I’m doing some preparatory research for a university paper on the gold standard I’ll be writing next month, and during that research I stumbled over a table of international currencies in a 1950s almanac that astonished me.
The table gave the gold parities for important international currencies, and it included a gold content for 0.222168 grams for the Soviet rouble. The Soviet rouble? The money that was used in Stalin’s communist empire adhered to a monetary standard that must have been perceived as the cornerstone of international capitalism at that time?
I googled around a bit, and I found this page from the web site of the Russian national bank:
The site doesn’t mention Russia going off the gold standard, but I suppose it did so before 1971, when the U.S. went off gold (because it is usually said that the U.S. was the last country to maintain the standard).
I don’t understand that. Why did the Soviet Union establish this seemingly ultra-capitalist practice? And if it did, and actually maintained convertibility (which the text I posted doesn’t say anything about), I’m positive Soviet citizens, who did have roubles (although there was nothing to buy in Russian stores) must have continously running banks for exchanging their paper money into gold, with the intent of getting Western commodities or Western hard cash for it. Even with heavy capital controls and bans on gold export/commodity import, there must have been intense smuggling.
[sup]And no, I’m not asking to do my work for you. Although this is related to the topic of my paper, I’m not going to include this as it doesn’t fit the precise question I’m working at. I’m just curious.[/sup]
I don’t see how having a gold standard would have anything to do with how Soviet citizens acted. There were so many restrictions on what you could do with your cash, that yeah if you had the opportunity to exchange your savings into gold you probably would take it. But the opportunity was rare… where would that gold come from?
I apologize. My perceptions are colored by the fact that my parents social circle was not going to stand for it and nobody planned on retiring in Soviet Union. Either the government would have to change(and it did) or they would leave(a lot did, we only got out after soviet union fell apart). Obviously with that mentality, if you want to secretely build any kind of wealth, storing it in worthless pieces of paper is silly. What else are you going to convert your money into? Gold was certainly easier than foreign currency.
I remember as a child going into a grocery store somewhere on the Black Sea in what now is Ukraine and having only one item available for sale - pickled krill in seaweed. A few days later food was brought in but it was only available with ration cards given to local residents. This was around 1988/89.
I was exaggerating, of course. It’s not that there was virtually nothing to buy (else the population would have starved to death, and at least in later decades there was some selection of consumer goods available). But the choice and quality was far behind Western standards, and certain types of products, for example tropical fruit, were rarely available at all.
And that’s exactly why I think gold must have been attractive to Soviet citizens: It would have been a way to convert roubles into Western currency, which could buy Western products. In communist East Germany, for example, there were state-owned stores (called Intershops) where you could buy Western products with Western money. The difficulty was to obtain the cash; that’s why many East German citizens were eager to offer illegal black market change to Western tourists, and that’s why the most popular thing Westerners could send as gifts to relatives living in the East was money.
Being on gold standard doesn’t mean that individual citizens can exchange their money for gold. The guarantee might just apply, for instance, to foreign banks.
Well, I’m sorry to hear they were were stuck there. Mostly, though, it was very, very hard to emigrate. Most people simply didn’t have that opportunity. So even converting cash into gold wouldn’t have done any good.
The way I remember a lot of people simply didn’t act rationally. Those who have been through famine and the blocade would absolutely stuff every available inch of storage space in their apartments/rooms with non-perishable goods when they had that opportunity. Simply because the horror of famine was still with them. I’d imagine at least some people would accumulate gold in the same manner.
You didn’t offend me!