Industry, Commerce, Finance.
Paper Money in Russia.
By Leo Pasvolsky.
There are three ways in which the countries at war succeed in meeting the enormous financial strain to which they are subjected. These are new taxes, long- and short-term loans, and new issues of paper money, usually without sufficient gold basis. All three of these methods are used extensively by the chief belligerents, whose money chests bear the main financial burden. They are a part of the general mobilization of all resources in the possession of these countries, for now everything is turned to account in the supreme effort of both sides to achieve success.
Of the three methods, the most interesting one is that of meeting war expenses by means of new paper money, which is not redeemable at the time of its issue. It is considered by economists the most dangerous way of raising money for government expenses. Despite its apparent ease of practical application, it often leads to such variations in the exchange value of the money unit, especially when it has not behind it a sufficiently large specie fund for immediate conversion, that an over indulgence in it is a very hazardous method indeed for any government to adopt.
Russia is making a very considerable use of this method at the present time. Her expenses in the war are enormous. Up to January 1, 1916, these expenses were calculated at no less than 10,282,000,000 roubles. The tax receipts during the first seventeen months of the War were barely sufficient to cover the current budget requirements, owing to the abolition of the spirits monopoly and the consequent loss of its enormous revenues, as well as to several other causes.[1] The government's credit operations, representing loans on the home, as
- ↑ See "The Russian Review," February, 1916, p. 45.
