Evening star., 1898-01-11
THE RUSSIAN CURRENCY
An Account of the Reform by N. de Rout-
kowsky.
Why 1t WINS Decided to Adopt Gold
as the Sole Standard
of Value.

W. ue fSouthOWSKy, financial agent OF
Russia. has. at the request of Assistant
Secretary Howell. given an account of the
reform of the Russian currency as estab-
Nshed during the year just closed. 1t is a
very clear statement of the condition of
financial affairs in Russia.
According to the former laws of Russia
the monetary unit was the silver ruble
containing 1902 grams of pure silver Be
siies silver CONS. there were circulating
as currency gold coins of various denom-
inaticns five and ten rubies, containing.
according to the law. 1.1Gl grams of pure
gold for every ruble, and the state credit
notes issued by the state bank of Russia.
Silver was the tega, tender for the payment
of taxes and duties to the government for
an unlimited amount. All state credit
Eotes were issued by the Bank of State
which was the only credit institution hav-
ing the privilege of issue. The whole prop
orty of the state was a guarantee for the
exchange of notes for coin, and each note
contained the express stipulation that it
was recognized at par with silver as legal
tender fO- payment of taxes and dues to
the government.
The Russian financial agent states that,
up to the year 1854 gold, silver and credit
notes circulated at par. In that year be-
gan the Crimean war, the heavy expenses
Of which, together with those of the war of
1877 and 1878, and other political and eco
noE1ic events, compelled the government
to suspend the exchange of notes for coin
The suspension lasted nearly forty years
bringing to the country all of the evils of
an inconvertible currency and arresting its
economic development
A Great Financial Effort.
The government decided to make a great
financial effort. Its expenses were cur
tailed. the revenues increased and the
deficit in the state budget eliminated. This
policy enabled the government in fifteen
years to accumulate a large reserve of
gold-more than twelve hundred million
rubles. This was obtained through foreign
loans and domestic production. and it re-
suited in bringing the national credit to
such position that, instead of borrowing
at per cent, as was the case fifteen years
ago. ii was possible at the close of the
period to get gold at 80 per cent. Having
accumulated a sufficient amount of gold to
resume specie payments. and the expenses
and revenues of the government having
been regulated as to result in a surplus
instead of deficit, the government under
took to deliver the country from incon-
vertible currency. The first question to de-
eide was what would be the new unit of
currency. The silver ruble had been, but
the value Of silver had declined so much
since the monetary laws of Russia We're
established that the value of pure silver,
contained in 4 coin of one ruble, expressed
of one hundred. and the value in gold Of a
credit note of one ruble was sixty-six and
two-thirdS cOpecks.
Silver ruoes being the standard the gov
ernment had the right to declare the ex
change of paper rubles at par with sill
ver but the exchange at such rate would
have fixed the silver standard In the
country. and would have brought
a great financial loss to all cred
itors. In consequence of constant fiuc-
tuations of the price Of silver, and the
practically unlimited amount of that metal.
which can be produced at low cost with
improved methods. silver was considered
By the imperial government as entirely uD-
fit to be used as the monetary unit, and
therefore gold was accepted. it being re-
sarded as the only metal least subject 10
fluctuations of value. and recognized
such by the leading commercial nations OF
the world.-It was decided at the same time
to take silver only as a subsidiary metal
for the minor coins. In redeeming the
credit note it was decided to give it the
value in gold which it had in the average
during the last three years in commercial
transactions-that is, sixty-six and two
thirds copecks, making it two-thirds OF
the value of the former gold ruble. If the
credit notes were made exchangeabe for
gold at the value of silver rubles FORTY
five copecks in gold. which the govern
ment had a perfect right to do, there would
have been a great loss to creditors. If the
notes were made exchangeable for gold at
the value of former gold rubles lone hun
Il
great loss to debtors. besides disturbance
in the productive powers of the country.
The imperial ukases of January ). Au-
gust 26 and November IA, 1897, framing
into a law the above mentioned principles,
have definitely settled the currency ques-
tion in Russia
Gold the Standard of Value.
Gold will henceforth be the sole standard
of value, and the new unit of currency will
be rub,e containing O.7I42 grams of pure
gold, equal in value to II .45 cents in United
States gold. Silver will be issued for sub
sidiary coins only. and one ruble will con-
tain 1902 grams Of pure silver, as hereto
fore. The state bank of Russia. will be.
heretofore, the cnly credit institution which
will have the right to issue state credit
notes. exchangeablc at par with gold in
the state bank and all its branches. 1t may
issue such notes to an unlimited amount.
Both gold and credit notes are made legal
tender to an unlimited amount The is
sues of the credit notes by the state bank.
II needed by the expansion of commerce.
will be so regulated that the amount of
outstanding notes will not be allowed to
exceed by more than 300, ,O0O,0O rubles the
value of gold coin and gold bars deposited
in the state bank for their redemption. The
amount of outstanding state credit notes
December last in bank and in circulation,
was ]. .O6S.UOO.OOO, and the amount of gold in
coin and in bars in the bank was ,16O.O .OOO.
600 The exchange of state credit notes at
par with gold is guaranteed, in addition to
the gold reserve. by the whole state prop
erty (about 60O.0O0OOO acres of forest and
15.OOO miles of railroads, besides govern
ment lands. etc.. Silver in the state bank
will not be included in the metallic reserve
of the bank for the purpose of redemption.
Silver has been coined to the amount of
100000 rubles. and the character Of the
legal tender of the silver rubles has not
been changed in the recent laws. Until 1t
shall be decreed otherwise, silver coins will
be a legal tender f1f all taxes and dues to
the government in an unlimited amount
but not SO between private individuals
The plan of currency reform adopted does
not concern in the least the creditors of the
imperial Russian government, as all loans
and interest will be paid, as usual, in the
money in which they were contracted
that is, in francs, pounds sterling. dollars,
marks, f1orins, etc.
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