"Barbarous Soviet Russia"

by Isaac McBride

The simultaneous issue of money of the old and new type made it impossible for the Commissariat of Finance to immediately commence the exchange of money, but this in no way did or does prevent it from preparing the ground for such exchange, in connection with the annulment of the major part of the old money in a somewhat different manner. Creating a considerable supply of money of the new model (1918) and increasing the productivity of the currency printing office, the Commissariat is to gradually pass over to, in fact has already begun, the issue of money exclusively of the new type. A little while after the old paper money has ceased to be printed, the laboring population, both rural and urban, as well as the Red Guards all of whom are not in position to accumulate large sums, will soon have none of the old money. Then will be the time to annul the money of the old type, since this annulment will not carry with it any serious encroachment on the interests of the large laboring masses.

Thus the issue of new money is one of the most needed first steps on the road to the preparation of the fundamental problem, that is the annihilation of a considerable quantity of money of the old type, reducing in this way the general volume of the mass of paper money in circulation.

We thus see that here, too, the Commissariat of Finance followed a definite policy. It goes without saying that from the point of view of Socialist policy all measures in the domain of money circulation are mere palliative measures. The Commissariat of Finance entertains no doubts as to the fact that a radical solution of the question is possible only by eliminating money as a medium of exchange.

The most immediate problem before the Commissariat of Finance is undoubtedly the accomplishment of the process which has already begun, namely, the selection of the most convenient moment for the annulment of the old money. As regards the part which currency generally (at this moment of transition) plays, there can be no doubt that now it is the only and therefore inevitable system of financing the entire governmental machinery and that the choice of other ways in this direction entirely depends upon purely economic conditions, i.e., mainly upon the process of organization and restoration of the national economy as a whole.

V

The explanatory note, attached to the budget for July to December, 1918, thus depicts our future budget: “When the Socialist reconstruction of Russia has been completed, when all the factories, mills and other establishments have passed into the hands of the government, and the products of these will go to the government freely and directly, when the agricultural and farming products will also freely flow into the government stores either in exchange for manufactured articles or as duty in kind ... then the state budget will reflect not the condition of the monetary transactions of the State Treasury ... but the condition of the operations involving material values, belonging to the State, and the operations will be transacted without the aid of money, at any rate without money in its present form.”

It is clear that at present the conditions are not yet fully prepared for the transition to the above-stated new form of state budget. But, in spite of this, the Commissariat of Finance has taken a big step forward in the direction of reforming our budget.

The budget of the Russian Socialist Federal Soviet Republic, adopted by the All-Russian Central Executive Committee on May 20, 1919, represents the experiment in effecting a survey not so much of the financial activity of the state, as of its economic activity, even though it is as yet in the form of money.

In the work of reforming the budget, the Commissariat of Finance has come across two obstacles which are a heritage of the pre-revolutionary time: the division of revenue and expenditures into general state and local, and the hesitation on the part of some to include in the budget all the productive and distributive operations of the Supreme Council of National Economy and of the Commissariat for Food Supply. Both, the first and second obstacles have been somewhat surmounted, and the above-mentioned (third) revolutionary budget is already different from the two preceding budgets in many peculiarities which are very typical. These consist in a complete account of all production and distribution which the state has taken upon itself. This experiment is by no means complete, but the achievement should nevertheless be judged as considerable. The concrete conditions for making out the budget, as is stated in the explanatory note, have already made it possible to enter upon the road of accounting for the entire production and distribution of the nation, and that thereby the foundation has been laid down for the development of the budget in the only direction which is proper under the present conditions.

The budget of the first half of 1919 has followed the same fundamental principles for the construction of the state budget by including the expenditures of the entire state production and distribution as well as the sum total of the revenue-in the form of income from the productive and distributive operations of the state. In other words, this budget for the first time takes into account all the transactions of the Supreme Council of National Economy and of the Commissariat for Food Supply.