Cash in circulation under Stalin
In view of some interest in the topic of finances in Stalin's times, I decided to continue the topic, devoting a little more attention to the circulation of cash. As in the case of Stalin's credit, Stalin's rules in the matter of cash circulation were no less specific, and some of their features should not be discussed.
But we have a good source. It is the textbook "Banking Statistics", compiled in 1940 and 1948 by F.D. Livshits. The textbook was intended for training bank employees, and many points were interpreted more than transparently there.
Livshits Fyodor Davydovich is the founder of Soviet banking and credit statistics. After the economics department of the Odessa Polytechnic Institute, which he graduated from in 1921, he quickly got into the State Planning Committee of the RSFSR, then the People's Commissariat of Finance of the USSR, where he worked until 1931. After that, he worked as a teacher: Moscow Credit and Economic Institute, then the Correspondence Credit and Economic Institute, and since 1946, the All-Union Correspondence Financial Institute, then also the Financial and Economic Institute. In 2012, it was merged into the Financial University under the Government of the Russian Federation.
Despite some disdain for correspondence higher education, this institute did important work - it trained personnel without interrupting their work: leading economists, chief accountants, employees of the USSR State Bank, and so on. During its entire existence, about 500 thousand people were trained there. A significant role in this was played by F.D. Livshits, who was supposed to explain how to properly conduct banking statistics.
Money and income of the population
Of course, he described the system of cash circulation. In general, we will follow his presentation, supplementing it with other materials if necessary.
Cash turnover in the USSR was also planned - a cash plan. It was compiled quarterly, broken down into months, and approved by the government as part of the credit plan, which was discussed in the previous article. The credit plan took into account the turnover of all money: non-cash and cash, and the cash plan - only cash. These plans were closely linked. F.D. Livshits wrote:
"If all bank operations were reduced to non-cash transfers from account to account within the socialized socialist sector, then the balance of the credit plan would always be identically equal to zero. However, this is not the case. Cash payments are made from the settlement and current accounts of our enterprises and organizations every minute through the bank's cash desks, and cash is almost continuously received into these same accounts through the bank's cash desks, not to mention the bank's operations directly with the population. Consequently, if the balance of the credit plan for a given period is not equal to zero, then this arises solely from the discrepancy between the incoming and outgoing transactions in that part of its turnover that is carried out in cash through the cash desks, i.e., in that part that is entirely reflected in the bank's cash plan." (p. 306)
This is especially for those who still believe in the absurd theories of "two-circuit money circulation". F.D. Livshits has formulated everything in a way that leaves no doubt.
He emphasized that the balance of cash turnover expresses the coincidence of the balances of four plans: the credit plan of the State Bank, the cash plan of the State Bank, changes in the volume of money supply and the balance of monetary income and expenditure of the population.
Now let's listen to Comrade V.P. Dyachenko, how the purpose of cash was understood in the USSR. Vasily Petrovich Dyachenko, Corresponding Member of the USSR Academy of Sciences, Professor, Doctor of Economics, after graduating from the Economics Department of the Leningrad Polytechnic Institute in 1929, worked until 1947 in the People's Commissariat (Ministry) of Finance of the USSR and during the preparation and implementation of the monetary reform of 1947, he headed the monetary circulation group of the Ministry of Finance. From 1947 until his death in 1971, he worked at the Institute of Economics of the USSR Academy of Sciences and at the State Economic Institute named after G.V. Plekhanov.
In his work "History Finance of the USSR”, published after his death, in 1978, V.P. Dyachenko quite frankly stated that cash serves the relations between the socialized economy and the population, that is, wages and payment for goods and services purchased by the population in the socialized economy. Also:
“An excess of the population’s monetary expenditures over its monetary incomes means the withdrawal of money from circulation, and an excess of the population’s monetary incomes over its monetary expenditures means an increase in the release of the money supply into circulation” (p. 391).
Is it possible to put money into circulation?
The cash plan took into account all aspects of cash circulation, starting with their production, i.e. printing at the Goznak factory, right up to the destruction of worn-out and unusable banknotes.
Sealed paper money and minted coins were transferred from Goznak and mints to the monetary bases of the State Bank, where they were stored pending subsequent use. It is worth mentioning right away that F.D. Livshits specifies the types of paper money. USSR State Bank notes are large-denomination banknotes: 10, 25, 50 and 100 rubles. They are backed by gold, precious metals and other assets of the State Bank. Treasury banknotes are small-denomination banknotes: 1, 3, 5 rubles, intended exclusively for exchanging State Bank notes.
From the monetary bases, by decision of the Emission Department of the State Bank of the USSR, cash was transferred to emission funds. Here is their function was very interesting. Firstly, the funds issued new money into circulation by transferring it to the circulating cash desks of the branches of the State Bank of the USSR. Secondly, they withdrew money from circulation, and not only worn-out ones.
The fact is that the revolving cash desks had the right to dispose of the amounts they had only during the operating day, when cash was issued and collected. Each branch of the USSR State Bank had a maximum cash balance, over which excess money was immediately transferred to the emission funds. When recounting, the money was sorted by denomination, old and unusable banknotes were selected, which after being transferred to the emission fund were written off for destruction.
The State Bank branch reported by telegraph to the regional, territorial or republican office about the completed transfer of cash to the emission fund, both in terms of the amount and composition of the banknotes.
When a branch needed additional cash over and above the incoming cash, that is, cash reinforcement, the branch could not take it from the emission fund. A telegraphic request for the issue of money was sent to the office, the office, having summarized the requests, sent a telegraphic request to the Emission Department of the State Bank of the USSR. If permission came from there, then the branch was informed by telegraph what amount and in what denominations it could take from the emission fund.
That is, the system of regulating the circulation of cash for withdrawal worked freely, but permission was required for its release into circulation. Now let's look at Dyakonov: the withdrawal of money from circulation meant that the population's expenses exceeded its income.
Why do you need money?!!
So, you could come to a branch of the USSR State Bank and demand cash? Here is an enterprise that had an account, there was money in the account... No, Comrade Stalin was not so benevolent. In 1930, during the credit reform, a rule was established: on the back of the payment document, the client indicated the purpose for which cash was being withdrawn. If there were several purposes, the total amount was divided into appropriate parts. Date, signature. Codes were introduced that bank and accounting employees knew almost by heart, which simplified the entries. For example, "62" is wages. Under the codes, transactions were recorded in the cash journals of the State Bank branches and cash reporting.
Formally, as F.D. Livshits writes, for statistical accounting. But not only. Also for control. The State Bank had the right to check the targeted spending of cash issued to an enterprise, organization or institution. For example, payroll records were compared with cash books. Any payments to an employee in excess of the amounts issued by the bank for wages were prohibited. The fact is that all enterprises, organizations and institutions that had cash proceeds were required to hand them over on the same day or, at most, the next day. According to the "Instructions of the State Bank of the USSR on the collection of cash proceeds" of 1943, proceeds could only be spent on urgent needs and on the formation of a cash balance according to the standard. If the audit revealed other expenses from the cash proceeds, then this was classified as illegal spending of cash proceeds, the enterprise was deprived of the right to spend money from the proceeds, and those guilty of untimely and incomplete delivery of proceeds were sent to cut down trees in a camp - criminal liability.
Overspending of wages was also prohibited, except in the case of overfulfillment of the plan. If the overspending was large, then permission from the People's Commissariat or the Ministry was required to issue at the expense of redistribution of the wage fund in the department.
So, the factory's accounting department received cash from the State Bank for salaries, distributed it to the proletariat, and the proletariat went off to drink away their earnings...
On the same day, cash proceeds began to flow into the State Bank branch. According to F.D. Livshits, 85-90% of the cash inflow was the proceeds of trading enterprises, determined by the payment of wages. Groups of collectors with special numbered bags sealed with wax seals went out to collect it. The collector gave the enterprise accountant an empty bag for the proceeds of the next day, and he himself took the one already filled with money, which was sealed in his presence and receipts were filled out. Much attention was devoted to manipulations with bags in the collection instructions. The bags were brought to the State Bank branch, opened there, their contents were recounted and registered.
Before the war, apparently, there was a practice that the amount of cash deposited was credited to the enterprise account the next day before lunch. During the war, the requirement became strict - to credit on the same day.
Thus, cash in its bulk, about 80-85% of those put into circulation, if they left the circulating cash desks of the USSR State Bank, then only for a short time - for a day or several days. The aforementioned authors do not provide statistics on this matter, but it seems that more than half of the cash left the cash desks of the State Bank for a period of less than an operational day.
F.D. Livshits wrote that it is difficult to organize accurate statistical accounting of cash turnover:
“Let’s assume that we managed to register, over the course of at least one month, all cases of transfer of banknotes with the following characteristics: the exact time of transfer, place, counterparties of the transaction, economic basis for the transfer (sale of goods, provision of services, withdrawal from bank accounts, etc.), type and quantity of goods sold, amount of money, number of banknotes involved, their denominations, etc.” (p. 380).
And he was very upset about this:
“Of course, such an ideally conceivable formulation of the study of money circulation is unrealizable.”
Comrade Livshits died in 1975, long before the advent of today's banking systems. There is no doubt that the management of the State Bank of the USSR during Stalin's time would have been overjoyed by the modern cashless payment system, and they would have solemnly decreed the abolition of cash for all time.
So, thanks to the efforts of Sberbank, VTB and others, we have in a certain sense come closer to communism.
Actual control
Now a little banter from Igor Guberman:
For the benefit of the hegemonic class,
so that he may rule without fail,
available for frisking at any moment
a single hegemon.
so that he may rule without fail,
available for frisking at any moment
a single hegemon.
He slandered, of course. But, since Guberman was first a railroad worker, then a dissident, then a prisoner, and then an emigrant, he simply knew nothing about the USSR State Bank system, where such unreliable people were not allowed anywhere near and, like most Soviet citizens, were not told anything significant.
If he had known about the methods of the USSR State Bank, he would have understood that the police and the KGB controlled the proletariat only occasionally, when it had completely gone wild. In reality, the Soviet proletariat, like every single proletarian, was under the pencil of the accounting department of his native factory and the local branch of the USSR State Bank standing behind the factory accounting department. The entire life of the Soviet hegemonic class passed through the accounts of the USSR State Bank.
Many people believe that the Nagant was the main means of defense of the Soviet power. But this is not true.
This is what Soviet power actually defended itself with: accounts and ledgers!!
People with bills in their hands, sitting in special rooms behind iron doors and bars, watched his every step. And this was the real control on which the might of Soviet power was built.
Stalin's system of cash circulation, together with the tax system and various methods of mobilizing funds, such as loan subscriptions, was set up to give people the bare minimum of money, only to cover their daily expenses. Firstly, as a way of forcing them to work. Secondly, so that there would be no opportunity to accumulate capital, even the most insignificant. Thirdly, so that the amount of cash that remained in circulation in the hands of the population remained as small as possible, so that conditions for private enterprise would not arise. If there is no solvent demand, then there is no enterprise.
And there is no, or practically no, other way except to strengthen the socialized socialist economy with our own labor.
Information