Cornell University Press

Torgsin and Stalin’s Quest for Gold

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At the end of the 1920s, the USSR, under Stalin’s leadership, launched an ambitious industrialization project while having no gold and currency reserves. The government feverishly sought gold to pay the tremendous foreign debts acquired to purchase foreign equipment, materials, the aid of specialists, and technologies. State-run currency stores called Torgsin (1930-1936) became one of the major sources of revenues.

Initially, only foreigners were allowed to shop in Torgsin. In fact, its name is the Russian acronym for The All-Union Organization for Trade with Foreigners. However, the acute demand for hard currency forced Stalin to open, in 1931, Torgsin stores to Soviet citizens who could purchase food and goods in its stores in exchange for tsarist gold coins and objects made of precious metals and gemstones, as well as foreign monies. After Torgsin opened its doors to Soviet customers it began to grow at lightning speed. It was no longer an insignificant trade office with a few stores but had expanded to 1500 stores across the country and had special representatives abroad.

Torgsin was a capitalist enterprise of socialist trade. The government opened Torgsin to Soviet people not to save them from starvation but to capitalize on the famine.

How can the rapid growth of Torgsin be explained? It was more than just the regime’s drive for gold that contributed to it. Torgsin’s growth to a larger degree was a result of the severe food crisis and mass famine in the USSR (1932-1933). People had no choice but to take their family heirlooms to Torgsin. The tragic year of the mass famine, 1933, stands out as the period when the Soviet people brought to Torgsin almost as much gold as was produced by the state gold mining industry (forty-five tons and 51.3 tons of pure gold, respectively)

During its short existence, Torgsin procured valuables worth close to 300 million gold rubles—the equivalent of 220 tons of pure gold (based on Torgsin’s purchasing prices). This largely compensated for the squandered, during the first years of Soviet power, imperial gold treasury, substantially supplemented the earnings of stalling Soviet exports, and paid off a significant portion of the industrial imports of those years.

In its pursuit of gold, the Soviet government in Torgsin rejected sacred postulates of Marxism including the principles of class approach, the market-less economy, and state currency monopoly that prohibited to use gold and foreign currency as the means of payment within the country. Driven by the state’s hunger for gold, Torgsin advertised in the capitalist West, encouraging foreigners to purchase goods for their relatives and friends in the USSR; and its seaport shops and restaurants operated semi-legally as brothels, inducing foreign sailors to spend hard currency for Soviet industrialization.

In its pursuit of gold, the Soviet government in Torgsin rejected sacred postulates of Marxism including the principles of class approach, the market-less economy, and state currency monopoly that prohibited to use gold and foreign currency as the means of payment within the country.

Torgsin’s story highlights the complexity and contradictions of Stalinism. Torgsin was a capitalist enterprise of socialist trade. The government opened Torgsin to Soviet people not to save them from starvation but to capitalize on the famine. The prices Torgsin paid to people for their valuables were substantially below world market prices while its sale prices for food and goods on average were more than three times higher than the Soviet export prices. Torgsin’s sale prices for food reached their peak during the winter of 1933—the apogee of the famine when millions were dying from hunger in the USSR.

Examining Torgsin from multiple perspectives—economic expediency, state and police surveillance, consumerism, interior design, and personnel—Stalin’s Quest for Gold transforms the stereotypical views of Soviet economy and enriches our understanding of Stalinism and everyday life in Soviet Russia.

*Featured photo: shows a part of Torgsin’s brochure and price list (1935) printed in English to advertise its activities abroad. The brochure encourages foreigners to order parcels through Torgsin for their relatives and friends in the USSR.

Cover of Stalin's Quest for Gold
Cover image of Stalin’s Quest for Gold.
Read more about this book.

Elena Osokina is Professor of Russian History at the University of South Carolina. She is the author of books in Russian, Italian, Chinese and, in English, Our Daily Bread.


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