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Sokolnikov

Economics

The Russian Rouble
and the German Mark

(16 January 1923)

From International Press Correspondence (weekly), Vol. 3 No. 1, 16 January 1923, pp. 5–6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Public Domain: Marxists Internet Archive (2021). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.

Gold currency has been replaced not only in Russia, but almost all over the European continent, by paper currency indicating every stage of failing rates of exchange. Even the bank-notes issued by the bank of England have maintained an unaltered value of 9 per cent lower than gold, ever since the war, and have shown but slight upward and downward fluctuations. The Dutch paper florin, although Holland remained neutral in the war, has also lost value by about the same proportion as the English bank-note. The French rate of exchange is much more unfavorable: the paper franc sinks in value from year to year, and the attempts made by the French government to improve France’s financial condition, at the expense of German reparations only lead to the further depreciation of the French banknotes, following on the catastrophic and feverish depreciation of German paper money. The depreciation of paper currency is accompanied by important economic and political, consequences all over Europe. In France the small peasantry, which had kept its savings in paper money, has lost more than half of these savings. In Germany, and in England the depreciation lays the heaviest burdens on workers and intellectuals In all these countries the uncertainty of monetary’ values involves rapidly rising prices, rapacious greed for profits, and complete uncertainty of what the next day may bring; in short, it involves the complete disintegration of all economic relations, and this is also expressed politically in the continual governmental crises. This financial breakdown is naturally only the result of the acute political and economic crisis into which Europe has been plunged by the war.

But the depreciating paper money of Europe was able to console itself for a time with the fact that its. Eastern neighbour, the Russian paper rouble, was falling more rapidly still. Conscious of their advantageous position, the countries trafficking in paper currency declined to recognize the Russian paper money as a member of their family they refused it an acknowledgement whatever as monetary value, precisely as the European governments have refused to “recognize” the Soviet government as a government. Now the situation is beginning to change: the rate at which the German mark depreciates has not only exceeded that of the paper money of the Austria strangled by the Versailles dictators, but is now even more rapid than that of Soviet Russia’s paper currency, which is now beginnings to take firm ground after long years of war, blockade, and famine. If we compare the price of the dollar (that is, of the only money in the world possessing full value) in marks at the German exchange, and in rubles at the free Moscow exchange, since January 1922, we observe the following:

In January the dollar had a value of 192 marks, in Berlin, 43.5 roubles in Moscow (bank-notes of the year 1922). In July the dollar cost 493 marks in Berlin, in Russia 411 rubles, so that the mark had depreciated by two and a half times, the rouble by nine and a half times; during the first half year of 1922 the rouble thus depreciated four times as rapidly as the mark. The second half year however, shows quite another picture. At the end of the first week in December, 8,390 marks were paid in Berlin for a dollar. (At the end of November the rate of exchange even exceeded 9,000.) In Moscow (at the free exchange) the dollar cost 2,750 rubles at the end of the first week in December The mark, calculated at its rate of exchange to the dollar, had thus depreciated by 17 times its value between July and December, the ruble 6.7 times only. The mark is thus depreciating 2½ times as fast as the rouble.

This more rapid repreciation of the mark, of course corresponds to the issue of paper money, which has increased proportionately more in Germany than in Russia. If we take the rate of bank-notes issued in January 1922 at 100, the following comparison of issues is obtained:

In actual figures the German issue was not great during he first few months, but the supplementary issue in May was 12 milliards, in June 18, in July 23, in August 59, in September 68, and in October 153 milliards (that is, about one half of the total amount of paper money in circulation up till October).

Naturally, it is a source of but little pleasure to Soviet Russia that the Germany monetary standards are worse off than its own. But as the conditions of valuta represent a peculiarly concentrated expression of the general political and economic situation of a country, the fact that Soviet Russia is now able (and very willing) to give the first place to capitalist Germany with regard to. rapid depreciation of rate of exchange is a sign that Eastern Europe is beginning to show greater economic and political stability than Central Europe. The country of the greatest revolution of the world can confidently assert that it is not going to take part in the paper-money bankruptcy: and can recommend to its enemies to heal themselves of the paper-money “disease”.

 
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