An Estimate of the Tax Element in Soviet Bonds.

It has long been common knowledge among students of Russian affairs that government sale of bonds to the Soviet population is not accomplished on a completely voluntary basis. To the extent that sales are compulsory, of course, a tax element is introduced. The use of compulsion by a government to achieve economic ends can usually be defined as involving a tax upon individuals, though typically the relationship is not as obvious as in the case of forced loans. A method of estimating the amount of tax in the case of Soviet forced loans is indicated below. The Soviet so-called mass-subscription loans have been sold to workers and peasants at their places of work since 1927. Payment is typically made in 10 equal monthly installments in the form of wage-withholdings. Bonds pay a nominal annual interest return which amounted to 13 per cent in 1927 but which has steadily declined and stands now at 2 per cent. Since the early thirties the interest on bonds has been discharged primarily in the form of lottery winnings. In the thirties, everyone was the winner of at least one lottery during the life of the bond. Today, only one out of every four bond-holders wins a lottery prize but it is a much larger prize the rest receive back their principal at the end of 20 years with no interest.