New-York tribune., 1917-09-03

as the price OF the ruble is hlgn or
low. AS a general proposition it is
said that the price of country's
money in terms Of another country's
money depends upon conditions of
demand and supply, except that
when gold may be freely coined in
both countries and may be freely
obtained in redemption Of the money
of both countries, and when no OBJ
stacle is thrown in the way of free
gold movement between the two
countries, the range of fluctuation
of the price cannot exceed the cost
Of shipping gold.
The Adverse Balance
From almost every point of view
the war threw the scale against the
ruble in the international markets.
Russia's trade balance went heavily
against her. Before the outbreak Of
hostilities Russian foreign trade was
largely with Germany. Russian raw
material was exchanged for Ger
man manufactures. Indeed, it was
through the purchase and sale of
mark exchange that the value Of the
ruble was originally stabilized. The
war cut off the German connections.
At the same time, owing to Russia's
geographical position and to the
difficulties connected with her inter-
nal transportation, almost insuper-
able barriers were thrown in the
way Of exports to her allies. In the
face of this imports greatly in
creased. A large part of the in
creased importation grew out Of the
necessities Of war, but a no mean
proportion, according to Vladimir j..
Novitzky, Of the Russian mission,
grew out of the increased demand OF
the peasants, whose incomes had
been augmented through the tre-
mendous internal purchases Of war
supplies and whose normal sur
pluses had been expanded through
the suppression Of vodka. In 1915
alone the excess Of imports over ex-
ports ran over 2,0o0,oo0,O00 rubles.
This prodigiously "unfavorable bal
ance of trade" naturally gave rise
to a great excess in the supply of
ruble exchange in all the countries
that had sold to Russia, and the
price of rubles correspondingly
dropped.
In normal times the decline would
have been checked through the ex-
portation of gold from Russia, as
explained above. But even though
it were assumed that no obstacles
irterfered with free gold movements
ever the Seven Seas, it was, as mat
ter of fact, impossible to get the gold.
Russia, like ally and foe, had sus-
pended gold payments and had for
bidden the export of gold except on
government account. There was,
therefore, no automatic check to the
ruble's decline. Foreign loans have
at least temporarily the same effect
as gold exports, but while such loans
were arranged to the fullest possible
extent, they acted as but weak Off
set to all the other depressing infu-
ences.
Among the depressing factors en-
phasis must also be placed on the
general decline in confidence in
rubles. This decline in confidence
was due first of all to the tremendous
imitation of the currency by the gov
ernment as a source Of revenue.
Purchases in the home market were
financed to a large extent through
the old expedient OF issuing more
notes. Moreover, the ruble exchange
offered for sale in the maZets Of the
world was largely drawn against de
posit credits that were also heavily
inflated. While from July 29, 1914,
to May %, 1917, the gold reserves Of
the Russian State Bank increased
from Rs. 1904, ,37S,000 to Rs. $685.
2S0,000, banknotes in circulation in
creased from Rs. 1,633, 3,34S,000 TO Rs.
lI.765,332 900 and Current accounts
of various persons and institutions
increased from Rs. 260, 10000 TO Rs.
2154,822,S97. Confidence in Russian
funds also declined because Of dis
trust Of the government. Pro-Ger-
man intrigues had weakened the
position Of the old autocracy before
the whole world. While the revolu-
tion cleared the air TO some extent
doubts arose as TO the stability OF the
revolutionary government, and the