84 REFORM OF RUSSIA'S FINANCES AND CENTRAL ADMINISTrtATION
very high. As foreign loans proved inadequate as a source of extraor-
dinary revenue, the government adopted another expedient, copied
from Western Europe, and with equally unfortunate effects: the emis-
sion of paper money, assignats. In 1769 Catherine II approved the
issuing of assignats as a short term measure. However, the temporary
expedient became a regular policy. Such a course was the result of the
naive conception concerning the assignats which prevailed at the
time, and of the great demands made by the state on the treasury_
Like most of their Western colleagues, the Russian financial "experts"
of the time did not make a clear distinction between bank notes and
paper money. They labored under the illusion that money could be
created by government fiat. After a brief period of illusory success and
prosperity, the harmful effect of the assignats came to light as the
paper ruble began to fall sharply in relation to silver. Naturally
enough, the lower value of the assignats in terms of silver contributed
to increase tqe budgetary deficit. Claiming that paper money was
"real money" and not merely a way of borrowing on the natiQn's
wealth, the state kept printing more and more assignats. The obvious
result did not fail to manifest itself s.oon. The amount of paper money
in circulation reached enormous proportions; the value of the assignats
kept falling and the government lost all control over the situation.^1
Alexander I continued this disastrous policy, so that at the end of
the first decade of his reign the paper ruble had dropped to almost ~
of nominal value in silver. 2 The cost of Russia's wars agains Napoleon
(^1) Year
1769
1770
1774
1778
1782
1786
1790
1794
1798
1801
1805
1809
1810
1811
1812
IS!4
Amount issued
in the year
2.169.975
3,757.700
2.207.075
5.897.125
908.825
11,000.000
21.550.000
31.356,765
8.799.000
31,540.560
55,832.720
46.172,580
2.020.520
64,,500.000
48.791,500
Amount in circulation
on 31 Dec. of year
2,169.975
6,378,675
20.051,800
23.500,000
33,289,425
46,219.250
111.000.000
145,550,000
194,931,605
221.488.335
292,199,110
533,201.300
579,373.880
581,394,400
645.894,400
798.125.900
Value in silver of
1 ruble assignats
99
99
100
99
99
98
87
68.5
62,5
7173 2 / 3 * ..
431 / 3
252 / 5
262 / 5
251 / 5
20
]1.1, Kashkarov, Denezlmoe obrashchenie v Rossii, vol, I. pp, 24. 25. 26,
'" Tho appreciation in these years was due to the years of peace and the optimism
generated by Alexander's accession,
2 de Bloch. oj), cit., I. pp, 110-111; Khromov. op. cit" 121-122.