International  Bank  Note  Society  Journal
Volume 36 ,No.2, 1997

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Wild" Capitalism in Russia

  by M. Istomin, I.B.N.S. #6811

On January 1,1992 the Government in Russia, headed by Egor Gaidar, started sweeping reforms in the country. The first and most impor­tant step was liberalization of prices, i.e. an authorized jump of prices. Standard measures typical for all countries in transition from "social­ism" to a free market society were undertaken. Among them was the free formation of companies, firms with  their  main  purpose being to obtain profit for a group of private individuals or for one person. The process was not quick due to the fact the country had not known of such ideas for more than 70 years. It is only natural that Moscow became the pioneer of the developments for many reasons, one being that it is a center of bureaucracy, i.e. of power. Wealth has been distributed in and from Moscow.

From the very beginning the legislative base for the reforms was not prepared. Many things were just improvised. Due to loopholes in the law/ many companies were set up (not only in the Russian Federation) whose main aim was to attract investment from the population without any intention of giving the invested money back. The people (investors) thought that becoming rich or prosperous was a simple thing—just give resources to those promising high dividends. Ofcourse, not all the companies intended to deceive the investors.

Such entities in Russia in the period 1993-1994 could be divided roughly into three groups: a) trading or industrial companies promising high dividends at the end of the year or a certain period - from their own activity, or trust companies -from the activity of the firms where the money was invested, or both, b) insurance companies insuring the money against inflation!!!!!!, and c) banks.

MMM belonged to the first type of company, functioning in Moscow during 1994. Of course, there were many others. MMM was immensely popular among the population due to very aggressive advertising and the prevailing mood of the people. It should be noted that MMM finan­cial instruments were self rated (for buying and selling, always up) by the company. In August 1994 it went bust under pressure from the Government. First MMM issued shares, then MMM tickets. Both were bought by the population, anticipating high profits. Although the Government tried as hard as possible to bring somebody to justice, it was not successful. No­body was punished, but actually no one could have been published/ as legally no claims could have been made.

The MMM society left behind a numerous family of tickets:

1) PNL,1 MMM ticket, ND(1994), mainly '"brick" color, small portrait. 70x150mm

2) PNL/1 MMM ticket/ ND(1994)/ bleak colors/ large portrait/ 70x150mm

3) PNL/10 MMM tickets/ND(1994)/ mainly red/ 70x150mm

4) PNL/10 MMM tickets/ND(1994)/ bleak red/ 60xl27mm

5) PNL/20 MMM tickets/ND(1994)/ mainly "brick" color/ 70xl50mm

6) PNL/50 MMM tickets/ND(1994)/ yellow and light blue/ 75x154mm

7) PNL/50 MMM tickets/ND(1994)/ bright red/ 60xl27mm

8) PNL/100 MMM tickets, ND(1994)/ small portrait of Mavrodi/ light green/ 74x153mm

9) PNL/100 MMM tickets/ ND(1994)/ large portrait of Mavrodi/ dark green/ 69x151 mm

10) PNL/ 500 MMM tickets/ ND(1994)/ blue and light orange/ large size/ 75x154mm

11) PNL/500 MMM tickets/ND(1994)/ lilac and bluish/ small size/ 60x125mm

12) PNL/500 MMM tickets/ND(1994)/ lilac/ the text "ONLY for NON-CASH OPERATIONS" top printed/ 60xl25mm

13) PNL, 500 MMM tickets/ ND(1994)/ in color similar to the above/ the text in small letters "ONLY for


14) PNL,1000 MMM tickets,ND(1994), in color similar to the above, the text in small letters "ONLY for NON-CASH OPERATIONS" printed/ BUT stamp "CASH," 67x130mm

15) PNL/1000 MMM tickets, ND(1994)/ lilac/ the text "ONLY for NON-CASH OPERATIONS" printed/ 67x130mm

16) PNL,1000 MMM tickets, ND(1994), lilac, greenish and bluish, 70x150mm

17) PNL,1000 MMM tickets, ND(1994), lilac and bluish, 74xl53mm, fractional #

18) PNL/10/000 MMM tickets,1994, bleak green color 70x150mm

MMM tickets were printed on watermarked paper having serial numbers and MMM designation all over. All of them bore the portrait of Sergyei P. Mavrodi, the founder and

owner. The notes look attractive and quite like money. Sometimes the society was called three butterflies/ as Mr. Mavrodi collected butterflies.

It is only natural that to be carried out all projects need funds. There are different ways of attract­ing the funds. One of the methods is the selling of shares. This important inherent feature of the market economy has been totally discred­ited in the former USSR countries due to the organizers of MMMs. Potential investors are now scared by the possibility of entrusting their money to somebody (bank, trust, industrial company or insurance firm) when he/she does not have direct control. Now the vast major­ity of the population prefers to keep the cash (dollars) in socks instead of investing it somewhere/ thus undermining their own well being. The sums in question are enormous

even by Western notions. Some­where in America the corresponding institutions know the exact quantity of the brand new notes, especially new $100 notes, shipped to Russia since 1992. In other countries with developed market infrastructure the blow would not be of such force (after all there were cases of such MMMs in many countries when the people started to irrationally believe that money grows in the vegetable garden). Here it will take years to regain the confidence of the people. Deep in their souls/ however/ the people hope that one day we will surprise the world with unusually swift economic growth.

Please send your inquires to:

M. Istomin P.O. Box 2411 310001 Kharkov UKRAINE





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