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The Russian currency


COMECON
COMECON

The Russian ruble lost almost all value during the Russian Civil War. The reissued Soviet ruble was stabilized during the NEP, but as a non-convertible currency that, under a decree of July 1926, could not be taken out of the country. Gosbank, the state bank, pegged the official exchange rate to the U.S. dollar in 1937, to the price of gold in 1950, and to the value of a basket of freely traded currencies in 1973. The exchange rate was artificial, responsive entirely to planning and political considerations. Soviet banks, which carried out the wishes of the CPSU and government, were charged with furnishing short-term credit to state-owned enterprises and with overseeing the fulfillment of the government’s economic plans.

Domestic retail trade proceeded through state stores and consumer cooperatives, which sold their wares at state-fixed prices, and through legal private vendors and the black market (the illicit sale of commodities), which sold at prices set by supply and demand. State outlets did the overwhelming percentage of business. The consumer cooperatives, confined to rural areas, were indistinguishable from the state outlets by the 1980s. Private vendors were limited by law to a few kinds of personal service (such as tutoring or baby-sitting) and to the urban bazaars selling produce from the peasants’ garden plots.

The black market, having flourished at earlier points in Soviet history when state supply of consumer goods and other commodities fell short, grew steadily in the 1970s and 1980s. The goods sold had often been embezzled from the public sector, manufactured using state-owned equipment or materials, or smuggled into the country.

The Soviet rulers insulated their country from the world economy, in the belief that it would develop more smoothly with a minimum of influence from capitalism. The government’s “foreign trade monopoly,” laid down by Lenin in 1918, stipulated that all foreign commerce was to follow through a specified state agency. Under the monopoly, the Ministry of Foreign Trade handled all exports and imports.

Soviet resistance to foreign trade eroded considerably after 1970, as the regime sought to plug gaps in domestic production with imports. By Soviet calculations, foreign trade added 11 percent to the value of the GNP in 1985, up from 4 percent in 1970. The USSR ran modest trade deficits in the 1980s. Fuels and electricity accounted for 40 percent of exports in 1989, machinery and equipment for 16 percent, and metals and ores 11 percent; machinery and equipment constituted 38 percent of imports, food products 17 percent, and consumer goods 14 percent. Fifty-six percent of trade flow was with the nine countries of the Council for Mutual Economic Assistance (COMECON or CMEA), the Soviet-East European trading bloc; 6 percent with other Communist countries; 26 percent with developed countries; and 12 percent with less developed nations. East Germany was the USSR’s largest trading partner among Communist countries, West Germany among developed countries, and India among less developed countries. The Soviet Union did not belong to any trade associations other than COMECON. "USSR" © Emmanuel BUCHOT, Encarta, Wikipedia.

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