This paper has been prepared without the benefit of research assistance. The author's debt of gratitude is limited to the reader who made several helpful suggestions. The author is solely responsible for any remaining errors or shortcomings.

¹ See the author's Money, Banking, and Credit in Eastern Europe (New York: Federal Reserve Bank of New York, 1966)Google Scholar.

² On the Saint-Simonist influence on several ministers of finance, see Normano, J. F., The Spirit of Russian Economics (New York: John Day, 1945), ch. iGoogle Scholar. This author published, under his true name, Levin, I. I., an important monograph, Aktsionemye Kommercheskiye Banki v Rossii (The Stock Commercial Banks in Russia), I (Petrograd, 1917)Google Scholar. Vol. II was never published.

³ In addition to the works by Alexander Gerschenkron, Lyashchenko, and Von Laue quoted below and in fns. 4 and 18, see also McKay, John, Pioneers for Profit: Foreign Entrepreneurship and Russian Industrialization, 1885–1913 (Chicago: University of Chicago Press, 1970)CrossRefGoogle Scholar, and Rieber, Alfred J., “The Railroads in Russia and their Modernization,” (Paper given at the V International Congress of Economic History, Leningrad, 1970)Google Scholar. For an analysis of the relationship between state and economic interests in Tsarist Russia, see Bendix, R., Work and Authority in Industry (New York: John Wiley and Sons, Inc., 1956), chs. i and iiiGoogle Scholar.

Until very recently, Soviet historians showed little interest in the financial and monetary history of Tsarist Russia. Thus, the sections on financial policy in the standard work of Lyashchenko, P. I., History of the National Economy of the U.S.S.R. (New York: Macmillan, 1949)Google Scholar, where the bibliography in the first (1947–8) edition covering the last part of the nineteenth century did not list one single book by a Soviet author on the history of the monetary system or on the monetary reform of 1897. There was only one such title listed in the revised Russian edition published ten years later.

⁴ The topic of the role of banking in the economic development of pre-revolutionary Russia has not received the attention it deserves. See, however, Miller, Margaret, The Economic Development of Russia (2d ed., New York: Augustus M. Kelley, 1967)Google Scholar, who wrote: “Since commerce and industry relied so largely on State assistance, there necessarily had to be a close connection between the [State] bank and the State. Owing to the imperfect development of the home money market, the large State deposit was essential to enable the Bank to carry on its operations. State policy was therefore in advance of the actual stage of development reached by the country in this fostering the activities of the State Bank” (p. 184).

Another important source in English is Olga Crisp, “Russia, 1860–1914,” in Cameron, Rondo (ed.), Banking in the Early Stages of Industrialization (New York: Oxford University Press, 1967)Google Scholar. Miss Crisp commented that “The history of Russian banking from the beginning of organized banking in the 1750's to the 1860's is an uninspiring recital of the vicissitudes of a small variety of government-organized and government-operated banking institutions which in the main confined their activity to granting long-term credit on mortgages of landed estates, or rather their serf working force” (p. 186), and that one of the reasons for the limited success of government-sponsored banks to stimulate the economy was the fact that the “borrowers had to comply with bureaucratic supervision and a multiplicity of regulations” (p. 189). See also Gerschenkron's, A. important “Russia: Patterns and Problems of Economic Developments, 1861–1958,” in Economic Backwardness in Historical Perspective (Cambridge: Harvard University Press, 1962), notably pp. 135–39Google Scholar, and further comments in Europe in the Russian Mirror (London: Cambridge University Press, 1970)Google Scholar, Lecture 4. For a contrary view of the role of banks, see Sinzheimer, G. P. G., “Reflections on Gerschenkron, Russian Backwardness and Economic Development,” Soviet Studies, XVII, 2 (Oct. 1965), pp. 209–25CrossRefGoogle Scholar, notably p. 218.

The most accessibly representative Soviet source on the subject available in English is ch. xii, “Finance Capital and Russian Industry,” in P. I. Lyashchenko, National Economy … (see also the extensive bibliography at the end of the volume). Borovoy, S. Ya., Kredit i Banki v Rossii (Credit and Banks in Russia) (Moscow, 1958)Google Scholar, and Gindin, I. F., Gosudarstvennyi Bank i Ekonomicheskaya Politika Tsarskogo Pravitel'stva, 1861–92 (The State Bank and the Economic Policy of the Tsarist Government) (Moscow, 1960)Google Scholar, as well as his earlier Banki i Plomyshlenost' v Rossii (Banks and Industry in Russia) (Moscow, 1948)Google Scholar, and Russkie Kommercheskie Banki (Russian Commercial Banks) (Moscow, Leningrad, 1927)Google Scholar, are important monographs. See also Sudeikin, V. T., Gosudarstvennyi Bank (The State Bank) (St. Petersburg, 1891)Google Scholar, and Migulin, P. P., Nasha Bankovskaya Politika, 1729–1903 (Our Banking Policy) (Kharkov, 1904)Google Scholar.

⁵ See for instance: Horn, Antoine E., “A History of Banking in the Russian Empire,” in Sumner, William G. (ed.), A History of Banking in All the Leading Nations, II (New York, 1896)Google Scholar; the article “Organization of Banking in Russia,” by Idelson, and Lexis, (translated from the Handwörterbuch der Staatswissenschaften) in 61st Congress, 2nd Session, Senate Document No. 586 (National Monetary Commission) (Washington: G.P.O., 1911)Google Scholar; and Conant, Charles A., A History of Modern Banks of Issue (5th ed.; New York: G. P. Putnam and Sons, 1915), pp. 251–73Google Scholar.

⁶ Hayek, F. (ed.), An Inquiry into the Nature and Effects of Paper Credit of Great Britain (London: Frank Cass Ltd., 1962), p. 107Google Scholar.

⁷ Cyon, E. de, Mr. Witte et les Finances Russes (Paris, 1895), p. 152Google Scholar. See also Margaret Miller, The Economic Development of Russia, p. 84.

⁸ Demands for “credit banks” can be traced as far as the middle of the eighteenth century; the first came in 1762 from mine owners in the Urals. Potemkin's plans for the capital of the newly acquired Ukraine (Ekoterinoslav) provided not only for a university and art academy, but also for a commercial bank.

The need for commercial banks for the benefit of “enterprising merchants in dire need” was recognized in a separate paragraph in Catherine the Great's famous Instructions (Nakaz) of 1767, but only two such official banks were organized during the eighteenth century to offer credit to merchants, both in the main ports engaged in foreign trade (St. Petersburg and Astrakhan).

The first specific plan to create a municipally-sponsored merchants bank was advanced in the 1760's by A. L. Ordin-Nashchekin, Voevode of Pskov, an important trading city not far from Novgorod. He advocated a “credit institution” for the main purpose of cheapening credit for the smaller merchants and to free them from dependence on foreigners. Borovoy, Kredit i Banki …, pp. 20–21.

Until the publication of Borovoy's monograph, the existence of the St. Petersburg Merchant Bank apparently had escaped the attention of the historians of the Russian credit system, from the pioneering study of Schlötzer, A., Münz-Geld und Bergwesengeschichte des Russischen Kaisertums (Göttingen, 1771)Google Scholar to the standard monographs published before the Revolution.

⁹ From their very origin in the second half of the seventeenth century, Russian mining and manufacturing were fostered by direct Treasury loans, mostly for capital purposes. More recent research by Soviet economic historians suggests that Treasury loans to private entrepreneurs during the reign of Peter I considerably exceeded the amount of one hundred thousand rubles, as estimated by Tugan-Baranovsky, M. in The Russian Factory (Berkeley: University of California Press, 1970), p. 16Google Scholar. In subsequent decades, the “Manufacturers' Collegium,” which dispensed and administered such loans, increased its activity considerably.

¹⁰ Catherine the Great created in 1769 two assignats banks (Banks for the Exchange of Government Assignats), one in St. Petersburg and the other in Moscow, which in 1786 were merged into a single State Assignats Bank. In addition to these banks, a curious attempt to enlarge the circulating medium was undertaken by creating special banks to monetize copper. On the history of the shortlived but curious Copper (1758) and Artillery (1760) Banks, created for the double purpose of increasing circulation of copper coin (in the second case, by minting coin from discarded artillery pieces) and of extending credit to land owners, merchants, and owners of mines and other enterprises, see Borovoy, Kredit i Banki …, p. 49 ff. For a history of the official banks, see also V. T. Sudeikin, Gosudarstvennyi Bank, ch. ii, and P. P. Migulin, Nasha Bankovskaya Politika …, ch. i.

¹¹ Borovoy, Kredit i Banki …, p. 279. The reform under consideration was the liberation of the serfs.

¹² A central bank was advocated as early as 1811 by M. M. Speransky, one of the most brilliant administrators produced by Tsarist Russia. In Financial Plan he proposed to limit government ownership of the bank to one third, in order to avoid recourse to government-owned banks to cover chronic budget deficits. See ch. iii in Pashkov, A. I. (ed.), Istoriya Russkoi Ekonomicheskoi Mysli (History of Russian Economic Thought) (4 vols. in 6 parts; Moscow: Academy of Science, 1957–1960).Google Scholar Only part 1 of vol. I has been translated by Letiche, John M., under the title: A History of Economic Thought, Ninth to Eighteenth Century (Berkeley: University of California Press, 1964)Google Scholar. On Speransky, see Raeff, Marc, Michael Speransky; Statesman of Imperial Russia (The Hague: Nijoff, 1957)CrossRefGoogle Scholar.

¹³ Gerschenkron, “Patterns and Problems …,” p. 14, considers them to be “specific instruments of industrialization in a backward country.”

The literature on the role of banking, in particular of mixed banks, in the process of industrialization of various countries of Europe is reviewed in Cameron's, Rondo “Banking and Credit as Factors in Economic Growth” (V International Congress of Economic History, Leningrad, 1970)Google Scholar, which also contains incisive insights into the nature of this relationship.

¹⁴ Ol', P. V., Inostrannyi Kapital v Rossii (Foreign Capital in Russia) (Petrograd, 1922)Google Scholar. Ol', a bitter critic of Witte's policies, devoted a lifetime to estimating foreign ownership in various branches of the Russian economy. His estimates were published only after the Bolshevik revolution. Ronin, S., Inostrannyi Kapital i Russkie Banki (Foreign Capital and Russian Banks) (Moscow, 1926)Google Scholar, presents estimates that are somewhat lower. He calculated that at the eve of World War I, foreigners held about 40 percent of the shares of the 18 leading banks accounting for about 75 percent of total capital of all commercial banks. See also I. F. Gindin, Gosudarstvennyi Bank …, pp. 390–403.

¹⁵ Aghad, Ernest, Grossbanken und Weltmarkt (Berlin: Max Paschke, 1914)Google Scholar. Aghad was a German whose inside knowledge derived from a long career in the employ of Russian banks and whose radical views were widely quoted by Marxist economists in and outside Russia. S. Ronin, one of the earliest Soviet historians of banking, added that this applied not only to the St. Petersburg, but to all Russian banks.

¹⁶ Relevant statistical data on the sources of funds of the State Bank and on its assets, as well as on the credit extended by privately-owned banks, are readily available in tabulations included in ch. ii of Arnold, Arthur Z., Banks, Credit and Money in Soviet Russia (New York: Columbia University Press, 1937)Google Scholar, and in themonographs by Miller and Gindin cited in fn. 4, as well as in Sudeikin, , Gosudarstvennyi Bank, for the years 1860–1888Google Scholar.

¹⁷ Crisp, “Russia, 1860–1914,” p. 217.

¹⁸ S. Witte, Exposé (memorandum) which set forth the reasons for the 1894 reform, quoted in de Cyon, Mr. Witte …, p. 133. On Witte's economic policies, see Laue, Theodore H. Von, Sergei Witte and the Industrialization of Russia (New York: Columbia University Press, 1963)Google Scholar.

Some major decisions in the field of banking and credit policy required formal approval by the Tsar. In such cases, the Minister of Finance requested it in a memorandum addressed to the Tsar, and a file of these documents, from the archives of the main office and the Moscow branch of the State Bank, and going back to the 1860's, has been deposited in the Central Historical Archives in Leningrad. Some of them deal with credit extended to individual firms. See I. F. Gindin, Gosudarstvennyi Bank …, p. 5.

¹⁹ The State Bank assisted industry and trade also in a variety of other ways; in 1911 for instance, it engaged in a program of constructing 84 grain elevators to facilitate lending on stored grain, but only a few were completed when the war broke out. Gindin, ibid., p. 190.

²⁰ In addition, railroads placed large loans abroad carrying a government guarantee on much of the borrowing. With much of the railroad network subsequently nationalized, these foreign loans became a liability of the Government.

²¹ As early as 1798, a Special Office for Foreign Transfers and Trade Payments enjoyed the monopoly of undertaking all foreign payments on behalf of the government, including settlement for purchases abroad. Its main purpose was, however, to undertake operations to support the exchange rate on the Russian trade bills held abroad. It was discontinued in 1816. Borovoy, Kredit i Banki …, p. 128.

²² With the exception of the socialist daily L'Humanité, publishers of practically all Paris newspapers received regular bribes (“subsidies”) from the Tsarist Government to assure suppression of unfavorable news and the printing of items that would facilitate the placement of Russian loans in France. An agent of the Ministry of Finance, Arthur Raffalovich (1853–1921), masquerading as a financial writer (and, in fact, the author of the valuable annual L'Année Financière and of numerous articles), was in charge of the operation. He succeeded so well in concealing the true nature of his activities in Paris that he was elected corresponding member of the Institut de France, and received the decoration of Grand Officer of the Legion of Honor. His activities were exposed, on the basis of documents, including signed receipts of publishers of various newspapers, discovered in the files of the Ministry of Finance, in a series of articles published between December 5, 1923 and March 30, 1924 in L'Humanité. A more complete account of this sordid affair can be found in L'Abominable Venalité de la Presse d'après les Documents des Archives Russes, (1897–1917), published (anonymously) in Paris in 1931 by the Librairie du Travail (closely connected with the French Communist Party). Souvarine, Boris, whose assistance in “making the publication possible” was acknowledged, was, in fact, the author (letter from Souvarine to the author, January 12, 1972)Google Scholar.

²³ For details, see Gindin, I. F., Russkie Komercheskie Banki (Russian Commercial Banks) (Moscow, 1948), pp. 390–403Google Scholar.

²⁴ The Loan and Discount Bank of Persia (1894) and the Russo-Chinese Bank (1895).

²⁵ The views of the Russian economists, political theorists, and social critics on the role of banking for the period prior to the creation of the State Bank are reviewed in Borovoy, Kredit i Banki …, and in Pashkov, Istoriya Russkoi ….

²⁶ Pashkov, ibid., I, ch. iv.

²⁷ Pososhkov's manuscript, addressed to Peter the Great and written in the year of the latter's death, was discovered and published more than a century later (1842). In claiming that “with us, what counts is not weight [of the metal], but the will of the ruler,” he contrasted the unlimited authority of the Tsar with the limited powers of the European kings. He even claimed that to have his image on a coin amounted to a loss of prestige for a European ruler, since it was not his authority, but rather the weight of the precious metal that imparted value to the coin. This did not need to be so in Russia, because “his most Illustrious Majesty's word is so valid with us that if His Majesty ordered the word ruble engraved on any kind of piece of copper, its value in trade would be a ruble and remain unchanged eternally.” Pososhkov, , Kniga o Skudosti i Bogatstve (Book on Poverty and Wealth) (1951 ed.), pp. 238–39Google Scholar. For a more detailed discussion, see Pashkov, A History of Economic Thought …, ch. xii (Letiche translation).

²⁸ Memorandum, “O Drevney i Novoi Rossii v ee politicheskom i grazhdanskom otnosheniyach” (On Ancient and New Russia and the Political and Civic Relations Between Them, 1811), translated by Pipes, Richard under the title Memoir on Ancient and Modern Russia (Cambridge: Harvard University Press, 1959)Google Scholar.

²⁹ Concerning this curious personality, see Efron, S. K., “Vospominaniya o S. F. Sharapove,” Istoricheskiy Vestnik, CXLIII (1916), 496–520 and 723–51Google Scholar. Sharapov's (1855–1911) original interest in the plight of agriculture led him to oppose the introduction of the gold standard. After a career as a newspaper editor and writer on monetary matters opposing the policies of the Minister of Finance and later Prime Minister S. Witte, he subsequently made his peace, and actually accepted a subsidy from him.

See also the article on Sharapov in the Bolshaya Sovetskaya Entsiklopediya (The Big Soviet Encyclopedia), LXI, p. 850.

³⁰ Vlasenko, V. E., Teorii Deneg v Rossi (Theories of Money in Russia) (Kiev, 1964), p. 100Google Scholar. See also my review of this book in Soviet Studies, XVII (July 1965), 105–10Google Scholar.

³¹ In 1916, when proposing replacement of the gold standard by a gold exchange standard after the end of the war, Tugan-Baranovsky pointed out that after the adoption of the gold standard the public demonstrated its preference for bank notes and that special measures were needed to bring metal coins into circulation, and he commented that the authors of the reform were blinded by the “gold fetish.”

³² “As soon as the state assumes the responsibility for managing fiat [“absolute”] money and creates the proper organs to that effect, it will have acquired the monopoly of trading in precious metals which are a means of settling international accounts. In other words this central organ of government will establish the [domestic] price of gold.” Sharapov expected frequent, perhaps daily, variations of the exchange rate through the intervention of a government agency to be a more potent and flexible tool for achieving the goals of a national economic policy than would a tariff policy. He added: “The very question of [managing of exchange rates by an agency of the state] is being raised here for the first time, and it is quite impossible to say how soon the Russian state will accomplish this task,” Bumazhnyi Rubel (The Paper Ruble) (St. Petersburg, 1895), p. 88Google Scholar. We now know the answer: it took less than a generation!

Tsarist Russia had repeatedly resorted to exchange rate depreciation in order to stimulate exports. Incidentally, Sharapov preferred, as Soviet planners do, using historical average prices rather than current market prices as a guide to foreign trade policy.

³³ Ibid., p. 50.

³⁴ This name of a state agency existed in the seventeenth and eighteenth centuries, and undertook the coinage of subsidiary coin (fiat money) and various financial operations on behalf of the government. It should be noted that in Russia, even during the feudal period, not only coinage, but also issuance of paper money was always a state privilege, and that privately owned banks were never permitted to issue notes for circulation (ibid., p. 103). It should also be remembered that Catherine the Great, and not the French Revolutionary Government, first issued the prototype of all fiat money—the assignats. It is also worth noting that Russia was the first country to introduce (officially in 1721, but in fact as early as 1534) a decimal monetary system (the United States was the second). See Spasky, I. G., The Russian Monetary System (translated from Russian) (Amsterdam: Jacques Schulman N. V., 1967)Google Scholar.

³⁵ “Can the Bolsheviks Retain Power?” Collected Works, Moscow, XXVI, p. 106 (italics in the original). The second quotation is from the same source. Lenin's faith in the role which banks would play as agents of a revolutionary transformation of society was not shared by other Russian revolutionaries. However, a leading professor of finance wrote at the end of 1906 that “under a popular rule, properly conducted credit operations undertaken by the government, could cause a real social revolution.” Migulin, P. P., Russkiy Gosudarstvennyi Kredit 1769–1906 (Russian Government Borrowing) (Kharkov, 1907)Google Scholar, introduction to (the final) part 5 of volume III.

³⁶ See the author's “The Origins of Lenin's Views on the Role of Banks in the Socialist Transformation of Society,” History of Political Economy (Spring 1972)Google Scholar.

³⁷ The continuity of financial processes was recognized in the remarkable study by Yurovsky, L. N., Denezhnaya Politika Sovetskoi Vlasti, 1917–1927 (The Monetary Policy of the Soviet Government) (Moscow, 1928)Google Scholar, who wrote: “However big the upheavals affecting Russia and the Soviet Union since 1914, however deep-going the revolutionary measures which cut the links with the past, elements of the past continue to live in the present and the laws introduced in recent years in some aspects are related to the monetary system created three decades earlier by Witte's reforms” (p. 9).