88 REFORM OF RUSSIA'S FINANCES AND CENTRAL ADMINISTRATION
consent to its implementation. The first legislative measures baaed on
Speransky's plan were issued in February 1810. The proposals and
arguments for the reform of Russia's monetary and financial condition
which Speransky presented marked a turning point in the history of
Russian financial administration and thinking on economic matters
and they deserve to be considered in some detail.
Appraising the situation created by several decades of financial
disorder and of uncontrolled emission of paper money, Speransky points
out in his Plan that all the burden falls on the Treasury of the Empire
and on those who stand in direct obligation to it as creditors and tax
payers. Obviously, the quickest and simplest method of solving the
problem would be to buy back all the assignats; but this has now
become impossible. Another suggestion has been made, namely to back
the assignats with state lands. But this solution is equally unadvisable
as the experience of the United States has shown, for fluid capital
cannot be based on real estate. After all, it is not only a question of
withdrawing from circulation the excessive amount of assignats over-
night. The real problem consists in basing the financial system firmly
upon the economic potential of the country. The foundation of a sound
financial system, in Speransky's belief, consists in an easy availability
of capital for the normal requirements of the national economy. "In
every state," he writes in the Plan of 1810, "and in particular in a
state which has more capital in goods than in money, the task of true
economy demands a speeding up of the circulation of monetary capital,
so that its smallest amount makes possible the fastest and largest
turnover; i.e. true economy demands that metal species be represented
by notes of credit. The qualities of all notes of credit are proportional
to the capital on which they are based." 1 Therefore, paper money
based on silver must be issued in proportion to the availability of
silver bullion, otherwise speculation will destroy its basic function. As
for copper money, the other currency in use at the time, it should
serve only as means of exchange for fractions of silver, and its value
can be determined only on the basis of experience.
The capital needed by the state to support the instruments of credit
and exchange is obtained through taxation. But what can serve as the
basis of taxation, what can produce taxable wealth? "Any labor which
brings in a net yearly income can be the object of taxation," answers
Speransky. 2 But not all of this potential capital can be tapped by the
1 Speranskii, "Plan Finansov," Sbornik [RIO, XLV (1885), p. 31 (italics are
Speransky's), d. also pp. 32-33.
2 Plan Finansov, p. 36.