Russian financial policy and the gold standard at the end of the nineteenth century
Ever since Russia had attained the status of a great power in the eighteenth century the military requirements for the maintenance of that position imposed on the Russian treasury a task of a magnitude disproportionate to the largely natural economy of the country and the poverty of its people. This imbalance led to chronic budgetary deficits, despite increased taxation, and recourse to the printing press and foreign loans. It was no accident that both Russia’s foreign indebtedness and the regime of paper money had their beginnings under Catherine II, whose reign marked Russia’s advent as a great power.1 As foreign borrowing was not always possible, the financial strain imposed by an active foreign policy was frequently reflected in inflation and the squeezing out of circulation of metallic currency. Since the first issue of roubles-assignats in 1768 in connection with the first Turkish war, the volume of assignats issued had been swollen by the second Turkish war, the wars with Sweden, Poland and Persia under Catherine II, the Italian campaign under Paul, and the Napoleonic wars under Alexander I to over 800 million roubles. By 1815 the value of the rouble-assignat in terms of silver had shrunk by nearly four-fifths.2 Only the relatively long period of peace under Nicholas I after 1830 made possible the currency reform of 1839–43 associated with the name of Count G. F. Kankrin, whereby the ‘credit rouble’, freely convertible into silver, replaced the rouble-assignat in the ratio of 1:3 1/2.3 The Crimean war, as a consequence of which the volume of paper roubles more than doubled, forced Russia back on to an inconvertible currency.
KeywordsForeign Capital Money Market Gold Reserve Foreign Loan Foreign Borrowing
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