Russian Ways

It must be comforting to Washington officialdom to discover that Russia is no more immune from the ravages of inflation than are the "decadent democracies. Evidently a considerable number of Russians are not above turning a quick ruble by somewhat questionable methods. Evidently some Russians rather fancy the idea of playing capitalist. Otherwise, the Council of Ministers would not have found lit necessary to announce the issue of new currency beginning tomorrow.

The official announcement declared that this "last sacrifice" was aimed at speculators who have been accumulating great amounts of money at the expense of the population. Speculators, however, are not the only ones who will suffer. Hit by the compulsory exchange of old rubles for new, will be those who for one reason or another do not keep their savings in banks. For them the rate of exchange will be ten old to one new ruble. Bank deposits under 3000 rubles will be traded "even Steven". Greater amounts will be exchanged at a less favorable ratio.

Although there is no way of knowing the proportion of purchasing power that is contained in bank accounts less than 3000 rubles, it is certain that a very considerable amount of savings will be wiped out. Even state bonds will be "devaluated". Purchasing power will simply vanish before the stroke of a pen. But this is no guarantee that inflation will be completely banished from the scene. The causes which combined to produce inflation are complex and deep-seated. Human nature being what it is, there is a presumption that speculation will continue. Russian industry is still not producing in the desired quantities. Russian farmers are still inclined to retain as much of their foodstuffs as they possibly can, rather than sell them at pre-determined prices. Many essential goods are in very short supply. So long as the basic ingredients of inflation are present they will have a tendency to assert their influence. With the amount of goods available for purchase remaining the same, the prices may be lowered; but then there will also be less rubles to be spent. In that case the mere fact of lower prices would not mean that inflation has been eliminated.