861.5151/12–1947: Airgram
The Chargé in the Soviet Union (Durbrow) to the Secretary of State
A–1386. The contrast between Soviet policy as expressed and the results of policy in action are shown up particularly clearly by the recent currency reform.
In revaluing monetary holdings, savings bank deposits under 3,000 rubles received the most favorable treatment of any form of liquid or intangible property widely held by the public, being credited with one new ruble for each old ruble. It was then stated: “This means that deposits belonging to the overwhelming majority of holders remain at their previous value”, and the point is made that the small man is given greater protection than the large holder.
Taking the currency measure as a whole, however, it becomes obvious that it is the “small man” who is hit the hardest. In the Soviet Union more than in most other countries the poorer classes, the great masses, are unable to buy any appreciable amount of tangible goods, have only those government bonds which they were compelled to buy, and it is doubtful if a very large percentage of the people have bank deposits—no recent figures have been seen, which is one good indication. In any event, what little surplus there is above daily food needs will naturally go into a small stock of cash which is available immediately if needed. Psychologically the first line of reserve is a bit of cash, assuming a not quite starvation-level existence, and only after this, if at all, are savings likely to go into banks. It is just this class with the small cash reserves which has lost the most, percentagewise.
Farther up the economic scale it is true that there may have been considerable amounts of cash in individual hands, acquired through speculation or graft, or merely saved by persons whose salaries were relatively large. However on the whole these classes are able to, and do, particularly in a country where there are no corporate intangibles, invest a good portion of their surplus in tangible goods. Since such property was not touched by the monetary decree, these people’s losses are proportionally less.
[Page 644]It must of course be remembered that the above reasoning does not apply to derationing and the new price level, the effect of which is quite different on the various income classes. But taking the currency reform separately, it is difficult to detect the much-advertised concern for the welfare of worker and peasant.