The Great Terror from 1936 to 1938 transformed the Soviet system. It erupted unexpectedly and with little warning. It developed through a series of steps acquiring momentum. In the first half of 1936 Kaganovich and Ordzhonikidze both spoke publicly against mass repression of their own cadres. In this they stood in clear opposition to Yezhov, the most vocal advocate of punitive measures against those deemed to be enemies of the state. Stalin's ability to use repression in the economy in 1933 had been thwarted by Ordzhonikidze and Kaganovich. By July 1936 he had decided to unleash a new witch-hunt. Kaganovich was required to change his stance on this issue. His shifting outlook and role sheds light on the way in which the Terror was initiated and on how the vozhd' managed his relations with his deputies. The rationalization for the Terror provided by Kaganovich at the time and subsequently provides a key to understanding the tortured logic of those involved in implementing these measures. The mass repression of 1936 was shaped in part by the long shadow cast by collectivization, dekulakization and the famine, which remained issues of bitter recriminations. In industry and transport the problem of low labour efficiency and the disappointing return on investment generated conflicting viewpoints between those who saw the problems as stemming from obstruction and wrecking and those who saw the problems as rooted in the rigidities of the state-owned, planned economy.