Evening star. [volume] (Washington, D.C.) 1854-1972, 1947-12-15
Russians Expected
To Make Propaganda
OF Painful Situation

American officials today expected
Russia to attempt to make prop
uganda capital out of a painful
financial situation in the wake of
drastic devaluation of the Soviet
ruble.
The devaluation program, involv-
ing exchange Of currency at the
rate of 10 old rubles for one new
one with less drastic rates for saw
ings deposits, was announced by
radio Moscow yesterday along with
abolition of food rationing and
price equalization move.
The New York Daily Worker,
leading Communist publication in
this country. headlined the Moscow
announcement in today's issue this
way: "Soviets slash prices; ruble
strengthened"
Follows Wave Of Rumors.
Moscow's announcement came
several days after the State De-
partment reported a wave of panic
buying" In Russia occasioned by
rumors of the impending currency
devaluation
Department officials said the
Voice of America" which broad
cast the first reports of the rumors,
would beam the story of the Soviet
financial maneuver to every country
reachable by its shortwave radio
broadcaStS.
Experts on Russian affairs viewed
the announcement as an extraor-
binary measure to deal with infla-
ton rather than as evidence that
the Soviet economy may be shaky.
Francis B. Stevens, acting chief OF
the State Departments Eastern
European Affairs Division, COM
mented it will not be possible to de-
termine at once the effect on the
Russian peoples real income.
Tipped 1870 Pet. Last Year.
"We1l have to wait until we see
the new official price level" he told
a reporter. The prices of rationed
goods we're upped about 100 per cent
last year, so it would take quite
cut to bring them down to 1916
levels"
]. Burke Knapp, associate director
of research and chief foreign cur
rency expert of the Federal Reserve
Board saw social" as we'll as an
economic purpose in the Soviet
move.
1T was obviously intended" he
said in response to request for
comment, ito wipe out the private
fortunes which have been accumu-
lated by what the Moscow radio
calls Spectators
He said that category includes
every one who produces and sells
on the nonrationed open market for
high prices, instead of selling to the
state for controlled prices"
Developments Reviewed.
Russia has met with much the
same wartime and postwar financial
difficulties as other countries. De-
Telopments since the 1941 Nazi in
va5ion have followed this general
course:
Wartime issues Of currency put
excess money into circulation at a
time when consumer goods were
becoming scarce. In 1943 Russia,
in an effort to drain off the excess
money and at the same time boost
civilian morale, set up so-called
commercial stores at which unra-
toned goods might be bought but
at prices 10 to 100 times those for |
the limited quantities permitted
through the ration system.
&Infationary trends continued
nevertheless. Although the ruble
has an official exchange rate of
So to the United States dollar, its
actual purchasing power has been
carefully figured by American
economists at 3 cents or less.
Gap in Prices Narrowed.
Meanwhile, aiming at getting rid
of rationing, the Kremlin last year
increased prices on rationed goods
by some 80 per cent, but narrowed
the gap by reducing quotations In
the commercial stores.
A leak of the governments inten-
ton to devalue led to the buying
spree which started in Moscow and
other cities in late November as
Soviet citizens sought to exchange
for goods the rubles which they
suspected would soon be nearly
worthless. The result has been to
strip almost bare the shelves OF
stores of all kinds. Latest reports
here are that some are still closed
for inventory"
These are only retail stores, how
ever. With the old inflated ruble
outlawed, officials expect the Soviet
regime to fill the shelves again
from wholesale distribution centers
in short order, and then to proclaim
lower prices-in terms of the new