In March 1917 the revolution in Russia saw the overthrow of Tsar Nicholas II and the assumption of power by the Provisional Government. In July 1917 the coalition government, led by the Menshevik Alexander Karensky, declared the Russian Republic and in October the Bolshevik Revolution launched a civil war that was to last for many years. In the far flung extremities of the former Russian Empire, people were faced with challenges to their allegiances—some supported the former Romanov regime; others opted for one of the socialist parties that formed the Provisional Government; and many supported the Bolsheviks. For some ethnic minorities, another choice was self-determination.

In Transcaucasia, the political struggle was carried out in much the same way as it was elsewhere in the former Russian empire. Transcaucasia had been an administrative region of the former empire, governed from Tiflis (Tblisi) in Georgia by a viceroy. After the overthrow of the Tsar, in answer to a call by the Provisional Government, the Special Transcaucasian Committee (OZAKOM)

was established to look after the legislation and competing interests in the region. In October the Constituent Assembly for Transcaucasia was elected and on 30 October OZAKOM was replaced by the Transcaucasian Commissariat (ZAVKOM)

, a Menshevik-controlled administration that was intended to administer Transcaucasia until the Constituent Assembly could be convened. Leaders in the Transcaucasus believed the Bolsheviks would ultimately be defeated and continued to support the remnants of the Provisional Government.

Russia remained engaged in the war against Germany during the rule of the Provisional Government and for the first months of Bolshevik administration, up to March 1918

. In Transcaucasia the struggle during this period was against Ottoman forces pressing at the borders of Armenia. With a concentration of armed forces in the region and poor communications with the central authorities, problems arose with the supply of various food stuffs and with the supply of currency. As the Ottoman forces gained the advantage, soldiers began deserting and it was believed that the ability to feed soldiers and to pay them their wages were two important factors that would stop the fragmentation of the armed forces.

Until the October revolution Transcaucasia was provided with bank notes by the central government but, by severing its ties with the Bolshevik administration in Petrograd and Moscow, the supply of currency had ceased and the Transcaucasian Commissariat fell into an unenviable financial situation. The Central Bank and Treasury branches of Transcaucasia consumed their last reserves and were unable to provide the money required by the government institutions to pay their expenses. Neither could they meet the requirements of the army and its related bodies.

Government revenue was also falling, especially with respect to the collection of local taxes, as the administration’s power was weakening and they sometimes found it difficult to impose their authority. Where people were prepared to pay their taxes they often found it difficult due to a shortage of cash. Another effect of the monetary crisis was that savings banks had difficulty in meeting the demands of their depositors. The public, facing the chaotic situation, continued to withdraw their money from the banks until, by December 1917, the banks were unable to meet their obligations to their depositors.

The Transcaucasian assembly, through initiatives suggested by finance commissar Khachatur Karjikian, desperately sought alternatives to lessen the seriousness of the situation, even if only temporary solutions might be found. The first attempt to address the problem, which lasted for only one week, was the introduction of the ‘Cheques Liquidation System’. This was intended to improve the shortage of banknotes in circulation and while it had some success, the system was only implemented in Tiflis. A similarly unsuccessful attempt was the application of previously issued government loans as a ‘debt payable to order’, as a means of payment to government contractors. The assembly, after examining all alternatives reached the conclusion that it would not be possible to provide enough money through the various schemes attempted and resolved that the only solution was an issue of paper money.

Because the political leaders in Transcaucasia believed that Russian territorial integrity would be restored in the coming months, they reasoned that all capital investments should be of a temporary nature, so that the interests of the ‘temporarily dissolved’ government should not suffer. Both a specially convened committee of experts and finance commissar Karjikian were of the opinion that Transcaucasia should not have its own particular currency system and that any paper money issued should be a temporary issue until the restoration of the Russian government.

Thus the finance commissariat considered the printing and issuing of paper money as an extraordinary and temporary measure with the understanding that the issue of the paper money would not violate the Russian currency system. Moreover, the finance commissar demanded that the local currency should be printed to the value of Russia’s financial obligations to Transcaucasia. Those obligations were calculated to be about 100 million roubles.

It was therefore understood that the paper money authorized by the Commissariat would have such a status that, if the expected political changes occurred, the Russian government would back the paper money. This view was supported by both the Armenian and other ethnic financial and industrial interests of the region.

At first there was an inclination to place the responsibility for printing the paper money with the Tiflis Autonomous Civic Authority, but this was ultimately seen as unsuitable. It was then decided that the production of the paper money would be authorized by the Transcaucasian League of the Cities. On 4 December 1917 at the Sixth Assembly of the Deputies of the League of the Cities, the decision was taken to release, in the name of ‘League of the Cities’, 50 million roubles in small bonds. (The motion to introduce the bonds was instigated by the Commissariat.) The bonds were to be guaranteed by the properties and possessions of the civic autonomous administrations.

A few days after the decision by ‘the Assembly of the Cities’ it became known that Baku’s civic autonomous authority had undertaken to print its own banknotes and that Baku refused to participate in financial and business dealings with the other cities of Transcaucasia

. This stand weakened the Assembly’s position and the Transcaucasian Commissariat, concerned at the measures implemented in Baku, decided to release the bonds in the name of Commissariat, believing this would cause Baku to refrain from its separate policy.

From 2 January 1918 the Commissariat began preparation of the bonds, although the official decision to issue them was made on 29 January. Legislation authorizing their issue was published on 4 February and the bonds began circulating on the same day.

According to the legislation the Finance Commissariat was given permission to release paper money valued at 100 million roubles as ‘Transcaucasian Commissariat Bonds’, for which acceptance was compulsory within the boundaries of Transcaucasia. The bonds served as legal tender and were decreed to be of equal value with Russian credit notes, which continued to circulate. In the legislation it was emphasized that the bonds were only a temporary measure, released until the reasons that caused the currency crisis in Transcaucasia were rectified.

At first, the Commissariat regarded Transcaucasia as an inseparable part of Russia and the solution of all important problems was dependant on the overthrow of the Bolshevik regime. However, within a short time the Transcaucasian Seim, i.e. the Constituent Assembly, was established and public opinion on the relationship with Russia beginning to change. The people and their leaders began discussing the possibility of separating from Russia.

At the beginning of April, the authorized allocation of 100 million roubles was consumed and the Seim once again found itself in difficulties. Not only did government expenditure require more currency, but the requirements of retreating troops from the front greatly concerned the Seim. The government could not ignore the troops, because increasing Bolshevik agitation amongst the soldiers presented a significant danger to Tiflis. The only remedy was a new issue of bonds and the Commissariat, on 4 April 1918, presented the Seim with a project which was immediately approved, authorizing the Finance Commissariat to issue bonds worth 200 million roubles.

Faced with the civil war in Russia and a belligerent Turkish army, Transcaucasia was declared an independent federation on 22 April 1918. The federation consisted of the three states of Armenia, Georgia and Azerbaijan. Despite the intention that Commissariat bonds would be issued at par with the Russian state credit notes, they were quickly trading at a discount. In March 1918 there was a 5% difference in the value between the Commissariat bonds and state credit notes. The variation increased to 15% on the day following the declaration of Transcaucasian independence

The Transcaucasian Federation, of Georgia, Amenia and Azerbaijan, was ill-conceived, with each of the participating states having differing allegiances. The Armenians were terrified of the Turks, having witnessed the Armenian genocide of 1915, while the Azerbaijanis had a common heritage with the Turks. Georgia was aligning itself with the Germans and encouraging their influence in the region. So, it was no surprise that on 26 May, just one month after the federation was created, Georgia withdrew from the federation and declared its independence. Armenia declared its independence a day later and Azerbaijan declared its independence on 28 May. Despite the separation, the three republics remained on good terms.

By the middle of July 1918 Armenia and Georgia were in a deep financial crisis, both unable to provide the minimum needs of the newly founded republics. It was therefore agreed by the three republics to issue a further 200 million bonds and the issue of bonds continued under joint agreements for another year

Meanwhile, the three republics had initiated the printing of their own banknotes—Azerbaijan from October 1918

, Georgia from June 1919, and Armenia from August 1919. Notwithstanding these circumstances, the circulation and acceptance of the Transcaucasian bonds remained compulsory within the three republics and the Transcaucasian bond was of equal value with the locally produced banknotes. Under the agreements by which the Transcaucasian bonds were issued, each republic had the right to reduce the circulation of the bonds in their respective republics, on the condition that only the amount which was allocated to that republic could be withdrawn from circulation.

The final agreement for the issue of bonds was on 4 July 1919 and the delivery of the notes authorized under this agreement was completed in early September 1919. Following this issue of bonds the role of the Transcaucasian Commissariat was completed. The total amount of bonds issued under the various agreements is summarized in the following table.

By the decisions of Transcaucasian Commissariat and Seim	300 million roubles
By the agreement of 20 July, 1918	200 million roubles
By the agreement of 6 September, 1918	80 million roubles
By the agreement of 15 November, 1918	160 million roubles
By the agreement of 12 February, 1919	320 million roubles
By the agreement of 7 March, 1919	200 million roubles
By the agreement of 4 July, 1919	100 million roubles
Total	1360 million roubles

The 300 million roubles printed by the decrees of the Commissariat and Seim were used for the needs of the Transcaucasian government, liquidation of the troops at the front, and for the Georgian government (during the first month following the declaration of the republic). The remaining 1060 million roubles were divided among three republics, with Georgia receiving 380 million roubles, and Azerbaijan and Armenia each receiving 340 million roubles. Thus the distribution of the bonds was not connected to the population, or the size of each republic, or the industrial output of the republics.

The following figures show the value of the bonds in circulation during the period of their issue (figures are in millions of roubles).

	Total amount of bonds in circulation	Value measured by gold roubles *
At the beginning of April 1918	92	16.7
At the beginning of June 1918	195	30.0
At the beginning of Sept 1918	402	57.4
At the beginning of Oct 1918	447	56.0
At the beginning of Dec 1918	634	52.8
At the beginning of June 1919	706	54.3
At the beginning of Feb 1919	768	46.6
At the beginning of March 1919	855	42.8
At the beginning of May 1919	1080	30.0
At the beginning of June 1919	1178	28.3
At the beginning of July 1919	1273	27.4
At the beginning of Sept 1919	1360	27.2
* The charts in this article are extracted from 'The Bonds of the Transcaucasian Commissariat' by Grigor Djaghetian. On 10 March 1924 Russia introduced a monetary reform where 1 Gold Rouble replaced 5,000 Roubles. The bonds were placed into circulation when roubles were the currency but Djaghetian’s article was written in 1927 after the monetary reform, which is why he compared the value of the bonds to gold roubles.

From these figures it is seen that the total value of the bonds in circulation, measured against the value of the gold rouble, steadily increased during the first eight months of their issue and reached a maximum value of 57.4 million gold roubles in September 1918. Thereafter, in a period of five months, with some fluctuation, the value remained around 50 million roubles. But, from the spring of 1919, when political factors imposed themselves and the Transcaucasian foreign trade balance slowly reduced, the value of bonds, in comparison with gold roubles, rapidly decreased to 27.2 gold roubles in September 1919.

The bonds of the Transcaucasian Commissariat were printed in the denominations of 1, 3, 5, 10, 50, 100 and 250 roubles. The final breakdown of all notes issued is as follows.

1-rouble bonds	3.0 million
3-rouble bonds	12.6 million
5-rouble bonds	22.6 million
10-rouble bonds	41.4 million
50-rouble bonds	226.0 million
100-rouble bonds	358.4 million
250-rouble bonds	696.0 million

By 1919, 1-, 3-, 5- and 10-rouble notes were being complemented with low value notes issued by each of the three republics. Although there was initially a strong demand for these notes, following the devaluation of the bonds and local currency the low value notes entirely disappeared from circulation.

While some of the bonds share common characteristics, there are variations in design. The title of the issuing authority is on each note in the following phrase: ‘Bond of the Transcaucasian Commissariat’. On the lower denomination notes (1, 3, 5 and 10 roubles), the word ‘Bond’ is in large letters, whereas for the higher denomination notes the word is the same size as the rest of the phrase.

There are four basic designs for the notes issued by the Commissariat—the 1- and 3-rouble notes use the same vertical design; the 5- and 10-rouble notes use similar designs; as do the 50- and 100-rouble notes; while the 250-rouble note uses a design unique to that denomination. The designs are principally patterns of an organic nature, displaying intricately woven lines, with leaves appearing as major design elements. On each note is a frieze, reminiscent of carved woodwork, and on all but the lower two denominations two doves appear in the frieze. On the 5- and 10-rouble notes, each dove looks over their shoulder and a leaf is placed between them. On the three higher denomination notes, the two doves face each and between them is a small tree.

The denomination, in numerals and words, appears on the front of each note, below which is written a declaration as to the validity of the bonds, which reads: ‘To circulate equally with state credit notes’. The year of issue, 1918, appears at the bottom of each note. There are two signatories for each bond, the ‘President of the Commissariat’ and the ‘Finance Minister’.

The signature at the left is of the ‘President of the Commissariat’, Evengii Gegechkhori. Aligned with the Menshiviks, Gegechkhori was a major political figure in the history of Georgia. He had been elected to the Third State Duma (Parliament) representing Kutaisi in 1907 and, although he was re-elected in the Fourth State Duma, he was disqualified on a technicality. After his tenure as President of the Transcaucasian Commissariat, he appears to have fallen into the milieu of Georgian politics, becoming Foreign Minister when the defeat of the Germans led to the resignation of the German-leaning foreign minister. After the Bolsheviks took control of Georgia he escaped to France, where he lived in exile.

The signature at the right is of Khachatur Karjikian, the ‘Finance Minister’. Karjikian was an Armenian politician and a member of the Armenian National Council in 1916 before becoming the minister of finance in the Transcaucasian Commissariat. While he was serving in the Commissariat he was also leader of the Dashnak party (i.e. the Armenian Revolutionary Federation). He later served as minister of finance for the Armenian Republic before being assassinated in November 1918.

All text on the front of the notes, including the signatures, is in Russian. Serial numbers are used only on the five higher denomination notes, and consist of two Cyrillic letters and four numerals. On the back of the notes, the denomination again appears in numerals and Russian text. In the lower portion of each note is a warning to counterfeiters, which may be translated as: ‘In counterfeiting bonds the guilty will undergo punishment as though they had counterfeited credit notes’. The back of each note also carries the validity clause, which appears on the front of the note (i.e. ‘To circulate equally with state credit notes’), in Armenian, Georgian and Azerbaijani texts.

The notes issued by the Transcaucasian Commissariat appear with and without watermark. It is assumed that the continued printing of the bonds in large numbers meant that some economies were made and the loss of watermark was one of the sacrifices to increased production. While the notes continued to be used in Azerbaijan, Georgia and Armenia after separate note emissions by the independent republics, they appear to have ceased to circulate after the Bolsheviks took control.

The notes of the Transcaucasian Commissariat remain a distant reminder of the fragile alliances of the peoples of the Transcaucasus and of the turmoil visited upon the region during the transition from Empire to Communist rule. Critics might say that the notes are unattractive, and it is true there is nothing particularly noticeable about the notes, but once the notes are placed in their historical context they become significant relics of a moment in history.

Note: Much of this article is based on material in ‘The Bonds of the Transcaucasian Commissariat’ by Grigor Djaghetian, written in Armenian and published in 1927. The author is grateful to Y. T. Nercessian for making the article available and to Vardkaz Mardiroussian for translating sections used in this study.