Economy of the first Democratic Republic
In 1918-1919, according to Noe Zhordania, economic policy consisted of two directions, Bolshevik and Liberal. The Bolshevik direction recognized the Socialist Revolution and socialism, while the Liberal direction upheld the inviolability of capital and broad rights to private initiative. According to the government, granting freedom of action to the state, local self-government bodies, cooperatives, and private capital would lead out heavy financial need.
Democratic Georgia’s strategy for economic reforms was as follows: regulation of finance management, creation of an independent monetary unity, minting money and establishing a customs system, put in place state control, declaration of state monopoly on the export of certain goods, full-fledged agrarian reform and revival of agriculture, attract internal and external resources, upgrade the tax system, simplify management, finalization of judicial reform, cut down state budget expenditure and promote the growth of revenues, promote private institutions, and others.
To draw more financial forces to the state budget, the country declared state monopoly on exported manganese (Chiatura), tobacco leaves, wool, and silk cocoon (silk thread, raw silk). In addition, mines (except for sand, clay, and simple construction stone), medicinal ore baths, waters, and muds were declared property of the state. Lottery was also monopolized by the state.
Because Georgia was believed to be an agricultural country, one of the pillars of the state’s economic revival lay in the proper management of agrarian reform, which was carried out in two stages. One involved confiscating lands above limits from their owners, and the other sought to distribute lands and to hand them in different forms among peasants to own.
Through the law adopted by the National Council, 19 customs stations were created under the management of the Ministry of Finance, Trade and Industry through the Main Customs Office. The largest amounts of goods were imported from Russia, Azerbaijan, England, America, Italy, and Armenia. The largest amounts of goods were exported to Azerbaijan, Armenia, Russia, Italy, the Ottoman Empire, and England. The largest amounts of goods were exported through the Poti and Sokhumi customs stations. The largest amounts of goods were imported through the Batumi and Poti customs stations.
Part of the information above has been extracted from Tamar Atanelishvili’s thesis titled Economic Reforms in the Democratic Republic of Georgia. Please see attachment for the thesis.