Chapter 10.2: The Economy

By the spring of 1945 the land reform initiated in 1940 and cancelled during the German occupation was finalised. All land was nationalised, the maximum size of farms was 30 hectares. Families which had cooperated with the Germans were not allowed to use more than 5 hectares and most of their property and animals were seized.

The seized land from larger farms was given to people who did not own land previously. However this did not improve the social and economic situation in the countryside. The new farms did not become viable, they were too small, badly equipped and most importantly a big portion of their new owners were not competent farmers.

In May 1947 Moscow decided that kolkhozes (collective farms) ought to be established in all three Baltic states. In the autumn of the same year the first 5 kolkhozes (kolhoos in Estonian) were established in the ESSR. If a farmer had used paid labour and/or owned farming machines, he was designated as a “kulak”. Kulaks had to pay an extremely high agriculture tax and sell a large section of the produce to the state. Taxes and norms were increased for all farms later. However, this and the strong pro-kolkhoz propaganda did not bear fruit. When a farm joined a kolkhoz, it would give its farmland land, equipment and animals away and the farmer would lose his independence, having to work under management. Estonians were not too keen on working for a large agricultural estate and not controlling their own lives, as it reminded them of another type of large agricultural estates that were very much deeply ingrained in the consciousness of Estonians. By 1948 there were 195 kolkhozes in Estonia, with only 2.2% of all farms as members.



The way of the kolkhozes, the way of socialism is the only way for a working peasant.


“Here was a swamp. Stalinist transformation of nature is the basis for the wealth of a kolkhoz.”

The situation changed after a wide scale deportation in March 1949, which I will cover more in depth in the next chapter. It caused an atmosphere of great fear and a mass “voluntary” joining movement began. In less than a month 64% of Estonian farms had been absorbed, by the beginning of next year it was 80% and by the beginning of 1951 it was 92%.

Kolkhozes had to give the majority of its produce away due to high state levy. This meant that kolkhozes were left with so little produce and money that the daily pay of the farmers was miserable. To not starve completely they had to put in a lot of work on their small personal piece of land. People lost the eagerness to work and agriculture deteriorated. The fertility of fields decreased and the amount of farm animals and yields fell well below the pre-war level.



The first and the best produce to the state!

After the death of Stalin the agricultural policy was adjusted. The selling norms of agricultural produce and taxes were lowered, the fixed prices of buying were increased. The sell of tractors to the kolkhozes began and the preparation of the leadership of kolkhozes (communal collective farms) and sovkhozes (state owned collective farms) improved. The latter was widely helped by the establishment of the Estonian Agricultural Academy (now the Estonian University of Life Sciences) in 1951. In the second half of the 1960s the wide specialisation of agriculture began. Each collective started to focus on one specific product.



The main building of the Estonian Agriculture Academy in Tartu. Construction of the building began in 1939 and it was supposed to be the headquarters of the local Defence League. Nowadays the building houses the Estonian Military Academy.

The 1970s was the era of giant farming estates. Smaller collective farms were joined to form larger ones. It did bring about the improvement in some economic indicators. Proper farm centres were built and the housing in the countryside improved. However, that came at a cost. People got to have an in-house water supply in exchange for living in an apartment, in the countryside. The historic network of countryside settlements was ruined, fertile lands were exhausted and the condition of the environment deteriorated.



A view of a Kolkhoz centre with its apartments and buildings.



Typical apartment buildings meant for Kolkhoz workers.



The centre of Aruküla kolkhoz. Kolkhoze received these central buildings that acted as both offices and clubhouses. This particular one is now used as a cultural centre, however many are left abandoned.




A cattle farm and a workshop.

The foundation of the Soviet economy for decades had been based on the preferential development of heavy industry. A similar policy was enacted in postwar Estonia, the main focus was put on the oil shale and machinery industry.

The Estonian Soviet Socialist Republic became the backyard of Leningrad. The oil shale basin of Virumaa was supposed to supply Leningrad with gas and the Baltic fleet of the Red Navy with fuel. In 1948 the world's first, albeit highly ineffective oil shale gas factory was established in Kohtla-Järve along with a gas line to Leningrad. New mines and settlements were established en masse. The centres of the industrial region, Kohtla-Järve and Sillamäe received city rights. Sillamäe was a factory town meant for a secret military factory where military grade uranium was produced, and it was inhabited by foreign workers from other areas of the Soviet Union. Sillamäe (as well as the military port town of Paldiski) became closed cities, where strangers were not allowed to enter.



Kiviõli Oil Shale Chemistry factory in 1951.



The famous stairs and the sea promenade of Sillamäe. Lined with Stalinist buildings. Sillamäe reached its peak of 20 thousand people in 1990, nowadays it has a population of roughly 12 thousand and till this day is homogeneously Russian, with the latter making up about 87% of the city population.



The town hall of Sillamäe (1950).

The machinery and metallurgy industries were expanded and started to produce products of all-union importance. Volta became a major factory that produced about 10% of all electric motors used in the Soviet Union. For several factories and enterprises the leadership of the ESSR had no information on (neither what was produced or who worked there), as they were part of the military-industrial complex of the USSR and were directly subjugated to bureaucrats in Moscow. These would be referred to as "liidutehased" (union factories).

In addition to heavy industry, light industry was developed rapidly as well. The cotton factories in Tallinn and Narva were restored and expanded, and the new positions were filled with imported labour. All produce was sent to the all-union market. In the end of the 1950s, industrial fishing was expanded in Estonia as well. The ESSR got a huge ocean fishing navy and the necessary infrastructure for it.

With the rebuilding of cities and heavy industrialisation there was a construction boom, which needed many workers and meant that resource extraction expanded greatly. The construction industry became the main migration pump which brought foreigners from all across the Soviet Union to Estonia.

The economic policy increased social, political and ideological tensions in society. The annual expansion of industry increased the influx of foreign workers, which caused the proportion of the native population to shrink and the overpopulation of the cities. Between 1946-1990 several million people passed through Estonia, out of them roughly 472 000 stayed. The number of Estonians increased from roughly 860 thousand in 1945 to 963 thousand in 1990, never reaching the 1 million mark of 1939. The overall population of Estonia however surpassed the pre-war population of roughly 1,1 million (that had sunk to below 900 thousand by 1945) already by 1959 and by 1990 there were more than 1.56 million people in Estonia.


The rest of the area up to 100% would be mostly Germans, Swedes and Finns during 1934 and in the post war era Ukrainians and Belarussians.

The increase in the number of Russians caused great social tensions between the immigrants and the native population, as the latter saw the former as colonisers. It was not helped by the official housing policy. Immigrants were given new apartments almost immediately, whilst the housing lists for native Estonians became longer and longer. Some territories of Estonia, especially the large industrial towns of Ida-Virumaa, became entirely Russian. Estonians stopped being the absolute majority in Tallinn by 1989. In Riga, Latvia, Russians even overtook Latvians as the largest ethnic group.

The newcomers did not assimilate with Estonians, the vast majority of them retained their own language and culture, as they were not expected to. Instead Estonians had to integrate with them and learn and speak Russian, as Russian cultural and ethnic supremacy was promoted. After all, it had been the Great Russian Tribe that had initiated the Workers Revolution.



The new Mustamäe borough in Tallinn, built in the 1960s. Has a large Russian population.



The Väike-Õismäe borough in Tallinn, built in the 1970s. Majority Russian.



Lasnamäe borough, built in the 1980s. It was supposed to house 200 thousand people, but only half of it was finished. The most Russian part of the capital.



Annelinn in Tartu. The only region of the city that has a substantial Russian population.

In the 1970s the opportunities to rapidly expand the Soviet industry and agriculture were exhausted. The Soviet economy was mainly maintained with the help of the sale of oil.

During the tenureship of Karl Vaino the agriculture was subjugated to fulfil the goals set out in the all-union food programme. This meant that the dairy and meat exports out of Estonia heavily increased. Pig farming was greatly expanded and a new port was built in Tallinn to import foreign grain. In the meantime local consumption became less diverse and shelves in stores became more empty. Local produce was exported to Russia, not much was imported. In addition to the already existing lack of everyday consumer goods the deficit of food products increased as well.

In industry the local policy was also led by all-union bureaucrats. By the 1980s more than 90% of the industry was under the control of them. A large portion of Estonia's industrial potential was wasted on military orders. The lag of technology and machinery when compared to the West increased.

The black market became a part of daily life. As there was a deficit to almost every single item, the only way to live well was to have the right connections. Highly valued were imported goods, even from other Eastern Bloc states like Poland or the GDR, not to mention Western goods, which were smuggled in through Finnish tourists who were allowed to visit Tallinn.



A common sight in the 1970s and 80s: a queue at a store. It generally signalled that a fresh batch of some deficit goods, which was difficult to get hold of, had been brought in. Many people chose to queue without knowing what was sold, as it was highly likely that they would need it, if not now then in the future.



People in Pärnu queuing for coffee beans. Shampoos, exotic fruit, candies, green peas and sausages were all considered very rare. Even being able to get good clothes was difficult. Stores did sell items of clothing, but for the most part they were unsightly, uncomfortable and of substandard quality, so people did not buy them.



A “valuutapood”, a special type of store which was filled to the brim with deficit products but where you could only buy using foreign currency, like Finnish marks or US dollars. Having access to those was illegal however. The store was meant for tourists, however shifty locals did also find their way inside it.

Overall the national income per capita was higher in Estonia than elsewhere, being 44% above the Soviet average in 1968, however that was due to Estonia being ahead of the Soviet Union before the occupation. Soviet rule significantly slowed down Estonia's economic growth, resulting in a wide wealth and living standards gap between its neighbours Sweden and Finland. Albeit being on par or even ahead of Finland in the late 1930s, and despite Soviet and Russian claims of improvements in standards, even three decades after World War II Estonia was rife with housing and food shortages and fell far behind Finland in not only levels of income but also average life span. Estonian sources estimate that due to the lack of efficiency of having no competition or market-clearing prices, the mismanagement of the Estonian economy cost hundreds of billions worth of dollars. Damage to the Estonian environment caused by the extensive over extraction of resources and industrial waste is estimated at 4 billion USD.