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Scythian Gold and the Gold-Standard : Soviet Attitudes To Gold and the International Monetary System
Published online by Cambridge University Press: 02 April 2024
Extract
The train has stopped in the night. It is the end of winter, 1920; it is very cold, about 25 degress below zero, some hundred kilometers west of Irkutsk. Along the train soldiers mount guard; ahead, a party of the detachment is clearing the track. Many of the soldiers have makeshift bandages around their wrists and feet: the Siberian frost has taken its toll. There is no question, however, of withdrawing the guard or stopping the work. This train is the most precious treasure of the Soviet. Republic, transporting the greater part of the State gold reserves: 355 m. tons. Previously housed in the vaults of the Kazan Bank in Tartary by the Tsarist government, it was removed in 1918 by admiral Kolchak; the greatest coup in history! Not that it brought the admiral any good luck: in Siberia, at the height of the civil war, the richest man in the world was only able to get a few shipments of gold through to Vladivostok, to pay his debts to the Americans and buy arms from them. And then Kolchak died: he was shot on February 7th, the gold now returning to Kazan.
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- Research Article
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- Copyright © 1978 Fédération Internationale des Sociétés de Philosophie / International Federation of Philosophical Societies (FISP)
Footnotes
*
In writing this article, I received advice and information from Professor Michael Kaser of Oxford University. President pierce Mendes-France was kind enough to receive me and give an account of his impressions and memories of Soviet attitudes at Bretton-Woods, where he himself led the French delegation. M. Gilbert Lasfargues, Assistant Director General of the Banque Commercial pour 1'Europe du Nord, kindly provided documents on the 1976 Chervonets. Finally, I have profited much from the remarks and suggestions of Professor Paul Coulbois, of the University of Paris I, during the revision of the manuscript. To them I would like to express my gratitude.
References
1 A. P. Kladt, V. A. Kondratiev, The Gold Convoy Affair, Moscow, Gospo litizdat, 1962, p. 112.
2 V. I. Lenin, Works, vol. IX, London, Lawrence and Wishart, 1937, p. 299.
3 Resolutions and Decisions of the Congresses, Conferences, and Plenary Assemblies of the Central Committee of the Communist Party of the Soviet Union, Vol. II. Moscow 1970, pp. 329-330.
4 V. I. Lenin, Op. cit., p. 300.
5 1 dolya = 1/96 zolotnik = 44.43 mg; 1 zolotnik = 1/96 1b = 4.266 g; 1 1b = 444.4 grams.
6 Nowdays chery also means "worm"; it is etymologically related to "red," again through the Slav root cherv; its designation "worm" has grown out of the name given to the cochineal larva from which the color carmine is extracted. The names cerven and czerviec, given to the month of June in Czech and Polish, stem from the fact that the cochineal larvae are gathered in June.
7 Quoted by D. Kuzovkov, "Our Currencies", Vestnik Kommunisticheskoi Akademyi 1924, 7, p. 96.
8 On the monetary history of this period, see Z. V. Atlas, Essays on the History of the Circulation of Money in the U.S.S.R. (1917-1925), Moscow, Gosfinizdat 1940, p. 284; Z. S. Katsenelenbaum, The Circulation of Money in Russia 1914-1924, Moscow-Leningrad: Ekonomicheskaya Zhizn' 1924, p. 192. Numismatists may refer, in the case of the Chervonets, to I. G. Spasskyi, The Russian Currency System: An Historico-Numismatic Essay, Leningrad, Aurora 1970, p. 256; and in French to Ch. Denis, Catalogue des monnais émises sur le territoire de la Russie (1914-1925), avec indications de leur valeur actuelle [A Catalogue of Currencies Issued in the Territory of Russia (1914-1925), With Information on Their Present Value], Paris, Florange et Ciani, 1927, p. 121.
9 M. Koltsov, quoted in A. Mel'nikova, A Stable Currency, Moscow, Politizdat 1973, p. 52: "limes" and "limards", instead of "millions" and "milliards", were the names given by the people to the Sovznak at the height of this inflation. This was so fast that it was necessary on several occasions to change their scale of value; thus the 1923 Ruble was worth 100 1922 Rubles, and the 1922 Ruble was worth 10,000 "old Rubles."
10 i.e. to 50 milliard "old Rubles"!
11 Cf. O. S. Bogdanov, The Monetary System of Modern Capitalism, Moscow, Mysl' 1976, p. 215, concerning the growth in sales of the Krügerrand, the South-African coin. According to Kaser's excellent study ("Soviet Union", Inter national Currency Review, 1976, No. I, pp. 49-52), in view of the significant market for gold coins (285.2 m. tons in 1974), the Soviets considered that if, after all, it was necessary to sell gold, it was more advantageous to do so in the form of coins so as to profit from the premium in relation to the ingot, which is naturally lower for new coins. It seems, moreover, that the Soviet monetary authorities have taken for granted an even greater immediate success for the Chervonets, predicting a market price of around 50 Dollars while the price on issue was fixed at 36.5 Dollars and this had gone no higher than 45 Dollars by 1976 (c.f.: "Goldner Tcherwonez für deutsche Münz-Sammler", Handelsblatt, 17th December 1975; "Der Tscherwonez its wieder von Mehrwert steuer befreit", 21st April 1976).
The exclusive rights for the European marketing of the Chervonets has been granted to the Dresdner Bank. Initiated in January 1976, sale was halted three weeks later owing to a decision by the Federal Ministry of Finance that the Chervonets was subject to V.A.T. (Value Added Tax). There followed a confused debate on whether or not the Chervonets qualified as legal tender in the U.S.S.R.; if it did, then it was not taxable, but if it did not qualify as such, as the ministry maintained, it was a collector's item and thence taxable. In April 1976 the ministry returned a "provisional" verdict, and the Dresdner Bank thus resumed sales.
12 Le Figaro, 4 August 1977; Agefi, 3 October 1977; Pravda, 25 October 1977. The German bank (Dresdner Bank, then Deutsche Bank) to whom exclusive rights to the distribution of the coins were offered finally decided not to accept; the distribution was then entrusted to the Lazard bank and to the American firm Occidental Petroleum, who were already involved in the financing of the Games.
13 In particular see: "The Ruble and the Soviet Gold", International Cur rency Review, 1971, March-April, pp. 5-11.; "Soviet Union", ibid., 1973, July-August, pp. 88-93; "The Soviet Balance of Payments," ibid. 1974, May-June, pp. 60-62; and the article quoted in note 12.
14 See the articles cited by Kaser, who was kind enough to provide in addition several extracts from a study yet to appear: Soviet Gold. For Gold sales in the first half of 1976 see the International Herald Tribune, 29th October 1976; the Financial Times of 27th July 1976 cites this as 150 tons.
15 These estimates are cited by Victor Zorza, "The Glitter of Soviet Gold", International Herald Tribune, 3rd April 1975, p. 4. Other estimates appear in John T. Farrell, "Soviet Payments Problems in Trade with the West", Soviet Economic Prospects for the Seventies, Joint Economic Committee of Con gress, Washington, 1973, p. 702. fol.
16 M. Kaser ("The Ruble and Soviet Gold", International Currency Review, March-April 1971, vol. III, No. 1, p. 7) mentions that, according to the Central Directorate for Gold and Platinum of the Ministry of Non-Ferrous Metals, the State Bank buys gold at 2 Rubles a gram; at a rate of 1.34 Dollars to the Ruble, this is the equivalent of 83.36 Dollars an ounce. Cf. also the Frankfurter Allgemeine Zeitung, 30th April 1975. This estimate is of only limited im portance in that it represents the conversion of a domestic cost into Dollars at an exchange rate that does not express the real relationship of the Ruble to the Dollar; it furthermore ignores the extent to which the buying-price is less than the production cost. We should also stress that in the U.S.S.R. private individuals may hold gold, and sell it to the State; the sale-price is fixed at 11.65 Rubles per gram of pure gold (of. Andres, Foundations of Monetary Theory in Soviet Society, Moscow, 1975, p. 82).
17 On the "traditionalist" side stands A. Stadnichenko, "Gold and the Dollar in the Economy of Modern Capitalism", Den'gi i Kredit, 1972, I, pp. 80- 90; and also by the same author: "There Can Be no Demonetization of Gold", Mirovaya Ekonomik i Mezhdunarodnye Otnosheniya, 1971, I; I. D. Zlobin, "On the Monetary Functions of Gold in the Conditions of Modern Capitalism", Den'gi i Kredit, 1975, 2, pp. 84-92; I. D. Zlobin and I. I. Konnik: "Gold and the Monopolistic State Regulation of Currency Circulation," Mirovaya Ekonomika i Mezhdunaronye Otnosheniya, 1971, 9, pp. 89-98. Likewise of this frame of mind are also O. S. Bogdanov (cited in note 11), Z. and M. Atlas (cf. below). The "modernists", or anti-metallists, are represented notably by A. Anikin, "The Gold Exchange Standard - Problems and Contradictions," Den'gi i Kredit, 1973, 3, pp. 77-86; S. Borisov, Gold In the Economy of Modern Capitalism, Moscow, Finansy, 1968; G. Solus, "Will Gold Maintain its Former Role?", Mirovaya Ekonomika… 1972, 8; a complete bibliography of this movement is given by A. Anikin in The Monetary Crisis of the West, Moscow, Nauka 1975, p. 200. On the historical origins of these controversies see G. Grosman, "Gold and the Sword: Money in the Soviet Command Economy," in Industrialization in Two Systems, Essay in Honor of Alexander Gershenkron, New York, John Wiley & Sons, 1966, p. 212 fol.
18 Iu. Nechaev, "Monetary Upheavals in the West," Ekonomicheskaya Gazeta, 1976, 13, p. 21.
19 I. Sysoev, "Monetary Reform or Surrender?," Ekonomicheskaya Gazeta, 1976, 5, p. 21; V. Zholobov, "The Intensification of the Monetary Crisis", Ekonomicheskaya Gazeta, 1976, 24, p. 21.
20 Atlas (Z), Atlas (M), Gerashchenko (V), and Krasavina (L), "The Pro blem of Gold and Inflation in the Conditions of Modern Capitalism," Den'gi i Kredit, 1975, 3, pp. 75-87.
21 Ibid., p. 78.
22 Ibid., p. 79.
23 Ibid., p. 81.
24 Enrique Andres, The Foundations of Monetary Theory In Socialist Society, Moscow, Mysl', 1975, p. 75.
25 S. de Brunhoff, Marx on Money, Paris 1973, p. 9.
26 A. Stadnichenko, "Gold and the Dollar", op. cit., p. 84.
27 I bid.
28 E. N. Grebennnikova, "The Monetary Role of Gold In the Present Stage of the Development of Capitalism", Den'gi i Kredit, 1973, 11, p. 83.
29 Moscow, Mezhdunarodnye Otnosheniya, 1974, pp. 52-53.
30 O. S. Bogdanov, op. cit., p. 204; Iu. N. Chichin, "The Monetary Crisis: Present Problems and Uncertain Prospects", Finansy S.S.S.R., 1974, 6, pp. 90-95.
31 E. N. Grebennikova, op. cit., p. 84.
32 B. V. Mayorov, "The Western International Monetary System and Gold", Den'gi i Kredit, 1974, 1, p. 84.
33 I. Zlobin, "On the Monetary Functions of Gold," op. cit., p. 92.
* United Nations Conference on Trade and Development.
34 Izvestiya, 6th March 1973, p. 4.
35 E. D. Zolotarenko, "There Are Still Problems", Den'gi i Kredit, 1976, 4, p. 86. The sales of gold by the International Monetary Fund, which began in June 1976, have provoked no particular comment, except in the bulletin of the Moscow Narodny Bank (c.f. Quarterly Review, Summer 1976, p. 29 fol.).
36 Cf. The International Monetary Fund 1945-1965, vol. 1, Chronicle, by J. Keith Horsefield, Washington, I.M.F., 1969.
37 Pierre Mendès-France, who led the French Delegation at Bretton-Woods, was kind enough to share with me his own observations at the Conference on this point.
38 F. I. Mikhalevskyi, Gold in the Capitalist System After the Second World War, Moscow, U.S.S.R. Academy of Sciences, 1952, p. 162.
39 K. Ia. Chizhov, The Financial and International Monetary Organizations of Capitalism, Moscow, Finansy, 1978, p. 14.
40 Ibid.
41 V. I. Lenin, "The Importance of Gold…," op. cit., p. 300.
* International Bank for Reconstruction and Development.
42 Cf. L. Brainard, "Criteria for Financing East-West Trade", in Tariff, Legal, and Credit Constraints on East-West Commercial Relations, ed. by J. Hardt, 1975, p. 135.
43 O. S. Bogdanov, "Some Problems of the Credit Policy of the Member States of the COMECON", in Problems of Economic Co-operation Between East and West Europe, Moscow, 1973, p. 22.
44 E. D. Zolotarenko, op. cit., in note 35, p. 87.
45 K. A. Larionov, Two Worlds, Two Monetary Systems, Moscow, Finansy, 1973, p. 63.
46 Op. cit., in note 17.
47 Zh. A. Pevzner in "Modern Inflation: Its Sources, Mechanics, and Its Socio-Economic Effects (a Discussion)", Mirovaya Ekonomika… 1971, 7, p. 115.
48 G. Matyukhin, The Problems of Credit Money in Capitalism, Moscow, Nauka, 1977.
49 P. Wiles, "On Purely Financial Convertibility," in Banque, monnaie et crédit en Europe Orientale, Brussels, NATO, 1973, p. 119-125.
50 F. Holzman, "CMEA's Hard Currency Deficits and Ruble Convertibility," a report to the Round Table of the International Association of Economic Sciences, Dresden, June 23rd - July 3rd 1976 (reproduction).
51 Andres, op. cit., chapter VI: The World Currency.
52 Ibid., p. 257.
53 Ibid., p. 259.
54 I. I. Konnik, Money During the Construction Period of the Communist Society, Moscow, 1966, p. 145.
55 Andres, op. cit., p. 267.
56 Ibid., p. 281. This is to be compared with a Financial Times interview of the academician N. Inozemtsev, Director of the Moscow Institute for The World Economy and International Relations, indicating that if there were to be a "new Bretton-Woods", then the Socialist countries would make a claim for the consideration of their interests, although this would not necessarily imply the convertibility of the Ruble, nor the participation of the U.S.S.R. in a new monetary system. Financial Times, 3rd November 1976.
57 Moscow Narodny Bank, Press Bulletin of December 8, 1976, p. 14-17, and April 13, 1977, p. 16.