Gradually taking over the semi-ruined pre-revolutionary financial apparatus, however, the Soviet Government was compelled to adopt measures for the systematization of the country’s finances in their entirety. This second period in the work of the People’s Commissariat for Finances (approximately up to August, 1918) also fails to show any features of sharply marked revolutionary change. From the very beginning the authorities have been confronted with a chaotic condition of the country’s financial affairs. All this, in connection with the large deficit which became apparent in the state budget, compelled the Commissariat of Finance to concentrate its immediate attention on straightening the general run of things and, thus, prepare the ground for further reforms. In order to accomplish the systematizing of the financial structure, the Government had to lean for support on the already existing unreformed institutions, i.e., the central department of finance, the local administrative-financial organs—the fiscal boards tax inspection, treasuries, excise boards—and, more particularly, the financial organs of the former local institutions for self-government (Zemstvos, and municipalities). Such a plan of work seemed most feasible, since the apparatus appeared suitable for fulfilling slightly modified functions; but the local government was not yet sufficiently crystallized or firmly established, neither was any stable connection established between that local government and the central bodies. Under such circumstances, the old institutions, which by force of habit continued to work exclusively at the dictate of and in accordance with instructions from the central bodies, seemed to be the most convenient and efficient means of carrying out measures which the central authorities had planned to straighten out the general disorder prevailing in financial affairs. However, this idea soon had to be discarded, the local Soviets insofar as they organized themselves and put their executive organs into definite shape, could not and did not have the right to neglect the work of the old financial organs functioning in the various localities, since the Soviets represented the local organs of the central government as a whole, and since it was upon them that the responsibility for all the work done in the localities, rested. Under such conditions friction was inevitable. In accordance with the principles of the old bureaucratic order, the local financial institutions neither knew nor had any idea of subordination other than the slavish subordination to the central authorities which excluded all initiative on their part.