| ½ 1914 | 5 | milliards of roubles. |
| 1915 | 12 | 〃 〃 |
| 1916 | 18 | 〃 〃 |
| Seven months, 1917 | 18 | 〃 〃 |
The enormous deficit was partially covered by loans and by paper currency. The expenses of the War were met, however, out of the so-called “War Fund.” At the Stavka, in accordance with the dictates of practical wisdom, expenditure was under the full control of the Chief-of-Staff of the Supreme Commander-in-Chief, who determined the heads of expenditure in his Orders, schedules, and estimates.
The Revolution dealt the death-blow to our finance. As Shingarev, the Minister of Finance, said, the Revolution “induced everyone to claim more rights, and stifled any sense of duty. Everybody demanded higher wages, but no one dreamt of paying taxes, and the finances of the country were thus placed in a hopeless position.” There was a real orgy; everyone was desperately trying to grab as much as possible from the Treasury under the guise of democratisation, taking advantage of the impotence of the Government and of powerlessness to resist. Even Nekrassov had the courage to declare at the Moscow Congress that “Never in history had any Czarist Government been as generous and prodigal as the Government of Revolutionary Russia,” and that “the new Revolutionary régime is much more expensive than the old one.” Suffice it to quote a few “astronomic” figures in order to gauge the insuperable obstacles in the way of a reasonable Budget. The decline of production and the excessive rise in wages resulted in the necessity of enormous expenditure for subsidies to expiring concerns and for overpayments for means of production. These over-payments in the Donetz Basin alone amounted to 1,200,000,000 roubles; the increase in the soldiers’ pay, 500,000,000 roubles; railwaymen’s pay, 350,000,000 roubles; Post Office employees, 60,000,000 roubles. After a month the latter demanded another 105,000,000 roubles, while the entire revenue of the Posts and Telegraphs was 60,000,000 roubles. The Soviet demanded 11 milliards (in other words, nearly the total of the Budget for 1915) for allowances to soldiers’ wives, whereas only 2 milliards had been spent till 1917 under this head. The Food Supply Committees cost 500,000,000 roubles per annum, and the Land Committee 140,000,000 roubles, etc., etc. Meanwhile the revenue was falling steadily. Thus, for example, the Land Tax fell 32 per cent. in the first few months of the Revolution; the revenue from town property, 41 per cent.; the House Tax, 43 per cent., etc. At the same time, our internal troubles caused the depreciation of the rouble and a fall in the price of Russian securities abroad. The Provisional Government based its financial policy upon “reorganisation of the Financial System on democratic lines and the direct taxation of the propertied classes” (Death Duties, Excess Profits Taxes, Income Taxes, etc.). The Government, however, would not adopt the measure recommended by the Revolutionary Democracy—a compulsory loan or a high Capital Levy—a measure distinctly tainted with Bolshevism. All these just taxes, introduced or planned, did not suffice even partially to satisfy the growing needs of the State. In the month of August the Finance Ministry was compelled to increase indirect taxation on certain monopolies, such as tea, sugar, and matches. These measures were, of course, extremely burdensome, and therefore highly unpopular.
Expenditure was growing, revenue was not forthcoming. The Liberty Loan was not progressing favourably, and there could be no hope for foreign loans on account of the condition of the Russian Front. Internal loans and Treasury Bonds yielded 9½ milliards in the first half of 1917. Ordinary revenue was expected to yield 5,800,000,000 roubles. There remained one weapon established by the historical tradition of every revolution—the Printing Press.
Paper currency reached colossal proportions:
| ½ 1914 | 1,425,000,000 | roubles. |
| 1915 | 2,612,000,000 | 〃 |
| 1916 | 3,488,000,000 | 〃 |
| ½ 1917 | 3,990,000,000 | 〃 |
According to the estimates of July, 1917, the total of paper currency was 13,916,000,000 roubles (the gold reserve was 1,293,000,000 roubles), as against 2 milliards before the War. Four successive Finance Ministers were unable to drag the country out of the financial morass. This might possibly have been achieved by the awakening of the national spirit and an understanding of the interests of the State, or by the growth of a wise and strong power which could have dealt a final blow to the anti-State, selfish motives of the Bourgeois elements that based their well-being upon the War and upon the blood of the people, as well as of the Democracy, which, in the words of Shingarev, “so severely condemned through its representatives in the Duma the very same poison (paper currency) which it was now drinking greedily at the moment when that Democracy had become its own master.”