issue limits of paper money have been extended three times, and the new issues have no gold reserve back of them. Yet it is not considered advisable to change at the present time the existing law concerning the size of the gold reserve that must correspond to the paper money in circulation. Moreover, it is evident that the resumption of specie payment and the return of the money circulation to its normal conditions would be possible immediately after the War, only if the general economic and financial conditions in the country are favorable. And these conditions depend upon the rate at which the Russian industrial and commercial life will develop when peace is again restored. This is inseparably connected with the regulation of money circulation, for an increased volume of national business would use up the surplus currency.
In commenting upon the proposal of the Ministry of Finance, the Petrograd "Messenger of Finance" says: "The main problem of Russia's economic policies in the future lies in the possibility of a rapid development of her productive forces. But there is another important problem that stands now before the Ministry of Finance. It is the problem of returning to the Treasury by means of suitable credit operations as large an amount as possible of the paper money now issued, so as to manage to cover the military expenses with as little an amount of new paper money as possible. Taking into consideration the comparatively small capacity of the Russian money market, as compared with the capacities of the richer European markets, a considerable part of the government credit operations has to go through the State Bank, largely in the form of its discounting the short-term term treasury obligations. However, the recent statistics show a noticeable growth of deposits in our savings banks. Thus the accumulation of capital, and consequently an increase in the capacity of the home market, are constantly going on, despite the War, and it is well to begin now the funding of the short-term treasury bonds. Since the withdrawal of these bonds will bring back to the State Bank very large amounts of paper money of recent issues, it would seem that it would be advisable to establish a connection between the issue of these bonds and the paper money circulation. This would mean that the paper money issued would be guaranteed by, and be in exact correspondence with, the short-term treasury bonds, which form the real basis and cause of its issue. In other words, the paper money not covered by a gold reserve would be
