Industrialisation, Politics, and Banking Instability in Late Imperial Russia

When industry experienced a slowdown during the financial crisis of 1899-1902, banks sustained devastating losses. This evidence suggests that national development policies had a destabilizing impact on bank performance. Second, in response to the financial crisis, the State Bank, a quasi-central bank of Russia, implemented a multifaceted approach to crisis containment.

I find that this multifaceted approach was successful in maintaining price, employment, and financial stability. The evidence also suggests that the State Bank’s crisis response was identical to the types of policies employed over a century later by the Federal Reserve during the 2007-09 financial crisis. Third, in response to the financial crisis, the Russian government, along-side privately-owned industry, transferred income and wealth from ordinary workers to industrialists and investors.

The evidence also suggests that industry forced the labour force to either work longer hours or more intensively. The distributional effect appears to have contributed to the occurrence of labour strikes, and ultimately to the 1905 revolution.