To-day the State Bank is much less of a bankers' bank than it was before the war. It continues as before to make both long and short-term advances to industry (the ratio between the two being roughly 1:4) and to government departments. But the proportion of its credit operations which is transacted through intermediary credit institutions is much smaller—some 15 per cent as against 5o per cent. In recent years its branch system has expanded fairly rapidly, and it now possesses some Soo local branches. In addition to the State Bank itself there are several other important credit institutions, which perform very similar functions to the joint stock commercial banks before the war.
Most important of these is the Bank for Industry and Trade, which was chartered in October 1922 with a capital mainly sub scribed by the Supreme Economic Council, the Commissariat of Trade and various industrial Trusts and Syndicates. In addition to ordinary bill-discounting and short-term advances, in May 1926 it opened a special department of long-term credits for the purpose of financing capital development in industry. Of the total credit operations it is responsible for about a tenth, and some authorities have desired to make it the main institution for the financing of industry, with the State Bank retiring to the position of a rediscount bank, dealing with industry, not directly, but by financing intermediary credit institutions. Trade is largely financed by the All-Union Co-operative Bank, the Ukrain ian Co-operative Bank and the Bank for Foreign Trade (which also holds investments in subsidiary institutions abroad such as the Bank for Russian Trade in London and the Banque Com merciale pour l'Europe du Nord in Paris). Agriculture is served by some 12-13,00o autonomous local societies of co-operative credit, which in return receive aid from the Central Agricultural Bank. There are also various municipal banks, engaged in financ ing municipal enterprises and local industry; while the Bank for Electrification is mainly a bank of long-term credit, designed to facilitate investment in electrical construction. Private capitalists stand at a disadvantage as against State organs or "mixed corn panies" in securing accommodation from the State banks; and they have organised credit associations of their own.
On the other hand, basic metal production, which had been most devastated by the civil war and was more difficult to reconstruct, still lagged behind the pre-war standard by some 2o-3o per cent. At the same time agricultural yield had recovered to within per cent of the average pre-war standard, and the sown area to a slightly larger extent. But of greater significance than the total yield is the fact that the quantity of agricultural produce placed on the market, and available for the towns and for export, is still scarcely more than three-quarters, and of grain hardly more than half of the pre-war amount, since a much smaller pro portion of the total harvest is now sent for sale outside the village than before. This situation is illustrated by the figures given by the Central Statistical Department in the accompanying table. The causes of this decline in the marketable surplus are prob ably several. First is the disappearance of the old landlords' estates, which formerly produced a fifth of the marketable surplus —a deficiency which is as yet far from being repaired by the growth of State farms. Second is the greater equalisation of land-holdings in the village, coupled with the lighter burdens of rent, taxes and mortgages, which mean that the average standard of life of the village has probably been raised and the village to day is consuming a larger proportion of its own produce. Third is the fact that the ratio between the price of industrial goods and of agricultural goods has changed since the war to the disad vantage of the latter, so that for each bushel of grain the peasant only procures in exchange a smaller quantity of textile or leather goods, of oil or metal or salt or sugar than he did before the war. (This is, indeed, a world-wide phenomenon.) This "gap" between the two sets of prices has been called "the scissors"; and while it is to-day much smaller than it was during the famous "scissors crisis" in 1923, it still remains considerably wider than before the war. (In wholesale prices the "scissors" has almost disappeared; but in retail prices it still remains.) This shrinkage of the marketable surplus has had its effect primarily on grain exports, which in recent years have been be tween a fourth and a fifth of their pre-war amount ; and since in the last few years town consumption (with the rise of wages) has increased faster than the supply of grain, the exportable surplus of grain has tended to decline rather than to increase. The effect on Russia's total export capacity would have been more serious, had not the export of certain other commodities, such as oil, been expanded. But the grain situation, coupled with strained political relations abroad and the absence both of any appreciable foreign interest payments or foreign borrowings, re mains the principal cause of the diminished foreign trade turnover, which is little more than a quarter of the pre-war amount. As a result Russia is seriously handicapped in obtaining by import the machinery and raw materials that she requires.