Under the new conditions, these local financial institutions were to constitute only a small component part of the local Soviets. Acute misunderstanding of the local authorities among themselves and between the local and central authorities on the subject of interrelations among all of these institutions, have demonstrated the imperative necessity for a reorganization. With this work of reforming the local financial organs (September, 1918) a new period opened: the third period in the activity of the commissariat, which coincides with the gradual strengthening of the general course of our economic policy. The economic policy definitely and decisively occupies the first place which duly belongs to it, while the financial policy, insofar as it is closely bound up with the economic policy, is being regulated and directed in accordance with the general requirements of the latter. II The financial policy of Soviet Russia was, for the first time, definitely outlined by the eighth (March, 1919) Convention of the Russian Communist Party. The eighth party convention clearly and concretely stated our financial problems for the transitionary period, and now our task consists in seeing to it that the work of the financial organs of the Republic should be in accord with the principles accepted by the party. These principles, briefly, are as follows: (1) Soviet Government State monopoly of the banking institutions; (2) radical reconstruction and simplifications of the banking operations, by means of transforming the banking apparatus into one of uniform accounting and general bookkeeping for the Soviet Republic; (3) the enactment of measures widening the sphere of accounting without the medium of money, with the final object of total elimination of money; (4) and, in view of the transformation of the government power into an organization fulfilling the functions of economic management for the entire country,—the transformation of the pre-revolutionary state budget into the budget of the economic life of the nation as a whole. In regard to the necessity for covering the expenses of the functioning state apparatus during the period of transition, the program adopted outlines the following plan: “The Russian Communist Party will advocate the transition from the system of levying contributions from the capitalists, to a proportional income and property tax: and, insofar as this tax outlives itself, due to the widely applied expropriation of the propertied classes, the government expenditures must be covered by the immediate conversion of part of the income derived from the various state monopolies into government revenue.”