Russian Financial Industry And National Economic Development In 1860—1917

The history of the Russian Finance is an integral part of the history of the World Finance, it has its own characteristics that are different from the development process of European and American Finance. The 19th century was the golden age of the World Finance Development. Equally, Russia had undergone historic transition of its finance system. War, reform and modernization had accelerated the evolution of the Russian Finance Industry。In the history of the Russian Finance Industry ,the most important stage of development is from 1860 to 1917, during which Russia had experienced many significant historical events in social and economic life. The Russian banking transition is regarded the cardinal line of this paper. The paper explores the development and evolution of the banking sector in various historical stages in the context in which Russian capitalism was developing fast.The credit relationship in Russian before 1860, the establishment of the National Bank and the Reconstruction of financial system in 1860, the monetary system and its reformation, the birth and development of St. Petersburg Stock Exchange are surveyed historically in this paper. After the abolition of serfdom in 1861, the functions for the national industrialization played by the new national bank—centered financial system are carefully analyzed. It can be said that the Russian industrialization nourished by diversified financial services provided by national banks and its credit institutions was flourishing. After the abolition of serfdom Russia's financial system achieved a historic leap, the financial system was improved; the efficiency of capital allocation and use had improved steadily. Russian government constantly adjusted its credit policy according to the economic situation, stabilized prices, and adjusted its policy context in which its industrialization and reform were executed. This fully reflects the government's active intervention in national economic life and the strict control of credit institutions.The paper is divided into six parts:The introduction gives a brief discussion on the historic and practical significance of the selected topic, introduces the study situation at home and abroad, and elaborates the research methods and thoughts, innovation and deficiencies of the paper.The first chapter discusses the forming process of Russian credit relations before 1860 and early official bank system. Russian bank system formed greatly later than European. The earliest credit system appeared in mid—18th century. In 1754, noble loading bank and merchant loading bank were established. In 1769,banks were opened in Moscow and Petersburg separately to exchange paper bank. In 1786, these banks were merged into national bank of circulation, and at the same year, a national loan bank was specially established to offer long—term loan to the noble. In 1817, national commercial bank was found to promote the development of industry and commerce, and trade finance. Also, palace bankers and private bankers who had close contact with the international financial community were in charged of financial transaction concerning foreign affairs, and they also offered credit services for commercial trade. Banks during this period might be used as"Queen's Court", and the Russian experts in economic history call it as"official bank".In the developing process of nearly one century, with the development and change of domestic economic life, there were many changes in the bank sector to meet the requirements of new economic situation at home and abroad.The second chapter concerns the rebuilding of national banks and the financial system. The period from the end of 1950s to the beginning of 1960s was a time for great reform in Russian, which brought dramatic change to the national financial system. In such histical background, national bank came into being, which undertook the histical mission of revitalizing natioanl economics, increasing the amount of circulation in commerce and trade, regulating, establishing and strengthening the currency circulation and bank sector. The national bank also was the executor of economic policy and financial policy of the government and ministry of finance. It was the biggest nationwide bank of circulation and commercial bank and grew to the real"mother of banks"in Russian till early 20th century. So to speak, capitalistic development history in Russian was accompanied by the flourishing development of new national financial system. Not only the number of credit institution increased, but the distribution of credit institution became presented in a form of ladder and network. So the credit institution could offer diversified credit services for people in different social strata and for the national economic construction. The third chapter is under the title of the evolution of the monetary system. This chapter gives a brief observation of the most important reforms of the monetary system in Russian history since 16th century, an analysis to the historical monetary system and reform features, a summative discussion on Russian monetary system and the efforts made by every Chancellor of the Exchequers during different periods. One of the outstanding features in the historical evolution of Russia is the frequent external wars aimed to expand territory wantonly. These wars consumed vast amounts of money, which generated the constant deficit in national budget and serious devaluation. So the government had to adjust monetary and credit policy according to the economic situation, to implement monetary reform after inflation during war time, to stabilize currency value and price of commodities, so as to create a favorable environment for national economic development.The fourth chapter focuses on related issues about bank capital investment and national economic construction. Over 50 years before the October Revolution broke out, Russian Finance Industry constantly grew and moved forward with domestic economic growth. The construction of the bank network had taken shape, and various types of banks and credit institutions actively joined in the wave of national economic modernization to offer financing and credit service to each national economic department, with full play of their functions. National bank and the real estate mortgage bank offered long—term loan with favorable low interest to landlord, peasants and citizens, which met their needs for capital. The national bank also spent great efforts to support agriculture needs, industry and grain trade with certain preferential policies. Besides, relying on continuous inflow of treasury fund and own funds, the national bank directly circulated necessary funds for industry modernization in large scale, broadened access to credit, and vigorously provided capital to support stock commercial bank and others to do business. Entering the 20th century, the national bank had played its function as a central bank. Stock commercial banks also contribute a lot in railway construction. They actively took part in the issue and ration of railroadbond to provide working capital to private railway companies. The close contact among Russian government, western Big bankers and banks can be traced back to 18th century. From the second half of 19th century, this contact became more close as the advance of Russian industrialization. Under the unremitting endeavor of successive chancellor of the exchequers, foreign capital continually inflowed in Russian in the form of loan and other forms. During these processes, stock commercial banks played an important role as a bridge.The fifth chapter is about the establishment and development of Russian financial market. As has been pointed out, the history of Russian exchange originated from an order issued by Peter the Great in 1703, the content of which was to open the first Russian exchange modeled after the most famous Amsterdam exchange at that time in Europe. Up to 1913, there were about 90 commodity exchanges in Russia which were mainly engaged in merchandise trade. Different from the European countries, futures exchange in Petersburg exchange was less developed. There were also securities businesses in Petersburg, Moscow, Odessa, which was also different from the European countries. In fact, in Russia there was no professional securities exchange at that time. Only in 1900, the national legislation was renewed to reform the Petersburg Exchange, so securities business of open type came into being which was under strict supervision of ministry of finance. And from mid—19th century, speculation in securities in private companies and banks gained great development in large scale in Russia. Big economic growth which began at the end of 19th century gave speculative property to Russian exchange.Taking into account the important parts played by the Russian government, it can be assumed that the research work in this paper comply with requirements of the times. It will help us understand today's financial reform in Russia by retrospect of the historical evolution of 1860—1917 in the Russian banking system, which is also the practical significance of this study.Innovation of this paper: So far, most studies are on Russia's financial reform and credit policy, banking system restructuring and reform, the establishment and development of capital markets, banking legislation and the role of economic growth after the disintegration of the Soviet Union. The development of the banking sector during the period of imperialist Russia is rarely paid attention to. Taking into account the history issue, it can be said that this paper not only has a practical significance, but make a useful complement to the domestic academic field.