Historical Sketch

The Khanate of Khiva (Khorezm) was established in the early 16th century, and in 1804 the Qungrat dynasty took power The Russian conquest of Central Asia also reached Khiva, which kept statehood under a protectorate. In February 1920, the Red Army conquered Khiva and overthrew the monarchy. The Khorezm People's Soviet Republic was proclaimed, in October 1923 renamed to Socialist Soviet Republic. In October 1924, Khorezm and neighboring Bukhara joined the USSR, where its territory got partitioned between Uzbekistan and Turkmenistan.

Monetary History Overview

The economic system of the Turkestan region had traditionally been based on accounting in the silver Tenge coin, taken over from Persia in the 18th century, with occasional gold coinage and additional subsidiary coppers. The coinage had continuously deteriorated during the 19th century such that debasing had driven out most of the silver. After the establishment of the Russian protectorate, an attempt was made to withdraw the local coinage and to introduce Russian subsidiary coins. The Khorezmian Tenge was rated as 20 Kopeks. When the Russian revolution reached Central Asia the local currencies depreciated rapidly. The Khivan Khanate (Khorezm) first issued copper coins at higher denominations, then, as the devaluation went on, the government switched to issuing paper money in increasing denominations, produced via hand stamping rather than machine printing and frequently using cloth rather than paper. The establishment of the People's Republic did not change the country's monetary situation. The new government, however, switched accounting to the 1st Khorezmian Ruble (Manat), using the transision rate from the time when the Russian protectorate was established. The depreciation continued in full speed as money issuance was uncontrolled and unbacked. In late 1921, an agreement between Russia and the Bukharan and Khoreziam People's Soviet Republics equated the local Ruble currencies with the (more stable) Russian Ruble notes of 1917 (referred to as "Kerenki" since they were issued under the 1917 Provisional Government). In January 1922, Soviet Russia carried out a currency redenomination, where new "model 1922" paper money was issued and earlier state paper money of all types was globally revalued by cutting four zeros. Soviet Khorezm imitated the step and introduced the 2nd Khorezmian Ruble (Manat), against which the all types of earlier notes as well as the "Kerenki" got devalued. Unlike neigboring Bukhara, Khorezm did not have the means to improve quality of the new notes, hand printing on paper and cloth continued. The new currency continued to depreciate, but remained in line with Soviet Russia, so that parity to the Soviet Russian currency could be preserved. In March 1923, the Soviet Union organized an Economic Conference for Central Asia which resolved to abolish the currencies of Bukhara and Khorezm and switch over to the Soviet Russian Ruble. The changeover took place during 1923.

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