Rykov tells us that at the end of 1919 4,000 industrial establishments had been nationalized. “That means,” he says, “that nearly the whole industry has been transferred to the state, to the Soviet organizations, and that the industry of private owners, of manufacturers, has been done away with, for the old statistics estimated the total number of industrial establishments, including peasants’ homework places, to be around 10,000. The peasants’ industry is not subject to nationalization, and 4,000 nationalized industrial establishments include not only the largest, but also the greater part of the middle-sized, industrial enterprises of Soviet Russia.” What is the state of these nationalized factories, and are the results obtained satisfactory? Again Rykov’s report gives the answer in very clear terms: “Of these 4,000 establishments only 2,000 are working at present. All the rest are closed and idle. The number of workers, by a rough estimate, is about 1,000,000. Thus you can see that both in point of number of the working-men employed as well as in point of numbers of still working establishments, the manufacturing industry is also in the throes of a crisis.” The explanation offered by Trotsky, that the industrial failure was due to the destruction of technical equipment, Rykov sweeps aside. “_The Soviet state, the Workers’ and Peasants’ Power, could not utilize even those lathes, machines, and factory equipment which were still at its disposal._ And a considerable part of manufacturing enterprises was shut down, while part is still working only in a few departments and workshops.” On every hand it is evident that shortage of raw materials and of skilled labor are the really important causes, not lack of machinery. Of 1,191 metallurgical plants 614 had been nationalized. The government had undertaken to provide these with about 30 per cent. of the metals required, but had been able to supply only 15 per cent., “less than one-quarter of the need that must be satisfied in order to sustain a minimum of our industrial life.” Take the textile industry as another example: Russia was the third country in Europe in textile manufacture, England and Germany alone leading her, the latter by no large margin. No lack of machinery accounts for the failure here, for of the available looms only 11 per cent. were used in 1919, and of the spindles only 7 per cent. The decline of production in 1919 was enormous, so that at the end of that year it was only 10 per cent. of the normal production. We are told that: “During the period of January-March, 1919, 100,000 to 200,000 poods of textile fabrics were produced per month; during the period of September-November only 25,000 to 68,000 poods were produced per month. Therefore we have to face an almost complete stoppage of all textile production in central Russia, which dominated all the other textile regions in Russia.”