Omaha daily bee., 1896-12-26
RUSSIA ON A GOLD BASIS
New Minister of Finance Preparing to Pay
in the Worlds Money Metal.
FINANCIAL CONDITION OF THE EMPIRE
Interesting Exhibits of the Cars
Monetary Mcthods-HuEe Volume
of Paper Indebtedness to
lie Paid I'm Gold.

- dbOul W DldNt lNo hlphNAdiy SJoNNhi Nf'A'
the gold basis Is not a surprise to the Russian
legation in Washington nor to financial stu
dents who are familiar with the condition OF
affairs in the empire The step just decided
upon by NJ. Witte, the minister Of finance,
Is but the elimination OF a series OF steps
taken during the past three years to bring
the paper currency OF the empire TO stable
value, to accumulate a large gold reserve,
and to resume gold payments at the Bank OF
Russia and at the imperial treasury. Such
steps, indeed, began much more than three
years ago writes Charles A. Conant in the
Gobe-Democrat, and the immense gold re-
serve now available for the restoration OF
gold payments has been in process of ac-
cumulation for many years. There has been
in Russia no serious free silver crusade, but
the resumption OF gold payments has been
delayed by the wars in which the empire
has been from time to time engaged. One
Of the earliest OF the wars with Turkey lin
1866 wGs the occasion for the undue eXpan-
sion of the paper circulation which had prev-
ously been issued and the decline of paper
more than 80 per cent below silver. On four
different OccaSions-in 1917. in 1899. in 1860
and in 1SSl-the imperial government made
serious efforts to reduce the mass of super
abundant paper and bring it back to par
with gold. The last attempt came soon after
the TurCo-Russian war. during which 491,-
100000 credit rubles R2I0,0 ,000) were is
sued to meet the expenses OF the war. The
project of reform embodied In the ullase of
January 1, 1881. involved the immediate re-
duction OF the debt OF the treasury to the
Bank OF Russia, annual payments of 50,000,-
900 Tubles 1926, 600 .000) by the treasury to the
bank, and the destruction of notes falling
into the hands of the bank This policy was
relaxed for variety of reasons, and notes
paid into the bank were kept on hand and
reissued instead of destroyed. 1t remained
Tor the administration OF the present ener-
getiC minister of finance NJ Witte to adupt
a policy which has been resolutely carried
out, has given fixity to exchange and en-
abled the empire at last to attain the goal
SO eagerly striyen for by successive admin
istrations.
THE STORE OF GOLD.
The statutes Of the Bank of Russia were
thoroughly reconstructed in 1894, with a
view TO protecting its circulating notes by
the combined gold supply of the bank and
the treasury. The funds at that time set
aside to cover the circulation of the bank
were 3519S90O0 gold rubles (S260, 900 000)
and the authorized circulation was ,12l-
2S2OOO credit rubes. Credit rubles were
worth only about two-thirds of gold rubles
so that the gold value of the circulation
was only about S650, 900, 900, although nomi-
nally equivalent at the gold parity, to
$3.50, 100000. The metallic coverture of the
Dank notes has been increased by the trans
fer OF gold from the treasury to the bank
until 1t now amounts to 425, 900 900 gold
rubles, in addition to 20 900 900 gold rubles
deposited as the guarantee of a special
issue of notes in 1891. This aggregate of
about 1919 1000 600 in gold is not nearly ali
the gold of which the treasury ard the
bank are now able to dispose as will ap-
pear hereafter. The government during
tho course of the past two years has taken
several other steps designed to famllarize
the public with the use of gold and TO
CiF than tIn
credit ruble. The free coinage of silver was
suspended on July 16 1898 without any
very violent protest on the part of the sill
yer party, customs duties have been for
some time collected in gold, and provision
was made by two important DEGREES for
gold contracts and the issue of gold GER
thcates. The ukase of May S, 1895, de-
clarCd that written contracts might be made
payable in Russian gold rublos, and that
such contracts might be settled in gold or
in rubes OF equivalent gold value at the
rate OF exchange prevailing at the date of
payment. Public repositories were author
lied to receive gold at its exchange value
In the payment of excise under regulations
framed by the minister of finance. Another
important step was taken by the ukase of
June q, 1895, which authorized the bank to
receive deposits of gold coin and bullion
and foreign bank notes and commercial
bills payable in gold and to issue certificates
therefor redeemable in gold on demand
These certificates are receivable as the
equivalent OF gold at the treasury and the
bank, but are not a legal substitute for
gold between individuals except with the
consent of the creditor. They are receiy-
able at branches of the bank for gold obli-
cations due at other branches and the ex-
change Is furnished free except for the cost
of telegraphic service. These important
acts were followed on July &C. 1895. by the
promulgatlon Of rules permitting the crea-
tion of special gold accounts at the bank
for the reception of gold and gold certin-
Gates, and the issue OF check books repre-
senting payments exclusively in gold.
REGULATING EXCHANGE.
Another long stride toward the resumption
or gold payments was the adoption of &
fixed rate of exchange for the credit ruble.
The quotations on foreign money markets
have ranged for several years in the vicin-
ity OF three credit rubles for two gold
rubles, making the gold value of the credit
ruble In United States currency about 90
cents, instead of 772 cents. which the gold
ruble represented The government has
employed several means of giving hxity to
exchange which have been subjected to
criticism, but the method adopted by the
act of August TO- 1896, is in the nature of
practical resumption of specie payments
at the current rate of exchange. This act
provided that until December 81. 1897, gold
imperials OF ten rubles and half imperials
of five rubles should be received by ali
way companies as the equivalent respec-
lively OF fifteen and seven and n half credit
rubles, and that until the date named the
Bank OF Russia should buy and sell inn
perlals and half imperials at the same price
This means that the holder of the paper
credit ruble can have 1t exchanged for gold
at the bank for two-thrds OF it's face value
or that he can obtain credit rubles by sur
rendering gold to the amount of one and
half times the value of the gold Ex>
change under such a rule cannot vary more
than a small fraction and business transac-
tlons with foreign countries can be tran
sactod with degree OF certainty in all
calculations which has been impossible under |
system of iluctuating exchange The Rus
sian government did not disclose positively |
until within the last few months that il |
proposed to make this new basis of ex- |
change the permanent basis of the new |
coinage. This appears to have now been |
decided upon and the new gold coins con-
forming to the existing rate OF exchange will !
be substituted as rapidly as possible for
those now in circulation.
PREPARED TO RESUME
The equipment with which the government |
aud the bank confront the obligation to re- |
sumo specie payments Is the strongest with |
which any government or bank has ever |
faced like obligation. NJ. Paul Leroy |
neaulleu, the eminent French economist, In |
an article in L'Economiste Francois OF