Banks in Prerevolutionary Russia

first created in the 1750’s by the feudal-serf state. Up to the middle of the 19th century these banks served not so much to facilitate the development of capitalist relations as to strengthen the serf economy. The main function of banks in prereform Russia was to provide loans to landlords. These operations were performed by the Bank of the Dvorianstvo (Nobles’ Bank; 1754–36), the State Loan Bank (1786–1860), and others. Crediting for trade (primarily foreign trade) was carried out on an immeasurably smaller scale. Commercial and industrial activity was credited by the bank under the auspices of the Commerce College (1754–82), by the Discount Offices (1797–1817), the Commercial Bank (1818–60), and also by the Astrakhan Bank (1764–1821). In the first half of the 19th century the bank system—which remained unchanged—consisted of the State Loan Bank and the State Commercial Bank in St. Petersburg, the St. Petersburg Safe Treasury, the Moscow Safe Treasury, and the Offices of Public Charity in provincial cities. The monopoly on credit held by the state and the dominance of the serf system, which restricted the transformation of “idle” capital into functioning capital, led to the accumulation of large cash deposits in the state banks (295 million silver rubles in 1833, 970 million silver rubles in 1859). In addition to the issue of long-term loans to landlords, deposits were used by the government (since 1810) as loans and made up the overwhelming percentage of the internal state debt. On the eve of the reform of 1861, the government was forced to liquidate all the banks enumerated above. This step furthered the development of the capitalist bank system in Russia.

In 1860 the State Bank was established. It became the greatest commercial bank in the country, and from 1896–97, after paper money was liquidated and the gold standard was introduced, it became the central bank of issue of Russia. Various commercial and land banks were established in Russia in the 1860’s. A capitalist credit system took shape in the country (see Table 1).

By the start of World War I, the State Bank and joint-stock commercial banks were the most important of the commercial banks of Russia. Many banks in Russia basically advanced loans to the middle strata of the commercial and industrial bourgeoisie; these banks took the form of mutual credit societies and also municipal public banks belonging to the local organs of self-government. By 1914 joint-stock commercial banks had invested vast resources in crediting trade and in financing industrial and other enterprises. The concentration of capital in joint-stock commercial banks was extremely high and exceeded the level attained in the chief capitalist countries.

The largest bank shareholders were transformed into monopolists, the masters of the internal monetary market and the St. Petersburg stock exchange and the main intermediaries between foreign money markets and Russian enterprises. They played an active role in the formation and consolidation of syndicates and trusts in Russia. During the industrial upsurge of 1909–13, bank monopolies invested hundreds of millions of rubles in the expansion of large enterprises, particularly in heavy industry. On the other hand, when industry was switched over to military deliveries during World War I, it was financed primarily by the state treasury. In this regard, the parasitism of the Russian bank monopolies increased sharply: they utilized their resources for the financing of military spending of the state, unbridled speculation in commodities and shares, and expansion of their control over various enterprises. By 1917 control or influence by large bank monopolies had been extended to 468 industrial and nonindustrial enterprises with capital of 2.17 billion rubles; this constituted 19 percent of the total number of joint-stock enterprises and 44 percent of their capital. The influence of banks was particularly great in metallurgy, machine-building, petroleum, cement, the sugar and tobacco industries, and private railroads and water transport. The greatest Russian banks were intimately tied to the foreign financial and capitalist groups and major French and German banks that had penetrated Russia. These French and German banks held sizable portions of the joint-stock capital of several leading Russian banks.

Joint-stock commercial banks enjoyed government support. The establishment of new joint-stock banks was strictly limited by the government. At different times, a total of only 91 joint-stock commercial banks operated in Russia, while in other capitalist countries there were hundreds and in the USA thousands. This government policy accelerated the centralization of capital in existing banks and, with the onset of imperialism, helped to intensify the processes of monopolization of credit (see tables 2a and 2b).

Land credit in Russia was represented by two state banks—the Bank of the Dvorianstvo and the Peasants’ Bank (in 1914 they accounted for more than 60 percent of mortgaged agricultural land)—and also by eight local dvorianstvo (gentry or nobility) banks, ten joint-stock land banks, and 36 municipal credit societies. By 1914 all land banks had issued 5.4 billion rubles of mortgage bonds (a form of long-term bond that mortgage banks used to attract money from capitalists) and granted long-term loans amounting to 5.3 billion rubles, of which over 3.6 billion rubles was issued on

mortgages of agricultural land—including as much as 60 percent granted to landlords and 40 percent directed through the Peasants’ Bank to finance the purchase of the landlords’ lands (at excessive prices) by the prosperous kulaks of the countryside, a trend accelerated by the Stolypin agrarian reform. The demand for agricultural production credit by the rural upper strata was met by the so-called peasant social institutions and zemstvo funds for small-scale credit and most importantly by savings bank and credit associations (credit cooperatives). In 1914 there were 18,000 such institutions and associations with 645 million rubles of outstanding loans. Savings banks in Russia belonged to the state, and the government used deposits (by 1914, 1.7 billion rubles) to invest in state bonds and mortgage bonds of state land banks.

In the course of the Great October Socialist Revolution, on Oct. 25 (Nov. 7), 1917, the Red Guard and revolutionary soldiers seized the State Bank, which became the property of the Soviet state. The state land banks were eliminated by the decree of the Council of People’s Commissars of Nov. 25 (Dec. 8), 1917. By the decree of the All-Russian Central Executive Committee of Dec. 14 (27), 1917, all private banks were nationalized and merged with the State Bank, and banking was declared a state monopoly.