308 NIEPODLEGLOSC
investment funds for Public Works and rural improvements, all contributed to
the emergence of a viable system. Thereafter, external factors, including the
German Tariff War of 1926—30, the Great Slump of 1931-4, and finally the
diplomatic crisis of the 1930s which put defence costs to 27.5 per cent of gov-
ernment expenditure, all strained Poland's modest economy to the utmost.
Polish industry encountered unsurmountable difficulties. According to some
present-day observers, it was passing through the 'inevitable symbiosis of late,
imperialist capitalism'. In other people's eyes, it was suffering from the obvious
effects of Independence, which had destroyed the old infrastructure and had dis-
rupted former markets, without providing adequate resources for adjusting to
new conditions. Its managers were attempting to develop along western capi-
talist lines, without the full support of western capital. The population of the
Second Republic was less industrialized in 1929 (13.2 per cent) than that of the
former Congress Kingdom in 1900 (17.6 per cent). The accession of the eastern
Borderlands with their very primitive rural society in no way compensated for
the loss of the vast Russian market, which under hostile Soviet management was
permanently closed. The windfall of Upper Silesia was blighted by its severance
from traditional services and customers in Germany. Poland's low credit rating
deterred foreign investment, which, far from putting the country at the mercy of
predatory speculators, was sadly missed. Fundamental shortcomings in the rail-
way network and in power supplies demanded investment beyond the state's
capacity. The main railway line between Silesia and the newly constructed port
of Gdynia, designed to facilitate coal exports, was not completed until 1929; the
main line from Warsaw to Cracow via the Kielce Tunnel was built in 1933; the
electrification campaign of 1936-9 increased power supplies by 600 per cent
over former levels, but even so did not achieve the same results as in Germany
or Russia. Government investments were concentrated in the armaments sector,
notably in the azote factory at Moscice, and the weapons establishments. As a
result, in relation to other European countries, Poland remained industrially
very underdeveloped. It was particularly vulnerable to the pressures of the
Slump, and in most of the main sectors failed to regain the production levels of
- In those few sectors where production made significant increases, as in the
food-processing industries, prices were so low that little impact was made on
the over-all situation:^21 (see table opposite)
The generally bleak picture of inter-war industry was lightened by a deter-
mined government initiative launched in March 1936. Having maintained a
stable currency throughout the Depression, albeit at great social cost, and antic-
ipating a balanced budget for the first time since 1929, the Sanacja authorities
ventured precociously into state planning. The Chief planner was Vice-Premier
and Minister of Finance, Eugeniusz Kwiatkowski (born 1888). The Plan, which
sought to match Poland's economic needs with her strategic requirements, was
to be mainly funded from internal sources. It was assisted by one important loan
from France of 2,600 million francs. It gave priority to war industry, and then to
improvements in the industrial base - especially to railways, electricity, and gas.