From International Press Correspondence, Vol. 2 No. 61, 25 July 1922, p. 463.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
For the first time since the Russian Soviet Republic came into existence, its Government turned to the public for a loan. First of all, we wish to state that the attempt at the first internal loan has been very successful. The 10,000,000 pood loan was fully realized and the money paid in full.
The peculiarity of this loan consists in the fact that it is paid in money, but repaid in grain. In addition it is a short-term loan. The money is being paid now and the bondholders will receive the corresponding amount in grain during this year, when the tax in kind is collected.
The special form of this loan was a result of the unstable money situation in Soviet Russia. Up to May of this year, the rouble depreciated rapidly. Consequently it seemed impossible to get loan at home, because no one was able to tell what the buying capacity of the Soviet rouble would be six mouths later. (Just as it is at present impossible to get a loan in Austria).
The advantage for the creditors of this loan consists in the fact that even today, at the present buying capacity of the rouble, they are in a position to secure the gram they need; they thus protect themselves against a further depreciation of the rouble. The advantage for the Government is that it already has in the form of money a part of the tax in kind, which is due only in the autumn. This carries with it two advantages:
As is well known, the rise in prices in Russia (at any rate on food articles) not only came to a standstill in May of this year, but a sharp decline set in, which in the South, in Odessa and Rostov for example, attained a 30% fall, in the Northern sections the fall in prices has been rather less. This means that the great increase in food prices during the current year was of a speculative nature, and the present drop in prices is due to the good prospects for a favorable crop and the arrival of foreign grain. It therefore depends mainly upon the expected crop to decide whether the grain loan participators speculated profitably or not, and whether the price of grain in autumn will be higher or lower than the price used as a basis for the grain loan.
An interesting innovation made by the grain loan is the provision that the peasants may use the grain loan bonds in payment of the tax in kind, due in autumn. The peasant who today pays the price for a certain quantity of grain in the form of a loan may pay his tax in kind with his bond instead of with grain. We thus see an attempt to return from tax in kind to the money tax.
This experiment, the first one of its kind, is being tried on a small scale. 10,000,000 poods amount to no more than about 170,000 tons and reckoned at the price which is at present being paid in Germany, it amounts to 2½ billion marks. It is not the quantity of grain or of money that lends significance to this loan, but rather the fact that the Soviet Government succeeded in raising an internal loan, an accomplishment to be envied by many a capitalist government. At the same time experience can be gathered and the apparatus created for future loans on a larger scale, which will be necessary for the stabilization of the rouble and the balancing of the deficit in the state finances.
The success of this loan carries with it a great political significance. For it proves that the broad masses of the Russian people have full confidence in the Soviet Government. It is a political vote of confidence given to the Soviet Government, expressed in the loan.
Last updated on 5 May 2020