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Subject essay: Lewis Siegelbaum

During the civil war, the Soviet state operated for the most part without a monetarized unit of account, which spawned wild inflation and fantasies of a moneyless economy. But the logic of the New Economic Policy, introduced in 1921, required a stable currency. In July 1922, the Sovnarkom announced the introduction of a new unit of currency, the chervonets, to be backed by gold. It was to replace the “Soviet token,” or sovznak, the Soviet government’s not-so-inventive name for its version of the ruble. Throughout the remainder of 1922 and all of 1923, while the chervonets was issued in limited amounts and used only for certain restricted financial transactions, the sovznak remained as legal, albeit rapidly depreciating, tender. Already in October 1922, the value of the sovznak had fallen to one-millionth of the pre-war ruble.

In February 1924, the chervonets, valued at the equivalent of 50,000 sovznaki of 1923 issue, became the sole unit of currency. By this time, some 809 quadrillion sovznaki were in circulation. On the basis of the less volatile currency, the state moved to convert the tax in kind which had been introduced with great fanfare in 1921 as the cornerstone of NEP, to monetary payments. It is a measure of how far the Soviet Union had traveled from the chiliastic visions of the first years of the revolution and civil war that the name of the new unit of currency soon reverted from chervonets to the (Soviet) ruble in popular if not official discourse.

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