quartered in Novi Sad, an extremely important area in case of a Soviet-led invasion of the country. He was a member of the Central Committee of the League of Yugoslav Communists. At the age of sixty-five he retired to private life.
Byrnes Robert F., Yugoslavia ( New York, 1957); Rusinow Dennison, The Yugoslav Experiment 1944-1974 ( Berkeley, 1977).
Nationalization in Communist Yugoslavia. Tito (see Tito, Josip Broz) and the young communists gathered around him were motivated by the idea of Yugoslavism. This concept meant that the communists were looking forward to the establishment of a unified South Slav nation in which ethnic divisions would eventually "wither away." More important, they were dedicated to the building of a socialist society, one that would facilitate the process. Their model was the Soviet Union. The Soviet model required state ownership of all the means of production, industrial as well as agricultural. All industrial firms and land, therefore, had to be nationalized, without compensation to their owners.
In early 1946, long before a similar process began in the other East European nations, the nationalization of all industrial enterprises, banks, and trades was accomplished. The process encountered fewer obstacles than elsewhere in Eastern Europe. The Germans and Italians had confiscated most of the larger firms and banks during the occupation of Yugoslavia. Consequently, there was little opposition from the private sector when these firms were declared state property. What the communists did not expect was that nationalization of Western-owned firms would arouse opposition from the Western Allies and would eventually choke off the supply of Western goods and spare parts for Yugoslavia.
At first, Tito brushed this possibility aside, since he expected that the Soviet Union would replace the Western aid. The Soviet Union did provide some support, as well as technical assistance, but at a price. Tito soon realized that this price was the opening up of the Yugoslav economy for Soviet exploitation.
Large industrial firms were concentrated in Croatia and Slovenia; many of their foundations went back to the time when the Habsburg monarchy controlled these regions. During the late 1950s, the state bureaucracy ran these factories with relative efficiency. There were even some plans to arrange for cooperation with Hungarian and Romanian enterprises just across the borders. In the republics of Serbia, Montenegro, and Macedonia, industry consisted mostly of coal and iron ore mines. The rest of the local industry was made up by small- and medium-sized factories. The federal government combined these into large firms; however, the consolidated companies lacked experienced managers and faced a shortage of skilled workers. From the very beginning, this created all sorts of structural problems. Nevertheless, these problems did not immediately obstruct the development of industry in Yugoslavia. But there was hidden unemployment in outdated factories that was covered by state subsidies for a considerable time.