Emission policy of the pre-revolutionary (tsarist) government of Russia during the First World War and its consequences: facts and figures

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The study is focused on the policy of the pre-revolutionary (tsarist) government of Russia in the field of issuance of paper currency in view of situation around the First World War. Against the background of major historical events and the economic situation general analysis, the article reveals the reasons for the changes in the currency issuing policy in Russia, identifies and traces the consequences of this policy in the view of changes in the financial system, as well as in the transformation of money circulation. It is proved that, recognizing the participation in the war as an emergency requiring significant financial reserves the government was forced to prohibit the exchange of banknotes for gold, and to give the State Bank the right to additional issue of currency. Based on the statistical data analysis, it is found that the repeated extension to the State Bank of the right to issue non-gold-covered paper currency not only provided Russia with a source of funding for the war, but, together with other factors, led to inflation. The main goal of the study is to confirm that the change in Russia’s approach to currency issuance in connection with participation in the war and focusing on budget deficiency coverage by issuing money became one of the main reasons for the subsequent crisis phenomena and processes occurred in the country's economy. The study is based on regulations and statistical data of the considered period involving the work of leading economists of the beginning of the XX century, containing information about the liquidity creation policy in Russia during the years of its participation in the First World War. The paper concluded that the change in the liquidity creation policy in Russia and its continuation in the course of Russia’s participation in the First World War was due only to the need to reimburse the financial costs caused by participation in the War. At the same time, such policy subsequently led to a disorganization of currency circulation and the entire financial system, negatively affecting the economy of the country as a whole.

About the authors

Yu. Yu. Gvozdkov

Ulyanovsk State University of Education

Author for correspondence.
Email: morenov@ssau.ru
ORCID iD: 0000-0002-6705-1959

postgraduate student, Department of History


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