Here's my next installment on history told through postage stamps and other paper ephemera including paper money and revenue stamps. All examples are in my collection unless otherwise noted. Today I'll look at the foundation for the economic problems near the end of the empire.
Monetary problems plagued the Russian economy before and after the Revolutions of 1917. Much of it stems from the Russo-Japanese War of 1904-5 and World War I. The czarist government could only keep itself afloat by constantly borrowing money. In this post you'll see examples of the bonds they issued to raise money. In effect, what they were doing was running the country and the war effort on a credit card that had no limits. And, as with modern credit cards, periodically they had to pay some of the money back with interest.
Under Nicholas II (and previous to him) the ruble was relatively stable, being backed by gold. In other words, you could exchange paper money for gold coinage, and the treasury only issued rubles to match the gold they had on hand. There was gradual inflation but it was manageable.
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| 1898-1915 one ruble bank note |
There's debate over whether Czarist Russia's tax policy was to keep the taxes paid by the nobility low and the rest high. It seems likely that that was the plan. Taxes were not just set to provide the government with revenue.
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| 1902 vodka tax stamp |
When Nicholas II banned vodka sales in 1914, so that his soldiers wouldn't drink on duty, that third of government revenue evaporated. This doesn't mean that people stopped drinking. They made their own, and the government didn't benefit from the sales.
In an earlier post I noted that the Russo-Japanese war was disastrous for Russia in three ways--economically, socially, and militarily. Militarily, they didn't have the infrastructure in place to get their troops to the front in a timely manner. They lost in a big way, cutting their losses with a peace brokered by US President Theodore Roosevelt. Economically, the country was plunged further into debt. The war resulted in huge losses of military equipment. A large number of naval vessels was lost as well as other equipment. Socially, around 400,000 soldiers and sailors were killed, making the war unpopular. The 1905 Winter Palace massacre came on the heels of the end of the war as people were desperate for relief.
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| 1917 Russian war bond poster (Wikipedia) |
The debts from this war were still current when the country entered another war unprepared. The Treasury issued various sorts of bonds to support the government and the war effort. Just as in other countries the government tried to drum up sales of war bonds. The bonds were also floated in various countries, notably France, Britain, and the United States.
Between 1915 and 1917 the government borrowed 8,000,000,000 rubles to fund the war effort. That's right. Billion with a B.
By 1915 the economy in Russia had tanked and regions were experiencing periodic famines. Coins disappeared from circulation as people hoarded money. The government was forced to resort to printing more paper money, including small denominations to replace coinage.
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| 1916 2 kopek bank note |
At first the government tried printing stamp money using the plates from a 1913 commemorative stamp set celebrating the 300th anniversary of the Romanov dynasty. They printed the images on thin cardboard with a notice on the back that this was indeed real money.
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| 1915 20 kopek stamp money |
Of course, all this came crashing to the ground when the two phases of the Russian Revolution happened in 1917.
