Thus, with the issuance of all the above-mentioned decrees, all the private credit associations have been eliminated and all existing Government Credit Institutions have been consolidated into one People’s Bank of the Russian Republic. The last step in the process of reform was the decree of the People’s Commissariat of Finance which consolidated the State Treasury Department with the central administration of the People’s Bank. This made possible, by uniting the administration of these organs, the enforcement of the decree concerning the amalgamation of the treasuries with the People’s Bank. The decree of the People’s Commissariat of Finance of October 29th, 1918, issued pursuant to Section 902 of rules on state and county financial organs, practically ends the entire reform of uniting the treasuries with the institutions of the Bank.
This reform constitutes the greatest revolutionary departure, in strict accordance with the instructions contained in the party program. Prior to the completion of this reform, the old pre-revolutionary principle continued to prevail—that of opposition of the State Treasury to the State Bank, which was independent financially, having its own means, operating at the expense of its capital stock, and acting as a depository for the funds of the State Treasury and as its creditor. Insofar as the new scheme of our financial life has been realized, this dualism, has finally disappeared in the process of realization of the reform. The Bank has now actually become the only budget-auditing savings account machinery of the Russian Socialist Federal Soviet Republic. At the present moment it is serving all the departments of the state administration, in the sense that it meets all the government expenditures and receives all the state revenue. It takes care of all accounting between the governmental institutions, on the one hand, and the private establishments and individuals on the other. Through the hands of the People’s Bank pass all the budgets of all institutions and enterprises, even the state budget itself; in it is concentrated the central bookkeeping which is to unify all the operations and to give a general picture of the national economic balance.
Thus, we may consider that the fundamental work, i.e., "the monopolization of the entire banking business in the hands of the Soviet Government, the radical alteration and the simplification of banking operations by means of converting the banking apparatus into an apparatus for uniform accounting and general bookkeeping of the Soviet Republic"—has been accomplished by the Commissariat of Finance.
IV
As regards the carrying into practice of a number of measures intended to widen the sphere of accounting without the aid of money, the Commissariat of Finance has, during the period above referred to, undertaken some steps insofar as this was possible under the circumstances.
As long as the state did not overcome the shortage of manufactured articles, caused by the general dislocation of industrial life, and as long as it could arrange for a moneyless direct exchange of commodities with the villages, nothing else remains for it than to take, insofar as possible, all possible steps to reduce the instances where money is used as a medium of exchange. Through an increase of moneyless operations between the departments, and between the government and individuals, economically dependent upon it, the ground is prepared for the abolition of money.
The first step in this direction was the decree of the Soviet of People’s Commissaries of January 23rd, 1919, on accounting operations, containing regulations on the settling of merchandise accounts (products, raw material, manufactured articles, etc.) among Soviet institutions, and also among such industrial and commercial establishments as have been nationalized, taken over by the municipalities, or are under the control of the Supreme Council of National Economy, the People’s Commissariat for Food Supply, and Provincial Councils of National Economy and their sub-divisions.
In accordance with this decree, the above-mentioned accounts are to be settled without the medium of currency, by means of a draft upon the state treasury for the amount chargeable to the consuming institution, and to be credited to the producing institution, or enterprise. In the strict sense, the decree establishes a principle, in accordance with which any Soviet institution or governmental enterprise requiring merchandise, must not resort to the aid of private dealers, but is in duty bound to apply to the corresponding Soviet institutions, accounting, producing or distributing those articles. Thus, it was proposed, by means of the above-mentioned decree, to reduce an enormous part of the state budget to the mere calculation of interdepartmental accounts, income on one side and expenditures on the other. In other words, it becomes possible to transact an enormous part of the operations without the use of money as a medium of exchange.
As regards the policy of the Commissariat of Finance in the domain of the circulation of money, one of the most important measures in this respect was the decree of the Soviet of People’s Commissaries of May 15th, 1919, on the issue of new paper money of the 1918 type.
This decree states the following motive for the issue of new money: “this money is being issued with the object of gradually replacing the paper money now in circulation of the present model, the form of which in no way corresponds to the foundations of Russia’s new political order, and also for the purpose of driving out of circulation various substitutes for money which have been issued due to the shortage of paper money.”