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The Scissors Crisis

The 'scissors crisis' sharpened opposition to the NEP. Trotsky coined the term to describe the widening gap between industrial and agricultural prices which led to urban fears of a 'grain strike'. The crisis peaked in October 1923 when industrial prices were 290 % of their 1913 levels, whereas agricultural prices in the state sector were at only 89 %. The problem was that industry was slower to recover from the Civil War than the peasant farms, whose bumper harvests of 1922 and 1923 deflated food prices. As the price of manufactures rose, the peasantry reduced its grain sales to the state depots.

To combat the crisis the government resorted to requisitioning, reduced industrial costs, and, in response to working-class resentment of the private traders, closed down 300,000 shops and market stalls. By April 1924 the immediate crisis had been solved. But the shortage of industrial goods and the withdrawal of the peasants from the market remained a basic problem of the NEP.

The Bolsheviks were divided about how to deal with this problem. Those on the left of the party favoured keeping agricultural prices low and taking grain by force when necessary to increase industrial production; whereas those on the right advocated paying higher prices to the peasants for their food, even if this entailed slowing down the rate of capital accumulation for industrialization, in order to preserve the market mechanism as the fundamental basis of the state's relationship with the peasantry.

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