After the victory of the February bourgeois-democratic revolution, power in Russia passed into the hands of the Provisional Government, which represented the interests of large capitalists and landowners, determining its policy, including economic and financial. The slogan proclaimed by it, "War to a victorious end," meant for large capital that the super-profits from military supplies under government contracts flowed to the usual address. On the other hand, continuing the war was impossible without enormous financial support. The Provisional Government, which inherited a devastated economy and a state budget with a huge deficit, was forced to introduce a state monopoly on the sale of essential products and issue loans.
On March 30, 1917, a decree of the Provisional Government was published regarding the issuance of an internal state "Loan of Freedom." The bourgeois press unanimously supported it, claiming that it could supposedly reduce the rate of inflation and allegedly contributed to the withdrawal of part of the paper money from circulation and a significant reduction in its issuance. However, hopes were not fulfilled; the loan managed to raise only about 4 billion rubles, and soon the idea of a forced loan itself also failed miserably. The printing press started working at full capacity again, debts to other states grew, taxes increased, wages decreased, but money was catastrophically lacking.
Under the Provisional Government, the issuance of banknotes of the pre-revolutionary model continued. By October, their issuance volume had already reached 16.5 billion rubles. By decree of April 26, 1917, credit notes with denominations of 250 and 1000 rubles were introduced, stating that they could be exchanged for gold coins; however, the promise was delayed: paper money sharply fell in value. The 250-ruble note featured the old imperial coat of arms, but without the attributes of royal power, while the 1000-ruble note depicted the Tauride Palace in Petrograd - the meeting place of the State Duma, the first Russian parliament. Because of this, they were nicknamed "Duma money" by the people. The volume of issuance especially increased under the government of A.F. Kerensky. From August 1917, the active issuance of treasury notes with denominations of 20 and 40 rubles began, widely known as "kerensks." Interestingly, these banknotes were issued to people in uncut sheets of up to 40 monetary units. The Provisional Government also issued stamps and money with denominations of 1, 2, and 3 kopecks.
Despite the significant volumes of issuance, cash was insufficient for trade or for paying wages to workers and employees. Among the reasons for this shortage were the strikes of workers at the Expedition for the Preparation of State Papers (the then Goznak). Financial difficulties especially increased. By the fall of 1917, due to seasonal expansion of trade turnover and another wave of inflation, the production capacity of the mint was at its limit. In this regard, the government allowed the use of certain types of security coupons as legal means of payment along with bonds of military loans and the "Loan of Freedom."
At the same time, attempts were made to print money abroad. For example, credit notes with denominations of 50, 100, 250, 500, and 1000 rubles were ordered in the USA. However, they began to arrive late - in 1918 - and were not used on a nationwide scale; however, 25-kopeck, 250, and 100-ruble notes with special overprints circulated in areas under the jurisdiction of local counter-revolutionary governments in Transbaikal and the Far East.
Confusion and chaos were introduced by stamps, checks, and bonds, which were abundantly issued by local authorities, individual organizations, and enterprises, and had limited circulation. A consortium of 30 largest Petrograd and Moscow banks planned to issue its own money, but the venture ultimately failed. An unstoppable process of disintegration of the unified monetary system of Russia began, contributing to a new surge of inflation. After seizing power, the Bolsheviks set one of their main tasks as taking control of the monetary and credit system. The State Bank was seized, and its internal structure underwent significant restructuring. By November 30, 1917, the Soviet government was able to obtain the first 5 million rubles to finance its activities, and shortly thereafter, by a special decree of the All-Russian Central Executive Committee (VTSIK) dated December 14 (27), 1917, "On the Nationalization of Banks," the entire network of private commercial and joint-stock banks also came under its control. This decree also introduced a state monopoly on banking. All internal and external loans of previous governments were annulled - totaling 36.2 billion rubles.
In general, the young government acted quite decisively. Now, it faced the task of conducting a monetary reform. Lenin was the ideologist of this reform, and the main directions of the project were reduced to three provisions: unconditional financial centralization, universal labor duty with a regularly collected progressive tax, and finally, a refusal to issue paper money. In the course of the monetary reform itself, it was proposed to exchange old banknotes for new ones at a special rate.
It should be noted that despite certain successes, the government faced significant financial difficulties due to the sabotage of bank employees and workers at the Expedition for the Preparation of State Papers. Money reserves dwindled, and their remnants were transported with great difficulty due to the devastation on the railways. In the provinces, for this reason, purchases of food and all types of monetary payments were halted. Urgent and constant replenishment of the financial reserves of the People's Bank of Russia was necessary.
By decree of the VTSIK dated January 21 (February 3), 1918, five percent short-term obligations of the State Treasury with denominations of 1000, 5000, 10000, 25000, 100000, 500000, and 1000000 rubles were equated to credit notes. These securities were prepared by the Ministry of Finance even before the revolution. Other types of securities also entered circulation. In total, about fifty groups of coupons and three groups of securities were launched into circulation. Their use as monetary signs continued from 1918 to 1922.
Having slightly alleviated the monetary hunger, the government intended to start a serious reform, but the relatively peaceful period of the revolution came to an end. A whole series of major capitalist states - England, Germany, the USA, France, and Japan - went to war against the new republic. The internal opposition - the White Guards - also rose up in armed struggle. The Civil War began, accompanied by an economic blockade.
The Soviet government had to switch to "war communism." Now, commodity exchange between the city and the countryside was carried out practically without money. Natural exchange replaced them, and from January 1919, the predatory grain requisitioning for peasants spread across the entire territory of the country. The payment for the use of mail, electricity, telegraph, water, and fuel by Soviet institutions was abolished. The wages of Soviet employees and workers also took on a natural character, but the state provided them with apartments, communal services, transport, etc., free of charge.
Buying and selling using monetary signs existed practically only in the "free" market, where prices rose fantastically. In January 1920, retail prices in Moscow markets rose more than 6,000 times compared to 1913, and a year later, they had already risen 30 (!) thousand times. The People's Bank effectively lost its credit and control functions, and by the decree of the Council of People's Commissars (SNC) dated January 19, 1920, it was abolished. In the People's Commissariat of Finance, three departments were formed: budgetary-calculation, tax, and central office. A number of Soviet economists and politicians believed that it was precisely through "war communism" that a transition to "true communism" could be made. Money, in their opinion, was dying, and there was no need to cling to it.
The Bolsheviks relied on the labor enthusiasm of the masses, not on the personal economic interest of workers in the results of their labor, which soon led to public discontent. A wave of riots swept across the country. Peasants from Tambov, Ukraine, and many other places rose up to defend their rights. The so-called Kronstadt Rebellion was a reaction to the policy of "war communism."
It is likely that the government's actions could be justified under the conditions of intervention and civil war, but in a peaceful life, they were completely inadequate. Moreover, there were no conditions for the abolition of money and trade, for a transition to direct distribution according to needs in the country. There was only one way - a civilized one: a full restoration of trade and monetary relations, the elimination of equalization, the introduction of economic accounting, and the orientation of production towards profit. But for this, one crucial detail was missing - a stable monetary unit. The active issuance of high-denomination banknotes significantly increased the share of Soviet money in the overall mass of means of circulation and payment. However, due to the shortage of monetary signs, the government in some cases allowed the printing of banknotes locally. Thus, in Central Asia, the monetary signs of the Bukhara and Khorezm People's Republics were in circulation. At the same time, some emissions in these republics were conducted directly with the sanction of the RSFSR Government, which was taken into account in the overall volume of money issued by the state.