The Ruble: A Political History

"The Ruble: A Political History

By Ekaterina Pravilova

(Oxford, 543 pages, $39.95)

When reading Ekaterina Pravilova's original, fascinating and meticulously researched "The Ruble" it is a good idea to keep in mind its subtitle: "A Political History." For Ms. Pravilova's multi-layered account of the evolution of the paper ruble from its inception in the mid-18th century until the post-revolutionary reforms in the early 1920s goes beyond the merely monetary. "The biography of the ruble," explains Ms. Pravilova, "is a history of the Russian state, written in the language of money." Regardless of the type of political system in place, she writes, "money does not simply reflect an existing (or imagined) social and political order but creates it; it is not a consequence or an attribute but an integral and constitutive part of any regime." Ms. Pravilova, a professor of history at Princeton, shows that the ruble has been, above all, a symbol and an instrument of centralized, autocratic and imperial power.

The story begins in 1769 with the launch, under Catherine the Great, of assignats, Russia's first paper currency. This was, Ms. Pravilova maintains, a risky move. Historically, money had been "a token of legitimacy," an indication of the "pureness and integrity of monarchical power." But even in Catherine's time, the figurative, if not the literal, flimsiness of paper money posed both economic and political dangers to the absolutist state.

Assignats, which bore a promise of convertibility into coinage, were quick to catch on. They were much easier to carry across a vast empire than coins, and they were fully backed by copper and silver coins lodged in two Assignat Banks. They also came with a temptation -- to which, inevitably, the empress succumbed. In the absence of adequate credit mechanisms, it wasn't long before the printing presses sped up to help pay for her wars and the expansion of empire. Russia had shifted to a monetary system in which the state's currency and the state's debt were, to a degree, the same thing. Assignats were backed by an undersized metallic hoard; property pledged by aristocrats; and Catherine's promises. Unsurprisingly, this was not enough to prop up their value.

The reign of Alexander I (1801-25) saw the emergence of two sharply divergent views on the future of Russia's money, each wrapped up in sharply divergent views of the Russian state. To oversimplify, liberals believed in a state where the ruler was accountable to the people and the currency to the discipline of the market -- in this case, a silver standard. For their part, the ideologues of autocracy argued for nominalism, a doctrine, relates Ms. Pravilova, that "reserved for the state the right to determine the value of money." Insisting that a currency's value should be supported by some guarantee (such as reserves) to boost its credibility in the marketplace risked encroaching on the czar's ability to do what was necessary to fund the discharge of his "sacred duties": The ruler's word should be reassurance enough.

The nominalists eventually prevailed. But defending their victory required the establishment of monetary and financial arrangements so convoluted that, despite Ms. Pravilova's best efforts, their descriptions may demand several re-readings before they can be grasped. The stratagems also included siphoning off funds (to the state) that could have otherwise been invested in commerce and industry, with results made more damaging by the extent to which Russia was kept at a counterproductive distance from the international capital that could have accelerated its modernization.

Some relief arrived with the turn to what Ms. Pravilova dubs "autocratic capitalism" in the wake of disaster in the Crimean War. A new, more liberal czar, Alexander II (1855-81), opened the Russian market to foreign traders and investors, adopted free trade and allowed "credit rubles" to move in and out of the country. This turned rubles into a commodity with its own price, an exchange rate watched keenly by the increasing number of Russians who could travel abroad. "Tangible valuables," writes Ms. Pravilova, "started yielding their place to intangible resources of every many kinds (securities, bonds, shares), while the role of the ruble became more abstract -- the measure of value rather than a value itself."

But the reformers did not go far enough: "They spoke the languages of capitalism and autocracy, not seeing the mismatch between the two," Ms. Pravilova notes. It was a preview, in some way, of the internal contradictions that doomed Mikhail Gorbachev's attempts to transform the Soviet system from within. In due course, some of the reforms that marked the earlier years of Alexander's reign were reversed (thus tariffs were reimposed on industrial goods), partly prompted by fears of what they could mean for autocratic rule. Nevertheless, in 1897, after a period of experimentation, Russia went onto a version of the gold standard, which, in practice, "strengthened the state's role in finance and the economy" even as it allowed "Russia to play on the international monetary market." In some respects, time had moved on. And then came 1914.

Because control of money was of both practical and symbolic value to the autocracy, it is perhaps fitting that soaring inflation played no small part in the regime's collapse three years later. It's no less appropriate that the chaos of the immediate post-revolutionary years and the fragility of the new regime were mirrored by a period of monetary confusion. "The ruble," writes Ms. Pravilova, "turned into a very vague category that included dozens of various types of currencies" -- including bank notes issued by the czars, by the provisional government that immediately succeeded them, and (valued at a rather lower level) by the ultimately, if at first precariously, victorious Bolsheviks.

In the end, however, as the Communist Party's grip on power tightened, so did its control over the currency, as it implemented its own variety of nominalism. The ruble was worth, domestically anyway, what the party said it was. The Soviet currency, writes Ms. Pravilova, was turned into a "subsidiary tool" of the command economy, and for citizens, a "sort of generalized ration-card." It was an arrangement that lasted longer than it should have.

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Mr. Stuttaford is the editor of National Review's Capital Matters." [1]

1. Imperial Tender. Stuttaford, Andrew. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 27 July 2023: A.15.