By late 1946 these reshufflings had evened out the balance of power among Stalin’s associates. The firings, demotions, and public humiliations more or less restored the structure of top government that had existed before the war. Stalin could now leave his associates in relative peace as he dealt with the country’s pressing economic problems.
Militarization, physical devastation, famine, an inefficient ration system, crippled agriculture, a degraded social infrastructure, and a reliance on compulsion in mobilizing the labor force—such were the features of the postwar Soviet economy. War’s toll was, of course, reflected in the sorry state of the budget. The government had financed the war’s huge costs primarily by printing money. The predictable result was spiraling inflation. Something had to be done about the excess currency circulating through the economy. To reduce the amount of money in circulation, the Soviet leadership ordered new rubles printed and old rubles devalued.
In his memoirs, the wartime finance commissar, Arseny Zverev, states that by late 1943 he had already discussed such measures with Stalin.42 Evidence that the finance commissariat was planning for currency reform so early can also be found in the archives. Toward the end of 1943 it was decided that the reform would be introduced after the war by reducing the buying power of the ruble through increased prices, exchanging old rubles for new ones, and abolishing the ration system.43 This is largely the program that went into effect a few years later.
Now that the war was over, the problem of stabilizing the country’s finances and doing away with rationing took on tremendous political importance. Doing away with ration cards even more quickly than in capitalist countries would demonstrate the advantages of socialism. The reform measures were planned for 1946, but the famine forced a delay. Throughout that year, Finance Commissar Zverev sent Stalin several memoranda on the upcoming reforms. Judging by Stalin’s notations on these documents, he took a great interest in the topic.44 As preparations reached their final phase, Zverev had frequent face-to-face meetings with the vozhd. According to the log of visitors to Stalin’s office, during the period leading up to the reform’s introduction on 14 December 1947, Zverev was there thirteen times.45
Finally, on 13 December 1947, the Politburo voted to approve the main documents instituting the currency reform and abolishing ration cards. It was stipulated that the measures would be announced over the radio at six o’clock in the evening on 14 December and in newspapers the following day. Overnight, between 14 and 15 December, the population was deprived of a significant portion of its savings. For every ten rubles people had in their possession, they would now receive one. There was a more complex system to deal with bank deposits. Accounts with under three thousand rubles were not affected, but those with three to ten thousand rubles would be compensated at a rate of two new rubles for every three old ones. Deposits over ten thousand rubles were compensated at a rate of one to two.
The Politburo was fully aware that the reform would not be popular. A large part of its resolution, which was intended for publication, was devoted to a detailed explanation of the move’s necessity, utility, and fairness. Keenly in tune with widespread prejudices, the text asserted that the reform would hit hardest at “speculative elements who have amassed large stores of money.” This assertion was false: the most well-off Soviet citizens were in the best position to convert their cash into other forms of wealth. Nevertheless, the idea that the currency reform was a means of confiscating ill-gotten gains proved extremely popular. As usual, the resolution did not neglect to mention the financial hardships faced by the toiling masses in capitalist countries. Its wording suggests that Stalin played an active role in drafting it. Among the revisions made in his handwriting is the added promise that this would be the Soviet people’s “final sacrifice.”46
Major reforms are always fraught with difficulty. The new rubles began to be printed in 1946 for introduction at the end of 1947, but at first a high percentage proved defective. To maintain secrecy, the new money was not delivered to Gosbank branches, of which there were many, but to specially set up storage facilities evenly distributed around the country. The new rubles were transported in special, heavily guarded train cars. Finally, when it came time to exchange rubles, in addition to regular Gosbank branches, 46,000 exchange points were set up, for which 170,000 workers were hired.47
No amount of secrecy, of course, could hide such a major operation from public view. Rumors began to spread and became more persistent after salaries and pensions for the second half of November were paid ahead of schedule. Overall, however, the public did not know what the reform would look like. Spurred by contradictory rumors, people scrambled to save their nest eggs. At first the panic affected purchases of durable goods and valuables. On 29 November 1947, Internal Affairs Minister Sergei Kruglov reported to Stalin that customers were flooding stores to buy manufactured goods and crowding into banks to withdraw their savings. Store shelves were emptied, and even items for which there had previously been no demand disappeared. Stores sold out of furniture suites going for tens of thousands of rubles—huge sums, given that the average annual salary for laborers or office workers was approximately 7,000 rubles. One suite costing 101,000 rubles that had languished on the showroom floor for years now had four competing buyers. Customers bought furs, fabrics, watches, jewelry, pianos, and rugs.48 On 30 November Kruglov reported that hundreds of people had lined up outside Moscow’s department stores before opening. People from neighboring oblasts flooded into the city. Huge lines of up to five hundred people formed outside savings banks. After two days of this buying frenzy, the authorities decided to take action. Kruglov informed Stalin that most stores had been closed under the pretext of renovation or taking inventory. The stores that remained open removed valuable items such as gold jewelry from sale. And some were forced to shut their doors because they had nothing left to sell.49