“A cross of gold” for Russia


In 1896, Emperor Nicholas II ordered a major currency reform to place the Russian ruble on the gold standard. This resulted in increased investment activity and an increase in the inflow of foreign capital. It was one of the many achievements during his 22-year reign as Emperor of the Russian Empire.

Russia had not enjoyed a stable currency since the Crimean War (1853-1856) when the government suspended the redemption of paper notes for gold and silver. The [international] exchange rate of the credit or paper ruble fell considerably during the Russo-Turkish War of 1877-78.

The instability of Russia’s currency stemmed from its lack of any precise correlation with foreign currencies [based on the gold standard]. This instability created a serious obstacle to 19th century Russian commercial and capital transaction. Not only did Russians have to pay higher prices for foreign goods, fluctuations of exchange complicated the Russian export trade. 

Ivan Alekseyevich Vyshnedgradsky (1832-1895), who served as Russia’s Minister of Finance from 1886-92, began the process of accumulating a gold reserve in order to stabilize the ruble. His successor Sergei Yulyevich Witte (1849-1915), who served as Minister of Finance from 1892-1903, accelerated this policy of accumulation, partly by using foreign loans to obtain gold. 


Emperor Nicholas II presides over a meeting of the State Council of the Russian Empire

While some acknowledged the virtues of the gold standard, they maintained nevertheless that it could not survive in Russia. The country was too poor, they said, and eventually all the gold would end up abroad. 

Under the terms of the monetary reform the new gold ruble, which was to become the basic monetary unit, was made to equal 1.50 old rubles. The gold reserve of the State Bank stood at 1,200,000,000 [1.2 billion] rubles [in new currency].

The struggle against the monetary reform did not cease, nonetheless, and indeed it took the most unexpected turns. During Nicholas II’s visit to Paris, for example, the French premier, Méline, tried to persuade the tsar that a gold currency would be harmful to Russia. Count Montebello, the French ambassador, pursued this line by submitting to the emperor, two detailed memoranda on the question.

Yet Nicholas II remained steadfast in his attitude toward the reform. He forwarded the French notes to Witte with the notation: “Enclosed are the memoranda which have been sent to me; I have not read them–you can keep them!” Finally on 2 January 1897 the Emperor convened a special session of the State Council at which he himself presided. The council decided at this meeting to proceed with the implementation of the reform. The Emperor’s ukaz of 3 January 1897 ordered the beginning of a new gold coinage in which the old Imperials [ten ruble gold coins] would be replaced by coins of the same weight and purity, but stamped “15 Rubles” instead of 10. 

The monetary reform entered Russian life without any fanfare and, contrary to the warnings of its opponents, without creating any tremors in the economy. For two years already the rate had remained stable. The speculation in rubles had ceased. The state had been selling gold at the rate of 1 ruble 50 kopecks for each ruble in gold, and the exchange of paper rubles for gold at the same rate was no novelty. Gold did not flow abroad, nor was any significant amount of it hidden away. Russia meanwhile stabilized its international financial position by painlessly moving on the gold standard, which by then most of the great powers had adopted. [Japan followed Russia’s example in March 1897.] The timing of the reform was fortuitous. Adoption of the gold standard followed four years of bumper crops (1893-96). 


Sergei Witte (1849-1915) served as Russia’s Minister of Finance from 1892-1903

Towards the end of 1897 the government decided to produce new gold coins in values of 10 and 5 rubles. Over the next fifteen years and for the first time since the introduction of paper currently [except for the brief period between the devaluation of 1842 and the Crimean War], Russia enjoyed the normal circulation of gold currency.

Some of the most prominent European economists–the Germans Adolph Wagner and William Lexis and the Englishman George Viscount Goschen–unanimously recognized the timeliness and success of the Russian monetary reform. Indeed, confronted by the inertia of Russian opinion and by foreign interests hostile to stabilization, the currency reform probably would have failed except for the intervention of the Emperor who compelled an end to the dispute by forcefully expressing his will at the meeting of the finance committee on 2 January 1897.

Witte recorded in his memoirs that “in the end I had only one force behind me, but it was a power stronger than all the rest–that was the confidence of the Emperor. And therefore I repeat that Russia owes its metallic gold currency exclusively to Emperor Nicholas II.”

This article has been sourced from Last Tsar. The Autocracy, 1894-1900, by Prince Sergei Oldenburg, it has been abridged and edited by Paul Gilbert

© Paul Gilbert. 24 August 2020