u
Jugoslaviji.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

which was followed by their in-depth strengthening. Before the end of the
year the preconditions of transition to total planning were created and
the necessary knowledge gained for adopting the general state econom-
ic plan. At the beginning of 1947 the organisation of the Federal Planning
Commission entered the first reorganisation phase after its formation.
The transfer of a large part of the economy into the hands of the state af-
ter the nationalisation at the end of 1946, the growing complexity of the
production processes due to production modernisation and the drawing
up of the extensive First Five-Year Plan of industrialisation imposed the
revision of certain organisation segments. Discussions were initiated at
the beginning of March regarding changes to the organisational structure,
as there were doubts about the distribution of additional duties within
the Federal Planning Commission and, in that regard, the appointment of
one more deputy chair in charge of general issues and proportions.74 On
that occasion it was determined that there was not sufficient delimitation
between the departments and that proper cooperation had not been or-
ganised between divisions and departments, this being the main cause of
difficulties in the work of this institution. The result was the drawing up
of a reorganisation scheme, while the organisation would still be based
on four departments, as initially established.75 The department leaders,
holding the positions of deputy chairs, were no longer the Soviet consult-
ant Ivan Evenko and Bojan Kugler, who had played a key part in the estab-
lishment of the planning institutions. Their place was occupied by Vlajko
Begović, who came from the Federal Control Commission to the position
of head of the proportion plan department, while Dušan Čalić, who had
returned from political economy studies in Moscow, was appointed the
chair of the general plan and records.76 Around the end of 1947, the head
of the Standardisation Office, engineer Boris Prikril, acquired the rank of
the FPC deputy chair.77

74 AJ, 41−1−1, Predlog organizacione šeme SPK, 3. mart 1947. godine.

75 AJ, 41−1−1, Rad i problemi Savezne planske komisije od 7. do 30. maja 1947. godine.
76 AJ, 41−1−1, Šema organizacije Savezne planske komisije, 9. Jul 1947. godine: IAB,
2821–1, Personalni dosije, Begović Vlajko.
77 AJ, 41−1−1, Sekretarijat podpredsednika za plan proizvodnje, Rešenje o naknadi
troškova za službena putovanja, 21. oktobar 1947. godine.

380
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

Figure 3: The reorganisation of the Federal Planning Commission from the summer of 1947

The reorganisation raised the question of the supply of staff due

to the expansion in the planning segments. The proportion plan depart-
ment employed 14, the production plan 21, the investment plan 13 and
the general plan and records department had 33 employees. It was then
that the demand for the employment of 87 more professionals in the field
of economy was projected, while the FPC management thought that 50%
of the staff required could be found among the final year students of col-
leges and secondary technical and economic schools.78 The development
of the higher-level planning bodies was formulated during 1947, at a time
when plenty of work was also done concerning the formation of the plan-
ning departments within production units. The planning department of

78 AJ, 41−1−1, Potreba Savezne planske komisije za kadrovima, 1947. godina.

381
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

the largest footwear industry enterprise, the “Bata“ rubber and footwear
combined plant from Borovo, which had 4,920 employees, although es-
tablished in the spring of 1947, was only formed in the May of the fol-
lowing year. The organisation of this department was not given sufficient
attention by the management of the combined plant. However, the com-
panies from within the Federal Government’s competence for the most
part founded their planning divisions during 1948.79

Figure 4: The organisation of the planning departments in enterprises at the beginning

of 194880

Due to the establishment of new enterprises, the First Five-Year

Plan underwent frequent reconstructions. One such reconstruction was
carried out in mid-1948, when after consultations between the represent-
atives of the republic ministries for industry, the federal ministries for in-
dustry and the Federal Planning Commission, the decision was made to
start the reconstruction of the initial Five-Year Plan. They agreed on the
order of the decisions to be carried out. The first step was to carry out the
rebalance of the industrial production five-year plan, which was followed
by the harmonisation of the federal industrial production five-year plan
with the plans of the republics.81
The beginning of the conflict with the Soviets and the purge of
disloyal elements in the Yugoslav leadership had a significant effect on

79 AJ, 10−73−75, Izveštaj o izvršenoj kontroli preduzeća „Jugoslovenski kombinat gume

i obuće Borovo“, 30. april 1948. godine.
80 AJ, Generalna direkcija savezne metalne industrije Ministarstva teške industrije
FNRJ (GDSMIMTIFNRJ), 140−1−1, „Jugoalat“, Fabrika alata, Novi Sad, 10. mart 1948.
godine.
81 AJ, 41−140−263, Odluka o rebalansu Petogodišnjeg plana sa savetovanja SPK,
Ministarstva lake industrije i ministarstava lake industrije republika, 20. jula 1948.
godine.

382
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

the planning institutions.82 The removal of A. Hebrang from the head of

the FPC in May 1948 and the arrival of Boris Kidrič in that position an-
nounced the implementation of more decisive moves in the field of plan-
ning in economy.83 By combining the titles of the chairman of the Eco-
nomic Council and the Federal Planning Commission, Kidrič set in motion
the process of disciplining the whole economic hierarchy. As the country
was under increasingly obvious political and economic pressure from the
East, it was a logical course of events. He emphasised in the joint confer-
ences and boards of the top-level economic institutions the “very danger-
ous tendency of giving more free rein to the republics” as there was no
“material base” for giving them greater independence. He believed that
the economic organisation, despite the country’s federal system, had to
remain centralist, but encouraged the republic planning commissions to
enable with their proposals a more proper implementation of the initia-
tive from the top.84
The ever-expanding job of planning had to be entrusted, since
1948, to the planning commissions which were already firmly hierarchi-
cally organised on all levels. The FPC was no longer able to perform several
functions at the same time, and B. Kidrič was forced to delegate responsi-
bilities to the lower instances. The ministries, general and main directo-
rates and planning departments within enterprises were entrusted with
operative planning and plan execution. The annual plans were divided into
the quarterly, monthly and ten-day plans. During 1949 the plan included
around 13,000 product groups, and each enterprise was obliged to sub-
mit between 600 and 800 different reports per year to their superordi-
nate authority. The exaggerated administrative demands kept swamping
the central economic institutions with different documents to the extent
that the annual economic plan stored in the FPC archives weighed over a
tonne. Occasional administrative chaos and ruling by decree were for the
most part unfeasible, so that the enterprises mainly held on to the gener-

82 Najdan Pašić i Kiro Hadži Vasilev, „Komunistička partija Jugoslavije u borbi za

izgradnju temelja socijalizma i za odbranu nezavisnosti Jugoslavije (1945−1948)“, u:
Pregled istorije Saveza komunista Jugoslavije, urednik Rodoljub Čolaković, (Beograd:
Institut za izučavanje radničkog pokreta, 1963), 423−463.
83 AJ, 836/II−5−a−1/13, Obrazloženje predsednika Vlade FNRJ Josipa Broza Tita o
predlogu za razrešenje s dužnosti ministra Vlade FNRJ Sretena Žujovića i Andrije
Hebranga na sednici prezidijuma narodne skupštine FNRJ, Beograd, 5. maj 1948.
84 Privredna politika Vlade FNRJ, Zapisnici Privrednog saveta Vlade FNRJ 1944−1953,
I−IV, priredili Momčilo Zečević i Bogdan Lekić, (Beograd: Arhiv Jugoslavije, 1995),
II/200−201.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

al plan elements and plan execution was overwhelmingly handed over to

the self-initiative of factory managers. Managing economy as some mam-
moth enterprise was, in a word, unsustainable without the active partic-
ipation of lower tiers of the economic structure.85
During the first half of 1949 B. Kidrič developed a very lively ac-
tivity on all levels with the aim of fixing the principles of planning as deep-
ly as possible into the economic structure. He encouraged the develop-
ment of many short courses in which the instructors had the task to train
the future planners of the lower planning institutions as quickly as pos-
sible for more complex planning operations in 1950.86 The increasingly
complex planning demands forced the FPC to start transferring some of
its responsibilities to the republic planning commissions in the summer
of 1949 and to intensify preparations for county and town/district plan-
ning commissions to take over more responsibility as well.87 The growth
of economy in the country industrialisation process produced increasing-
ly complex organisation forms. The complex administrative system which
generated such a process began, with time, to produce additional, often
unnecessary documentation.88 On the other hand, the break with the So-
viets led to a new course of state policy, which was announced by pass-
ing the Instruction on the establishment and work of workers’ councils of
state-owned companies on 23 December 1949, and definitely confirmed
on 27 June 1950 by adopting the Basic Law on the Management of State-
Owned Companies and Higher Economic Associations by Labour Collec-
tives.89 In this way, by steering the country in the opposite direction, the
CPY actually set out in search of its own path to socialism. This practical-
ly meant abandoning the Soviet economic principles of the time, initiating
the democratisation of the state and society, decentralisation of power and
debureaucratisation of the state apparatus. It was the confrontation with
the accumulated bureaucratic tendencies due to the economic reorgan-
isation that resulted in the simplification of all the planning segments.90

85 Branko Horvat, Privredni sistem i ekonomska politika Jugoslavije: problemi, teorije,

ostvarenja, propusti, (Beograd: Institut ekonomskih nauka, 1970), 27; Ljubomir
Madžar i Aleksandar Jovanović, Osnovi teorije razvoja i planiranja, (Beograd:
Savremena administracija, 1995), 176−179.
86 Zapisnici Privrednog saveta Vlade FNRJ 1944−1953, II/334−335.
87 AJ, 41−4−4, Zapisnik savetovanja predsednika oblasnih, gradskih i kotarskih planskih
komisija održanog u subotu 11. juna 1949. godine u prostorijama Planske komisije
Narodne republike Hrvatske u Zagrebu.
88 IAB, 2821–8, Radnička klasa, radnički saveti, 7−11.
89 AJ, 507/XI−1−80, O radničkim savjetima, 3. novembar 1952.
90 Zapisnici Privrednog saveta Vlade FNRJ 1944−1953, II/701.

384
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

The beginning of economic reorganisation in the spring of 1950

had a decisive influence on the Federal Planning Commission’s work. The
need for a new reorganisation was created with the beginning of a gener-
al economic reorientation towards workers’ self-management. The need
arose to simplify and fortify the FPC’s position in the new circumstanc-
es. In the first place, it was essential to define the relation to the councils
which were in the formation process. In terms of organisation, the FPC
was still relying on only one proportion department, with the following
six groups or divisions formed within it: 1. The methodology and organi-
sation group 2. The group for the social product and the national income
3. The group for production, reproduction, and material balance match-
ing 4. The group for investments in general, their distribution by branch-
es and spread across the territory 5. The group for commodity and pur-
chase funds 6. The group for labour and staff 7. The group for the balance
of payments and the foreign trade balance. These groups developed the
basic proportions together with the councils and the republics. The total
number of employees was reduced five times with 32 persons remain-
ing at work in this institution. The adoption of this organisation meant a
consistent implementation of the line of decentralisation of management
in economy and elimination of the technocratic and administrative meth-
ods in FPC work. The reorganisation was finished during June and FPC
was entrusted with setting the basic plan proportions in close coopera-
tion with the councils, The Production Development Administration and
the Records Administration.91 Then, according to the decree of the Pre-
sidium of the People’s Assembly from 31 May, the FPC members became
the chairs of the republic planning commissions.92
One of the last moves with the participation of the already down-
graded FPC was the proposal for the implementation of the First Five-
Year Plan to be extended by one year. The draft of the “Law on the Exten-
sion of Implementation of the Law on the Five-Year Plan of Development
of the National Economy of FPRY in the years 1947-1951” was adopted
by both houses of the People’s Assembly, so that the implementation of
the Law on the Five-Year Plan of Development of the National Economy
of FPRY was extended by one year. The FPRY Government was author-
ised to ensure the implementation of this Law and it took all the measures
required for executing the remaining tasks of the Five-Year Plan to the

91 AJ, 41−1−1, Zapisnik sa sastanka Kolegijuma Savezne planske komisije, održanog 19.
maja 1950. godine u 9 časova.
92 „Ukaz o sastavu Savezne planske komisije“, Službeni list FNRJ, 38/50.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

end of 1952, and the Law entered into force on 1 January 1951.93 During
March 1951 this institution was reorganised for the last time. The FPC’s
scope of work included the preparation, drawing up and submission to
the Federal Government of long-term and current general state econom-
ic plans, as well as the duty to ensure adequate proportions in the devel-
opment of individual branches of economy. On the basis of the opinions
and instructions received from the Economic Council of the FPRY Gov-
ernment, and in cooperation with individual federal councils, ministries
and committees, it outlined the first proportions of the annual plan and
defined the final proportions. It organised the research activity and took
care of improving economic and technical knowledge and experience. Un-
der its direct management were the Federal Administration for the Im-
provement of Production, the Federal Records Administration, the Fed-
eral Statistical Office, the Federal Institute of Civil Engineering and the
Institute of Electrical Communications.94
The change of the paradigm during the fifties was in stark contrast
to the state organisation of the economy and the administrative-centralist
approach to management adopted from the USSR. The abolishment of the
old proprietary forms according to which the factories were owned by the
state, their transition to public property, under the direct management of
workers, and “letting the law of value act freely”, had a crucial influence
on redefining the course of the time in the field of economic planning.95
With the system reform, the FPC lost the role it had had at the beginning.
Work according to the new principles was “dead letter”, and less than a
month from this last reorganisation the state decided to finally disband
the Federal Planning Commission. Before long, the planning institutions
on all the levels faced the same fate. The competences of all the planning
commissions were transferred to the Economic Council and the newly es-
tablished Main Planning Administration, which only had a research-advi-
sory role in the new system.96 However, the end of managing the econo-
my through the state’s extensive macroeconomic planning did not mean a

93 Народна скупштина ФНРЈ, Стенографске белешке Другог редовног заседања

Савезног већа и Већа народа, 27−29. децембра 1950, (Београд: Президијум
Народне скупштине ФНРЈ, 1951), 151.
94 AJ, 41−1−1, Nadležnost Savezne planske komisije posle reorganizacije iz marta 1951.
godine.
95 AJ, 40−6−11, Zapisnik sa konferencije druga predsednika Privrednog saveta Vlade
FNRJ, održane 30. marta 1951. godine.
96 AJ, Glavna uprava za plan (GGUP), 129−2−5, Razrada metodologije planiranja, 1951.
godina.

386
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

break with development planning as a management method. The planning

sectors survived on the micro-level in enterprises, and with transition to
a new economic system they assumed an important role in the planning
of development and growth of direct production units.

From Corporate to Cooperative Economic Structure:

Forms of Organisation of the Economy in Yugoslavia
(1945−1951)
After the liberation of the country, industrial and mining enter-
prises gradually developed in a diametrically opposite direction from
that before the war. At first, right after the liberation of one part of the
country, leadership was in the hands of the State Administration of Na-
tional Assets, and then passed under the competence of the republic and
federal ministries of industry, i.e. mining and electric power industry. In
the beginning, the federal ministries managed only some of the more im-
portant enterprises from different branches of industry, such as mining
and electric power industry, while later they included industries of gen-
eral state importance, such as metallurgy, electrical industry, energetics
and chemical industry. The other enterprises were managed directly by
the republic ministries. Despite this organisational decentralisation, the
tasks all the ministries were facing were becoming bigger and more ex-
tensive, so that the ministries turned into operational bodies often “lost
in minor things”, solving problems of individual enterprises concerning
the procurement and distribution of raw materials, propellant and auxil-
iary materials, direct distribution, etc. Thus, the ministries lost their role
of institutions of general management and coordination, and to a large
extent control of the work of the entire industry and mining, which was
also the case with both federal ministries. There was also a lack of coordi-
nation in the work between individual republics, so the tendency of local
patriotism began to manifest itself more and more with regard to gener-
al matters, especially in the procurement of raw materials, fuel and oth-
er materials.97
Another group of problems faced by ministries stemmed from
technological obsolescence of certain parts of industry and mining. A
significant part was largely obsolete and unprofitable, and one part was

97 AJ, Ministarstvo industrije Vlade FNRJ (MIVFNRJ), 17–6–6, Referat o radu naše
industrije, 1945–1946. godina.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

built before the First World War on the basis of a wider economic unit, in
completely different circumstances and in a direction quite opposite to
the economic integration of the state. Foreign capital, which had a lead-
ing role in many industries and mining, maintained its profitability by the
low cost of labour, cheap sources of energy and raw materials, numerous
privileges, concessions and customs facilities. This legacy, under the new
circumstances and with the different development strategy, made tran-
sition to the new type of economic system more difficult, while the min-
istries of economy tried as hard as possible to maintain integration, us-
ing in the first place the centralisation of management and the directive
“order-execution” mode.98
The process of the administrative breakthrough of all republic and
federal ministries of economy into the everyday work of the enterpris-
es paved the way for a rapid bureaucratisation of the economy. The in-
clusion of a large number of enterprises under the protection of the state
could not have had a different outcome, as the creation of a complex state
sector of the economy required a large number of executives and, in gen-
eral, skilled and professional bureaucracy familiar with working in large
systems. However, as systems of this type did not exist in large numbers
before the war, and as a small number of people with experience in large
corporations could be found throughout the country, the situation in the
economy in the first days after the liberation reflected a general disorgan-
isation. Recalling those days, Svetozar Vukmanović Tempo placed special
emphasis on the problems of organising production in the public sector
and stated that “we had no experience in that and we could only use the
Soviet experience”.99 The Soviet economic solutions were applied in ac-
cordance with the Yugoslav circumstances, so many of them underwent
certain modifications. Vladimir Dedijer points out that the economic lead-
ership initially relied exclusively on Soviet models, but that with the ar-
rival of Boris Kidrič at the helm of the economy, the design and general
introduction of Yugoslav elements into the system of economic organi-
sation began.100
The corporatisation of the economy, which the communist au-
thorities in Yugoslavia began immediately after the liberation, was an in-

98 Ibid.
99 Svetozar Vukmanović Tempo, Revolucija koja teče, Memoari, I-II, (Beograd: Komunist,
1971), II/37.
100 Vladimir Dedijer, Novi prilozi za biografiju Josipa Broza Tita (1945−1955), III,
(Beograd: Rad, 1984), 208.

388
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

tegral part of the radical changes from the very beginning. The imperative
of rapid transition to the command-planned economic system based on
the Soviet model implied a redefinition of all segments of economic life.
The corporatisation of the public sector of industry was only one of the
vital components of this process. The Yugoslav political and state leader-
ship, following the Soviet practice, began to implement corporatisation
on two levels. On the first, upper level, the state encompassed under its
command the entire state sector of industry, thus creating a single hierar-
chically monolithic organisation of management, while beginning to reor-
ganise the industry on the lower level. The reorganisation of the industry
aimed to base all the branches of industry on modern principles. In re-
gard to this, the main task of the planners was to carry out the liquidation
of inefficient companies and to merge a large number of smaller factories
within related areas and create production units which would satisfy all
the standards of efficient business by providing a complete production
process. In their opinion, this was to ensure the full profitability of pro-
duction.101 President of the Economic Council and Minister of Industry,
Boris Kidrič, held that in the process of building a socialist economic sys-
tem there was no difference from capitalist corporations in terms of or-
ganisational and technical forms. In the beginning of 1947, B. Kidrič point-
ed out that the emerging socialist forms of organisation had to get rid of
”the out-dated bureaucratic methods of work” and ”use technical and op-
erational management, modern technical and operational means, typical
of capitalist trusts”, in order to master as soon as possible the operation-
al way of working and in the future to surpass the capitalist conduct of
business.102 From the macroeconomic point of view, the development of
the centralised corporate structure of the public sector significantly ben-
efited from Soviet experts, who employed their knowledge in helping the
Soviet model being promptly implemented in practice.103

101 Александар, Ракоњац, „Почеци корпоративизације државног сектора

индустрије у Југославији (1945–1947)“, Друштвене науке пред изазовима
савременог друштва, НИСУН 6, I, (Ниш: ФФУН, 2017), 165–178; Mijo Mirković,
Uvod u ekonomiku FNRJ, (Zagreb: Naprijed, 1959), 17.
102 AJ, 40−2−6, Zapisnik sa konferencije održane 27. januara 1947. godine u Ministarstvu
industrije FNRJ po pitanju reorganizacije glavnih uprava; Zapisnici Privrednog saveta
Vlade FNRJ 1944−1953, I/67−72.
103 AJ, 17–9–9, Stručnjaci iz USSR, 30. septembar 1946. godine; Diplomatski arhiv
Ministarstva spoljnih poslova Republike Srbije (DAMSPRS), 1945, Politička Arhiva
(PA), USSR, f. 30, d. 7041, Spisak sovjetskih građana koji se upućuju na rad u
Jugoslaviju, 21. novembar 1945. godine.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

The ambitious demands of the new government in the field of

economy, for the sake of rapid transformation of society in the circum-
stances of the first post-war year, were not realistic. The situation in the
field imposed a cautious and gradual approach, despite the intention of
economic leaders to implement the CPY’s concept of state management of
the economy as soon as possible. In the beginning of 1946, industry, min-
ing and electric power industry were on the way to recover so the major
tasks assigned to these key branches of economy required major changes
in the way of management. These circumstances influenced the creation of
organisational forms of more operational management in the transition-
al phase and the main administrations were established in the spring of
1946. The main administrations in Yugoslavia relied on the experiences
of the main and general administrations (“glavki”) in the USSR, on whose
model they were created. The role of the main administrations or “glavki”
was tied to the need to find a middle link between the ministries and the
enterprises, and with their basic command function, they supervised and
managed the work of enterprises from a certain branch. Besides the main
administrations, directorates general were established with the same aim
of fostering greater industrial production. With the basic law on state-
owned enterprises passed in mid-1946, the state sanctioned this novelty
by giving considerable authority in the management of enterprises to ad-
ministrative and operational managements. In this way the administra-
tive and operational management became the direct representative and
guardian of state interests in the factories, and along with the greatest
administrative powers, they were also entrusted with director appoint-
ment. The headquarters of the main administrations were located in the
capitals of the republics, and the location depended exclusively on wheth-
er the level of development of a particular economic branch the admin-
istration was in charge of was the most developed in that federal unit.104
These institutions, although parts of the central state apparatus,
were not financed from the budget but from the annual income of the en-
terprises from the branch of economy they oversaw.105 This meant that
the amount of funds that flowed into the director’s fund depended directly
on the fulfilment of the plan for which the staff of these institutions were

104 AJ, 106−4−10, Obrazovanje glavnih uprava u okviru Ministarstva industrije FNRJ, 6.
jul 1946. godine; Основни закон о државним привредним предузећима, Београд
1949.
105 AJ, 140−5−22, Izveštaj o poslovanju Generalne direkcije savezne metalne industrije
za plansku 1949. godinu, 22. jun 1950. godine.

390
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

responsible.106 In case a certain enterprise exceeded the quota set by the

plan, 50% of the unplanned profit went to the director’s fund. With these
material incentives, the state wanted to encourage a competitive spirit
and increase the productivity of the industry.107 At the very beginning of
the formation of the main administrations and general directorates, sev-
eral ”unwholesome” tendencies surfaced. Firstly, too many experts began
to join the administration to the detriment of the factories. Secondly, after
the establishment of the general administrations in 1946, in order to in-
crease the efficiency of industrial enterprises, these institutions began to
branch out their administrative management apparatus.108 Irregularities
in the functioning of these economic bodies were especially pronounced
among personnel officers, who were one of the most important parts of
this ”new mechanism” of economic management.109
In the beginning of 1947, before starting the extensive plans for
industrialisation and electrification of the country, the general adminis-
trations were transformed into general and main directorates due to the
deepening of operational forms of management.110 With the establish-
ment of the directorates-general and federal directorates, coordination
between the economic ministries and the enterprises under their juris-
diction was accelerated. These ”middle links” in charge of ensuring more
operational management were the ”connective tissue” without which the
economy could no longer function. Therefore, despite the crisis of pro-
fessional staff in that period, which was one of the main obstacles to the
successful implementation of the state project of corporatisation of the
economy, all managers with professional experience in the economy were
gathered and then delegated according to the priorities to the most im-
portant main units/directorates and enterprises. Due to the lack of do-
mestic staff, experts from abroad were hired, mostly from Germany and
other European countries, who were tasked with reshaping the methods
of work organisation, production and management at the medium and
micro levels, i.e. in the administrative units and enterprises. Till the end
of 1948, a vertical management system was implemented with a clearly

106 AJ, 50−17−34, Uredba o bankovnim računima dobiti državnih privrednih preduzeća
i njihovih administrativno-operativnih rukovodilaca, 31. decembar 1946. godine.
107 AJ, 40–1–3, Izvod iz uvodnog referata i zaključne reči predsednika Privrednog saveta,
6–7; B. Petranović, Politička i ekonomska osnova narodne vlasti u Jugoslaviji za
vreme obnove, 251–252.
108 AJ, 17–12–12, Organizacija upravljanja industrijom, 1946. godina..
109 AJ, 17–104–105, Nepravilnosti personalnih organa, 1. jul 1946. godine.
110 Zapisnici Privrednog saveta Vlade FNRJ 1944−1953, I/159−169; Lj. Korać, n. d., 282.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

defined ”top-down” hierarchical structure: ”Ministry - directorates – en-

terprises”. This brought to full expression the efforts to consolidate the
economy, which had been started in 1945, and thus the centralisation of
management reached its peak.111
On the example of the banking sector, which was considered by eco-
nomic leaders to be of great importance for the economy, we can see most
clearly the direction of the new state policy mentioned above. Considering
it the “bloodstream of the economy”, just after the liberation of Belgrade
the economic leaders began to make plans to take over the entire banking
sector.112 This was awaited until the autumn of 1946. The most important
act within this process was the nationalisation of the banking sector, under-
taken by the authorities in late 1946 as part of the nationalisation of large
parts of the economy. The transfer of private banking assets to state own-
ership provided an opportunity for communist rulers to impose total con-
trol over economic flows. The purchase of the shares of the National Bank
of the Federal People’s Republic of Yugoslavia, the Industrial Bank of Yugo-
slavia, the Craft Bank of the Federal People’s Republic of Yugoslavia and the
Cooperative and Agricultural Bank of the Federal People’s Republic of Yugo-
slavia, owned by private individuals and companies, took place in Septem-
ber 1946.113 A few days after the nationalisation was finished, state-owned
banks were merged with the National Bank. The creation of a single state
financial corporation was aimed at coordinating all the monetary activities
of the state budget regarding the national economic plan.114
The main headquarters, other headquarters and branches stood
in the order of strict subordination. The corporate organisational struc-
ture was designed to integrate all financial flows in the country.115 Through
its activities, the National Bank covered all banking operations from the
simplest cash operations to the conduct of the country’s monetary pol-

111 AJ, 108−2−10, Rad generalnih odnosno glavnih direkcija u vezi sa rešavanjem
zadatka postavljenog Privrednim savetom, 7. oktobar 1948. godine; AJ, 185−2, Spisak
generalnih i glavnih direkcija Ministarstva industrije FNRJ i industrijskih preduzeća
koja su pod njihovim administrativno-operativnim rukovodstvom.
112 AJ, KMJ, 836/III−1−a/3, Predlog za reformu bankarstva u Jugoslaviji i informacija o
novčanim zavodima, Vis, 18. septembar 1944. godine.
113 AJ, 50−13−29, Uredba o otkupu akcija Narodne banke FNRJ, Industrijske banke
Jugoslavije, Zanatske banke FNRJ i Zadružne i poljoprivredne banke FNRJ, 1946. godina.
114 AJ, 50−13−29, Uredba o spajanju kreditnih preduzeća iz državnog sektora, 1946.
godina; Arhiv Narodne banke Srbije (ANBS), 1/III, Narodna Banka FNRJ (NBFNRJ)
(1945–1963), dosije 399, Fuzija bankarskih preduzeća državnog sektora sa
Narodnom bankom FNRJ, 1946. godina.
115 ANBS, 1/III, d. 374, O organizaciji Narodne banke FNRJ, 1946. godina.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

icy.116 With the concentration and centralisation of the banking system,

the National Bank became a ”bank over banks”, and only the State Invest-
ment Bank, which was tasked with lending for long-term investments, re-
mained outside its jurisdiction.117
The passage of the law on the nationalisation of private enterpris-
es legally shaped the possibility of raising the organisation of the econo-
my to a higher level. The enterprises were categorised according to im-
portance. By grouping enterprises of national importance, the de facto
federal economy was created. The Federal Government had exclusive ju-
risdiction over this group of around three hundred largest enterprises.
By creating this superstructure, which was managed by the state through
administrative-operational managements, the state aimed at creating a
large economic system which would allow it to control the lower floors
of the economy more easily.118 Thus, the essential aspiration of the eco-
nomic integration of Yugoslavia finally found expression in the creation
of a single supranational economy.119120

Table 1: The organisational form of the Ministry of Heavy Industry from

January 1948 and the number of employees at the beginning of 1949120
No. of Workers Total no. of em-
Heavy industry branch enter-
prises employed ployees
Ferrous metallurgy 11 16,185 23,455
Aluminium and copper industry 2 1,565 2,333
Industry of refractory materials 6 1,304 1,948
Heavy metal industry 13 8,556 16,812
Industry of agricultural machines 4 1,642 3,057
Engine industry 4 3,062 5,215
Electric power industry 4 3,368 5,773
Total 44 35,689 58,593

116 ANBS, 1/III, d. 376, Zadaci Narodne banke FNRJ, 1948. godina.
117 Gordana Hofmann, Narodna banka 1944−1991, (Beograd: Evropski centar za mir i
razvoj, 2004), 30.
118 AJ, Savezna uprava industrije tekstila, kože i obuće (SUITKO), 185−2, Spisak
generalnih i glavnih direkcija Ministarstva industrije FNRJ i industrijskih preduzeća
koja su pod njihovim administrativno-operativnim rukovodstvom.
119 AJ, Predsedništvo Vlade FNRJ (PVFNRJ), 50−4−10, Spisak preduzeća opštedržavnog
značaja, 31. decembar 1946. godine.
120 AJ, 106−13−24, Podaci o teškoj industriji, 8. april 1949. godine.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

Many privately owned enterprises were assigned a status in the

economic hierarchy following the decision to confiscate them and, finally,
definite confirmation of their ownership status after the nationalisation
at the end of 1946. Many companies were then assigned to the republic
governments121, while others were registered as enterprises of national
importance and handed over to the management of the Federal Govern-
ment.122 The diversification of the economy and the growing workload of
the federal ministries in charge of the economy forced the Government
to consider reorganisation. Thus, due to the primary importance of heavy
industry in building the country, the first reorganisation within the Gov-
ernment was carried out in early 1948, as a result of which the Ministry of
Industry became the Ministry of Heavy Industry and the Ministry of Light
Industry, and the Ministry of Agriculture and Forestry was divided into
two ministries.123 A re-evaluation of the public enterprises was carried
out at the end of 1948, after which some of them were granted a higher
status, becoming enterprises of national importance, and passing under
the jurisdiction of the federal ministries of light or heavy industry.124 In-
dividual enterprises preserved their federal importance, but due to the
diversification of industry as a result of enforced industrialisation they
were transferred from the competence of one to the competence of an-
other ministry, mainly that of the Ministry of Light Industry.125 A further
deepening of relations within the economic structure was carried out dur-
ing 1948. The division according to importance for the economy includ-
ed a further classification by grouping the enterprises into three catego-
ries. The categorisation was performed taking into account the scope of
operations, the importance of the problems individual enterprises were

121 AJ, Ministarstvo teške industrije Vlade FNRJ (MTIVFNRJ), 16−13−17, Privremeno
rešenje ministra industrije FNRJ o ustupanju preduzeća narodnim republikama,
1946. godina; AJ, Generalna direkcija savezne elektroindustrije (GDSE), 134−5−22,
Rešenje o ustupanju preduzeća opštedržavnog značaja narodnim republikama, 3.
april 1947. godine.
122 AJ, Državni sekretarijat za poslove narodne privrede (DSPNP), 26−90, Objava o
registraciji državnog privrednog preduzeća opštedržavnog značaja „Fabrika šibica
Dolac na Lašvi“, 20. maj 1947. godine; AV, Planska komisija APV (PKAPV), 218−70,
Izveštaj, Svodna analiza o izvršenju privrednog plana AP Vojvodine u 1949. godini,
Industrija pokrajinskog značaja.
123 AJ, 836/II−5−a−1/12, Govor Maršala Tita na sednici Prezidijuma Narodne skupštine
FNRJ povodom predloga o rekonstrukciji Vlade FNRJ, 8. januar 1948. godine.
124 AJ, 16−13−17, Preuzimanje preduzeća i određivanje administrativno-operativnog
rukovodioca, 21. oktobar 1948. godine.
125 AJ, 10−5−5, Rešenje o prenosu državnih privrednih preduzeća iz nadležnosti jednog
u nadležnost drugog organa, Prenos tri fabrike sijalica, 30. mart 1949. godine.

394
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

facing and the degree of accountability in plan implementation.126 The en-

terprise categorisation was further deepened by the beginning of 1950,
by introducing the fourth and fifth categories.127

Table 2: the categorisation of enterprises of national importance

Ironworks “Jesenice”; ironworks “Zenica”; “Đuro Đaković”;

“Rade Končar”; “Litostroj”; “Ivo Lola Ribar”; “ТАМ”; “IMR”;
“Goša”; “Elektrometalurški kombinat Šibenik”; mine and iron-
Category I
works “Vareš”; “Dalmatinska industrija cementa Split”; “14.
oktobar”; “Prvomajska”; “Fabrika vagona Kraljevo”; ironworks
“Guštanj”; “Splošna”; “Osiječka Ljevaonica željeza”; “Iskra”

Ironworks “Smederevo”; “Novokabel”; “IMPOL”; “Beočinska

fabrika cementa”; ironworks “Štore”; “ELKA”, mine “Ljubija”;
Category II “Zmaj”; ironworks “Sisak”; “Jugoalat”; “Vojvođanska livnica
Novi Sad”; “IPM”; “Tovarna glinice in aluminija Strnišće”; re-
fractory clay mine “Vrbica”

Cement factory “Sloboda”; cement factory “Partizan” Kaš-

tel; cement factory “10 kolovoz” Split; factory “Partizani”
Category III Aranđelovac; mine “Goleš”; “Trbovljanska cementarna”; mine
“Cer”; “Fabrika kablova Svetozarevo”; “TEŽ”; “DIS”; “Tesla”;
mine “Čevljanovići”; “Valjaonica Zemun”

The efforts to establish a uniform organisation in the enterprises

within the same directorate were concluded during 1949.128 During the
realisation of the uniformity process, the enterprises which had the most
efficient internal organisation in terms of functionality were taken as ex-
amples, and served as models to be followed by all the other enterprises
under the competence of the same directorate. Among the enterprises of
the General Directorate of the Federal Motor Industry, ”IMR” was the first

126 AJ, 16−24−29, Kategorizacija preduzeća, 27. avgust 1948. godine.

127 AJ, Glavna direkcija savezne industrije vatrostalnog materijala (GDSIVM), 133−16−26,
Kategorizacija preduzeća Glavna direkcija savezne industrije vatrostalnog materijala
Ministarstva teške industrije FNRJ, 14. februar 1950. godine.
128 The newly established State Control Commission did the utmost to carry this process
through to the end (AJ, 50−10−22, Uredba o organizaciji i nadležnosti Komisije
državne kontrole FNRJ, 1. mart 1949. godine).

395
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

to functionally apply the new uniform organisation prescribed by the Gov-

ernment. After the visit of the enterprise ”TAM” delegation to the facto-
ry in Rakovica, which established that the internal organisation of ”IMR”
was suitable for their enterprise, the implementation of the same organ-
isation solutions was initiated in Tezno.129

Figure 5: The organisational structure of enterprises at the peak of command-planned

economy (1948)130

The dynamics of economic life required a constant adaptation

of organisational forms to the new needs, and those needs became par-
ticularly relevant when economic development was followed by big so-
cial changes such as industrialisation and town planning as its imma-
nent component. In this context the diversity of life itself and its needs,
the technology of production processes, the path a product passed to the
consumer, required the existence of diverse organisational forms. As a re-
sult, uniform organisation patterns, which had been planned from 1945,
were not easy to establish in industry either. From the end of 1948, the
CPY management increasingly realised the negative consequences of uni-

129 AJ, Glavna direkcija savezne industrije motora Ministarstva teške industrije Vlade
FNRJ (GDSIMMTIVFNRJ), 108−30−49, Zavođenje jednoobrazne organizacije u
preduzeću „TAM“, 19. maj 1949. godine.
130 AJ, 140−1−1, „14. Oktobar“, Fabrika građevinskih i rudarskih uređaja, Kruševac,
1948. godina.

396
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

formity in the organisation of economy and economic development. They

emphasised the need for deepening the organisational forms with a view
to achieving better market supply and excluding the performance of dou-
ble functions. Emphasis was placed on the aim to adapt the organisational
forms to the technological process, with special focus on the vertical or-
ganisation of enterprises irrespective of their size and category. In other
words, “trustisation” was to be carried out following the criterion for en-
terprises which had connected technological processes. It was a contin-
uation of the creation of complex corporate forms of economic organisa-
tion.131 However, the conflict with the USSR brought about major changes
in all the spheres of life and the work on that was finished around the end
of 1949 by changing the direction towards decentralisation and workers’
self-management.132
The conflict with the USSR, economic blockade by the Socialist
Bloc countries, difficult situation in rural areas due to the implementa-
tion of a repressive buying up policy, numerous ambitiously initiated eco-
nomic objects were just a few of the factors which led to redefining the
economic course of the time. The most decisive factor was certainly the
ideological conflict with the Soviets, which spilled over into all the oth-
er segments of interrelations with them. However, what surpassed by
far all the aforesaid factors and essentially generated the state of conflict
was the fact that the Yugoslav revolution had been independent, so that
those who had carried it out could not easily consent to foreign involve-
ment, even if it came from the state by which it was largely inspired. The
split was helped in particular by the ethno-psychological traits charac-
teristic of the area that the Yugoslav revolutionaries came from, among
which defiance and spite figured prominently, which belonged in the cor-
pus of values necessary for pursuing a sovereign policy. All the aforesaid
had a decisive influence on Yugoslavia’s decision to choose its own path
into socialism.133

131 AJ, 106−13−24, Primedbe na plan za reorganizaciju direkcije i preduzeća.

132 Arhiv Republike Slovenije (ARS), Osebni fond - Boris Kidrič (OFBK), 1381−2−2,
Boris Kidrič (1912−1953), 24; AJ, 40−4−9, Zapisnik sa sastanka Privrednog saveta
Vlade FNRJ, održanog 19. septembra 1949. godine; Leonid Gibianskii, „The Soviet-
Yugoslav Split and the Cominform“, in: The Establishment of Communist Regimes in
Eastern Europe, 1944-1949. ed. Norman Naimark and Leonid Gibianskii, (Boulder:
WestviewPress, 1997), 303−311; A. Kemp-Welch, Poland under Communism, A Cold
War History, (New York: Cambridge University Press, 2008), 30−35.
133 Dinko A. Tomasic, “The problem of unity of world communism“, Marquette University
Slavic Institute Papers, No. 16, Wiskonsin 1962, 1−7; Vladimir Bakarić, Ekonomski i

397
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

The circumstances in the autumn of 1949 mentioned above re-

sulted in the idea of abandoning the Soviet economic model. The econom-
ic managers emphasised that the development of economy, and the scope
of production in particular, changes in the social composition of the popu-
lation, the rise in the number of industrial workers and the need for more
of them, the strengthening of the republic and local economic apparatus-
es, numerous newly made products and the further expansion of the so-
cialist sector, had resulted in abandoning the old organisation forms and
called for further economic organisation development. The continuation
of economic development within the command-planned framework of the
previous period was ending. This change did mean a radical split, but the
dismantling of the carefully constructed social and economic system was
a process which took years to complete. The top officials of the state were
aware of that, and they had to approach the changes through stages.134
The shift to self-management, in the beginning in the form of work-
ers’ councils, implied three parallel, and in the communist interpretation
necessary processes. The first was debureaucratisation, the second the de-
centralisation of management, and the third the democratisation of socie-
ty. Although the three processes were inseparable from the point of view
of economic leaders, the ideological point of the party sword was turned
more fiercely towards doing away with the society’s bureaucratic tenden-
cies. In the opinion of CPY ideologues, these tendencies resulted from the
application of Soviet solutions, and bureaucratisation was viewed as im-
manent to the Soviet socialist concept.135 This view, however, followed
from the conflict with the USSR and had an undeniable ideological back-
ground, before any justification could be found in reality. Simply put, all
modern economic organisms had complex management mechanisms, so
that bureaucratisation was a logical starting point in the development of
“the economy as a large economic system”. In other words, no big cor-
poration or corporate system could exist without relying on the services
of an army of office workers.136 Naturally, the Yugoslav communists had
at the time held the naïve belief that the dismantling of the Soviet-type
state economic system would mark the end of the power of bureaucracy
as a social class. The plan was to transfer one part of the state apparatus

politički aspekt socijalističkog samoupravljanja, (Sarajevo: Svjetlost, 1975), 28−32;

Najdan Pašić i Kiro Hadži Vasilev, nav. delo, 423−463.
134 AJ, 40−4−9, Zapisnik sa sastanka Privrednog saveta Vlade FNRJ, održanog 19.
septembra 1949. godine.
135 Zapisnici Privrednog saveta Vlade FNRJ 1944−1953, II/480−481.
136 Luis Mamford, Kultura gradova, (Novi Sad: Mediterran publishing, 2010), 254−255.

398
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

engaged in the administrative structures in charge of economy directly

into production units. This thinking of the dangers of political bureaucra-
cy for society were not exclusive to Yugoslavia, but were the product of
Western political thought, and by overestimating the power of the politi-
cal, they underestimated the social impact of the economic bureaucracy,
which was far more numerous and much better connected. Democrati-
sation, as the last phase of the social reform, had as the ultimate aim the
delegation of decision-making to the direct producers, which would final-
ly eliminate the first two processes.137

Figure 6: The organisation of economic ministries and other supporting institutions during
the First Five-Year Plan.

With regard to the decentralisation of power, the reorganisation

was directed at removing the threat of rigid centralisation, which was,
in the opinion of economic strategists, reflected in the Federal Planning
Commission as an economic task force through which the Federal Gov-
ernment dictated the economic trends. Certain leaders, such as the min-
ister of light industry Josip Cazi, drew the conclusion that such “devas-
tating practice” had to be prevented in order to avoid, as in the case of
the USSR, a disruption of the equality of peoples due to the possibility of

137 Milentije Popović, Udruženi rad i neposredna demokratija, (Sarajevo: Svjetlost,

1976), 99−109; Edvard Kardelj, Samoupravljanje i društvena svojina, (Sarajevo:
Svjetlost, 1979), 98−101; Veljko Vlahović, Savez komunista u sistemu socijalističkog
samoupravljanja, Sabrani radovi, IV, (Titograd: Pobjeda, 1981), 36−41.

399
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

one of the republics displaying hegemonistic tendencies. Josip Cazi’s ar-

gumentation derived from the CPY’s pre-war views on the national issue,
which were predominantly based on the platitude of the “hegemonism of
the Great-Serbian bourgeoisie”138, which in Cazi’s views from the begin-
ning of 1950 undoubtedly gave way to the hegemony of Serbia and Bel-
grade, the capital. He thought that the republics were the highest forms
of social life, and should be strengthened and granted full accountabili-
ty, which would prevent the formation of a “hegemonistic clique which
would impede the initiative of the working masses”. In his conclusion,
which was logically inconsistent, he stressed that the decentralisation
measures, including the transfer of higher competences to the republics,
would curb any economic particularism. Finally, Cazi thought that the re-
organisation would not reduce the republics’ answerability to the centre,
but would rather increase it.139
The economic reorganisation process started with the establish-
ment of the Power Engineering and Extractive Industry Council (SEEI) on
08 February 1950. The establishment of this Council was preceded by the
abolishment of the federal ministries of electric power industry and min-
ing. As a result, the duties from within the domain of these two depart-
ments were transferred to the competence of the Council, and its scope of
accountability now included the newly established committees for elec-
tric power industry, non-metals and coal, as well as the general directo-
rates for metallurgy and oil production and processing.140 The light indus-
try was the next to face reorganisation in April 1950 under the authority
of the Federal Government. The total light industry was transferred to the
jurisdiction of the republics, and the further existence of the federal min-
istry of industry was no longer justified.141 All the enterprises which had
been within the jurisdiction of the Ministry of Light Industry of the FPRY
were assigned through reorganisation to the control of the republic min-
istries depending on the republic they were in. The newly formed Process-
ing Industry Council (SPI), a federal body, became the meeting place for
the Council chair, the chair of the Committee for Local Economy and Utili-

138 Mira Radojević, „Udružena opozicija i komunisti“, Istorija 20. veka, 1−2/1990, 39−57.
139 AJ, 10−1−1, Zapisnik sa sastanka generalnih i glavnih direktora, inženjera i
personalnih rukovodilaca saveznih direkcija lake industrije po pitanju reorganizacije
privrede, održanog u Ministarstvu lake industrije FNRJ, 10. februar 1950. godine.
140 Službeni list FNRJ, 10/50.
141 AJ, 10−1−1, Zapisnik sa konferencije u Ministarstvu lake industrije FNRJ sa
generalnim i glavnim direktorima saveznih direkcija resora ovog ministarstva – po
pitanju reorganizacije – održane dana 30. marta 1950. godine.

400
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

ty Operations and the republic governments’ ministers for the processing

and local economies who gathered together for the purpose of making ar-
rangements, coordinating and aligning the state’s general economic pol-
icy. This became the venue of decision-making on how much funds each
republic would receive from the federal budget, of debating investment
plans, determining production proportions, etc. The scope of SPI includ-
ed: the production, refinement and processing of non-metal ores; metal
industry and metalworking; electric power industry; chemical industry;
wood industry; the industry of cellulose, pulp and paper; textile industry;
leather and shoe wear industry; rubber industry; forest exploitation.142 At
the same time with SPI, after the dissolution of the Ministry of Civil Engi-
neering, the Council for Civil Engineering and the Construction Industry
(SGGI) was formed. The duty of this Council was general control of the civ-
il engineering and construction industry operations, as well as coordinat-
ing the activities of the republic bodies competent for those operations.143
The Machine-building Industry Council was the last to be formed
in June 1950 (SM). This was preceded by the dissolution of the Ministry
of Heavy Industry, which was tackled the last due to the complexity of its
structure and its importance for overall economic development. The Coun-
cil’s task was general management of machine building and black metal-
lurgy operations from the federal level, as well as coordinating the activi-
ties of the republic bodies competent for those operations.144 The Central
Government only retained direct control of parts of heavy industry, met-
allurgy and mining. The reorganisation led to a new form of organisation
of the federal administrative authorities in charge of direct management
of operations of four branches of economy. This includes the general di-
rectorates of metallurgy, oil production and processing, machine-build-
ing industry and ferrous metallurgy, while the factories under their con-
trol retained the status of enterprises of general national importance.
Although under direct control of the Federal Government, these institu-
tions were formally under the jurisdiction of the metal-building industry,
power engineering and extractive industry councils.145

142 AJ, 10−1−1, Zapisnik konferencije održane u Ministarstvu lake industrije FNRJ
3.4.1950. godine sa ministrima industrije narodnih republika u vezi reorganizacije
resora lake industrije.
143 Službeni list FNRJ, 32/50.
144 Ljubomir Korać, Organizacija Federacije u socijalističkoj Jugoslaviji 1943−1978,
(Zagreb, Arhiv Jugoslavije/Globus: 1981), 285.
145 AJ, 26−91, Rešenje o prenosu preduzeća pod AOR-om Generalne direkcije rudnika
i topionica obojenih metala iz nadležnosti ove direkcije u nadležnost Generalne

401
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

The establishment of the new organisation forms was accompa-

nied by the delegation of state-owned enterprises under federal jurisdic-
tion to the republics. The Law on State-Owned Enterprises provided the
legal framework for the transfer of competences from one state authority
onto another. It was the beginning of decentralisation at the lower tiers
of economic organisation, through which economic entities of nationwide
importance were gradually being transferred under republic control. The
first federal enterprises from Serbia to be handed over to the Government
of the People’s Republic of Serbia by the Government of FPRY at the end
of July 1950 were “Fabrika građevinskih mašina Smederevo”, the agricul-
tural machinery factories “Zmaj” and “Pobeda”, “Fabrika kablova Svetoza-
revo” and the cable factory from Novi Sad, the magnesite mines “Goleš”,
“Drenica” and “Šumadija”, the “Mladenovac” and “Partizan” grog (clay) fac-
tories and the “Magnohrom” enterprise from Rankovićevo. The PR Cro-
atia Government was entrusted with the enterprises “Osječka ljevaonica
željeza i tvornica strojeva” and the “Elka” factory of insulated conductors
and reinforced pipes, while the Government of PR Slovenia took control
of “Mariborska tovarna kmetijskih strojev” and the “Iskra” electrical engi-
neering and fine mechanics factory. The factory “Fabrika poljoprivrednih
mašina” from Tuzla was similarly handed over to the Bosnia Herzegovi-
na Government.146 By following the decentralisation course, the Govern-
ment started with the abolishment of a large number of federal general
and main directorates, as their further existence was no longer justified.147
With a view to more efficient management, in the absence of a solution,
the republics formed temporary general directorates for all the branch-
es that already existed at the federal level.148
In April 1951 the economic management decentralisation process
entered the second phase. It was then that the largest remaining enterpris-
es in the heavy industry, metallurgy and mining areas, controlled by the
Government’s general directorates, started gradually passing under the
control of the republics’ newly established general directorates, follow-
ing the same system as those under the jurisdiction of the Federal Minis-

direkcije metalurgije Vlade FNRJ, 7. april 1950. godine; Lj. Korać, op. cit., 280−286.
146 AJ, 6−4−4, Rešenja o predaji preduzeća opštedržavnog značaja vladama narodnih
republika, 21. jul 1950. godine.
147 AJ, 50−11−24, Uredba o ukidanju generalnih i glavnih direkcija i uprava u nadležnosti
Vlade FNRJ, 25. jul 1950. godine.
148 AJ, Savet za prerađivačku industriju (SPIVFNRJ), 109−4−6, Problem preduzeća koja
prelaze iz okvira Saveznog ministarstva lake industrije u okvir republika, 1950.
godina.

402
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

try of Light Industry a year earlier. The handover of the enterprises took
place at the beginning of April between the FPRY General Machine-build-
ing Industry Directorate and the general machine-building industry direc-
torates of the republics.149 The same fate was shared by the enterprises
integrated into the General Metallurgy Directorate of the FPRY Govern-
ment. The enterprises of the general directorate for oil production and
processing of the FPRY Government and the Electrification Directorate
of the Power Engineering and Extractive Industry Council were all trans-
ferred to the governments of the republics they belonged to.150 However,

149 AJ, Generalna direkcija za mašinogradnju Vlade FNRJ (GDMVFNRJ), 107−3−5,

Zapisnici o primopredaju preduzeća Generalne direkcije mašinogradnje Vlade FNRJ
generalnim direkcijama mašinogradnje narodnih republika, 1950. godina.
150 AJ, Savet za energetiku i ekstraktivnu industriju Vlade FNRJ (SEEIVFNRJ), 59−1−2,
Strogo poverljiva naredba o prenosu preduzeća iz savezne nadležnosti u nadležnost
narodnih republika, 1. april 1951. godine); The Federal Government assigned to the
General Machine Industry Directorate of the People’s Republic of Serbia the following
enterprises: ”FTAM Ivo Lola Ribar”, “IPM”, “IKVL”, “IMR”, ”14. oktobar”, ”Fabrika
vagona Rankovićevo”, ”Dragoslav Đorđević Goša”, ”Jugoalat”, ”Potisje”; to the General
Machine Industry Directorate of the People’s Republic of Croatia the enterprises ”Đuro
Đaković”, ”Prvomajska”, ”Tvornica parnih kotlova Žitnjak”, ”Jedinstvo”, ”Rade Končar”;
to the General Machine Industry Directorate of Slovenia the enterprises ”Litostroj”,
”Savezni institut za turbomašine”, ”Franc Leskošek”, ”TAM”; to the General Machine
Industry Directorate of Bosnia Herzegovina ”Industrija auto-moto traktorskih
pribora”, ”Trudbenik”, ”Fabrika transformatora Banja Luka”. The enterprises of the
General Directorate of Ferrous Metallurgy of the FPRY Government were transferred
from the federal competence to the competence of the republics. Serbia took over
”Železara Smederevo” and ”Valjaonica Zemun”, Croatia ”Železara Sisak”, Slovenia was
entrusted with the ironworks ”Štore”, ”Guštanj” and ”Jesenice”, Bosnia Herzegovina
with the ironworks ”Zenica” and ”Doboj”, ”Rudnik i železara Vareš” and the ”Ljubija”
mine, while ”Železara Nikšić” was transferred to the competence of the People’s
Republic of Montenegro. The enterprises of the General Directorate of Metallurgy of
the FPRY Government were not exempt from this process. Serbia was entrusted with
the copper mines and smelteries of “Bor“, the lead and zinc mines and smelteries
of “Trepča“, the antimony mines and smeltery “Milenko Kušić“, the antimony mines
and smeltery of ”Zajača” , the gold mine of “Majdanpek”, the molybdenum mine of
”Mačkatica”, the mining basin of ”Neresnica”, the mining basin of ”Rudnik”, the lead
and zinc mine of ”Kopaonik”, the lead and zinc mine of ”Avala”, the copper and copper
alloy rolling mill of ”Sevojno”; Croatia was assigned ”Istarki boksiti”, ”Tvornica glinice
i aluminijuma Lozovac”, ”Tvornica elektroda i ferolegura Šibenik”, ”Boksitni rudnici
Drniš”; Slovenia was entrusted with ”Topilnica in valjarna cinka Celje”, ”Rudniki svinca
in topilnica Mežice”, the mercury mine of ”Idrija”, ”Industrija metalnih polizdelkov
Impol” , ”Tovarna glinice in aluminija Strnišće”, ”Kemična tovarna Moste”; Bosnia
Herzegovina ”Boksitni rudnici Mostar”, ”Boksitni rudnici Bosanska Krupa”, ”Rudarski
basen Srebrenica”, the ”Čevljanovići” mine, the pyrite mine ”Bakovići”; Makedonija
assumed control of the chromium mining basin of ”Raduša”, the chromium mines of
”Lojane”, the chromium mine of ”Rabrovo”, the lead mine of ”Zletovo”, the ”Cer” mine
(Ibid).

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

although this transition from the corporative to the cooperative organi-

sation planted the seeds of derogation of the federal government’s con-
trol of economy, the central government, through the newly established
councils, retained a powerful presence in the country’s economic trends151,
as the decentralisation of economy and the dissolution of economic ad-
ministrations of federal importance demonstrated “unwholesome” dis-
integration tendencies. 152 With a view to preventing the development of
such relations, enterprises in the same branch began associating into the
so-called “communities”, which coordinated in detail the work of the rel-
evant branch of industry under the council’s supervision. The democrati-
sation of the economy, in the form of workers’ self-management of enter-
prises through workers’ councils, was at the time more of a proclamation
and most desirable prospect than social reality.153

“Bottom-up” corporatisation:
The enterprise consolidation process
The process of developing the state economy sector into a mono-
lithic economic structure unfolded on two levels in parallel. The lower cor-
poratisation level, which was equally important, unfolded directly in the
“production base”. Enterprises were merged in different ways. The field
situation often required a more thorough planning of the future location
of individual factories, so that certain smaller enterprises totally disap-
peared from the list, as the local authorities consistently carried out the
federal government’s initiative on the need for enterprise consolidation.
In line with that, among the Yugoslav communists widely accepted para-
digm, which had been carried out in the USSR in the 1930s, the shoe fac-
tory “Sebra” from Subotica was merged with a larger factory within the
same branch, also located in Subotica, the “Marika” factory.154 There were
different examples as well, so that the liquidated “Tvornica ulja d.d.” from
Koprivnica transferred its iron girders, axles and ball bearings to the “Ju-
gobeton” construction company from Zagreb, which were then used for
the repair of the whole factory building and 80% of the machines.155 In

151 AJ, 109−4−6, Organizacija prerađivačke delatnosti, 1951. godina.

152 AJ, Savet za industriju i građevinarstvo Vlade FNRJ (SIGVFNRJ), 166−1, Savet za
industriju i građevinarstvo, Zadatak zajednice, 1951. godina.
153 AJ, 166−1, Predlog pravila o radu zajednice elektroindustrije FNRJ (1951. godina).
154 AJ, 17–147–148, Fabrika cipela „Sebra“.
155 AJ, 17–147–148, Izveštaj o radovima obnove za jul 1946. godine, Državno industrijsko
građevinsko preduzeće Državno industrijsko građevinsko preduzeće „Jugobeton“.

404
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

addition of those cases, there were also enterprises the reconstruction

of which was considered in the light of their pre-war activity, which had
been based on the proximity and abundance of raw material resources,
and the price of their transportation to the production plants. The Bos-
nia Herzegovina leadership thus decided to completely wind up the “Uso-
ra” sugar factory from Doboj, the “Sartid a.d.” metalworks factory from
Višegrad and “Trijumf” from Sarajevo, which were totally ruined, as a re-
sult of unprofitable business and expensive production before the war.156
New industrial enterprises were formed in different ways, and one
of the most important criterions which characterised all the new enterpris-
es was a correlation between the enterprise location, the proximity of the
raw material base, the transportation price, the workforce qualification
level, production profitability and the country’s need for the products in
question. The overall set of these sub-criteria determined an enterprise’s
profitability and was as such the main factor in enterprise establishment.
The economic logic thus required for the “Franjo Trbuha” and “Ivan Krut-
zler” butchery machines and tools workshops, both from Zagreb, which
had been confiscated as a result of their owners’ collaboration with the
Ustasha regime, to be transferred to the facilities of the “NIA” machine
and tool factory from Zagreb, specifically expanded for the purpose. The
reason lied in the fact that neither of the two workshops had a foundry,
and they had to order all the parts required for their machines from en-
terprises which had foundries and metalworking machines, and the fact
that those workshops had only between 10 and 20 workers made their
product expensive and unaffordable for a large number of users. After the
relocation of these workshops and the establishment of a shared plant for
the production of butchery machines and tools within the “NIA” factory, a
new enterprise, “Narodna industrija aparata i strojeva” was established,
which now had expanded production and all the required machines to
complete the production, make it cheaper and more profitable.157 We also
have an example of a total merger of three confiscated enterprises in the
same field, i.e. the “Velebit”, “Rapid” and “Joakim Tomić” factories, which
manufactured prams and home furniture. Their merger led to the forma-
tion of a new state-owned enterprise in Zagreb under the name “Državna

156 AJ, 17–147–148, Podaci o obnovi preduzeća Narodne Republike Bosne i Hercegovine
za 1945. godinu, 26. maj 1946. godine.
157 AJ, 17–4–4, Osnivanje novih industrijskih preduzeća, „Narodna industrija aparata i
strojeva“ Zagreb, 25. maj 1946. godine.

405
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

tvornica željeznog pokućstva i dječjih kolica”, when their machines were

moved to new factory halls built for the purpose.158
The process of building “the economy as a large economic system”,
which unfolded through the consolidation of factories, took off during the
summer of 1946. The merger decision-making was solely the responsi-
bility of the FPRY Government, since the enterprises involved were state-
owned enterprises of nationwide importance. There were successful and
unsuccessful mergers, and only half-successful ones. The “Iskra” electrical
engineering and fine mechanics factory from Kranj and the “Zmaj” facto-
ry for galvanic cells and electrical engineering equipment from Ljubljana
were a successful merger example. Having operated in the same sector,
with “Iskra” being an enterprise with considerably more capital and a
more advanced work organisation, it was decided to “blend” “Zmaj” into
“Iskra”, thus creating a single enterprise of substantially larger production
and technological capacities.159 On the other hand, the merger of several
confiscated electrical industry enterprises from the city of Zagreb territo-
ry turned out a failure. The enterprises involved were “Hrvatsko Simens
električno d.d.”, “AEG Hrvatsko društvo za elektriku”, “Industrija Paspa”,
“ELIN d.d.”, “ELKA društvo za elektrotehniku i fabrika kabela d.d.”, “NO-
RIS”, “Elektroproizvod”, “Tvornica akumulatora MUNJA d.d.” and “Nar-
odno elektrotehničko poduzeće za elektriku i strojeve”, which were inte-
grated with the state-owned enterprise “ELIH”. Since those enterprises
differed in their operations, shortly after the integration this turned out
to be a negative factor, which finally led to “ELIH”’s liquidation. The liqui-
dation took place on 31 December 1946, and on the following day “Rade
Končar”, “ELKA”, “Croatia”, “Elektrotehna” and “Munja” started operating
as independent enterprises.160
The first and second concentration degrees in the form of hori-
zontal and vertical integrations were carried out within the General Ad-
ministration for the Automotive Industry and Precision Mechanics (from
1947 the General Directorate of the Federal Motor Industry). Such moves
by the Government testify to the country’s clear aspiration to motorise the
economy as soon as possible, and this corporate model was supposed to
serve as a means to realise that within the set timeframe. In this regard,

158 AJ, 17–4–4, Osnivanje novih industrijskih preduzeća, „Državna tvornica željeznog
pokućstva i dječjih kolica“, 24. maj 1946. godine.
159 AJ, 16−14−18, Fuzija preduzeća „Iskra“ i „Zmaj“, 24. avgust 1946. godine.
160 AJ, 16−14−18, Fuzionisanje elektrotehničkih preduzeća sa „ELIH-om“ i likvidacija,
1946. godina.

406
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

in the summer of 1946, regrouping was carried out within the General
Directorate of the Federal Motor Industry, after which there was a merg-
er of certain enterprises followed by their placement under the exclusive
competence of this Directorate. The enterprises “Industrija motora A.D.”
and the iron and metal foundry “Gvožđar A.D.” from Rakovica carried
out a merger resulting in the establishment of the state enterprise “IMR”.
Part of the same process was the merger of the precision mechanics en-
terprises “Mikron A.D.” and “Nestor A.D.” from Belgrade, after which the
enterprise “IPM” was formed. “Tovarna letalskih delov”, founded during
the occupation by the German company “Vereinigte Deutsche Motoren-
werke A.G.”, continued its work and served as the base from which the
state enterprise “TAM” was founded.161
The end of the last wave of nationalisation in mid-1948 brought
the process of consolidation of economic entities to an end.162 “IMR” then
completed the process of consolidating its own economic capacities when
the enterprise “Jugostroj” was merged with it, followed by “Goldner”.
These factories provided an opportunity for more rational production
by bringing into the “IMR” factory halls machines, professional staff and
a foundry of brass, aluminium and other alloys. This laid the foundation
for the future fabrication of tractors, but also completed the integration
within the motor industry.163 The example of the nationalised enterprise
“Rafinerija dragih kovin Ing. Paulin” from Ljubljana, which was merged
by the state decision with the enterprise of national importance “Galeni-
ka” from Zemun, indicates the determination of the state to completely
reshape the lower tiers of the economic structure in accordance with the
proclaimed economic concept. It was then that the Ministry of Light Indus-
try of FPRY decided that “Galenika”, which had included the production
of dental alloys in the production plan, should delete from the investment
plan the items relating to the purchase of machines and equipment nec-
essary to produce this article. This decision was adopted because it was
decided to move the already existing equipment of the nationalised en-
terprise “Rafinerija dragih kovin Ing. Paulin” from Slovenia to Zemun. In
addition to the merger of the two enterprises, funds were allocated from
one end of the country to the other. At a time when it was difficult to ob-

161 AJ, 16−13−17, Podaci potrebni za blagovremeno obavljanje registracije, 20. avgust
1946. godine.
162 AJ, 50−4−10, Izveštaj o praćenju nacionalizacije privatnih privrednih preduzeća u
NRS, 15. maj 1948. godine.
163 AJ, 108−1−2, Priključenje preduzeća „Jugostroj“ „Industriji motora Rakovica“, 11. maj
1948. godine.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

tain investment funds, or to realise purchases abroad, this was of para-

mount importance.164
The emergence of a new self-management social and economic
system at the end of 1949 resulted in the beginning of a profound reorgan-
isation of the economic structure. However, this did not result in a break
with the policy which inclined towards the formation of large econom-
ic systems. The work on the corporatisation of the basic economic units
was carried on, but with much more experience and meaningful moves.
Over the years of management, the economic leaders had become well ac-
quainted with all the peculiarities of the Yugoslav economy, and were now
in a position to identify earlier omissions and consider the following ac-
tions more carefully. One such action was the decision on merging the en-
terprises “Boksitni rudnici Drniš” and “Elektrometalurški kombinat Šibe-
nik”, which led to the establishment of an enterprise which started with
the exploitation of bauxite ore deposits, production of alumina, alumin-
ium, aluminium alloys, ferroalloys and amorphous electrodes. Through
this merger, a mining and metallurgical company was formed, which com-
pleted the entire production process. On the other hand, “Elektrometa-
lurški kombinat” was also the product of a merger of “Elektroželezara”
from Šibenik, “Tvornica glinice i aluminijuma” from Lozovac and “Hidro-
centrala Manojlovac” in July 1948, so that the successful consolidation pro-
cess was continued in the case of this firm.165 An identical process may be
followed with the machine tool factory “Prvomajska” which was merged
with the “Tvornica hidrauličnih strojeva” from Zagreb.166
On the other hand, with the aim of overcoming the economic back-
wardness as soon as possible through accelerated industrial construction,
economically unprofitable factories sprang up. Examples of this unnec-
essary waste of investment funds were two factories on the border be-
tween Serbia and Bosnia. The first, the “Terpentin” factory in Dobrun was
built before, and modernised after the war, while the second, complete-
ly new, was built across the border in Mokra Gora. Due to the relatively
scarce raw material base, i.e. the resin from local conifers, which was ob-
tained from a rather limited forest area in Bosnia and Serbia, the capac-

164 AJ, 10−5−5, Pripajanje nacionalizovanog preduzeća „Rafinerija dragih kovin Ing.
Paulin“, Ljubljana, preduzeću „Galenika“ Zemun, 21. jun 1948. godine.
165 AJ, 26−91, Rešenje o spajanju preduzeća „Boksitni rudnici Drniš“ i „Elektrometalurški
kombinat Šibenik“, 7. april 1950. godine.
166 AJ, 26−92, Rešenje o spajanju preduzeća „Tvornica hidrauličnih mašina“ Zagreb
i „Prvomajska“ tvornica alatnih strojeva i levaonica, Zagreb, 23. decembar 1948.
godine.

408
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

ities of these resin processing enterprises could not be adequately used

and the production quality did not satisfy consumers. Since this economic
anomaly was due to a lack of coordination of economic leaders from Ser-
bia and Bosnia Herzegovina, the Federal Government intervened in or-
der to remedy it. They decided to dismount the factory in Mokra Gora and
move it to Dobrun, thus concentrating the production in the “Terpentin”
factory, which had a longer tradition in tarry, possessed the professional
staff and was located next to the Užice-Sarajevo railway communication.
In addition to achieving the profitability of operations, this merger also
led to transferring to the Dobrun factory some new technological process-
es, which the enterprise had not had before.167
These steps taken by the state in the first five post-war years rad-
ically altered the appearance of the Yugoslav economy. The economic pol-
icy created by the CPY was aimed at the liquidation of medium, small and
micro enterprises, mostly of the craft type, which, according to the Yugo-
slav communists, were a relic of the past and an obstacle to modern in-
dustry development. The integralist aspirations of state economic policy
led not only to the formation of large enterprises, but also to the integra-
tion of the economy into a single entity, which was managed by the fed-
eral government through many institutions which had a clearly defined
position in the economic hierarchy.168 In this consolidation process, the
Yugoslav economy became a giant corporation in the late 1940s, capa-
ble of synchronising numerous individual actions and connecting short-
term and long-term plans. Visible progress was made during the imple-
mentation of the forced industrialisation during the First Five-Year Plan.
The outlines of a changed economic structure could be seen as early as
the beginning of the 1950s. Besides the development of production, there
was also a significant concentration of industry, which had been largely
fragmented before the war. Although the number of enterprises had not
increased, despite technical training and modernisation, the number of
industry workers had more than doubled. There had been only 102 en-
terprises with over 500 workers before the war, and over 200 at the end
of 1951. There had been five enterprises with over 3,000 workers before
the war, and after the war, as many as 10 with over 4,000 employees.169

167 AJ, 109−8−15, Povećanje kapaciteta, Prenos postrojenja iz NR Srbije, Fuzionisanje

preduzeća „Terpentin“ u Dobrunu i Mokroj Gori, 12. jun 1950. godine.
168 N. Čobeljić, Privreda Jugoslavije, Rast, struktura i funkcionisanje, (Beograd: Savremena
administracija, 1977), 11−18.
169 AJ, KPCKSKJ, XI−1/91, Neki podaci o razvoju naše privrede u odnosu na stanje pre
rata, 1952. godina.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

The split with the Soviets in 1948 announced the end of the central plan-
ning and corporate organisation of the economy. With the introduction of
the first workers’ councils at the end of 1949 and the tendency to transfer
management directly to manufacturers, the corporate organisation model
started giving way to the cooperative model. The results of the first eco-
nomic reorganisation during 1950 confirmed the new course of state pol-
icy and testified to a clean break with the economic organisation estab-
lished on the Soviet corporate model.170 From that point on, armed with
considerable experience in practical management and organisation, the
Yugoslav economic managers began to devise their own forms of econom-
ic organisation based on the idea of workers’ self-management.

External and Internal Factors of the Industrialisation

of Yugoslavia (1945-1952)

Political and economic dependence on the East

The burning ambition of the Yugoslav leadership in terms of rais-
ing the economic structure to a higher level in the shortest possible time
had its expression in the often unrealistic demands towards the USSR.
The Soviet side tried to accommodate such desires as much as possible,
even though its devastated economy had modest results.171 The irration-
al faith in the limitless possibilities of the Soviet Union was fostered in a
way by Soviet propaganda during the previous decade, so that the Sovi-
et state leaders were aware of their responsibility relating to the young-
er revolution which had been the first in Europe, after the ”Red October”,
to successfully kindle the flame of socialism. The escalation of the Trieste
crisis during the spring of 1946, frequent violations of the Yugoslav air-
space by American planes, and the growing pressure from Anglo-Ameri-
can allies on Yugoslavia over the fear of possible communist penetration
of the Apennine peninsula, were opportunities for the Yugoslav and Sovi-

170 ARS, Osebna zbirka - Boris Kidrič (OZBK), 1522−2−10, Ekspoze o organizaciji
državnega upravljanja našega gospodarstva, 5. februar 1950. godine.
171 Момир Нинковић, „Неуспешни преговори о организацији југословенско-
совјетских мешовитих друштава (1945−1947)“, Токови историје, 2/2015,
129−130; Milan Gulić, Momir Ninković, „Mješovita jugoslovensko-sovjetska društva
slučaj Juste“, Istorija 20. veka, 1/2014, 143−148.

410
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

et leaders to consider the political situation in the region.172 Tito’s second

and last visit to the Soviet Union took place in these difficult circumstanc-
es. During the stay of the highest Yugoslav delegation led by Marshal Tito
in Moscow in late May and early June, negotiations were held on deepen-
ing economic cooperation and on previous foreign policy moves by the Yu-
goslav government. On that occasion, Stalin promised economic and tech-
nical assistance, long-term cheap loans for the construction of industry,
assistance in weapons and ammunition. He was interested in the Yugo-
slav leadership’s attitude towards neighbours and certain regional issues,
primarily in their relation towards Bulgaria and Albania.173 In parallel to
the political, the two governments also conducted trade agreements. The
course of events led to the conclusion of the first purely economic agree-
ment on 8th June 1946, which opened the door for economic coopera-
tion. With the mutual delivery agreement, the Soviet government lent a
hand to the Yugoslav economy.174 Negotiations were initiated on the for-
mation of eight joint enterprises, but only two such requests were carried
out in the February of 1947, by establishing joint Yugoslav-Soviet com-
panies for air traffic and traffic on the Danube. The formation of the ”JUS-
TA” and ”JUSPAD” companies was aimed at restoring and increasing Yu-
goslavia’s production possibilities.175
In the following months, economic negotiations were conduct-
ed with the more developed part of the Soviet bloc countries. The Agree-
ment on Czechoslovak Investment Deliveries and Yugoslav Counter-deliv-
eries,176 The Five-Year Agreement on the Exchange of Goods with Poland
from 1947, and the Agreement on Economic Cooperation in the Field of
Aluminium Industry, as well as The Agreement on Long-term Hungarian
Deliveries and Yugoslav Counter-deliveries from 1947 reflected the Yu-
goslav leaders’ desire to support the needs of the coming industrialisation
as best they could.177 With that in mind, the Yugoslav delegation returned

172 AJ, I−1/7, Pismo Edvarda Kardelja maršalu Titu, Beograd, 6. jun 1946. godine.
173 AJ, I−1/7, Beleška Koče Popovića o sastanku u Kremlju i na dači, 27. maj 1946. godine.
174 AJ, I−1/7, Sovjetsko-jugoslovenski kominike o boravku u Moskvi delegacije
jugoslovenske Vlade na čelu sa predsednikom ministarskog saveta FNRJ maršalom
Josipom Brozom Titom, Moskva, 8. jun 1946. godine.
175 DAMSPRS, 1947, PA, USSR, f. 107, d. 27458, Mešovita jugoslovensko-sovjetska
društva „JUSPA“ i „JUSPAD“, 1947. godina.
176 ДАМСПРС, 1947, ПА, Чехословачка, ф. 26, д. 43662, Извештај о чехословачким
инвестиционим испорукама и југословенским противиспорукама по споразуму
од 25. фебруара 1947. године.
177 АЈ, КМЈ, 836/III−2−д/19, Извештај о међународним економско-трговинским
односима ФНРЈ у периоду од 1948. до I полугођа 1952. године, Београд (5.8.1952.

411
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

to Moscow in the spring of 1947. The meeting of the Yugoslav state dele-
gation, led by Edvard Kardelj, with Generalissimo Joseph Vissarionovich
Stalin, in Moscow at the end of April 1947, and the affirmative position of
the Soviet head of state on assistance in building the Yugoslav economy,
directly encouraged a more dynamic legal formulation of new economic
agreements.178 The first such agreement between the two governments
was signed in Moscow on 25th July 1947, and it included the delivery of
plants and industrial devices on credit, which resolved the Yugoslav side’s
procurement of metallurgical plants planned for construction during the
First Five-Year Plan.179 Since the Yugoslavs were not accustomed to in-
dependently building such complex industrial systems, which were to
be obtained under the first agreement, a second one was concluded, ac-
companying the main agreement, which defined the Soviet technical aid
and assistance in the building of industrial facilities. A few days later, an
agreement on providing arms and military technical supplies on credit
was signed as well.180 The fourth agreement, by which the USSR was com-
mitted to sell to Yugoslavia the 1453mm railway rolling stock obtained
as spoils of war, was signed a month later, on 23rd August. The negotia-
tions for determining the technical specifications and delivery conditions
started immediately after signing these agreements.181
In the last months of 1947, Yugoslavia fell into an internal crisis
due to the total collapse of the grain buying policy in the villages. On the
other hand, the arrival of capital machine equipment from the USSR and
Czechoslovakia for industrialisation purposes did not take place within
the prescribed deadlines, the determination of specifications was delayed,
and often the most important items were completely omitted.182 The USSR
bound the Czechoslovak and Hungarian industries by agreements for its
own economy building purposes, so that the two states were unable to

године).
178 DAMSPRS, 1947, Strogo poverljiva politička arhiva (SPPA), USSR, f. 4, d. 1234,
Telegram E. Kardelja Maršalu Titu iz Moskve, 19. april 1947. godine.
179 DAMSPRS, 1947, PA, USSR, f. 107, d. 27403, Sporazum između Vlade USSR-a i Vlade
FNRJ o isporuci Jugoslaviji postrojenja i industrijskih uređaja na kredit, 25. jul 1947.
godine.
180 DAMSPRS, 1947, PA, USSR, f. 107, d. 21403, Sporazum o uzajamnom pružanju
tehničke pomoći zaključen između Vlade USSR-a i Vlade FNRJ, 25. jul 1947. godine.
181 DAMSPRS, 1947, PA, USSR, f. 107, d. 27411, Sporazum između Vlade FNRJ i Vlade
USSR-a o prodaji Jugoslaviji železničkog voznog parka koloseka 1453 mm,
pripadajućeg Savezu SSR kao ratni plen.
182 AJ, 836/I–3–b/646, Telegram ambasadora u Moskvi Vladimira Popovića maršalu
Titu, 4. decembar 1947. godine.

412
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

fulfil the agreements signed with Yugoslavia. In a situation of potential

political collapse on both fronts, Marshal Tito and his closest associates
decided to slightly liberalise the policy relating to the peasantry and seek
the equipment in western countries’ markets. The overriding interest of
the country’s economic development forced Yugoslav economic strate-
gists to initiate the reorganisation of foreign trade plans, and accordingly
the export contingents of strategic raw materials, especially non-ferrous
metals to the USSR and Czechoslovakia had to be reduced and offered to
western countries in exchange for installations and machines. Preparing
the ground for this intervention by initiating trade agreements with cap-
italist countries provoked sharp reactions in Moscow.183
The refusal of the USA to deblock the monetary reserves without
certain concessions, and serious difficulties of Yugoslav foreign trade to
find capital equipment suppliers, led the Yugoslav leaders to introduce
the USSR as intermediary in the whole business. In the middle of Janu-
ary a dispatch was sent to Moscow to Milovan Đilas, who was heading
the Yugoslav delegation there. Although the aim of his visit was political,
to resolve the controversy around the entry of Yugoslav units into Alba-
nia and the question of the Balkan federation with Bulgaria, M. Đilas was
asked to request the Soviet leadership for a loan in gold amounting to 60
million USD, the security for which would be the Yugoslav gold blocked in
the US.184 Đilas presented the issue of the loan in gold for the first time be-
fore Andrei Zhdanov on 26th January, and got the reply that it was within
Stalin’s competence185, and then repeated the request to Anastas Mikoyan
on 11th February and got the same answer.186 In his talks with V. Molotov,
E. Kardelj repeated the request for gold once again, without success, two
days after Đilas had done so with Mikoyan.187 In the meantime, the head
of the Yugoslav secret police Aleksandar Ranković had notified the del-
egation in Moscow that rumours were spreading in Romania ”that Mar-

183 Central Intelligence Agency Records Search Tool (CREST), General CIA Records
(GCIAR), CIA-RDP82-00457R002300670005-2, Yugoslavia and the Cominform,
February 15, 1949.
184
AJ, 836/I–3–b/651, Depeša Milovanu Đilasu sa molbom da pred sovjetskim rukovodstvom
zatraži zajam u zlatu, 19. januar 1948. godine.
185 AJ, 836/I–3–b/651, Depeša M. Đilasa maršalu Titu o razgovoru sa Andrejem
Ždanovom, 26. januar 1948. godine.
186 AJ, 836/I–3–b/651, Depeša M. Đilasa maršalu Titu o razgovoru sa Anastasom
Mikojanom, 11. februar 1948. godine.
187 AJ, 836/I–3–b/651, Depeša E. Kardelja maršalu Titu o razgovoru sa V. Molotovom, 13.
februar 1948. godine.

413
ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

shal Tito accessed The Marshall Plan, that he refused to go to Moscow for
consultations, that Marshal Tito decided in favour of American policy and
had an argument with Dimitrov, an attempt on whose life was alleged-
ly made yesterday”. Doubtless the Russian side had started spinning the
web of disinformation in order to discredit Tito’s regime and prepare the
ground for the final showdown.188
The decision of the USSR Government not to allow any further
stay of Soviet economic consultants in Yugoslavia came somewhat unex-
pectedly for the Yugoslav economic leaders. Their attempts to effect their
stay in Yugoslavia produced no results, while the Soviet side used the
pretext that the consultants had been out of the country for too long and
had to come back. The Soviet embassy insisted on the urgency of their re-
turn, which was a surprising demand in the eyes of the Economic Council
members.189 This demand by the Soviet Government coincided with the
negotiations initiated in Moscow about the expansion of trade coopera-
tion. M. Đilas, Vladimir Popović and Bogdan Crnobrnja started negotia-
tions with Mikoyan on 20 February. On that occasion Mikoyan request-
ed that Yugoslavia should not export non-ferrous metals to the western
countries, and told them that the USSR would pay all the available export
contingents in dollars and pounds. On the assurances of the Yugoslav del-
egates that it was their ”political line” too, Mikoyan said ”that it might be
so now, but that it has not been the line before”.190 The Yugoslav trade del-
egation to the Soviet Union, which was still led by the deputy minister of
foreign trade B. Crnobrnja, during the two months of negotiations faced
the Soviet Government’s permanent refusal to provide a final answer on
signing a new trade agreement and expanding the scope of trade in the
articles essential for the country’s industrialisation. To the surprise of J.
B. Tito and the entire Yugoslav top leadership, the ultimate answer was
negative. For the first time, Yugoslavia was in a position that due to rely-
ing on one state exclusively, it had lost valuable time to try to realise its
needs on the other side.191

188 AJ, 836/I–3–b/651, Depeša Aleksandra Rankovića M. Đilasu o antijugoslovenskim

glasinama u Rumuniji, 6. februar 1948. godine.
189 DAMSPRS, 1948, PA, USSR, f. 133, d. 42088, Hitna molba sovjetske ambasade u
Beogradu da se sovjetski savetnici u jugoslovenskoj privredi vrate u USSR, 26. januar
1948. godine.
190 AJ, 836/I–3–b/651, Depeša M. Đilasa maršalu Titu o razgovoru sa A. Mikojanom po
trgovinskim pitanjima, 21. februar 1948. godine.
191 М. Ninković, „Misija Bogdana Crnobrnje u Moskvi i pitanje odustajanja od trgovinskih
pregovora za 1948. godinu“, Istorija 20. veka, 2/2018, 117−135.

414
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

The change of tone of cooperation between the countries was

soon to show that a much deeper political conflict lay in the background.
The Soviet diplomatic and military representatives in Yugoslavia received
on 18th March their government’s order to immediately send back all the
military and civilian advisors on the pretext that they were “surrounded
by unfriendliness”.192 The letter of the Central Committee of the CPSU(b),
which arrived on the address of the Central Committee of the CPY on 27
March 1948 shed light on the previous moves by the Soviet Government.193
There was a standstill in negotiations at the state level regarding the de-
livery of industrial plants and machines on loan in the second half of April.
At the beginning of the year the Soviet side had delivered, as an advance
delivery, the machines in the value amounting approximately to 800,000
USD, and those were the first and last deliveries received by Yugoslavia
based on this agreement. Already in June, the Yugoslav delegates in Mos-
cow in charge of technical cooperation on this issue were not extended
visas and were forced to leave the USSR. The other agreements were not
realised in full either, although the percentage of their implementation
exceeded by far this, for the Yugoslav state, crucial arrangement with the
Soviets.194 The Yugoslav leadership lost the last illusion of any continua-
tion of any form of cooperation only at the end of 1948, when the USSR
Foreign Trade Minister A. Mikoyan, after the conclusion of negotiations
on trade in Moscow, informed the member of the Yugoslav trade delega-
tion, Milentije Popović, that the implementation of the Agreement on the
Delivery of Industrial Plants on Loan was suspended as long as the Yu-
goslav party and state leadership persisted in their current political po-
sition.195 The demand to settle the amount of 800 thousand dollars men-
tioned above, which followed at the end of January 1949, put an end to
this Agreement and to any further cooperation with the USSR.196

192 AJ, 836/I–3–b/655, Pismo predsednika ministarskog saveta J. B. Tita ministru

spoljnih poslova USSR-a V. M. Molotovu, 20. mart 1948. godine.
193 AJ, Komisija za međunarodne odnose i veze Centralnog Komiteta Saveza komunista
Jugoslavije (KMOVCKSKJ), USSR, 507/IX, 119/I−1, Pismo CK SKP(b) Centralnom
Komitetu KPJ, 27. mart 1948. godine.
194 DAMSPRS, 1949, PA, USSR, f. 99, d. 23510, Osnovni elementi i podaci iz odnosa između
FNRJ i USSR, 1949. godina.
195 DAMSPRS, 1948, PA, USSR, f. 132, d. 432110, Pregled svih pravnih dokumenata iz
kojih proizilaze politički, ekonomski, saobraćajni i drugi odnosi između FNRJ i USSR.
196 DAMSPRS, 1949, PA, USSR, f. 99, d. 23333, Kratki referat o razgovorima sa
predstavnicima USSR-a u vezi sa sporazumom između Vlade FNRJ i Vlade USSR o
isporuci Jugoslaviji industrijskih postrojenja i uređaja na kredit od 25. jula 1947.
godine, 21. februar 1949. godine.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

Reorientation to cooperation with the West after 1948

and its effect on industrialisation

After the break of the economic relations and total economic block-
ade of the country by the USSR and its satellites, the circumstances largely
demanded the reorientation of the foreign policy from the Eastern markets
to the markets of Western Europe. The complexity and difficulty of this
task was compounded by the growing complexity of international trade
and a lack of knowledge on the global market situation. In addition, Yu-
goslavia was forced to face the consequences of economic pressure of the
Cominform countries and secure the supply of the most necessary capi-
tal goods and equipment for the Five-Year Plan facilities, raw materials
for the industry and secure marketing of export articles for obtaining the
foreign currencies required for purchases abroad.197 All the tasks identi-
fied above demanded immediate solutions with a view to alleviating the
effects of the economic isolation measures taken by the East Bloc coun-
tries. In a relatively short period of time, Yugoslavia succeeded in reor-
ienting foreign trade to new markets and different business conditions,
getting past the economic blockade and foil the hostile plans of the USSR
and its satellites to cause damage to the economy and the country’s de-
fence capabilities.198 Through the conduct of trade agreements and trade
operations, Yugoslavia gained huge experience and realised the condi-
tions for the expansion of economic relations and trade. New trade rela-
tions were established, and in a short while, the country was presented
to the Western world as a serious partner in international trade. With a
gradual strengthening of trade relations, the international political posi-
tions were strengthened too, and the Yugoslav state became firmly estab-
lished as a fighter for political independence and economic equality be-
tween the countries.199

197 FRUS, 1948, Eastern Europe, The Soviet Union, Volume IV, (Wasington: United States
Government Printing Office, 1974), Document no. 725, The Chargé in Yugoslavia
(Reams) to the Secretary of State, Belgrade, September 15, 1948.
198 National Archives and Records Administration (NARA), Record Group (RG) 59,
Central Decimal Files (CDF), box 5330, 868.00/2−2751, Yugoslavia: Annual
Economic Review for 1950, February 27, 1951 (I would like to thank my dear friend
and colleague Jovan Čavoški, PhD, on the documents provided from the US National
Archives in Washington DC).
199 AJ, KMJ, 836/III−2−d/19, Izveštaj o međunarodnim ekonomsko-trgovinskim
odnosima FNRJ u periodu od 1948. do prvog polugođa 1952. godine, Beograd, 5.
avgust 1952. godine.

416
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

Until the break of the economic relations, the share of the USSR
and the Soviet Bloc countries in trade amounted to 50%.200 The fact that
trade with Eastern Europe accounted for half the exchange on a global
scale testifies to the importance of Czechoslovakia and the USSR in the
first place for the Yugoslav economy. In view of that, the strengthening of
international economic ties with the West was one of the most important
conditions for the development of the Yugoslav economy. Thus, the ba-
sic form of economic relations with foreign countries was foreign trade.
It was related to the export of domestic goods to the global market with
the aim of buying products required for to the domestic economy. A sec-
ond important form of economic co-operation was the use of international
loans and credits, and then co-operation through the UN and its economic
commissions relating to economic issues and technical assistance, as well
as direct co-operation of domestic companies in concrete trade with their
business partners abroad, commercial organisations, etc.
The interest of constant strengthening and economic progress
of the country, in the period after the Cominform Resolution, resulted
in Yugoslavia renewing old and signing new trade agreements with the
Western Bloc countries, resolving many unresolved issues, such as the re-
payment of compensation for nationalised property and previous state
debts based on credits, signing several transport arrangements and con-
ventions regulating international traffic, and concluding several invest-
ment agreements for the purchase of equipment for civilian and military
needs on credit. The result of this dynamic foreign-trade activity was the
expansion of the political and economic room for manoeuvre. Contrary to
the Cominform’s expectations, Yugoslavia avoided international isolation
and established ties on all sides with the western countries, which were
in many ways more beneficial to those it had before. The final long-term
effect of the Cominform Resolution with respect to international politi-
cal and economic connections was positive for Yugoslavia. The negative
consequences were reflected in the fact that the commissioning of some
factories and electric power plants was temporarily postponed, and thus
the goals of the First Five-Year Plan could not be achieved to the end.201
After the unilateral termination of economic relations and in-
vestment agreements by the Cominform countries, Yugoslavia was stuck

200 Александар Ракоњац, „Обнова старих и успостављање нових трговинских

односа (1945−1947) - Југославија, СССР и државе „народне демократије““,
Токови историје, 1/2018, 55−79.
201 AJ, KMJ, 836/III−2−d/19.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

with a number of started facilities and without the right equipment hav-
ing been provided for them.202 In these circumstances the solutions im-
posed to provide the necessary equipment were extremely difficult. The
first solution was to start using the already constructed machine build-
ing capacities to manufacture one part of the equipment in the country
as soon as possible. However, the difficulties with the implementation of
this solution were enormous, as Yugoslav economy was facing this type
of production for the first time, which demanded the time for staff train-
ing and the organisation of production. The implementation of this deci-
sion was also disrupted by the deficit in steel, which was to be resolved
while mastering equipment production. The second solution that was
imposed was related to the reorientation of foreign trade, i.e. the possi-
bility of purchasing the machines and installations in the capitalist West.
Along with the difficulties in finding the suitable firms which would take
over the delivery of the needed equipment, the problem of paying for this
equipment arose, as the value of potential purchases exceeded the limit
provided for foreign trade. In addition to the equipment procurement is-
sue, another consequence of political and military pressure from the USSR
and the people’s democracies was the need to change the structure of na-
tional income spending towards greater allocations for national defence,
which resulted in reduced investments in the economy. The third reason
for the establishment of the key facility programme was the deficit of the
balance of payments, which appeared as a consequence of the reorienta-
tion of foreign trade and the reduction in yields due to droughts in agri-
culture. Those reasons had a negative effect on the investment policy and
resulted in the creation of an investment building programme which was
intended to restrict the broad range of investments and focus all efforts
on a certain number of key facilities. This change of the investment plan
was aimed at preventing a rise of the existing disparities in the economy.
The investment funds reduced in this way were to be used most efficient-
ly in order to put individual large facilities into operation as soon as pos-
sible. This key facility programme did not match the programme of con-
struction of the First Five-Year Plan, as it originated in the conditions of
economic blockade, the political and military pressure of the Cominform
countries, the need for efficient machine building and balance of pay-
ments activation. Under the influence of these factors, in some branches
the programme was broader than the Five-Year Plan (ferrous metallurgy

202 DAMSPRS, 1949, PA, USSR, f. 99, d. 23540, Raskidanje ugovora od strane vlada USSR i
drugih IE zemalja.

418
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

and machine building), and narrower in others, and the investment activ-
ity of the latter was reduced to the necessary minimum (the cement and
food industries).203 However, the FPC did their utmost to come by addi-
tional funds and allocate them towards building some major light indus-
try facilities.204 Be that as it may, the key facility programme was not a
static quantity – there were 140 facilities at the time of its establishment
– but had an expanding tendency.205
The key facilities programme temporarily prevented the locating
of new facilities in backward regions, as it aimed to achieve time and fi-
nancial efficiency in completing initiated projects and took into account
strategic aspects. The reasons for adopting the Programme lied in the fact
that due to traffic conditions, labour problems, and difficulties in building
communal housing facilities, the profitability of investments was much
lower and, in those conditions, it was inexpedient to use the existing in-
vestment funds in solving this issue. Due to all the factors specified above,
the passive regions were, despite the First Five-Year Plan decisions, des-
tined to a temporary stagnation in terms of development. Construction
financing was carried out from the current accumulation, loans and am-
ortisation funds of enterprises. The use of the enterprises’ amortisation
funds for the Programme aims temporarily prevented the reconstruction
of existing factories, thus undermining the overall economic efficiency.
On the other hand, the Programme resulted in the longest survival of ad-
ministrative measures relating to the distribution of the part of the na-
tional income earmarked for investments. Along with the positive sides
they revealed in the fast development of the basic industry and vital traf-
fic infrastructure, the administrative measures in the state investment
policy had a negative effect on the costs of building individual facilities.
These negative effects were compounded by the domestic staff’s inexpe-
rience in the building of such facilities, which led to the rise in the build-
ing prices in the investments of the building type. This rise in prices was
estimated at around 30% of the construction works value. However, gain-
ing work experience with the new industrial facilities, the staff compen-
sated for those losses.206

203 AJ, Kabinet predsednika republike (KPR), 837/III−A−1−c, Investiciona politika, 10.
avgust 1952. godine; AJ, 6−29−30, Izmena planova investicija, 18. jul 1950. godine.
204 AJ, 10−53−55, Investiciona problematika Ministarstva lake industrije FNRJ, 5. april
1950. godine.
205 AJ, 837/III−A−1−c.
206 Ibid.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

Table 3: Investments in military and civilian economy in millions

The summary of realisation of in-
The summary of realisation of invest-
vestments in the Ministry of National
ments in civilian economy
Defence
year dinars dollars % dinars dollars %
1947 36,718 734 84 7,006 141 16
1948 46,415 928 77.6 13,408 268 22.4
1949 58,783 1,176 86 9,574 191 14
1950 51,432 1,029 78.8 13,868 277 21.2
1951 44,502 890 80.2 11,000 220 19.8
1952 43,300 866 86.6 6,700 1,000 13.4
Total 281,150 5,623 82 61,556 1,231 18
158.1 million dollars or 2.8% of investments from concluded loans
was invested in the civilian sector

The construction of the key facilities aimed to realise the revised,

and then amended plan of industrialisation and electrification, so that com-
pared to 1950, electric power production was to be increased by 67%, coal
production and processing by 64%, oil processing by 54%, ferrous met-
allurgy production by 180%, non-ferrous metallurgy by 161%, non-met-
als by 136%, electric power industry by 116%, major chemical industry
by 46%, etc. This primarily included heavy industry facilities, the comple-
tion of which was made uncertain due to the termination of investment
agreements by the Cominform countries. This Programme did not match
the Five-Year Plan building programme, as in the conditions of economic
blockade by the East and increased allocations for defence, the broad range
of investments was narrowed down, and the funds were for the most part
directed towards faster development of ferrous metallurgy and machine
building facilities. As a result, the investment activity in other branches
was reduced to a minimum. Despite the high unpredictability caused by
the split with the Soviets, thanks to the active politics of the state leader-
ship, heavy industry development was favourably resolved for the most
part. Speaking of production before and after the Second World War, or
in 1939 compared to 1951/52, there is visible progress achieved owing to
the development of new and the expansion of the old heavy industry ca-

420
Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

pacities. In 1952, ferrous metallurgy production was by 76% higher than

in the last year before the war broke out, non-ferrous metallurgy by 45%,
non-metal processing industry by 73%, metal and machine building in-
dustry by 165%, electric power industry by 702%, chemical by 64% and
building materials industry by 77%. The production structure dominat-
ed by machines the annual production of which in the same period was
raised by 482% testifies in the best way to the qualitative changes that
took place in the Yugoslav heavy industry.207

Table 4: Investments in industry per capita (in the prices from 1952)

1947 1948 1949 1950 1951 1952

Investments
in industry (in 60,193 83,805 126,020 128,344 134,447 167,104
million dinars)
Population
(in thousand 15,662 15,817 15,972 16,147 16,338 16,545
inhabitants)
Investments
per capita (in 3,843 5,298 7,890 7,948 8,229 10,100
dinars)
Index of in-
vestments per 100 137.9 205.3 206.8 214.1 262.8
capita

The year of greatest efforts in terms of investments was 1949, af-

ter which they started falling until they stabilised in 1952/53. Despite the
drop in the number of investments from 1949 to 1952, investments in in-
dustry were absolutely growing, which resulted from the concentration
of investment funds on basic industry facilities. Along with the absolute
rise of investments in industry, investments in agriculture were declining,
and the reason, in addition to the focus of investments on heavy industry
and transportation, was in the stabilisation of the existing state-run agri-
cultural estates. With respect to the concentration of financial investment
funds within the basic industries, power industry stood out with the level

207 Statistički godišnjak FNRJ za 1954. godinu, (Beograd: Statistički zavod, 1955), 162; AJ,
837/III−A−1−c.

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ON THE FAULT LINES OF EUROPEAN AND WORLD POLITICS: YUGOSLAVIA BETWEEN ALLIANCES AND NEUTRALITY/NON-ALIGNMENT

of spending, as the development of the energy base through the key facil-
ities programme was intended to form a solid energy foundation, which
was essential for the further development of industry and other branches
of economy.208 With that in mind, a number of facilities were put into oper-
ation by 1953. The most important among them were the thermal power
plants Kostolac, Zenica, Lučani, Banovići and Zrenjanin, then the hydroe-
lectric power plants of Vinodol, Ozalj II, Moste, Mariborski Otok, Sapun-
čica, Pesočani, Slap Zete, the coke and coal screening plant of Lukavac, a
new refinery of motor and transformer oil, a new refinery of lubricating
oils, etc. However, despite significant results in power industry, most of
the investments of this period, in power engineering in particular, were
not activated. The commissioning of these power facilities was planned
for the period between 1953 and 1957. The examples of the hydroelec-
tric power plants of Vlasina, Zvornik, Vuzenica, Jablanica and Mavrovo are
good illustrations, because over 50% of the necessary funds for the com-
pletion of construction were invested in each of the mentioned facilities.
By starting up these power plants, the electric power industry was sup-
posed to get richer by 508 MW of installed capacity.209
By 1952, the range of industrial production was significantly ex-
panded, and the quality was raised to such a level that the results in those
fields were no longer comparable to those from before 1949. Mechani-
cal engineering and electrical industry had a particularly rapid growth,
as few countries had at the time. It should be borne in mind that with re-
spect to the use of available capacities, the metal processing industry was
in the lead with 89% utilisation, the electrical industry with 87%, fol-
lowed by the chemical industry with 58%, and the construction industry
with 71%. During the six years of implementation of the First Five-Year
Industrialisation Plan, 700 billion dinars in total were invested in indus-
try, of which 343 billion dinars or 49% of all investment were invested
in the military industry in the period from 1948 to 1952 due to pressure
from the USSR and its satellites. Despite the economic blockade of the So-
viet Bloc countries, increased material expenses for defence, the natural
disasters of 1950 and 1952, permanent rise of investments in industry,

208 AJ, Savezni zavod za društveno planiranje (SZDP), 459−24, Investiciona ulaganja
1946−1955 po tekućim i stalnim cenama, II deo, Tabelarni pregledi bruto investicija,
februar 1957. godine.
209 AJ, 837/III−A−1−c.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

primarily electric power and basic industry, the state for the most part
achieved the goals of the Five-Year Plan.210
Although the development of the power industry was significant,
electrical power industry was lagging behind in construction compared
to other industries, which negatively affected production in those indus-
tries and other sectors. In terms of the scope of investment in industry, the
metallurgical industry held the second place. The aim of the programme
of key capital development, in these industries, was to develop a raw ma-
terial base for the metal processing and electric power industries. A se-
ries of facilities within those industries were put into operation, such as
the Blooming rolling mill in Zenica, part of the seamless pipes rolling mill
in Sisak, the sheet metal rolling mill in Smederevo, copper electrolysis in
Bor, five new flotations of lead-zinc ores, the grog factory in Arandjelovac,
“Magnohrom” in Rankovićevo (Kraljevo). However, huge funds were also
invested into several metallurgical industry facilities which were not com-
missioned and were expected to start working in the mid-1950s. The cas-
es of the aluminium and alumina factory from Kidričevo and the copper
rolling mill from Sevojno, which were awaiting the investment of the re-
maining 12.1% and 20% respectively of the necessary funds for plant
completion are good examples of the efforts taken with the aim of com-
pleting the first industrialisation phase. Similarly, in addition to those fac-
tories which were to go into partial operation in 1954, the start of pro-
duction within this industry branch was also awaited in the furnace and
coke plant in Zenica.211
The third place in terms of the scope of investments in industry
was held by the metal processing and electric power industries. The pro-
gramme fostered the development of machine building, so that it could
gradually meet the growing demands of the developing economy. A num-
ber of new factories were built during the First Five-Year Plan, while the
existing ones underwent a fundamental reconstruction and expansion. For
the most part, the capacities planned for these branches were developed
in the provided timeframes. The next step was to develop the production
of specific types of equipment, which required additions to the existing
machines. The machine building factories were already making equipment
for hydroelectric power plants, ferrous metallurgy, agriculture, civil en-
gineering and transportation facilities. The key facilities programme had

210 AJ, LFMT (Lični fond Mijalka Todorovića), 522−81, Povećanje proizvodnje, Osnovno
pitanje naše ekonomske politike, 1953. godina.
211 Ibid.

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good results in other industries as well. For example, four spinning mills
were constructed in the textile industry, and the starch factory in Zrenja-
nin was in the final phase of construction. In this period, Yugoslavia was
granted a number of loans from the International Bank for Reconstruction
and Development, private banks from abroad and other countries. The
largest part of these loans (191.3 million dollars) was used to purchase
equipment.212 Although the amount of these loans was small compared to
the efforts taken by the country in the direction of industrialisation, they
were decisive in the key capital development, as they made possible the
purchase of equipment for the most important industrial facilities and in-
dustrialisation.213 The total or partial construction of individual facilities
enabled the country, between 1952 and 1953, to initiate a gradual tran-
sition to the system of investment credits, thus doing away with the last
remnants of the Soviet methods of investments in the economy.

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Aleksandar RAKONJAC POST-WAR TRANSFORMATIONS OF YUGOSLAV ECONOMY (1945-1952)

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