The monetary reform of 1947 in the USSR

The monetary reform of 1947, conducted in the USSR, was a stiff measure of the country's economic recovery after the Second World War. Such reforms in the post-war years were experienced by many states. The main reason for this was the huge money supply, issued to cover military expenditures.

Consequences of the war

The Second World War caused enormous damage to both the USSR and many other participating countries. In addition to the huge human losses, the damage was done to the state as a whole.

During the war, about 32,000 industrial enterprises, nearly one hundred thousand rural farms, more than 4,000 railway stations and 60,000 tracks were destroyed. The hospitals and libraries, theaters and museums, schools and universities were destroyed.

The infrastructure of the country was almost completely destroyed, millions of Soviet citizens were left without a roof over their heads, more than 30% of national wealth was destroyed, food supplies were almost spent. The country was physically and morally drained.

Reasons for reform

The restoration of the country, which fell into decay after the war, required significant transformations in many areas of life. One such transformation was the monetary reform carried out in the USSR in 1947. There were many reasons for the reform:

1. In wartime, a large number of banknotes were issued. This was due to the huge expenditure on military needs. As a result, at the end of the war, the money in circulation was four times as large as before. In the postwar period, this amount of money was not required and threatened with depreciation of the ruble.
2. In circulation, a sufficient number of counterfeit bills were circulating, which were issued by the Hitlerites. These bills should have been withdrawn during the monetary reform of 1947.
3. In the USSR, cards were introduced to combat the deficit of goods. With the help of cards, the majority of food and non-food items were distributed among the population. The cancellation of the coupon system made it possible to establish fixed prices for consumer goods.
4. The number of profiteers who made a fortune during the war increased significantly. The establishment of fixed prices was also aimed at combating the speculative element.

The objectives of the monetary reform of 1947

The resolution "On the implementation of the monetary reform and the cancellation of cards for food and manufactured goods" was the basis for the beginning of the reforms. The main purpose of the monetary reform of 1947 was to eliminate the consequences of the last war. It should be noted that similar reforms were carried out in most of the countries participating in the war.

The task of the reform was to remove in the shortest time from circulation old-style banknotes that had been excessively issued during the war, and to exchange them for new ones. According to the terms of the monetary reform of 1947, the ruble was replaced by the ruble.

The provisions described in the decree also stipulated the procedure for the cancellation of cards. The presence of a coupon for the goods gave citizens the right to purchase a particular product. The number of coupons was limited, so not everyone could afford to buy the desired product. This gave impetus to the spread of speculation. People who do not have a card for the right product, could buy it from speculators at an increased price. The monetary reform of 1947 established uniform fixed prices for all groups of goods.

How did the reform

The reform planning began a year earlier. However, in connection with the post-war famine, it had to be postponed. The beginning of the events was scheduled for December 16. It was required to finish the reform as soon as possible, the end date was fixed in two weeks, on December 29.

As a form of transformation, a denomination was chosen. If we describe briefly, the monetary reform of 1947 was reduced to a change in the value of bank notes. The percentage of denomination was 10: 1, that is, ten old chervonets were equated to one new ruble. However, the price order, various payments and salaries during the recalculation did not change, despite the decline in prices. In this regard, many historians do not consider this reform a denomination, agreeing that it was of a confiscatory nature.

On December 11, the departments of the Ministry of Internal Affairs of the country received packages to be opened on the 14th of the same month by the heads of the savings banks and other departments of the financial structure. In these packages, the essence of the monetary reform of 1947 was stated, as well as detailed instructions for the exchange of financial resources of the population. The instruction concerned cash, as well as deposits and bonds.

Exchange of money

The confiscation nature of the monetary reform of 1947 was also confirmed by one of the paragraphs of the decree. This clause stated that the exchange of people's money should be done in such a way as not only to withdraw excess cash from circulation, but also to eliminate the accumulation of speculators. However, there were accumulations not only among people who had acquired their fortune during the war years, but also for citizens who saved their savings for many years. The same can be said about those regions of the USSR that were not touched by the war, where favorable conditions for trade remained. But this "nuance" was wisely kept silent.

Cash paper money changed at the box office of the State Bank of the USSR at a rate of ten to one, for deposits the exchange ratio was different. It should be noted that the coins did not exchange and remained in circulation.

Canceling cards

The card system existed in the USSR since the establishment of the state. It was canceled several times and resumed. The card system existed in the country from 1917 to 1921, from 1931 to 1935. The next entry of coupons for goods fell during the war years. It should be noted that at that time many states that took part in hostilities moved to the card system. The cancellation of cards was part of the measures of the monetary reform of 1947 in the USSR. But first it was necessary to regulate the price policy. At the time of the reform, market prices were significantly different from rations and exceeded them by about ten times. The resolution on the implementation of the reform described a new order of price formation, which should reduce the difference in market and ration value of goods. Prices for bread, cereals, pasta and beer were decided to be reduced by 10-12% in comparison with ration prices, and prices were to be increased for fruits, milk, eggs, tea, fabrics and clothing. Retail value of meat, fish products, confectionery, vegetables, tobacco products, vodka remained at the level of existing rations prices.

Bonds

The monetary reform in the USSR in 1947 also affected the bonds that were at that time in circulation. Bond is a guarantor-paper guaranteeing the owner the receipt of debt from the borrower within a specified period. The borrower or issuer in this case is the state.

During the period of the USSR's participation in military operations, when state expenditures for military needs increased sharply, State war bonds were issued with a total amount of 81 billion rubles. The amount of all domestic loans was about 50 billion rubles. Thus, by the time of the monetary reform in 1947, the state owed the population more than 130 billion rubles.

The bonds were also subject to exchange. Conversion measures consisted in the exchange of old interest-bearing loans for new ones at the rate of three to one, and the winning bonds - at a rate of five to one. That is, one new ruble in bonds equated to three or five old rubles, respectively. As a result of this exchange, the internal debt of the state to the population has been reduced by an average of four times.

Deposits

The coefficient of exchange of savings of the population varied depending on the amount of accumulation. If the size of the deposit did not reach three thousand, the exchange was made at a rate of one to one. Deposits from three to ten thousand - three to two. If the deposit amount exceeded 10,000 rubles, then 3 old rubles were equal to one new one.

That is, the more the amount of savings, the more the depositor lost. In this regard, when rumors about the forthcoming reform became more obvious, kilometer queues lined the savings banks. People who had large deposits wanted to withdraw money. They cut their large deposits into smaller ones, re-registering them for third parties.

The last victim

Talks about the upcoming reform spread quite quickly among the population. Information about the denomination and the confiscation of money has caused a real stir. People bought everything from shops absolutely to at least partially invest money, which in a short time should become "candy wrappers". At this time, even sold the product that has been gathering dust for years on the shelves. In the savings banks the same thing happened. Also, citizens aspired to make various payments, for example, utilities.

As Stalin said, "the last victim" was required to restore the state. And the government promised to take over most of the costs. However, it turned out to be otherwise. The heaviest blow was dealt to the villagers, the most unprotected stratum of the population. The monetary reform of 1947 was to be carried out in an extremely short time. If this period was two weeks for remote sparsely populated territories, residents of the central regions should have time to exchange money for a week. And if the townspeople had the opportunity to make an expensive purchase or open a deposit, many villagers did not have time to reach the nearest savings bank. In addition, a separate part of citizens did not risk showing their real savings, fearing unnecessary questions and persecution. In principle, the government counted on this. Of the 74 billion rubles in circulation, not more than a quarter, more than 25 billion rubles, have been presented for the exchange.

Consequences of the reform

As a result of the monetary reform of 1947, the Soviet Union managed to avoid depreciation of the ruble, the surplus of the bills that were issued in the war years were eliminated. Thanks to the recalculation, the costs of which were raised on the shoulders of the population, the State Bank managed to raise a considerable sum. This money was used to restore the post-war country. The cancellation of the cards ensured the reduction of market prices for many groups of goods and significantly reduced the number of speculators.

It is generally accepted that the reform, like many other Stalinist introductions, was coercive and harsh. However, it is necessary to recognize that these measures were necessary and necessary for the restoration of the Soviet economy.