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State Bank of the USSR

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State Bank of the USSR
Государственный банк СССР
Former head office of the Gosbank in Moscow, originally the branch of the State Bank of the Russian Empire
Former head office of the Gosbank in Moscow, originally the branch of the State Bank of the Russian Empire
Headquarters12 Neglinnaya str., Moscow, Soviet Union
EstablishedOctober 1921; 103 years ago (1921-10)
Dissolved1 March 1992; 32 years ago (1992-03-01)
Central bank ofSoviet Union
CurrencySoviet ruble
SUR (ISO 4217)
Preceded byState Bank of the Russian Empire
Succeeded byCentral Bank of Russia

The State Bank of the USSR (Russian: Государственный банк СССР, romanized: Gosudarstvennyy bank SSSR), known as the State Bank of the RSFSR from 1921 to 1923, and commonly referred to as Gosbank (Russian: Госбанк), was the central bank and main component of the single-tier banking system of the Soviet Union. It replaced the State Bank of the Russian Empire, and following the dissolution of the Soviet Union, it was absorbed by the Central Bank of Russia in 1992.[1]

Gosbank was one of the three main Soviet economic authorities, the other two being Gosplan (the State Planning Committee) and Gossnab (the State Committee for Material Technical Supply). It closely collaborated with the Soviet Ministry of Finance to prepare the national state budget.

History

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The foundation of the bank was part of the implementation of the New Economic Policy (NEP), following the monetary dislocation and barter economy during the Russian Civil War. On 3 October 1921, the All-Russian Central Executive Committee passed a resolution for the founding of the State Bank of the Russian Soviet Federative Socialist Republic, followed by a similar resolution passed by the Council of People's Commissars on 10 October 1921 and a statute passed by the Central Committee on 13 October 1921 which stipulated that the State Bank was part of the Ministry of Finance (Narkomfin). It began operations on 16 November 1921.[2] In February 1922, Vladimir Lenin derided the State Bank as "a bureaucratic paper game", comparing it to a Potemkin village in a letter to the bank’s head Aron Sheinman whom he accused of "Communist-mandarin childishness".[3]

The State Bank presided over the two successive devaluations of the ruble, in 1922 (1 for 10,000) and 1923 (1 for 100). Meanwhile, on 11 October 1922 it was granted the right to issue the gold-backed chervonets or gold ruble that brought an end to the early Soviet hyperinflation. In 1923, it took its permanent name as State Bank of the USSR. In 1924 the State Bank produced its first consolidated credit plan, and formed the Committee on Banks to oversee the sectoral banks that had been created under the NEP. In 1925, it took over the previously separate cash holding system of Narkomfin.[2]

The subsequent phase of Soviet central planning and phasing-out of the NEP led to the State Bank being granted a monopoly over short-term bank credit in 1927, and over all short-term credit in 1930 after mutual and direct commercial credit was terminated. In 1928-1930, the local branches of other banks were brought under the State Bank or closed, so that Prombank, Tsekombank or Selkhozbank subsequently operated largely through the State Bank's local offices. That phase of reform was completed in 1932, after which the division of labor between the State Bank and the other components of the Soviet banking system remained broadly stable until the late 1980s.[2]

In 1931 Boris Berlatsky, a senior official of the State Bank was put on trial for wrecking as part of the 1931 Menshevik Trial.[4]

Exchange rate between the Soviet ruble and major world currencies, February 1985

Following aggressive monetary expansion during World War II, the monetary reform of 1947 resulted in another round of devaluation (1 for 10) and related confiscatory measures. In 1959, the consolidation of the specialized long-term credit banks into the Construction Bank of the USSR resulted in the assumption of some former operations of Selkhozbank, Tsekombank and municipal banks by the State Bank. The monetary reform of 1961 introduced another round of devaluation (1 for 10). In 1963, the State Bank's control over the system was further strengthened as it took over the State Labor Savings Banks System from the Soviet Ministry of Finance.[2]

The Soviet state used the State Bank primarily as a tool to impose centralized control upon industry in general, using bank balances and transaction histories to monitor the activity of individual concerns and their compliance with five-year plans and directives. The State Bank never acted as a commercial bank aiming at profit maximization, but purely as an instrument of government policy. Instead of independently and impartially assessing the creditworthiness of the borrower, Gosbank would provide loan funds to individuals, groups and industries as directed by the central government.

In the 1970s, the State Bank was involved in the creation of Ost-West Handelsbank in Frankfurt (1971), Donau Bank in Vienna (1974), and East-West United Bank in Luxembourg (1974) together with the Foreign Trade Bank of the USSR.

The Law on the State Enterprise, introduced in June 1987, represented a significant attempt to impose financial accountability and autonomy on state enterprises.[5] Bank reforming officially began on 1 January 1988 when Gosbank was dismantled to create a two-tier banking system.[6] Mikhail Gorbachev divided Gosbank into a central bank and state-owned specialized banks (spetsbanks).[7] These included Agroprombank and Zhilsotsbank, while Stroybank became Promstroybank.[8] The government continued to direct credit policy, but Gosbank was now able to set interest rates on credit in coordination with Gosplan and the Ministry of Finance.[8]

In March 1989, the Council of Ministers of the Soviet Union passed a resolution making the spetsbanks responsible for their own financing of operations, known as khozraschet, as policymakers had thought that this would give the spetsbanks a profit motive; however, this only increased tensions between the spetsbanks and Gosbank as the latter retained control over credit resources.[9] Following the appointment of Viktor Gerashchenko as the director of Gosbank, it played a key role in the creation of a parallel banking system as Gerashchenko viewed the early spetsbank reforms as insufficient.[9]

In September 1990, the Soviet government permitted the specialized banks that had emerged from Gosbank to "commercialize" themselves, which quickly led to the splintering of the centralized system.[10] As both the governments of the Soviet Union and Russian SFSR had not created the institutional groundwork for this process, this led to the emergence of hundreds of small banks and a few large centralized banking systems.[10]

Demise

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Following the election of Boris Yeltsin as chairman of the Supreme Soviet of Russia and the elections of the Congress of People's Deputies of Russia in March 1990, the Russian republic sought to distance itself from the central government and on 12 June, it declared state sovereignty.[11] In July, the government of the Russian SFSR formed the Central Bank of Russia (CBR) from the Russian republic's branch of Gosbank.[12] The government had sought to create a counterweight to Gosbank during the struggle for state sovereignty.[6] In October, it created Vneshtorgbank Russia as its own foreign trade bank.[13] In December, the Law on the Central Bank and the Law on Banks and Banking Activity was passed in the Russian republic, which formalized the CBR's independence.[13]

In December 1990, Soviet prime minister Valentin Pavlov and Gosbank director Viktor Gerashchenko responded to the Russian SFSR's passage of sovereign banking laws by validating all 50 and 100 ruble notes in circulation from the following month.[14] As the Bank of Russia was not informed, the public's trust in Gosbank was greatly damaged.[15] The Soviet republics stopped paying most taxes to the central government, and in March 1991, Gosbank estimated that only seven billion rubles of expected tax revenue had been remitted by the republics, out of a total of 23.4 billion rubles.[1] Deputy Premier Grigory Yavlinsky advocated for the creation of a "banking union", namely a formal monetary union among the Soviet republics, in the New Union Treaty, but that attempt rapidly foundered in the second half of 1991.[16]: 183 

Gosbank and the CBR continued to operate in parallel until the August Coup.[1] On 23 August, Russian president Boris Yeltsin ordered the Council of Ministers of the Soviet Union to finish the transfer of Union-level organizations within the Russian SFSR to the government of the Russian SFSR by the end of the year.[1] Andrei Zverev was appointed by the government of the Russian SFSR as the temporary director of Gosbank, although Gerashchenko did not submit his resignation until 26 December.[1] On 15 November, Yeltsin took over the Ministry of Finance of the USSR and Goznak.[1] After the signing of the Belovezh Accords, the Presidium of the Supreme Soviet of Russia passed a resolution transferring Gosbank's "facilities, documents, and specialists" to the Bank of Russia, and on 1 January 1992, it took over the rest of Gosbank's resources in Russia, after which Gosbank officially ceased to exist.[17]

Leadership

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The following is a list of the chairmen of the Board of the State Bank.[2][18] The chairman was appointed by the Premier of the Soviet Union.

Name (governor) Photo Term of office Appointed by
Start of term End of term
Aron Sheinman[2] 1921 1924 Vladimir Lenin
Nikolai Tumanov [ru] March 5, 1924 January 16, 1926 Alexei Rykov
Aron Sheinman 1926 1929
Georgy Pyatakov April 19, 1929 October 18, 1930
Moissei Kalmanovich [ru] October 18, 1930 April 4, 1934 Vyacheslav Molotov
Lev Maryasin [ru] April 4, 1934 July 14, 1936
Solomon Kruglikov [ru] July 14, 1936 September 15, 1937
Alexey Grichmanov [ru] September 15, 1937 July 16, 1938
Nikolai Bulganin October 2, 1938 April 17, 1940
Nikolai K. Sokolov [ru] April 17, 1940 October 12, 1940
Nikolai Bulganin October 12, 1940 May 23, 1945 Joseph Stalin
Yakov Golev [ru] May 23, 1945 March 23, 1948
Vasily Popov [ru] March 23, 1948 March 31, 1958
Nikolai Bulganin March 31, 1958 August 15, 1958 Nikita Khrushchev
Alexander Korovushkin [ru] August 15, 1958 August 14, 1963
Alexey Poskonov [ru] 1963 1969
Miefodiy Svieshnikov [ru] 1969 1976 Alexei Kosygin
Vladimir Alkhimov [ru] October 11, 1976 January 10, 1986
Viktor Dementsev [ru] January 10, 1986 August 22, 1987 Nikolai Ryzhkov
Nikolai Garetovsky [ru] August 22, 1987 June 7, 1989
Viktor Gerashchenko June 7, 1989 August 26, 1991 Valentin Pavlov
Andrei Zverev [ru] August 26, 1991 December 20, 1991 Ivan Silayev
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  • Branch building in Stalino (later Donetsk), shortly after inauguration in 1928
    Branch building in Stalino (later Donetsk), shortly after inauguration in 1928
  • The same building in 2008
    The same building in 2008

See also

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References

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  1. ^ a b c d e f Johnson 2018, p. 62.
  2. ^ a b c d e f The State Bank of the USSR (PDF), Bank of Russia
  3. ^ Lenin, Vladimir (1922). Letter to A. L. Sheinman. Progress Publishers. Retrieved 26 May 2015.
  4. ^ Jasny, Naum (1972). Soviet Economists of the Twenties. London: Cambridge University Press. ISBN 9780521083027.
  5. ^ Johnson 2018, p. 29.
  6. ^ a b Johnson 2018, p. 4.
  7. ^ Johnson 2018, p. 27.
  8. ^ a b Johnson 2018, p. 30.
  9. ^ a b Johnson 2018, p. 32.
  10. ^ a b Johnson 2018, p. 5.
  11. ^ Johnson 2018, p. 43.
  12. ^ Johnson 2018, p. 46.
  13. ^ a b Johnson 2018, p. 47.
  14. ^ Johnson 2018, p. 61.
  15. ^ Johnson 2018, pp. 61–62.
  16. ^ Peter Bofinger (1993), "Options for a monetary framework for the areas of the former Soviet Union" (PDF), European Economy
  17. ^ Johnson 2018, p. 63.
  18. ^ "ГОСУДАРСТВЕННЫЙ БАНК СССР" [State Bank of the USSR]. СОВНАРКОМ, СОВМИН, КАБМИН СССР 1923-1991 гг. (SOVNARKOM, SOVMIN, CABMIN of the USSR 1923-1991) (in Russian). Archived from the original on 14 April 2016. Retrieved 24 January 2020.

Sources

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