On the road to financial autonomy. Stalin's gold ruble
Representatives of the ruling class in Russia regularly say that there is no money. That investment is small, then they themselves invest capital in Western securities. However, under Stalin, Russia-USSR was able to solve the problem of financial independence and achieve unprecedented success in the economy. History Stalin's ruble shows that with a zealous host, a country like Russia can flourish without letting itself be robbed by internal and external parasites.
A brief history of the monetary system during the reign of Nicholas II
The monetary system that existed in the Russian Empire before World War I was formed thanks to the 1897 reform of the year (the Witte reform). The introduction of the gold ruble was in the interests of large capital, as well as foreign banks and monopolies, which exported their capital to Russia. In general, Witte fulfilled the wishes of the so-called. "Financial International", which was associated with a number of contacts. The reform was preceded by measures to strengthen the budget and the accumulation of gold reserves. The accumulation of gold went by increasing its production and forcing the export by reducing the domestic consumption of the population (“not enough to eat, but we will take out”).
As a result of monetary reform in Russia, the classical form of the monetary system with gold currency was established. However, despite the large gold reserves, the financial position of the Russian Empire was not stable. Russia had a large foreign debt.
Believing in the need for Western investment and the free circulation of the ruble, Nicholas II removed the protective barriers. Foreign capital really poured into Russia, but it (as in the modern Russian Federation) had a speculative character. Foreigners built enterprises for the extraction and processing of raw materials in Russia, the manufacturing sector grew rapidly in the empire. But most of the profits immediately exported abroad in the form of interest on loans and dividends from Western capital. For this, a freely convertible gold ruble was required. Gold flowed from the Russian Empire to Western banks. With the help of Witte, Western capital built a system such that most of the profits were in the hands of the “financial international”, as well as Russian bankers and large industrialists. At the same time, the Russian rich preferred to burn money abroad, to buy Western luxury items on them.
Having entered the First World War, Russia rather quickly exhausted its budget reserves. The government was forced to ban the exchange of credit tickets for gold and began to resort to the issue of paper banknotes in large amounts to cover military expenses. In 1914-1915 the money supply has more than doubled. However, the financial situation was still fairly stable. In some other warring powers, the situation was worse. Military orders and food purchases for the army even somewhat stimulated the national economy, and the Russian economy continued to grow. This delayed the fall in the value of the ruble. The confidence in the ruble has not yet been undermined. In 1916, the situation worsened somewhat, the depreciation of money began. The money supply continued to grow: from 2,4 billion rubles at the beginning of the war and 5,7 billion rubles at the beginning of 1916 to 10,8 billion to March 1 of 1917.
It should be noted that the depreciation of the ruble in 1914-1917. It was no longer due to the growth in consumer demand for a decreasing amount of goods, but because of the speculative component. In fact, a significant part of the industrial and financial circles of Russia during the war years tried to cash in on wartime and the difficulties of the country. In the price of goods increasingly laid thieves component. There was a terrible war, hundreds of thousands of sons of the Fatherland died, were injured, became cripples, froze and starved, fed lice, and at this time in the rear stole everything they could.
So, at state-owned (state-owned) factories, products cost 2-3 times less than at private ones. At the state-owned factory 122-mm shrapnel cost 15 rubles, and in private - 35 rubles. When the chief of the Main Artillery Directorate, General Alexey Manikovsky, tried to press the thieves, they complained to the tsar. Nicholas II summoned the general to himself and said that he was hampered by "the initiative of society in supplying the army." To this, Manikovsky responded that private owners already get 300% profits, and in some cases up to 1000%. Nikolai said this: "Well, let them make money, so long as they do not steal." Manikovsky noted that "this is worse than theft, it is open robbery." However, the emperor insisted on his own on the pretext that "no need to annoy the public."
This conversation is very indicative, it characterizes the degree of decomposition of the Russian empire and the weakness of imperial power. Nicholas, even during a war, does not want to toughen orders and restore order in the rear, fearing to “annoy the public.” As is well known, the public in this period, like most of the press, was formed by liberal, Masonic and Zionist circles. "The Fifth Column", which eventually destroyed the autocracy and the Russian Empire, staging the February Revolution.
It should be noted that the activities of Manikovsky, who became the head of the GAU in a crisis situation - during the period of the so-called "shell hunger", came up against serious resistance. The general proved himself to be an energetic leader who was able to establish ammunition production and by 1917 fully satisfy the needs of the front. Under Manikovsky, existing production facilities were expanded - weapons, artillery, shell, powder, and new ones are created. Manikovsky was an excellent manager. Possessed tremendous energy and exceptional abilities. His favorite saying was: “Procrastination of death is like!” The general was not afraid to take responsibility on himself, resolving matters with lightning speed. He attracted people with cordiality and directness. Manikovsky harshly criticized private producers focused on superprofits, they overstated prices and issued defective products. Private industrialists hated him and almost achieved the resignation of Manikovsky from the post of head of the GAU. In March 1916, the Minister of War agreed to transfer the general back to the post of commandant of the Kronstadt fortress. However, the possibility of disrupting the supply of ammunition to the army in the event Manikovsky left, forced the military leadership to leave the skilled manager at his post.
Manikovsky was able to put under his control private factories producing military products. Manikovsky himself believed that in peacetime, state-owned enterprises should serve as a price regulator and the vanguard of technical progress, and during the war - have a dominant position. After the revolution, Manikovsky went to serve in the Red Army, headed the Artillery Directorate, the Red Army Procurement Directorate. Thanks to Manikovsky, powerful artillery appeared in the Red Army and an army supply system for ammunition was organized. Unfortunately, he died in 1920 year.
The picture of general theft in bourgeois circles is well illustrated by the situation in the Urals, which was one of the oldest industrial centers of the empire. For comparison, during the years of the Great Patriotic War, the Urals became the most powerful center of the USSR, which made a huge contribution to the overall victory. So, if production per Ural worker in the first (peaceful) half year of 1941 was taken as 100%, then in the second half of 1941, production increased to 217,3%, and in the first half of 1942 year - to 329%.
We see a completely different picture in the Urals during the First World War. Until the spring-summer of 1915, when the Great Retreat of the Russian army began and an acute shortage of weapons (especially shells, barbed wire) was discovered, the Urals and its industry didn’t think much about it. Only in 1915, the need to urgently transfer factories to military production and increase steel production became acute. In the summer of 1915, a commission of General Mikhailovsky arrived in the Urals, which traveled around the factories and held meetings with the breeders. Breeders began to move, began to actively express their "patriotism."
Entrepreneurs have developed vigorous activities to modernize and expand production. We went purchasing new machines, built new factories. The number of workers has grown significantly. It would seem that the Urals should have experienced an increase in production. However, the opposite happened. Fell ore, smelting iron and steel. At the same time, entrepreneurs felt great, rolled like cheese in butter. The profits of joint-stock companies rose sharply. So, the Theological Society, which had about 1913 million gross profit in 4, received more than 1916 million rubles in 10,5 year; the profit of the Beloretsk society increased from 860 thousand rubles to 2 million 170 thousand rubles, etc. In general, the profit of Ural breeders for three years has tripled.
The Provisional Government
It is clear that with such a system, the government had no choice but to print more and more money. When the liberals in February 1917 seized power, the collapse of the economy and the financial crisis intensified. From March to October 1917, the money supply doubled and reached 1 in November 1917 of the year 20,4 billion rubles. This is due to a sharp decrease in the volume of production, a reduction in commodity output, and the ejection of money and peasant broths, which led to a strong depreciation of the ruble. The depreciation of money overtook the issue. Russia has entered a period of strong financial crisis and the collapse of the monetary system. By the time of the October Revolution, the paper ruble had depreciated to 10 pre-revolutionary kopecks. The Bolsheviks inherited a completely upset financial system.
The period of "war communism"
The Soviet government implemented a number of anti-crisis measures. Lenin put forward the idea of not issuing money as one of the most important tasks of economic policy. Council of People's Commissars (SNK) took measures to reduce costs. When SNK established a "Special Committee to reduce public spending."
However, during the civil war and other difficulties of this period, it was not possible to eliminate the budget deficit. From November 1917 of the year to April 1918 of the year 18,7 billion rubles were issued. In the spring of 1918, active work was carried out on the preparation of monetary reform. Lenin paid great attention to this question and emphasized that all other reforms are doomed to failure, if there is no success in financial policy.
However, in view of the intensification of civil war and intervention, the financial reform, which implied a reduction in the money supply, could not be implemented. Military spending rose sharply, while budget revenues could not be increased due to increased economic chaos and the inability to collect taxes. The budget deficit, despite the introduction of an emergency revolutionary tax, has increased dramatically and continued to grow. In 1920, the budget deficit was more than one trillion rubles (87% of the budget expenditure). The only source of covering the budget deficit was the issue of money. The amount of money from mid-1918 of the year to the beginning of 1921 of the year increased almost 30 times - from 43,7 billion rubles on July 1 1918 of the year to 1,2 trillion rubles on 1 January of 1921.
Money quickly depreciated. So, in January 1920, the money supply increased by 15,7%, and prices increased by 27%; in February, the money supply was increased by 12,6% and prices by 23%; in March, the money supply increased by 16,2% and prices by 25%. The rapid depreciation of money was associated not only with the issue, but also a significant reduction in production and commodity mass. War, chaos and general devastation caused a reduction in production. The naturalization of the economy and the exchange (the surplus, the supply of food, the introduction of free services and goods, etc.), as well as the acceleration of the circulation of money, also had an effect. There was a “flight of money”, characteristic of a period of strong inflation. Certain goods have become a medium of exchange, crowding out money. In addition, the Soviet government did not even have a symbolic provision of money. The gold reserve of the Russian Empire was lost, exported abroad. The Soviet ruble was not credible due to the lack of gold reserves. Psychology is of great importance in financial policy. Financial experiments of the Bolsheviks played their negative role. The Bolsheviks tried to refuse money altogether and distribute goods for free.
The period of the NEP
Inflation during the civil war and intervention was not possible to stop. It was necessary to maintain and feed the state apparatus, the army, support the city and the workers, and there was almost no tax revenue. But as soon as the war ended, the Soviet government was able to change the situation.
One of the most important measures to improve monetary circulation was the organization of the State Bank in October 1921. The State Bank has become not only the main credit institution, but also the center for organizing money circulation and money circulation regulation. With the transition to the New Economic Policy, the value of money has increased. Everywhere was restored payment for goods and services. Most of the state-owned enterprises were transferred to cost accounting, that is, they stopped the free supply of raw materials and materials and reduced budget support. The card system of distribution of products among employees and workers was limited, and then eliminated; cash wages gradually replaced natural wages.
The XI Congress of the RCP (B.) Adopted a detailed program of financial policy. The transfer to the cost accounting of the majority of enterprises and organizations contributed to the growth of production and trade, reduced government spending and expanded sources of revenue for the budget. In 1922-1923 local budgets were organized and administrative expenses were reduced. In 1922, the first short-term bread loan was issued. Loan bonds were sold for money, and they could be repaid with money or bread. The bonds were accepted in payment of the natural tax, which replaced the surplus. These and other measures have somewhat stabilized the financial situation of Soviet Russia.
To reorganize currency circulation in 1921-1922 held two denominations of banknotes. Under the first denomination, one ruble of new money (banknotes of the 1922 model of the year) was equal to 10 thousand of banknotes of previous issues. For the second denomination (banknotes of the 1923 model of the year) to 1 million rubles of banknotes of all issues up to 1922 of the year or 100 thousand rubles of the 1922 model of the year.
However, it was not possible to radically change the situation. Money supply continued to grow at a rapid pace. From 1 July 1921 to 1 January 1923, it grew 850 times. The bad harvest and famine of the year 1921 also played a negative role. True, the growth of economic turnover contributed to the fact that the depreciation of money was slower than the growth of emissions. To create a stable currency, fundamental monetary reform and a serious expansion of production and trade were required.
To be continued ...
- Alexander Samsonov
- On the road to financial autonomy. Stalin's gold ruble
On the road to financial autonomy. Stalin's gold ruble. Part of 2
How Stalin freed the ruble from the dollar. Stalin's plan to create a common "non-dollar" market
Information