Russia State Assignat 25 Rubles 1778
On the obverse is the text: "ОБЪЯВИТЕЛЮ СЕЙ АССИГНАЦИИ ПЛАТИТЬ САНКТ ПЕТЕРБУРГСКОЙ БАНКЪ ХОДЯЧЕЮ МОНЕТОЮ ДВАТЦАТЬ ПЯТЬ РУБЛЕЙ 1778 ГОДА. САНКТ ПЕТЕРБУРГЪ" (Payable to the bearer of this Assignation by the Saint Petersburg Bank in "circulation coin" Twenty five rubles of 1778, Saint Petersburg.) Above the text is the Assignat's denomination in Arabic figures.
Handwritten Signatures of two Russian Senators (Members of the Governing Senate of the Russian Empire.), handwritten signature of Chief Director of the Banks Boards and Director of the St. Petersburg Bank or Moscow Bank.
The two embossed medallions on the top of the banknote:
At the left medallion - It included the same military attributes (cannon and banners) with the addition of cannonballs and, in addition, the attributes of trade (a bale with goods, a barrel, a scepter-caduceus of Mercury) and a ship in the sea. The composition was crowned with the inscription "ПОКОИТЪ И ОБОРОНЯЕТЪ" (PEACE AND DEFENSE).
At the right medallion - The impregnable rock in a stormy sea, sea waves with sea monsters. The composition was crowned with the inscription "НЕВРЕДИМА" (UNHARMED).
The paper is watermarked. Above and below in two lines are inscription ЛЮБОВЬ К ОТЕЧЕСТВУ (LOVE FOR THE FATHERLAND) / ДЕЙСТВУЕТ К ПОЛЬЗЕ ОНОГО (EFFECTIVE FOR THE BENEFIT OF IT). At the sides are ГОСУДАРСТВЕННАЯ КАЗНА (STATE TREASURY) on one hand and on the other the note's value spelled out in old Slavic letters. In the corners are displayed the coat of arms of the four Tsardoms –Tsardom of Astrakhan, Tsardom of Moscow, Tsardom of Kazan and Tsardom of Siberia.
RUSSIAN STATE ASSIGNATS
25 Rubles 1769 25 Rubles 1778 50 Rubles 75 Rubles 100 Rubles
Russia State Assignat 1786-1818 Issue
Russia State Assignat 1818-1843 Issue
The introduction of paper money in Russia
In 1769, in the reign of Catherine II or Catherine the Great, as a consequence of the RussoTurkish War (1768–1774) and the consequent costly expansion of the Russian administration, the first Russian paper money was issued, called "imperial assignats" (assignatsii), after the French "assignats" or promissory notes. These promissory notes were not covered by any holdings of precious metals, but were based solely on the state’s promise to pay. Russia thus joined the list of countries that issued paper money in an attempt to pay state deficits caused largely by wars, and at the same time to introduce more convenient units of payment for use in their developing internal markets. However, it was in very few countries that political crises led to such a lasting disruption of the currency as in Russia, whose paper-money economy was destined to inflict deep scars on society and to leave a heavy legacy.The assignats were issued and redeemed in St Petersburg and Moscow by specially founded "assignat banks," initially in notes worth 25, 50, 75 and 100 roubles, and as a kind of surrogate money permitted a considerably more profitable management of the state money monopoly than had the constant manipulation of the repertoire of coins.
The paper rouble established itself alongside the silver rouble as a second unit of currency and account, and from 1769 to 1849 an official distinction was made between the silver rouble (rubl serebrom) and the "assignat rouble" (rubl assignatsiyami), which distinction continued unofficially for a while even after 1849. The free convertibility of the assignats was guaranteed by decree, but was limited to copper coins. By keeping the silver in the state treasury and the copper in circulation, the government hoped to achieve a more rapid circulation of money, and above all a strengthening of the state finances.
The initially restrained issues of assignats did indeed bring about a speeding-up of the money circulation, which had been impeded by the large percentage of copper coins. Since, however, the government did not cover the assignats by a sufficient reserve of precious metal, and soon began to print them in large quantitites to cover the immediate credit requirements of the treasury, their value fell considerably. In addition, no compulsory exchange rate was laid down for the assignats, which meant that they did not have to be accepted like normal paper money.
The resulting inflation increased especially during the Napoleonic Wars, when an attempt was made to cover the vast costs of the war by an unlimited issue of paper money. The assignats lost their original function as as a form of circulating credit intended to replace or supplement metallic money, and became a mere source of credit for the state. Even their convertibility into copper was no longer guaranteed, so that they lost their parity with both the silver and copper rouble. Once the assignats had forced the silver rouble out of circulation as an accounting coin and had become the sole yardstick of value, the problems posed by a non-existent gold or silver trading coin together with steadily disappearing silver or copper small change became only too apparent.
The 19th century: between currency crisis and currency stability
Despite the continuing devaluation of assignats and copper coins, the exchange of the paper rouble was not discontinued. After the government had tried several times to buy up the assignats, it recognised them in 1812 as the sole Russian currency. This decision resulted in a still lower exchange rate with metallic currency and further discredited the paper money among the people.
The currency reform of Yegor Kankrin
It was not until the currency reform carried out by finance minister Yegor Kankrin between 1839 and 1843 that the circulation of assignats ceased. In 1839, in conformity with the Russian currency tradition and the double standard current in Europe, the silver rouble was declared the sole unit of currency.
In 1840 the value of the silver rouble was fixed at 3 1/2 assignat roubles. In the same year a deposit bank was set up which was intended to receive precious metals and in return to issue "deposit notes" (depositnye bilety or depositki) backed by silver. Behind this temporary solution lay the intention of increasing the precious-metal reserves of the bank, increasing the currency and means of credit in circulation, and also to accustom the population to new paper currency notes.
In 1843 began the exchange of assignats for "credit notes" (kreditnye bilety or kreditki), a process which took until 1852. The assignats themselves were demonetised from 1 January 1849. Although the deposit notes, together with any assignats remaining in circulation, were exchanged for credit notes as early as 1843, for a long time their name was used colloquially for credit notes. Credit notes were a fully valid paper currency which was exchangeable for silver and gold and circulated until 1917 in notes of 1, 3, 5, 10, 25, 50 and 100 roubles, and whose exchange was temporarily backed by reserves of precious metal. However, owing to their still limited backing by precious metal, the credit notes were no more immune to devaluation than the assignats had been before them.
The Crimean War and its consequences for monetary policy
The Crimean War (1853–1856) caused the silver currency to collapse once more. Just like the assignats earlier, the credit notes served as an instrument of financial policy for the government and changed from a vehicle of value to a vehicle of credit. The over-issue of credit notes was accompanied by a gradual restriction of their convertibility, until in 1856 the banks ceased to exchange credit notes for silver or gold coins. Yet again the disadvantages and inflationary effects of a quantity of paper money that far exceeded the requirements of the economy became apparent. As a result, many attempts were made to cut down on the increased issue of paper money in times of crisis and once more to reduce the total volume of paper money to a sixth of the reserves of precious metals.
The second half of the 19th century
After the Crimean War, the purchasing power of the credit notes sank ever further. It was not until 1862, immediately after the abolition of serfdom, that the Russian government decided to resume redeeming credit notes in exchange for hard cash, in order to restore the rouble’s parity.
There was another extensive issue of paper money during the Russo-Turkish War of 1877–1878. In 1876 the imperial treasury was permitted to raise the funds required to cover the cost of the war by taking out loans from the imperial bank, which responded by issuing new credit notes. Another financial crisis broke out in the early 1880s, during which the government was unwilling to undertake any significant restriction of the money in circulation. Towards the end of the 1880s all attempts to withdraw the credit notes issued during the Russo-Turkish War were finally abandoned. The general aim of gradually raising the exchange rate for the rouble to its old parity lived on, but was not destined to be realised.
The introduction of the gold currency
It was not until 1897 that a successful stabilisation of the rouble took place, brought about by the introduction of a gold-based monometallic currency. The reform of 1895–7 was the result of fundamental economic considerations by the finance ministers Ivan Vyshnegradski and Sergei Vitte. Russia’s change to a gold currency paralleled a highly significant development in the West: from the early 1870s onwards, silver had been suffering a steady decline in value, and was replaced by gold as the currency standard in such countries as Germany, the Scandinavian kingdoms, the Netherlands and the United States.
Russia had become an important supplier of grain to Western Europe, alongside the United States. That meant that the monetary systems of the grain-importing countries, and the standard metal that predominated in international monetary transactions, were bound to become vitally important for Russia. However, the aim followed by the Russian government in increasing grain exports was to obtain foreign currency or gold to finance industrialisation, without taking any account of the country’s food supply, which led to the name "hunger exports" for the whole process.
The efforts of the finance ministry to consolidate the budget and strengthen the currency culminated in 1897 in the official introduction of the gold standard, which concluded the stabilisation of the rouble, which had been achieved by 1894. At the same time, the prerequisites for the attainment of international prestige by the Russian economy and currency, and hence for foreign investment in the Tsarist Empire, were met by the issuing of state bonds or direct investments.
The gold rouble replaced the paper rouble as the new unit of currency and became the basis of the Russian currency, which demoted the silver rouble to the status of small change. New gold coins were issued, such as the imperial of 15 roubles, the poluimperial of 7 1/2 roubles, and the 1/3- imperial of 5 roubles, and banknotes were exchanged for gold coins. The exchange rate between the credit rouble and the gold rouble was fixed at 1.5 : 1, and the issue of new banknotes was made dependent on the level of the gold reserves.
But all that glitters is not gold …
The currency reform of 1897 introduced a properly organised currency system, the lack of which had inhibited the development of Russia’s productive energies and exacerbated the mismatch between its foreign obligations and its economic capacity. However, many problems remained unsolved, especially as regards agriculture, for example that of raising agricultural productivity or relieving material suffering among the rural population.
Until well into the 19th century, successive Russian governments had shown themselves incapable of countering the shortage of money and credit by developing a thoroughly structured economic system that involved all economic sectors. Both economic resources and the tax revenue from the population in the expanding Tsarist Empire remained so limited that even in times of peace the financial strength of the state could only be made adequate for the maintenance of military power by prodigious efforts. However, the long periods of war, which sapped the economic strength of the state to a high degree, delayed and disrupted the emergence of a unitary national economic entity, and hence of a functioning monetary system.
The primary purpose of money, though, was not to promote the well-being of the Russian state and its subjects. The various monetary measures taken by the government were in fact carried out in order to finance wars or to restore the currency, which had been overstrained by military expenditure. Those monetary course-corrections were, however, incapable of functioning as motors for the state and private economy. Although the introduction of the gold currency standard in 1897 brought about a stabilisation of the rouble and made tsarist Russia more attractive for foreign investors, private purchasing power was initially a minor consideration. To put it in a nutshell: by neglecting to take far-reaching measures, affecting all economic sectors, in order to open up all sources of credit, the Russian state robbed itself of what it most needed: a dynamic, exploitable volume of tax revenue arising out of trade and industry. At the end of the 19th century, Russia had a range of economic and financial policies which were appropriate to its system, but which were "wrong," or at the very least anachronistic, for the introduction of a capitalist system of production.