By the spring of 1922, the problem of stabilization of the ruble became particularly acute, as the depreciation of the ruble prevented the economic recovery. It should be noted that the Soviet government knew why he needed a hard ruble. And this was different from modern economists, who like to talk about the profitability of a “weak ruble” for Russia. In reality, the depreciation of the ruble is beneficial to the West, which with its hard currency makes it easier to buy Russian raw materials. Favorable devaluation of the ruble and the modern large Russian capital. All this reinforces the raw material nature of the Russian economy. For the development of national production and domestic trade profitable solid ruble. The Bolsheviks understood this well.
Foreign currency and gold, which penetrated into the economic turnover of the USSR, reduced the sphere of circulation of the Soviet ruble. It was necessary to create a stable currency. Two denominations were the first stage of reform. The denomination unified monetary circulation, but did not strengthen the Sovznak. Since the summer of 1922, the State Bank has been conducting preparatory work in preparation for the release of new banknotes. Decrees of the Council of People's Commissars of July 25 and October 11 of 1922, the State Bank received the right to issue new banknotes - banknotes of large bills. It was planned to put into circulation notes in denominations of 1, 2, 3, 5, 10, 25 and 50 chervonets. Money received the name from "pure gold" (high-grade pure gold), which had red, that is red shade. In the future, banknotes with denominations in 2 and 50 ducats, which were provided for by decree, were not released into circulation. The Soviet chervonets was equated to the 10-ruble gold coin of the Russian Empire weighing 7,74. The chervonets was 25% secured with gold, other precious metals, and also foreign currency; on 75% it was provided with short-term government obligations and goods.
Sovznak was not completely canceled, not enough security. Chervonets was a very large amount, and in fact it could only be used for large and bulk purchases. Small retailers needed small amounts. Metallic gold coins were mainly used by the Soviet government for foreign trade, internal circulation was limited. As a result, a solid Soviet currency was created on a gold basis, but without the circulation of gold money. By the summer of 1923, the chervonets was firmly introduced into circulation as the main currency of Soviet Russia. The number of bank notes in circulation increased from 3,5 million rubles on January 1 1923 of the year to 237 million rubles on January 1 of 1924. Their share in the whole mass of money, calculated in gold pieces, increased from 3% to 75%.
Along with the release of the chervonets in October 1923, the so-called transport certificates of a banknote in 5 rubles were put into circulation, they were accepted into payments by the railway along with chervonets. Almost transport certificates were accepted in payments not only by railways. Transport certificates were included in the money turnover of the country as a small denomination of gold pieces.
Monetary reform stabilized the situation of the country, but failed to eliminate a number of negative phenomena. The depreciation of the Sovznak continued at a rapid pace. The falling Sovznak remained the leading currency in the countryside for some time, as the chervonets had too much banknotes. Chervonets, with low productivity (when the peasants produced a little more than they consumed themselves) and low cash incomes of the peasants, was not accessible to the broad masses of the population. In addition, in the village there were no compensation mechanisms protecting cash income from the devaluation of the Soviet signs that were in the cities. Thus, the problems that caused the falling currency, lay mainly on the Soviet peasantry. In fact, the burden of building the Soviet state was placed on the shoulders of the peasantry.
The preservation of a falling currency had a negative effect on the position of workers. Salary was still largely issued not by ducats, but by Soviet signs. Jumps of Sovznak and chervonets courses and fluctuations in the rates of the same money in different markets created grounds for speculation. The stratum of the NEPmen (the “new Russian” 1920s) and the kulaks won on the speculative rise in prices and the depreciation of their debts. Prosperous peasantry (fists) profit from usury and speculative operations. This showed the need to introduce a single currency.
Not only the representatives of the Nepman bourgeoisie and the kulaks, but also the Trotskyists resisted. They prophesied the failure of monetary reform and proposed to cancel it or stay on top of this. Economists at the Narkomfin Economic Research Institute also predicted the collapse of monetary reform, saying that it was impossible to quickly reduce budget expenditures and find other sources to cover the budget deficit. Thus, certain segments of the population in the Soviet Union wanted to maintain the weakness of the ruble and the dependence of Soviet money circulation on the world money market and on our economy and on foreign capital. Private traders and Nepmen wanted a free exchange of gold coins for gold, in order to be able to withdraw gold abroad and escape there too.
At the beginning of 1924, the final stage of the reform was carried out. In the spring of 1924, treasury notes in denominations of 1, 3 and 5 rubles began to be received in money circulation. Sovznaky ceased to produce and began to withdraw them from circulation by buying them at a fixed rate. The Sovznaks of the 1923 sample of the year were redeemed from the population at the rate of one gold ruble in treasury notes for 50 thousand old (in the old sample banknotes 50 billion rubles). At the same time, a high-grade silver coin worth 1 ruble and 50 kopecks, as well as a bargaining silver and copper coin, were issued.
The successful completion of monetary reform in 1924 year led to the creation of a single stable Soviet currency. Without outside help, they eliminated with their own forces the frustration of the monetary system that lasted 10 years. After the issuance of treasury notes and a bargaining chip, before the withdrawal of banknotes, five types of banknotes were in circulation for some time: treasury bills, chervonets, bargaining, banknotes and transport certificates.
Monetary reform was of great importance for the economy of the USSR. 1924-1925 year - the first financial year after the monetary reform - was the year of the maximum for the entire recovery period of the rise of the industry. Industry output grew by 57% compared with the industrial year 1923-1924. A stable currency has created the conditions for cost reduction, strengthening cost accounting, control and planning in industry. So, in the second half of 1924, the cost of production fell by almost 20%. Labor productivity in the 1925 year reached the pre-war level. Wages also reached the pre-war level. The reform was of great importance for the development of agriculture. The losses of peasants from the depreciation of money stopped, conditions for the sale of agricultural products improved; The price difference between industrial and agricultural products has slightly decreased. This contributed to the rise of the peasant economy, expanded the raw material and industrial base for industry. The market for industrial products was expanded.
Thus, for three years of serious work with the financial system, the Soviet government, without any external loans and credits, managed to strengthen the monetary system so much that a paper coin was worth more than a gold coin of the same denomination — more than gold. The introduction of hard currency calmed the population. And with a sharp increase in production, there was an increase in the mass of money. The USSR could, like the British with sterling and the Americans with the dollar, receive a net profit from the issue - from the printing press.
But in the end everything was still kept on the Soviet peasantry. In the USSR, “price scissors” continued to exist: prices for industrial goods were high, and for agricultural products - low. Peasants were not given a fair price for their products, since funds were needed for the development of the Soviet Union. Actually, the Bolsheviks did not hide this. They honestly said that, in addition to the usual taxes, direct and indirect, it was necessary to receive another “supertax” in the form of overpayments for industrial goods and in the form of the peasants who did not receive funds for agricultural goods. As Joseph Stalin noted at the April 1929 plenum of the Central Committee of the CPSU (b), it is “something like a tribute for our backwardness.” The overtax was necessary for the development of industry and the elimination of the backwardness of the USSR from the advanced Western powers. It was believed that this tax was due to the peasants, as they have a personal farm, the income from which allows them to pay an additional tax. This distinguished the peasants from the workers who lived only on wages. As a result, at the expense of the Soviet peasantry they exported agricultural products and received currency.
In the Russian Empire, they did the same, but the difference was that in the USSR the funds received were used for development. In addition, in the Soviet Union there was an industrial development strategy and a planned economy. Bought machines, built heavy industry enterprises. Patience and the “tightening of the belts” made it possible in the shortest possible time to eliminate the backlog of the USSR from the advanced countries of the West, to create a powerful industry and not only survive the bloody World War II, but also win, become a superpower.
Soviet chervonets 1923 of the year
Before the start of World War II, the issuance of banknotes was in circulation on the basis of the credit operations of the State Bank. Money was issued into circulation in accordance with the needs of the national economy. During this period, the planned Soviet system of credit and money circulation was finally formed on the basis of the concentration of commodity masses in the hands of the state, which were put into circulation at stable prices.
In 1929, the Soviet government temporarily introduced a card system. This was done to preserve real wages and provide workers with bread at low prices at the expense of state stocks. At the end of 1934, when large-scale mechanized production was finally established in agriculture, and collective and state farms occupied a dominant position in agriculture, it became possible to fully provide the population without cards. Card system canceled. At the same time, there were two price levels in commodity circulation - high in commercial and collective-farm trade and low in a closed trading network.
The consumer demand of the population continued to grow during this period. Thus, the number of workers and employees in the USSR from 1928 of the year to 1934 year doubled and exceeded 23 million. The average annual salary in the same period increased from 703 rubles to 1791 rubles, and the payroll increased from 8,2 billion rubles to 41,6 billion rubles. In 1937, the average annual salary rose to 3047 rubles. Collective farmers' incomes also increased. At the same time, the state’s expenditures on education, free medical care and other socio-cultural activities have seriously increased. The state budget expenditures for these needs in 1937 year increased compared with 1928 year in 17 times.
We must remember how the Soviet leadership developed industry in the USSR. For the goods you need a buyer. If goods are bought up and needed more, production will also develop. But the buyer needs money to buy goods. Stalin chose t. The “American way” of industrial development (the “English way” implies the seizure of colonies and the use of their markets), the way of developing their own market In 1930, hundreds of factories and enterprises were commissioned, but buyers were needed. Then the government began to deliberately issue, throwing money into the Soviet market. At the initial stage, the debts of state enterprises were covered. Then they began to regularly increase the purchasing power of the population. In the postwar period began regular reductions in prices for goods.
The USSR formed the internal market. At the same time, the country had a positive balance in foreign trade; from 1933, the USSR always sold a little more than it bought. The rush of Russia-USSR was striking. If we make a comparison in the prices of 1928 of the year, then the level of industrial production of 1913 of the year is 11 billion rubles. This level reached the Soviet Union in 1927. In the next year, 1928, the country significantly surpassed the pre-revolutionary level - the level of industrial production reached 16,8 billion rubles. In 1938, industrial production in the USSR reached the level of 100,4 billion rubles. In terms of commercial output, the Union has risen from fifth place in the world and fourth in Western Europe to second in the world and first in Europe. The Soviet Union produced 13,7% of world industrial output. The leaders were Americans - the US produced 41,9%. The leading European powers were inferior to the USSR: Germany produced 11,6% of world industrial output; Great Britain - 9,3; France - 5,7%.
Thus, the following prerequisites became the key to the success of the USSR: 1) mobilization of the people, “tightening the belts” for the sake of the highest goal — the creation of a developed and powerful industry. This made it possible, temporarily reducing the consumption of the population, to take a “supertax” on the development of industry; 2) issue of money in the initial period of industrialization, it allowed to expand the domestic market, making it "insatiable." The population trusted the Soviet ruble, so it did not depreciate; 3) monopoly of foreign trade. Stalin protected the domestic market and launched an offensive on the world market.
10 chervonets 1937 of the year
During the 1940 of the year and the pre-war months of 1941, the reserves of the state budget increased steadily. By the beginning of the war, they reached 9,3 billion rubles. As a result, the Soviet government did not spend all the money that was collected in the budget. The government was preparing for war and created a supply of goods. To these products were not sold, reduced the mass of money. During this period, more than a quarter of the money supply was withdrawn from circulation.
In total, 582 billion rubles were spent on the war, and 1117 billion rubles were received by the budget during the war. The war and the military restructuring of the economy significantly changed the state of money circulation in the Soviet Union. The material and monetary resources of the Soviet state were switched to meeting the needs that were caused by the war with Germany. Huge military expenditures, a sharp decrease in the production of consumer goods (enterprises began to manufacture military products), and consequently, a significant decrease in retail turnover and state budget revenues — all this caused an overstrain of the USSR’s financial resources. Military spending increased steadily from 1940 of the year (57 billion rubles) to 1944 of the year (152,6 billion rubles) and began to decrease from 1945 of the year (144,5 billion rubles). The proportion of military expenditures in the total budget expenditures peaked in 1942-1943. The cost of financing the national economy fell from 58,3 billion rubles in the 1940 year to 31,6 billion rubles in the 1942 year. Then they began to grow rapidly, and in 1945, they reached 74,4 billion rubles. It should be noted that most of the appropriations for the national economy were directed towards capital construction related to the war and to the restoration of the ruined.
Due to the occupation of a large part of the territory, in connection with the transfer of industry to the output of military products, the production of consumer goods and the production of food products dropped sharply. Thus, bread production declined from 24 million tons in the 1940 year to 11 million tons in the 1945 year; cereals from 1,7 mln. tons to 1,1 mln. tons; meat from 1417 thousand tons to 624 thousand tons; catch of fish from 14 million centners to 11,3; sugars from 2151 kt to 465; cotton fabric from 3952 million meters to 1615; leather shoes from 211 million pairs to 63,1, etc. Moreover, the largest decline in production was recorded in 1942-1943.
At the same time, there was an increase in non-market consumption of the majority of the goods produced by the light and food industries. This further reduced market funds and government retail trade. Retail turnover in 1940 prices of the year decreased in 1942 to 34% of the pre-war level. Even in the victorious 1945 year, it was 47% of the turnover of the 1940 year.
While commodity funds for the population seriously declined, cash income fell only in the first years of the war, in 1944-1945. they began to rise again and exceeded the prewar level. Significantly were increased expenditures on the monetary allowance of military personnel, on retirement benefits and allowances to military personnel and their families.
The war violated the balance between the monetary income of the population and the turnover. This created a threat to monetary circulation. Therefore, the government has taken a number of serious measures to eliminate the sharp discrepancy between income and expenditure of the population. On the one hand, they began to increase payments, contributions of the population, on the other hand, they began to increase the prices of some goods - vodka, tobacco, perfumery, etc. In addition, they began to expand commercial trade, enabling a part of the population with extra cash, buy goods at high prices.
So, with the beginning of the war, they introduced a military allowance to the income tax from workers and employees, and to the agricultural tax from peasant collective farmers and individual farmers. Since 1942, a military tax was imposed. At a higher level than before the war, people subscribed to government loans (during the war years they collected 76 billion rubles). Large sums were received from the placement of money and clothing lottery tickets among the population. Established a tax on bachelors and small families. Unmarried people older than 18 years and childless married couples paid 2% of their income. In connection with the cancellation of vacations, compensation for non-use was not handed out, but transferred to registered deposits with savings banks. A significant source of income was the collection of funds to the Defense and Red Army funds, attracting cash contributions of military personnel to the field offices of the State Bank. During the war years at the expense of these events more than 200 billion rubles were attracted from the population.
The increase in prices for vodka, tobacco, perfumery and some other goods, as well as revenues from organized commercial trade, gave an additional 172 billion rubles. At the same time, the main products were able to save pre-war prices. And in the conditions of a shortage of food products and a number of manufactured goods, a rationing system was introduced to ensure a living wage. This allowed us to maintain a minimum level of consumption for all.
All these measures yielded about 90% of the financial resources needed by the country. The budget deficit in the early years of the war and the lag in the receipt of finance in the budget from expenditures necessitated emission. In total, during the war years, 54,4 billion rubles were released into circulation. As a result, the money supply at the beginning of 1946 of the year reached 73,9 billion rubles and surpassed the pre-war money supply by 3,8 times. Especially a lot of rubles had to be printed in the second half of 1941, when huge expenses were required to transfer the country to "war rails" (printed 15,3 billion rubles).
The emission, reduction of state supply of goods to the population, reduction of food surpluses among the rural population led to a large increase in market prices. For agricultural products, growth was 1020% in 1943, compared to 100% in 1940. Then prices began to fall. It must be said that the huge gap between the prices of state trade and market trade, as well as the difference in price levels in different cities and districts led to widespread speculation during the war years. Unfortunately, even in the most difficult years of the Great Patriotic War, when the overwhelming majority of the people gave the front literally everything (from lives to the last money), there were subhuman self-seekers who were rich in someone else's grief.
In general, the monetary system of the USSR stood the test of war. Despite the severe wounds that the war inflicted on the country's economy, the issue was relatively small. For comparison, in the three years of the First World War, Russia increased the money supply by a factor of 9,5, and during the four years of the Great Patriotic War - by a factor of 3,8. Already during the war, it was possible to stop the deterioration of the situation and begin to strengthen the monetary system. The advantage of a socialist economy proved the most brutal war in stories humanity.
To be continued ...