chapter  7
19 Pages

Slutsky and currency emission On the question of the calculation of the income received by the

I He began by defining the key variables as follows: the total quantity of paper currency officially issued at time t, what Slutsky called major emission, was ut; the quantity of money still in transit and residing in bank cash registers, that is, not yet in actual circulation, was wt; the quantity of money at a given moment actually in circulation, that is actually circulating outside of cash registers, what Slutsky called minor emission, was mt; hence:

ut = mt + wt (1)

For any given period, for example from t = 0 to t = 1, major emission was u1 – u0 and minor emission was m1 – m0 (Slutsky, 1923a, 39). Minor emission was thus ut – wt. In the companion article published in the Economic Bulletin of the Conjuncture Institute, Slutsky presented some actual data on major and minor emission for various months across 1922 and 1923 that was obtained from the Soviet Currency Directorate. Some of this data is shown here (for illustrative purposes) as Table 7.1. This data provided an empirical indication of the duration of time that some specific portion of major emission was withheld from actual circulation. Furthermore, if pt was the real value of monetary units and it was an index of the given moment, then

it = 1 / pt (2)

or pt = 1 / it. Signifying the real value of all major emission by Ut and all minor emission by Mt, then:

Ut = ptut = ut / it (3)

Mt = ptmt = mt / it (4)

Slutsky noted that the quantity of money issued into circulation did not always coincide with the quantity actually found in circulation, even after a definite period of time had elapsed, since a small part was lost or ruined, and an insignificant part was hoarded.