Why Did Stalin Need Torgsin?

Abstract

This chapter assesses why Joseph Stalin needed Torgsin. The analysis of Soviet foreign trade data, foreign debt, gold and currency reserves, and gold production shows a direct and tight correlation between the opening of Torgsin and the currency needs of industrialization. The year 1931, when Torgsin began its large-scale operation of buying up gold from the population, marked the high point of industrial imports. The country was deep in debt and had little with which to pay it off: exports had failed to bring in the expected currency earnings, and the gold reserve of the Russian Empire had been exhausted. The acute gold and hard-currency crisis defined the moment when the elite “for foreigners only” Torgsin began to turn into a people's enterprise. The urgent need for Torgsin was also determined by the fact that the country's gold mining industry had yet to be created.