The topic for this study was suggested to the writer by Dr. Hans Ernest Ronimois, who felt that the problems of centralized formation and allocation of capital in the U.S.S.R. offered a particularly fruitful field for inquiry. In the United States, or any other free market economy, such problems are solved mainly through the agency of a market system which allocates monetary and material resources on the basis of the price mechanism. In the Soviet Union, on the other hand, the criteria of the market have had to be ignored in the face of central plans calling for intensive development of heavy Industry. The automatic mechanism of the market has been replaced by the arbitrary process of apportionment or allocation effected through the medium of centralized distributive organizations. This study deals at some length first with the origins of investment funds in the American and the Soviet economy. Following upon this issue, a survey is made of the shares of investment funds received by the several prime industries, i.e., iron and steel, electric power, machine building, petroleum, coal, railway transport and construction, in the United States and the Soviet Union. Finally, this study examines various economically disruptive effects of the Soviet apportioning technique, by which is meant the misallocation of financial and material resources in the U.S.S.R.. These deficiencies are concluded to represent a problem the gravity of which is sufficient to make its solution a major concern for Soviet planning authorities. / Arts, Faculty of / Central Eastern Northern European Studies, Department of / Graduate