Page:The Russian Review Volume 1.djvu/263

Rh The Russian money market is not so strongly developed as those of the other belligerents. Hence it is more difficult to float loans within the country with any degree of rapidity that would approach the need, and the burden of these financial operations temporarily falls upon the State Bank. The Bank is thus compelled to allow credit to private banks, requiring from them as security government bonds issued for these loans. By increasing in this way the amount of securities held by it, the Bank is enabled to supply the government with considerable amounts of money, until the sale of government securities upon the open market would bring in sufficient amounts of money for the government to dispense with this method. The most important method, however, by which the State Bank is enabled to assist the government financially is by discounting short-term treasury bonds, which, too, are beginning to secure a good position upon the open market.

As has been already pointed out, the issue limits allowed the State Bank have already been reached, and the Ministry of Finance proposes another extension of the limit. Assuming that the War will last until the end of the present year, it is calculated that the war expenses of the government during the year will reach approximately ten billion roubles. The experience of the past year has shown that about 31 per cent of this amount would have to be obtained by means of new issues of paper money. Taking into consideration the possible temporary expenditures that the Bank might be called upon to make for the needs of the Treasury in the matter of floating new loans, etc., the Ministry proposes that the issue limits of the State Bank be increased by another four billion dollars.

This sum does not take into account the needs of commercial operations that are not connected with the War. Again the experience of the past months has shown that no new issues of paper money will be required for these operations during the current year.

In proposing this measure, the Ministry of Finance is perfectly aware of the fact, of course, that with its introduction the amount of paper money issued by the government will reach almost ten billion roubles, against a gold reserve equal to only a little over one billion six hundred million roubles. It is impossible to foretell how long the War is going to last, and, therefore, it cannot be calculated even approximately, what amount of paper money would have to be issued. So far, the