The 1991 monetary reform in Russian history is known as the Pavlovian reform. It is so called by the name of the Prime Minister of the Soviet Union, who initiated its holding. It was Valentin Pavlov. From January to April, an exchange of large denominations was carried out.
Prerequisites for reform
The initiator of the monetary reform of 1991 was directly the Minister of Finance, whose name was Valentin Sergeyevich Pavlov. It was assumed that it would be possible to use the effect of surprise in order to implement the ruble reform as efficiently as possible and to establish stable circulation of funds in the Soviet Union. This was one of the main prerequisites for the 1991 monetary reform.
Moreover, it is surprising that on the eve of this order Pavlov himself repeatedly publicly announced that he would not carry out any monetary reform. At that time, he served as Minister of Finance.
However, on January 14, Pavlov was promoted, he became the Prime Minister of the Soviet Union. So the country's leadership planned to consolidate the implementation of political and financial reforms that were supposed to stabilize the situation in the country.
Reform Goals
This monetary reform in the USSR pursued several goals. One of the priority tasks set by the government was to get rid of the excess money supply, which was in free circulation in the country. This was one of the main goals of the 1991 monetary reform. It was assumed that due to this it will be possible to deal with the deficit that has formed in the country on the commodity market.
At the same time, the fight against counterfeit banknotes, which were allegedly imported in bulk from abroad, was declared a formal reason for the monetary reform in 1991.
Most scholars and historians claim that no reliable evidence of this has been found.
Reform Terms
The decree on the actual start of monetary reform in the USSR was signed by President Mikhail Gorbachev. This happened on January 22nd. Soviet rubles issued in 1961 with a par value of 50 and 100 rubles were withdrawn from circulation. At 21.00, the signing of this decree was officially announced on Central Television. At that time, almost all stores and banks were closed. The most resourceful in the first hours after that began to exchange their banknotes in denominations of 50 and 100 rubles at the box office meters, at railway stations and taxi drivers. They took advantage of the fact that most of the drivers and cashiers who were at work did not know anything about the start of the reform.
Another part of the citizens was able to sell Soviet rubles by sending them by money transfers in post offices at stations, which, as a rule, worked until midnight. The most resourceful and dodgy bought tickets for trains and planes at a high price, for the longest distances, and after that they came to hand these tickets back and get already liquid money in their hands.
Exchange Rules
At the same time, during the monetary reform of 1991, the official rules for the exchange of cash were announced. For them it was possible to get small bills of the same year of release or similar bills of a modern type.
However, strict restrictions were placed on this exchange. Largely because of them, the 1991 monetary reform was so strongly criticized.
Firstly, the exchange took only 3 days - from January 23 to 25. The last one was Friday. In addition, it was possible to change no more than a thousand rubles per person. After these deadlines, the exchange of old bills was allowed only in specially organized commissions for this. The deadline was set until the end of March.
Savings Bank Limitations
At the same time, the amount that citizens had the right to withdraw from the Soviet Savings Bank was sharply limited. Within a month, each investor could withdraw no more than 500 rubles. In the context of the monetary reform of 1991, the inhabitants of the Soviet Union had the right to keep their savings in several cash desks at the same time. Including they could be in different cities. In order for depositors not to withdraw money above the established amount, on the last pages of the Soviet passport, employees of savings banks began to make special notes about movements on deposits - how much money the owner managed to withdraw.
On April 2, another important event occurred, which became a consequence of the 1991 Pavlovian reform. No one was warned in advance about it, so it was possible to sharply reduce the ruble exchange rate that existed at that time.
Reform Outcomes
The main outcome of the 1991 monetary reform was that the government’s plans were only partially implemented. As a result of the confiscation procedure, it was possible to withdraw 14 billion rubles in cash.
It was assumed that the effect of complete surprise would help to cope with speculators, as well as "left" incomes, smuggling, counterfeiting, facts of corruption. In fact, the main result of the reform was the almost complete disappointment of most people in their government.
Moreover, Pavlov’s reforms continued after that. Already on April 2, the USSR set new prices, which were three times higher than the previous ones. The Soviet government did this also unexpectedly.
Banknotes of a new sample
One of the first banknotes of the 1991 model was denominations of 50 and 100 rubles. They replaced the old ones, which were actively withdrawn from circulation. After that, banknotes of 1961 remained in circulation starting from 1 to 25 rubles. At the same time, metallic coins were preserved.
Over time, new 1991 bills appeared in denominations of 1, 3, 5, 50 and 100 rubles, which differed very slightly from the old ones, mainly only in shade. They did not have inscriptions in the languages of the peoples of the Union republics, as it was before, and some other nuances appeared.
Banknotes also appeared that had not been in circulation in the Soviet Union since the 1920s — at 200, 500 and 1,000 rubles. They decided not to issue a new banknote of 25 rubles.
The State Bank began issuing and issuing new coins in 1991. They also differed from the former, primarily in denomination. 10 kopecks were made of iron and covered with brass. 50 kopecks, one and five rubles were from a nickel alloy, and 10 rubles were from bimetal.
Reform creator
In the minds of most Soviet citizens, this monetary reform is firmly associated with the name of the Prime Minister of the Soviet Union, Valentin Pavlov. He went down in history as the only person who was the Prime Minister of the USSR. Before him, such a position simply did not exist, and soon after 1991 the Soviet Union simply collapsed.
Pavlov’s biography is indicative of a Soviet official. He was born in a family of a nurse and a driver in 1937. He was educated at the Moscow Finance Institute, graduating from the Faculty of Finance and Economics.
After high school, he held the position of inspector of state revenues in one of the metropolitan district executive committees, and from here began to build his career. In the early 60s he moved to the Ministry of Finance of the RSFSR. In 1986 he took the post of First Deputy Minister of Finance of the USSR. In 1989, he became Minister of Finance, in 1990 - a member of the Central Committee of the CPSU.
Pavlov reforms
Pavlov carried out many reforms. He did a lot to form a large number of institutions of the Soviet state. In particular, he participated in the formation of the tax inspectorate, commercial banks, the Pension Fund, and was also actively involved in attracting investments, participated in the creation and regulation of cooperatives and the first joint ventures.
But, of course, the majority of citizens remembered the monetary reform most of all. It is noteworthy that on the night after the announcement of this decree, Moscow switched off telephone communications. Pavlov's decisions caused great excitement, led to increased discontent throughout the country.
Another action that caused serious dissatisfaction with Pavlov’s policy in the country was a two-three-fold increase in prices for basic services and consumer goods. Because of this, Pavlov can be considered an extremely unpopular politician in the country at that time.
Participation in the Emergency Committee
Pavlov was one of the participants of the Emergency Committee. Unlike many other members of the State Committee on the State of Emergency in the USSR, Pavlov did not fly to Gorbachev in Foros. Moreover, he fell ill and assigned his duties that day to Vitaly Doguzhiev, who at that time held the post of first deputy prime minister.
On August 22, by decree of Gorbachev, Pavlov was relieved of his post as prime minister. After that, security officers were on duty at his hospital ward. On August 23, he became officially aware of his arrest; Pavlov was transferred to the Sailor Silence prison, where other members of the State Emergency Committee were by then.
The Supreme Council approved the resignation of Pavlov on August 28, this automatically led to the removal of the entire government from work. During the interrogation, Pavlov refused to admit his guilt, saying that there was simply no conspiracy.
In 1993, after familiarizing himself with the Pavlov case, he was released from the pre-trial detention center; in February 1994, he was amnestied by a decision of the State Duma of the first convocation.
Work in other positions
After his release, Pavlov took over as president of Chasprombank, leaving him after the license was revoked from the bank. In the mid-90s, he served as an adviser to Promstroibank, later was an employee of various economic institutions, and was deputy chairman of the Free Economic Society.
In 2002, he had a heart attack, but already in January of the following year he managed to return to work, actively discussed participation in the upcoming elections to the State Duma, but in March he suffered from an extensive stroke. For three weeks, doctors fought for his life, but without success, on March 30, he died. Pavlov was buried in Moscow at Pyatnitsky cemetery. He was 65 years old.
Those who personally knew and worked with Pavlov recalled that he was a professional who knew a lot about economics and finance. For example, the Russian banker and economist Viktor Gerashchenko, who four times during his career became the head of the State Bank (first twice the State Bank of the USSR, and then two more times the State Bank of Russia), wrote in his memoirs that Pavlov had a very peculiar character. At the same time, he often made decisions based solely on his personal convictions, without consulting either assistants or other specialists who were versed in this field.
This happened during the replacement of bills with face values of one hundred and fifty rubles. It is noteworthy that Gerashchenko emphasized that he knew Pavlov from the institute, where they played basketball together. Despite the fact that this is a team sport, Pavlov was an exclusively individualist in his work, he rarely listened to someone, even if there was an opportunity to get practical and useful advice. He was repeatedly criticized for this, perhaps individualism played a cruel joke with him, because many mistakes could have been avoided if he had more carefully calculated the possible consequences of his decisions.
Economic reforms in the country
The monetary reform, which this article is devoted to, became one of the first significant transformations in Russia in the early 90s. Other important economic reforms include the transition to the market that Yeltsin announced in 1992. Then, after the formation of the new government, Yegor Gaidar began to actively pursue new economic reforms .
Since 1992, Russians have learned about concepts such as voucher privatization, price liberalization, hyperinflation. In January, a decree on free trade came into force. A little later, the state program of privatization of enterprises was officially approved.
The economic policies pursued by the democrats in Russia were not approved by many and were often subjected to sharp criticism. In this regard, monetary reform, organized by Prime Minister Pavlov in 1991, became the first in the list of unpopular methods of power.