The Pavlovian Reform of 1991: Causes, Consequences

Many remember, in what year the Pavlovian reform led to the final impoverishment of the Soviet people. It is customary to refer to it as the first and, in fact, the last Prime Minister of the Soviet Union. Let us further consider what the Pavlovian reform of 1991 was: the causes, stages, consequences of the transformations.

Situation in the country

The beginning of 1991 did not bode well for the collapsing Soviet Union. Interethnic clashes intensified on the outskirts of the country, there was a global deficit in stores, people lined up in huge queues. Economic transformations of Gorbachev did not lead to anything, perestroika did not take place. The government tried to move from a planned to a market system of management. However, the state institution was not ready for this - there were no necessary people and bodies in the country. The overwhelming majority of the population could not provide themselves with enough food and industrial goods. People are used to empty shelves. The only positive phenomenon at that time was a stable payment of a modest salary. Undoubtedly, the country's leadership understood that if they began to delay the payment of labor, this would result in mass protests. And this government could not allow it. Meanwhile, people did not demand a lot of material wealth. The population of the USSR is accustomed to restrictions, shortages, and isolation. Everyone lived from pay to pay, trying to provide their families with food, first of all with housing, and secondly with housing. In the opinion of prof. Vol'chik, the nature of the existing excess of money supply was caused by the growing dysfunctions of the institutions of the planned economic regime. Inconsistent and chaotic transformations destroyed the centralized system, but did not contribute to the formation of market regulatory mechanisms and institutions.

Why did the Pavlovian reform of 1991 begin?

There were a lot of money in the country. However, in the current crisis conditions, they constantly depreciated and turned into meaningless waste paper. As an official reason, the fight against counterfeit banknotes "thrown in from abroad" was called. In addition, the government decided to withdraw the unearned income of citizens. This formulation of the reasons was the most common for Soviet ideology. Unofficially, it was clear to everyone that the key goal was the liquidation of banknotes printed in the late 1980s. To carry out social guarantees, accumulated from the population and increasing the deficit of consumer products.

Conversion Organizer

The author of the reform was Valentin Pavlov, a 53-year-old "supporter of state capitalism," the finance minister. Since 1986, he headed the State Committee of the USSR for prices. Accordingly, he knew not the ideological, but the real state of affairs. Pavlov has long been looking for different ways of withdrawing money from the population, unsecured goods. Having occupied a ministerial post in July 1989, he constantly considered the idea of transformation. Under his plan, the reform included not only the withdrawal of excess money, but also contribute to higher prices, taking into account the cost of services and goods.

Variants of transformations

Pavlov's monetary reform of 1991 suggested several concepts. Among them were those that were previously used in other countries. Paradoxical concepts were also developed. For example, as one of the options was the introduction of "parallel money" following the example of the gold chervonets of the 1920s, but in non-cash circulation. Another concept presupposed simply confiscational cancellation of previous banknotes without exchange and an emission credit regulation mechanism. Such transformations were carried out in 1948 in Germany by Chancellor Adenauer. As a result, the "black market" was virtually eliminated . There was one more, compromise variant, according to which the Pavlovian reform of 1991 could go. Money, the compensation of which was supposed to be within a strictly fixed amount, was not especially among the people. However, the management intended to exchange with the change in the scale of the national currency. At the same time, it was envisaged to withdraw savings beyond a strictly defined amount. The minister insisted on the speedy implementation of the reforms so that the money stored not in banks, but in "pouches", people either did not have time, or could not pass in full. The Ministry of Finance did not doubt that most of the population had nothing to save from scanty salaries, and only "dishonest people" could keep staples in large bills.

Substantiation of transformations

Pavlov's reform of 1991 was to be approved by Gorbachev. To do this, it needed to be justified. Pavlov used the well-known method. In the summer of 1990, he gave a secret note to Gorbachev and Ryzhkov. In it, the minister explains the need to exchange only 50 and 100 ruble notes in 1961 c. The fact that they are exported to a large extent abroad. Ryzhkov, being at that time chairman of the Council of Ministers, requested confirmation of the customs authorities. From there it was reported that the border, as a rule, is crossed by ten-ruble banknotes, not hundreds. The discussion began, as a result of which Ryzhkov was dismissed. Gorbachev, rapidly losing popularity among the masses, needed a man who would take responsibility for the upcoming steps. Pavlov excellently approached this role. On January 14, 1991, his candidature was approved for the post of prime minister.

Cabinet management

Pavlov began his activity as prime minister with disinformation. From a high rostrum, he assured that there is no preparation for future reforms. He said that financial transformations are only part of the whole range of activities that are oriented towards improving the economy. Isolated implementation of the reform of money without solving other problems is meaningless, since it will not lead to any results. In addition, the prime minister said that the transformation would cost the economy 5 billion rubles. And at the end of his speech, he pointed out that the existing capacity at the time of issuing banknotes will allow you to accumulate the necessary amount of new banknotes within three years.

The excitement of the people

Soviet citizens, who had long been accustomed to ideological attacks of the leadership, who did not understand the essence of the market economy, still felt some kind of trick on the part of the party. The first persons of the state have already ceased to enjoy any kind of trust. Information about the upcoming reform filtered through acquaintances, so some citizens managed to change their "hundred" and "fifty dollars" in advance. On the eve of the announcement of the exchange, a part of the population managed to "exchange" cash at the ticket offices of the stations and the metro, in the shops, at the taxi drivers. However, there were only a few "lucky ones". Everyone suspected of reform, but no one knew when or how it would be conducted. Future changes were discussed everywhere: in transport, in universities, in collective farms, in industry, in the army. Most of the population came from one side to the conclusion that "there is really nothing to save," and on the other hand "they deceive all the same."

Pavlovskaya money reform: the course of "action"

On January 22, Gorbachev signed a decree, according to which 50 and 100 ruble banknotes of 1961 were withdrawn from circulation. And are exchanged for smaller new bills. From this moment the Pavlovian reform of 1991 began. The population had less money than they expected. Cash exchange in the amount of up to 1 thousand rubles. It took only three days - from January 23 to 25 (from Wednesday to Friday). At the same time, the withdrawal of money from accounts in Sberbank was limited to 500 rubles. The exchange was allowed until the end of March, but in special commissions. They considered each case of missing the deadline separately. Together with this, the citizen had to tell where he had taken the amount of more than 1 thousand. The presidential decree was read out at 9 pm, when practically all the organizations no longer worked. The most savvy citizens in the panic began to save their money. Someone urgently sent a transfer, someone bought several tickets for a plane or a train for different flights, so that they could be handed over later. However, only a few managed to do all this.

The process of exchange

The Pavlovsk reform created huge queues as early as the morning of January 23. In the cash departments of the Savings Bank there were "delegates" of work collectives, who changed banknotes of entire teams. The calculation of management on working days was partially justified. Many citizens simply did not have time to get from production to cash desks. However, in some areas the local administration was meeting the population. Exchange offices were opened in the production, in post offices. In the queues themselves there were conflicts, someone was getting sick. As a result, the Pavlovian monetary reform allowed the population to withdraw about 14 billion rubles. According to the organizers, of course, it was intended to confiscate more than 51.5 billion out of 133 billion (about 39%). Pavlov's reform, in addition, included freezing of bank savings. On these funds, 40% per annum was charged. However, they could not be received until next year.

results

The Pavlovian reform sharply reduced the national income. In comparison with 1990, it decreased by 20%. Along with this, the budget deficit has significantly increased . According to various estimates, in 1991 it was 20-30% of GDP. When the Pavlova reform was over, its organizer made accusations against foreign banks, reproaching them for coordinated activities aimed at disorganizing the circulation of cash in the USSR. In the second stage of the reforms, without any preliminary announcement, since April 2, prices for consumer products have jumped sharply in the country, despite the fact that for decades they remained at a stable level. All this led to an absolute loss of any confidence in the leadership of the party. The population considered themselves robbed twice.

Conclusion

As the results of public opinion show, the Pavlovian reform has become one of the key reasons for the failure of the coup d'état. He was known to have been taken by conservatives from the government and the Politburo of the CPSU Central Committee in 1991. It is noteworthy that among the members of the Emergency Committee there was also the reformer Valentin Pavlov. Later, he said that at that time very few people realized and believed that it was not an ideological issue that was being decided. At the end of January, the 91st population of the country said goodbye not only to the missing banknotes, but also to part of its past. People living in Vladikavkaz, who witnessed these events, and now often remember how, on January 26, a day after the general excitement, a well-dressed man with a suitcase appeared at the building of the State Bank. He opened it and poured 50-ruble banknotes into the snow and set them on fire. From the modern point of view, according to Vol'chik, this form of reform is absolutely unacceptable. However, if we evaluate the situation in the same way as the previous leadership did, then there was simply no other way of financial transformation. Almost all the reforms of the USSR differed in confiscatory character. And this "share" of the early 90's was no exception.