At the time the Bolsheviks took power in Petrograd, paper money circulating in Russia totaled 19.6 billion rubles.38 The bulk of it consisted of Imperial rubles, popularly known as “Nikolaevki.” There were also paper rubles issued by the Provisional Government, called either “Kerenki” or “Dumki.” The latter were simple talons, printed on one side, without serial number, signature, or name of issuer, displaying only the ruble value and a warning of punishment for counterfeiting. In 1917 and early 1918, “Kerenkis” circulated at a slight discount to Imperial rubles. After taking over the State Bank and the Treasury, the Bolsheviks continued to issue “Kerenkis” without altering their appearance. During the next year and a half (until February 1919), the Bolshevik Government produced no currency of its own, which was a striking forfeiture of the traditional right of a sovereign power to issue its own money, and can only be explained by the fear that the population, especially the peasants, would refuse to accept it. Since the tax system broke down completely after October 1917 and other revenues fell far short of the government’s needs, the Bolsheviks had recourse to the printing presses. In the first half of 1918, the People’s Bank issued between 2 and 3 billion rubles a month, without any backing whatever.* In October 1918, the Sovnarkom raised the limit on the emission of uncovered bank notes from the 16.5 billion previously authorized by the Provisional Government, and long since exceeded, to 33.5 billion.39 In January 1919, Soviet Russia had in circulation 61.3 billion rubles, two-thirds of them “Kerenkis” issued by the Bolsheviks. The following month, the government produced the first Soviet money, called “accounting tokens.”† This new currency circulated alongside “Nikolaevkis” and “Kerenkis,” but at a deep discount to them.
In early 1919, inflation, though increasingly severe, had still not reached the grotesque dimensions that lay ahead. Compared with 1917, the price index had increased 15 times: with 1913 as 100, it grew to 755 in October 1917, to 10,200 in October 1918, and to 92,300 in October 1919.40
Then the dam burst. On May 15, 1919, the People’s Bank was authorized to emit as much money as in its view the national economy required.41 From then on, the printing of “colored paper” became the largest and perhaps the only growth industry in Soviet Russia. At the end of the year, the mint employed 13,616 workers.42 The only constraints on emissions were shortages of paper and ink: on occasion the government had to allocate gold to purchase printing supplies abroad.43 Even so, the presses could not keep up with the demand. According to Osinskii, in the second half of 1919, “treasury operations”—in other words, the printing of money—consumed between 45 and 60 percent of budgetary expenditures, which served him as an argument for the most rapid elimination of money as a means of balancing the budget!44 In the course of 1919, the amount of paper money in circulation nearly quadrupled (from 61.3 to 225 billion). In 1920 it nearly quintupled (to 1.2 trillion), and in the first six months of 1921 it doubled again (to 2.3 trillion).45
By then, Soviet money had become, for all practical purposes, worthless: a 50,000-ruble bank note had the purchasing power of a prewar kopeck coin.46 The only paper currency that still retained value was the Imperial ruble; these notes, however, were hoarded and all but disappeared from circulation.47 But since people could not carry on without some unit to measure value, they resorted to money substitutes, the most common of which were bread and salt.48 Inflation reached astronomical proportions, as the following tables indicate:
REAL VALUE OF RUSSIAN MONEY IN CIRCULATION 49
(in billions of rublesi November 1, 1917 1,919 January 1, 1918 1,332 January 1, 1919 379 January 1, 1920 93 January 1, 1921 70 July 1, 1921 29
PRICES IN RUSSIA, 1913-192350 (as of October 1) 1913 1.0 1917 7.55 1918 102 1919 923 1920 9,620 1921 81,900 1922 7,340,000 1923 648,230,000
“From January 1, 1917, to January 1, 1923,” in the words of one economic historian, “the quantity of money [in Russia] increased 200,000 times and the price of goods increased 10 million times.”* 51
