V. I. Lenin

Report To The All-Russia
Congress Of Representatives
Of Financial Departments Of Soviets [1]

May 18, 1918

The country’s financial situation is critical, The problem of transforming the country on socialist lines offers many difficulties that al times appear insurmountable, but no matter how arduous the work that at every step meets with the resistance of the petty-bourgeoisie, the profiteers and propertied classes, I think we shall have to carry it out.

You experienced, practical people know better than anybody what difficulties have to be overcome in advancing from general assumptions and decrees to daily practice. We have tremendous work ahead of us, because the propertied classes will put up a desperate resistance, but the more difficult the task, the greater the benefits when we have conquered the bourgeoisie and subordinated them to the control of the Soviet authorities. Our tasks are such that it is worth while working and fighting the last decisive battle against the bourgeoisie, for the success of the socialist re-form of the country depends on the fulfilment of those tasks.

The basic tasks presented by the Soviet government in the field of finance must be immediately put into effect, and this meeting we are holding with you will help towards ensuring that our planned reforms do not remain mere declarations.

We must effect sound financial reforms at all costs, and we must remember that any radical reforms will he doomed to failure unless our financial policy is successful.

In the name of the Council of People’s Commissars I draw your attention to the tasks that have come to the fore at a large number of meetings and ask you to work out the details of their practical application. The tasks are the following.

Centralisation Of Finances

The centralisation of finances and the concentration of our forces are essential; unless these principles are applied in practice we shall be unable to carry out the economic reforms that will provide every citizen with enough to eat arid the possibility of satisfying his cultural needs.

The need for centralisation is now reaching the consciousness of the masses; this change is taking place slowly and for this reason it will be more extensive and more profound; an urge towards decentralisation is to be observed, but it is a disease of the transitional period, a disease due to growth, and is quite natural because the centralism of the tsar and the bourgeoisie engendered hatred of and disgust at all centralised authority among the masses.

I regard centralism as the means of providing a subsistence minimum for the working people. I am in favour of the broadest autonomy for local Soviet organisations but at the same time I believe that if our work of consciously transforming the country is to be fruitful, there must be a single, strictly defined financial policy, and that instructions must be carried out from top to bottom.

From you we expect a decree on the centralisation of the counlry’s finances.

Income And Property Taxation

The second task confronting us is the correct organisation of a progressive income and property tax. You know that all socialists are against indirect taxation because the only correct tax from the socialist point of view is the progressive income and property tax. I will not conceal the fact that we shall meet with tremendous difficulty in introducing this tax-the propertied classes will put up a desperate resistance.

The bourgeoisie are today evading taxation by bribery and through their connections; we must close all loopholes. We have many plans in this sphere and have cleared the ground on which to build the foundation, but the actual foundation of that building has not yet been built. The time for this has now come.

Decrees alone will be insufficient to put the income tax into effect; practical methods and experience will be needed.

We assume that we shall have to go over to the monthly collection of the income tax. The section of the population receiving its income from the state treasury is increasing, and measures must be taken to collect the income tax from these people by stopping it out of their wages.

All income and earnings, without exception, must be subject to income tax; the work of the printing press that has so far been practiced may be justified as a temporary measure, but it must give place to a progressive income and property tax that is collected at very frequent intervals.

I should like to ask you to work out this measure in detail and draw up practical and precise plans that can be incorporated in decrees and instructions in the shortest time.

On the question of indemnities, Lenin said:

I am not against indemnities in general; the proletariat could not destroy the bourgeoisie without resorting to indemnities; it was a correct measure in the period of transition, but now that period is past and the taxation of the propertied classes must be replaced by a single, centralised state tax.

There is no doubt that the bourgeoisie will try with every means in their power to evade our laws and indulge in petty frauds. We shall struggle against that and in the end we shall defeat what is left of the bourgeoisie.

Labour Conscription

The third aim of our financial policy is the introduction of labour conscription and the registration of the propertied classes.

The old capitalism, based on free competition, has been completely killed by the war-it has given way to state, monopolised capitalism. Because of the war, the advanced countries of Western Europe, Britain and Germany, have introduced strict accounting for, and control of, all production; they have introduced labour conscription for the propertyless classes but have left many loopholes open for the bourgeoisie. We must apply the experience of these countries, but must introduce labour conscription primarily for the propertied classes who have grown rich oil the war, and not for the poor people who have already made more than enough sacrifices on the altar of war.

The time has come to introduce labour taxation-’ budget books primarily for the bourgeoisie so that it will be possible to see what amount of work each of them devotes to the country. Control must be maintained by the local Soviets. This measure is at present quite superfluous as far as the poor are concerned since they already have to work enough; furthermore, the trade unions will adopt all the necessary measures to increase labour productivity and introduce labour discipline.

The registration of all propertied people and a law compelling rich people to have work, taxation and budget books-this is something we have to settle immediately. It must be worked out practically and concretely and is a measure that will enable us to place the burden of taxation on the rich, which is only just.

New Currency

The fourth task of the moment is the substitution of new currency for the old. Money, banknotes-everything that is called money today-these titles to social well-being, have a disruptive effect and are dangerous in so far as the bourgeoisie, by hoarding these banknotes, retain economic power.

To reduce this effect we must undertake the strict registration of all banknotes in circulation in order to change all old currency for new. It is beyond all doubt that in putting this measure into effect we shall come up against terrific economic and political difficulties; the preparatory work must be thorough-several thousand millions in the new money must be ready; in every volost, in every block of every large town, we must have savings banks, but these difficulties will not make us hesitate. We shall announce a very short period in which everyone must declare the amount of money lie possesses and obtain new currency for it; if the sum is a small one he will get ruble for ruble; if it is above the established limit he will get only part of it. This is a measure that will undoubtedly meet with counteraction, not only on the part of the bourgeoisie, but also on the part of the kulaks in the countryside who have been growing rich on the war and burying thousands of banknotes in bottles. We shall come face to face with the class enemy. It will be an arduous but rewarding struggle. Among us there is no doubt as to whether we have to take upon ourselves the full burden of this struggle, since it is necessary and inevitable. Tremendous preparatory work will be necessary to effect this measure; we must draw up a type of declaratory leaflet, we must develop propaganda in the localities, fix a time for the exchange of old money for new, etc. We shall, however, do it. It will be the last decisive battle with the, bourgeoisie and will enable us to pay temporary tribute to foreign capital-until the hour of the social revolution strikes in the West-and carry out the necessary reforms in the country.

In conclusion Lenin, speaking in the name of the Council of People’s Commissars, wished the Congress success in its work. (Lenin’s speech was interrupted more than once by enthusiastic applause.)

Endnotes

[1] First All-Russia Congress of Representatives of the Financial Departments of the Regional, Gubernia and Uyezd Soviets was held in Moscow, May 17-21, 1918. It was attended by 230 delegates. The following subjects were on the agenda: reports from the provinces; general financial policy; local finances; banks, treasury and tax inspection; correct use of credits; organisational problems.

Lenin spoke at the evening session on May 18. The propositions in his report on the tasks of Soviet financial policy formed the basis of the resolution moved by the Communist group at the Congress; the resolution was accepted by the majority. of delegates. The Left Socialist-Revolutionaries moved a resolution of their own but after the debate withdrew it and voted for the communist resolution. The Congress gave a commission of six people the task of drawing up together with the Commissariat for Finances as quickly as possible a number of decisions: on a progressive income tax and a general property tax "on the basis of Comrade Lenin’s theses"; on a system of indirect taxes based on state monopolies; on centralisation of taxation and banking; on reform of the currency; on the "uniform centralised organisation of the whole (local and central) apparatus of financial administration".