Untitled - OUDL Home

institutions was encouraged. Piecemeal reform of commerciallaw was undertaken. The first wave of companypromotion took place in the sixties, and the rapiddevelopment of the stock exchange ushered in a newfinancial and commercial era.Effective currency reform was not achieved until theend of the century. Between 1769 and 1839 Russia hadlived on an inconvertible paper-money system. Thepaper rouble suffered enormous depreciation during theNapoleonic period, especially between 1806 and 1812,despite the efforts of Speransky at financial reform (cf. pp.no and 398-399). In 1839-41 a currency reform waseffected, the essential of which was a convertible papermoney based on the silver rouble. This, however, brokedown and the collapse of the finances in the CrimeanWar was followed by the official abandonment of themetallic standard in 1858. Thereafter the control ofthe rouble and the struggle to attract gold and to maintainthe foreign exchange rate were primary factors in stateeconomic policy. At last, in 1897, the finance minister,Witte, succeeded in putting Russia on the gold standard.Thanks largely to this extremely important measureRussia's financial credit weathered the war with Japanand the 1905 Revolution with surprising success, and by1914 a large war chest had been built up.(2) Under Alexander II for the first time the policyof foreign capital imports on a large scale was deliberatelyadopted as an indispensable means of modernizingRussia. She became the largest borrowing country inEurope. Initially the flow of foreign money was directedto railways, but thereafter to all branches of industryand to many other concerns.Witte, who from 1892 to 1903 was minister both offinance and of trade and communications, did his utmostto encourage foreign capital in his very energetic forwardingof industrial and transport development. In 1892the total direct national debt stood at 5,300 millionroubles, in 1914 at 8,850 million, when the interest on itaccounted for a little over a fifth of the expenditure andthe interest on the external portion of this debt fornearly fourteen per cent. Of this direct debt 48 per357