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Q: Russian Foreign Debts, after the Bolsheviks ( No Answer,   7 Comments )
Subject: Russian Foreign Debts, after the Bolsheviks
Category: Relationships and Society > Government
Asked by: probonopublico-ga
List Price: $25.00
Posted: 06 Oct 2004 06:46 PDT
Expires: 24 Oct 2004 06:45 PDT
Question ID: 411029
It has been reported that the Bolsheviks renounced all foreign debts
incurred by the Imperial regime and I understand that both French and
Dutch lenders suffered heavily.

In the case of the Dutch, a figure of 1 billion Guilders has been
quoted (but it's unclear whether the 'Billion' is the English or
American variety). Apparently, the Dutch loans were mostly from
private individuals.

Can anyone quantify the main creditor countries?

And confirm that Soviet Russia did default?
There is no answer at this time.

Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: pafalafa-ga on 06 Oct 2004 07:23 PDT

The Bolsheviks were constantly threatening to repudiate the debts that
predated their rise to power, and the West was constantly threatening
to cut off credit to Russia as a result.  Telegrams were flying, and
international conferences occurred aplenty.

It's difficult to say what actually transpired in the end -- I think
it would take a PhD level piece of research to really tease it all
apart and sum it all up.  I'm sure a lot of folks in Holland, Belgium
(they owned a lot of property in Russia, for some reason) and
elsewhere were awfully worried for a lot of years.

I did find one sort of summary tidbit, though, from October 30, 1921
Washington Post, in a multi-headlined article titled:

[ hard can it be to recognize a Bolshevik...!]
Soviet Note to US and Allies Asks World Conference Be Called for Such Purpose
Only Obligations Prior to 1914 Are Concerned -- Message Not Yet Received Here

Anyway, the article says, in part:

Russia's total state debt at the beginning of 1914 amounted to
9,888,310,000 rubles (or about $5,093,379,650 at the rate of $0.515 to
the ruble, which prevailed at that time).

Subsequently, Russia contracted various debts abroad for the conduct
of the war, and these loans, together with internal bond issues,
brought the state debt up to 32,300,000,000 rubles (about
$16,634,500,000) on September 1, 1917, just before the bolshevik

The debts incurred after 1914, however, are not included in the new soviet offer.

Figures are unavailable to show the distribution of the state debt,
either in 1914 or 1917.


Hope that helps a bit, anyway.


P.S.  Is it OK calling you PBP?  I get lazy sometimes.
Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: pafalafa-ga on 06 Oct 2004 12:36 PDT
Here's a bit more:

Economic History of Europe in Modern Times
Harry Elmer Barnes - author, Felix Fleugel - author, Melvin M. Knight - author. 
Publisher: Houghton Mifflin Company, Boston, 1928.

Chapter XV:  RUSSIA

During the two decades which elapsed between that time and the World
War, the total Russian state debt increased from 5,775,000,000 to
about 8,800,000,000 gold rubles. The foreign part of this increased
from 1,733,000,000 gold rubles on January 1, 1895 to 4,229,000,000 on
January 1, 1914, or from 30 to 48 per cent of the total. France,
Russia's military ally, held four fifths of the strictly government
debt, and was thus in a position to see that military railways and
other war preparations were not neglected. Great Britain held most of
the remainder. Of a foreign industrial investment of some two billion
rubles, France furnished nearly a third, Great Britain a fourth,
Germany and Belgium nearly a sixth each. Gradually a curious situation
appeared, in which central Europe controlled the lion's share of
Russia's foreign commerce, collecting a handsome trade balance yearly,
while western Europe collected a heavy balance of payments on
investments in Russia and wielded great power, through the budget, on
the policies of the Russian State.


The western European military supporters of Russia were not all in the
same economic position, however -- an important fact to remember in
trying to understand their post-war attitudes. France was chiefly the
investor, collecting cash revenues, while Great Britain was easily
second in Russia's foreign trade, her total being about half that of
Germany. Thus England had less to lose by a Russian repudiation of old
debts and more to gain by a resumption of commerce. The United States
had an unimportant share of the total Russian pre-war trade, as
compared with the great European powers. In searching for some solid
and comprehensible reason for the similarity of French and American
pronouncements against recognition, the eye is caught by the fact that
6 per cent of the old industrial securities and 7 per cent of the
enormous war debt of Russia were placed in the United States. If we
look for an economic explanation of French recognition ( 1924) and
American non-recognition (to 1927), the eye is caught by the foreign
trade figures. France had a much smaller percentage of the Russian
trade at the time she recognized the Soviet Government than in the
pre-war period ( 1909-13 average). Without according recognition, and
thus prejudicing her debt claims, the United States has already made
considerable headway in the trade with Russia.


During the war, the Russian national debt was increased from
8,810,000,000 rubles to nearly 23,000,000,000, the foreign debt of
4,229,000,000 rubles rising to 11,910,000,000. In 1914, there were
about 1,775,000,000 paper rubles in circulation, backed by a fund of
some 1,700,000,000 rubles in gold (par 51.46 cents). Mining was
stimulated, and the metal money withdrawn from circulation as far as
possible. Although gold to a value of about 640,000,000 rubles was
added to deposits abroad, the Russian State Bank still had a reserve
of about 1,200,000,000 at the time of the Bolshevik Revolution of
November, 1917. This was equal to about a twentieth of the internal
debt, while the 309,000,000 rubles still held on deposit abroad was
less than one thirty-fifth of the foreign debt. On July 27, 1914,
twice in 1915, and twice in 1916, the emission of paper by the State
Bank was legally extended, mounting from 300 million to a billion and
a half. The issues of 1915 amounted to 2,600,000,000 rubles; of 1916
to 3,379,000,000, and of 1917 to more than 18 billion rubles. In the
Petrograd free market, a gold ruble was worth 1.10 paper ones in
January, 1915; 1.30 in January, 1916; 1.60 in January, 1917, and about
2 at the time of the March Revolution. By the late summer of 1917, the
paper ruble had sunk below a third of its face value, and to an eighth
at the time of the Bolshevik coup in November.


One of these, recognized by the Soviet Government, is that the time
must come when it will adjust the claims of other States and their
citizens against it. Another, which these creditors understand
perfectly well, is that the settlement can never be at face value,
including accumulated interest. Negotiations went on in 1925 and 1926
between Russia and France concerning a pre-war debt of some five
billion dollars to investors, in the latter country, but no fraction
of it could be agreed upon as payable. Counting public and private
loans, interest, and the claims for confiscated or destroyed property,
the American bill to Russia was nearly three quarters of a billion
dollars in 1926. Russia's creditors insist that she must acknowledge
the huge foreign claims "in principle." In practice, this usually
means that the debtor nation exchanges the acknowledgment of a large
sum "in principle" for a quiet agreement to accept a much smaller one.
Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: fp-ga on 06 Oct 2004 13:22 PDT
"Western claims, totaling about 14 billion rubles (roughly 7 billion
dollars), included pre-World War I tsarist debts, wartime borrowing,
and compensation for nationalized European property; the Soviets made
huge counterclaims for damage done by Allied intervention.
The West agreed that wartime debts and Allied damage to Russia about
canceled out, but the French especially sought repayment of the prewar
debt, most of which they held, and reimbursement for confiscated
Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: fp-ga on 06 Oct 2004 13:38 PDT
"According to the data presented by the Soviet Government at the 1922
Genoa Conference, the total external national debt of Russia (state
and government-guaranteed loans) had amounted by the year 1914 to 6330
million golden roubles (at the pre-war exchange rate of the Rouble
when it equalled 0.5 USD or 2.16 German RM). The share of France was
3786 million roubles in credits, of Germany - 975 million, of Holland
- 575 million, of Great Britain ? 500 million, and the share of other
nations - 494 million. The recent studies also indicate that by the
year 1915 Russian joint-stock companies had received 1940 million
roubles in foreign investments where the leading role was again played
by France (594 million roubles), followed by Britain (491.5), Germany
(399), Belgium (230.4) and the USA (114)." (page 1 of 13)

Genoa Conference of 1922:
Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: probonopublico-ga on 06 Oct 2004 21:49 PDT
Hi, Paf and Freddy

Very many thanks for your Comments and Yes you may call me pbp.

I am sure that I can now fix you both up with PhD certificates.

Or would you prefer a couple of comfortable chairs?

All the Best

Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: argenta-ga on 08 Oct 2004 04:11 PDT
These may be of interest (a bit jumbled up I'm afraid)

April 16, 1922 in the Treaty of Rapallo. Under the treaty, Germany and
Russia agreed on mutual recognition, cancellation of debt claims,
normalization of trade relations, and secret cooperation in military

Genoa, Conference of, 1922, at Genoa, Italy. Representatives of 34
nations convened on Apr. 10 to attempt the reconstruction of European
finance and commerce. It was the first conference after World War I in
which Germany and the Soviet Union were accepted on a par with other
nations. The USSR, despite its repudiation of the czarist national
debt, had offered to discuss the question at an international
assembly. This offer marked the first Soviet attempt to enter the
European diplomatic circle after the Russian Revolution. At Genoa the
creditor nations?all represented except the United States?demanded
recognition of the czarist debt, compensation for confiscated
property, and guarantees for future contracts. The Russians, headed by
Georgi Chicherin, offered to recognize the debt in return for
cancellation of the Russian war debt, compensation for damages
inflicted by Allied forces in their intervention after the revolution,
and extensive credit for the Soviet government.
The divergent purposes of the former Allies and the distrust caused by
the announcement of the Treaty of Rapallo (see Rapallo, Treaty of,
1922) between Germany and the USSR made agreement impossible, and the
conference adjourned on May 19.

J. V. Stalin
Leningradskaya Pravda, No. 89,
April 18, 1926

?I might refer, further, to such a fact as the annulment of the
tsarist debts, which removed a burden of thousands of millions of
rubles of indebtedness from our national economy. It should not be
forgotten that if these debts had remained, we should have had to pay
annually several hundreds of millions in interest alone, to the
detriment of our industry and our entire national economy. There is no
question that this circumstance has greatly facilitated the matter of

Why Do Investors Still Hope?
The Soviet Repudiation Puzzle (1918-1919)

?At the time, Russian assets are actively traded on the Paris stock
exchange and held by a large fraction of
French investors. In order to strengthen diplomatic relations with
Russia, the French government had, since the
1890?s, helped to float Russian bonds. This had led to a very large
diffusion of Russian values, mainly state and
railway bonds, among the French middle class. In 1919, as the French
government centralized the claims related
to French interests in Russia, 1,6 million investors filled in a form.
According to Girault (1974), the Russian
section represents 33% of foreign values and amount to approximately
4,5% of French private wealth.
Furthermore, France centralized most Russian financial assets at the
beginning of the twentieth century and
approximately 40% to 45% of Russian sovereign debts. According to the
Office national des valeurs mobilières,
the amounts invested in Russian shares and bonds before WWI reached 15
to 18 billion francs (?Note sur la
création d?un comité français de protection des intérêts français en
Russie?, Office national des valeurs
mobilières, 22/1/1918, ANPFVM 440-A-17).?

Page 12 repudiates edict and may make repayment

USA recognise USSR.
Gives up resistance on repayment of Tsarist debts

November 17, 1933 U.S. Recognition of the Soviet Government The
Roosevelt administration formally recognized the Soviet government
ending a long period of estrangement. The Soviet Commissar of Foreign
Affairs, Maxim Litvinov, arrived in Washington, DC on November 7th to
begin negotiations. In a formal exchange of notes, the Soviets
promised not to interfere in the domestic affairs of the United
States, including propaganda; to extend religious freedom to Americans
living in the Soviet Union; to negotiate an agreement to guarantee a
fair trial for American citizens accused of crimes in the USSR; and to
negotiate a settlement of mutual claims (an agreement on tsarist debts
to the U.S. was never negotiated). Official recognition restored trade
relations between the two countries, although the volume did not reach
anticipated levels.


10 February 1918 
Sobranie RSFSR, 1917-18, P- 344

    1. All State loans contracted by the Governments of the Russian
landlords and Russian bourgeoisie, enumerated in a special list being
published, are annulled (wiped out) as from December 1917. The
December coupons of these loans will not be paid.

    2. All guarantees given by the said Governments in connexion with
loans of various undertakings and institutions are similarly annulled.

    3. All foreign loans are annulled unconditionally and without any exceptions.

Russia, France debt accord signed
MOSCOW: Russia and France will soon give up mutual debt claims they
accumulated before the end of World War II, according to a Russian
government document obtained by Reuters on Friday.

A regulation signed by Russian Prime Minister Viktor Chernomyrdin on
May 26 says neither Russia nor France will put forward claims on
mutual debts accumulated before May 9, 1945. : Chernomyrdin signs
Russia, France debt accord 2

Russia will pay France $400 million in eight $50 million semi-annual
payments, which will put an end to financial disagreement between the
countries, the document says.

The disagreements prevented Russia's debut Eurobond last November from
being traded in France and have held up Russia's application to join
the Paris Club of creditor nations.

The first payment is to be made within 15 days after the regulation is
signed, the second on August 1, 1997, and the remaining six payments
are to be made on February 1 and August 1, 1998, 1999 and 2000, it

The regulation orders the government to make provisions for these
payments when drafting the 1998, 1999 and 2000 budgets.

The debt outlined by the document includes payments on bonds issued by
the Tsarist government, damage caused to Russia by the French 1918-22
intervention in the Russian civil war after the 1917 Bolshevik
revolution, gold transferred to Germany under the 1918 Brest-Litovsk
peace accord and later transferred to France under the 1919 Versailles
peace accord and gold sent to France by opponents of the Bolsheviks
during the civil war.-Reuter?

?NEW YORK, April 6 (Reuters) - A Paris court on Tuesday dismissed a
lawsuit against Moody's Investors Service and Standard & Poor's by
holders of bonds issued by the Russian government prior to the 1917
Bolshevik Revolution, the credit rating agencies said.
The French Association of Russian Bondholders, or Afper, had contended
that its interests were prejudiced when the credit rating agencies in
1996 rated new Russian debt. Moody's said the lawsuit was dismissed
for lack of standing.?

?Moscow Times
The French Assocation of Russian Bond Holders (AFPER), which
represents about 13,000 French citizens who own stock issued by
pre-revolutionary Russian companies?
?an agreement signed between Russia and France in 1996 in which Russia
paid $450 million to settle claims between the Soviet Union and France
up to 1945.
but the court struck down the suit saying that the Russian government
had immunity granted by the 1996 bilateral agreement?

?The court recalled that under a relative Russian-French agreement,
Russia had paid $400 million to settle the property disputes that had
emerged before 1945. ..
Russia's present position on the matter is that the disputes have been
settled completely and further claims from the French holders of
Russian bonds shall be settled with the French government.?

Seize art items in exhibition

AFPER web site

Subject: Re: Russian Foreign Debts, after the Bolsheviks
From: probonopublico-ga on 08 Oct 2004 05:54 PDT
Hi, Argenta

Very many thanks for the info provided.

It is very helpful.

All the Best


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