History of bonds in the USSR, their role in the development of the country's economy

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The first bonds of the USSR were issued in 1922. The Soviet government was forced to look for funds to restore industry and agriculture, destroyed during the First World War and the Civil War. Foreign investors were in no hurry to invest, and international banks were in no hurry to lend. The country's economy was in ruins. Money was urgently needed. The only one who could give them was the people.

What types of bonds existed

USSR government bonds were issued in two forms: interest-bearing and win-win. For the first type, a percentage of 3-4% per annum was paid, for the second, annual drawings were held. The bond in this case was something like a lottery ticket. Payments were made only for the security whose number turned out to be winning.

The term for the full repayment of the state's debt to citizens was 20 years. Naturally, no one believed that the state would give at least something for them, and subsequent markdowns and revaluations further undermined the belief that at least some money would be paid. Nobody perceivedUSSR bonds as a financial instrument for the accumulation and preservation of capital.

Who was the main buyer

Buying bonds was originally forced in fact, but was considered voluntary legally. The first who were obliged to buy government bonds of the USSR were small and medium-sized entrepreneurs (NEPmen), large landowners (they were not yet driven to collective farms), and workers at enterprises. The very first securities were issued for agricultural products and industrial products. After the restoration of the monetary system, bonds were sold for money.

Paper was bought because it was mandatory (many weren't even asked, they automatically deducted the amount from their salary). They took it as another tax levy. Therefore, there is practically no judicial practice in the Russian Federation regarding non-payments on USSR bonds. The only lawsuit in Russian history took place in 2006 over bonds issued in 1982. The verdict was in favor of the state, which is understandable. The Russian Federation is not able to pay all the debts that were made by the Soviet Union to all holders of securities.

Issue periods

The state resorted to this tool not constantly, as some people write. It was more of a forced measure than a desire to once again rob the population. Therefore, there is nothing surprising in the fact that the dates of the beginning of the issue coincide with the tragic moments in the history of our Motherland. Loan bondsUSSR produced in the following years:

• 1922-27 after World War I and the Civil War. The already weak economy was almost completely destroyed. Money was needed for its restoration and development.
• 1927-41 - accelerated industrialization. More than 1,000 enterprises are built in the country a year. The USSR becomes an industrialized country. Proceeds from the sale of bonds are also used to buy machine tools and patents.
• From 1942 to 1946 - the period of the active phase of the war. To develop and consolidate success, you need as much military equipment and ammunition as possible. Bonds were bought up like hot cakes. To defeat the Nazis, the people spared neither money nor effort. In 1942, the amount of securities sold exceeded 10 billion rubles in the first 2 days of the issue alone.
• 1946-57 After the war, there was an urgent need for money. Half the country lay in ruins. Funds were needed for restoration.
• 1957-89 Bonds are used as a savings instrument. Citizens' capital is used in the formation of the state budget.

There were periods when the state extended the repayment periods for several years. Securities depreciated. Despite such measures, there was no outrage. Everyone was well aware that the money goes to the benefit of society, and does not settle on the accounts of officials in foreign banks.

Where the proceeds went

Funds from their sale went to the restoration and development of the country, improving the lives of ordinary Soviet citizens. Enterprises were built and new jobs appeared. Goods were producedpopular consumption. The Soviet economy grew. People received salaries, the level of well-being increased.

Conclusion

Whether the state acted well or badly by not paying in full its debts to the citizens to whom it “sucked” junk bonds is still a moot point. Some people think it's wrong. Others - that there was nothing of the kind, and all holders of securities received funds in full. Although witnesses of those times say the opposite. But without the material assistance of the common people it would be impossible to carry out industrialization, ensure victory in the Second World War and the subsequent restoration of the country. With the proceeds from the sale of bonds in the USSR, they built houses, hospitals, railways, factories.

As far as the actions of the government were justified, judge for yourself. But no matter what assessment a contemporary makes, nothing can be changed in the past.