In 1914, the ruble of the Russian Empire was considered one of the most solid and reliable national currencies in the world. Where did the national financial disaster begin?
The war has finished the golden ruble
1 August 1914, the Russian Empire entered the war, later called the First World War. Hopes for its speedy end were not justified, the war lasted more than four years. In addition to the disasters of the military, it also led to immeasurably more serious political and economic upheavals, the end result of which was the October Revolution 1917 of the year and the subsequent Civil War. After all, inflation is a companion of any protracted military action. To wage war is a very expensive pleasure, and even rich countries have to turn on the printing press (and at the same time make loans, both internal and external). And the inevitable consequence of a civil war (or a defeat in a war is normal) is hyperinflation - the number of zeros on unsecured banknotes is growing rapidly. The dubious honor of setting records in the field of hyperinflation, fortunately, does not belong to our country - we did not have bills with denominations of sextillion (billion trillion, 10 to 21 degrees, Hungary, 1946) or 100 thousand billions (Germany, 1924), during Civic denominations of banknotes of the State Bank of Russia have reached us only to millions.
In the First World War, Russia entered, possessing a solid and reliable national currency. After the monetary reform of 1898, the royal ruble had a gold supply, and by 1914, the gold reserves exceeded the amount of paper money in circulation, so that if necessary the government could replicate more than 300 million rubles.
But already 27 July 1914 was in the Russian Empire, a law was passed, suspending the exchange of paper money for gold (so did most of the countries that participated in the war). The same law gave the State Bank the right to print money that was not provided with gold in the amount of up to 1 500 million rubles. In fact, by the year 1917 6 500 million had already been printed. Moreover, the real provision of paper money with gold reserves at this point was only 16%.
Naturally, the result of the depreciation of money was a huge inflation. In 1915, it was still only 30%, but in 1916, it already jumped to 100%. Public servants already with 1915, compulsory indexed salary adjusted for inflation, but this did not save from rising prices. It got to the point that at the end of 1916, the government made an attempt to conduct a sort of surplus - that is, seize part of the crop at fixed prices, but ran into outright sabotage by the peasants, because prices on the market were several times higher, and the provision of no one guaranteed industrial goods at fixed prices for rural residents.
In March, the Provisional Government, headed by Prince Lvov (later replaced by A.Ferensky Kerensky), came to power in Russia, which succeeded in a fantastic thing - in a short time to turn a stable state into a disorderly collapsing colossus . Suffice it to say that during the 1917 months of its existence, in addition to the collapse of the army, the amnesty of criminals and the destruction of the police, it released as much money as the royal for two and a half years of war - the total amount of the issue was 8 million rubles (not counting the change marks on 6412,4 million and exchange treasury marks on 95,8 million).
Before 1917, the largest Russian banknote was 500 rubles. Before the First World War, it was a very large amount. But by 1917, the money was so depreciated that it was the monthly salary of a skilled worker. By the time the Provisional Government began to issue money, the situation became so disastrous that the bills in denominations of 250 and 1000 rubles (the so-called “Duma money”) immediately began to print. But this was not enough - prices were already rising to dizzying heights. So much so that in some regions, in-order, there was a barter in the absence or total uselessness of money.
A desperate attempt by the Provisional Government to prolong the agony of the traditionally established commodity-money relations was the release of the famous “queens” - paper money in denominations of 20 and 40 rubles. More useless money in stories Russia was not yet. They were not even faked - because they were printed on plain paper (even label paper was suitable), this could be done in any printing house. Given their low dignity, the “Kerenki” were released in whole sheets, not even cut into bills. However, there was no need to cut them - at the prices of those times it was much easier to pay in whole rolls. But very soon such a need disappeared - the Provisional Government was overthrown and the “Kerenki” were practically out of circulation. Most often, the happy owners of such rolls used them for pasting walls. This is how I spoke about the situation that had arisen at the beginning of 1918, S., E.E. Khitun, who later turned out to be in exile in China: “I had money issued by the Kerensky Government, but peasants were more willing to exchange edible products for clothes than for quickly losing value money of the already defunct Government.”
In October, 1917, an epoch-making event in Russian history occurred - the power in the country was seized by the Bolsheviks, who created the new government - the Council of People's Commissars (Council of People's Commissars). They got a heavy legacy - the state was on the verge of collapse. But besides the accumulated political experience, there were no management practitioners among them. Nevertheless, they instinctively groped for the only surest way among the economic chaos that reigned during the Civil War by the end of 1918. This was the introduction of the economic policy of war communism. Not to mention the fact that this was in many ways the embodiment of the ideas followed by the Bolsheviks, military communism was the most reasonable way out of this situation.
The nationalization of everything that can be nationalized, the prohibition of private trade and the state monopoly on trade in the main types of agricultural products and foreign trade, the surplus, which was carried out by the detachments, an attempt to create labor armies (by the way, something like our labor armies of the times of war communism created in the early thirties Roosevelt’s in Democratic America). Attempts were made if not to get rid of money at all, then at least to reduce their circulation to a minimum. The money that was in circulation, civil servants and workers of industrial enterprises were given only part of their salaries, the rest was given in kind - food rations (plus free working clothes and utilities). But it was impossible to abolish money on the move by one strong-willed decision.
The State Bank, the Expedition of Harvesting Government Papers (the future Goznak), the Mint and part of the country's gold reserves (in 1915, during the Great Retreat, the gold reserves were evacuated to Kazan and Nizhny Novgorod just in case. In 1918 about half of the gold reserves, exported to Kazan, turned out to be white). One of the first decrees of the new government was the decree of December 14 (27) “On the nationalization of banks”. There is only one bank left in the country - the former State, now the People's. Cash reserves ("Romanov", "Duma", "Kerensky") at this bank quickly ended. After all, now the new government was required to pay salaries, allowances, pensions, to buy food.
And on January 21 (February 3), the Central Executive Committee issued a decree of 1918, according to which 5-percent short-term liabilities of the state treasury issued shortly before October were put into circulation along with credit cards. And it was the first of the decrees and circulars of this kind. The number of securities inherited from the tsarist and Provisional governments, replacing money, grew steadily. This number included not only bonds of the recent Freedom Loan, but also, for example, exotic coupons of the 5-interest home loan ... 1864 of the year. In total, there were three categories of securities and four dozen varieties of coupons in circulation - apparently, everything that was found.
On the 1918 year, the Bolsheviks planned a monetary reform, about which Lenin wrote: “We will appoint the shortest period during which everyone will have to make a declaration about the amount of money he has and receive new ones in return; if the amount is small, he will receive a ruble per ruble; if it exceeds the norm, he will receive only a part. This measure will undoubtedly meet with the strongest opposition not only from the side of the bourgeoisie, but also from the side of the village kulaks, who have grown rich in the war and who have buried bottles filled with thousands of paper money. We will meet breasts with class enemies. ” Alas, the Civil War began in the country, and instead of monetary reform it was necessary to introduce military communism.
Money supply has increased 119 times
In 1918, the Soviet government continued to print rapidly depreciating "Kerenki". Clichés from the Provisional Government were used. On these notes, the date “1918” was combined with the coat of arms of a no longer existing state — a double-headed eagle devoid of royal regalia. The purchasing power of the “Kerenok” of the Soviet issue has become even more scanty, and the popular name of this “currency” has changed - in honor of the Governor of the RSFSR State Bank L.G. Pyatakov "Kerenki" were nicknamed "pyatakovkami."
From November 1917 to the first half of 1921, the Soviet government introduced into circulation 2328,3 billion rubles. (as a result, the money supply has increased 119 times). And even this astronomical money supply was not enough to cover the budget deficit - in 1921, it amounted to 21 936 916 billion rubles.
Before the war, industrial products were produced for a total amount of 66,5 billion gold rubles (before the war); by 1921, this figure was reduced to 700 – 800 thousand gold rubles. Over the same period, agricultural production fell from pre-war 5 billion to 1,6 – 1,8 billion.
People lost their jobs
By March, 1921, prices in comparison with pre-war increased 30 thousands (!) Times. Comments to this sad statistic are superfluous.
As General Krasnov, one of the leaders of the White movement, wrote (his statements were, of course, extremely biased towards the Bolsheviks, but not without a grain of truth): “People lost the habit of working and did not want to work, people did not consider themselves obliged to obey the laws, pay taxes, execute orders. Unusually developed speculation, the occupation of buying and selling, which has become a kind of craft for a number of people and even intelligent people. Bolshevik commissars instigated bribery, which became an ordinary and, as it were, legal phenomenon.
In a country littered with bread, meat, fats and milk, hunger began. There were no goods, and the villagers did not want to carry their products to the cities. In the cities there were no banknotes, and they were replaced by substitutes, Freedom Loan coupons and others, which made trade extremely difficult ... ”Of course, first of all Krasnov had in mind the situation created by the Bolsheviks on the eve of the arrival of whites in the south of the country, but this The statement is applicable to the whole of Russia.
The civil war did not prevent economists from arguing about how to bring the monetary system to order. The most obvious way out of this situation was the release of a new monetary unit, secured with either gold or foreign currency, which can be exchanged for gold (gold exchange standard). In fact, it was a return to the pre-war royal ruble. But, for example, economist and statistician S.G. Strumilin (the future academician of the USSR Academy of Sciences) proposed an alternative option - not to embed the Soviet currency in the global financial system, but to provide only the domestic market - the money supply should fully correspond to the mass of goods.
Monetary reform was inevitable. The civil war ended in a convincing victory for the Reds, and keeping the system of war communism intact would be suicide for the Soviet economy.
15 March 1921, at the X Congress of the RCP (B), a new economic policy was announced. The economy should have been adjacent to the public and private sectors. It was also planned to attract foreign capital through the granting of concessions. The surplus, which caused the peasant uprisings, was replaced by a tax in kind. And, of course, no new economic policy was possible without a new ruble. Supporters of the gold supply of the new Soviet currency won the disputes. October 11 1922, by decree of the Council of People's Commissars, introduced a new monetary unit - chervonets. The gold supply of the new currency constituted the 1 spool and the 78,24 gold fraction (1 spool - 4,26575417 gram, in the spool 96 fraction).
It should be noted that the reform was extremely successful, the chervonets was quickly recognized by the population as a reliable currency, whose values were not in doubt.