BEFORE the war for £10 you received 94 roubles, but now you
receive 150. Last year after the great Russian retreat the exchange
stood at over 160, but banks refused to give more than a nominal
exchange. And in order to stop traffic abroad and foreign speculation
in Russian money it was forbidden by law for any one to take more than
500 roubles out of the country. Now, however, the new value of the
rouble seems to have been accepted, and banks generally give the due
exchange value. Although the rouble has slightly improved it is not
anticipated that the paper money will ever regain its guaranteed gold
exchange. Each Russian note is in the form of a certificate that the
State Bank will pay in exchange for it a certain quantity of gold. That
certificate has little value to-day, and it is an open secret that the
Government buys gold at a rate which assumes a lower value for the
rouble. People who have hoards of gold coinage--and they are many in
Russia, for the people are disinclined to use banks--are keeping their
gold, and their action is justified by the privileges which are already
accorded those who can pay the Government in coin. It is expected by
many that at the end of the war the rouble will be assigned a lower
gold value.
One obvious effect of the depreciation of the rouble has been that all
real estate and material belongings have increased in money value.
If you have an estate worth 94,000 roubles before the war, it is now
worth 150,000 roubles, and you are lucky if your fortune was in this
comparatively more real form, of land. People, on the other hand, who
were in debt have found the actual weight of the debt diminishing as
money lost value. This has been particularly noticeable in the case of
people who have mortgaged property. Suddenly it has been possible to
sell the property at a high figure, pay off the debt, and still retain
an unexpectedly large margin.
My friends the M.s have long wished to sell their large house in
Vladikavkaz, but have held its value at what was in the old days
an absurdly high figure. People used to laugh when the price was
mentioned. But this year, “as if by miracle,” to use my friends’
phrase, a purchaser turned up, agreed to their price and completed
the transaction in six hours. He was pleased and they were pleased.
“What sort of a man was he?” I asked. “Oh, a sort of a Tartar,” they
replied. He made a long way the better bargain, for he understood to
what extent the rouble had lost value. On the other hand my friends
paid off a big debt with these depreciated roubles, and there also they
gained.
The people who have made money by the war are busy buying land and
houses. This is reproachfully called land speculation, but is in
reality commonsense action on the part of those who wish to make fast
their wealth. When I paid a visit to Kislovodsk in the Caucasus, an
extremely popular watering place in the mountains, I found a perfect
rage of buying and selling property, brought about by this elementary
change in values.
The public are still exhorted to pay for their railway tickets in gold,
but are less inclined to do so than ever. There is reason to believe
that there are a number of millions of gold coins being hoarded in the
country. Friends have shown me their private supplies. When one reads
of burglaries, there is often a mention of several hundreds of roubles
in gold being stolen.
In the southern districts of the Empire German agents have appeared,
offering 15 roubles paper for 10 roubles gold. In this way Germany
is said to have collected a considerable amount of Russian gold. The
traffic was discovered by the police in Russian Central Asia, where men
were found to be carrying this gold into Persia and thence to Turkey
and Germany in small hand-bags. Many arrests were made, including that
of M. Poteliakhof, a rich Bokhara Jew and dealer in cotton, who was
found to be deep in this nefarious trade.
Russia has no gold in circulation, but also she has no silver and no
copper. Russian silver coinage became last year, at least in popular
estimation, worth its weight in silver, and people began hoarding it;
copper also was hoarded, and after the retreat from the Carpathians
there were a series of small-change panics in the towns in the
background. Many shops were sacked because the shopkeepers refused to
give change; people travelled free on the trams because the conductors
could not change their rouble notes. On other occasions you were
obliged to accept sticky postage stamps as change. Thorough Government
action swiftly followed, and paper tokens for all the small coins were
introduced. Postage stamps without gummy backs were issued for 10, 15
and 20 copecks, a shilling note (50 copecks) was issued, and slips
were printed for 1, 2, 3 and 5 copecks. How filthy this money became
may be imagined. People gave it to beggars saying, “I give you this
not because I pity your state, but because the money is so dirty.”
Still this new paper was accepted without riots, and the people soon
realised that it was more convenient than “sounding” money, and that
five roubles’ worth of it could be put in a small purse without adding
a considerable weight to one’s pockets. Thoughtful people welcomed it
as teaching the ignorant that money had no value in itself, but only as
a token of exchange. To-day one never sees a silver piece in Russia.
All is being hoarded.
Perhaps, however, the war and the substitution of paper for coin has
taught some people to care less for money. The Russian word is _dengy_,
which is really a Tartar word. Indeed, where money is concerned the
Russian is a bit of a Tartar and loves to feel the metal between
his hands. If a substantial sum is mentioned, he nods his head and
exclaims, “That is money!” as if he could see it being emptied out with
a joyous clash on the table in front of him. Of course the people
who see money that way always see it in small quantities. The Russian
business man is crafty over small deals. I imagine his money sense
fails him more or less in very large deals and financial operations. To
the true financier money must be somewhat of an abstraction and high
finance a sort of higher thought.