The State Bank of the Russian Empire () was the dominant financial institution of the Russian Empire from its founding in 1860 until the Empire's end in 1917.
A public bank headquartered in Saint Petersburg, it initially coexisted within the Empire with the Bank Polski until the latter was deprived of its residual monetary role in 1870, and with the Bank of Finland which soon defined a separate monetary zone for the Finnish markka. In 1897, with the Russian adoption of the gold standard, the State Bank fully took the attributes of a central bank, while keeping a significant additional role of commercial and development lending that made it the main source of credit to the Russian economy.
During the Russian Revolution, the State Bank forcibly absorbed the former business of all Russia's private-sector banks, was renamed People's Bank (), then was liquidated in January 1920. After an extended gap during the era of war communism, it was eventually revived in Russia as the Soviet Gosbank in October 1921, whereas other organizations took central banking roles in newly independent Estonia, Latvia, Lithuania, and Poland, as well as Bessarabia within Greater Romania.
Creation and early years
Following the inflation that led to the abolition of the Russian Assignation Bank, Russia from 1818 onwards did not have a bank of issue of its own. After the deflationary 1820s and 1830s, the finance ministry's State Credit Note Bureau was established in 1843 and printed paper money distributed by the State Commercial Bank, but from January 1855 these were no longer backed by silver reserves. The state-owned banking system, including the State Commercial Bank and the State Loan Bank, collapsed in a bank run in 1858–1859.
The State Bank of the Russian Empire was established on at the behest of Minister of Finance Alexander Knyazhevich by ukaz of Emperor Alexander II. This ukaz also ratified the statutes of the State Bank. The bank was subordinate to the Ministry of Finance and was under the supervision of the Council of State Credit Institutions. It was the only state-owned central bank of its era, together with the Sveriges Riksbank and the Bank of Finland, which predated it within the Empire. It was also the largest credit institution in the Empire. Its first Governor was Russian Jewish financier Alexander von Stieglitz.
According to the statutes, the State Bank was intended for short-term credit (no more than 9 months) to trade and industry as well as a monetary role. In its first decade of operations, the State Bank invested most of its resources in state bonds and state-guaranteed securities. In addition, it issued short-term and long-term loans to the State Treasury. By 1879, the Treasury's debt to the State Bank amounted to 478.9 million rubles. The repayment of that debt, which began in 1881, ended in 1901. Lending to commercial and industrial turnover occurred mainly through discounting bills and issuing loans against bills. Until the mid-1870s, bill accounting averaged 30-50 million rubles. From the mid-1870s to the mid-1880s, transactions involving the accounting of trade bills doubled and averaged 100 million rubles. Ten years later, in 1890, they reached 152.5 million rubles. From 1867, the Ministry of Finance began intensive accumulation of gold reserves. By decree of Alexander II of June 2, 1867, the State Bank and its offices were granted the right to accept specie for payments. It was allowed to take Russian and foreign coins, as well as gold and silver bullion. Prices were set by the State Bank. The coin was sent to his change fund. As a result, during 1867-1876 the exchange fund increased from 78.3 million rubles to 310.1 million rubles.
The State Bank carried out an operation to liquidate the accounts of pre-reform state banks, a mission which was prominently entrusted to it by the charter and was only completed in 1887. These included the State Commercial Bank and State Loan Bank. The State bank had to pay interest and reimburse principal on those deposits that remained after the free exchange of deposit notes for 5 percent bank notes, payment of interest on coupons of 5 percent bank notes and capital on notes intended for redemption. To cover these expenses, the State Bank had to transfer interest and amounts received from borrowers of the old banks, as well as the amounts of payments from the State Treasury on the debt to its pre-reform banks. All liquidation operations were to be carried out at the expense of the State Treasury, which, if necessary, was to provide the bank, in addition to its initial capital, with cash or its interest-bearing obligations with the right to sell them on the stock exchange. But due to the constant budget deficit, the State Treasury was not able to provide additional funds to the State Bank, and the bank was forced to annually allocate part of its commercial profits to these operations. The liquidation operations began to produce surplus income only in 1872. In January 1887, the special account for the liquidation of former state banks was abolished. Proceeds from loans and profits from the State Bank from this operation began to be used for the current needs of the treasury.
The State Bank in its first decades was not a genuine central bank, because it could not make independent decisions on critical monetary matters such as issuing notes. Instead, it could only issue banknotes at the order of the finance ministry, which was therefore effectively in charge of Russia's monetary policy until the reforms of the 1890s.
Economic interventionism
Following the appointment of Nikolai von Bunge as Finance Minister in 1881, the State Bank stopped issuing loans to the State Treasury "for current needs", as Bunge introduced the practice of concluding government loans to cover the budget deficit. The Treasury began to repay its debt to the State Bank in 1881. A decree of January 1, 1881 announced the cessation of issuing banknotes and a reduction in their number in circulation. However, in 1882 an economic crisis broke out and lasted for almost five years. As a result, for 1881-1886, instead of 300 million rubles as initially planned, only 87 million rubles were written off from the balance sheet of the State Bank. Only in 1896 did the Bank's expenses at the expense of the Treasury for the first time equal the amounts of the Treasury invested in it. The Treasury's debt to the State Bank was fully repaid in 1901, in accordance with a decree of Nicholas II of April 28, 1900, which ordered the State Treasury to repay the balance of its debt to the State Bank in the amount of 50 million rubles.
In line with interventionist economic policy from the mid-1870s, the State Bank began to carry out operations to save shaky and bankrupt banks and some non-financial enterprises. The State Bank's actions thus mitigated the impact of the banking crises of the mid-1870s and early 1880s and supported financial stability. The main capital and provincial commercial banks were bailed out. In the mid-1880s, the State Bank was involved in supporting and rescuing mutual credit societies. Their debt to the Bank in 1887 reached 6.2 million rubles. Urban public banks in major cities were also bailed out. From 1886, the State Bank began to intensively subsidize the Peasants' Land Bank and the Nobles' Land Bank. These banks received funds for their operations as a result of issuing mortgage notes. Losses that arose during their implementation were paid by the State Bank from the treasury.
Charter renewal of 1894
On June 6, 1894, Finance Minister Sergei Witte initiated reform of the State Bank with the adoption of a new charter that directed it to more intensive lending to trade and industry, especially agriculture. The bank's fixed capital was increased to 50 million rubles, and its reserve capital to 5 million rubles (it had been 15 million rubles for fixed capital and 3 million rubles for reserve capital at creation in 1860). The mandate of the State Bank, was changed from "revitalizing trade turnover" to "facilitating money circulation, promoting domestic trade, industry and agriculture through short-term credit". In addition, as before, the State Bank was mandated to contribute to the "strengthening of the monetary credit system". The State Bank's discounting operation was extended to bills issued for commercial and industrial purposes, while their term was increased to 12 months. Loans to industrial enterprises could reach up to 500 thousand rubles, and be issued for a period of up to two years. The State Bank was given the right to issue loans against solo bills secured by a pledge of real estate, a pledge of agricultural and factory equipment, a surety, or security determined by the Minister of Finance. The new charter made changes to governance, by which the State Bank was removed from the supervision of the Council of State Credit Institutions and placed under the supervision of the State Audit Office. The general management of the State Bank was entrusted to a Council which replaced the previous board and to the Governor. The Council included the director of the Special Chancellery for Credit, a member from the State Control, fellow bank managers, the manager of the St. Petersburg office of the bank, members from the Ministry of Finance (their number was not limited), one member from the nobility and one from the merchants. The Chairman of the Council of the State Bank was its Governor.
The growth of commercial operations in the State Bank, which began a year before the adoption of the new charter, was short-lived and ended in 1896. During this period, discounting operations almost tripled. There was, albeit on a smaller scale, an increase in special current accounts and interest-bearing loans. Commodity loans to rural owners almost tripled from 9.2 million to 29.8 million rubles, and loans to industrial enterprises almost doubled from 8.8 million to 16.7 million rubles.
Monetary reform of 1895–1898
Witte started a new cycle of monetary reform just a year after the new charter, the highlight of which was Russia's adoption of the gold standard in 1897. During this reform, the State Bank's task was centered on money issuance and monetary policy. At the beginning of 1895, Russia's gold reserves amounted to 911.6 million rubles; stabilization of the market exchange rate occurred in 1893–1895. A decree of Nicholas II of granted the State Bank a formal monopoly over note issuance in the Russian Empire while preserving its capacity to engage in ordinary lending. The text stated: "State credit notes are issued by the State Bank in an amount strictly limited by the urgent needs of monetary circulation, backed by gold; the amount of gold backing the notes must be at least half of the total amount of credit notes issued in circulation, when the latter does not exceed 600 million rubles. Credit notes in circulation exceeding 600 million rubles must be backed in gold at least one ruble per ruble, so that for every 15 rubles in credit notes there is a corresponding backing of at least one imperial in gold."
The State Bank was primarily directed to ensure the stability of the new monetary system, and subsequently was very restrained in its lending and credit activity despite the permissive provisions of the 1894 charter in that area. In the second half of the 1890s, the entire attention of the Ministry of Finance and the State Bank was focused on strengthening the metal reserves by compressing the bank's active operations. For example, between and , the discounting of bills and the issuance of loans on special current accounts against bills decreased from 215 to 170 million rubles; the issuance of commercial loans from 49 to 22 million rubles; and other loans from 55 to 31 million rubles.
Late-tsarist instability and foreign borrowing