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1 January 1970, was restricted to holding checking and savings accounts of the population. The PKO now also provides credits for private housing constriction and major home repairs, formerly functions of the Investment Bank, and provides credits for installment sales in place of the now-defunct Installment Sales Organization. A branch of the PKO, the Bank of the Polish Welfare Fund, handles transfers between Poles living abroad and their families in Poland.

Poland also has a number of savings and loan cooperatives that operate in much the same fashion as Western savings and loan banks — holding savings accounts and issuing short-term credits. Total savings deposits in the PKO and savings and credit cooperatives, together with loan-and-relief funds of trade unions, have grown rapidly; they increased about sevenfold during 1956-60 and sixfold during 1961-71, totaling approximately 149 billion zlotys at the end of 1971. The per capita volume of savings deposits in Poland is currently about 5.6 times the average per capita monthly gross income.

Other banks in Poland include the Bank of Commerce, which handles all payments and settlements connected with international commodity trade and services. The Bank of Agriculture administers the Agricultural Development Fund, handles budget-financed investments in agriculture, and provides credits to enterprises subordinate to the Association of the Timber and Timber Products industry.

All property and personal insurance in Poland is issued by the General Insurance Agency, which is owned by the state and directed by the Ministry of Finance.

4. Economic reforms

Poland was the first Communist country, aside from Yugoslavia, to experiment with economic reform. In the more liberal atmosphere following the 1956 revolt and the coming to power of Gomulka, there was widespread criticism of the highly-centralized, Soviet-type, command economy. A reform program known as the New Economic Model was published in June 1957, and various elements of it went into effect during 1957-58. Although changes were less far-reaching in practice than on paper, the scope of central planning and control was reduced and decision-making in the economy was partially decentralized. Most of the impetus for reform was lost after 1958. Economic conditions improved, and the regime tightened central controls in 1959-60 in order to push investments.

By 1963, Polish interest in economic reform was revived, largely because of the failures evident in existing economic policies, but also in response to the adoption of reform programs in other Communist countries. The leadership charted a program of economic reform, approved it at the Fourth Party Congress in November 1964, and proposed to implement it during 1966-70. The program contained most of the major features of reform programs in the other Communist countries: some reduction of central planning and control, greater use of the profit motive to guide production, decentralization of investment, and a strengthening of management. It also reduced direct investment allocations from the budget, in favor of financing investments through the retained earnings of enterprises and the use of bank credit.

The Polish leadership at the Fifth Party Congress in November 1968 announced a new concept of "planning from the bottom upward." In essence, the new concept provided for an enlarged role for individual enterprises in the drafting of the 1971-75 plan by requiring each enterprise to draft its own 5-year plan for development, as well as several alternative versions, on the basis of general guidelines from the State Planning Commission. By nominally enlarging each enterprise's role in plan formulation, the national planners wished to inspire managers and workers alike to greater on-the-job efforts, and also to diffuse responsibility for shortcomings that might appear in the plan's execution. Besides its traditional role in the planning process, the State Planning Commission assumed new responsibilities in the area of technological forecasting.

In the winter of 1969-70, Gomulka gave in to Party pressure for further modifications. A key part of the program consisted of tightening control of employment and introducing incentive wages and bonuses into industry. Implementation of the reforms led to drastic reductions in overtime work in 1970, and to a slowdown in the rise of employment and real wages. At that time, the regime unveiled its new incentives system, a complicated formula for tying bonuses to profitability, among other things. A special formula was devised for shipbuilding — linking bonuses in part to the sales prices received for ships. About 80% of ship output through 1975 was targeted for export, and the workers resented having their bonuses depend on factors outside their control.

The announcement of retail price increases — which sparked the December 1970 riots — was in line with the long-standing wish of planners and economists to revamp the price structure to channel excess demand to consumer manufacturers other than the heavily

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